Global data center colocation and interconnectivity provider Equinix has unveiled its financial results for the quarter ending September 30, 2023, marking a significant milestone as the company’s quarterly revenues surpassed the $2 billion mark for the first time. This remarkable achievement comes as enterprises and service providers increasingly integrate artificial intelligence (AI) into their strategies and offerings.
Equinix reported a 12% increase in quarterly revenues, reaching $2.06 billion compared to the same period last year. This growth rate accelerates to 14% on a normalized and constant currency basis, underscoring the company's solid performance amidst global economic fluctuations.
The data center operator successfully closed an impressive 4,200 deals in the third quarter, engaging with over 3,100 customers. This includes a record number of new logos from high-propensity, targeted customers, highlighting Equinix's expanding market influence as a data center colocation provider across the globe.
Over 65% of new logos were attributed to channel bookings, with these wins predominantly centered around digital transformation initiatives, signaling a broader industry trend towards technology-driven change.
In a move reflecting confidence in its continued strong operating performance, Equinix increased its quarterly cash dividend by a substantial 25%, bringing it to $4.26 per share on its common stock.
“We delivered another solid quarter of results and continue to drive strong value creation on a per share basis, raising both our dividend and AFFO/share outlook for the full year,” said Charles Meyers, President and CEO, Equinix. “A recent Gartner poll found 55 percent of organizations are in pilot or production mode with generative AI. We're seeing this manifest in accelerated interest from both enterprise customers and emerging service providers looking to service this demand. We expect Equinix’s broad portfolio of offerings, in tandem with our key technology partners, will allow us to capture high-value opportunities across the AI value chain, positioning Platform Equinix to be the place where private AI happens and allowing customers to place compute resources in proximity to data and seamlessly leverage public cloud capabilities while maintaining control of high-value proprietary data.”
Business Highlights Q3
As of the third quarter, Equinix is managing 56 notable projects spanning 23 countries, reinforcing its commitment to global expansion. This quarter saw the announcement of significant ventures, from expansions in Madrid, Osaka, São Paulo, and Silicon Valley to the highly anticipated launch of its fourth International Business Exchange (IBX) data center in Mumbai, a significant move in supporting India's burgeoning digital economy. As AI continues its upward trend, Equinix is innovating its infrastructure to meet this demand. A detailed summary of the business highlights for the third quarter includes the following:
- Equinix is still growing its worldwide presence in light of the robust demand signals and the extended time it takes to deploy more capacity. As of right now, the business is working on 56 significant projects in 39 markets across 23 countries. Of these, 14 xScale buildings are slated to debut with a capacity of over 100 megawatts.
- Nine new projects, including new constructions in Madrid, Osaka, São Paulo, and Silicon Valley, were added by Equinix in Q3.
- As Equinix expands into highly differentiated and scaled markets, significant metros get more than 50 percent of the growth capital expenditure.
- To facilitate the expansion of India's digital economy - which is projected to reach $1 trillion by 2026 - Equinix has announced a $42 million investment for MB4, its fourth International Business Exchange (IBX) data center located in Mumbai. The new facility, which is anticipated to open by the end of the year, would enable domestic and international companies to increase their digital capacity as a basis for quickening India's digital transformation.
- Equinix is utilizing its ‘co-innovation’ facility in Ashburn, Virginia, to assess technologies to support rising power requirements, including supporting high-power-density AI deployments with liquid cooling technologies - such as direct-to-chip, immersion, and rear door heat exchangers - as the demand for AI grows. Equinix is innovating to build the data center of the future. In addition, Equinix continues to invest in its platform strategy, with revenue growth from its digital services portfolio over-indexing the broader business and strong enterprise customer adoption of Equinix's Network Edge offering. The company can support liquid-cooled deployments across all markets, including support for direct-to-chip liquid cooling in 45 markets across all three regions.
- With more than 460,000 interconnections overall, Equinix's worldwide interconnection brand is still operating well. Record port orders helped Equinix Fabric maintain its pace, and Equinix Internet Exchange had another successful quarter with peak traffic approaching 35 terabits per second.
- Earlier in the month, NetApp and Equinix announced a wider partnership with the launch of NetApp Storage on Equinix Metal, an integrated full stack solution that gives business clients low-latency access to all clouds while maintaining data management.
- Equinix is well-positioned with major participants in the AI ecosystem, with a roughly 40% market share of cloud on-ramps in the areas in which it operates. The firm was honored in August as a 2023 Google Cloud Customer Awards winner for its efforts supporting Google AI technologies.
- To offer a crucial U.S.-based interconnectivity access point for the Southern Cross NEXT underwater cable system, Equinix and Southern Cross Cables Limited extended their partnership in September. In its LA4 Los Angeles IBX data center, SX NEXT is using Equinix's next-generation cable landing station design to increase aggregate capacity on Southern Cross' Trans-Pacific networks by 500 percent.
- To provide new features and improved trading speed, Equinix announced earlier this month that the Warsaw Stock Exchange is moving its main matching engine and trading system to Equinix.
In September, Adam Berlew was named Chief Marketing Officer. Mr. Berlew, who served as Vice President of Global Marketing at Equinix from 2012 to 2015, brings over 25 years of expertise in strategic marketing and global leadership positions back to the company. As a new member of Equinix's client and Revenue leadership team, he will be responsible for accelerating revenue development and client acquisition via efficient marketing techniques that support Platform Equinix, the company's long-term goal.
Business Outlook Q4
Equinix projects sales for the fourth quarter of 2023 to be in the range of $2.088 and $2.128 billion, which represents a normalized and constant currency growth of 3 to 4% or an increase of around 1 to 3% over the preceding quarter. When comparing this guidance to the average foreign exchange rates in Q32023, there will be a $26 million negative foreign exchange effect.
It is anticipated that adjusted EBITDA would fall between $899 and $929 million. This projection includes $5 million in acquisition integration expenses, $13 million in negative foreign exchange effect relative to average FX rates in Q32023, and special one-time expenditures linked to corporate real estate activity. It is anticipated that recurring capital expenditures would range between $100 and $120 million.
2023 Annual Guidance and Industry Impact
Looking ahead, Equinix projects its 2023 annual revenues to be between $8.166 and $8.206 billion, reflecting a 12 to 13% increase over the previous year, or a 14 to 15% increase on a normalized and constant currency basis. The company's adjusted EBITDA is expected to be in the range of $3.680 to $3.710 billion, maintaining a 45 percent margin. AFFO is projected to be between $2.996 and $3.026 billion, with per-share values ranging from $31.87 to $32.19.
Equinix's impressive financial performance and forward-looking guidance highlight the company's pivotal role in the evolving digital landscape. The integration of AI into enterprise strategies, coupled with a strong focus on digital transformation, would position Equinix at the forefront of technological advancement.
In conclusion, Equinix’s achievement of exceeding $2 billion in quarterly sales is unmistakable proof of its dominance in the worldwide digital infrastructure market. The data center colocation and interconnectivity provider has established itself as a key participant in the IT sector thanks to its notable expansion, which has been driven by the incorporation of AI into a variety of business strategies and an increased emphasis on digital transformation.
