Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Stockholders' Equity

Stockholders' Equity

Stockholders' Equity Rollforward

The following tables provide a rollforward of our stockholders' equity for the three months ended June 30, 2023 and 2022 (in thousands, except share and per share data):

											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, 2022	92,813,976	$	93	(193,273)	$	(71,966)	$	17,320,017	$	(7,317,570)	$	(1,389,446)	$	2,964,838	$	11,505,966	$	(134)	$	11,505,832
Net income (loss)	—	—		—	—		—		—		—		258,786		258,786		(56)		258,730
Other comprehensive income	—	—		—	—		—		—		104,258		—		104,258		—		104,258
Issuance of common stock and release of treasury stock for employee equity awards	419,490	—		16,066	5,978		38,565		—		—		—		44,543		1		44,544
Issuance of common stock under ATM Program	458,459	1		—	—		300,774		—		—		—		300,775		—		300,775
Dividend distribution on common stock,$3.41 per share	—	—		—	—		—		(318,736)		—		—		(318,736)		—		(318,736)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(483)		—		—		(483)		—		(483)
Accrued dividends on unvested equity awards	—	—		—	—		—		(2,406)		—		—		(2,406)		—		(2,406)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		136,345		—		—		—		136,345		—		136,345
Balance as of March 31, 2023	93,691,925	$	94	(177,207)	$	(65,988)	$	17,795,701	$	(7,639,195)	$	(1,285,188)	$	3,223,624	$	12,029,048	$	(189)	$	12,028,859
Net income (loss)		—		—	—		—		—		—		207,030		207,030		(17)		207,013
Other comprehensive income (loss)	—	—		—	—		—		—		(3,268)		—		(3,268)		97		(3,171)
Issuance of common stock and release of treasury stock for employee equity awards	44,734	—		5,417	2,015		527		—		—		—		2,542		—		2,542
Dividend distribution on common stock, $3.41 per share	—	—		—	—		—		(318,914)		—		—		(318,914)		—		(318,914)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(86)		—		—		(86)		—		(86)
Accrued dividends on unvested equity awards	—	—		—	—		—		(5,058)		—		—		(5,058)		—		(5,058)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		112,815		—		—		—		112,815		—		112,815
Balance as of June 30, 2023	93,736,659	$	94	(171,790)	$	(63,973)	$	17,909,043	$	(7,963,253)	$	(1,288,456)	$	3,430,654	$	12,024,109	$	(109)	$	12,024,000

							Additional Paid-in Capital		Accumulated Dividends		AOCI (Loss)		Retained Earnings		Equinix Stockholders' Equity		Non-controlling interests		Total Stockholders' Equity
	Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount
Balance as of December 31, 2021	90,872,826	$	91	(301,420)	$	(112,208)	$	15,984,597	$	(6,165,140)	$	(1,085,751)	$	2,260,493	$	10,882,082	$	(318)	$	10,881,764
Net income	—	—		—	—		—		—		—		147,453		147,453		240		147,693
Other comprehensive income	—	—		—	—		—		—		32,837		—		32,837		3		32,840
Issuance of common stock and release of treasury stock for employee equity awards	430,973	—		11,445	4,259		39,617		—		—		—		43,876		—		43,876
Dividend distribution on common stock, $3.10 per share	—	—		—	—		—		(282,031)		—		—		(282,031)		—		(282,031)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(497)		—		—		(497)		—		(497)
Accrued dividends on unvested equity awards	—	—		—	—		—		(2,045)		—		—		(2,045)		—		(2,045)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		121,210		—		—		—		121,210		—		121,210
Balance as of March 31, 2022	91,303,799	$	91	(289,975)	$	(107,949)	$	16,145,424	$	(6,449,713)	$	(1,052,914)	$	2,407,946	$	10,942,885	$	(75)	$	10,942,810
Net income (loss)	—	—		—	—		—		—		—		216,322		216,322		(80)		216,242
Other comprehensive loss	—	—		—	—		—		—		(365,842)		—		(365,842)		(35)		(365,877)
Issuance of common stock and release of treasury stock for employee equity awards	36,682	—		24,609	9,157		4,882		—		—		—		14,039		—		14,039
Dividend distribution on common stock, $3.10 per share	—	—		—	—		—		(282,168)		—		—		(282,168)		—		(282,168)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(57)		—		—		(57)		—		(57)
Accrued dividends on unvested equity awards	—	—		—	—		—		(4,400)		—		—		(4,400)		—		(4,400)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		109,005		—		—		—		109,005		—		109,005
Balance as of June 30, 2022	91,340,481	$	91	(265,366)	$	(98,792)	$	16,259,311	$	(6,736,338)	$	(1,418,756)	$	2,624,268	$	10,629,784	$	(190)	$	10,629,594

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):

	Balance as of December 31, 2022		Net Change		Balance as of June 30, 2023
Foreign currency translation adjustment (“CTA”) loss	$	(1,838,237)	$	183,040	$	(1,655,197)
Unrealized gain on cash flow hedges (1)	33,953		(17,673)		16,280
Net investment hedge CTA gain (1)	415,749		(64,146)		351,603
Net actuarial loss on defined benefit plans (2)	(911)		(231)		(1,142)
	$	(1,389,446)	$	100,990	$	(1,288,456)

(1)Refer to Note 7 for a discussion of the amounts reclassified from accumulated other comprehensive loss to net income.

(2)We have two defined benefit pension plans covering all employees in two countries where such plans are mandated by law. We do not have any defined benefit plans in any other countries.

Changes in foreign currencies can have a significant impact to our condensed consolidated balance sheets (as evidenced above in our foreign currency translation loss), as well as its condensed consolidated results of operations, as amounts in foreign currencies are generally translated into more U.S. Dollars when the U.S. Dollar weakens or fewer U.S. Dollars when the U.S. Dollar strengthens. As of June 30, 2023, the U.S. Dollar was generally weaker relative to certain of the currencies of the foreign countries in which we operate as compared to December 31, 2022. Because of this, the U.S. Dollar had an overall favorable impact on our condensed consolidated financial position because the foreign denominations translated into more U.S. Dollars as evidenced by a decrease in foreign currency translation loss for the six months ended June 30, 2023 as reflected in the above table. The volatility of the U.S. Dollar as compared to the other currencies in which we operate could have a significant impact on our condensed consolidated financial position and results of operations including the amount of revenue that we report in future periods.

Common Stock

In October 2020, we established an "at the market" equity offering program (the "2020 ATM Program"), under which we could, from time to time, offer and sell shares of our common stock to or through sales agents up to an aggregate of $1.5 billion. In February 2022, we entered into a forward sale amendment to the 2020 ATM Program, under which we could, from time to time, offer and sell shares under the equity distribution agreement pursuant to forward sale transactions (the "Equity Forward Amendment"). In November 2022, we established a successor ATM program, also with substantially the same terms as the Equity Forward Amendment noted above, under which we may, from time to time, offer and sell on a spot or forward basis up to an aggregate of $1.5 billion of our common stock to or through sales agents in "at the market" transactions (the "2022 ATM Program"). The forward sale agreements provide three settlement alternatives to us: physical settlement, cash settlement or net share settlement. In accordance with ASC 815, the forward sale agreements are classified as equity for balance sheet purposes.

During the six months ended June 30, 2022, we executed five forward sale agreements under the 2020 ATM Program to sell 579,873 shares of our common stock. On August 3, 2022, we physically settled these forward sale shares for approximately $393.6 million, net of payment of commissions to sales agents and other offering expenses, at an aggregate weighted-average forward sale price of $678.72 per share. In the fourth quarter of 2022, we executed three additional forward sale agreements to sell 458,459 shares of our common stock with maturity dates ranging from February 2023 to November 2023. Of this amount, 308,875 shares were executed under the 2020 ATM Program and the remaining 149,584 shares were executed under the 2022 ATM Program. As of December 31, 2022, no shares remained available for sale under the 2020 ATM Program. On February 28, 2023, we physically settled these forward sale shares for approximately $301.6 million, net of payment of commissions to sales agents and other offering expenses, at an aggregate weighted-average forward sale price of $657.75 per share.

During the six months ended June 30, 2023, we executed two forward sale agreements to sell 269,547 shares of our common stock with maturity dates ranging from February 2024 to March 2024. As of June 30, 2023, the estimated net settlement value for the forward sale agreements was approximately $199.8 million at an aggregate weighted-average forward sale price of $741.13 per share. The weighted-average forward sale price that we expect to receive upon physical settlement will be subject to adjustments for a discount rate factor equal to a specified benchmark rate less a spread minus scheduled dividends during the terms of the agreements.

As of June 30, 2023, we had approximately $1.2 billion of common stock available for sale under the 2022 ATM Program, which amount gives effect to the unsettled forward sale transactions noted above. For the three and six months ended June 30, 2023, other than as noted above, we sold no additional shares under the 2022 ATM Program and for the three and six months ended June 30, 2022, we did not sell any shares under the 2020 ATM Program.

Stock-Based Compensation

For the six months ended June 30, 2023, the Talent, Culture and Compensation Committee and/or the Stock Award Committee of our Board of Directors, as the case may be, granted an aggregate of 891,561 restricted stock units ("RSUs") to certain employees, including executive officers. These equity awards are subject to vesting provisions and have a weighted-average grant date fair value of $690.63 per share and a weighted-average requisite service period of 3.45 years. The valuation of RSUs 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 our stock price on the date of grant. We use revenues, adjusted funds from operations ("AFFO") per share and digital services revenues as the performance measurements in the RSUs with both service and performance conditions that were granted in the six months ended June 30, 2023.

We use a Monte Carlo simulation option-pricing model to determine the fair value of RSUs with a service and market condition. We used total shareholder return ("TSR") as the performance measurement in the RSUs with a service and market condition that were granted in the six months ended June 30, 2023. There were no significant changes in the assumptions used to determine the fair value of RSUs with a service and market condition that were granted in 2023 compared to the prior year.

The following table presents, by operating expense category, our stock-based compensation expense recognized in our condensed consolidated statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of revenues	$	12,399	$	11,878	$	23,722	$	22,321
Sales and marketing	22,554		23,171		42,059		43,355
General and administrative	69,593		69,633		137,480		128,958
Total	$	104,546	$	104,682	$	203,261	$	194,634

Redeemable Non-controlling Interest

On April 3, 2023, we issued additional shares in our Indonesian operating entity to a third party investor for $25.0 million, which resulted in the third party investor owning a 25% ownership interest in the entity.

The Indonesian operating entity is a VIE because it does not have sufficient funds from its operations to be self-sustaining. We provide certain management services to the entity and earn fees for the performance of such services. We have the power to direct the activities that most significantly impact the economic performance of the entity and have concluded that we are its primary beneficiary.

Under the terms of the shareholders’ agreement, the investor may put its 25% ownership stake in the entity to us for a maximum exercise price of $25.0 million, subject to certain contingent conditions. Accordingly, we present the investor’s contingently redeemable non-controlling interest ("NCI") outside of permanent equity at the higher of its maximum redemption amount of $25.0 million and its balance after attribution of gains and losses in the

condensed consolidated balance sheets. There were no changes in the carrying value of the redeemable NCI for the three and six months ended June 30, 2023.

As of June 30, 2023, the carrying value of the assets and liabilities of the Indonesian VIE, which were included in other assets and other liabilities on the condensed consolidated balance sheets were $28.9 million and $0.7 million, respectively.

The income and losses attributable to us as well as to the redeemable NCI from the Indonesian VIE were insignificant for the three and six months ended June 30, 2023.