EQUINIX INC (EQIX) Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered solid topline and cash metrics but GAAP EPS was negative due to non-recurring charges; revenue was $2.261B (+7% YoY, +3% QoQ) and adjusted EBITDA was $1.021B (45% margin) .
• Actual Q4 revenue landed just below the low end of Q3-issued guidance ($2.262–$2.302B), primarily on FX headwinds and timing of nonrecurring xScale fees; adjusted EBITDA was within guidance .
• Management raised the quarterly dividend 10% to $4.69 per share and guided FY 2025 to 49% adjusted EBITDA margin with AFFO up 7–10% (normalized 9–12%) and total capex of $3.2–$3.5B .
• Strategic drivers: record gross bookings, interconnection now 19% of recurring revenue, strong AI/HPC demand (half of top-25 deals in Q4), and xScale JV scale-up; near-term catalysts include margin expansion and recurring revenue step-ups in 2025 .

What Went Well and What Went Wrong

What Went Well

• AI/HPC demand accelerated: “more than half of the volume of our top 25 deals” tied to high-performance compute and AI, with growing enterprise use cases (healthcare, finance, transportation, gaming) .
• Interconnection strength: 482,000 total interconnections, +6,000 Q4 additions; interconnection revenue +9% YoY and now 19% of recurring revenue; Equinix Fabric adoption of 25/50 Gbps circuits rising .
• Dividend and margin trajectory: dividend per share up 10%; FY25 guidance implies adjusted EBITDA margin of ~49%, +190 bps YoY on operating leverage and lower power pass-through .

What Went Wrong

• GAAP EPS loss in Q4: diluted EPS was -$0.14, driven by $314M non-recurring charges (impairments, restructuring, transaction costs) and debt extinguishment; these also cut full-year GAAP net income .
• FX headwinds and nonrecurring fee timing: Q4 revenue faced $22M FX headwind vs prior guidance rates and deferral of certain nonrecurring xScale fees into Q1 2025 .
• Capacity constraints in Tier-1 metros limited bookings upside; management is accelerating “build bolder” large-phase expansions to address constrained inventory .

Financial Results

Key comparisons:

• Revenue: +7.2% YoY ($2.261B vs $2.110B) ; +2.7% QoQ ($2.261B vs $2.201B) .
• Adjusted EBITDA: +11.0% YoY ($1.021B vs $0.920B) ; -2.6% QoQ ($1.021B vs $1.048B) .
• AFFO: +11.4% YoY ($770M vs $691M) ; -11.1% QoQ ($770M vs $866M) .

Segment/Region revenue (services basis):

Select KPIs and operating metrics:

Notes:

• Q4 diluted GAAP EPS negative from non-recurring charges ($160M metal asset impairment, $73M HK4 impairment, $31M restructuring) and loss on debt extinguishment .
• Q4 adjusted EBITDA within guidance; sequential margin decline reflects seasonality, higher repairs/maintenance ($83M vs ~$50M avg), xScale fee mix, and FX .

Guidance Changes

Context:

• Q4 underperformance vs guidance driven by FX turning from expected benefit (Q3 outlook) to $22M headwind during Q4 and deferral of nonrecurring fees .
• FY25 guidance includes ~$252M negative FX vs prior guidance rates and lower Metal contribution; margins benefit from operating leverage and lower power pass-through .

Earnings Call Themes & Trends

Management Commentary

• CEO framing the opportunity: “We remain confident that… investment in AI represents a secular demand driver… we cement Equinix as the place where private AI happens. In Q4, more than half of the volume of our top 25 deals was related to high-performance compute and AI workloads” .
• Strategy: “Serve better, solve smarter, build bolder… build bigger data centers in fewer, larger phases… no other provider… offers this unique combination… at a global scale” .
• KPI progress: “MRR per cabinet yield stepped up to $2,326 per cabinet driven by net positive pricing actions and increasing power densities… net cabinets billing stepped up by 2,200” .
• Margin cadence: “We expect quarterly margins to step up over the course of the year… second half adjusted EBITDA margins are expected to be at or near 50%” .

Q&A Highlights

• Inference vs training momentum: Management expects rapid AI adoption; DeepSeek’s implied cost reduction supports broader enterprise feasibility; Equinix’s interconnection density is key to multi-cloud data/app movement .
• xScale JV progress: Hampton site targeted for 2027 asset; three other U.S. sites under review; ~$40M incremental opex embedded in guidance to scale xScale .
• Capacity constraints: Bookings could have been higher absent Tier-1 constraints; “build bolder” accelerates NY3/DC16/LD4 by ~1 year; 62 projects underway .
• Churn outlook: Q4 churn 2.5% (timing effect), normalized 2.2%; 2025 guided 2.0–2.5% with focus on interconnection to lower propensity to churn .
• Margin mechanics: Q4 repairs/maintenance ~$83M vs ~$50M avg, impacting sequential EBITDA; FX headwinds and nonrecurring fee mix also affected Q4 .

Estimates Context

• We attempted to retrieve S&P Global Wall Street consensus for Q4/Q3/Q2 revenue, EPS, and EBITDA; the SPGI API returned a daily limit error, so consensus estimates were unavailable at the time of analysis. As a result, comparisons versus Street estimates are not included.
• Given the guidance-to-actual context, notable items were: Q4 revenue modestly below guidance midpoint (FX and timing of fees) and adjusted EBITDA within range .

Key Takeaways for Investors

• AI/HPC demand is a durable growth vector; interconnection monetization (19% of recurring) and Fabric adoption position Equinix to capture “private AI” workloads across industries .
• Near-term EPS optics are noisy from nonrecurring charges; focus on adjusted metrics and FY25 margin expansion (~49% EBITDA margin, +190 bps YoY) and AFFO growth (7–10%) .
• Capacity remains the gating factor; the “build bolder” strategy and accelerated project phases should unlock additional Tier-1 revenue capture through 2025–2026 .
• xScale JV is shifting from fee lumpy to more recurring contribution over ’25–’26; watch opex ramp in ’25 (~$40M) and leasing progress (>400 MW to date) .
• Cash/dividend support remains strong: increased DPS to $4.69 and liquidity for ’25 capex plan; Americas crossed $1B quarterly revenue for the first time, reinforcing demand depth .
• Trading implications: expect Street to focus on margin cadence (seasonality: Q2 step-up), FX sensitivity, and recurring revenue step-ups over the year; monitor interconnection mix and cabinet density trends that support yield per cabinet .

Sources: SEC 8-K press release and exhibits for Q4 2024; Q2/Q3 2024 8-Ks; Q4 2024 earnings call transcript; Equinix press release on Dell/NVIDIA collaboration.