QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of incorporation) | (I.R.S. Employer Identification No.) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company |
Page No. | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
June 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Short-term investments | |||||||
Accounts receivable, net of allowance for doubtful accounts of $16,275 and $15,950 | |||||||
Other current assets | |||||||
Assets held for sale | |||||||
Total current assets | |||||||
Property, plant and equipment, net | |||||||
Operating lease right-of-use assets | — | ||||||
Goodwill | |||||||
Intangible assets, net | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | $ | |||||
Accrued property, plant and equipment | |||||||
Current portion of operating lease liabilities | — | ||||||
Current portion of finance lease liabilities | |||||||
Current portion of mortgage and loans payable | |||||||
Current portion of senior notes | |||||||
Other current liabilities | |||||||
Liabilities held for sale | |||||||
Total current liabilities | |||||||
Operating lease liabilities, less current portion | — | ||||||
Finance lease liabilities, less current portion | |||||||
Mortgage and loans payable, less current portion | |||||||
Senior notes, less current portion | |||||||
Other liabilities | |||||||
Total liabilities | |||||||
Commitments and contingencies (Note 10) | |||||||
Equinix stockholders' equity | |||||||
Common stock, $0.001 par value per share: 300,000,000 shares authorized; 85,213,952 issued and 84,819,158 outstanding in 2019 and 81,119,117 issued and 80,722,258 outstanding in 2018 | |||||||
Additional paid-in capital | |||||||
Treasury stock, at cost; 394,794 shares in 2019 and 396,859 shares in 2018 | ( | ) | ( | ) | |||
Accumulated dividends | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Retained earnings | |||||||
Total Equinix stockholders' equity | |||||||
Non-controlling interests | ( | ) | |||||
Total stockholders' equity | |||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Unaudited) | |||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Costs and operating expenses: | |||||||||||||||
Cost of revenues | |||||||||||||||
Sales and marketing | |||||||||||||||
General and administrative | |||||||||||||||
Acquisition costs | |||||||||||||||
Impairment charges | |||||||||||||||
Total costs and operating expenses | |||||||||||||||
Income from operations | |||||||||||||||
Interest income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other income | |||||||||||||||
Loss on debt extinguishment | ( | ) | ( | ) | ( | ) | |||||||||
Income before income taxes | |||||||||||||||
Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income | |||||||||||||||
Net (income) loss attributable to non-controlling interests | ( | ) | |||||||||||||
Net income attributable to Equinix | $ | $ | $ | $ | |||||||||||
Earnings per share ("EPS") attributable to Equinix: | |||||||||||||||
Basic EPS | $ | $ | $ | $ | |||||||||||
Weighted-average shares for basic EPS | |||||||||||||||
Diluted EPS | $ | $ | $ | $ | |||||||||||
Weighted-average shares for diluted EPS |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Unaudited) | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustment ("CTA") gain (loss), net of tax effects of $(585), $5,985, $(595) and $5,985 | ( | ) | ( | ) | ( | ) | |||||||||
Net investment hedge CTA gain (loss), net of tax effect of $0, $0, $10 and $1,637 | ( | ) | |||||||||||||
Unrealized gain (loss) on cash flow hedges, net of tax effects of $650, $(11,758), $(2,091) and $(10,398) | ( | ) | |||||||||||||
Net actuarial gain (loss) on defined benefit plans, net of tax effects of $2, $(4), $1 and $(10) | ( | ) | ( | ) | |||||||||||
Total other comprehensive loss, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Comprehensive income (loss), net of tax | ( | ) | |||||||||||||
Net (income) loss attributable to non-controlling interests | ( | ) | |||||||||||||
Other comprehensive loss attributable to non-controlling interests | |||||||||||||||
Comprehensive income (loss) attributable to Equinix | $ | $ | ( | ) | $ | $ |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(Unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | |||||||
Stock-based compensation | |||||||
Amortization of intangible assets | |||||||
Amortization of debt issuance costs and debt discounts and premiums | |||||||
Provision for allowance for doubtful accounts | |||||||
Impairment charges | |||||||
Loss on debt extinguishment | |||||||
Other items | |||||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Income taxes, net | ( | ) | |||||
Other assets | ( | ) | |||||
Operating lease right-of-use assets | — | ||||||
Operating lease liabilities | ( | ) | — | ||||
Accounts payable and accrued expenses | ( | ) | ( | ) | |||
Other liabilities | |||||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Purchases of investments | ( | ) | ( | ) | |||
Sales of investments | |||||||
Business acquisitions, net of cash and restricted cash acquired | ( | ) | ( | ) | |||
Purchases of real estate | ( | ) | ( | ) | |||
Purchases of other property, plant and equipment | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from employee equity awards | |||||||
Payment of dividends and special distribution | ( | ) | ( | ) | |||
Proceeds from public offering of common stock, net of issuance costs | |||||||
Proceeds from senior notes | |||||||
Repayments of finance lease liabilities | ( | ) | ( | ) | |||
Repayments of mortgage and loans payable | ( | ) | ( | ) | |||
Repayment of senior notes | ( | ) | |||||
Debt extinguishment costs | ( | ) | |||||
Debt issuance costs | ( | ) | |||||
Other financing activities | |||||||
Net cash provided by financing activities | |||||||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | ( | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||
Cash and cash equivalents | $ | $ | |||||
Current portion of restricted cash included in other current assets | |||||||
Non-current portion of restricted cash included in other assets | |||||||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows | $ | $ |
1. | Basis of Presentation and Significant Accounting Policies |
Balance Sheet | Balances at December 31, 2018 | Adjustments due to adoption of Topic 842 | Balances at January 1, 2019 | |||||||||
Assets | ||||||||||||
Other current assets | $ | $ | ( | ) | $ | |||||||
Property, plant and equipment, net | ( | ) | ||||||||||
Operating lease right-of-use assets | ||||||||||||
Intangible assets, net | ( | ) | ||||||||||
Other assets | ( | ) | ||||||||||
Liabilities | ||||||||||||
Current portion of operating lease liabilities | ||||||||||||
Current portion of finance lease liabilities | ||||||||||||
Current portion of capital lease and other financing obligations | ( | ) | ||||||||||
Other current liabilities | ( | ) | ||||||||||
Operating lease liabilities, less current portion | ||||||||||||
Finance lease liabilities, less current portion | ||||||||||||
Capital lease and other financing obligations, less current portion | ( | ) | ||||||||||
Other liabilities | ( | ) | ||||||||||
Equity | ||||||||||||
Retained Earnings | ( | ) |
2. | Revenue |
Accounts receivable, net | Contract asset, current | Contract asset, non-current | Deferred revenue, current | Deferred revenue, non-current | |||||||||||||||
Beginning balances as of January 1, 2019 | $ | $ | $ | $ | $ | ||||||||||||||
Closing balances as of June 30, 2019 | |||||||||||||||||||
Increase/(decrease) | $ | $ | ( | ) | $ | $ | $ | ( | ) |
3. | Earnings Per Share |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net (income) loss attributable to non-controlling interests | ( | ) | |||||||||||||
Net income attributable to Equinix | $ | $ | $ | $ | |||||||||||
Weighted-average shares used to calculate basic EPS | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||
Employee equity awards | |||||||||||||||
Weighted-average shares used to calculate diluted EPS | |||||||||||||||
EPS attributable to Equinix: | |||||||||||||||
Basic EPS | $ | $ | $ | $ | |||||||||||
Diluted EPS | $ | $ | $ | $ |
4. | Acquisitions |
Metronode | Infomart Dallas | ||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable | |||||||
Other current assets | |||||||
Property, plant, and equipment | |||||||
Intangible assets | |||||||
Goodwill | |||||||
Other assets (1) | |||||||
Total assets acquired | |||||||
Accounts payable and accrued liabilities | ( | ) | ( | ) | |||
Other current liabilities | ( | ) | ( | ) | |||
Deferred tax liabilities | ( | ) | |||||
Other liabilities (1) | ( | ) | ( | ) | |||
Net assets acquired | $ | $ |
(1) | In connection with the Metronode Acquisition, the Company recorded indemnification assets of $ |
Intangible Assets | Fair Value | Estimated Useful Lives (Years) | Weighted-average Estimated Useful Lives (Years) | |||||
Customer relationships (Metronode) | $ | |||||||
Customer relationships (Infomart Dallas) | ||||||||
In-place leases (Infomart Dallas) | 3.6 - 7.5 | |||||||
Trade names (Infomart Dallas) | ||||||||
Favorable leases (Infomart Dallas) | 3.6 - 7.5 |
5. | Assets Held for Sale |
Property, plant and equipment | $ | ||
Operating lease right-of-use assets | |||
Goodwill | |||
Intangible assets | |||
Deferred tax assets | |||
Other assets | |||
Total assets held for sale | $ | ||
Current portion of operating lease liabilities | $ | ||
Current portion of finance lease liabilities | |||
Operating lease liabilities, less current portion | |||
Finance lease liabilities, less current portion | |||
Deferred tax liabilities | |||
Other liabilities | |||
Total liabilities held for sale | $ |
6. | Derivatives and Hedging Activities |
Amount of gain or (loss) recognized in accumulated other comprehensive income: | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Foreign currency debt | $ | ( | ) | $ | $ | $ | |||||||||||
Cross-currency interest rate swaps (included component) (1) | ( | ) | |||||||||||||||
Cross-currency interest rate swaps (excluded component) (2) | |||||||||||||||||
Total | $ | ( | ) | $ | $ | $ | |||||||||||
Amount of gain or (loss) recognized in earnings: | |||||||||||||||||
Location of gain or (loss) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Cross-currency interest rate swaps (excluded component) (2) | Interest expense | $ | $ | $ | $ | ||||||||||||
Total | $ | $ | $ | $ |
(1) | Included component represents foreign exchange spot rates. |
(2) | Excluded component represents cross-currency basis spread and interest rates. |
Amount of gain or (loss) recognized in accumulated other comprehensive income: | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Foreign currency forward and option contracts (included component) (1) | $ | ( | ) | $ | $ | $ | |||||||||||
Foreign currency option contracts (excluded component) (2) | ( | ) | ( | ) | |||||||||||||
Total | $ | ( | ) | $ | $ | $ | |||||||||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income to income: | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
Location of gain or (loss) | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Foreign currency forward contracts | Revenues | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Foreign currency forward contracts | Cost of revenues | ( | ) | ( | ) | ||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
Amount of gain or (loss) excluded from effectiveness testing included in income: | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
Location of gain or (loss) | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Foreign currency forward contracts | Other income (expense) | $ | $ | $ | $ | ||||||||||||
Foreign currency option contracts (excluded component) (2) | Revenues | ( | ) | ( | ) | ||||||||||||
Total | $ | ( | ) | $ | $ | $ |
(1) | Included component represents foreign exchange spot rates. |
(2) | Excluded component represents option's time value. |
Amount of gain or (loss) recognized in earnings: | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
Location of gain or (loss) | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Embedded derivatives | Revenues | $ | ( | ) | $ | $ | $ | ||||||||||
Economic hedge of embedded derivatives | Revenues | ( | ) | ( | ) | ||||||||||||
Foreign currency forward contracts | Other income (expense) | ||||||||||||||||
Total | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||||||
Assets (1) | Liabilities (2) | Assets (1) | Liabilities (2) | ||||||||||||
Designated as hedging instruments: | |||||||||||||||
Cash flow hedges | |||||||||||||||
Foreign currency forward and option contracts | $ | $ | $ | $ | |||||||||||
Net investment hedges | |||||||||||||||
Cross-currency interest rate swaps | |||||||||||||||
Total designated as hedging | |||||||||||||||
Not designated as hedging instruments: | |||||||||||||||
Embedded derivatives | |||||||||||||||
Economic hedges of embedded derivatives | |||||||||||||||
Foreign currency forward contracts | |||||||||||||||
Total not designated as hedging | |||||||||||||||
Total Derivatives | $ | $ | $ | $ |
(1) | As presented in the Company's condensed consolidated balance sheets within other current assets and other assets. |
(2) | As presented in the Company's condensed consolidated balance sheets within other current liabilities and other liabilities. |
Gross Amounts Offset in Consolidated Balance Sheet | |||||||||||||||||||
Gross Amounts | Gross Amounts Offset in the Balance Sheet | Net Amounts | Gross Amounts not Offset in the Balance Sheet | Net | |||||||||||||||
June 30, 2019 | |||||||||||||||||||
Derivative assets | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Derivative liabilities | ( | ) | |||||||||||||||||
December 31, 2018 | |||||||||||||||||||
Derivative assets | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Derivative liabilities | ( | ) |
7. | Fair Value Measurements |
Fair Value at June 30, 2019 | Fair Value Measurement Using | ||||||||||
Level 1 | Level 2 | ||||||||||
Assets: | |||||||||||
Cash | $ | $ | $ | ||||||||
Money market and deposit accounts | |||||||||||
Publicly traded equity securities | |||||||||||
Certificates of deposit | |||||||||||
Derivative instruments (1) | |||||||||||
Total | $ | $ | $ | ||||||||
Liabilities: | |||||||||||
Derivative instruments (1) | $ | $ | $ |
(1) | Amounts are included within other current assets, other assets, others current liabilities and other liabilities in the Company's accompanying condensed consolidated balance sheet. |
Fair Value at December 31, 2018 | Fair Value Measurement Using | ||||||||||
Level 1 | Level 2 | ||||||||||
Assets: | |||||||||||
Cash | $ | $ | $ | ||||||||
Money market and deposit accounts | |||||||||||
Publicly traded equity securities | |||||||||||
Certificates of deposit | |||||||||||
Derivative instruments (1) | |||||||||||
Total | $ | $ | $ | ||||||||
Liabilities: | |||||||||||
Derivative instruments (1) | $ | $ | $ |
(1) | Amounts are included within other current assets, other assets, other current liabilities and other liabilities in the Company's accompanying condensed consolidated balance sheet. |
8. | Leases |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
Finance lease cost | |||||||
Amortization of right-of-use assets (1) | $ | $ | |||||
Interest on lease liabilities | |||||||
Total finance lease cost | |||||||
Operating lease cost | |||||||
Total lease cost | $ | $ |
Six Months Ended June 30, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from finance leases | $ | ||
Operating cash flows from operating leases | |||
Financing cash flows from finance leases | |||
Right-of-use assets obtained in exchange for lease obligations: (1) | |||
Finance leases | $ | ||
Operating leases | |||
As of June 30, 2019 | |||
Weighted-average remaining lease term - finance leases (2) | |||
Weighted-average remaining lease term - operating leases (2) | |||
Weighted-average discount rate - finance leases | % | ||
Weighted-average discount rate - operating leases | % |
Operating Leases | Finance Leases | Total | |||||||||
2019 (6 months remaining) | $ | $ | $ | ||||||||
2020 | |||||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
Thereafter | |||||||||||
Total lease payments | |||||||||||
Plus amount representing residual property value | |||||||||||
Less imputed interest | ( | ) | ( | ) | ( | ) | |||||
Total | $ | $ | $ |
Capital Lease Obligations | Other Financing Obligations (1) | Total Capital Lease and Other Financing Obligations | Operating Leases | ||||||||||||
2019 | $ | $ | $ | $ | |||||||||||
2020 | |||||||||||||||
2021 | |||||||||||||||
2022 | |||||||||||||||
2023 | |||||||||||||||
Thereafter | |||||||||||||||
Total minimum lease payments | |||||||||||||||
Plus amount representing residual property value | — | ||||||||||||||
Less amount representing interest | ( | ) | ( | ) | ( | ) | — | ||||||||
Present value of net minimum lease payments | |||||||||||||||
Less current portion | ( | ) | ( | ) | ( | ) | — | ||||||||
Total | $ | $ | $ | $ |
9. | Debt Facilities |
June 30, 2019 | December 31, 2018 | ||||||
Term loans | $ | $ | |||||
Mortgage payable and loans payable | |||||||
Less amount representing unamortized debt discount and debt issuance cost | ( | ) | ( | ) | |||
Add amount representing unamortized mortgage premium | |||||||
Less current portion | ( | ) | ( | ) | |||
Total | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||||
Amount | Effective Rate | Amount | Effective Rate | ||||||||||
5.000% Infomart Senior Notes (1) | $ | % | $ | % | |||||||||
5.375% Senior Notes due 2022 | % | % | |||||||||||
5.375% Senior Notes due 2023 | % | % | |||||||||||
2.875% Euro Senior Notes due 2024 | % | % | |||||||||||
5.750% Senior Notes due 2025 | % | % | |||||||||||
2.875% Euro Senior Notes due 2025 | % | % | |||||||||||
5.875% Senior Notes due 2026 | % | % | |||||||||||
2.875% Euro Senior Notes due 2026 | % | % | |||||||||||
5.375% Senior Notes due 2027 | % | % | |||||||||||
Less amount representing unamortized debt issuance cost | ( | ) | ( | ) | |||||||||
Add amount representing unamortized debt premium | |||||||||||||
Less current portion | ( | ) | ( | ) | |||||||||
Total | $ | $ |
Years ending: | |||
2019 (6 months remaining) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total | $ |
June 30, 2019 | December 31, 2018 | ||||||
Mortgage and loans payable | $ | $ | |||||
Senior notes |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest expense | $ | $ | $ | $ | |||||||||||
Interest capitalized | |||||||||||||||
Interest charges incurred | $ | $ | $ | $ |
10. | Commitments and Contingencies |
11. | Stockholders' Equity |
AOCI (Loss) | Retained Earnings | Equinix Stockholders' Equity | Non-controlling Interests | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Dividends | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||
Adjustment from adoption of new accounting standard update | — | — | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Issuance of common stock and release of treasury stock for employee equity awards | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Issuance of common stock for equity offering | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Dividend distribution on common stock, $2.46 per share | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||
Settlement of accrued dividends on vested equity awards | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||||||
Accrued dividends on unvested equity awards | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||
Stock-based compensation, net of estimated forfeitures | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Balance as of March 31, 2019 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ) | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Issuance of common stock and release of treasury stock for employee equity awards | — | ( | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||
Issuance of common stock under ATM Program | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Dividend distribution on common stock, $2.46 per share | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||
Settlement of accrued dividends on vested equity awards | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||||||
Accrued dividends on unvested equity awards | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) |
AOCI (Loss) | Retained Earnings | Equinix Stockholders' Equity | Non-controlling Interests | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Dividends | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Stock-based compensation, net of estimated forfeitures | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Balance as of June 30, 2019 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ |
Additional Paid-in Capital | Accumulated Dividends | AOCI (Loss) | Retained Earnings | Equinix Stockholders' Equity | |||||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||
Balance as of December 31, 2017 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
Adjustment from adoption of new accounting standard update | — | — | — | — | — | — | ( | ) | |||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock and release of treasury stock for employee equity awards | — | — | — | ||||||||||||||||||||||||||||||
Dividend distribution on common stock, $2.28 per share | — | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||||
Settlement of accrued dividends on vested equity awards | — | — | — | — | ( | ) | — | — | |||||||||||||||||||||||||
Accrued dividends on unvested equity awards | — | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||||
Stock-based compensation, net of estimated forfeitures | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Balance as of March 31, 2018 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
Issuance of common stock and release of treasury stock for employee equity awards | ( | ) | — | — | — | ||||||||||||||||||||||||||||
Issuance of common stock under ATM Program | — | — | — | — | — | ||||||||||||||||||||||||||||
Dividend distribution on common stock, $2.28 per share | — | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||||
Settlement of accrued dividends on vested equity awards | — | — | — | — | ( | ) | — | — | |||||||||||||||||||||||||
Accrued dividends on unvested equity awards | — | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||||
Stock-based compensation, net of estimated forfeitures | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Balance as of June 30, 2018 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ |
Balance as of December 31, 2018 | Net Change | Balance as of June 30, 2019 | |||||||||
Foreign currency translation adjustment ("CTA") loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Unrealized gain on cash flow hedges (1) | |||||||||||
Net investment hedge CTA gain (1) | |||||||||||
Net actuarial loss on defined benefit plans (2) | ( | ) | ( | ) | ( | ) | |||||
Accumulated other comprehensive loss attributable to Equinix | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) | Refer to Note 6 for a discussion of the amounts reclassified from accumulated other comprehensive loss to net income. |
(2) | The Company has a defined benefit pension plan covering all employees in one country where such plan is mandated by law. The Company does not have any defined benefit plans in any other countries. The unamortized gain (loss) on defined benefit plans includes gains or losses resulting from a change in the value of either the projected benefit obligation or the plan assets resulting from a change in an actuarial assumption, net of amortization. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Cost of revenues | $ | $ | $ | $ | |||||||||||
Sales and marketing | |||||||||||||||
General and administrative | |||||||||||||||
Total | $ | $ | $ | $ |
12. | Segment Information |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||
Americas | EMEA | Asia-Pacific | Total | Americas | EMEA | Asia-Pacific | Total | ||||||||||||||||||||||||
Colocation (1) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Interconnection | |||||||||||||||||||||||||||||||
Managed infrastructure | |||||||||||||||||||||||||||||||
Other (1) | |||||||||||||||||||||||||||||||
Recurring revenues | |||||||||||||||||||||||||||||||
Non-recurring revenues | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||
Americas | EMEA | Asia-Pacific | Total | Americas | EMEA | Asia-Pacific | Total | ||||||||||||||||||||||||
Colocation (1) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Interconnection | |||||||||||||||||||||||||||||||
Managed infrastructure | |||||||||||||||||||||||||||||||
Other (1) | |||||||||||||||||||||||||||||||
Recurring revenues | |||||||||||||||||||||||||||||||
Non-recurring revenues | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Adjusted EBITDA: | |||||||||||||||
Americas | $ | $ | $ | $ | |||||||||||
EMEA | |||||||||||||||
Asia-Pacific | |||||||||||||||
Total adjusted EBITDA | |||||||||||||||
Depreciation, amortization and accretion expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Stock-based compensation expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Impairment charges | ( | ) | ( | ) | |||||||||||
Acquisition costs | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income from operations | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Depreciation and amortization: | |||||||||||||||
Americas | $ | $ | $ | $ | |||||||||||
EMEA | |||||||||||||||
Asia-Pacific | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Capital expenditures: | |||||||||||||||
Americas | $ | $ | $ | $ | |||||||||||
EMEA | |||||||||||||||
Asia-Pacific | |||||||||||||||
Total | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Americas | $ | $ | |||||
EMEA | |||||||
Asia-Pacific | |||||||
Total long-lived assets | $ | $ |
13. | Subsequent Events |
• | Overview |
• | Results of Operations |
• | Non-GAAP Financial Measures |
• | Liquidity and Capital Resources |
• | Contractual Obligations and Off-Balance-Sheet Arrangements |
• | Critical Accounting Policies and Estimates |
• | Recent Accounting Pronouncements |
Three Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency (1) | ||||||||||||||
Americas: | |||||||||||||||||||
Recurring revenues | $ | 614,806 | 44 | % | $ | 588,887 | 47 | % | 4 | % | 5 | % | |||||||
Non-recurring revenues | 29,614 | 2 | % | 29,388 | 2 | % | 1 | % | 1 | % | |||||||||
644,420 | 46 | % | 618,275 | 49 | % | 4 | % | 5 | % | ||||||||||
EMEA: | |||||||||||||||||||
Recurring revenues | 417,081 | 30 | % | 359,582 | 28 | % | 16 | % | 22 | % | |||||||||
Non-recurring revenues | 32,774 | 3 | % | 23,586 | 2 | % | 39 | % | 47 | % | |||||||||
449,855 | 33 | % | 383,168 | 30 | % | 17 | % | 24 | % | ||||||||||
Asia-Pacific: | |||||||||||||||||||
Recurring revenues | 274,158 | 20 | % | 239,280 | 19 | % | 15 | % | 18 | % | |||||||||
Non-recurring revenues | 16,544 | 1 | % | 21,220 | 2 | % | (22 | )% | (20 | )% | |||||||||
290,702 | 21 | % | 260,500 | 21 | % | 12 | % | 15 | % | ||||||||||
Total: | |||||||||||||||||||
Recurring revenues | 1,306,045 | 94 | % | 1,187,749 | 94 | % | 10 | % | 13 | % | |||||||||
Non-recurring revenues | 78,932 | 6 | % | 74,194 | 6 | % | 6 | % | 10 | % | |||||||||
$ | 1,384,977 | 100 | % | $ | 1,261,943 | 100 | % | 10 | % | 13 | % |
(1) | As defined in the "Non-GAAP Financial Measures" section in Item 2 of this Quarterly Report on Form 10-Q. |
Three Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 287,065 | 41 | % | $ | 282,395 | 43 | % | 2 | % | 3 | % | |||||||
EMEA | 251,876 | 36 | % | 226,301 | 35 | % | 11 | % | 17 | % | |||||||||
Asia-Pacific | 159,238 | 23 | % | 143,105 | 22 | % | 11 | % | 14 | % | |||||||||
Total | $ | 698,179 | 100 | % | $ | 651,801 | 100 | % | 7 | % | 10 | % |
Three Months Ended June 30, | |||||
2019 | 2018 | ||||
Cost of revenues as a percentage of revenues: | |||||
Americas | 45 | % | 46 | % | |
EMEA | 56 | % | 59 | % | |
Asia-Pacific | 55 | % | 55 | % | |
Total | 50 | % | 52 | % |
Three Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 97,596 | 61 | % | $ | 96,554 | 62 | % | 1 | % | 1 | % | |||||||
EMEA | 39,711 | 25 | % | 36,544 | 24 | % | 9 | % | 14 | % | |||||||||
Asia-Pacific | 21,894 | 14 | % | 21,104 | 14 | % | 4 | % | 7 | % | |||||||||
Total | $ | 159,201 | 100 | % | $ | 154,202 | 100 | % | 3 | % | 5 | % |
Three Months Ended June 30, | |||||
2019 | 2018 | ||||
Sales and marketing expenses as a percentage of revenues: | |||||
Americas | 15 | % | 16 | % | |
EMEA | 9 | % | 10 | % | |
Asia-Pacific | 8 | % | 8 | % | |
Total | 11 | % | 12 | % |
Three Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 160,997 | 69 | % | $ | 140,812 | 67 | % | 14 | % | 15 | % | |||||||
EMEA | 48,085 | 21 | % | 46,739 | 22 | % | 3 | % | 7 | % | |||||||||
Asia-Pacific | 23,574 | 10 | % | 22,938 | 11 | % | 3 | % | 5 | % | |||||||||
Total | $ | 232,656 | 100 | % | $ | 210,489 | 100 | % | 11 | % | 12 | % |
Three Months Ended June 30, | |||||
2019 | 2018 | ||||
General and administrative expenses as a percentage of revenues: | |||||
Americas | 25 | % | 23 | % | |
EMEA | 11 | % | 12 | % | |
Asia-Pacific | 8 | % | 9 | % | |
Total | 17 | % | 17 | % |
Three Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 99,195 | 34 | % | $ | 87,711 | 41 | % | 13 | % | 14 | % | |||||||
EMEA | 106,555 | 37 | % | 73,046 | 34 | % | 46 | % | 55 | % | |||||||||
Asia-Pacific | 86,031 | 29 | % | 54,281 | 25 | % | 58 | % | 64 | % | |||||||||
Total | $ | 291,781 | 100 | % | $ | 215,038 | 100 | % | 36 | % | 41 | % |
Three Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 309,052 | 46 | % | $ | 293,955 | 49 | % | 5 | % | 6 | % | |||||||
EMEA | 209,645 | 31 | % | 170,815 | 28 | % | 23 | % | 30 | % | |||||||||
Asia-Pacific | 158,313 | 23 | % | 139,234 | 23 | % | 14 | % | 17 | % | |||||||||
Total | $ | 677,010 | 100 | % | $ | 604,004 | 100 | % | 12 | % | 15 | % |
Six Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency (1) | ||||||||||||||
Americas: | |||||||||||||||||||
Recurring revenues | $ | 1,221,116 | 44 | % | $ | 1,164,879 | 47 | % | 5 | % | 6 | % | |||||||
Non-recurring revenues | 67,670 | 3 | % | 56,023 | 2 | % | 21 | % | 22 | % | |||||||||
1,288,786 | 47 | % | 1,220,902 | 49 | % | 6 | % | 7 | % | ||||||||||
EMEA: | |||||||||||||||||||
Recurring revenues | 817,318 | 30 | % | 715,072 | 29 | % | 14 | % | 22 | % | |||||||||
Non-recurring revenues | 67,197 | 2 | % | 47,726 | 2 | % | 41 | % | 50 | % | |||||||||
884,515 | 32 | % | 762,798 | 31 | % | 16 | % | 23 | % | ||||||||||
Asia-Pacific: | |||||||||||||||||||
Recurring revenues | 542,439 | 20 | % | 458,427 | 19 | % | 18 | % | 22 | % | |||||||||
Non-recurring revenues | 32,455 | 1 | % | 35,693 | 1 | % | (9 | )% | (6 | )% | |||||||||
574,894 | 21 | % | 494,120 | 20 | % | 16 | % | 20 | % | ||||||||||
Total: | |||||||||||||||||||
Recurring revenues | 2,580,873 | 94 | % | 2,338,378 | 95 | % | 10 | % | 14 | % | |||||||||
Non-recurring revenues | 167,322 | 6 | % | 139,442 | 5 | % | 20 | % | 24 | % | |||||||||
$ | 2,748,195 | 100 | % | $ | 2,477,820 | 100 | % | 11 | % | 14 | % |
(1) | As defined in the "Non-GAAP Financial Measures" section in Item 2 of this Quarterly Report on Form 10-Q. |
Six Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 572,724 | 41 | % | $ | 547,536 | 43 | % | 5 | % | 6 | % | |||||||
EMEA | 494,330 | 36 | % | 452,471 | 35 | % | 9 | % | 16 | % | |||||||||
Asia-Pacific | 313,155 | 23 | % | 274,224 | 22 | % | 14 | % | 17 | % | |||||||||
Total | $ | 1,380,209 | 100 | % | $ | 1,274,231 | 100 | % | 8 | % | 12 | % |
Six Months Ended June 30, | |||||
2019 | 2018 | ||||
Cost of revenues as a percentage of revenues: | |||||
Americas | 44 | % | 45 | % | |
EMEA | 56 | % | 59 | % | |
Asia-Pacific | 54 | % | 55 | % | |
Total | 50 | % | 51 | % |
Six Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 202,634 | 62 | % | $ | 194,517 | 62 | % | 4 | % | 5 | % | |||||||
EMEA | 80,913 | 24 | % | 76,607 | 24 | % | 6 | % | 12 | % | |||||||||
Asia-Pacific | 45,369 | 14 | % | 42,854 | 14 | % | 6 | % | 9 | % | |||||||||
Total | $ | 328,916 | 100 | % | $ | 313,978 | 100 | % | 5 | % | 7 | % |
Six Months Ended June 30, | |||||
2019 | 2018 | ||||
Sales and marketing expenses as a percentage of revenues: | |||||
Americas | 16 | % | 16 | % | |
EMEA | 9 | % | 10 | % | |
Asia-Pacific | 8 | % | 9 | % | |
Total | 12 | % | 13 | % |
Six Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 308,135 | 69 | % | $ | 276,689 | 67 | % | 11 | % | 12 | % | |||||||
EMEA | 93,427 | 21 | % | 93,589 | 23 | % | — | % | 5 | % | |||||||||
Asia-Pacific | 46,140 | 10 | % | 43,368 | 10 | % | 6 | % | 9 | % | |||||||||
Total | $ | 447,702 | 100 | % | $ | 413,646 | 100 | % | 8 | % | 10 | % |
Six Months Ended June 30, | |||||
2019 | 2018 | ||||
General and administrative expenses as a percentage of revenues: | |||||
Americas | 24 | % | 23 | % | |
EMEA | 11 | % | 12 | % | |
Asia-Pacific | 8 | % | 9 | % | |
Total | 16 | % | 17 | % |
Six Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 189,206 | 33 | % | $ | 189,447 | 43 | % | — | % | 1 | % | |||||||
EMEA | 211,562 | 37 | % | 137,149 | 31 | % | 54 | % | 66 | % | |||||||||
Asia-Pacific | 170,521 | 30 | % | 114,317 | 26 | % | 49 | % | 54 | % | |||||||||
Total | $ | 571,289 | 100 | % | $ | 440,913 | 100 | % | 30 | % | 35 | % |
Six Months Ended June 30, | % Change | ||||||||||||||||||
2019 | % | 2018 | % | Actual | Constant Currency | ||||||||||||||
Americas | $ | 616,890 | 46 | % | $ | 585,504 | 50 | % | 5 | % | 6 | % | |||||||
EMEA | 408,717 | 31 | % | 336,993 | 28 | % | 21 | % | 30 | % | |||||||||
Asia-Pacific | 311,558 | 23 | % | 261,022 | 22 | % | 19 | % | 23 | % | |||||||||
Total | $ | 1,337,165 | 100 | % | $ | 1,183,519 | 100 | % | 13 | % | 17 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Income from operations | $ | 291,781 | $ | 215,038 | $ | 571,289 | $ | 440,913 | |||||||
Depreciation, amortization, and accretion expense | 320,550 | 308,828 | 635,255 | 615,293 | |||||||||||
Stock-based compensation expense | 61,519 | 49,725 | 110,542 | 92,261 | |||||||||||
Acquisition costs | 2,774 | 30,413 | 5,245 | 35,052 | |||||||||||
Impairment charges | 386 | — | 14,834 | — | |||||||||||
Adjusted EBITDA | $ | 677,010 | $ | 604,004 | $ | 1,337,165 | $ | 1,183,519 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 143,852 | $ | 67,618 | $ | 261,599 | $ | 130,512 | |||||||
Net (income) loss attributable to non-controlling interests | (325 | ) | — | 6 | — | ||||||||||
Net income attributable to Equinix | 143,527 | 67,618 | 261,605 | 130,512 | |||||||||||
Adjustments: | |||||||||||||||
Real estate depreciation | 209,103 | 221,029 | 414,752 | 443,884 | |||||||||||
Loss on disposition of real estate property | 343 | 878 | 2,689 | 5,884 | |||||||||||
FFO attributable to common shareholders | $ | 352,973 | $ | 289,525 | $ | 679,046 | $ | 580,280 | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
FFO attributable to common shareholders | $ | 352,973 | $ | 289,525 | $ | 679,046 | $ | 580,280 | |||||||
Adjustments: | |||||||||||||||
Installation revenue adjustment | 1,492 | 840 | 2,521 | 2,999 | |||||||||||
Straight-line rent expense adjustment | 2,300 | 1,664 | 4,678 | 3,965 | |||||||||||
Contract cost adjustment | (12,348 | ) | (4,384 | ) | (19,126 | ) | (7,739 | ) | |||||||
Amortization of deferred financing costs and debt discounts and premiums | 3,238 | 3,362 | 6,233 | 7,461 | |||||||||||
Stock-based compensation expense | 61,519 | 49,725 | 110,542 | 92,261 | |||||||||||
Non-real estate depreciation expense | 60,904 | 35,267 | 118,898 | 69,364 | |||||||||||
Amortization expense | 49,217 | 51,035 | 98,752 | 101,651 | |||||||||||
Accretion expense | 1,326 | 1,497 | 2,853 | 394 | |||||||||||
Recurring capital expenditures | (36,726 | ) | (42,206 | ) | (57,673 | ) | (77,437 | ) | |||||||
Loss on debt extinguishment | — | 19,215 | 382 | 40,706 | |||||||||||
Acquisition costs | 2,774 | 30,413 | 5,245 | 35,052 | |||||||||||
Impairment charges | 386 | — | 14,834 | — | |||||||||||
Income tax expense adjustment | 10,592 | (7,827 | ) | 18,582 | (6,255 | ) | |||||||||
AFFO attributable to common shareholders | $ | 497,647 | $ | 428,126 | $ | 985,767 | $ | 842,702 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(dollars in thousands) | |||||||
Net cash provided by operating activities | $ | 964,064 | $ | 839,635 | |||
Net cash used in investing activities | (901,559 | ) | (1,730,000 | ) | |||
Net cash provided by financing activities | 946,772 | 467,743 |
2019 (6 months remaining) | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | |||||||||||||||||||||
Term loans and other loans payable (1) | $ | 36,592 | $ | 72,978 | $ | 72,722 | $ | 1,158,801 | $ | 2,528 | $ | 2,450 | $ | 1,346,071 | |||||||||||||
Senior notes (1) | 150,000 | 300,000 | 150,000 | 750,000 | 1,000,000 | 5,976,200 | 8,326,200 | ||||||||||||||||||||
Interest (2) | 201,304 | 391,187 | 374,849 | 348,363 | 277,528 | 599,427 | 2,192,658 | ||||||||||||||||||||
Finance leases (3) | 76,153 | 157,700 | 156,656 | 157,284 | 158,137 | 1,563,362 | 2,269,292 | ||||||||||||||||||||
Operating leases (3) | 93,232 | 198,629 | 185,623 | 178,060 | 163,424 | 1,184,006 | 2,002,974 | ||||||||||||||||||||
Other contractual commitments (4) | 1,196,382 | 259,330 | 79,514 | 44,802 | 31,799 | 303,615 | 1,915,442 | ||||||||||||||||||||
Asset retirement obligations (5) | 6,310 | 3,985 | 4,091 | 11,965 | 5,702 | 71,755 | 103,808 | ||||||||||||||||||||
$ | 1,759,973 | $ | 1,383,809 | $ | 1,023,455 | $ | 2,649,275 | $ | 1,639,118 | $ | 9,700,815 | $ | 18,156,445 |
(1) | Represents principal and unamortized mortgage premium only. |
(2) | Represents interest on mortgage payable, loans payable, senior notes and term loans based on their respective interest rates as of June 30, 2019, as well as the credit facility fee for the revolving credit facility. |
(3) | Represents lease payments under finance and operating lease arrangements, including renewal options that are certain to be exercised. |
(4) | Represents off-balance sheet arrangements. Other contractual commitments are described below. |
(5) | Represents liability, net of future accretion expense. |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | the possible disruption of our ongoing business and diversion of management's attention by acquisition, transition and integration activities, particularly when multiple acquisitions and integrations are occurring at the same time; |
• | our potential inability to successfully pursue or realize some or all of the anticipated revenue opportunities associated with an acquisition or investment; |
• | the possibility that we may not be able to successfully integrate acquired businesses, or businesses in which we invest, or achieve anticipated operating efficiencies or cost savings; |
• | the possibility that announced acquisitions may not be completed, due to failure to satisfy the conditions to closing as a result of: |
◦ | an injunction, law or order that makes unlawful the consummation of the acquisition; |
◦ | inaccuracy or breach of the representations and warranties of, or the non-compliance with covenants by, either party; |
◦ | the nonreceipt of closing documents; or |
◦ | for other reasons; |
• | the possibility that there could be a delay in the completion of an acquisition, which could, among other things, result in additional transaction costs, loss of revenue or other negative effects resulting from uncertainty about completion of the respective acquisition; |
• | the dilution of our existing stockholders as a result of our issuing stock as consideration in a transaction or selling stock in order to fund the transaction; |
• | the possibility of customer dissatisfaction if we are unable to achieve levels of quality and stability on par with past practices; |
• | the possibility that we will be unable to retain relationships with key customers, landlords and/or suppliers of the acquired businesses, some of which may terminate their contracts with the acquired business as a result of the acquisition or which may attempt to negotiate changes in their current or future business relationships with us; |
• | the possibility that we could lose key employees from the acquired businesses before integrating them; |
• | the possibility that we may be unable to integrate or migrate IT systems, which could create a risk of errors or performance problems and could affect our ability to meet customer service level obligations; |
• | the potential deterioration in our ability to access credit markets due to increased leverage; |
• | the possibility that our customers may not accept either the existing equipment infrastructure or the "look-and-feel" of a new or different IBX data center; |
• | the possibility that additional capital expenditures may be required or that transaction expenses associated with acquisitions may be higher than anticipated; |
• | the possibility that required financing to fund an acquisition may not be available on acceptable terms or at all; |
• | the possibility that we may be unable to obtain required approvals from governmental authorities under antitrust and competition laws on a timely basis or at all, which could, among other things, delay or prevent us from completing an acquisition, limit our ability to realize the expected financial or strategic benefits of an acquisition or have other adverse effects on our current business and operations; |
• | the possible loss or reduction in value of acquired businesses; |
• | the possibility that future acquisitions may present new complexities in deal structure, related complex accounting and coordination with new partners, particularly in light of our desire to maintain our qualification for taxation as a REIT; |
• | the possibility that we may not be able to prepare and issue our financial statements and other public filings in a timely and accurate manner, and/or maintain an effective control environment, due to the strain on the finance organization when multiple acquisitions and integrations are occurring at the same time; |
• | the possibility that future acquisitions may trigger property tax reassessments resulting in a substantial increase to our property taxes beyond that which we anticipated; |
• | the possibility that future acquisitions may be in geographies and regulatory environments to which we are unaccustomed and we may become subject to complex requirements and risks with which we have limited experience; |
• | the possibility that carriers may find it cost-prohibitive or impractical to bring fiber and networks into a new IBX data center; |
• | the possibility of litigation or other claims in connection with, or as a result of, an acquisition, including claims from terminated employees, customers, former stockholders or other third parties; |
• | the possibility that asset divestments may be required in order to obtain regulatory clearance for a transaction; |
• | the possibility of pre-existing undisclosed liabilities, including, but not limited to, lease or landlord related liability, environmental liability or asbestos liability, for which insurance coverage may be insufficient or unavailable, or other issues not discovered in the diligence process; and |
• | the possibility that we receive limited or incorrect information about the acquired business in the diligence process. For example, we sometimes do not receive all of the customer contracts associated with our acquisitions in the diligence process, which affects our visibility into customer termination rights and could expose us to additional liabilities. |
• | certain financing conditions, including the fulfilment by each of Equinix and GIC of their funding obligations; |
• | completion of presale reorganization, including obtaining certain customer consents; and |
• | obtaining required regulatory approvals. |
• | we may not have the right to exercise sole decision-making authority regarding the properties, partnership, joint venture or other entity; |
• | if our partners become bankrupt or fail to fund their share of required capital contributions, we may choose to or be required to contribute such capital; |
• | our partners may have economic, tax or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives; |
• | our joint venture partners may take actions that are not within our control, which could require us to dispose of the joint venture asset, transfer it to a TRS in order for Equinix to maintain its qualification for REIT taxation, or purchase the partner's interests or assets at an above-market price; |
• | disputes between us and our partners may result in litigation or arbitration that would increase our expenses and prevent our management from focusing their time and effort on our day-to-day business; and |
• | we may in certain circumstances be liable for the actions of our third-party partners or guarantee all or a portion of the joint venture's liabilities, which may require the company to pay an amount greater than its investment in the joint venture. |
• | require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt and in respect of other off-balance sheet arrangements, reducing the availability of our cash flow to fund future capital expenditures, working capital, execution of our expansion strategy and other general corporate requirements; |
• | increase the likelihood of negative outlook from our credit rating agencies, or of a downgrade to our current rating; |
• | make it more difficult for us to satisfy our obligations under our various debt instruments; |
• | increase our cost of borrowing and even limit our ability to access additional debt to fund future growth; |
• | increase our vulnerability to general adverse economic and industry conditions and adverse changes in governmental regulations; |
• | limit our flexibility in planning for, or reacting to, changes in our business and industry, which may place us at a competitive disadvantage compared with our competitors; |
• | limit our operating flexibility through covenants with which we must comply; |
• | limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity, which would also limit our ability to further expand our business; and |
• | make us more vulnerable to increases in interest rates because of the variable interest rates on some of our borrowings to the extent we have not entirely hedged such variable rate debt. |
• | the costs of customizing IBX data centers for foreign countries; |
• | protectionist laws and business practices favoring local competition; |
• | greater difficulty or delay in accounts receivable collection; |
• | difficulties in staffing and managing foreign operations, including negotiating with foreign labor unions or workers' councils; |
• | difficulties in managing across cultures and in foreign languages; |
• | political and economic instability; |
• | fluctuations in currency exchange rates; |
• | difficulties in repatriating funds from certain countries; |
• | our ability to obtain, transfer or maintain licenses required by governmental entities with respect to our business; |
• | unexpected changes in regulatory, tax and political environments such as the United Kingdom's pending withdrawal from the European Union ("Brexit"); |
• | our ability to secure and maintain the necessary physical and telecommunications infrastructure; |
• | compliance with anti-bribery and corruption laws; |
• | compliance with economic and trade sanctions enforced by the Office of Foreign Assets Control of the U.S. Department of Treasury; and |
• | compliance with evolving governmental regulation with which we have little experience. |
• | our operating results or forecasts; |
• | new issuances of equity, debt or convertible debt by us, including issuances through our ATM Program; |
• | increases in market interest rates and changes in other general market and economic conditions, including inflationary concerns; |
• | changes to our capital allocation, tax planning or business strategy; |
• | our qualification for taxation as a REIT and our declaration of distributions to our stockholders; |
• | changes in U.S. or foreign tax laws; |
• | changes in management or key personnel; |
• | developments in our relationships with customers; |
• | announcements by our customers or competitors; |
• | changes in regulatory policy or interpretation; |
• | governmental investigations; |
• | changes in the ratings of our debt or stock by rating agencies or securities analysts; |
• | our purchase or development of real estate and/or additional IBX data centers; |
• | our acquisitions of complementary businesses; or |
• | the operational performance of our IBX data centers. |
• | human error; |
• | equipment failure; |
• | physical, electronic and cyber security breaches; |
• | fire, earthquake, hurricane, flood, tornado and other natural disasters; |
• | extreme temperatures; |
• | water damage; |
• | fiber cuts; |
• | power loss; |
• | terrorist acts; |
• | sabotage and vandalism; and |
• | failure of business partners who provide our resale products. |
• | construction delays; |
• | lack of availability and delays for data center equipment, including items such as generators and switchgear; |
• | unexpected budget changes; |
• | increased prices for building supplies, raw materials and data center equipment; |
• | labor availability, labor disputes and work stoppages with contractors, subcontractors and other third parties; |
• | unanticipated environmental issues and geological problems; and |
• | delays related to permitting from public agencies and utility companies. |
• | fluctuations of foreign currencies in the markets in which we operate; |
• | the timing and magnitude of depreciation and interest expense or other expenses related to the acquisition, purchase or construction of additional IBX data centers or the upgrade of existing IBX data centers; |
• | demand for space, power and solutions at our IBX data centers; |
• | changes in general economic conditions, such as an economic downturn, or specific market conditions in the telecommunications and internet industries, both of which may have an impact on our customer base; |
• | charges to earnings resulting from past acquisitions due to, among other things, impairment of goodwill or intangible assets, reduction in the useful lives of intangible assets acquired, identification of additional assumed contingent liabilities or revised estimates to restructure an acquired company's operations; |
• | the duration of the sales cycle for our offerings and our ability to ramp our newly-hired sales persons to full productivity within the time period we have forecasted; |
• | restructuring charges or reversals of restructuring charges, which may be necessary due to revised sublease assumptions, changes in strategy or otherwise; |
• | acquisitions or dispositions we may make; |
• | the financial condition and credit risk of our customers; |
• | the provision of customer discounts and credits; |
• | the mix of current and proposed products and offerings and the gross margins associated with our products and offerings; |
• | the timing required for new and future IBX data centers to open or become fully utilized; |
• | competition in the markets in which we operate; |
• | conditions related to international operations; |
• | increasing repair and maintenance expenses in connection with aging IBX data centers; |
• | lack of available capacity in our existing IBX data centers to generate new revenue or delays in opening new or acquired IBX data centers that delay our ability to generate new revenue in markets which have otherwise reached capacity; |
• | changes in rent expense as we amend our IBX data center leases in connection with extending their lease terms when their initial lease term expiration dates approach or changes in shared operating costs in connection with our leases, which are commonly referred to as common area maintenance expenses; |
• | the timing and magnitude of other operating expenses, including taxes, expenses related to the expansion of sales, marketing, operations and acquisitions, if any, of complementary businesses and assets; |
• | the cost and availability of adequate public utilities, including electricity; |
• | changes in employee stock-based compensation; |
• | overall inflation; |
• | increasing interest expense due to any increases in interest rates and/or potential additional debt financings; |
• | changes in our tax planning strategies or failure to realize anticipated benefits from such strategies; |
• | changes in income tax benefit or expense; and |
• | changes in or new GAAP as periodically released by the Financial Accounting Standards Board ("FASB"). |
• | ownership limitations and transfer restrictions relating to our stock that are intended to facilitate our compliance with certain REIT rules relating to share ownership; |
• | authorization for the issuance of "blank check" preferred stock; |
• | the prohibition of cumulative voting in the election of directors; |
• | limits on the persons who may call special meetings of stockholders; |
• | limits on stockholder action by written consent; and |
• | advance notice requirements for nominations to the Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings. |
• | we will not be allowed a deduction for distributions to stockholders in computing our taxable income; |
• | we will be subject to federal and state income tax on our taxable income at regular corporate income tax rates; and |
• | we would not be eligible to elect REIT status again until the fifth taxable year that begins after the first year for which we failed to qualify for taxation as a REIT. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosure |
Item 5. | Other Information |
Item 6. | Exhibits |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Filing Date/ Period End Date | Exhibit | Filed Herewith | |||||
8-K | 5/29/15 | 2.1 | ||||||||
8-K | 5/29/15 | 2.2 | ||||||||
10-K | 12/31/15 | 2.3 | ||||||||
8-K | 12/6/16 | 2.1 | ||||||||
10-K | 12/31/16 | 2.5 | ||||||||
8-K | 5/1/17 | 2.1 | ||||||||
10-Q | 8/8/18 | 2.7 | ||||||||
10-K/A | 12/31/02 | 3.1 | ||||||||
8-K | 6/14/11 | 3.1 | ||||||||
8-K | 6/11/13 | 3.1 | ||||||||
10-Q | 6/30/2014 | 3.4 | ||||||||
10-K/A | 12/31/02 | 3.3 | ||||||||
8-K | 3/29/16 | 3.1 | ||||||||
4.1 | Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6. | |||||||||
8-K | 3/5/13 | 4.3 | ||||||||
4.3 | Form of 5.375% Senior Note due 2023 (see Exhibit 4.2). | |||||||||
8-K | 11/20/14 | 4.1 | ||||||||
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Filing Date/ Period End Date | Exhibit | Filed Herewith | |||||
8-K | 11/20/14 | 4.2 | ||||||||
4.6 | Form of 5.375% Senior Note due 2022 (see Exhibit 4.5). | |||||||||
8-K | 11/20/14 | 4.4 | ||||||||
4.8 | Form of 5.750% Senior Note due 2025 (see Exhibit 4.7). | |||||||||
8-K | 12/04/15 | 4.2 | ||||||||
4.10 | Form of 5.875% Senior Note due 2026 (see Exhibit 4.9). | |||||||||
8-K | 3/22/17 | 4.2 | ||||||||
4.12 | Form of 5.375% Senior Notes due 2027 (see Exhibit 4.11). | |||||||||
8-K | 9/20/17 | 4.2 | ||||||||
4.14 | Form of 2.875% Senior Notes due 2025 (see Exhibit 4.13). | |||||||||
8-K | 12/05/17 | 4.1 | ||||||||
8-K | 12/05/17 | 4.2 | ||||||||
4.17 | Form of 2.875% Senior Notes due 2026 (see Exhibit 4.16). | |||||||||
8-K | 03/14/18 | 4.2 | ||||||||
4.19 | Form of 2.875% Senior Notes due 2024 (see Exhibit 4.18). | |||||||||
8-K | 04/03/18 | 4.2 | ||||||||
4.21 | Form of 5.00% Senior Notes due April 2019 (see Exhibit 4.20). | |||||||||
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Filing Date/ Period End Date | Exhibit | Filed Herewith | |||||
4.22 | Form of 5.00% Senior Notes due October 2019 (see Exhibit 4.20). | |||||||||
4.23 | Form of 5.00% Senior Notes due April 2020 (see Exhibit 4.20). | |||||||||
4.24 | Form of 5.00% Senior Notes due October 2020 (see Exhibit 4.20). | |||||||||
4.25 | Form of 5.00% Senior Notes due April 2021 (see Exhibit 4.20). | |||||||||
10-K | 12/31/14 | 4.13 | ||||||||
10.1** | S-4 (File No. 333-93749) | 12/29/1999 | 10.5 | |||||||
10.2** | 10-K | 12/31/16 | 10.2 | |||||||
10.3** | 10-K | 12/31/16 | 10.3 | |||||||
10.4** | 10-K | 12/31/16 | 10.4 | |||||||
10.5** | 10-Q | 6/30/14 | 10.5 | |||||||
10.6** | 10-K | 12/31/08 | 10.32 | |||||||
10.7** | 10-K | 12/31/08 | 10.33 | |||||||
10.8** | 10-K | 12/31/08 | 10.35 | |||||||
10.9** | S-1/A (File No. 333-137607) filed by Switch & Data Facilities Company | 2/5/07 | 10.9 | |||||||
10.10** | 10-Q | 9/30/10 | 10.42 | |||||||
10.11** | 10-K | 12/31/10 | 10.33 | |||||||
10.12** | 10-K | 12/31/10 | 10.34 | |||||||
10.13** | 10-Q | 3/31/14 | 10.51 | |||||||
10.14** | 10-Q | 3/31/19 | 10.16 |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Filing Date/ Period End Date | Exhibit | Filed Herewith | |||||
10.15** | X | |||||||||
10.16** | X | |||||||||
10.17** | X | |||||||||
10.18** | 10-Q | 3/31/17 | 10.35 | |||||||
10.19** | 10-Q | 3/31/17 | 10.36 | |||||||
10.20** | 10-Q | 3/31/17 | 10.37 | |||||||
10.21** | 10-Q | 3/31/17 | 10.39 | |||||||
10.22** | 10-Q | 3/31/18 | 10.31 | |||||||
10.23** | 10-Q | 3/31/18 | 10.32 | |||||||
10.24** | 10-Q | 3/31/18 | 10.33 | |||||||
10.25** | 10-Q | 3/31/19 | 10.28 | |||||||
10.26** | 10-Q | 3/31/19 | 10.29 | |||||||
10.27** | 10-Q | 3/31/19 | 10.30 | |||||||
10.28** | 10-Q | 3/31/19 | 10.31 | |||||||
10-Q | 9/30/14 | 10.67 | ||||||||
10-Q | 6/30/16 | 10.55 | ||||||||
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Filing Date/ Period End Date | Exhibit | Filed Herewith | |||||
10-K | 12/31/2017 | 10.40 | ||||||||
10-Q | 8/8/2018 | 10.35 | ||||||||
10-Q | 8/8/2018 | 10.36 | ||||||||
X | ||||||||||
10.35** | 10-K | 2/22/2019 | 10.37 | |||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X | ||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | X | ||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | X |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Filing Date/ Period End Date | Exhibit | Filed Herewith | |||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | X | ||||||||
104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X |
EQUINIX, INC. | ||
Date: August 2, 2019 | ||
By: | /s/ KEITH D. TAYLOR | |
Chief Financial Officer | ||
(Principal Financial Officer) |
Exhibit Number | Description of Document |
10.15** | |
10.16** | |
10.17** | |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
(i) | the date of Executive’s Qualifying Termination; |
(ii) | the date of the Company’s receipt of the Executive’s executed General Release; and |
(iii) | the expiration of any rescission period applicable to the Executive’s executed General Release. |
(i) | The Executive’s voluntary resignation of his or her employment for Good Reason; or |
(ii) | The Company’s termination of the Executive’s employment for any reason other than Cause; |
Worldwide Corporate Headquarters Equinix, Inc. One Lagoon Drive Redwood City, CA 94065 | ![]() | |
www.equinix.com +650 598 6000 Main +650 598 6900 Fax |
• | Direct Paid Housing - Payment of your rent in the assignment location will continue until such time as you repatriate. Expense related to ending the lease of your property and the cleaning of the property will be covered by Equinix |
• | Cleaning and dilapidation - Payment of the cleaning of your property and the payment of any dilapidation/repair claims made by the landlord. Any damage in the property over and above reasonable ‘fair wear and tear’, may be recoverable from you by Equinix |
• | Direct Paid Schooling- Payment of any schooling charges following notice being served. |
• | Temporary Accommodation - A hotel or serviced apartment for a period of up to 30 days will be provided to you upon return to the Home Country, if required. |
• | Per Diem - In the event of having to leave the permanent housing and whilst in temporary accommodation (serviced flat/apartment) until the repatriation date, meals and incidental expenses will be reimbursed to per diem rate values as supplied by Equinix's appointed data service suppliers, via the relocation destination service provider. |
• | One Way Flight - Equinix will reimburse you for the flight(s) back to the Home Country for you and accompanying family members, in line with the Group Travel policy |
• | Pro-rated Bonus - Equinix may elect to pay your pro-rated bonus award for pay year 2019, covering your time spent in the host country. You will be advised in a separate letter if this is the case, together with the calculation. |
• | Return Shipment - A household goods shipment to transport your belongings back to the Home Country, will be provided to you. Weight limits will be based on Equinix policy. K2 will arrange this shipment. |
• | Delivery of Storage- Your storage items, once scheduled, will be delivered and unpacked to your home address in the United States, |
• | Relocation Allowance - A one-time, lump sum relocation allowance of USD 10,000.00 net will be provided to you to defray a portion of the expenses associated with your move to the Home Country. The relocation allowance will be grossed up where required to include an amount sufficient to cover the withholding taxes you would otherwise have to pay. The relocation allowance will be paid to you by the Employer Payroll in your Home Country and the “grossed up” amount of the allowance will be reported as income to you. |
• | Your immigration status in the host country will be updated and as per any agreements in respect of either continued business travel and/or the circumstances of any dependants |
/s/ Eric Schwartz | 6/5/2019 | ||
…...................................................... | …................................................... | ||
Eric Schwartz | Date |
BORROWER: | EQUINIX, INC. |
By:/s/ Melanie Mock Name:Melanie Mock Title:Treasurer |
By: | /s/ Angela Larkin |
Name: | Angela Larkin |
Title: | Vice President |
By: | /s/ Noreen Lee |
Name: | Noreen Lee |
Title: | V.P. |
By: | /s/ Robert F. Parr |
By: | /s/ Bruce Borden |
Name: | Bruce Borden |
Title: | Executive Director |
A.1. | Consolidated Net Income (previous 2 fiscal quarters ending on Statement Date)1 | $_____________ |
A.2. | Equinix’s consolidated interest expense (previous 2 fiscal quarters ending on Statement Date; to the extent deducted in calculating Line A.1) | $_____________ |
A.3. | Equinix’s consolidated income tax expense (previous 2 fiscal quarters ending on Statement Date; to the extent deducted in calculating Line A.1) | $_____________ |
A.4. | Equinix’s consolidated depreciation expense (previous 2 fiscal quarters ending on Statement Date; to the extent deducted in calculating Line A.1) | $_____________ |
A.5. | Equinix’s consolidated amortization expense (previous 2 fiscal quarters ending on Statement Date; to the extent deducted in calculating Line A.1) | $_____________ |
A.6. | Equinix’s consolidated non-cash stock based compensation expense (previous 2 fiscal quarters ending on Statement Date; to the extent deducted in calculating Line A.1) | $_____________ |
A.7. | Consolidated EBITDA (the sum of Lines A.1 through A.6, multiplied by 2)2 | $_____________ |
A.8. | Equinix’s consolidated rent expense (previous 2 fiscal quarters ending on Statement Date; to the extent deducted in calculating Line A.1) | $_____________ |
A.9. | Consolidated EBITDAR (the sum of (i) the sum of Lines A.1 through A.6 plus (ii) Line A.8 multiplied by 2) | $_____________ |
A.10. | Equinix’s consolidated current maturity of long-term debt for next 12 months (but excluding (i) any Convertible Subordinated Notes, (ii) the current portion of the Revolving Facility, (iii) the final installment of the Term Loans, and (iv) the final installment of any Senior Unsecured Notes) | $_____________ |
A.11. | Equinix’s consolidated principal portion of the current maturity of Finance Lease obligations for the next 12 months | $_____________ |
A.12. | Line A.2 multiplied by 2 (consolidated interest expense, annualized) | $_____________ |
A.13. | Line A.8 multiplied by 2 (consolidated rent expense, annualized) | $_____________ |
A.14. | Consolidated Fixed Charges (sum of Lines A.10 through A.13) | $_____________ |
A.15. | Consolidated Fixed Charge Coverage Ratio (Line A.9 divided by Line A.14) | ______: 1.00 |
B.1. | Consolidated Funded Indebtedness at Statement Date3 | $_____________ |
B.2. | Line A.13 (consolidated rent expense for previous 2 fiscal quarters ending on Statement Date, annualized) | $_____________ |
B.3. | Line B.2 multiplied by 6 | $_____________ |
B.4. | The amount of unencumbered (other than by Liens permitted under clauses (a), (c) and (g) of Section 7.01 of the Agreement) and unrestricted cash, cash equivalents, freely tradable and liquid short term-investments, and freely tradable and liquid long-term investments of Equinix and its Subsidiaries at Statement Date | $_____________ |
B.5. | Consolidated Net Lease Adjusted Indebtedness at Statement Date (Line B.1 plus Line B.3, then minus Line B.4) | $_____________ |
B.6. | Consolidated EBITDAR (Line A.9) | $_____________ |
B.7. | Consolidated Net Lease Adjusted Leverage Ratio (Line B.5 divided by Line B.6) | _____ : 1.00 |
C.1. | Consolidated Funded Indebtedness at Statement Date that is secured by a Lien | $_____________ |
C.2. | Equinix’s consolidated Attributable Indebtedness in respect of Finance Leases and in respect of Synthetic Lease Obligations at Statement Date | $_____________ |
C.3. | Line B.3 (rent expense for the Measurement Period multiplied by 6) | $_____________ |
C.4. | Consolidated Lease Adjusted Secured Indebtedness at Statement Date (Sum of Lines C.1 through C.3) | $_____________ |
C.5. | Consolidated EBITDAR (Line A.9) | $_____________ |
C.6. | Consolidated Lease Adjusted Secured Leverage Ratio (Line C.4 divided by Line C.5) | _____ : 1.00 |
Entity | Jurisdiction |
Equinix (Australia) Enterprises Holdings Pty Limited | Australia |
Equinix (Australia) Enterprises Pty Limited | Australia |
Equinix Australia Pty Limited | Australia |
McLaren Pty Limited | Australia |
Metronode (ACT) Pty Limited | Australia |
Metronode (NSW) Pty Ltd | Australia |
Metronode C1 Pty Limited | Australia |
Metronode Group Pty Limited | Australia |
Metronode Investments Pty Limited | Australia |
Metronode M2 Pty Ltd | Australia |
Metronode P2 Pty Limited | Australia |
MGH Pegasus Pty Ltd | Australia |
Equinix Australia National Pty. Ltd. | Australia |
Metronode S2 Pty Ltd | Australia |
MGH Bidco Pty Limited | Australia |
MGH Finco Pty Limited | Australia |
MGH Holdco Pty Ltd | Australia |
McLaren Unit Trust | Australia |
Equinix do Brasil Soluções de Tecnologia em Informática Ltda. | Brazil |
Equinix do Brasil Telecomunicações Ltda. | Brazil |
Equinix Colombia, Inc. | British Virgin Islands |
Equinix (Bulgaria) Data Centers EOOD | Bulgaria |
Equinix (Canada) Enterprises Ltd. | Canada |
Equinix Canada Ltd. | Canada |
CHI 3, LLC | Delaware, U.S. |
DCI Management, Inc. | Delaware, U.S. |
DCI Tech Holdings Infomart, LLLP | Delaware, U.S. |
EPS Enterprises, Inc. | Delaware, U.S. |
Equinix (EMEA) Management, Inc. | Delaware, U.S. |
Equinix (Government) LLC | Delaware, U.S. |
Equinix (US) Enterprises, Inc. | Delaware, U.S. |
Equinix (Velocity) Holding Company | Delaware, U.S. |
Equinix Impact LLC | Delaware, U.S. |
Equinix LLC | Delaware, U.S. |
Equinix Pacific LLC | Delaware, U.S. |
Equinix Professional Services, Inc. | Delaware, U.S. |
Equinix Government Solutions LLC | Delaware, U.S. |
Equinix RP II LLC | Delaware, U.S. |
Equinix South America Holdings, LLC | Delaware, U.S. |
Infomart Dallas GP, LLC | Delaware, U.S. |
Infomart Dallas, LP | Delaware, U.S. |
Infomart Holdings, LLC | Delaware, U.S. |
Infomart Venture, LLC | Delaware, U.S. |
LA4, LLC | Delaware, U.S. |
Moran Road Partners, LLC | Delaware, U.S. |
NY2 Hartz Way, LLC | Delaware, U.S. |
SV1, LLC | Delaware, U.S. |
Switch & Data Facilities Company LLC | Delaware, U.S. |
Switch & Data LLC | Delaware, U.S. |
Switch & Data MA One LLC | Delaware, U.S. |
Switch & Data WA One LLC | Delaware, U.S. |
Switch & Data/NY Facilities Company LLC | Delaware, U.S. |
Switch and Data CA Nine LLC | Delaware, U.S. |
Switch And Data NJ Two LLC | Delaware, U.S. |
Switch and Data Operating Company LLC | Delaware, U.S. |
Switch and Data VA Four LLC | Delaware, U.S. |
VDC I, LLC | Delaware, U.S. |
VDC II, LLC | Delaware, U.S. |
VDC III, LLC | Delaware, U.S. |
VDC IV, LLC | Delaware, U.S. |
VDC V, LLC | Delaware, U.S. |
VDC VI, LLC | Delaware, U.S. |
VDC VII, LLC | Delaware, U.S. |
VDC VIII, LLC | Delaware, U.S. |
Equinix Hyperscale (LP) LLC | Delaware, U.S. |
Equinix Hyperscale (GP) LLC | Delaware, U.S. |
Equinix (Finland) Enterprises Oy | Finland |
Equinix (Finland) Oy | Finland |
Equinix (France) Enterprises SAS | France |
Equinix (Real Estate) Holdings SC | France |
Equinix (Real Estate) SCI | France |
Equinix France SAS | France |
Equinix (Germany) Enterprises GmbH | Germany |
Equinix (Germany) GmbH | Germany |
Equinix (Real Estate) GmbH | Germany |
Upminster GmbH | Germany |
Equinix Hyperscale 1 (FR9) GmbH | Germany |
Equinix Hyperscale 1 (FR11) GmbH | Germany |
Equinix (Hong Kong) Enterprises Limited | Hong Kong |
Equinix Hong Kong Limited | Hong Kong |
CHI 3 Procurement, LLC | Illinois, U.S. |
Equinix (Ireland) Enterprises Limited | Ireland |
Equinix (Ireland) Limited | Ireland |
Equinix (Italia) Enterprises S.r.l. | Italy |
Equinix Italia S.r.l. | Italy |
Open Hub Med Societa Consortile a responsabilita limitata | Italy |
Equinix (Japan) Enterprises K.K. | Japan |
Equinix (Japan) Technology Services K.K. | Japan |
Equinix Japan K.K | Japan |
Metronode New Zealand Limited | New Zealand |
Equinix Muscat LLC | Oman |
Equinix Middle East Services LLC | Oman |
Equinix (China) Investment Holding Co., Ltd (亿利互连 (中国) 投资有限公司) | People’s Republic of China |
Equinix Information Technology (Shanghai) Co., Ltd. (亿利互连信息技术 (上海) 有限公司) | People’s Republic of China |
Equinix WGQ Information Technology (Shanghai) Co., Ltd. (亿利互连 (上海) 通讯科技有限公司) | People’s Republic of China |
Equinix YP Information Technology (Shanghai) Co., Ltd. (亿利互连数据系统 (上海) 有限公司) | People’s Republic of China |
Gaohong Equinix (Shanghai) Information Technology Co., Ltd (高鸿亿利 (上海) 信息技术有限公司) | People’s Republic of China |
Equinix (Poland) Technology Services sp. z o.o. | Poland |
Equinix (Poland) Enterprises sp. z o.o. | Poland |
Equinix (Poland) sp. z o.o. | Poland |
Equinix (Portugal) Data Centers, S.A. | Portugal |
Equinix II (Portugal) Enterprises Data Centers, Unipessoal Lda | Portugal |
Equinix Korea LLC | Republic of Korea |
Equinix (Singapore) Enterprises Pte. Ltd. | Singapore |
Equinix Asia Pacific Holdings Pte. Ltd. | Singapore |
Equinix Asia Pacific Pte. Ltd. | Singapore |
Equinix Singapore Holdings Pte. Ltd. | Singapore |
Equinix Singapore Pte. Ltd. | Singapore |
Equinix (Spain) Enterprises, S.L.U. | Spain |
Equinix (Spain), S.A.U. | Spain |
TelecityGroup Spain S.A. | Spain |
Equinix (Sweden) AB | Sweden |
Equinix (Sweden) Enterprises AB | Sweden |
Equinix (Switzerland) Enterprises GmbH | Switzerland |
Equinix (Switzerland) GmbH | Switzerland |
EMEA Hyperscale 1 C.V. | The Netherlands |
Equinix Hyperscale 1 Holdings B.V. | The Netherlands |
Equinix (EMEA) Acquisition Enterprises B.V. | The Netherlands |
Equinix (EMEA) B.V. | The Netherlands |
Equinix (Netherlands) B.V. | The Netherlands |
Equinix (Netherlands) Enterprises B.V. | The Netherlands |
Equinix (Netherlands) Holdings B.V. | The Netherlands |
Switch Datacenters Amsterdam B.V. | The Netherlands |
Equinix (Real Estate) B.V. | The Netherlands |
Virtu Secure Webservices B.V. | The Netherlands |
Equinix (EMEA) Hyperscale Services B.V. | The Netherlands |
Equinix Turkey Data Merkezi Üretim Inºaat Sanayi ve Ticaret Anonim ªirketi | Turkey |
Equinix Turkey Enterprises Data Merkezi Üretim Inºaat Sanayi ve Ticaret Anonim ªirketi | Turkey |
Equinix Turkey Internet Hizmetleri Anonim Sirketi | Turkey |
Equinix Middle East FZ-LLC | United Arab Emirates |
Equinix Hyperscale 1 (LD11) Limited | United Kingdom |
Equinix (Services) Limited | United Kingdom |
Equinix (UK) Enterprises Limited | United Kingdom |
Equinix (UK) Limited | United Kingdom |
Equinix Hyperscale 1 (PA8) SAS | France |
Equinix Hyperscale 1 (UK) Financing Limited | United Kingdom |
Equinix Hyperscale 1 (LD13) Limited | United Kingdom |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 16,275 | $ 15,950 |
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 85,213,952 | 81,119,117 |
Common stock, shares outstanding (in shares) | 84,819,158 | 80,722,258 |
Treasury stock, at cost (shares) | 394,794 | 396,859 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Income Statement [Abstract] | ||||
Revenues | $ 1,384,977 | $ 1,261,943 | $ 2,748,195 | $ 2,477,820 |
Costs and operating expenses: | ||||
Cost of revenues | 698,179 | 651,801 | 1,380,209 | 1,274,231 |
Sales and marketing | 159,201 | 154,202 | 328,916 | 313,978 |
General and administrative | 232,656 | 210,489 | 447,702 | 413,646 |
Acquisition costs | 2,774 | 30,413 | 5,245 | 35,052 |
Impairment charges | 386 | 0 | 14,834 | 0 |
Total costs and operating expenses | 1,093,196 | 1,046,905 | 2,176,906 | 2,036,907 |
Income from operations | 291,781 | 215,038 | 571,289 | 440,913 |
Interest income | 7,762 | 3,958 | 11,964 | 8,568 |
Interest expense | (120,547) | (134,673) | (243,393) | (260,950) |
Other income | 12,180 | 8,866 | 12,014 | 5,802 |
Loss on debt extinguishment | 0 | (19,215) | (382) | (40,706) |
Income before income taxes | 191,176 | 73,974 | 351,492 | 153,627 |
Income tax expense | (47,324) | (6,356) | (89,893) | (23,115) |
Net income | 143,852 | 67,618 | 261,599 | 130,512 |
Net (income) loss attributable to non-controlling interests | (325) | 0 | 6 | 0 |
Net income attributable to Equinix | $ 143,527 | $ 67,618 | $ 261,605 | $ 130,512 |
Earnings per share (EPS) attributable to Equinix: | ||||
Basic EPS (in dollars per share) | $ 1.70 | $ 0.85 | $ 3.15 | $ 1.64 |
Weighted-average shares for basic EPS (in shares) | 84,399 | 79,479 | 83,114 | 79,361 |
Diluted EPS (in dollars per share) | $ 1.69 | $ 0.85 | $ 3.13 | $ 1.64 |
Weighted-average shares for diluted EPS (in shares) | 84,767 | 79,752 | 83,471 | 79,746 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustment (CTA) gain (loss), tax | $ (585) | $ 5,985 | $ (595) | $ 5,985 |
Net investment hedge CTA gain (loss), tax | 0 | 0 | 10 | 1,637 |
Unrealized gain (loss) on cash flow hedges, tax | 650 | (2,091) | ||
Unrealized gain (loss) on cash flow hedges, tax | (11,758) | (10,398) | ||
Net actuarial gain on defined benefit plans, tax | $ 2 | $ (4) | $ 1 | $ (10) |
Basis of Presentation and Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by Equinix, Inc. ("Equinix" or the "Company") and reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state the financial position and the results of operations for the interim periods presented. The condensed consolidated balance sheet data as of December 31, 2018 has been derived from audited consolidated financial statements as of that date. The condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission ("SEC"), but omit certain information and footnote disclosure necessary to present the statements in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For further information, refer to the Consolidated Financial Statements and Notes thereto included in Equinix's Form 10-K as filed with the SEC on February 22, 2019. Results for the interim periods are not necessarily indicative of results for the entire fiscal year. Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Equinix and its subsidiaries, including the acquisitions of Switch Datacenters' AMS1 data center business in Amsterdam, Netherlands from April 18, 2019, Metronode from April 18, 2018 and Infomart Dallas from April 2, 2018. All intercompany accounts and transactions have been eliminated in consolidation. Derivatives and Hedging Activities The Company uses derivative instruments, including foreign currency forwards and options and cross-currency interest rate swaps, to manage certain foreign currency exposures. Derivative instruments are viewed as risk management tools by the Company and are not used for speculative purposes. The Company recognizes all derivatives on the Company's condensed consolidated balance sheets at fair value. The accounting for changes in the value of a derivative depends on whether the contract qualifies and has been designated for hedge accounting. In order to qualify for hedge accounting, a derivative must be considered highly effective at reducing the risk associated with the exposure being hedged and there must be documentation of the risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, and the effectiveness assessment methodology. For cash flow hedges, the Company uses regression analysis at the time they are designated to assess their effectiveness. Hedge designations are reviewed on a quarterly basis to assess whether circumstances have changed that would disrupt the hedge instrument’s relationship to the forecasted transactions or net investment. The Company uses the forward method to assess effectiveness of qualifying foreign currency forwards that are designated as cash flow hedges, whereby, the change in the fair value of the derivative is recorded in other comprehensive income (loss) and reclassified to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item when the hedged item affects earnings. The Company uses the spot method to assess effectiveness of qualifying foreign currency exchange options that are designated as cash flow hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and reclassified to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item when the hedged item affects earnings, and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized on a straight-line basis to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item. When two or more derivative instruments in combination are jointly designated as a cash flow hedging instrument, as with foreign currency exchange option collars, they are treated as a single instrument. If the hedge relationship is terminated for any derivatives designated as cash flow hedges, then the change in fair value of the derivative recorded in other comprehensive income (loss) is recognized in earnings when the previously hedged item affects earnings, consistent with the original hedge strategy. For hedge relationships discontinued because the forecasted transaction is not expected to occur according to the original strategy, any related derivative amounts recorded in other comprehensive income (loss) are immediately recognized in earnings. The Company uses the spot method to assess effectiveness of cross-currency interest rate swaps that are designated as net investment hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized to interest expense on a straight-line basis. From time to time, the Company also uses foreign exchange forward contracts to hedge against the effect of foreign exchange rate fluctuations on a portion of its net investment in the foreign subsidiaries. The Company uses the spot method to assess effectiveness of qualifying foreign currency forwards that are designated as net investment hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized to interest expense on a straight-line basis. Foreign currency gains or losses associated with derivatives that are not designated as hedging instruments for accounting purposes are recorded within other income (expense) in the Company’s condensed consolidated statements of operations, with the exception of (i) foreign currency embedded derivatives contained in certain of the Company’s customer contracts and (ii) foreign exchange forward contracts that are entered into to hedge the accounting impact of the foreign currency embedded derivatives, which are recorded within revenues in the Company’s condensed consolidated statements of operations. For further information on derivatives and hedging activities, see Note 6 below. Income Taxes The Company elected to be taxed as a real estate investment trust for federal income tax purposes ("REIT") beginning with its 2015 taxable year. As a result, the Company may deduct the distributions made to its stockholders from taxable income generated by the Company and its qualified REIT subsidiaries ("QRSs"). The Company's dividends paid deduction generally eliminates the U.S. taxable income of the Company and its QRSs, resulting in no U.S. income tax due. However, the Company's taxable REIT subsidiaries ("TRSs") continue to be subject to income taxes on any taxable income generated by them. In addition, the foreign operations of the Company will continue to be subject to local income taxes regardless of whether the foreign operations are operated as QRSs or TRSs. The Company provides for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the Company, tax law changes and future business acquisitions. The Company's effective tax rates were 25.6% and 15.0% for the six months ended June 30, 2019 and 2018, respectively. The increase in the effective tax rate for the six months ended June 30, 2019 as compared to the same period in 2018 is primarily due to a one-time tax benefit recognized as a result of a legal entity reorganization in the Company's Americas region during the six months ended June 30, 2018. Assets Held for Sale Assets and liabilities to be disposed of that meet all of the criteria to be classified as held for sale as set forth in the accounting standard for impairment or disposal of long-lived assets are reported at the lower of their carrying amounts or fair values less costs to sell. Assets are not depreciated or amortized while they are classified as held for sale. For further information on assets held for sale, see Note 5 below. Recent Accounting Pronouncements Accounting Standards Not Yet Adopted In June 2016, Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company will adopt this new ASU on January 1, 2020. The Company expects this ASU to impact its accounting for allowances for doubtful accounts and is currently evaluating the extent of the impact that the adoption of this standard will have on its condensed consolidated financial statements. Accounting Standards Adopted In August 2017, FASB issued ASU 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU was issued to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and to simplify the application of the hedge accounting guidance in current GAAP. This ASU permits hedge accounting for risk components involving nonfinancial risk and interest rate risk, requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the hedged item is reported, no longer requires separate measurement and reporting of hedge ineffectiveness, eases the requirement for hedge effectiveness assessment, and requires a tabular disclosure related to the effect on the income statement of fair value and cash flow hedges. This ASU is effective for annual or any interim reporting periods beginning after December 15, 2018 with early adoption permitted. The Company adopted ASU 2017-12 on January 1, 2019 using the modified retrospective approach. For cash flow hedges existing on the date of adoption, the Company recognized the cumulative effect of the change on the opening balance of accumulated other comprehensive income (loss) with a corresponding adjustment to the opening balance of retained earnings for amounts previously recognized in earnings related to ineffectiveness. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements. In February 2016, FASB issued ASU 2016-02, Leases and issued subsequent amendments to the initial guidance, collectively referred to as "Topic 842." Topic 842 replaces the guidance in former ASC Topic 840, Leases. The new lease guidance increases transparency and comparability among organizations by requiring the recognition of the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee's future obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use ("ROU") asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Topic 842 allows entities to adopt with one of two methods: the modified retrospective transition method or the alternative transition method. On January 1, 2019, the Company adopted Topic 842 using the alternative transition method. Therefore, results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while comparative information has not been restated and continues to be reported under accounting standards in effect for those periods. The Company recognized the cumulative effects of initially applying the standard as an adjustment to the opening balance of retained earnings in the period of adoption. In adopting the new guidance, the Company elected to apply the package of practical expedients permitted under the transition guidance which allows the Company not to reassess (1) whether any expired or existing contracts contain leases under the new definition of a lease; (2) lease classification for any expired or existing leases; and (3) whether previously capitalized initial direct costs would qualify for capitalization under Topic 842. The Company also elected to apply the land easements practical expedient which permits the Company not to assess at transition whether any expired or existing land easements are, or contain, leases if they were not previously accounted for as leases under Topic 840. Upon adoption of Topic 842, the Company also elected to adopt the practical expedient which allows the Company to combine qualified non-lease and lease components by underlying class of asset based, on predominance, as a lessor. Occasionally, the Company enters into revenue contracts with customers for data center and office spaces, which contain both lease and non-lease components. In general, lease and non-lease components related to the use of space and solutions provided in a data center, which share the same pattern of transfer, will be combined and accounted for under ASC 606, Revenue from Contracts with Customers. Lease and non-lease components related to the use of office space, which share the same pattern of transfer, will be combined and accounted for under Topic 842. Lease components which are not classified as operating leases do not qualify for the practical expedient. Non-lease components, which do not have similar patterns of transfers, such as professional services and goods for resale, are also excluded from combination. Adoption of the standard had a significant impact on the Company's financial results, including the (1) recognition of new ROU assets and liabilities on its balance sheet for all operating leases; and (2) de-recognition of existing build-to-suit assets and liabilities with cumulative effects of initially applying the standard as an adjustment to the retained earnings. The cumulative effect of the changes made to its consolidated January 1, 2019 balance sheet from the adoption of Topic 842 was as follows (in thousands):
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Contract Balances The following table summarizes the opening and closing balances of the Company's accounts receivable, net; contract asset, current; contract asset, non-current; deferred revenue, current; and deferred revenue, non-current (in thousands):
The difference between the opening and closing balances of the Company's accounts receivable, net, contract assets and deferred revenues primarily results from revenue growth and the timing difference between the satisfaction of the Company's performance obligation and the customer's payment. The amounts of revenue recognized during the six months ended June 30, 2019 from the opening deferred revenue balance as of January 1, 2019 was $62.6 million. Remaining performance obligations As of June 30, 2019, approximately $7.6 billion of total revenues and deferred installation revenues are expected to be recognized in future periods, the majority of which will be recognized over the next 24 months. While initial contract terms vary in length, substantially all contracts thereafter automatically renew in one-year increments. Included in the remaining performance obligations is either 1) remaining performance obligations under the initial contract terms or 2) remaining performance obligations related to contracts in the renewal period once the initial terms have lapsed. The remaining performance obligations do not include variable consideration related to unsatisfied performance obligations such as the usage of metered power or any contracts that could be terminated without any significant penalties such as the majority of interconnection revenues. The remaining performance obligations above include revenues to be recognized in the future related to arrangements where the Company is considered the lessor.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share ("EPS") for the periods presented (in thousands, except per share amounts):
The Company has excluded common stock related to employee equity awards in the diluted EPS calculation above of approximately 4,000 shares and 220,000 shares for the three months ended June 30, 2019 and 2018, respectively, and approximately 54,000 and 247,000 shares for the six months ended June 30, 2019 and 2018, respectively, because their effect would be anti-dilutive.
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Acquisitions |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions 2019 Acquisition On April 18, 2019, the Company completed the acquisition of Switch Datacenters' AMS1 data center business in Amsterdam, Netherlands, for a cash purchase price of approximately €30.6 million or approximately $34.3 million, at the exchange rate in effect on April 18, 2019. The valuation of assets acquired and liabilities assumed are still being appraised by a third-party and the purchase price allocation is not yet complete. The operating results of the acquisition are reported in the EMEA region following the date of acquisition, and are not significant to the Company's total operations for the three months ended June 30, 2019. 2018 Acquisitions On April 18, 2018, the Company acquired all of the equity interests in Metronode from the Ontario Teachers' Pension Plan Board for a cash purchase price of A$1.034 billion or approximately $804.6 million at the exchange rate in effect on April 18, 2018 (the "Metronode Acquisition"). Metronode operated 10 data centers in six metro areas in Australia. The acquisition supports the Company's ongoing global expansion to meet customer demand in the Asia-Pacific region. On April 2, 2018, the Company completed the acquisition of Infomart Dallas, including its operations and tenants, from ASB Real Estate Investments (the "Infomart Dallas Acquisition"), for total consideration of approximately $804.0 million. The consideration was comprised of approximately $45.8 million in cash, subject to customary adjustments, and $758.2 million aggregate fair value of 5.000% senior unsecured notes (see Note 9). Prior to the acquisition, a portion of the building was leased to the Company and was being used as its Dallas 1, 2, 3 and 6 data centers, which were all accounted for as build-to-suit leases. Upon acquisition, the Company effectively terminated the leases and settled the related financing obligations and other liabilities related to the leases for approximately $170.3 million and $1.9 million, respectively, and recognized a loss on debt extinguishment of $19.5 million. The acquisition of this highly interconnected facility and tenants adds to the Company's global platform and secures the ability to further expand in the Americas market in the future. Both acquisitions constitute a business under the accounting standard for business combinations and, therefore, were accounted for as business combinations using the acquisition method of accounting. Under the acquisition method of accounting, the total purchase price is allocated to the assets acquired and liabilities assumed measured at fair value on the date of acquisition. During the three months ended March 31, 2019, the Company completed the detailed valuation analysis of Metronode and Infomart Dallas to derive the fair value of assets acquired and liabilities assumed and finalized the allocation of purchase price for Metronode and Infomart Dallas. For the Metronode Acquisition, the adjustments made during the three months ended March 31, 2019 primarily resulted in a decrease in deferred tax liability and goodwill of $4.2 million and $3.7 million, respectively. No purchase price allocation adjustments were made during the three months ended March 31, 2019 for the Infomart Dallas Acquisition. For the Metronode Acquisition, the adjustments made from the provisional amounts reported as of June 30, 2018 primarily resulted in a decrease in property, plant and equipment, other assets, other liabilities and deferred tax assets of $10.1 million, $10.0 million, $9.7 million and $4.1 million, respectively, and an increase in goodwill, intangible assets and deferred tax liabilities of $41.6 million, $4.8 million and $31.3 million, respectively. The adjustments for the Infomart Dallas Acquisition made from the provisional amounts reported as of June 30, 2018 primarily resulted in a decrease in goodwill of $6.2 million and an increase in intangible assets of $4.6 million. The changes in fair value of acquired assets and liabilities assumed did not have a significant impact on the Company's results of operations for any reporting periods prior to March 31, 2019. A summary of the final allocation of total purchase consideration is presented as follows (in thousands):
The following table presents certain information on the acquired intangible assets (in thousands):
The fair value of customer relationships was estimated by applying an income approach, by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue. The Company applied discount rates of 7.3% for Metronode and 8.2% for Infomart Dallas, which reflected the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows. Other assumptions used to estimate the fair value of customer relationships included projected revenue growth, probability of renewal, customer attrition rates and operating margins. The fair value of Infomart Dallas' trade name was estimated using the relief from royalty approach. The Company applied a relief from royalty rate of 1.5% and a discount rate of 8.2%. The fair value of in-place leases was estimated by projecting the avoided costs, such as the cost of originating the acquired in-place leases, during a typical lease up period. The fair value measurements were based on significant inputs that are not observable in the market and thus represent Level 3 measurements as defined in the accounting standard for fair value measurements. The fair value of property, plant and equipment was estimated by applying the cost approach, with the exception of land which was estimated by applying the market approach, for the Metronode Acquisition. For the Infomart Dallas Acquisition, the fair values of land, building and personal property were estimated by applying the market approach, residual income method and cost approach, respectively. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The premise of the cost approach is that a market participant would pay no more for an asset than the amount for which the asset could be replaced or reproduced. The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence, economic useful life, remaining useful life, age and effective age. The residual income method estimates the fair value of the Infomart Dallas building using an income approach less the fair values attributed to land, personal property, in-place leases and favorable and unfavorable leases. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is attributable to the workforce of the acquired business and the projected revenue increase expected to arise from future customers after the Metronode and Infomart Dallas acquisitions. Goodwill from the acquisition of Metronode is not amortizable for local tax purposes and is attributable to the Company's Asia-Pacific region. Goodwill from the acquisition of Infomart Dallas is deductible for local tax purposes and is attributable to the Company's Americas region. Operating results of Metronode and Infomart Dallas have been reported in the Asia-Pacific and Americas regions, respectively. For the three months ended June 30, 2019, the Company's results of operations included $27.4 million of revenues and insignificant net income from operations from the combined operations of Metronode and Infomart Dallas. For the six months ended June 30, 2019, the Company's results of operations included $54.6 million of revenues and $3.3 million of net income from operations from the combined operations of Metronode and Infomart Dallas.
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Assets Held for Sale |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Held for Sale | Assets Held for Sale In June 2019, the Company entered into an agreement to form a joint venture in the form of a limited liability partnership with GIC, Singapore’s sovereign wealth fund (the "Joint Venture"), to develop and operate xScale™ data centers in Europe. Under the terms of the agreement, the Company will own a 20% interest and GIC will own an 80% interest in the Joint Venture. The Company has agreed to sell both its London 10 and Paris 8 data centers, certain construction development and leases in London, Amsterdam and Frankfurt to the Joint Venture. The assets and liabilities of these data centers and facilities, which are currently included within the Company's EMEA operating segment, were classified as held for sale as of June 30, 2019. The transaction is expected to close in the third quarter of 2019, pending regulatory approval and other closing conditions. In January 2019, the Company entered into an agreement to sell its New York 12 ("NY12") data center. The assets of the NY12 data center to be divested were classified as held for sale. During the six months ended June 30, 2019, the Company recorded an impairment charge of $14.7 million, reducing the carrying value of NY12 assets to the estimated fair value less cost to sell. The following table summarizes the assets and liabilities that were classified as assets and liabilities held for sale in the condensed consolidated balance sheet as of June 30, 2019 (in thousands):
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Derivatives and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities | Derivatives and Hedging Activities Derivatives Designated as Hedging Instruments Net Investment Hedges. The Company is exposed to the impact of foreign exchange rate fluctuations on the value of investments in its foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, the Company has entered into various foreign currency debt obligations, which are designated as hedges against the Company's net investments in foreign subsidiaries. As of June 30, 2019 and December 31, 2018, the total principal amounts of foreign currency debt obligations designated as net investment hedges were $4,130.2 million and $4,139.8 million, respectively. The Company also uses cross-currency interest rate swaps to hedge a portion of its net investment in its European operations. As of June 30, 2019, U.S. Dollar to Euro cross-currency interest rate swap contracts with a total notional amount of $750.0 million were outstanding, with maturity dates in April 2022, January 2024 and January 2025. At maturity of each outstanding contract, the Company will receive U.S. Dollars from and pay Euros to the contract counterparty. During the term of each contract, the Company receives interest payments in U.S. Dollars and makes interest payments in Euros based on a notional amount and fixed interest rates determined at contract inception. The Company did not have any cross-currency interest rate swaps outstanding as of December 31, 2018. The effect of net investment hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018 was as follows (in thousands):
Cash Flow Hedges. The Company hedges its foreign currency translation exposure for forecasted revenues and expenses in its EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona and Swiss Franc. The foreign currency forward and option contracts that the Company uses to hedge this exposure are designated as cash flow hedges. As of June 30, 2019 and December 31, 2018, the total notional amounts of these foreign exchange contracts were $853.2 million and $760.9 million, respectively. The Company enters into intercompany hedging instruments ("intercompany derivatives") with wholly-owned subsidiaries of the Company in order to hedge certain forecasted revenues and expenses denominated in currencies other than the U.S. Dollar. Simultaneously, the Company enters into derivative contracts with unrelated third parties to externally hedge the net exposure created by such intercompany derivatives. The effect of cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018 was as follows (in thousands):
As of June 30, 2019, the Company's cash flow hedge instruments had maturity dates ranging from July 2019 to June 2021 and the Company recorded a net gain of $28.2 million within accumulated other comprehensive income (loss) relating to cash flow hedges that will be reclassified to revenues and expenses as they mature in the next 12 months. As of December 31, 2018, the Company's cash flow hedge instruments had maturity dates ranging from January 2019 to December 2020 and the Company recorded a net gain of $21.4 million within accumulated other comprehensive income (loss) relating to cash flow hedges that will be reclassified to revenues and expenses as they mature in the next 12 months. Derivatives Not Designated as Hedging Instruments Embedded Derivatives. The Company is deemed to have foreign currency forward contracts embedded in certain of the Company's customer agreements that are priced in currencies different from the functional or local currencies of the parties involved. These embedded derivatives are separated from their host contracts and carried on the Company's balance sheet at their fair value. The majority of these embedded derivatives arise as a result of the Company's foreign subsidiaries pricing their customer contracts in U.S. Dollar. Economic Hedges of Embedded Derivatives. The Company uses foreign currency forward contracts to manage the foreign exchange risk associated with the Company's customer agreements that are priced in currencies different from the functional or local currencies of the parties involved ("economic hedges of embedded derivatives"). Foreign currency forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date. Foreign Currency Forward Contracts. The Company also uses foreign currency forward contracts to manage the foreign exchange risk associated with certain foreign currency-denominated monetary assets and liabilities. As a result of foreign currency fluctuations, the U.S. Dollar equivalent values of its foreign currency-denominated monetary assets and liabilities change. Gains and losses on these contracts are included in other income (expense), on a net basis, along with the foreign currency gains and losses of the related foreign currency-denominated monetary assets and liabilities associated with these foreign currency forward contracts. As of June 30, 2019 and December 31, 2018, the total notional amounts of these foreign currency contracts were $1,817.2 million and $1,500.4 million, respectively. The following table presents the effect of derivatives not designated as hedging instruments in the Company's condensed consolidated statements of operations (in thousands):
Fair Value of Derivative Instruments The following table presents the fair value of derivative instruments recognized in the Company's condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018 (in thousands):
Offsetting Derivative Assets and Liabilities The Company presents its derivative instruments and the accrued interest related to cross-currency interest rate swaps at gross fair values in the condensed consolidated balance sheets. The Company enters into master netting agreements with its counterparties for transactions other than embedded derivatives to mitigate credit risk exposure to any single counterparty. Master netting agreements allow for individual derivative contracts with a single counterparty to offset in the event of default. For presentation on the condensed consolidated balance sheets, the Company does not offset fair value amounts recognized for derivative instruments or the accrued interest related to cross-currency interest rate swaps under master netting arrangements. The following table presents information related to these offsetting arrangements as of June 30, 2019 and December 31, 2018 (in thousands):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value estimates are made as of a specific point in time based on methods using the market approach valuation method which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities or other valuation techniques. These techniques involve uncertainties and are affected by the assumptions used and the judgments made regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows, future expected loss experience and other factors. Cash, Cash Equivalents and Investments. The fair value of the Company's investments in money market funds approximates their face value. Such instruments are included in cash equivalents. The Company's money market funds and publicly traded equity securities are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices for identical instruments in active markets. The fair value of the Company's other investments, including certificates of deposit, approximates their face value. The fair value of these investments is priced based on the quoted market price for similar instruments or nonbinding market prices that are corroborated by observable market data. Such instruments are classified within Level 2 of the fair value hierarchy. The Company determines the fair values of its Level 2 investments by using inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, custody bank, third-party pricing vendors, or other sources. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. The Company is responsible for its condensed consolidated financial statements and underlying estimates. The Company uses the specific identification method in computing realized gains and losses. Realized gains and losses on the investments are included within other income (expense) in the Company's condensed consolidated statements of operations. Publicly traded equity securities are measured at fair value with changes in the fair values recognized within other income (expense) in the Company's condensed consolidated statements of operations. Derivative Assets and Liabilities. For derivatives, the Company uses forward contract and option models employing market observable inputs, such as spot currency rates and forward points with adjustments made to these values utilizing published credit default swap rates of its foreign exchange trading counterparties and other comparable companies. The Company has determined that the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, therefore the derivatives are categorized as Level 2. The Company did not have any nonfinancial assets or liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018. The Company's financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 were as follows (in thousands):
The Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 were as follows (in thousands):
The Company did not have any Level 3 financial assets or financial liabilities as of June 30, 2019 and December 31, 2018.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company determines if an arrangement is or contains a lease at inception. The Company enters into lease arrangements primarily for data center spaces, office spaces and equipment. The Company recognizes a ROU asset and lease liability on the condensed consolidated balance sheet for all leases with a term longer than 12 months. As of June 30, 2019, the Company recorded finance lease assets of $968.2 million, net of accumulated amortization of $449.4 million, within the property, plant and equipment, net. ROU assets represent the Company's right to use an underlying asset for the lease term. Lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are classified and recognized at the commencement date. ROU liabilities are measured based on the present value of fixed lease payments over the lease term. ROU assets consist of (i) initial measurement of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) initial direct costs incurred by the Company. Lease payments may vary because of changes in facts or circumstances occurring after the commencement, including changes in inflation indices. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate) are included in the measurement of ROU assets and lease liabilities using the index or rate at the commencement date. Variable lease payments that do not depend on an index or a rate are excluded from the measurement of ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Since most of the Company's leases do not provide an implicit rate, the Company uses its own incremental borrowing rate ("IBR") on a collateralized basis in determining the present value of lease payments. The Company utilizes a market-based approach to estimate the IBR. The approach requires significant judgment. Therefore, the Company utilizes different data sets to estimate IBRs via an analysis of (i) yields on our outstanding public debt; (ii) yields on comparable credit rating composite curves; (iii) sovereign rates; and (iv) historical difference in yields on the curves of our secured and unsecured rated debt. The Company also applies adjustments to account for considerations related to (i) tenor and (ii) country credit rating that may not be fully incorporated by the aforementioned data sets. The majority of the Company's lease arrangements include options to extend the lease. If the Company is reasonably certain to exercise such options, the periods covered by the options are included in the lease term. The depreciable lives of certain fixed assets and leasehold improvements are limited by the expected lease term. The Company has certain leases with an initial term of 12 months or less. For such leases, the Company elects not to recognize any ROU asset or lease liability on the condensed consolidated balance sheet. The Company has lease agreements with lease and non-lease components. The Company elects to account for the lease and non-lease components as a single lease component for all classes of underlying assets for which the Company has identified lease arrangements. Significant Lease Transaction Hong Kong 4 ("HK4") Data Center In August 2018, the Company entered into a lease agreement with the landlord to lease the remaining floors of the HK4 data center. The lease did not commence until May 2019. Pursuant to the accounting standard for leases, the Company assessed the lease classification of the HK4 lease at commencement date and determined that the lease should be accounted for as an operating lease. During the three months ended June 30, 2019, the Company recorded operating lease ROU asset and liability of 317.3 million Hong Kong dollars, or $40.6 million at the exchange rate in effect on June 30, 2019. Lease Expenses The components of lease expenses are as follows (in thousands):
(1) Amortization of right-of-use assets is included with depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the condensed consolidated statements of operations. Other Information Other information related to leases is as follows (in thousands):
(1) Represents all non-cash changes in ROU assets, including the impact of reclassifying finance lease and operating lease ROU assets of $36.9 million and $9.6 million, respectively, to assets held for sale. Refer to Note 5. (2) Includes lease renewal options that are reasonably certain to be exercised. Maturities of Lease Liabilities Maturities of lease liabilities under Topic 842 as of June 30, 2019 are as follows (in thousands):
For the year ended December 31, 2018, the Company's operating lease, capital lease and other financing obligations under ASC Topic 840 are summarized as follows (in thousands):
(1) Other financing obligations are primarily related to build-to-suit arrangements. The Company entered into agreements with various landlords primarily to lease data center spaces which have not yet commenced as of June 30, 2019. These leases will commence between fiscal years 2019 and 2020, with lease terms of 5 to 29 years and a total lease commitment of approximately $260.3 million.
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Leases | Leases The Company determines if an arrangement is or contains a lease at inception. The Company enters into lease arrangements primarily for data center spaces, office spaces and equipment. The Company recognizes a ROU asset and lease liability on the condensed consolidated balance sheet for all leases with a term longer than 12 months. As of June 30, 2019, the Company recorded finance lease assets of $968.2 million, net of accumulated amortization of $449.4 million, within the property, plant and equipment, net. ROU assets represent the Company's right to use an underlying asset for the lease term. Lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are classified and recognized at the commencement date. ROU liabilities are measured based on the present value of fixed lease payments over the lease term. ROU assets consist of (i) initial measurement of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) initial direct costs incurred by the Company. Lease payments may vary because of changes in facts or circumstances occurring after the commencement, including changes in inflation indices. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate) are included in the measurement of ROU assets and lease liabilities using the index or rate at the commencement date. Variable lease payments that do not depend on an index or a rate are excluded from the measurement of ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Since most of the Company's leases do not provide an implicit rate, the Company uses its own incremental borrowing rate ("IBR") on a collateralized basis in determining the present value of lease payments. The Company utilizes a market-based approach to estimate the IBR. The approach requires significant judgment. Therefore, the Company utilizes different data sets to estimate IBRs via an analysis of (i) yields on our outstanding public debt; (ii) yields on comparable credit rating composite curves; (iii) sovereign rates; and (iv) historical difference in yields on the curves of our secured and unsecured rated debt. The Company also applies adjustments to account for considerations related to (i) tenor and (ii) country credit rating that may not be fully incorporated by the aforementioned data sets. The majority of the Company's lease arrangements include options to extend the lease. If the Company is reasonably certain to exercise such options, the periods covered by the options are included in the lease term. The depreciable lives of certain fixed assets and leasehold improvements are limited by the expected lease term. The Company has certain leases with an initial term of 12 months or less. For such leases, the Company elects not to recognize any ROU asset or lease liability on the condensed consolidated balance sheet. The Company has lease agreements with lease and non-lease components. The Company elects to account for the lease and non-lease components as a single lease component for all classes of underlying assets for which the Company has identified lease arrangements. Significant Lease Transaction Hong Kong 4 ("HK4") Data Center In August 2018, the Company entered into a lease agreement with the landlord to lease the remaining floors of the HK4 data center. The lease did not commence until May 2019. Pursuant to the accounting standard for leases, the Company assessed the lease classification of the HK4 lease at commencement date and determined that the lease should be accounted for as an operating lease. During the three months ended June 30, 2019, the Company recorded operating lease ROU asset and liability of 317.3 million Hong Kong dollars, or $40.6 million at the exchange rate in effect on June 30, 2019. Lease Expenses The components of lease expenses are as follows (in thousands):
(1) Amortization of right-of-use assets is included with depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the condensed consolidated statements of operations. Other Information Other information related to leases is as follows (in thousands):
(1) Represents all non-cash changes in ROU assets, including the impact of reclassifying finance lease and operating lease ROU assets of $36.9 million and $9.6 million, respectively, to assets held for sale. Refer to Note 5. (2) Includes lease renewal options that are reasonably certain to be exercised. Maturities of Lease Liabilities Maturities of lease liabilities under Topic 842 as of June 30, 2019 are as follows (in thousands):
For the year ended December 31, 2018, the Company's operating lease, capital lease and other financing obligations under ASC Topic 840 are summarized as follows (in thousands):
(1) Other financing obligations are primarily related to build-to-suit arrangements. The Company entered into agreements with various landlords primarily to lease data center spaces which have not yet commenced as of June 30, 2019. These leases will commence between fiscal years 2019 and 2020, with lease terms of 5 to 29 years and a total lease commitment of approximately $260.3 million.
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Debt Facilities |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Facilities | Debt Facilities Mortgage and Loans Payable As of June 30, 2019 and December 31, 2018, the Company's mortgage and loans payable consisted of the following (in thousands):
Senior Notes As of June 30, 2019 and December 31, 2018, the Company's senior notes consisted of the following (in thousands):
(1) 5.000% Infomart Senior Notes consist of five tranches due in each of April 2019, October 2019, April 2020, October 2020 and April 2021. The effective rate represents the weighted-average effective interest rates of the tranches outstanding at the periods presented in the table above. Maturities of Debt Instruments The following table sets forth maturities of the Company's debt, including mortgage and loans payable, and senior notes, gross of debt issuance costs, debt discounts and debt premiums, as of June 30, 2019 (in thousands):
Fair Value of Debt Instruments The following table sets forth the estimated fair values of the Company's mortgage and loans payable and senior notes, including current maturities, as of (in thousands):
The fair values of the mortgage and loans payable and 5.000% Infomart Senior Notes, which were not publicly traded, were estimated by considering the Company's credit rating, current rates available to the Company for debt of the same remaining maturities and terms of the debt (Level 2). The fair value of the senior notes, which were traded in the public debt market, was based on quoted market prices (Level 1). Interest Charges The following table sets forth total interest costs incurred and total interest costs capitalized for the periods presented (in thousands):
Total interest paid, net of capitalized interest, during the three months ended June 30, 2019 and 2018 was $107.4 million and $111.6 million, respectively. Total interest paid, net of capitalized interest, during the six months ended June 30, 2019 and 2018 was $243.6 million and $215.3 million, respectively.
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Commitments and Contingencies |
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Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments As a result of the Company's various IBX data center expansion projects, as of June 30, 2019, the Company was contractually committed for approximately $0.9 billion of unaccrued capital expenditures, primarily for IBX infrastructure equipment not yet delivered and labor not yet provided, in connection with the work necessary to open these IBX data centers and make them available to customers for installation. The Company also had numerous other, non-capital purchase commitments in place as of June 30, 2019, such as commitments to purchase power in select locations through the remainder of 2019 and thereafter, and other open purchase orders for goods or services to be delivered or provided during the remainder of 2019 and thereafter. Such other miscellaneous purchase commitments totaled approximately $1.0 billion as of June 30, 2019. In addition, the Company entered into lease agreements in various locations that have not yet commenced as of June 30, 2019. For further information on lease commitments, see Note 8 above. Contingent Liabilities The Company estimates exposure on certain liabilities, such as indirect and property taxes, based on the best information available at the time of determination. With respect to real and personal property taxes, the Company records what it can reasonably estimate based on prior payment history, assessed value by the assessor's office, current landlord estimates or estimates based on current or changing fixed asset values in each specific municipality, as applicable. However, there are circumstances beyond the Company's control whereby the underlying value of the property or basis for which the tax is calculated on the property may change, such as a landlord selling the underlying property of one of the Company's IBX data center leases or a municipality changing the assessment value in a jurisdiction and, as a result, the Company's property tax obligations may vary from period to period. Based upon the most current facts and circumstances, the Company makes the necessary property tax accruals for each of its reporting periods. However, revisions in the Company's estimates of the potential or actual liability could materially impact the financial position, results of operations or cash flows of the Company. The Company's indirect and property tax filings in various jurisdictions are subject to examination by local tax authorities. The outcome of any examinations cannot be predicted with certainty. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations that would affect the adequacy of its tax accruals for each of the reporting periods. If any issues arising from the tax examinations are resolved in a manner inconsistent with the Company's expectations, the revision of the estimates of the potential or actual liabilities could materially impact the financial position, results of operations, or cash flows of the Company.
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Stockholders' Equity Rollforward The following tables provide a rollforward of stockholders' equity for the three and six months ended June 30, 2019 and 2018 (in thousands):
Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):
Changes in foreign currencies can have a significant impact to the Company's consolidated balance sheets (as evidenced above in the Company's foreign currency translation loss), as well as its consolidated results of operations, as amounts in foreign currencies are generally translated into more U.S. Dollars when the U.S. Dollar weakens or less U.S. Dollars when the U.S. Dollar strengthens. As of June 30, 2019, the U.S. Dollar was generally stronger relative to certain of the currencies of the foreign countries in which the Company operates as compared to December 31, 2018. This overall strengthening of the U.S. Dollar had an overall unfavorable impact on the Company's condensed consolidated financial position because the foreign denominations translated into less U.S. Dollars as evidenced by an increase in foreign currency translation loss for the six months ended June 30, 2019 as reflected in the above table. In future periods, the volatility of the U.S. Dollar as compared to the other currencies in which the Company operates could have a significant impact on its condensed consolidated financial position and results of operations including the amount of revenue that the Company reports in future periods. Common Stock In March 2019, the Company issued and sold 2,985,575 shares of common stock in a public offering pursuant to a registration statement and a related prospectus and prospectus supplement. The Company received net proceeds of approximately $1,213.4 million, net of underwriting discounts, commissions and offering expenses. In August 2017, the Company established an "at-the-market" equity offering program (the "2017 ATM Program") under which the Company may, from time to time, issue and sell shares of its common stock to or through sales agents up to an aggregate of $750.0 million. For the six months ended June 30, 2018, the Company sold 19,100 shares under the 2017 ATM Program, for approximately $7.6 million, net of payment of commissions to the sales agents. As of December 31, 2018, no shares remained available for sale under the 2017 ATM Program. In December 2018, the Company launched another ATM program, under which it may offer and sell from time to time up to an aggregate of $750.0 million of its common stock in "at the market" transactions (the "2018 ATM Program"). For the six months ended June 30, 2019, the Company sold 722,361 shares under the 2018 ATM program, for approximately $348.2 million, net of payment of commissions to sales agents. Stock-Based Compensation For the six months ended June 30, 2019, the Compensation Committee and/or the Stock Award Committee of the Company's Board of Directors, as the case may be, approved the issuance of an aggregate of 697,174 shares of restricted stock units to certain employees, including executive officers, pursuant to the 2000 Equity Incentive Plan. These equity awards are subject to vesting provisions and have a weighted-average grant date fair value of $434.17 and a weighted-average requisite service period of 3.66 years. The valuation of restricted stock units with only a service condition or a service and performance condition require no significant assumptions as the fair value for these types of equity awards is based solely on the fair value of the Company's stock price on the date of grant. The Company used revenues and adjusted funds from operations ("AFFO") per share as the performance measurements in the restricted stock units with both service and performance conditions that were granted in the six months ended June 30, 2019. The Company uses a Monte Carlo simulation option-pricing model to determine the fair value of restricted stock units with a service and market condition. The Company used total shareholder return ("TSR") as the performance measurement in the restricted stock units with a service and market condition that were granted in the six months ended June 30, 2019. There were no significant changes in the assumptions used to determine the fair value of restricted stock units with a service and market condition that were granted in 2019 compared to the prior year. The following table presents, by operating expense category, the Company's stock-based compensation expense recognized in the Company's condensed consolidated statements of operations (in thousands):
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information While the Company has a single line of business, which is the design, build-out and operation of IBX data centers, it has determined that it has three reportable segments comprised of its Americas, EMEA and Asia-Pacific geographic regions. The Company's chief operating decision-maker evaluates performance, makes operating decisions and allocates resources based on the Company's revenues and adjusted EBITDA performance both on a consolidated basis and based on these three reportable segments. The following tables present revenue information disaggregated by product lines and geographic areas (in thousands):
(1) Includes some leasing and hedging activities.
(1) Includes some leasing and hedging activities. No single customer accounted for 10% or greater of the Company's accounts receivable or revenues for the three and six months ended June 30, 2019 and 2018. The Company defines adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, acquisition costs and gain on asset sales as presented below (in thousands):
The Company also provides the following additional segment disclosures (in thousands):
The Company's long-lived assets are located in the following geographic areas as of (in thousands):
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 31, 2019, the Company declared a quarterly cash dividend of $2.46 per share, which is payable on September 18, 2019 to the Company's common stockholders of record as of the close of business on August 21, 2019.
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Basis of Presentation and Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by Equinix, Inc. ("Equinix" or the "Company") and reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state the financial position and the results of operations for the interim periods presented. The condensed consolidated balance sheet data as of December 31, 2018 has been derived from audited consolidated financial statements as of that date. The condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission ("SEC"), but omit certain information and footnote disclosure necessary to present the statements in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For further information, refer to the Consolidated Financial Statements and Notes thereto included in Equinix's Form 10-K as filed with the SEC on February 22, 2019. Results for the interim periods are not necessarily indicative of results for the entire fiscal year.
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Consolidation | Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Equinix and its subsidiaries, including the acquisitions of Switch Datacenters' AMS1 data center business in Amsterdam, Netherlands from April 18, 2019, Metronode from April 18, 2018 and Infomart Dallas from April 2, 2018. All intercompany accounts and transactions have been eliminated in consolidation.
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Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company uses derivative instruments, including foreign currency forwards and options and cross-currency interest rate swaps, to manage certain foreign currency exposures. Derivative instruments are viewed as risk management tools by the Company and are not used for speculative purposes. The Company recognizes all derivatives on the Company's condensed consolidated balance sheets at fair value. The accounting for changes in the value of a derivative depends on whether the contract qualifies and has been designated for hedge accounting. In order to qualify for hedge accounting, a derivative must be considered highly effective at reducing the risk associated with the exposure being hedged and there must be documentation of the risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, and the effectiveness assessment methodology. For cash flow hedges, the Company uses regression analysis at the time they are designated to assess their effectiveness. Hedge designations are reviewed on a quarterly basis to assess whether circumstances have changed that would disrupt the hedge instrument’s relationship to the forecasted transactions or net investment. The Company uses the forward method to assess effectiveness of qualifying foreign currency forwards that are designated as cash flow hedges, whereby, the change in the fair value of the derivative is recorded in other comprehensive income (loss) and reclassified to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item when the hedged item affects earnings. The Company uses the spot method to assess effectiveness of qualifying foreign currency exchange options that are designated as cash flow hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and reclassified to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item when the hedged item affects earnings, and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized on a straight-line basis to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item. When two or more derivative instruments in combination are jointly designated as a cash flow hedging instrument, as with foreign currency exchange option collars, they are treated as a single instrument. If the hedge relationship is terminated for any derivatives designated as cash flow hedges, then the change in fair value of the derivative recorded in other comprehensive income (loss) is recognized in earnings when the previously hedged item affects earnings, consistent with the original hedge strategy. For hedge relationships discontinued because the forecasted transaction is not expected to occur according to the original strategy, any related derivative amounts recorded in other comprehensive income (loss) are immediately recognized in earnings. The Company uses the spot method to assess effectiveness of cross-currency interest rate swaps that are designated as net investment hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized to interest expense on a straight-line basis. From time to time, the Company also uses foreign exchange forward contracts to hedge against the effect of foreign exchange rate fluctuations on a portion of its net investment in the foreign subsidiaries. The Company uses the spot method to assess effectiveness of qualifying foreign currency forwards that are designated as net investment hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized to interest expense on a straight-line basis. Foreign currency gains or losses associated with derivatives that are not designated as hedging instruments for accounting purposes are recorded within other income (expense) in the Company’s condensed consolidated statements of operations, with the exception of (i) foreign currency embedded derivatives contained in certain of the Company’s customer contracts and (ii) foreign exchange forward contracts that are entered into to hedge the accounting impact of the foreign currency embedded derivatives, which are recorded within revenues in the Company’s condensed consolidated statements of operations. For further information on derivatives and hedging activities, see Note 6 below. Derivatives Designated as Hedging Instruments Net Investment Hedges. The Company is exposed to the impact of foreign exchange rate fluctuations on the value of investments in its foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, the Company has entered into various foreign currency debt obligations, which are designated as hedges against the Company's net investments in foreign subsidiaries. As of June 30, 2019 and December 31, 2018, the total principal amounts of foreign currency debt obligations designated as net investment hedges were $4,130.2 million and $4,139.8 million, respectively. The Company also uses cross-currency interest rate swaps to hedge a portion of its net investment in its European operations. As of June 30, 2019, U.S. Dollar to Euro cross-currency interest rate swap contracts with a total notional amount of $750.0 million were outstanding, with maturity dates in April 2022, January 2024 and January 2025. At maturity of each outstanding contract, the Company will receive U.S. Dollars from and pay Euros to the contract counterparty. During the term of each contract, the Company receives interest payments in U.S. Dollars and makes interest payments in Euros based on a notional amount and fixed interest rates determined at contract inception. The Company did not have any cross-currency interest rate swaps outstanding as of December 31, 2018. Cash Flow Hedges. The Company hedges its foreign currency translation exposure for forecasted revenues and expenses in its EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona and Swiss Franc. The foreign currency forward and option contracts that the Company uses to hedge this exposure are designated as cash flow hedges. As of June 30, 2019 and December 31, 2018, the total notional amounts of these foreign exchange contracts were $853.2 million and $760.9 million, respectively. The Company enters into intercompany hedging instruments ("intercompany derivatives") with wholly-owned subsidiaries of the Company in order to hedge certain forecasted revenues and expenses denominated in currencies other than the U.S. Dollar. Simultaneously, the Company enters into derivative contracts with unrelated third parties to externally hedge the net exposure created by such intercompany derivatives.
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Income Taxes | Income Taxes The Company elected to be taxed as a real estate investment trust for federal income tax purposes ("REIT") beginning with its 2015 taxable year. As a result, the Company may deduct the distributions made to its stockholders from taxable income generated by the Company and its qualified REIT subsidiaries ("QRSs"). The Company's dividends paid deduction generally eliminates the U.S. taxable income of the Company and its QRSs, resulting in no U.S. income tax due. However, the Company's taxable REIT subsidiaries ("TRSs") continue to be subject to income taxes on any taxable income generated by them. In addition, the foreign operations of the Company will continue to be subject to local income taxes regardless of whether the foreign operations are operated as QRSs or TRSs. The Company provides for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the Company, tax law changes and future business acquisitions.
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Assets Held for Sale | Assets Held for Sale Assets and liabilities to be disposed of that meet all of the criteria to be classified as held for sale as set forth in the accounting standard for impairment or disposal of long-lived assets are reported at the lower of their carrying amounts or fair values less costs to sell. Assets are not depreciated or amortized while they are classified as held for sale. For further information on assets held for sale, see Note 5 below.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Not Yet Adopted In June 2016, Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company will adopt this new ASU on January 1, 2020. The Company expects this ASU to impact its accounting for allowances for doubtful accounts and is currently evaluating the extent of the impact that the adoption of this standard will have on its condensed consolidated financial statements. Accounting Standards Adopted In August 2017, FASB issued ASU 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU was issued to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and to simplify the application of the hedge accounting guidance in current GAAP. This ASU permits hedge accounting for risk components involving nonfinancial risk and interest rate risk, requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the hedged item is reported, no longer requires separate measurement and reporting of hedge ineffectiveness, eases the requirement for hedge effectiveness assessment, and requires a tabular disclosure related to the effect on the income statement of fair value and cash flow hedges. This ASU is effective for annual or any interim reporting periods beginning after December 15, 2018 with early adoption permitted. The Company adopted ASU 2017-12 on January 1, 2019 using the modified retrospective approach. For cash flow hedges existing on the date of adoption, the Company recognized the cumulative effect of the change on the opening balance of accumulated other comprehensive income (loss) with a corresponding adjustment to the opening balance of retained earnings for amounts previously recognized in earnings related to ineffectiveness. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements. In February 2016, FASB issued ASU 2016-02, Leases and issued subsequent amendments to the initial guidance, collectively referred to as "Topic 842." Topic 842 replaces the guidance in former ASC Topic 840, Leases. The new lease guidance increases transparency and comparability among organizations by requiring the recognition of the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee's future obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use ("ROU") asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Topic 842 allows entities to adopt with one of two methods: the modified retrospective transition method or the alternative transition method. On January 1, 2019, the Company adopted Topic 842 using the alternative transition method. Therefore, results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while comparative information has not been restated and continues to be reported under accounting standards in effect for those periods. The Company recognized the cumulative effects of initially applying the standard as an adjustment to the opening balance of retained earnings in the period of adoption. In adopting the new guidance, the Company elected to apply the package of practical expedients permitted under the transition guidance which allows the Company not to reassess (1) whether any expired or existing contracts contain leases under the new definition of a lease; (2) lease classification for any expired or existing leases; and (3) whether previously capitalized initial direct costs would qualify for capitalization under Topic 842. The Company also elected to apply the land easements practical expedient which permits the Company not to assess at transition whether any expired or existing land easements are, or contain, leases if they were not previously accounted for as leases under Topic 840. Upon adoption of Topic 842, the Company also elected to adopt the practical expedient which allows the Company to combine qualified non-lease and lease components by underlying class of asset based, on predominance, as a lessor. Occasionally, the Company enters into revenue contracts with customers for data center and office spaces, which contain both lease and non-lease components. In general, lease and non-lease components related to the use of space and solutions provided in a data center, which share the same pattern of transfer, will be combined and accounted for under ASC 606, Revenue from Contracts with Customers. Lease and non-lease components related to the use of office space, which share the same pattern of transfer, will be combined and accounted for under Topic 842. Lease components which are not classified as operating leases do not qualify for the practical expedient. Non-lease components, which do not have similar patterns of transfers, such as professional services and goods for resale, are also excluded from combination. Adoption of the standard had a significant impact on the Company's financial results, including the (1) recognition of new ROU assets and liabilities on its balance sheet for all operating leases; and (2) de-recognition of existing build-to-suit assets and liabilities with cumulative effects of initially applying the standard as an adjustment to the retained earnings. The cumulative effect of the changes made to its consolidated January 1, 2019 balance sheet from the adoption of Topic 842 was as follows (in thousands):
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Revenue Recognition | Contract Balances The following table summarizes the opening and closing balances of the Company's accounts receivable, net; contract asset, current; contract asset, non-current; deferred revenue, current; and deferred revenue, non-current (in thousands):
The difference between the opening and closing balances of the Company's accounts receivable, net, contract assets and deferred revenues primarily results from revenue growth and the timing difference between the satisfaction of the Company's performance obligation and the customer's payment. The amounts of revenue recognized during the six months ended June 30, 2019 from the opening deferred revenue balance as of January 1, 2019 was $62.6 million. Remaining performance obligations As of June 30, 2019, approximately $7.6 billion of total revenues and deferred installation revenues are expected to be recognized in future periods, the majority of which will be recognized over the next 24 months. While initial contract terms vary in length, substantially all contracts thereafter automatically renew in one-year increments. Included in the remaining performance obligations is either 1) remaining performance obligations under the initial contract terms or 2) remaining performance obligations related to contracts in the renewal period once the initial terms have lapsed. The remaining performance obligations do not include variable consideration related to unsatisfied performance obligations such as the usage of metered power or any contracts that could be terminated without any significant penalties such as the majority of interconnection revenues. The remaining performance obligations above include revenues to be recognized in the future related to arrangements where the Company is considered the lessor.
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Derivatives Not Designated as Hedging Instruments | Derivatives Not Designated as Hedging Instruments Embedded Derivatives. The Company is deemed to have foreign currency forward contracts embedded in certain of the Company's customer agreements that are priced in currencies different from the functional or local currencies of the parties involved. These embedded derivatives are separated from their host contracts and carried on the Company's balance sheet at their fair value. The majority of these embedded derivatives arise as a result of the Company's foreign subsidiaries pricing their customer contracts in U.S. Dollar. Economic Hedges of Embedded Derivatives. The Company uses foreign currency forward contracts to manage the foreign exchange risk associated with the Company's customer agreements that are priced in currencies different from the functional or local currencies of the parties involved ("economic hedges of embedded derivatives"). Foreign currency forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date. Foreign Currency Forward Contracts. The Company also uses foreign currency forward contracts to manage the foreign exchange risk associated with certain foreign currency-denominated monetary assets and liabilities. As a result of foreign currency fluctuations, the U.S. Dollar equivalent values of its foreign currency-denominated monetary assets and liabilities change. Gains and losses on these contracts are included in other income (expense), on a net basis, along with the foreign currency gains and losses of the related foreign currency-denominated monetary assets and liabilities associated with these foreign currency forward contracts.
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Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments. The fair value of the Company's investments in money market funds approximates their face value. Such instruments are included in cash equivalents. The Company's money market funds and publicly traded equity securities are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices for identical instruments in active markets. The fair value of the Company's other investments, including certificates of deposit, approximates their face value. The fair value of these investments is priced based on the quoted market price for similar instruments or nonbinding market prices that are corroborated by observable market data. Such instruments are classified within Level 2 of the fair value hierarchy. The Company determines the fair values of its Level 2 investments by using inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, custody bank, third-party pricing vendors, or other sources. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. The Company is responsible for its condensed consolidated financial statements and underlying estimates. The Company uses the specific identification method in computing realized gains and losses. Realized gains and losses on the investments are included within other income (expense) in the Company's condensed consolidated statements of operations. Publicly traded equity securities are measured at fair value with changes in the fair values recognized within other income (expense) in the Company's condensed consolidated statements of operations.
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Derivative Assets and Liabilities | Derivative Assets and Liabilities. For derivatives, the Company uses forward contract and option models employing market observable inputs, such as spot currency rates and forward points with adjustments made to these values utilizing published credit default swap rates of its foreign exchange trading counterparties and other comparable companies. The Company has determined that the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, therefore the derivatives are categorized as Level 2.
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Segment Information | While the Company has a single line of business, which is the design, build-out and operation of IBX data centers, it has determined that it has three reportable segments comprised of its Americas, EMEA and Asia-Pacific geographic regions. The Company's chief operating decision-maker evaluates performance, makes operating decisions and allocates resources based on the Company's revenues and adjusted EBITDA performance both on a consolidated basis and based on these three reportable segments. |
Basis of Presentation and Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of ASU 842 adoption | The cumulative effect of the changes made to its consolidated January 1, 2019 balance sheet from the adoption of Topic 842 was as follows (in thousands):
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Revenue (Tables) |
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Summary of opening and closing balances | The following table summarizes the opening and closing balances of the Company's accounts receivable, net; contract asset, current; contract asset, non-current; deferred revenue, current; and deferred revenue, non-current (in thousands):
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Earnings Per Share (Tables) |
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Computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share ("EPS") for the periods presented (in thousands, except per share amounts):
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Acquisitions (Tables) |
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Schedule of final allocation of total purchase consideration | A summary of the final allocation of total purchase consideration is presented as follows (in thousands):
(1) In connection with the Metronode Acquisition, the Company recorded indemnification assets of $44.4 million, which represented the seller's obligation under the purchase agreement to reimburse pre-acquisition tax liabilities settled after the acquisition.
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Schedule of acquired intangible assets | The following table presents certain information on the acquired intangible assets (in thousands):
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Assets Held for Sale (Tables) |
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Summary of assets and liabilities held for sale | The following table summarizes the assets and liabilities that were classified as assets and liabilities held for sale in the condensed consolidated balance sheet as of June 30, 2019 (in thousands):
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Derivatives and Hedging Activities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of net investment hedges | The effect of net investment hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018 was as follows (in thousands):
(2) Excluded component represents cross-currency basis spread and interest rates.
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Summary of cash flow hedges | The effect of cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018 was as follows (in thousands):
(2) Excluded component represents option's time value.
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Schedule of derivatives not designated as hedging instruments in the Company's condensed consolidated statements of operations | The following table presents the effect of derivatives not designated as hedging instruments in the Company's condensed consolidated statements of operations (in thousands):
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Schedule of derivative instruments recognized in the Company's condensed consolidated balance sheets | The following table presents the fair value of derivative instruments recognized in the Company's condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018 (in thousands):
(2) As presented in the Company's condensed consolidated balance sheets within other current liabilities and other liabilities.
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Schedule of offsetting derivative assets and liabilities | The following table presents information related to these offsetting arrangements as of June 30, 2019 and December 31, 2018 (in thousands):
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Schedule of offsetting derivative assets and liabilities | The following table presents information related to these offsetting arrangements as of June 30, 2019 and December 31, 2018 (in thousands):
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The Company's financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 were as follows (in thousands):
The Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 were as follows (in thousands):
(1) Amounts are included within other current assets, other assets, other current liabilities and other liabilities in the Company's accompanying condensed consolidated balance sheet.
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of lease expenses | The components of lease expenses are as follows (in thousands):
(1) Amortization of right-of-use assets is included with depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the condensed consolidated statements of operations.
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Other information related to leases | Other information related to leases is as follows (in thousands):
(1) Represents all non-cash changes in ROU assets, including the impact of reclassifying finance lease and operating lease ROU assets of $36.9 million and $9.6 million, respectively, to assets held for sale. Refer to Note 5. (2) Includes lease renewal options that are reasonably certain to be exercised.
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Maturities of lease liabilities | Maturities of lease liabilities under Topic 842 as of June 30, 2019 are as follows (in thousands):
For the year ended December 31, 2018, the Company's operating lease, capital lease and other financing obligations under ASC Topic 840 are summarized as follows (in thousands):
(1) Other financing obligations are primarily related to build-to-suit arrangements.
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Maturities of lease liabilities | Maturities of lease liabilities under Topic 842 as of June 30, 2019 are as follows (in thousands):
For the year ended December 31, 2018, the Company's operating lease, capital lease and other financing obligations under ASC Topic 840 are summarized as follows (in thousands):
(1) Other financing obligations are primarily related to build-to-suit arrangements.
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Debt Facilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of debt | As of June 30, 2019 and December 31, 2018, the Company's senior notes consisted of the following (in thousands):
(1) 5.000% Infomart Senior Notes consist of five tranches due in each of April 2019, October 2019, April 2020, October 2020 and April 2021. The effective rate represents the weighted-average effective interest rates of the tranches outstanding at the periods presented in the table above. As of June 30, 2019 and December 31, 2018, the Company's mortgage and loans payable consisted of the following (in thousands):
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Summary of maturities of debt instruments | The following table sets forth maturities of the Company's debt, including mortgage and loans payable, and senior notes, gross of debt issuance costs, debt discounts and debt premiums, as of June 30, 2019 (in thousands):
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Fair value of debt instruments | The following table sets forth the estimated fair values of the Company's mortgage and loans payable and senior notes, including current maturities, as of (in thousands):
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Schedule of interest charges incurred | The following table sets forth total interest costs incurred and total interest costs capitalized for the periods presented (in thousands):
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Stockholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of rollforward of stockholders' equity | The following tables provide a rollforward of stockholders' equity for the three and six months ended June 30, 2019 and 2018 (in thousands):
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Schedule of changes in accumulated other comprehensive loss | The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):
(2) The Company has a defined benefit pension plan covering all employees in one country where such plan is mandated by law. The Company does not have any defined benefit plans in any other countries. The unamortized gain (loss) on defined benefit plans includes gains or losses resulting from a change in the value of either the projected benefit obligation or the plan assets resulting from a change in an actuarial assumption, net of amortization.
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Schedule of stock-based compensation expense by operating expense category | The following table presents, by operating expense category, the Company's stock-based compensation expense recognized in the Company's condensed consolidated statements of operations (in thousands):
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenue information disaggregated by service lines and geographic areas | The following tables present revenue information disaggregated by product lines and geographic areas (in thousands):
(1) Includes some leasing and hedging activities.
(1) Includes some leasing and hedging activities.
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Schedule of Adjusted EBITDA | The Company defines adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, acquisition costs and gain on asset sales as presented below (in thousands):
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Segment Disclosures | The Company also provides the following additional segment disclosures (in thousands):
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Segment Long-Lived Assets | The Company's long-lived assets are located in the following geographic areas as of (in thousands):
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Basis of Presentation and Significant Accounting Policies - Narrative (Detail) |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
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Accounting Policies [Abstract] | ||
Effective income tax rate, continuing operations | 25.60% | 15.00% |
Revenue - Opening and Closing Balances (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
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Revenue from Contract with Customer [Abstract] | |||
Accounts receivable, net | $ 752,680 | $ 630,119 | $ 630,119 |
Increase (decrease) in accounts receivables | 122,561 | ||
Contract asset, current | 9,346 | 9,778 | |
Increase (decrease) in contract asset, current | (432) | ||
Contract asset, non-current | 18,883 | 16,396 | |
Increase (decrease) in contract asset, non-current | 2,487 | ||
Deferred revenue, current | 77,026 | 73,142 | |
Increase (decrease) in deferred revenue, current | 3,884 | ||
Deferred revenue, non-current | 46,517 | $ 46,641 | |
Increase (decrease) in deferred revenue, non-current | $ (124) |
Revenue - Narrative (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
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Revenue from Contract with Customer [Abstract] | |
Deferred revenue, revenue recognized | $ 62.6 |
Revenue, remaining performance obligation | $ 7,600.0 |
Revenue, requirement of payment, terms | P24M |
Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Earnings Per Share [Abstract] | ||||||
Net income | $ 143,852 | $ 117,747 | $ 67,618 | $ 261,599 | $ 130,512 | |
Net (income) loss attributable to non-controlling interests | (325) | 0 | 6 | 0 | ||
Net income attributable to Equinix | $ 143,527 | $ 67,618 | $ 62,894 | $ 261,605 | $ 130,512 | |
Weighted-average shares used to calculate basic EPS (in shares) | 84,399 | 79,479 | 83,114 | 79,361 | ||
Effect of dilutive securities: | ||||||
Employee equity awards (in shares) | 368 | 273 | 357 | 385 | ||
Weighted-average shares used to calculate diluted EPS (in shares) | 84,767 | 79,752 | 83,471 | 79,746 | ||
Basic EPS (in dollars per share) | $ 1.70 | $ 0.85 | $ 3.15 | $ 1.64 | ||
Diluted EPS (in dollars per share) | $ 1.69 | $ 0.85 | $ 3.13 | $ 1.64 |
Earnings Per Share - Anti-dilutive Potential Shares of Common Stock Excluded from Computation of Earnings Per Share (Detail) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Earnings Per Share [Abstract] | ||||
Anti-dilutive potential shares of common stock excluded from computation of earnings per share (in shares) | 4 | 220 | 54 | 247 |
Assets Held for Sale - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Long Lived Assets Held-for-sale [Line Items] | |||||
Impairment charges | $ 386 | $ 0 | $ 14,834 | $ 0 | |
New York 12 [Member] | Held for sale [Member] | |||||
Long Lived Assets Held-for-sale [Line Items] | |||||
Impairment charges | $ 14,700 | ||||
Joint Venture [Member] | Equinix, Inc. [Member] | Forecast [Member] | |||||
Long Lived Assets Held-for-sale [Line Items] | |||||
Ownership interest | 20.00% | ||||
Joint Venture [Member] | GIC, Singapore Sovereign Wealth Fund [Member] | Forecast [Member] | |||||
Long Lived Assets Held-for-sale [Line Items] | |||||
Ownership interest | 80.00% |
Derivatives and Hedging Activities - Narrative (Detail) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative [Line Items] | ||
Net gain (loss) to be reclassified during next 12 months | $ 28.2 | $ 21.4 |
Designated as hedging instruments [Member] | Cross-currency interest rate swap [Member] | ||
Derivative [Line Items] | ||
Derivative, notional amount | 750.0 | |
Not designated as hedging instruments [Member] | Foreign currency forward contract [Member] | ||
Derivative [Line Items] | ||
Derivative, notional amount | 1,817.2 | 1,500.4 |
Net investment hedges [Member] | Designated as hedging instruments [Member] | ||
Derivative [Line Items] | ||
Derivative, notional amount | 4,130.2 | 4,139.8 |
Cash flow hedges [Member] | Foreign currency forward and option contracts [Member] | ||
Derivative [Line Items] | ||
Derivative, notional amount | $ 853.2 | $ 760.9 |
Derivatives and Hedging Activities - Offsetting Derivative Assets and Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative assets | ||
Gross Amounts | $ 80,919 | $ 73,074 |
Gross Amounts Offset in the Balance Sheet | 0 | 0 |
Net Amounts | 80,919 | 73,074 |
Gross Amounts not Offset in the Balance Sheet | (32,248) | (6,517) |
Net | 48,671 | 66,557 |
Derivative liabilities | ||
Gross Amounts | 35,931 | 9,740 |
Gross Amounts Offset in the Balance Sheet | 0 | 0 |
Net Amounts | 35,931 | 9,740 |
Gross Amounts not Offset in the Balance Sheet | (32,248) | (6,517) |
Net | $ 3,683 | $ 3,223 |
Leases - Narrative (Detail) $ in Millions |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019
HKD ($)
|
Jun. 30, 2019
USD ($)
|
Jan. 01, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Lessee, Lease, Description [Line Items] | ||||
Operating Lease, Liability | $ 1,465,260,000 | |||
Operating lease right-of-use assets | 1,468,378,000 | $ 1,468,762,000 | $ 0 | |
Lease liability | 260,300,000 | |||
Hong Kong 4 Data Center [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating Lease, Liability | $ 317.3 | 40,600,000 | ||
Operating lease right-of-use assets | $ 317.3 | 40,600,000 | ||
Property, plant and equipment [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Right-of-use asset, finance lease | 968,200,000 | |||
Finance lease, amortization | $ 449,400,000 | |||
Minimum [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease not yet commenced, remaining lease term | 5 years | |||
Maximum [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease not yet commenced, remaining lease term | 29 years |
Leases - Lease Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Finance lease cost | ||
Amortization of right-of-use assets | $ 19,811 | $ 39,897 |
Interest on lease liabilities | 27,111 | 54,634 |
Total finance lease cost | 46,922 | 94,531 |
Operating lease cost | 54,920 | 106,559 |
Total lease cost | $ 101,842 | $ 201,090 |
Leases - Other Information (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Cash Flow, Lessee [Abstract] | |
Operating cash flows from finance leases | $ 52,701 |
Operating cash flows from operating leases | 101,875 |
Financing cash flows from finance leases | 43,112 |
Right-of-use assets obtained in exchange for lease obligations | |
Finance leases | 2,597 |
Operating leases | $ 77,905 |
Weighted-average remaining lease term - finance leases | 14 years |
Weighted-average remaining lease term - operating leases | 13 years |
Weighted-average discount rate - finance leases | 10.00% |
Weighted-average discount rate - operating leases | 4.00% |
Held for sale [Member] | |
Long Lived Assets Held-for-sale [Line Items] | |
Financing lease right-of-use assets | $ 36,900 |
Operating lease right-of-use assets | $ 9,600 |
Debt Facilities - Mortgage and Loans Payable (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Long term debt, gross | $ 1,344,241 | $ 1,388,524 |
Less the amount representing debt discount and debt issuance cost | (5,725) | (6,614) |
Add amount representing unamortized mortgage premium | 1,830 | 1,882 |
Loans payable current and non current | 1,340,346 | 1,383,792 |
Less current portion | (72,795) | (73,129) |
Loans payable, noncurrent | 1,267,551 | 1,310,663 |
Term loans [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt, gross | 1,301,849 | 1,344,482 |
Mortgage payable and other loans payable [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt, gross | $ 42,392 | $ 44,042 |
Debt Facilities - Summary of Maturities of Debt Instruments (Detail) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2019 (6 months remaining) | $ 186,592 |
2020 | 372,978 |
2021 | 222,722 |
2022 | 1,908,801 |
2023 | 1,002,528 |
Thereafter | 5,978,650 |
Total long term debt | $ 9,672,271 |
Debt Facilities - Fair Value of Debt Instruments (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Mortgage and loans payable | $ 1,349,302 | $ 1,389,632 |
Senior notes | $ 8,710,218 | $ 8,422,211 |
Senior Notes [Member] | 5.000% Infomart Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 5.00% |
Debt Facilities - Interest Charges (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Debt Disclosure [Abstract] | ||||
Interest expense | $ 120,547 | $ 134,673 | $ 243,393 | $ 260,950 |
Interest capitalized | 5,910 | 3,484 | 15,764 | 6,798 |
Interest charges incurred | 126,457 | 138,157 | 259,157 | 267,748 |
Interest paid, net of capitalized interest | $ 107,400 | $ 111,600 | $ 243,600 | $ 215,300 |
Commitments and Contingencies (Detail) $ in Billions |
Jun. 30, 2019
USD ($)
|
---|---|
Capital expenditures [Member] | |
Other Commitments [Line Items] | |
Purchase commitments | $ 0.9 |
Miscellaneous purchase commitments [Member] | |
Other Commitments [Line Items] | |
Purchase commitments | $ 1.0 |
Stockholders' Equity - Rollforward - Additional Information (Details) - $ / shares |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Equity [Abstract] | ||||
Dividend distribution on common stock (in dollars per share) | $ 2.46 | $ 2.46 | $ 2.28 | $ 2.28 |
Stockholders' Equity - Stock-Based Compensation Expense Recognized in Company's Condensed Consolidated Statement of Operations (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 61,519 | $ 49,725 | $ 110,542 | $ 92,261 |
Cost of revenues [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 6,500 | 4,607 | 11,512 | 8,506 |
Sales and marketing [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 15,157 | 14,108 | 28,458 | 25,814 |
General and administrative [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 39,862 | $ 31,010 | $ 70,572 | $ 57,941 |
Segment Information - Additional Information (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2019
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Information - Schedule of Adjusted EBITDA (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||||
Total adjusted EBITDA | $ 677,010 | $ 604,004 | $ 1,337,165 | $ 1,183,519 |
Depreciation, amortization and accretion expense | (320,550) | (308,828) | (635,255) | (615,293) |
Stock-based compensation expense | (61,519) | (49,725) | (110,542) | (92,261) |
Impairment charges | (386) | 0 | (14,834) | 0 |
Acquisition costs | (2,774) | (30,413) | (5,245) | (35,052) |
Income from operations | 291,781 | 215,038 | 571,289 | 440,913 |
Americas [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total adjusted EBITDA | 309,052 | 293,955 | 616,890 | 585,504 |
EMEA [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total adjusted EBITDA | 209,645 | 170,815 | 408,717 | 336,993 |
Asia-Pacific [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total adjusted EBITDA | $ 158,313 | $ 139,234 | $ 311,558 | $ 261,022 |
Segment Information - Segment Disclosures (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | $ 319,224 | $ 307,331 | $ 632,402 | $ 614,899 |
Capital expenditures | 444,171 | 520,239 | 808,138 | 869,968 |
Americas [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | 167,244 | 159,922 | 334,014 | 317,500 |
Capital expenditures | 173,623 | 200,277 | 318,118 | 347,606 |
EMEA [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | 87,980 | 88,492 | 172,145 | 181,772 |
Capital expenditures | 170,851 | 222,377 | 335,206 | 376,768 |
Asia-Pacific [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | 64,000 | 58,917 | 126,243 | 115,627 |
Capital expenditures | $ 99,697 | $ 97,585 | $ 154,814 | $ 145,594 |
Segment Information - Long-Lived Assets (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Company's long-lived assets | $ 10,992,740 | $ 10,732,909 | $ 11,026,020 |
Americas [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Company's long-lived assets | 5,055,889 | 5,010,507 | |
EMEA [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Company's long-lived assets | 3,715,307 | 3,726,596 | |
Asia-Pacific [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Company's long-lived assets | $ 2,221,544 | $ 2,288,917 |
Subsequent Events (Detail) |
Jul. 31, 2019
$ / shares
|
---|---|
Subsequent event [Member] | |
Subsequent Event [Line Items] | |
Cash dividends declared (in dollars per share) | $ 2.46 |
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