) reported fourth-quarter 2013 earnings of $1.13 per share, ahead
of the Zacks Consensus Estimate of 78 cents. The quarter's figure
excludes loss on debt extinguishment.
Total revenue in the reported quarter was $564.7 million, up
11.6% from the year-ago quarter. The Zacks Consensus Estimate was
pegged at $565 million. The company witnessed decent revenue
growth across all three geographic regions. With over 1,200
customers, cloud and IT services continued to be the highest
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 that customers
Moreover, recurring revenues came in at $538.1 million, up
11.4% from the year-ago quarter, while Equinix's non-recurring
revenues increased 14.6% from the year-ago quarter to $26.6
Revenues across all three geographic regions increased on a
year-over-year basis. Revenues from the Americas, EMEA and
Asia-Pacific increased 9.8%, 23.4% and 2.3% to $326.1 million,
$144.8 million and $93.8 million, respectively.
Additionally, Equinix's MRR (monthly recurring revenues) churn
was within the expectations of 2.3%. The churning remained in
line with the guidance, as Equinix adopted highly disciplined
approach to customer renewals.
Reported gross margin for the quarter was 52.3% compared with
50.8% in the year-ago quarter primarily due to higher revenue
base. Reported total operating expenses increased 10.3% from the
year-ago quarter while as a percentage of revenues, operating
margins came in at 30.1% compared to 30.4% over the same period
Operating income on GAAP basis came in at $125.4 million, up
22.1% from the year-ago quarter. Net income excluding loss on
debt extinguishment stood at $60.7 million or $1.13 per share
compared with net income from continuing operations of $34.8
million or 66 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Equinix generated cash from operating activities of $166.7
million compared to $206.6 million in the previous quarter. Cash,
cash equivalents and short-term investments were $631.7 million,
compared to $745.8 million in the previous quarter. The company's
total debt outstanding (including total loans payable, senior
notes and total convertible debt principal) stood at $4.2
Equinix expects first-quarter 2014 revenues in the range of
$572.0 to $576.0 million, lower than the Zacks Consensus Estimate
of $581.0 million. Gross margins are expected to range between
68% and 69%, while selling, general and administrative (SG&A)
expenses are expected to range between $133.0 million and $137.0
million. Adjusted EBITDA is expected in the range of $256.0 to
$260.0 million. Capital expenditures are expected in the $130.0
to $140.0 million range.
For fiscal 2014, total revenue is expected to be up 11% year
over year to approximately $2.38 billion, but lower than the
Zacks Consensus Estimate which is pegged at $2.41 billion.
SG&A expenses are expected to range between $530 million and
Adjusted EBITDA is expected to be above $1.1 billion. Capital
expenditures for 2014 are expected in the range of $550.0 to
Equinix's fourth-quarter 2013 earnings beat the Zacks
Consensus Estimate while revenues were relatively in line. Growth
across geographies and business segments helped revenues to
improve on a year-over-year basis.
It is worth noting that demand for Equinix's data centers are
growing. The recurring revenue model is sufficiently supporting
the company's revenues. Moreover, the company's proposed REIT
conversion is on track. Additionally, the company's
) remain the growth catalysts, going forward.
On the other hand, the company must work to reduce its debt
level. European exposure and industry consolidation are the other
headwinds. The company's lower-than-expected revenue guidance
remains an overhang on the stock.
Equinix carries a Zacks Rank #2 (Buy). Apart from Equinix,
investors can also consider
), which sports a Zacks Rank #1 (Strong Buy).
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