A month has gone by since the last earnings report for Equinix (EQIX Quick QuoteEQIX - Free Report) . Shares have added about 7.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Equinix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Equinix's Q3 AFFO Beat on Solid Demand, Revenues Rise Y/Y

Equinix’s third-quarter 2024 adjusted funds from operations (AFFO) per share of $9.05 surpassed the Zacks Consensus Estimate of $8.70. The figure improved 10.5% from the prior-year quarter.

Results displayed steady growth in colocation and inter-connection revenues, driven by strong demand for digital infrastructure. During the quarter, Equinix’s total interconnections reached 478,000, rising 4% year over year. The company also revised its outlook for 2024.

Total quarterly revenues were $2.2 billion, in line with the Zacks Consensus Estimate. The top line increased 6.8% year over year.

Quarter in Detail

Recurring revenues were $2.06 billion, up 5% from the year-ago quarter. Our projection for the metric was $2.08 billion. Non-recurring revenues rose 42% to $142 million. We estimated the metric to be $124 million.

Revenues from the Americas, EMEA and the Asia Pacific rose 4.9%, 4.8% and 13.9% to $958 million, $743 million and $500 million, year over year, respectively.

The adjusted EBITDA came in at $1.05 billion, up 12% year over year. We projected the metric at $1.04 billion. Adjusted EBITDA margin was reported at 48%.

AFFO rose 12.2% to $866 million from the year-ago period.

Equinix spent $69 million on recurring capital expenditure in the third quarter, up 35.3% on a year-over-year basis. Recurring capital expenditure was 3.1% of revenues in the reported quarter. Non-recurring capital expenditure was $655 million, up 15.7% year over year.

Balance Sheet

Equinix had $7.2 billion of available liquidity as of Sept. 30, 2024. This comprised cash, cash equivalents, short-term investments and its undrawn revolver. It excludes restricted cash.

Its net leverage ratio was 3.5, and the weighted average maturity was seven years as of Sept. 30, 2024.

2024 Raised Guidance

For the fourth quarter of 2024, Equinix projects revenues between $2.262 billion and $2.302 billion, implying a 3.5% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $1.010-$1.050 billion.

For the current year, AFFO per share is estimated between $34.81 and $35.22, revised upward from the prior-guided range of $34.67-$35.30. This suggests an 8-10% increase from the previous year.

For 2024, Equinix now estimates generating total revenues of $8.748-$8.788 billion, indicating year-over-year growth of 7%. Earlier, the company had guided total revenues of $8.692-$8.772 billion.

Management predicts an adjusted EBITDA of $4.086-$4.126 billion, revised from $4.066-$4.126 billion projected earlier. Expectations for adjusted EBITDA margin were maintained at 47%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Equinix has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equinix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.