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Equinix (EQIX) Surpasses FFO and Revenue Estimates in Q2
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Equinix Inc. (EQIX - Free Report) posted impressive results for second-quarter 2021, wherein adjusted funds from operations (AFFO) per share and revenues both surpassed the Zacks Consensus Estimate and witnessed year-over-year growth.
The company’s quarterly AFFO per share was $7.01, beating the Zacks Consensus Estimate of $6.72. The figure also improved 10.4% from the year-ago quarter’s $6.35.
This upside primarily stemmed from steady growth in interconnection revenues. During the second quarter, the company added an incremental 7,800 interconnections, bringing the company's total interconnections to more than 406,600.
Quarter in Detail
Total quarterly revenues came in at $1.66 billion, beating the Zacks Consensus Estimate of $1.64 billion. The top line improved 13%, year over year, marking the 74th consecutive quarter of revenue growth.
Recurring revenues were $1.54 billion, up 10.3% from the year-ago quarter’s figure. Non-recurring revenues surged 60.4% from the year-ago quarter to $115.4 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 13.5%, 10.2% and 15.2% to $750.6 million, $537.9 million and $369.3 million, respectively.
Adjusted EBITDA came in at $797 million, up 10.7% year over year.
AFFO inched up 13.3% year over year to $632 million during the June-end quarter.
However, Adjusted EBITDA margin was 48%, down from the 49% recorded in the prior-year quarter.
Balance Sheet
Equinix exited the second quarter with cash and cash equivalents of $1.8 billion, up from the $1.6 billion reported at the end of 2020. The company’s total debt principal outstanding was $14 billion as of Jun 30, 2021, up from the $12.5 billion witnessed at the end of 2020.
Dividend Update
Concurrent with the second-quarter 2021 earnings release, on Jul 28, Equinix’s board of directors approved a quarterly cash dividend of $2.87 per share. This dividend will be paid out on Sep 22 to shareholders of record as of Aug 18, 2021.
Guidance
For third-quarter 2021, Equinix projects revenues of $1.668 and $1.688 billion, calling for 1-2% growth, quarter over quarter. Adjusted EBITDA is likely to lie between $766 million and $786 million.
For the ongoing year, AFFO per share is estimated to be $26.92 - $27.36, suggesting a 9-11% year-over-year increase. The Zacks Consensus Estimate for the same is pegged at $27.30.
Further, Equinix estimates to generate revenues of $6.619 - $6.659 billion, indicating growth of 10-11% on a year-over-year basis. Assuming integration costs of $25 million, it predicts adjusted EBITDA of $3.108 - $3.148 billion.
Our Take
Equinix’s global data-center portfolio is well positioned to gain from tailwinds such as high demand for inter-connected data-center space, driven by acceleration in enterprise cloud adoption and increasing cloud or Internet customers’ demands.
However, the company’s expansion moves require huge capital outlays. Given its significant debt obligations, such activities might increase financial obligations and hinder profitability.
Equinix carries a Zacks Rank #3 (Hold), at present.
Boston Properties Inc.’s (BXP - Free Report) second-quarter 2021 FFO per share of $1.72 beat the Zacks Consensus Estimate of $1.61. The quarterly figure also exceeded the mid-point of the company’s guidance by 12 cents, reflecting an improved portfolio performance, and better-than-projected parking, hotel, retail and termination income.
Highwoods Properties, Inc.’s (HIW - Free Report) quarterly FFO per share of 93 cents topped the Zacks Consensus Estimate by a cent. Rental and other revenues of $185.5 million outpaced the consensus mark of $184.9 million.
Prologis, Inc. (PLD - Free Report) came up with second-quarter core FFO per share of $1.01, surpassing the Zacks Consensus Estimate of 99 cents. Results underlined all-time low vacancies in its markets that aided rent growth and valuation increases.
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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Equinix (EQIX) Surpasses FFO and Revenue Estimates in Q2
Equinix Inc. (EQIX - Free Report) posted impressive results for second-quarter 2021, wherein adjusted funds from operations (AFFO) per share and revenues both surpassed the Zacks Consensus Estimate and witnessed year-over-year growth.
The company’s quarterly AFFO per share was $7.01, beating the Zacks Consensus Estimate of $6.72. The figure also improved 10.4% from the year-ago quarter’s $6.35.
This upside primarily stemmed from steady growth in interconnection revenues. During the second quarter, the company added an incremental 7,800 interconnections, bringing the company's total interconnections to more than 406,600.
Quarter in Detail
Total quarterly revenues came in at $1.66 billion, beating the Zacks Consensus Estimate of $1.64 billion. The top line improved 13%, year over year, marking the 74th consecutive quarter of revenue growth.
Recurring revenues were $1.54 billion, up 10.3% from the year-ago quarter’s figure. Non-recurring revenues surged 60.4% from the year-ago quarter to $115.4 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 13.5%, 10.2% and 15.2% to $750.6 million, $537.9 million and $369.3 million, respectively.
Adjusted EBITDA came in at $797 million, up 10.7% year over year.
AFFO inched up 13.3% year over year to $632 million during the June-end quarter.
However, Adjusted EBITDA margin was 48%, down from the 49% recorded in the prior-year quarter.
Balance Sheet
Equinix exited the second quarter with cash and cash equivalents of $1.8 billion, up from the $1.6 billion reported at the end of 2020. The company’s total debt principal outstanding was $14 billion as of Jun 30, 2021, up from the $12.5 billion witnessed at the end of 2020.
Dividend Update
Concurrent with the second-quarter 2021 earnings release, on Jul 28, Equinix’s board of directors approved a quarterly cash dividend of $2.87 per share. This dividend will be paid out on Sep 22 to shareholders of record as of Aug 18, 2021.
Guidance
For third-quarter 2021, Equinix projects revenues of $1.668 and $1.688 billion, calling for 1-2% growth, quarter over quarter. Adjusted EBITDA is likely to lie between $766 million and $786 million.
For the ongoing year, AFFO per share is estimated to be $26.92 - $27.36, suggesting a 9-11% year-over-year increase. The Zacks Consensus Estimate for the same is pegged at $27.30.
Further, Equinix estimates to generate revenues of $6.619 - $6.659 billion, indicating growth of 10-11% on a year-over-year basis. Assuming integration costs of $25 million, it predicts adjusted EBITDA of $3.108 - $3.148 billion.
Our Take
Equinix’s global data-center portfolio is well positioned to gain from tailwinds such as high demand for inter-connected data-center space, driven by acceleration in enterprise cloud adoption and increasing cloud or Internet customers’ demands.
However, the company’s expansion moves require huge capital outlays. Given its significant debt obligations, such activities might increase financial obligations and hinder profitability.
Equinix carries a Zacks Rank #3 (Hold), at present.
Equinix, Inc. Price, Consensus and EPS Surprise
Equinix, Inc. price-consensus-eps-surprise-chart | Equinix, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other REITs
Boston Properties Inc.’s (BXP - Free Report) second-quarter 2021 FFO per share of $1.72 beat the Zacks Consensus Estimate of $1.61. The quarterly figure also exceeded the mid-point of the company’s guidance by 12 cents, reflecting an improved portfolio performance, and better-than-projected parking, hotel, retail and termination income.
Highwoods Properties, Inc.’s (HIW - Free Report) quarterly FFO per share of 93 cents topped the Zacks Consensus Estimate by a cent. Rental and other revenues of $185.5 million outpaced the consensus mark of $184.9 million.
Prologis, Inc. (PLD - Free Report) came up with second-quarter core FFO per share of $1.01, surpassing the Zacks Consensus Estimate of 99 cents. Results underlined all-time low vacancies in its markets that aided rent growth and valuation increases.
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.