Equinix is rolling in it.... money that is

Colo giant racks up the dollar bills by renting space to big 'n bulky cloud slingers

Equinix Infomart data centre in Dallas

The dark Satantic mills of the internet belched out more cash than they ever have for chunky data centre landlord Equinix in its calendar Q1.

The company reported an 11 per cent year-on-year rise in turnover to $1.363bn for the three months ended 31 March: 28 per cent of this was generated by sales of rack space to cloud and IT service providers - Equinix's largest category.

The company is on a roll, with 32 data centre construction projects underway; two upcoming facilities in Paris and one in Tokyo are dedicated to hyperscale customers – i.e. the world’s largest cloud vendors.

Newly minted CEO Charles Meyers said in an earnings call that Equinix recorded "our second best net bookings quarter, reflecting strong customer demand and lower churn".

Meyers got the top job in September 2018, replacing interim lead Peter Van Camp, who was called in after his predecessor, Steve Smith – who led the company for more than a decade - was sacked over ‘poor judgment in [an] employee matter’. The details of the matter in question have never been made public.

Smith’s misdeeds haven’t managed to damage the image of the company, or its business prospects. New customers joining Equinix in the past three months include British mobile operator Three UK, Chinese social media giant Tencent, and rocket biz SpaceX.

“We processed over 4,000 deals in the quarter, highlighting the diversity and high-volume nature of the Equinix retail colocation business,” Meyers said.

Channel sales were responsible for more than 20 per cent of the bookings.

Meyers noted that growth of interconnection revenue – down to customers networking with other businesses that have presence in Equinix data centres - was outpacing the growth in colocation revenue. In Q1, Equinix expanded its ECX Fabric, enabling interconnections between data centres located on different continents.

That’s not to say colocation is becoming less important: the colo business made $981m in a quarter, up from $ 881m a year ago, while interconnection was responsible for $213m, up from 195m in Q1 2018. Managed services brought in $73m, up from $71.4m.

The Americas markets generated 47 per cent of total revenue, EMEA was responsible for 32 per cent, and Asia Pacific - 21 per cent.

In terms of operating expenses for the past three months, Equinix spent approximately $170m on sales and marketing, $215m on administration, paid $2.5m in acquisition costs, and took an impairment charge of $14.5m. Total operating expenses were at $ 401.7m, up from 367.5m a year ago.

Recurring capital expenditure shrunk to $21 million, from $35 million a year ago, while non-recurring capex totalled $343m – this included money spent on data centre expansions in Frankfurt, Hong Kong, London, Paris and Shanghai.

Operating income rose 3 per cent quarter-on-quarter to $280m, and net income rose 7 per cent, to $118m.

In March, Equinix raised $1.242bn in equity, and earlier today, the company paid down the first of five $150m instalments of senior notes related to its acquisition of the Infomart colocation campus in Dallas – a massive construction of glass and steel, built to resemble London’s Crystal Palace.

Being primarily a property business, at the end of the quarter Equinix had a total of $22.491bn in assets, and $1.655bn in cash. The company expects $1.381bn-$1.391bn in revenue for the second quarter, up around 2 per cent sequentially.

Equinix has also revised its guidance for the full year, adding $25m “due to better than expected operating business performance” and a positive foreign currency benefit, for a total of $5.545bn-$5.595bn – that’s annual growth of about 9-10 per cent.

In total, Equinix operates 202 data centres across 52 geographic markets, including a new facility in London, opened earlier this week.

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