Equinix's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Equinix (EQIX)

Q1 2012 Earnings Call

April 25, 2012 5:30 pm ET


Katrina Rymill -

Stephen M. Smith - Chief Executive Officer, President, Director and Member of Stock Award Committee

Keith D. Taylor - Chief Financial Officer and Principal Accounting Officer

Charles Meyers - President of North America


Michael Rollins - Citigroup Inc, Research Division

Scott Goldman - Goldman Sachs Group Inc., Research Division

Frank G. Louthan - Raymond James & Associates, Inc., Research Division

James D. Breen - William Blair & Company L.L.C., Research Division

Gray Powell - Wells Fargo Securities, LLC, Research Division

Colby Synesael - Cowen and Company, LLC, Research Division

Jonathan A. Schildkraut - Evercore Partners Inc., Research Division

David W. Barden - BofA Merrill Lynch, Research Division



Good afternoon, and welcome to Equinix Conference Call. [Operator Instructions] Today's conference is being recorded. If anyone has any objections, please disconnect at this time. I'd like to turn the call over to Katrina Rymill, VP of IR. You may begin.

Katrina Rymill

Good afternoon, and welcome to today's conference call. Before we get started, I'd like to remind everyone that some of the statements that we'll be making today are forward-looking in nature and involve risks and uncertainties. Actual results may vary significantly from those statements and may be affected by the risks we identified in today's press release and those identified in our filings with the SEC, including our most recent Form 10-K filed on February 24, 2012, and Form 10-Q filed on October 28, 2011.

Equinix assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. In addition, in light of Regulation Fair Disclosure, it's Equinix's policy not to comment on its financial guidance during the quarter, unless it is done through an exclusive public disclosure. In addition, we will provide non-GAAP measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures and the list of the reasons why the company uses these measures in today's press release on the Equinix Investor Relations page at www.equinix.com.

We'd also like to remind you that we post important information about Equinix on the Investor Relations page of our website. We encourage you to check our website regularly for the most current available information.

With us today are Steve Smith, Equinix's CEO and President; Keith Taylor, Chief Financial Officer; Charles Meyers, President of the Americas. Following our prepared remarks, we'll be taking questions from sell-side analysts. In the interest of wrapping this call in an hour, we'd like to ask these analysts to limit any follow-on questions to one.

At this time, I'll turn the call over to Steve.

Stephen M. Smith

Thank you, Katrina. Good afternoon, and welcome to our first quarter earnings call. I'm pleased to report that Equinix delivered strong financial results in the first quarter and a great start to 2012. As shown on Slide 3, revenues were $452.2 million, up 5% quarter-over-quarter and 25% over the same quarter last year. Adjusted EBITDA was $215.2 million for the quarter, up 29% over the same quarter last year. We continue to see growth through high-value deployments where application performance and reliability matter, resulting in record bookings in all 3 operating regions this quarter.

Our focus on creating digital ecosystems and the corresponding vertical alignment of our sales force is reflected in our market momentum, particularly in the network and cloud segments. By targeting customer applications that fully leverage the advantage of Platform Equinix, we continue to see a very favorable deal mix and a healthy pricing environment.

The breadth of our global platform remains a unique competitive advantage. In this quarter, we exported record bookings across regional boundaries. Currently, 59% of our monthly recurring revenues come from customers deployed across multiple countries, reinforcing the value of our global platform.

As the Internet continues to scale, the global data center market remains as dynamic as ever. Trends such as mobility, cloud computing, data management and social media are at the heart of this shift. There are more people interacting with data than ever before, and the world's effective capacity to exchange information through telecommunications network is predicted to reach approximately 670 exabyte annually in 2013. These global trends are forcing architecture decisions to place network data centers at the heart of multitiered architecture deployments. Our network-dense IBX stood at the intersection of these business and technology trends as a solution to both cost and performance challenges.

As we continue to accumulate private, public and hybrid cloud deployments across Platform Equinix, we are creating a marketplace for buyers and sellers of cloud services to transact. Equinix IBXs are important locations for our cloud and SaaS customers to host their services and gain access to customers and partners across our platform. Similarly, CIOs of major corporations see Equinix IBXs as critical points to access cloud vendors to optimize application performance while maintaining security and reliability for their architecture. Equinix's goal is to assist customers, both cloud vendors and users, to leverage the cloud seamlessly.

The vertical ecosystems being formed inside Equinix underscore these trends and point to a vibrant ever-changing digital economy. The financial services industry is undergoing historic transformation. Deregulation and globalization have spawned a global community of financial institutions connecting to share data and transact across an entire platform of data centers. Bloomberg is deployed in 7 Equinix markets where they are connecting directly to the most important trading infrastructure around the world to ensure critical information is available in real time to the trading communities. Increasingly, this industry is also looking to private cloud services for fast, secure and reliable transactions, which is fueling the growth of interconnection between our cloud and financial ecosystem. Other industries are undergoing similar changes that CIOs architect their infrastructure to incorporate mobility, cloud and advanced data analytics to ensure quality real time transactions. This quarter, one of the world's largest logistics company selected Platform Equinix to more efficiently manage its delivery services system, which sit at the heart of their business success. The digital supply chain is transforming how companies sell, price, produce and deliver products and services, and Equinix data centers are what businesses need to fulfill the requirements of this new economy.

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