Equinix Raises 2008 Guidance (Again)

Equinix (EQIX) has once again exceeded Wall Street's revenue expectations and raised its guidance for the third quarter and full year 2008. That's a repeat of the first quarter, when the company's earnings were followed by similar strength from other colocation and interconnection specialists.

Equinix also announced that it is moving ahead with phase 2 of its NY4 data center in Secaucus, New Jersey, which will add space for another 1,100 cabinets with a density of 5 kilowatts apiece.

Equinix added 144 new customers in the quarter, including NASDAQ, bringing the total number of customers worldwide to 2,090. Equinix executives said they continue to see strong demand for data center space in major markets, a trend which includes financial companies. As a result, the company once again raised its revenue guidance and now expects total revenues in the range of $700 to $710 million for 2008. In April Equinix raised its guidance to $685 million to $700 million, up from its prior view of $650 million to $665 million. The company also projects third quarter revenues of $180 to 184 million, compared to the Wall Street consensus of $178.5 million. UPDATE: In early trading Thursday, shares of Equinix declined more than $6 a share to $86.54, a drop of 6 percent.

"Equinix delivered another strong quarter and, as demonstrated by our increased guidance, is positioned for a very strong second half," said Steve Smith, president and CEO of Equinix. "With our continued focus on business execution and delivering on customer needs, we have a solid foundation to fully capitalize on our market leadership position."

Revenues for the second quarter were $172.0 million, a 9 percent increase over the previous quarter and 87 percent improvement over the same quarter last year. Net income for the second quarter was $2.2 million, compared to net income of $5.4 million in the previous quarter and net income of $1.2 million in the year-ago period. The net income reflects a $3 million negative impact from foreign exchange, and a $3.1 million increase in stock-based compensation expense.

Equinix said it had completed expansions in the London, Paris, Silicon Valley and Washington D.C. markets on schedule, adding approximately 2,750 cabinet equivalents in the U.S. and 2,600 cabinet equivalents in Europe.

The company's cabinet capacity as of June 30 (excluding Europe) was approximately 33,300 cabinets, while about 24,600 cabinets were billing, a utilization rate of 78 percent. Average monthly recurring revenue (MRR) per cabinet in the U.S. as of June 30 was $1,748 up from $1,693 in the previous quarter. Equinix had 20,570 cross-connects in its U.S. data centers.

Equinix executives also said that despite a report from real estate brokerage CBRE of slowing demand for data center space in London, it has seen "absolutely no slowdown in London in terms of demand and/or pricing."