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Equinix (EQIX) Beats on FFO, Misses Revenue Estimates in Q3
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Equinix Inc. (EQIX - Free Report) posted impressive results for third-quarter 2021, wherein the 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 $6.94, beating the Zacks Consensus Estimate of $6.69. The figure also improved 7.1% from the year-ago quarter’s $6.48.
This upside primarily stemmed from steady growth in the inter-connection revenues. During the third quarter, the company added an additional 7,800 inter-connections, bringing the company's total inter-connections to more than 414,400.
Quarter in Detail
Total quarterly revenues came in at $1.68 billion, narrowly missing the Zacks Consensus Estimate of $1.675 billion. However, the top line improved 10%, year over year, marking the 75th consecutive quarter of top-line growth.
Recurring revenues were $1.56 billion, up 9.2% from the year-ago quarter. Non-recurring revenues climbed 27.2% from the year-ago quarter to $111.6 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%, 5.2% and 11.4% to $763.1 million, $545.2 million and $366.9 million, respectively.
The adjusted EBITDA came in at $786.3 million, up 6.7% year over year.
The AFFO jumped 8.4% year over year to $628.3 million during the September-end quarter.
However, the adjusted EBITDA margin was 47%, down from the 49% recorded in the prior-year quarter.
Balance Sheet
Equinix exited the third quarter with cash and cash equivalents of $1.4 billion, down from the $1.6 billion reported at the end of 2020. The company’s total debt principal outstanding was $13.9 billion as of Sep 30, 2021, up from the $12.5 billion witnessed at the end of 2020.
Dividend Update
Concurrent with the third-quarter 2021 earnings release, on Nov 3, Equinix’s board of directors approved a quarterly cash dividend of $2.87 per share. This dividend will be paid out on Dec 15 to shareholders of record as of Nov 17, 2021.
Guidance
For fourth-quarter 2021, Equinix projects revenues of $1.685 and $1.705 billion, calling for 1-2% growth, quarter over quarter. The adjusted EBITDA is likely to lie between $762 million and $782 million.
For the ongoing year, the AFFO per share is estimated to be $27.03-$27.25, suggesting a 9-10% year-over-year increase. The Zacks Consensus Estimate for the same is pegged at $27.29.
Further, Equinix estimates to generate revenues of $6.614-$6.634 billion, indicating growth of 10-11% on a year-over-year basis. Assuming the integration costs of $18 million, management predicts adjusted EBITDA of $3.119-$3.139 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 the 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.
Prologis, Inc. (PLD - Free Report) came up with third-quarter core FFO per share of $1.04, surpassing the Zacks Consensus Estimate of $1.03. Results reflected solid increases in market rents and valuations amid unprecedented low vacancies in its markets.
Boston Properties Inc.’s (BXP - Free Report) third-quarter 2021 FFO per share of $1.73 beat the Zacks Consensus Estimate of $1.70. The quarterly figure also exceeded the mid-point of the company’s third-quarter guidance by 4 cents, highlighting the better-than-projected results from the in-service portfolio and improved parking revenues.
Highwoods Properties, Inc.’s (HIW - Free Report) FFO per share of 96 cents topped the Zacks Consensus Estimate of 93 cents for the September-end quarter. Rental and other revenues of $195.5 million outpaced the consensus mark of $192.2 million.
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) Beats on FFO, Misses Revenue Estimates in Q3
Equinix Inc. (EQIX - Free Report) posted impressive results for third-quarter 2021, wherein the 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 $6.94, beating the Zacks Consensus Estimate of $6.69. The figure also improved 7.1% from the year-ago quarter’s $6.48.
This upside primarily stemmed from steady growth in the inter-connection revenues. During the third quarter, the company added an additional 7,800 inter-connections, bringing the company's total inter-connections to more than 414,400.
Quarter in Detail
Total quarterly revenues came in at $1.68 billion, narrowly missing the Zacks Consensus Estimate of $1.675 billion. However, the top line improved 10%, year over year, marking the 75th consecutive quarter of top-line growth.
Recurring revenues were $1.56 billion, up 9.2% from the year-ago quarter. Non-recurring revenues climbed 27.2% from the year-ago quarter to $111.6 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%, 5.2% and 11.4% to $763.1 million, $545.2 million and $366.9 million, respectively.
The adjusted EBITDA came in at $786.3 million, up 6.7% year over year.
The AFFO jumped 8.4% year over year to $628.3 million during the September-end quarter.
However, the adjusted EBITDA margin was 47%, down from the 49% recorded in the prior-year quarter.
Balance Sheet
Equinix exited the third quarter with cash and cash equivalents of $1.4 billion, down from the $1.6 billion reported at the end of 2020. The company’s total debt principal outstanding was $13.9 billion as of Sep 30, 2021, up from the $12.5 billion witnessed at the end of 2020.
Dividend Update
Concurrent with the third-quarter 2021 earnings release, on Nov 3, Equinix’s board of directors approved a quarterly cash dividend of $2.87 per share. This dividend will be paid out on Dec 15 to shareholders of record as of Nov 17, 2021.
Guidance
For fourth-quarter 2021, Equinix projects revenues of $1.685 and $1.705 billion, calling for 1-2% growth, quarter over quarter. The adjusted EBITDA is likely to lie between $762 million and $782 million.
For the ongoing year, the AFFO per share is estimated to be $27.03-$27.25, suggesting a 9-10% year-over-year increase. The Zacks Consensus Estimate for the same is pegged at $27.29.
Further, Equinix estimates to generate revenues of $6.614-$6.634 billion, indicating growth of 10-11% on a year-over-year basis. Assuming the integration costs of $18 million, management predicts adjusted EBITDA of $3.119-$3.139 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 the 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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Equinix, Inc. Price, Consensus and EPS Surprise
Equinix, Inc. price-consensus-eps-surprise-chart | Equinix, Inc. Quote
Performance of Other REITs
Prologis, Inc. (PLD - Free Report) came up with third-quarter core FFO per share of $1.04, surpassing the Zacks Consensus Estimate of $1.03. Results reflected solid increases in market rents and valuations amid unprecedented low vacancies in its markets.
Boston Properties Inc.’s (BXP - Free Report) third-quarter 2021 FFO per share of $1.73 beat the Zacks Consensus Estimate of $1.70. The quarterly figure also exceeded the mid-point of the company’s third-quarter guidance by 4 cents, highlighting the better-than-projected results from the in-service portfolio and improved parking revenues.
Highwoods Properties, Inc.’s (HIW - Free Report) FFO per share of 96 cents topped the Zacks Consensus Estimate of 93 cents for the September-end quarter. Rental and other revenues of $195.5 million outpaced the consensus mark of $192.2 million.
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.