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Equinix's (EQIX) Q1 AFFO Beat on Solid Demand, Revenues Rise
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Equinix Inc.’s (EQIX - Free Report) first-quarter 2024 adjusted funds from operations (AFFO) per share of $8.86 surpassed the Zacks Consensus Estimate of $8.58. The figure improved nearly 3.1% from the prior-year quarter.
Shares of Equinix gained 10.62% in the after-hours trading session on May 8 at the NYSE. The increase was due to steady growth in colocation and inter-connection revenues on the back of strong demand for digital infrastructure. During the quarter, Equinix’s total interconnections reached 468,400, rising 4% year over year. The company also revised its outlook for 2024.
Total quarterly revenues came in at $2.13 billion, missing the Zacks Consensus Estimate of $2.14 billion. However, the top line increased 6.5% year over year.
Quarter in Detail
Recurring revenues were $2.01 billion, up 6.3% from the year-ago quarter. Our projection was the same as reported. Non-recurring revenues rose 8.3% to $117 million. We estimated the metric to be $121.5 million.
Revenues from the Americas, EMEA and the Asia Pacific rose 6.5%, 5.2% and 8.5% to $939 million, $727 million and $461 million, year over year, respectively.
The adjusted EBITDA came in at $992 million, up 5% year over year. We projected the metric at $974.7 million. Adjusted EBITDA margin was reported at 47%.
AFFO rose 5.1% to $843 million from the year-ago period.
EQIX spent $21 million on recurring capital expenditure in the first quarter, down 8.7% on a year-over-year basis. Recurring capital expenditure was 1% of revenues in the reported quarter. Non-recurring capital expenditure was $686 million, up 35% year over year.
Balance Sheet
Equinix had $5.9 billion of available liquidity as of Mar 31, 2024. This comprised cash, cash equivalents, its undrawn revolver and $500 million of unsettled at-the-market proceeds. It excludes restricted cash.
Its net leverage ratio was 3.6, and the weighted average maturity was 7.3 years as of Mar 31, 2024.
Dividend Update
Concurrently, Equinix’s board of directors announced a quarterly cash dividend of $4.26 per share. The dividend will be paid out on Jun 19 to shareholders on record as of May 22, 2024.
2024 Guidance
For the second quarter of 2024, Equinix projects revenues between $2.148 billion and $2.168 billion, implying a 1-2% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $1.019-$1.039 billion.
For the current year, AFFO per share is estimated between $34.45 and $35.29, revised downward from the prior-guided range of $34.58-$35.31. But this suggests a 7-10% increase from the previous year. The Zacks Consensus Estimate for the same is currently pegged at $34.90.
For 2024, Equinix now estimates generating total revenues of $8.692-$8.792 billion, indicating year-over-year growth of 6-7%. Earlier, the company had guided total revenues of $8.793-$8.893 billion.
Management predicts an adjusted EBITDA of $4.044-$4.124 billion, revised from $4.089-$4.169 billion projected earlier. Expectations for adjusted EBITDA margin were maintained at 47%.
Digital Realty Trust (DLR - Free Report) reported first-quarter 2024 core funds from operations (FFO) per share of $1.67, outpacing the Zacks Consensus Estimate of $1.63.
Results reflect healthy leasing activity. However, rising operating expenses acted as a dampener in the quarter. DLR revised its outlook for 2024.
SBA Communications Corporation (SBAC - Free Report) reported first-quarter 2024 AFFO per share of $3.29, lagging the Zacks Consensus Estimate of $3.30. Nonetheless, the figure reflects a rise of 5.1% from the prior-year quarter.
Results were affected by lower site development revenues. However, SBAC witnessed an improvement in site leasing revenues, which supported the results to some extent. It continues to benefit from the addition of sites to its portfolio. The company lowered its 2024 outlook.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Equinix's (EQIX) Q1 AFFO Beat on Solid Demand, Revenues Rise
Equinix Inc.’s (EQIX - Free Report) first-quarter 2024 adjusted funds from operations (AFFO) per share of $8.86 surpassed the Zacks Consensus Estimate of $8.58. The figure improved nearly 3.1% from the prior-year quarter.
Shares of Equinix gained 10.62% in the after-hours trading session on May 8 at the NYSE. The increase was due to steady growth in colocation and inter-connection revenues on the back of strong demand for digital infrastructure. During the quarter, Equinix’s total interconnections reached 468,400, rising 4% year over year. The company also revised its outlook for 2024.
Total quarterly revenues came in at $2.13 billion, missing the Zacks Consensus Estimate of $2.14 billion. However, the top line increased 6.5% year over year.
Quarter in Detail
Recurring revenues were $2.01 billion, up 6.3% from the year-ago quarter. Our projection was the same as reported. Non-recurring revenues rose 8.3% to $117 million. We estimated the metric to be $121.5 million.
Revenues from the Americas, EMEA and the Asia Pacific rose 6.5%, 5.2% and 8.5% to $939 million, $727 million and $461 million, year over year, respectively.
The adjusted EBITDA came in at $992 million, up 5% year over year. We projected the metric at $974.7 million. Adjusted EBITDA margin was reported at 47%.
AFFO rose 5.1% to $843 million from the year-ago period.
EQIX spent $21 million on recurring capital expenditure in the first quarter, down 8.7% on a year-over-year basis. Recurring capital expenditure was 1% of revenues in the reported quarter. Non-recurring capital expenditure was $686 million, up 35% year over year.
Balance Sheet
Equinix had $5.9 billion of available liquidity as of Mar 31, 2024. This comprised cash, cash equivalents, its undrawn revolver and $500 million of unsettled at-the-market proceeds. It excludes restricted cash.
Its net leverage ratio was 3.6, and the weighted average maturity was 7.3 years as of Mar 31, 2024.
Dividend Update
Concurrently, Equinix’s board of directors announced a quarterly cash dividend of $4.26 per share. The dividend will be paid out on Jun 19 to shareholders on record as of May 22, 2024.
2024 Guidance
For the second quarter of 2024, Equinix projects revenues between $2.148 billion and $2.168 billion, implying a 1-2% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $1.019-$1.039 billion.
For the current year, AFFO per share is estimated between $34.45 and $35.29, revised downward from the prior-guided range of $34.58-$35.31. But this suggests a 7-10% increase from the previous year. The Zacks Consensus Estimate for the same is currently pegged at $34.90.
For 2024, Equinix now estimates generating total revenues of $8.692-$8.792 billion, indicating year-over-year growth of 6-7%. Earlier, the company had guided total revenues of $8.793-$8.893 billion.
Management predicts an adjusted EBITDA of $4.044-$4.124 billion, revised from $4.089-$4.169 billion projected earlier. Expectations for adjusted EBITDA margin were maintained at 47%.
Equinix carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Equinix, Inc. Price, Consensus and EPS Surprise
Equinix, Inc. price-consensus-eps-surprise-chart | Equinix, Inc. Quote
Performance of Other REITs
Digital Realty Trust (DLR - Free Report) reported first-quarter 2024 core funds from operations (FFO) per share of $1.67, outpacing the Zacks Consensus Estimate of $1.63.
Results reflect healthy leasing activity. However, rising operating expenses acted as a dampener in the quarter. DLR revised its outlook for 2024.
SBA Communications Corporation (SBAC - Free Report) reported first-quarter 2024 AFFO per share of $3.29, lagging the Zacks Consensus Estimate of $3.30. Nonetheless, the figure reflects a rise of 5.1% from the prior-year quarter.
Results were affected by lower site development revenues. However, SBAC witnessed an improvement in site leasing revenues, which supported the results to some extent. It continues to benefit from the addition of sites to its portfolio. The company lowered its 2024 outlook.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.