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Equinix's (EQIX) Q3 AFFO Beats, Dividend Hiked, '23 View Up
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Equinix Inc.’s (EQIX - Free Report) third-quarter 2023 adjusted funds from operations (AFFO) per share of $8.19 surpassed the Zacks Consensus Estimate of $7.79. The figure improved nearly 6% from the prior-year quarter.
EQIX’s results reflect steady growth in colocation and inter-connection revenues as enterprises and service providers look to integrate artificial intelligence into their strategies and offerings. During the quarter, Equinix’s total interconnections reached 460,500, rising 1% sequentially and 4% year over year. The company also raised its AFFO per share guidance for 2023.
Total quarterly revenues came in at $2.06 billion, beating the Zacks Consensus Estimate marginally. Moreover, the top line increased almost 12% year over year.
Quarter in Detail
Recurring revenues were $1.96 billion, up 12.2% from the year-ago quarter. Our projection was pegged at $1.96 billion. Non-recurring revenues rose 8.1% to $99.9 million. We estimated the metric at $97.8 million.
Revenues from the Americas, EMEA and the Asia Pacific rose 7.9%, 19.8% and 8.9% to $913.7 million, $708.7 million and $438.6 million, year over year, respectively.
The adjusted EBITDA came in at $935.9 million, up 7.5% year over year. We projected the metric at $920.9 million. Adjusted EBITDA margin was reported at 45%.
AFFO rose 8.4% to $771.6 million from the year-ago period.
EQIX spent $51.7 million on recurring capital expenditure in the third quarter, up 3.1% on a year-over-year basis. Recurring capital expenditure was 2.5% of revenues in the reported quarter. Non-recurring was $566 million, up 12.5% year over year.
Balance Sheet
Equinix had $6.7 billion of available liquidity as of Sep 30, 2023. This comprised cash, cash equivalents, its undrawn revolver and $431 million of unsettled at-the-market proceeds. It excludes restricted cash.
Its net leverage ratio was 3.5, and the weighted average maturity was 7.8 years as of Sep 30, 2023.
Dividend Update
Concurrently, Equinix’s board of directors announced an increase in the quarterly cash dividend to $4.26 per share from $3.41 paid out earlier. This represents a hike of 25%. The increased dividend will be paid out on Dec 13 to shareholders on record as of Nov 15, 2023.
Per Keith Taylor, CFO of the company, “The increase in our common stock dividend reflects the success and operating performance of the business, and our continued confidence to drive increasing value on a per share basis.”
Upbeat 2023 Guidance
For the fourth quarter of 2023, Equinix projects revenues between $2.088 billion and $2.128 billion, implying a 1-3% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $899-$929 million.
For the current year, AFFO per share is estimated between $31.87 and $32.19, revised upward from the prior-guided range of $31.51-$32.15. This suggests an 8-9% increase from the previous year. The Zacks Consensus Estimate for the same is currently pegged at $31.94, which lies within the guided range.
Considering a $25 million negative foreign currency impact, Equinix now estimates generating total revenues of $8.166-$8.206 billion, indicating year-over-year growth of 12-14%. Earlier, the company had guided total revenues of $8.171-$8.251 billion. The company expects to incur $15 million of integration costs.
Management predicts an adjusted EBITDA of $3.680-$3.710 billion, revised from $3.660-$3.720 billion projected earlier. Expectations for adjusted EBITDA margin were maintained at 45%.
Prologis, Inc. (PLD - Free Report) reported third-quarter 2023 core FFO per share of $1.30, beating the Zacks Consensus Estimate of $1.26. The figure, however, declined 24.9% from the year-ago quarter.
The results of this industrial REIT reflected healthy rent growth. However, lower occupancy and higher interest expenses were undermining factors. PLD also raised the midpoint of its 2023 core FFO per share guidance by a cent.
Crown Castle Inc. (CCI - Free Report) reported AFFO per share of $1.77, lagging the Zacks Consensus Estimate by a whisker. The reported figure declined 4.3% from the year-ago quarter.
Results reflected lower-than-anticipated revenues. Higher interest expense and lower contribution from adjusted EBITDA were undermining factors. While CCI maintained its outlook for 2023, it issued 2024 AFFO per share guidance below the consensus mark.
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2023 AFFO per share of $2.26, surpassing the Zacks Consensus Estimate of $2.24. The reported figure climbed 6.1% from the year-ago quarter.
Results reflected year-over-year revenue growth, aided by decent leasing activity and solid rental rate growth. ARE also increased the midpoint of its 2023 AFFO per share outlook by 2 cents.
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's (EQIX) Q3 AFFO Beats, Dividend Hiked, '23 View Up
Equinix Inc.’s (EQIX - Free Report) third-quarter 2023 adjusted funds from operations (AFFO) per share of $8.19 surpassed the Zacks Consensus Estimate of $7.79. The figure improved nearly 6% from the prior-year quarter.
EQIX’s results reflect steady growth in colocation and inter-connection revenues as enterprises and service providers look to integrate artificial intelligence into their strategies and offerings. During the quarter, Equinix’s total interconnections reached 460,500, rising 1% sequentially and 4% year over year. The company also raised its AFFO per share guidance for 2023.
Total quarterly revenues came in at $2.06 billion, beating the Zacks Consensus Estimate marginally. Moreover, the top line increased almost 12% year over year.
Quarter in Detail
Recurring revenues were $1.96 billion, up 12.2% from the year-ago quarter. Our projection was pegged at $1.96 billion. Non-recurring revenues rose 8.1% to $99.9 million. We estimated the metric at $97.8 million.
Revenues from the Americas, EMEA and the Asia Pacific rose 7.9%, 19.8% and 8.9% to $913.7 million, $708.7 million and $438.6 million, year over year, respectively.
The adjusted EBITDA came in at $935.9 million, up 7.5% year over year. We projected the metric at $920.9 million. Adjusted EBITDA margin was reported at 45%.
AFFO rose 8.4% to $771.6 million from the year-ago period.
EQIX spent $51.7 million on recurring capital expenditure in the third quarter, up 3.1% on a year-over-year basis. Recurring capital expenditure was 2.5% of revenues in the reported quarter. Non-recurring was $566 million, up 12.5% year over year.
Balance Sheet
Equinix had $6.7 billion of available liquidity as of Sep 30, 2023. This comprised cash, cash equivalents, its undrawn revolver and $431 million of unsettled at-the-market proceeds. It excludes restricted cash.
Its net leverage ratio was 3.5, and the weighted average maturity was 7.8 years as of Sep 30, 2023.
Dividend Update
Concurrently, Equinix’s board of directors announced an increase in the quarterly cash dividend to $4.26 per share from $3.41 paid out earlier. This represents a hike of 25%. The increased dividend will be paid out on Dec 13 to shareholders on record as of Nov 15, 2023.
Per Keith Taylor, CFO of the company, “The increase in our common stock dividend reflects the success and operating performance of the business, and our continued confidence to drive increasing value on a per share basis.”
Upbeat 2023 Guidance
For the fourth quarter of 2023, Equinix projects revenues between $2.088 billion and $2.128 billion, implying a 1-3% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $899-$929 million.
For the current year, AFFO per share is estimated between $31.87 and $32.19, revised upward from the prior-guided range of $31.51-$32.15. This suggests an 8-9% increase from the previous year. The Zacks Consensus Estimate for the same is currently pegged at $31.94, which lies within the guided range.
Considering a $25 million negative foreign currency impact, Equinix now estimates generating total revenues of $8.166-$8.206 billion, indicating year-over-year growth of 12-14%. Earlier, the company had guided total revenues of $8.171-$8.251 billion. The company expects to incur $15 million of integration costs.
Management predicts an adjusted EBITDA of $3.680-$3.710 billion, revised from $3.660-$3.720 billion projected earlier. Expectations for adjusted EBITDA margin were maintained at 45%.
Equinix sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank 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) reported third-quarter 2023 core FFO per share of $1.30, beating the Zacks Consensus Estimate of $1.26. The figure, however, declined 24.9% from the year-ago quarter.
The results of this industrial REIT reflected healthy rent growth. However, lower occupancy and higher interest expenses were undermining factors. PLD also raised the midpoint of its 2023 core FFO per share guidance by a cent.
Crown Castle Inc. (CCI - Free Report) reported AFFO per share of $1.77, lagging the Zacks Consensus Estimate by a whisker. The reported figure declined 4.3% from the year-ago quarter.
Results reflected lower-than-anticipated revenues. Higher interest expense and lower contribution from adjusted EBITDA were undermining factors. While CCI maintained its outlook for 2023, it issued 2024 AFFO per share guidance below the consensus mark.
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2023 AFFO per share of $2.26, surpassing the Zacks Consensus Estimate of $2.24. The reported figure climbed 6.1% from the year-ago quarter.
Results reflected year-over-year revenue growth, aided by decent leasing activity and solid rental rate growth. ARE also increased the midpoint of its 2023 AFFO per share outlook by 2 cents.
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.