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Equinix (EQIX) to Post Q3 Earnings: What's in the Offing?
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Equinix, Inc. (EQIX - Free Report) is scheduled to report third-quarter 2023 results on Oct 25, after market close. The company’s quarterly results are likely to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the previous quarter, this Redwood City, CA-based data center real estate investment trust (REIT) reported a surprise of 7.06% in terms of adjusted FFO per share. Its quarterly results reflected steady growth in colocation and inter-connection revenues on the back of strong demand for digital infrastructure.
Over the preceding four quarters, EQIX’s FFO per share surpassed the consensus estimate on all occasions, the average beat being 6.75%. This is depicted in the graph below:
Data center infrastructure demand has remained robust amid growth in cloud computing, the Internet of Things and Big Data, and elevated demand for third-party IT infrastructure. Moreover, the growth in artificial intelligence, autonomous vehicles and virtual/augmented reality markets has created a solid base for data centers.
Against this backdrop, Equinix’s geographically diverse portfolio of International Business Exchanges (IBX) data centers is expected to have benefited from enterprises’ growing reliance on technology and acceleration in digital transformation strategies.
The company has a recurring revenue model, which comprises colocation, related interconnection and managed IT infrastructure services. This is expected to have supported stable cashflows in the to-be-reported quarter, boosting the data center REIT’s top line.
Also, solid demand for Equinix’s interconnected ecosystem in the to-be-reported quarter is likely to have given it an edge.
The Zacks Consensus Estimate for interconnection revenues is pegged at $354.19 million, suggesting growth of 11.3% from the prior-year period’s reported figure.
For the third quarter, Equinix has projected revenues between $2.039 billion and $2.069 billion. The Zacks Consensus Estimate stands at $2.06 billion, implying an increase of 11.9% from the year-ago period’s reported figure.
EQIX estimated adjusted EBITDA in the range of $908-$938 million for the quarter. Our estimate is pegged at $920.9 million, implying a year-over-year increase of 5.7%.
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 enabled it to capitalize on long-term growth opportunities.
EQIX’s activities during the to-be-reported were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally upward over the past month to $7.79. Moreover, it suggests a slight increase from the prior-year quarter’s reported figure.
However, higher interest expenses 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 4.9%.
Q3 Developments
In September, Equinix expanded its partnership with Southern Cross Cables Limited to serve as a vital U.S.-based interconnectivity access point for the Southern Cross NEXT (“SX NEXT”) submarine cable system. This development is set to redefine digital connectivity among Australia, New Zealand and the United States while addressing the growing demand for low-latency, high-capacity subsea cables.
The SX NEXT cable offers the lowest latency path from Australia and New Zealand to Los Angeles in the United States. By connecting to Equinix's LA4 Los Angeles IBX data center, it enables rapid provisioning and cost savings for Southern Cross.
Moreover, the SX NEXT cable boosts network performance across multiple industries in the region and bolsters the aggregate capacity of Southern Cross' existing Trans-Pacific ecosystem by an impressive 500%. This move aligns perfectly with Equinix's strategy of providing state-of-the-art subsea infrastructure.
In August, Equinix announced a $42 million investment to establish its fourth IBX data center in Mumbai. The new facility, MB4, is poised to address the escalating demand for cutting-edge data centers and interconnection services while supporting local and overseas businesses in their digital transformation endeavors.
MB4, scheduled to be available in the fourth quarter of 2023 (subject to regulatory approvals), is set to address this heightened demand, bolstering Equinix's digital infrastructure capacity in India. The facility will offer expanded connectivity options to major telecom networks. It will also enable Metro Connect availability, strengthening Equinix's network by integrating with the highly connected Equinix data center sites of MB1 and MB2. Initially offering a capacity of 350 cabinets in its first phase, the facility's full potential is projected to encompass 700 cabinets upon completion.
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 -0.32%. 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:
VICI Properties (VICI - Free Report) is slated to report quarterly numbers on Oct 25. VICI has an Earnings ESP of +1.50% and carries a Zacks Rank #2 (Buy) presently.
American Tower (AMT - Free Report) is slated to report quarterly numbers on Oct 26. AMT has an Earnings ESP of +0.59% and carries a Zacks Rank #3 presently.
Digital Realty Trust (DLR - Free Report) is scheduled to report quarterly numbers on Oct 26. DLR has an Earnings ESP of +0.85% and a Zacks Rank #3 currently.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Equinix (EQIX) to Post Q3 Earnings: What's in the Offing?
Equinix, Inc. (EQIX - Free Report) is scheduled to report third-quarter 2023 results on Oct 25, after market close. The company’s quarterly results are likely to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the previous quarter, this Redwood City, CA-based data center real estate investment trust (REIT) reported a surprise of 7.06% in terms of adjusted FFO per share. Its quarterly results reflected steady growth in colocation and inter-connection revenues on the back of strong demand for digital infrastructure.
Over the preceding four quarters, EQIX’s FFO per share surpassed the consensus estimate on all occasions, the average beat being 6.75%. This is depicted in the graph below:
Equinix, Inc. Price and EPS Surprise
Equinix, Inc. price-eps-surprise | Equinix, Inc. Quote
Factors at Play
Data center infrastructure demand has remained robust amid growth in cloud computing, the Internet of Things and Big Data, and elevated demand for third-party IT infrastructure. Moreover, the growth in artificial intelligence, autonomous vehicles and virtual/augmented reality markets has created a solid base for data centers.
Against this backdrop, Equinix’s geographically diverse portfolio of International Business Exchanges (IBX) data centers is expected to have benefited from enterprises’ growing reliance on technology and acceleration in digital transformation strategies.
The company has a recurring revenue model, which comprises colocation, related interconnection and managed IT infrastructure services. This is expected to have supported stable cashflows in the to-be-reported quarter, boosting the data center REIT’s top line.
Also, solid demand for Equinix’s interconnected ecosystem in the to-be-reported quarter is likely to have given it an edge.
The Zacks Consensus Estimate for interconnection revenues is pegged at $354.19 million, suggesting growth of 11.3% from the prior-year period’s reported figure.
For the third quarter, Equinix has projected revenues between $2.039 billion and $2.069 billion. The Zacks Consensus Estimate stands at $2.06 billion, implying an increase of 11.9% from the year-ago period’s reported figure.
EQIX estimated adjusted EBITDA in the range of $908-$938 million for the quarter. Our estimate is pegged at $920.9 million, implying a year-over-year increase of 5.7%.
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 enabled it to capitalize on long-term growth opportunities.
EQIX’s activities during the to-be-reported were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally upward over the past month to $7.79. Moreover, it suggests a slight increase from the prior-year quarter’s reported figure.
However, higher interest expenses 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 4.9%.
Q3 Developments
In September, Equinix expanded its partnership with Southern Cross Cables Limited to serve as a vital U.S.-based interconnectivity access point for the Southern Cross NEXT (“SX NEXT”) submarine cable system. This development is set to redefine digital connectivity among Australia, New Zealand and the United States while addressing the growing demand for low-latency, high-capacity subsea cables.
The SX NEXT cable offers the lowest latency path from Australia and New Zealand to Los Angeles in the United States. By connecting to Equinix's LA4 Los Angeles IBX data center, it enables rapid provisioning and cost savings for Southern Cross.
Moreover, the SX NEXT cable boosts network performance across multiple industries in the region and bolsters the aggregate capacity of Southern Cross' existing Trans-Pacific ecosystem by an impressive 500%. This move aligns perfectly with Equinix's strategy of providing state-of-the-art subsea infrastructure.
In August, Equinix announced a $42 million investment to establish its fourth IBX data center in Mumbai. The new facility, MB4, is poised to address the escalating demand for cutting-edge data centers and interconnection services while supporting local and overseas businesses in their digital transformation endeavors.
MB4, scheduled to be available in the fourth quarter of 2023 (subject to regulatory approvals), is set to address this heightened demand, bolstering Equinix's digital infrastructure capacity in India. The facility will offer expanded connectivity options to major telecom networks. It will also enable Metro Connect availability, strengthening Equinix's network by integrating with the highly connected Equinix data center sites of MB1 and MB2. Initially offering a capacity of 350 cabinets in its first phase, the facility's full potential is projected to encompass 700 cabinets upon completion.
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 -0.32%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: EQIX currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank 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:
VICI Properties (VICI - Free Report) is slated to report quarterly numbers on Oct 25. VICI has an Earnings ESP of +1.50% and carries a Zacks Rank #2 (Buy) presently.
American Tower (AMT - Free Report) is slated to report quarterly numbers on Oct 26. AMT has an Earnings ESP of +0.59% and carries a Zacks Rank #3 presently.
Digital Realty Trust (DLR - Free Report) is scheduled to report quarterly numbers on Oct 26. DLR has an Earnings ESP of +0.85% and a Zacks Rank #3 currently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.