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Equinix's (EQIX) AFFO and Revenues Miss Estimates in Q1

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Equinix Inc.’s EQIX first-quarter 2022 adjusted funds from operations (AFFO) per share and total revenues lagged the Zacks Consensus Estimate.

EQIX’s quarterly AFFO per share was $7.16, missing the Zacks Consensus Estimate of $7.19. However, the figure grew 4% year over year.

Steady growth in the inter-connection revenues was observed. During the first quarter, Equinix added 8,900 inter-connections, bringing its total inter-connections to 428,200.

Quarter in Detail

Total quarterly revenues came in at $1.73 billion, lagging the Zacks Consensus Estimate of $1.75 billion. However, the top line improved 9% year over year, marking the 77th consecutive quarter of top-line growth.

Recurring revenues were $1.64 billion, up 8.7% from the year-ago quarter. Non-recurring revenues were $92.1 million, rising 8.2%.

Revenues from the three regions increased on a year-over-year basis as well. Revenues from the Americas, EMEA and the Asia Pacific rose 10%, 6% and 9% to $800 million, $550 million and $384 million, respectively.

The adjusted EBITDA came in at $799.7 million, up 3.4% year over year. Adjusted EBITDA margin fell to 46% from 48% recorded in the year-ago quarter.
AFFO increased 4.1% to $652.6 million.

EQIX spent $24 million on recurring capital expenditure in the first quarter, up 20% on a year-over-year basis. Recurring capital expenditure was 1.4% of revenues in the first-quarter 2022. Non-recurring was reported at $389 million, shrinking 39.6%.

Balance Sheet

Equinix exited first-quarter 2022 with cash and cash equivalents of $1.7 billion, up from $1.54 billion reported at the end of 2021.The available liquidity was $5.6 billion as of Mar 31, 2022.

EQIX’s total debt principal outstanding was $13.97 billion as of Mar 31, 2022, compared with $13.86 billion as of Dec 31, 2021. On Apr 7, Moody’s upgraded Equinix’s credit ratings to Baa2.

Dividend Update

Concurrent with the first-quarter 2022 earnings release, Equinix’s board of directors approved a quarterly cash dividend of $3.10 per share. This dividend will be paid out on Jun 15, 2022, to its shareholders on record as of May 18, 2022.

Guidance

For second-quarter 2022, Equinix projects revenues to lie between $1.809 billion and $1.829 billion, a 4-5% increase over the prior quarter. The adjusted EBITDA is expected between $828 million and $848 million.

For 2022, Equinix estimates to generate total revenues of $7.291 and $7.341 billion, indicating growth of 10-11% from 2021. The company expects to incur $25 million of acquisition-related integration costs. Management predicts adjusted EBITDA of $3.344-$3.374 billion and an adjusted EBITDA margin of 46%.

For the full year, AFFO per share is estimated between $28.93 and $29.26, suggesting a 7-8% increase from the prior year. The Zacks Consensus Estimate for the same is pegged at $29.09.

Additionally, total capital expenditures are expected to lie between $2.265 billion and $2.515 billion.

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.

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

Performance of Notable REITs

UDR Inc. UDR reported first-quarter 2022 FFO as adjusted per share of 55 cents, in line with the Zacks Consensus Estimate. The figure is 17% higher than the prior-year quarter’s 47 cents.

UDR’s quarterly revenues climbed 18.5% year over year to $357.3 million. The top line surpassed the Zacks Consensus Estimate of $353.8 million.

An increase in revenues from rental income fueled the quarter’s top-line growth. Robust operating trends and strong pricing power were major contributing factors.

Essex Property Trust Inc. ESS reported first-quarter 2022 core FFO per share of $3.37, beating the Zacks Consensus Estimate of $3.34. The figure also improved 9.8% from the year-ago quarter. Additionally, total revenues of $381.9 million surpassed the Zacks Consensus Estimate of $376.3 million. The figure increased 7.5% year over year.

Improvement in same-property revenues and net operating income during the quarter supported growth in ESS’ core FFO.

Equity Residential’s EQR reported first-quarter 2022 normalized FFO per share of 77 cents, missing the Zacks Consensus Estimate of 80 cents. Rental income came in at $653.3 million, lagging the consensus mark of $658.07 million. Nonetheless, on a year-over-year basis, normalized FFO per share improved 13.2%, while rental income climbed 9.3%.

EQR’s normalized FFO grew based on strong lease demand, while same-store revenue witnessed growth driven by strong physical occupancy and improvement in pricing power.

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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