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What's in Store for Equinix (EQIX) This Earnings Season?
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Equinix, Inc. (EQIX - Free Report) will report third-quarter 2021 results on Nov 3, after market close. The company’s quarterly results will likely highlight year-over-year growth in revenues and funds from operations (FFO) per share.
In the previous quarter, Equinix delivered a surprise of 4.32% in terms of adjusted FFO per share. The results displayed steady growth in interconnection revenues.
Over the last four quarters, the company outpaced the Zacks Consensus Estimate on all occasions, the average beat being 4.75%.
Let’s see how things have shaped up prior to the earnings announcement.
Factors at Play
Equinix enjoys a geographically-diversified portfolio. The company has a robust digital footprint of International Business Exchanges (IBX) data centers across five continents, which help it serve customers with global interconnectivity. In September, it opened a new IBX data center in Frankfurt to cater to the rising demand for private connectivity and digital infrastructure in Germany. The company also partnered with Nokia to enhance the 5G & Edge ecosystem.
High growth in cloud computing, Internet of Things and big data, and an elevated demand for third-party IT infrastructure are spurring demand for data-center infrastructure. Moreover, growth in artificial intelligence, autonomous vehicle and virtual/augmented reality markets has been creating a robust demand for data centers. Amid these, the demand for data-center space is likely to have been healthy during third-quarter 2021.
Hence, being infrastructure providers for the rapidly-growing digital economy, data-center landlords, such as Equinix, Digital Realty Trust (DLR - Free Report) , CyrusOne Inc. and CoreSite Realty Corporation (COR - Free Report) , are well placed for sustainable growth.
The coronavirus pandemic has ramped up digital transformation in unthinkable ways and data centers play a crucial role in supporting this development. Data centers have become an essential part of our digital lives and the pandemic has only further highlighted its value. Demand for data centers witnessed a significant boost on the increased access to Internet-related services during lockdowns.
Also, rising cloud adoption is expected to have helped Equinix continue capturing demand and grow its interconnected ecosystems during the third quarter. With 7,800 interconnections added during the second quarter, the company seems well poised to have banked on these trends in the to-be-reported quarter, driving its recurring interconnection revenues. In September, Equinix was chosen by i3D.net to support its global gaming platform. The deal displayed the rising demand for Equinix's reliable and powerful interconnection services. The Zacks Consensus Estimate for interconnection revenues is pegged at $296 million, suggesting 13.4% growth from the prior-year period.
The company’s solid cash-generating capacity, owing to a stable base of contracted recurring interconnection and collocation revenues, is anticipated to have fueled the third-quarter revenue growth. The consensus estimate for revenues is pegged at $1.68 billion, suggesting a 10.6% year-over-year improvement. Management forecasts quarterly revenues of $1.67 and $1.69 billion, calling for 1-2% growth, quarter over quarter.
Management projects the adjusted EBITDA to lie between $766 million and $786 million for third-quarter 2021.
Apart from these, the company has been strengthening its portfolio on the back of acquisitions and development. Boosting its presence in the India market, Equinix completed the acquisition of India operations of GPX Global Systems, Inc. for an all-cash transaction of $161 million in September.
Nevertheless, considering the strong growth potential in the data-center market, competition from other providers might have intensified. Equinix competes with neutral colocation providers as well as with traditional colocation providers, Internet service providers and web-hosting facilities.
The intensifying competition is expected to have prompted aggressive pricing policies, making Equinix vulnerable to pricing pressure.
Prior to the third-quarter earnings release, the Zacks Consensus Estimate for the quarterly FFO per share has been revised marginally downward to $6.69 in the past week. However, it suggests year-over-year growth of 3.9%.
What the Zacks Model Unveils
Per our quantitative model, Equinix does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO beat this quarter.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Equinix has an Earnings ESP of -2.82%
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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What's in Store for Equinix (EQIX) This Earnings Season?
Equinix, Inc. (EQIX - Free Report) will report third-quarter 2021 results on Nov 3, after market close. The company’s quarterly results will likely highlight year-over-year growth in revenues and funds from operations (FFO) per share.
In the previous quarter, Equinix delivered a surprise of 4.32% in terms of adjusted FFO per share. The results displayed steady growth in interconnection revenues.
Over the last four quarters, the company outpaced the Zacks Consensus Estimate on all occasions, the average beat being 4.75%.
Equinix, Inc. Price and EPS Surprise
Equinix, Inc. price-eps-surprise | Equinix, Inc. Quote
Let’s see how things have shaped up prior to the earnings announcement.
Factors at Play
Equinix enjoys a geographically-diversified portfolio. The company has a robust digital footprint of International Business Exchanges (IBX) data centers across five continents, which help it serve customers with global interconnectivity. In September, it opened a new IBX data center in Frankfurt to cater to the rising demand for private connectivity and digital infrastructure in Germany. The company also partnered with Nokia to enhance the 5G & Edge ecosystem.
High growth in cloud computing, Internet of Things and big data, and an elevated demand for third-party IT infrastructure are spurring demand for data-center infrastructure. Moreover, growth in artificial intelligence, autonomous vehicle and virtual/augmented reality markets has been creating a robust demand for data centers. Amid these, the demand for data-center space is likely to have been healthy during third-quarter 2021.
Hence, being infrastructure providers for the rapidly-growing digital economy, data-center landlords, such as Equinix, Digital Realty Trust (DLR - Free Report) , CyrusOne Inc. and CoreSite Realty Corporation (COR - Free Report) , are well placed for sustainable growth.
The coronavirus pandemic has ramped up digital transformation in unthinkable ways and data centers play a crucial role in supporting this development. Data centers have become an essential part of our digital lives and the pandemic has only further highlighted its value. Demand for data centers witnessed a significant boost on the increased access to Internet-related services during lockdowns.
Also, rising cloud adoption is expected to have helped Equinix continue capturing demand and grow its interconnected ecosystems during the third quarter. With 7,800 interconnections added during the second quarter, the company seems well poised to have banked on these trends in the to-be-reported quarter, driving its recurring interconnection revenues. In September, Equinix was chosen by i3D.net to support its global gaming platform. The deal displayed the rising demand for Equinix's reliable and powerful interconnection services. The Zacks Consensus Estimate for interconnection revenues is pegged at $296 million, suggesting 13.4% growth from the prior-year period.
The company’s solid cash-generating capacity, owing to a stable base of contracted recurring interconnection and collocation revenues, is anticipated to have fueled the third-quarter revenue growth. The consensus estimate for revenues is pegged at $1.68 billion, suggesting a 10.6% year-over-year improvement. Management forecasts quarterly revenues of $1.67 and $1.69 billion, calling for 1-2% growth, quarter over quarter.
Management projects the adjusted EBITDA to lie between $766 million and $786 million for third-quarter 2021.
Apart from these, the company has been strengthening its portfolio on the back of acquisitions and development. Boosting its presence in the India market, Equinix completed the acquisition of India operations of GPX Global Systems, Inc. for an all-cash transaction of $161 million in September.
Nevertheless, considering the strong growth potential in the data-center market, competition from other providers might have intensified. Equinix competes with neutral colocation providers as well as with traditional colocation providers, Internet service providers and web-hosting facilities.
The intensifying competition is expected to have prompted aggressive pricing policies, making Equinix vulnerable to pricing pressure.
Prior to the third-quarter earnings release, the Zacks Consensus Estimate for the quarterly FFO per share has been revised marginally downward to $6.69 in the past week. However, it suggests year-over-year growth of 3.9%.
What the Zacks Model Unveils
Per our quantitative model, Equinix does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO beat this quarter.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Equinix has an Earnings ESP of -2.82%
Zacks Rank: Equinix currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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.