It has been about a month since the last earnings report for Equinix (EQIX Quick QuoteEQIX - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.

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

Equinix FFO Surpass Estimates in Q1, Revenues Miss

Equinix posted mixed results for first-quarter 2020, wherein adjusted FFO (AFFO) per share surpassed the Zacks Consensus Estimate, while revenues lagged. Nonetheless, both AFFO and revenues improved year over year.

The company’s quarterly AFFO per share was $6.21, beating the Zacks Consensus Estimate of $5.98. The figure also improved 13% from the year-ago quarter’s $5.95.

The upside primarily stemmed from steady growth in interconnection revenues. However, the negative impacts of foreign currency hindered revenue growth and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Further, $3 million in integration costs hurt AFFO and adjusted EBITDA.

Quarter in Detail

Total quarterly revenues were $1.44 billion, missing the Zacks Consensus Estimate of $1.45 billion. Nonetheless, the top-line figure improved 6% year over year, representing the 69th consecutive quarter of revenue growth.

Recurring revenues were $1.36 billion, up 6.8% from the year-ago quarter’s figure. Non-recurring revenues declined 6.3% from the year-ago quarter to $82.8 million.

Revenues from the three geographic regions increased on a year-over-year basis as well. Revenues from the Americas, EMEA and the Asia Pacific jumped 2.7%, 10.2% and 6.9% to $661.9 million, $478.9 million and $303.7 million, respectively.

Cash gross margin was 67%, stable year over year. Total operating expenses were up 11.4% year over year to $283.8 million.

Adjusted EBITDA was $684 million, up 3.6% year over year. Adjusted EBITDA margins were 47%, down from 48% recorded in the prior-year quarter. AFFO appreciated 13% year over year to $535 million in the March-end quarter.

Balance Sheet

Equinix exited the first quarter with cash and cash equivalents of $1.17 billion. The company’s total debt principal outstanding was $11.75 billion as of Mar 31, 2020.

Guidance

The company widened its guidance for the ongoing year. For 2020, it estimates generating revenues of $5.877-$5.985 billion. It predicts adjusted EBITDA of $2.765-$2.845 billion and AFFO of $2.043-$2.133 billion. Further, AFFO per share is estimated to be between $23.62 and $24.66.

For second-quarter 2020, Equinix projects revenues of $1.446-$1.466 billion. Adjusted EBITDA is likely to be between $679 million and $699 million.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Equinix has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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.