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Equinix's (EQIX) FFO Misses the Mark, Revenues Beat in Q4

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Equinix Inc.’s EQIX fourth-quarter 2021 adjusted funds from operations (AFFO) per share lagged the Zacks Consensus Estimate while revenues surpassed the Zacks Consensus Estimate. However, both figures witnessed year-over-year growth.

EQIX’s quarterly AFFO per share was $6.22, missing the Zacks Consensus Estimate of $6.27. However, the figure improved 8% from the year-ago quarter’s $5.76.

This upside primarily stemmed from steady growth in the inter-connection revenues. During the fourth quarter, Equinix added an additional 7,500 inter-connections, bringing its total inter-connections to 419,300.

For the full year, AFFO per share came in at $27.11, higher than the prior-year tally of $24.76. However, the figure lagged the Zacks Consensus Estimate of $27.20. This was backed by 10.6% growth in total revenues to $6.64 billion.

Quarter in Detail

Total quarterly revenues came in at $1.71 billion, beating the Zacks Consensus Estimate of $1.7 billion. Further, the top line improved 9.1% year over year, marking the 76th consecutive quarter of top-line growth.

Recurring revenues were $1.6 billion, up 9.4% from the year-ago quarter’s figure. Non-recurring revenues climbed 5% from the year-ago quarter’s level to $102.9 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 9.8%, 8.2% and 8.9% to $782.1 million, $553.3 million and $370.9 million, respectively.

The adjusted EBITDA came in at $787.6 million, up 10.7% year over year.
The AFFO jumped 9.1% year over year to $564.2 million during the December quarter.

The adjusted EBITDA margin was 46%, up from 45% recorded in the prior-year quarter.

Balance Sheet

Equinix exited the fourth quarter of 2021with cash and cash equivalents of $1.54 billion, down from $1.6 billion reported at the end of 2020. EQIX’s total debt principal outstanding was $13.9 billion as of Dec 31, 2021, up from $12.5 billion witnessed at the end of 2020.

Dividend Update

Concurrent with the fourth-quarter 2021 earnings release, on Feb 16, Equinix’s board of directors approved a quarterly cash dividend of $3.10 per share. This dividend will be paid out on Mar 23 to its shareholders of record as of Mar 7, 2022.

Guidance

For first-quarter 2022, Equinix projects revenues of $1.726- $1.746 billion, calling for a 2% increase quarter-over-quarter at the midpoint. The adjusted EBITDA is expected between $781 million and $801 million.

For 2022, Equinix estimates to generate revenues of $7.202-$7.252 billion, indicating growth of 9% from the year-ago period’s reported figure. EQIX expects to incur $20 million of acquisition-related integration costs. Management predicts adjusted EBITDA of $3.307-$3.337 billion.

For the full year, the AFFO per share is estimated between $28.87 and $29.20, suggesting an 6-8% increase from the prior-year quarter’s reported number. The Zacks Consensus Estimate for the same is pegged at $29.45.

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 Other REITs

Alexandria Real Estate Equities, Inc. ARE reported an adjusted FFO of $1.97 per share for fourth-quarter 2021, up 7.1% from the year-ago quarter’s $1.84. The figure surpassed the Zacks Consensus Estimate of $1.96.

The year-over-year improvement in ARE’s FFO resulted from 24.4% top-line growth to $576.9 million. Results reflected decent internal growth. Alexandria witnessed continued healthy leasing activity and rental rate growth during the quarter.

Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported fourth-quarter 2021 core FFO per share of $1.90, surpassing the Zacks Consensus Estimate of $1.87. The reported number increased 15.2% from the year-ago quarter’s figure of $1.57.

MAA’s quarterly results were driven by higher average effective rent per unit for the same-store portfolio. The average physical occupancy for the same-store portfolio also increased year over year.

Equity Residential’s EQR fourth-quarter 2021 normalized FFO per share of 82 cents outpaced the Zacks Consensus Estimate of 80 cents. Rental income of $645.1 million also beat the consensus mark of $628.6 million.

On a year-over-year basis, Equity Residential’s normalized FFO per share improved 7.9%, while rental income rose 5.2%. EQR’s results were driven by a strong physical occupancy, a substantially improved pricing power and higher non-Residential revenues.

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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