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Equinix (EQIX) Q4 FFO Surpasses Estimates, Revenues Meet

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Equinix Inc. EQIX posted mixed results for fourth-quarter 2019, wherein adjusted funds from operations (AFFO) per share surpassed the Zacks Consensus Estimate, while revenues were in line. Nonetheless, both AFFO and revenues improved year over year.

The company’s quarterly AFFO per share was $5.51, beating the Zacks Consensus Estimate of $5.36. The figure also improved from the year-ago quarter’s $5.13. The upside primarily stemmed from robust top-line growth and solid operating performance.

For 2019, AFFO per share was $22.81, up from $20.69 recorded in 2018. The reported figure surpassed the Zacks Consensus Estimate of $22.65 per share.

Quarter in Detail

Total quarterly revenues were $1.42 billion, in line with the Zacks Consensus Estimate. The top-line figure improved 8.2% year over year.

For 2019, revenues were $5.56 billion, up from $5.07 billion recorded in 2018. The reported figure was in line with the Zacks Consensus Estimate.

Recurring revenues were $1.34 billion, up 8.8% from the year-ago quarter’s figure. Non-recurring revenues declined marginally from the year-ago quarter to $79.2 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 2.4%, 15.1% and 11.5% to $653.7 million, $463.8 million and $299.7 million, respectively.

Cash gross margin was 66%, stable year over year. Total operating expenses were up 2.7% year over year to $378.5 million.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $675.9 million, up 9.5% year over year. Adjusted EBITDA margins were 48%, up from 47% recorded in the prior-year quarter. AFFO appreciated 14.1% year over year to $472.6 million in the December-end quarter.

Balance Sheet

Equinix exited the fourth quarter with cash and cash equivalents of $1.9 billion. The company’s total debt principal outstanding was $11.9 billion as of Dec 31, 2019.

Dividend Update

Concurrent with its fourth-quarter 2019 earnings release, on Feb 12, Equinix’s board of directors approved a quarterly cash dividend of $2.66 per share. The dividend will be paid out on Mar 18 to shareholders of record as of Feb 26.

Guidance

For 2020, the company estimates generating revenues of $6.000-$6.050 billion. It predicts adjusted EBITDA of $2.858-$2.908 billion and AFFO of $2.108-$2.158 billion. Further, AFFO per share is estimated to lie between $24.42 and $25.00. The Zacks Consensus Estimate for the same is pegged at $24.79.

For first-quarter 2020, Equinix projects revenues of $1.450-$1.460 billion. Adjusted EBITDA is likely to lie between $686 million and $696 million.

Our Take

Equinix’s decent results were supported by strong performance across all three geographies. Its recurring revenue model and current expansion plans are encouraging. However, stiff competition and ongoing consolidation in the telecommunication industry might bring down the lucrative expansion opportunities for the company.

Equinix, Inc. Price, Consensus and EPS Surprise
 

Equinix, Inc. Price, Consensus and EPS Surprise

Equinix, Inc. price-consensus-eps-surprise-chart | Equinix, Inc. Quote

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.

Performance & Earnings Release Schedule of Other REITs

Highwoods Properties Inc.’s HIW fourth-quarter 2019 FFO per share of 91 cents surpassed the Zacks Consensus Estimate of 90 cents. The figure also improved from 86 cents reported in the year-ago period.

Boston Properties Inc.’s BXP fourth-quarter 2019 FFO per share of $1.87 surpassed the Zacks Consensus Estimate of $1.85. The reported figure also increased 17.6% from $1.59 per share reported in the year-ago quarter.

Ventas, Inc. (VTR - Free Report) will report results next week.

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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