Equinix Q4 2011 Earnings Preview

Feb.15.12 | About: Equinix, Inc. (EQIX)

Equinix (NASDAQ:EQIX) will be reporting Q4 2011 and full-year results on Wednesday, after the market close.

The company is considered a reliable bellwether for the network-neutral colocation sector, and its numbers will be closely watched by investors interested in getting some insight into the data center sector that recently delivered very positive performances.

Equinix's stock has recently enjoyed a strong upside, reaching new 52-week highs:

(chart from finviz.com)

Analysts expect, on average, revenue of $429.8 million in the quarter, and EPS of $0.44, with their forecast ranging from $0.18 to $0.58. The company guided for revenue greater than $ 424.5 million, and adjusted EBITDA in excess of $189.8 million. Historically, the company doesn't issue guidance for EPS, as management believes that adjusted EBITDA is a better metric for understanding the company's underlining performance. As a reminder, in Q3 the accounting due to the mark-to-market movement of the redeemable interest in ALOG that Equinix does not own impacted EPS more than $0.10 per share, making it difficult to compare this datum with consensus.

We expect Equinix to deliver revenue beating consensus, and stronger adjusted EBITDA numbers than forecast by management.

The company has already indicated that it expects 2012 revenue to be greater than $1,870 million, and to deliver adjusted EBITDA in excess of $850 million. CapEx is expected in the range of $700 to $800 million next year, as the company forecasts to keep investing in new facilities to support market demand (expansion CapEx is expected to range between $580 and $680 million).

While revenue and adjusted EBITDA alone give a great sense of Equinix's strong growth, we believe there are several other non financial metrics that may be useful to check the company's performance. We are including a quick chart that sheds some light into the number of cabinet equivalents billing at quarter end and the reported recurring revenue per cabinet equivalent in the last few quarters.

The spreadsheet is also available for download at this link for your own modeling.

Recently, Equinix fixed an ambitious, but in our opinion achievable, target of $3 billion in revenue by 2015. The company has also confirmed its intention to evaluate new acquisitions, especially in regions where the company may not operate at the moment.


Disclosure: I am long EQIX.