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Equinix (EQIX) Q1 FFO Surpasses Estimates, Revenues Meet

·5 min read

Equinix Inc. EQIX posted strong results for first-quarter 2021, wherein adjusted funds from operations (AFFO) per share surpassed the Zacks Consensus Estimate and improved year over year, while revenues met the consensus mark and witnessed year-over-year growth.

The company’s quarterly AFFO per share was $6.98, beating the Zacks Consensus Estimate of $6.63. The figure also improved 21% from the year-ago quarter’s $6.21.

The upside primarily stemmed from steady growth in interconnection revenues. In fact, in the first quarter, it added an incremental 6,700 interconnections, bringing the company's total interconnections to more than 398,000.

Also, it achieved the milestone of becoming the market leader in retail colocation in all three regions of the world (the Americas, EMEA and the Asia Pacific), taking the first spot in the Asia Pacific for the first time.

Quarter in Detail

Total quarterly revenues were $1.6 billion, meeting the Zacks Consensus Estimate. Also, the top line improved 10.5% year over year, representing the 73rd consecutive quarter of revenue growth.

Recurring revenues were $1.51 billion, up 11% from the year-ago quarter’s figure. Non-recurring revenues improved 2.8% from the year-ago quarter to $85.1 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 9.7%, 8.3% and 15.7% to $725 million, $518.7 million and $351.4 million, respectively.

Adjusted EBITDA was $773 million, up 13% year over year. Adjusted EBITDA margin was 48%, up from 47% recorded in the prior-year quarter. AFFO appreciated 21% year over year to $627 million in the March-end quarter.

Balance Sheet

Equinix exited the first quarter with cash and cash equivalents of $1.75 billion, up from $1.60 billion reported at 2020 end. The company’s total debt principal outstanding was $13.3 billion as of Mar 31, 2021, up from $12.5 billion reported at 2020 end.

Dividend Update

Concurrent with its first-quarter 2021 earnings release, on Apr 28, Equinix’s board of directors approved a quarterly cash dividend of $2.87 per share. The dividend will be paid out on Jun 16 to shareholders of record as of May 19, 2021.

Guidance

For the ongoing year, Equinix estimates generating revenues of $6.55-$6.61 billion, indicating growth of 9-10% on a year-over-year basis. Assuming integration costs of $30 million, it predicts adjusted EBITDA of $3.071-$3.131 billion.

Further, AFFO per share is estimated to be $26.73-$27.28, up 8-10% year over year. The Zacks Consensus Estimate for the same is pegged at $27.14.

For first-quarter 2021, Equinix projects revenues of $1.630-$1.660 billion, implying growth of 2-4% quarter over quarter. Adjusted EBITDA is likely to be between $769 million and $789 million.

Our Take

Equinix’s global data-center portfolio is well-positioned to gain from tailwinds such as high demand for inter-connected data-center space, stemming from a rise in remote working and digital infrastructure accelerations.

However, the company’s expansion efforts involve significant capital outlays. Given its significant debt obligations, such activities are likely to increase financial obligations and impact operating results.

Equinix, Inc. Price, Consensus and EPS Surprise

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 of Other REITs

PS Business Parks, Inc. PSB reported first-quarter 2021 core FFO per share of $1.67, in line with the Zacks Consensus Estimate. However, the reported figure decreased 2.9% year over year.

Boston Properties Inc.’s BXP first-quarter 2021 FFO per share of $1.56 beat the Zacks Consensus Estimate of $1.55. The quarterly figure also exceeded the mid-point of the company’s guidance by a cent, highlighting better-than-projected portfolio performance and higher fee income.

Highwoods Properties, Inc.’s HIW first-quarter 2021 FFO per share of 91 cents surpassed the Zacks Consensus Estimate of 87 cents. However, FFO per share declined 2.2% from 91 cents recorded in the year-ago period.

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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