Equinix Posts Double-Digit Revenue and AFFO Growth

Equinix (EQIX 0.90%) reported second-quarter 2017 results after the market closed on Wednesday. 

Here's how the quarter worked out for the data center operator and global interconnection specialist, which is organized as a real estate investment trust (REIT).

Equinix's results: The raw numbers 

Data source: Equinix. *AFFO is a closely watched metric for companies organized as REITs, as it's a driver of payouts to shareholders. It's akin to "earnings" for REITs.

Revenue increased 11% on a normalized -- which excludes the revenue contribution from acquisitions -- and constant-currency basis.

Equinix's revenue came in at about the midpoint of its guidance range of $976 million to $982 million, which didn't include revenue from acquisitions. The company doesn't provide quarterly AFFO guidance.

Image source: Getty Images.

What happened with Equinix in the quarter?

• Recurring revenue, consisting primarily of colocation, interconnection, and managed services, jumped 19% to $1,010 million. Non-recurring revenue increased 15% to $56.4 million.
• It completed its $3.6 billion acquisition of 29 Verizon data centers across 15 metro areas in North and South America. The acquisition brought it more than 600 net new customers. In addition to increasing its capacity in key markets, the deal opened up three new markets (Houston, TX.; Culpeper, VA.; and Bogota, Colombia). Moreover, the company said that the Miami facility "significantly expands [its] ability to serve interconnection needs between North and South America."
• It continued its organic expansion by opening new data centers in Amsterdam, Frankfurt, and the Silicon Valley, which extends its global platform to 182 IBX (international business exchange) data centers across 44 markets and 22 countries.
• Enterprise remained the fastest-growing vertical with a record number of Fortune 500 customer wins in the quarter. These included Weyerhaeuser and Shire.
• With the Verizon data center acquisition, the company's customers now include 42% of the Fortune 500 and 30% of the Global 2000 companies.
• More than 58% of revenue came from customers deployed across all three regions, and 84% came from customers deployed across multiple metro areas, demonstrating the value of its global platform.
• Interconnection year-over-year revenue increased 24% and 17% on a normalized and constant currency basis, significantly outpacing colocation revenue growth. The company said this is "reflecting the movement toward Interconnection Oriented Architectures and the rapid adoption of hybrid, multicloud as the preferred IT deployment model."

What management had to say

Here's what CEO Steve Smith had to say in the press release about the quarter:

Q2 was another strong quarter for Equinix, surpassing the milestone of $1 billion in quarterly revenues for the first time in the company's history. A key highlight in the quarter was the completion of Verizon's Americas data center portfolio, strengthening our global market leadership and providing additional capability to meet customer demand. As the shift to digital impacts businesses across all segments, private, secure and distributed interconnection continues to grow as a core design principle of IT, resulting in key new customer wins, and healthy and growing market share for Equinix.

Looking ahead

Equinix provided third-quarter guidance and adjusted its full-year 2017 guidance to include the expected contributions from the Verizon data centers. For the third quarter, the company expects revenue in the range of $1,133 million to $1,141 million, which at the midpoint represents growth of 7% and constant-currency growth of 3% over the year-ago quarter. Equinix does not issue quarterly AFFO guidance. 

Updated full-year guidance is as follows:

Data source: Equinix.

AFFO outlook assumes $52 million of integration costs for acquisitions.