Demand for interconnection products fuels Equinix’s revenues in Q1 2020

Maria Nikolova

Equinix saw its revenues grow to $1.445 billion in the first quarter of 2020, up from $1.363 billion a year earlier.

Global interconnection and data center company Equinix Inc (NASDAQ:EQIX) has posted a set of solid metrics for the first quarter of 2020, with revenues rising in annual and quarterly terms.

The company reported revenues of $1.445 billion for the quarter to end-March 2020, up from $1,417 billion in the preceding quarter and up from $1,363 billion in the first quarter of 2019.

Interconnection revenues in the first quarter of 2020 grew 14% year-over-year, or 15% on a normalized and constant currency basis, steadily rising over the last few quarters, reflecting the demand across Equinix’s portfolio of interconnection products. In the first three months of 2020, Equinix added an incremental 6,800 interconnections, fueled by content video streaming and unified communication services. ECX Fabric™ demonstrated strong growth in average revenue per user, as higher bandwidth and inter-metro connections become a larger share of the total.

The revenues result includes $15 million of negative foreign currency impact when compared to prior guidance rates.

Net income for the first quarter of 2020 amounted to $119 million, a 5% decrease from the previous quarter, and slightly up from a year earlier.

Among business highlights for the quarter Equinix mentions its acquisition of Packet. Let’s recall that, in March 2020, Equinix announced the completion of the $335 million deal. Now operating as “Packet, an Equinix company,” the Packet team is contributing to Equinix’s strategy to help enterprises seamlessly deploy hybrid multicloud architectures by developing new solutions that combine Packet’s leading bare metal automation technology with the rich ecosystems, global reach and interconnection fabric of Platform Equinix®.

Equinix widened quarterly total revenues and adjusted EBITDA guidance ranges to account for the possible net financial impact associated with COVID-19. For the second quarter of 2020, the company expects revenues to range between $1.446 and $1.466 billion, an increase of 0 – 2% quarter-over-quarter, or a normalized and constant currency increase of approximately 1 – 2%. This guidance includes a negative foreign currency impact of $17 million when compared to the average foreign currency (“FX”) rates in Q1 2020 and an approximate $6 million impact from the COVID-19 reduction in revenues attributed to the waiver of certain Smart Hands fees.

Adjusted EBITDA is expected to range between $679 and $699 million, including a negative foreign currency impact of $7 million when compared to the average FX rates in Q1 2020, $8 million of integration costs from acquisitions, and the flow-through impacts related to COVID-19. Recurring capital expenditures are expected to range between $26 and $36 million.

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