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Equinix Inc. (EQIX - Free Report) posted strong results for third-quarter 2020, wherein adjusted funds from operations (AFFO) per share and revenues surpassed the Zacks Consensus Estimate and improved year over year.
The company’s quarterly AFFO per share was $6.48, beating the Zacks Consensus Estimate of $6.03. The figure also improved 17.4% from the year-ago quarter’s $5.52.
The upside primarily stemmed from steady growth in interconnection revenues. In fact, during the third quarter, it added an incremental 8,500 interconnections, which were driven by video conferencing, work-from-home aggregation and enterprise cloud connectivity.
Quarter in Detail
Total quarterly revenues were $1.52 billion, surpassing the Zacks Consensus Estimate of $1.50 billion. Also, the top-line figure improved 8.8% year over year, representing the 71st consecutive quarter of revenue growth.
Recurring revenues were $1.43 billion, up 8.5% from the year-ago quarter’s figure. Non-recurring revenues improved 13.2% from the year-ago quarter to $87.7 million.
Revenues from the three geographic regions increased on a year-over-year basis as well. Revenues from the Americas, EMEA and the Asia Pacific jumped 4.2%, 13.1% and 12.3% to $672.3 million, $518 million and $329.3 million, respectively.
Cash gross margin was 67%, stable year over year. Total operating expenses were up 13.8% year over year to $463.4 million.
Adjusted EBITDA was $737 million, up 9.3% year over year. Adjusted EBITDA margin was 49%, up from 48% as of the prior year quarter. AFFO appreciated 22.6% year over year to $579.7 million in the September-end quarter.
Balance Sheet
Equinix exited the third quarter with cash and cash equivalents of $2.6 billion. The company’s total debt principal outstanding was $12.4 billion as of Sep 30, 2020.
Dividend Update
Concurrent with its third-quarter 2020 earnings release, on Oct 28, Equinix’s board of directors approved a quarterly cash dividend of $2.66 per share. The dividend will be paid out on Dec 9 to shareholders of record as of Nov 18.
Guidance
The company improved its guidance for the ongoing year on foreign currency benefit and the acquisition of the Bell Canada data centers. For 2020, it estimates generating revenues of $5.983-$6.003 billion as compared with $5.919-$5.989 billion mentioned earlier. It predicts adjusted EBITDA of $2.827-$2.847 billion, higher than $2.781-$2.851 billion stated earlier.
Moreover, AFFO is expected to be $2.157-$2.177 billion as compared with $2.107-$2.177 billion mentioned previously. Further, AFFO per share is estimated to be $24.38-$24.61, up from $23.87-$24.67 stated earlier. The Zacks Consensus Estimate for the same is pegged at $24.52.
For fourth-quarter 2020, Equinix projects revenues of $1.549-$1.569 billion. Adjusted EBITDA is likely to be between $685 million and $705 million.
Our Take
The company’s focus on acquisitions to expand data-center capacity in key markets as well as strengthen its competitive positioning and global reach is supporting its performance. In fact, strong performance across all three geographies drove its results.
However, stiff competition and ongoing consolidation in the telecommunication industry might bring down lucrative expansion opportunities for the company over the long term.
We now look forward to the earnings releases of other REITs like Lexington Realty Trust (LXP - Free Report) , National Storage Affiliates Trust (NSA - Free Report) and Ventas, Inc. (VTR - Free Report) . While Lexington Realty and National Storage Affiliates are slated to report third-quarter earnings on Nov 5, Ventas will release results on Nov 6.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Equinix (EQIX) Tops Q3 FFO & Revenues Estimates, Ups '20 View
Equinix Inc. (EQIX - Free Report) posted strong results for third-quarter 2020, wherein adjusted funds from operations (AFFO) per share and revenues surpassed the Zacks Consensus Estimate and improved year over year.
The company’s quarterly AFFO per share was $6.48, beating the Zacks Consensus Estimate of $6.03. The figure also improved 17.4% from the year-ago quarter’s $5.52.
The upside primarily stemmed from steady growth in interconnection revenues. In fact, during the third quarter, it added an incremental 8,500 interconnections, which were driven by video conferencing, work-from-home aggregation and enterprise cloud connectivity.
Quarter in Detail
Total quarterly revenues were $1.52 billion, surpassing the Zacks Consensus Estimate of $1.50 billion. Also, the top-line figure improved 8.8% year over year, representing the 71st consecutive quarter of revenue growth.
Recurring revenues were $1.43 billion, up 8.5% from the year-ago quarter’s figure. Non-recurring revenues improved 13.2% from the year-ago quarter to $87.7 million.
Revenues from the three geographic regions increased on a year-over-year basis as well. Revenues from the Americas, EMEA and the Asia Pacific jumped 4.2%, 13.1% and 12.3% to $672.3 million, $518 million and $329.3 million, respectively.
Cash gross margin was 67%, stable year over year. Total operating expenses were up 13.8% year over year to $463.4 million.
Adjusted EBITDA was $737 million, up 9.3% year over year. Adjusted EBITDA margin was 49%, up from 48% as of the prior year quarter. AFFO appreciated 22.6% year over year to $579.7 million in the September-end quarter.
Balance Sheet
Equinix exited the third quarter with cash and cash equivalents of $2.6 billion. The company’s total debt principal outstanding was $12.4 billion as of Sep 30, 2020.
Dividend Update
Concurrent with its third-quarter 2020 earnings release, on Oct 28, Equinix’s board of directors approved a quarterly cash dividend of $2.66 per share. The dividend will be paid out on Dec 9 to shareholders of record as of Nov 18.
Guidance
The company improved its guidance for the ongoing year on foreign currency benefit and the acquisition of the Bell Canada data centers. For 2020, it estimates generating revenues of $5.983-$6.003 billion as compared with $5.919-$5.989 billion mentioned earlier. It predicts adjusted EBITDA of $2.827-$2.847 billion, higher than $2.781-$2.851 billion stated earlier.
Moreover, AFFO is expected to be $2.157-$2.177 billion as compared with $2.107-$2.177 billion mentioned previously. Further, AFFO per share is estimated to be $24.38-$24.61, up from $23.87-$24.67 stated earlier. The Zacks Consensus Estimate for the same is pegged at $24.52.
For fourth-quarter 2020, Equinix projects revenues of $1.549-$1.569 billion. Adjusted EBITDA is likely to be between $685 million and $705 million.
Our Take
The company’s focus on acquisitions to expand data-center capacity in key markets as well as strengthen its competitive positioning and global reach is supporting its performance. In fact, strong performance across all three geographies drove its results.
However, stiff competition and ongoing consolidation in the telecommunication industry might bring down lucrative expansion opportunities for the company over the long term.
Equinix, Inc. Price, Consensus and EPS Surprise
Equinix, Inc. price-consensus-eps-surprise-chart | Equinix, Inc. Quote
Equinix carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We now look forward to the earnings releases of other REITs like Lexington Realty Trust (LXP - Free Report) , National Storage Affiliates Trust (NSA - Free Report) and Ventas, Inc. (VTR - Free Report) . While Lexington Realty and National Storage Affiliates are slated to report third-quarter earnings on Nov 5, Ventas will release results on Nov 6.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>