Equinix Inc. (EQIX) reported third-quarter 2013 earnings excluding REIT related expenses of around 73 cents is ahead of the Zacks Consensus Estimate of 57 cents. The quarter’s figure excludes depreciation, amortization & accretion expenditure, acquisition costs, but includes stock-based compensation expense.
Revenues
Total revenue in the reported quarter was $540.5 million, up 10.6% from the year-ago quarter. Quarterly revenues however marginally missed the Zacks Consensus Estimate of $542.0 million. The company witnessed decent revenue growth across all three geographic regions of the network vertical, especially in EMEA. With over 1,200 customers, cloud and IT services continued to be the highest growth vertical.
Apart from this, the company witnessed substantial growth in Software-as-a-Service. This sub segment continues to contribute significantly as end users require highly interconnected footprint to deliver the application performance their customers expect.
Moreover, recurring revenues (including colocation, interconnection, managed services and rental) were $517.0 million during the third-quarter, up 11.7% from the year-ago quarter. Non-recurring revenues were $23.5 million in the quarter, down 9.4% from the year-ago quarter.
Revenues across all three geographic regions increased year over year. Revenues from the Americas increased 8.3% on a year-over-year basis to $318.1 million. EMEA Revenues increased 18.7% year over year to $132.9 million and Asia-Pacific revenues grew 7.9% year over year to $89.5 million.
Additionally, Equinix’s MRR (monthly recurring revenue) churn was within the expectations of 2.5%. The churning remained in line with guidance, as Equinix adopted highly disciplined approach to customer renewals.
Operating Results
Adjusted gross margin for the quarter was 49.5% as compared to 48.5% in the year-ago quarter. Adjusted total operating expenses increased 12.4% from the year-ago quarter. The year-over-year increase in operating expenses was primarily attributed to higher selling and marketing expenses (up 15.8%) and general and administrative expenses (up 15.6%).
Adjusted operating income from continuing operations was $108.6 million, up 13.3% from the year-ago quarter.
Net income excluding REIT related expenses stood at $36.9 million or 73 cents compared with net income of $28.5 million or 57 cents in the year-ago quarter. REIT tax in the third-quarter was $58.0 million.
Balance Sheet & Cash Flow
Equinix generated cash from operating activities of $206.6 million compared to $147.2 million in the previous quarter. Cash, cash equivalents and short-term investments were $745.8 million, compared to $1.22 billion in the previous quarter.
Equinix reported capital expenditure of $171.0 million, of which $130.0 million was spent on expansion and $41.0 million was attributed to ongoing capital expenditures. Total loans payable stood at $196.9 million, while convertible debts amounted to $720.2 million.
Guidance
Equinix expects fourth-quarter 2013 revenues in the range of $559.0 million to $563.0 million. Gross margins are expected to be approximately 68%, while the selling, general and administrative expenses are expected to range between $123.0 million and $128.0 million.
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