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What's in the Cards for Equinix (EQIX) This Earnings Season?
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Equinix, Inc. (EQIX - Free Report) is scheduled to report second-quarter 2023 results on Aug 2, after market close. While the company’s quarterly results are likely to reflect year-over-year growth in revenues, funds from operations (FFO) per share might exhibit a marginal decline.
In the previous quarter, Equinix reported a surprise of 8.46% in terms of adjusted FFO per share. The company’s performance during the quarter reflected steady growth in colocation and inter-connection revenues.
Over the preceding four quarters, EQIX’s FFO per share surpassed the consensus estimate on all occasions, the average beat being 5.94%. This is depicted in the graph below:
During the second quarter, the demand for high-performing data centers is likely to have been robust amid the continued strength in enterprises’ cloud adoption and customers’ digital demand. Specifically, the rise in mobile data usage, AI, Internet of Things, edge computing and 5G technology might have accelerated the need for digital infrastructure globally.
Equinix’s geographically diverse portfolio of International Business Exchanges (IBX) data centers is anticipated to have capitalized on this upbeat trend, aiding its second-quarter 2023 earnings.
EQIX enjoys a diversified revenue base across customer, region and industry segments and has a recurring revenue model that comprises colocation, related interconnection and managed IT infrastructure services. This is expected to have supported stable cashflows for the company in the to-be-reported quarter, boosting its top line.
Also, solid demand for Equinix’s interconnected ecosystem in the to-be-reported quarter is expected to have given it an edge.
The Zacks Consensus Estimate for interconnection revenues is pegged at $343.75 million, suggesting growth of 9.1% from the prior-year period’s reported figure.
For the second quarter, Equinix has projected revenues between $1.995 billion and $2.025 billion. The Zacks Consensus Estimate for the same stands at $2.017 billion, implying an 11% increase from the year-ago period’s reported figure.
EQIX estimated adjusted EBITDA in the range of $881-$911 million for the quarter. Our estimate for quarterly adjusted EBITDA is pegged at $892.7 million, implying a year-over-year increase of 3.8%.
We expect Equinix to have continued with its asset-base expansion during the quarter via acquisitions and development activities. Its robust balance sheet position is likely to have supported such activities.
However, higher interest expense and adverse foreign currency fluctuations might have partly impeded the company’s quarterly performance. Our estimate for the quarter’s interest expense implies a year-over-year increase of 5.1%.
EQIX’s activities during the second quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for second-quarter FFO per share has been revised 4.1% downward over the past month to $7.51. Moreover, on a year-over-year basis, it suggests a decline of nearly 1%.
Q2 Developments
In June 2023, the firm announced important upgrades to its Equinix Fabric platform, which includes the launch of 25 and 50 Gbps virtual connections to cloud service providers. This will empower businesses to handle larger workloads, such as AI training models and scalable enterprise networks, seamlessly and efficiently.
It also partnered with Google Cloud to accommodate workloads involving AI and machine learning. While Google Cloud will be the first to leverage this capability, integrations with other major cloud platforms are anticipated for the future.
In the same month, the company unveiled plans for its first IBX data center in Cyberjaya, Kuala Lumpur, with an investment of more than $100 million. The new data center, KL1, slated to begin operations in the first quarter of 2024, will provide a capacity of 450 cabinets and colocation space of 1,300 square meters initially. Upon completion, the same will be well-equipped to provide a total of 900 cabinets and a colocation space of 2,630 square meters.
Earnings Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Equinix this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: Equinix has an Earnings ESP of -4.90%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Here are some stocks from the REIT sector, which according to our model, have the right combination of elements to deliver a surprise this reporting cycle:
Hudson Pacific Properties (HPP - Free Report) is slated to report quarterly numbers on Aug 1. HPP has an Earnings ESP of +2.22% and carries a Zacks Rank #3 presently.
Ventas (VTR - Free Report) is scheduled to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and a Zacks Rank #2 (Buy) currently.
Ryman Hospitality Properties (RHP - Free Report) is slated to report quarterly numbers on Aug 3. RHP has an Earnings ESP of +3.87% and carries a Zacks Rank #1 presently.
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 the Cards for Equinix (EQIX) This Earnings Season?
Equinix, Inc. (EQIX - Free Report) is scheduled to report second-quarter 2023 results on Aug 2, after market close. While the company’s quarterly results are likely to reflect year-over-year growth in revenues, funds from operations (FFO) per share might exhibit a marginal decline.
In the previous quarter, Equinix reported a surprise of 8.46% in terms of adjusted FFO per share. The company’s performance during the quarter reflected steady growth in colocation and inter-connection revenues.
Over the preceding four quarters, EQIX’s FFO per share surpassed the consensus estimate on all occasions, the average beat being 5.94%. This is depicted in the graph below:
Equinix, Inc. Price and EPS Surprise
Equinix, Inc. price-eps-surprise | Equinix, Inc. Quote
Factors at Play
During the second quarter, the demand for high-performing data centers is likely to have been robust amid the continued strength in enterprises’ cloud adoption and customers’ digital demand. Specifically, the rise in mobile data usage, AI, Internet of Things, edge computing and 5G technology might have accelerated the need for digital infrastructure globally.
Equinix’s geographically diverse portfolio of International Business Exchanges (IBX) data centers is anticipated to have capitalized on this upbeat trend, aiding its second-quarter 2023 earnings.
EQIX enjoys a diversified revenue base across customer, region and industry segments and has a recurring revenue model that comprises colocation, related interconnection and managed IT infrastructure services. This is expected to have supported stable cashflows for the company in the to-be-reported quarter, boosting its top line.
Also, solid demand for Equinix’s interconnected ecosystem in the to-be-reported quarter is expected to have given it an edge.
The Zacks Consensus Estimate for interconnection revenues is pegged at $343.75 million, suggesting growth of 9.1% from the prior-year period’s reported figure.
For the second quarter, Equinix has projected revenues between $1.995 billion and $2.025 billion. The Zacks Consensus Estimate for the same stands at $2.017 billion, implying an 11% increase from the year-ago period’s reported figure.
EQIX estimated adjusted EBITDA in the range of $881-$911 million for the quarter. Our estimate for quarterly adjusted EBITDA is pegged at $892.7 million, implying a year-over-year increase of 3.8%.
We expect Equinix to have continued with its asset-base expansion during the quarter via acquisitions and development activities. Its robust balance sheet position is likely to have supported such activities.
However, higher interest expense and adverse foreign currency fluctuations might have partly impeded the company’s quarterly performance. Our estimate for the quarter’s interest expense implies a year-over-year increase of 5.1%.
EQIX’s activities during the second quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for second-quarter FFO per share has been revised 4.1% downward over the past month to $7.51. Moreover, on a year-over-year basis, it suggests a decline of nearly 1%.
Q2 Developments
In June 2023, the firm announced important upgrades to its Equinix Fabric platform, which includes the launch of 25 and 50 Gbps virtual connections to cloud service providers. This will empower businesses to handle larger workloads, such as AI training models and scalable enterprise networks, seamlessly and efficiently.
It also partnered with Google Cloud to accommodate workloads involving AI and machine learning. While Google Cloud will be the first to leverage this capability, integrations with other major cloud platforms are anticipated for the future.
In the same month, the company unveiled plans for its first IBX data center in Cyberjaya, Kuala Lumpur, with an investment of more than $100 million. The new data center, KL1, slated to begin operations in the first quarter of 2024, will provide a capacity of 450 cabinets and colocation space of 1,300 square meters initially. Upon completion, the same will be well-equipped to provide a total of 900 cabinets and a colocation space of 2,630 square meters.
Earnings Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Equinix this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: Equinix has an Earnings ESP of -4.90%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: EQIX currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are some stocks from the REIT sector, which according to our model, have the right combination of elements to deliver a surprise this reporting cycle:
Hudson Pacific Properties (HPP - Free Report) is slated to report quarterly numbers on Aug 1. HPP has an Earnings ESP of +2.22% and carries a Zacks Rank #3 presently.
Ventas (VTR - Free Report) is scheduled to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and a Zacks Rank #2 (Buy) currently.
Ryman Hospitality Properties (RHP - Free Report) is slated to report quarterly numbers on Aug 3. RHP has an Earnings ESP of +3.87% and carries a Zacks Rank #1 presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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.