Equinix Reports Second Quarter 2008 Results

Revenues were $172.0 million for the second quarter, a 9% increase over the previous quarter, and an 87% increase over the same quarter last year. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $163.4 million for the second quarter, a 9% increase over the previous quarter and an 86% increase over the same quarter last year. Non-recurring revenues were $8.6 million in the quarter, consisting primarily of professional services and installation fees.

Cost of revenues were $102.0 million for the second quarter, an 8% increase over the previous quarter and an 83% increase over the same quarter last year. Excluding depreciation, amortization, accretion and stock-based compensation of $35.9 million, cost of revenues were $66.1 million for the second quarter, a 7% increase over the previous quarter and a 96% increase over the same quarter last year. Cash gross margins, defined as gross profit less depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 62%, up from 61% the previous quarter and down from 63% the same quarter last year.

Selling, general and administrative expenses were $56.7 million for the second quarter, a 14% increase from the previous quarter and a 70% increase over the same quarter last year. Excluding depreciation, amortization and stock-based compensation of $19.9 million, selling, general and administrative expenses were $36.8 million for the second quarter, an 8% increase over the previous quarter and a 62% increase 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 same quarter last year. This reflects a negative $3.0 million quarter-over-quarter fluctuation related to foreign exchange, and a specific $3.1 million increase in stock-based compensation expense related to the executive change in our European operations. This represents a basic net income per share of $0.06 based on a weighted average share count of 36.6 million and a diluted net income per share of $0.06 based on a weighted average share count of 37.8 million for the second quarter of 2008.

EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation expense, restructuring charges and any gains or losses from asset sales, for the second quarter was $69.1 million, an increase of 11% from the previous quarter and up 96% from the same quarter last year.

"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."

Capital expenditures in the second quarter were $84.5 million, of which $11.9 million was attributed to ongoing capital expenditures and $72.6 million was attributed to expansion capital expenditures.

The Company generated cash from operating activities of $66.5 million for the second quarter as compared to $63.1 million in the previous quarter, and $38.1 million the same quarter last year. Cash used in investing activities was $108.4 million in the second quarter as compared to $165.1 million in the previous quarter and $157.4 million for the same quarter last year.

As of June 30, 2008, the Company's cash, cash equivalents and investments were $324.7 million, as compared to $325.5 million as of March 31, 2008.

Other Company Developments

-- As announced in a separate press release today, Margie Backaus has decided to step down from her role as chief business officer. Backaus will transition out of her current responsibilities through the end of the year

-- Appointed Mark Adams to the post of chief development officer. Adams has over twenty years of strategy and business development experience across various sectors of the high-tech industry including positions at EFI, General Electric Capital, McKinsey & Company and Adaptec. He will have global responsibility over Equinix's corporate strategy and M&A activity across all three regions

-- Appointed Dave Pickut to the post of chief technology officer. Pickut, who has held several management positions with the Company since 2001, will play a key leadership role in developing and evangelizing Equinix's technological blueprint for the IBX center of the future

-- Completed on-schedule expansions in the London, Paris, Silicon Valley and Washington D.C. markets, adding approximately 2,750 cabinet equivalents in the U.S., and 2,600 cabinet equivalents in Europe

-- Announced plans for an expansion in its existing NY4 IBX center in Secaucus, N.J. The expansion will add 1,100 cabinets to the Company's capacity in the New York market at 5 kilowatts per cabinet. Capital expenditures for the expansion are expected to be in the range of $80.0 to $90.0 million, of which $52.0 million is expected to be committed in 2008

-- Launched Equinix Exchange service in the Paris market and signed several initial customers

Company Metrics

-- Cabinet capacity as of June 30, 2008, and excluding the Europe region, was approximately 33,300 cabinets, including 27,200 in the U.S., and 6,100 in Asia

-- The total number of cabinets billing as of June 30, 2008, and excluding the Europe region, was approximately 25,100 representing an approximate utilization rate of 76%, a net increase of approximately 1,600 cabinets in the quarter

-- Cabinet and MRR churn was approximately 2.0% in the quarter

-- On a weighted average basis as of June 30, 2008, and excluding the Europe region, the number of cabinets billing was approximately 24,600 representing an approximate utilization rate of 78%. In the U.S., this result was 19,700 representing an approximate utilization rate of 77%. In Asia, this result was 4,900 representing an approximate utilization rate of 82%

-- Weighted average monthly recurring revenue (MRR) per cabinet as of June 30, 2008, and excluding the Europe region, was $1,650. In the U.S., this result was $1,748 and in Asia, it was $1,261

-- U.S. interconnection service revenues were 19% of U.S. recurring revenues for the quarter. Interconnection services represented approximately 14% of total worldwide recurring revenues for the quarter

-- The total number of U.S. cross connects that were billing as of June 30, 2008 was 20,570

-- The total number of exchange ports sold as of June 30, 2008 was 703, which included 120 in Asia and 69 in Europe, and 114 were 10 gigabits per second Ethernet ports

-- Added 144 new customers in the quarter, including NASDAQ, bringing the total number of customers worldwide to 2,090, which excludes approximately 450 customers related to a portion of the Netherlands operations

Business Outlook

For the third quarter of 2008, the Company expects revenues to be in the range of $180.0 to $184.0 million. Cash gross margins are expected to be approximately 61% including incremental costs from expansion IBX centers opening in the quarter and increasing utility rates related to both seasonal and inflationary adjustments. Cash selling, general and administrative expenses are expected to be approximately $38.0 million. EBITDA for the quarter is expected to be between $70.0 and $74.0 million. Capital expenditures for the third quarter of 2008 are expected to be $125.0 to $130.0 million, comprised of approximately $25.0 million of ongoing capital expenditures and $100.0 to $105.0 million of expansion capital expenditures.

For the full year of 2008, total revenues are expected to be in the range of $700.0 to $710.0 million. Total year cash gross margins are expected to be approximately 61%. Cash selling, general and administrative expenses are expected to be approximately $148.0 million. EBITDA for the year is expected to be between $280.0 and $286.0 million. Capital expenditures for 2008 are expected to be in the range of $450.0 to $460.0 million, comprised of approximately $60.0 million of ongoing capital expenditures and $390.0 to $400.0 million of expansion capital expenditures. This range includes $50.0 million for the NY4 phase II expansion announced today and $30.0 million of capital expenditures for the LA4 IBX center, not originally included in the 2008 guidance. The total investment expected for the LA4 expansion remains unchanged at approximately $110 million. Expansion capital expenditures are for the announced expansions in the Amsterdam, Frankfurt, Hong Kong, London, Los Angeles, New York, Paris, Silicon Valley, Singapore, Sydney, Tokyo and Washington, D.C. markets.

The Company will discuss its results and guidance on its quarterly conference call on Wednesday, July 23, 2008, at 5:30 p.m. ET (2:30 p.m. PT). To hear the conference call live, please dial 210-234-0004 (domestic and international) and reference the passcode (EQIX). A simultaneous live Webcast of the call will be available over the Internet at www.equinix.com, under the Investor Relations heading.

A replay of the call will be available beginning on Wednesday, July 23, 2008, at 7:30 p.m. (ET) through August 23, 2008 by dialing 203-369-0647. In addition, the Webcast will be available on the company's Web site at www.equinix.com. No password is required for either method of replay.

About Equinix

Equinix is the leading global provider of network-neutral data center and interconnection services, offering premium colocation, traffic exchange and outsourced IT infrastructure solutions. Global enterprises, content companies, systems integrators and network service providers look to Equinix Internet Business Exchange (IBX(R)) centers for world-class reliability and network diversity. Equinix IBX centers serve as critical, core hubs for IP networks and Internet operations worldwide. With 40 IBX centers located in 18 strategic markets across North America, Europe and Asia-Pacific, Equinix enables customers to reliably operate their mission-critical infrastructure on a global basis.

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the challenges of acquiring, operating and constructing IBX centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of companies we have or will acquire into Equinix; a failure to receive significant revenue from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; the results of any litigation relating to past stock option grants and practices; and other risks described from time to time in Equinix's filings with the Securities and Exchange Commission. In particular, see Equinix's recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.

Equinix and IBX are registered trademarks of Equinix, Inc. Internet Business Exchange is a trademark of Equinix, Inc.

Non-GAAP Financial Measures

Equinix continues to provide all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Equinix uses non- GAAP financial measures, such as EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), free cash flow and adjusted free cash flow to evaluate its operations. In presenting these non-GAAP financial measures, Equinix excludes certain non-cash or non-recurring items that it believes are not good indicators of the Company's current or future operating performance. These non-cash or non-recurring items are depreciation, amortization, accretion, stock-based compensation, restructuring charges and, with respect to 2007 results, the loss from conversion and extinguishment of debt and gain on EMS sale. Recent legislative and regulatory changes encourage use of and emphasis on GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. Equinix excludes these non-cash or non-recurring items in order for Equinix's lenders, investors, and industry analysts who review and report on the Company, to better evaluate the Company's operating performance and cash spending levels relative to its industry sector and competitor base.

Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of our IBX centers and do not reflect our current or future cash spending levels to support our business. Our IBX centers are long-lived assets, and have an economic life greater than ten years. The construction costs of our IBX centers do not recur and future capital expenditures remain minor relative to our initial investment. This is a trend we expect to continue. In addition, depreciation is also based on the estimated useful lives of our IBX centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX centers, and are not indicative of current or expected future capital expenditures. Therefore, Equinix excludes depreciation from its operating results when evaluating its operations.

In addition, in presenting the non-GAAP financial measures, Equinix excludes amortization expense related to certain intangible assets, as it represents a cost that may not recur and is not a good indicator of the Company's current or future operating performance. Equinix excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charge liabilities, as these expenses represent costs, which Equinix believes are not meaningful in evaluating the Company's current operations. Equinix excludes non-cash stock-based compensation expense as it represents expense attributed to stock awards that have no current or future cash obligations. As such, we, and our investors and analysts, exclude this stock-based compensation expense when assessing the cash generating performance of our operations. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to the Company's decision to exit leases for excess space adjacent to several of our IBX centers, which we do not intend to build out now or in the future. With respect to its 2007 results, Equinix excludes the loss from conversion and extinguishment of debt and the gain from EMS sale. The loss from conversion and extinguishment of debt represents activity that is not typical for the company. The gain on EMS sale represents a unique transaction for the Company and future sales of other service offerings are not expected. Management believes such items as restructuring charges, the gain on the sale of a service offering and the loss from conversion and extinguishment of debt are unique transactions that are not expected to recur, and consequently, does not consider these items as a normal component of expenses or income related to current and ongoing operations.

Our management does not itself, nor does it suggest that investors should, consider such non- GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. However, we have presented such non-GAAP financial measures to provide investors with an additional tool to evaluate our operating results in a manner that focuses on what management believes to be our core, ongoing business operations. Management believes that the inclusion of these non-GAAP financial measures provide consistency and comparability with past reports and provide a better understanding of the overall performance of the business and its ability to perform in subsequent periods. Equinix believes that if it did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze Equinix effectively.

Investors should note, however, that the non-GAAP financial measures used by Equinix may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies. In addition, whenever Equinix uses such non-GAAP financial measures, it provides a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.

Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, net income (loss) from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data. Equinix intends to calculate the various non-GAAP financial measures in future periods consistent with how it was calculated for the three and six months ended June 30, 2008 and 2007, presented within this press release.

EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION (in thousands, except per share detail) (unaudited) Three Months Ended Six Months Ended ---------------------------- ------------------- June 30, March 31, June 30, June 30, June 30, 2008 2008 2007 2008 2007 --------- --------- -------- --------- --------- Recurring revenues $163,395 $150,359 $87,904 $313,754 $168,790 Non-recurring revenues 8,649 7,859 3,933 16,508 8,156 --------- --------- -------- --------- --------- Revenues 172,044 158,218 91,837 330,262 176,946 Cost of revenues 102,008 94,486 55,609 196,494 108,374 --------- --------- -------- --------- --------- Gross profit 70,036 63,732 36,228 133,768 68,572 --------- --------- -------- --------- --------- Operating expenses: Sales and marketing 15,290 15,351 8,896 30,641 17,972 General and administrative 41,445 34,376 24,478 75,821 46,940 Restructuring charges - - 407 - 407 --------- --------- -------- --------- --------- Total operating expenses 56,735 49,727 33,781 106,462 65,319 --------- --------- -------- --------- --------- Income from operations 13,301 14,005 2,447 27,306 3,253 --------- --------- -------- --------- --------- Interest and other income (expense): Interest income 2,411 3,441 5,082 5,852 7,031 Interest expense (12,823) (13,594) (5,986) (26,417) (9,578) Other income (expense) (918) 2,040 (129) 1,122 1 Loss on conversion and extinguishment of debt - - - - (3,395) --------- --------- -------- --------- --------- Total interest and other, net (11,330) (8,113) (1,033) (19,443) (5,941) --------- --------- -------- --------- --------- Net income (loss) before income taxes 1,971 5,892 1,414 7,863 (2,688) Income taxes 258 (471) (197) (213) (551) --------- --------- -------- --------- --------- Net income (loss) $ 2,229 $ 5,421 $ 1,217 $ 7,650 $ (3,239) ========= ========= ======== ========= ========= Net income (loss) per share: Basic net income (loss) per share $ 0.06 $ 0.15 $ 0.04 $ 0.21 $ (0.11) ========= ========= ======== ========= ========= Diluted net income (loss) per share $ 0.06 $ 0.15 $ 0.04 $ 0.20 $ (0.11) ========= ========= ======== ========= ========= Shares used in computing basic net income (loss) per share 36,572 36,277 31,126 36,424 30,424 ========= ========= ======== ========= ========= Shares used in computing diluted net income (loss) per share 37,844 37,259 32,641 37,570 30,424 ========= ========= ======== ========= =========

EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended Six Months Ended ----------------------------- ------------------- June 30, March 31, June 30, June 30, June 30, 2008 2008 2007 2008 2007 --------- --------- --------- --------- --------- Recurring revenues $163,395 $150,359 $ 87,904 $313,754 $168,790 Non-recurring revenues 8,649 7,859 3,933 16,508 8,156 --------- --------- --------- --------- --------- Revenues (1) 172,044 158,218 91,837 330,262 176,946 --------- --------- --------- --------- --------- Cash cost of revenues (2) 66,088 61,761 33,739 127,849 65,670 --------- --------- --------- --------- --------- Cash gross profit (3) 105,956 96,457 58,098 202,413 111,276 --------- --------- --------- --------- --------- Cash operating expenses (4): Cash sales and marketing expenses (5) 10,911 11,477 7,116 22,388 13,551 Cash general and administrative expenses (6) 25,911 22,711 15,671 48,622 30,036 --------- --------- --------- --------- --------- Total cash operating expenses (7) 36,822 34,188 22,787 71,010 43,587 --------- --------- --------- --------- --------- EBITDA (8) $ 69,134 $ 62,269 $ 35,311 $131,403 $ 67,689 ========= ========= ========= ========= ========= Cash gross margins (9) 62% 61% 63% 61% 63% ========= ========= ========= ========= ========= EBITDA flow-through rate (10) 50% 78% 44% 50% 53% ========= ========= ========= ========= ========= -------------------- (1) The geographic split of our revenues on a services basis is presented below: United States Revenues: Colocation $ 83,053 $ 75,297 $ 57,993 $158,350 $110,504 Interconnection 20,106 19,019 16,660 39,125 32,543 Managed infrastructure 503 554 575 1,057 1,116 Rental 117 248 325 365 633 --------- --------- --------- --------- --------- Recurring revenues 103,779 95,118 75,553 198,897 144,796 Non-recurring revenues 3,468 4,078 2,697 7,546 5,980 --------- --------- --------- --------- --------- Revenues 107,247 99,196 78,250 206,443 150,776 --------- --------- --------- --------- --------- Asia-Pacific Revenues: Colocation 13,485 11,811 7,648 25,296 14,896 Interconnection 1,648 1,535 993 3,183 1,830 Managed infrastructure 3,525 3,662 3,710 7,187 7,268 Rental - - - - - --------- --------- --------- --------- --------- Recurring revenues 18,658 17,008 12,351 35,666 23,994 Non-recurring revenues 1,946 1,165 1,236 3,111 2,176 --------- --------- --------- --------- --------- Revenues 20,604 18,173 13,587 38,777 26,170 --------- --------- --------- --------- --------- Europe Revenues: Colocation 36,436 34,241 - 70,677 - Interconnection 1,638 1,594 - 3,232 - Managed infrastructure 2,805 2,284 - 5,089 - Rental 79 114 - 193 - --------- --------- --------- --------- --------- Recurring revenues 40,958 38,233 - 79,191 - Non-recurring revenues 3,235 2,616 - 5,851 - --------- --------- --------- --------- --------- Revenues 44,193 40,849 - 85,042 - --------- --------- --------- --------- --------- Worldwide Revenues: Colocation 132,974 121,349 65,641 254,323 125,400 Interconnection 23,392 22,148 17,653 45,540 34,373 Managed infrastructure 6,833 6,500 4,285 13,333 8,384 Rental 196 362 325 558 633 --------- --------- --------- --------- --------- Recurring revenues 163,395 150,359 87,904 313,754 168,790 Non-recurring revenues 8,649 7,859 3,933 16,508 8,156 --------- --------- --------- --------- --------- Revenues $172,044 $158,218 $ 91,837 $330,262 $176,946 ========= ========= ========= ========= ========= (2) We define cash cost of revenues as cost of revenues less depreciation, amortization, accretion and stock-based compensation as presented below: Cost of revenues $102,008 $ 94,486 $ 55,609 $196,494 $108,374 Depreciation, amortization and accretion expense (34,712) (31,755) (20,866) (66,467) (40,563) Stock-based compensation expense (1,208) (970) (1,004) (2,178) (2,141) --------- --------- --------- --------- --------- Cash cost of revenues $ 66,088 $ 61,761 $ 33,739 $127,849 $ 65,670 ========= ========= ========= ========= ========= The geographic split of our cash cost of revenues is presented below: U.S. cash cost of revenues $ 33,587 $ 33,006 $ 27,899 $ 66,593 $ 54,397 Asia-Pacific cash cost of revenues 8,872 7,769 5,840 16,641 11,273 Europe cash cost of revenues 23,629 20,986 - 44,615 - --------- --------- --------- --------- --------- Cash cost of revenues $ 66,088 $ 61,761 $ 33,739 $127,849 $ 65,670 ========= ========= ========= ========= ========= (3) We define cash gross profit as revenues less cash cost of revenues (as defined above). (4) We define cash operating expenses as operating expenses less depreciation, amortization, stock-based compensation, restructuring charges and gains on asset sales. We also refer to cash operating expenses as cash selling, general and administrative expenses or "cash SG&A". (5) We define cash sales and marketing expenses as sales and marketing expenses less depreciation, amortization and stock-based compensation as presented below: Sales and marketing expenses $ 15,290 $ 15,351 $ 8,896 $ 30,641 $ 17,972 Depreciation and amortization expense (1,626) (1,573) (15) (3,199) (30) Stock-based compensation expense (2,753) (2,301) (1,765) (5,054) (4,391) --------- --------- --------- --------- --------- Cash sales and marketing expenses $ 10,911 $ 11,477 $ 7,116 $ 22,388 $ 13,551 ========= ========= ========= ========= ========= (6) We define cash general and administrative expenses as general and administrative expenses less depreciation, amortization and stock-based compensation as presented below: General and administrative expenses $ 41,445 $ 34,376 $ 24,478 $ 75,821 $ 46,940 Depreciation and amortization expense (2,447) (2,595) (1,531) (5,042) (2,893) Stock-based compensation expense (13,087) (9,070) (7,276) (22,157) (14,011) --------- --------- --------- --------- --------- Cash general and administrative expenses $ 25,911 $ 22,711 $ 15,671 $ 48,622 $ 30,036 ========= ========= ========= ========= ========= (7) Our cash operating expenses, or cash SG&A, as defined above, is presented below: Cash sales and marketing expenses $ 10,911 $ 11,477 $ 7,116 $ 22,388 $ 13,551 Cash general and administrative expenses 25,911 22,711 15,671 48,622 30,036 --------- --------- --------- --------- --------- Cash SG&A $ 36,822 $ 34,188 $ 22,787 $ 71,010 $ 43,587 ========= ========= ========= ========= ========= The geographic split of our cash operating expenses, or cash SG&A, is presented below: U.S. cash SG&A $ 22,846 $ 20,054 $ 19,328 $ 42,900 $ 36,399 Asia-Pacific cash SG&A 4,686 5,034 3,459 9,720 7,188 Europe cash SG&A 9,290 9,100 - 18,390 - --------- --------- --------- --------- --------- Cash SG&A $ 36,822 $ 34,188 $ 22,787 $ 71,010 $ 43,587 ========= ========= ========= ========= ========= (8) We define EBITDA as income (loss) from operations less depreciation, amortization, accretion, stock-based compensation expense, restructuring charges and gains on asset sales as presented below: Income (loss) from operations $ 13,301 $ 14,005 $ 2,447 $ 27,306 $ 3,253 Depreciation, amortization and accretion expense 38,785 35,923 22,412 74,708 43,486 Stock-based compensation expense 17,048 12,341 10,045 29,389 20,543 Restructuring charges - - 407 - 407 Gains on asset sales - - - - - --------- --------- --------- --------- --------- EBITDA $ 69,134 $ 62,269 $ 35,311 $131,403 $ 67,689 ========= ========= ========= ========= ========= The geographic split of our EBITDA is presented below: U.S. income (loss) from operations $ 15,310 $ 13,278 $ 1,246 $ 28,588 $ 1,614 U.S. depreciation, amortization and accretion expense 24,615 23,220 20,626 47,835 40,065 U.S. stock-based compensation expense 10,889 9,638 8,744 20,527 17,894 U.S. restructuring charges - - 407 - 407 U.S. gain on asset sale - - - - - --------- --------- --------- --------- --------- U.S. EBITDA 50,814 46,136 31,023 96,950 59,980 --------- --------- --------- --------- --------- Asia-Pacific income (loss) from operations 1,138 675 1,201 1,813 1,639 Asia-Pacific depreciation, amortization and accretion expense 4,449 3,624 1,786 8,073 3,421 Asia-Pacific stock-based compensation expense 1,459 1,071 1,301 2,530 2,649 Asia-Pacific restructuring charges - - - - - Asia-Pacific gain on asset sale - - - - - --------- --------- --------- --------- --------- Asia-Pacific EBITDA 7,046 5,370 4,288 12,416 7,709 --------- --------- --------- --------- --------- Europe income (loss) from operations (3,147) 52 - (3,095) - Europe depreciation, amortization and accretion expense 9,721 9,079 - 18,800 - Europe stock- based compensation expense 4,700 1,632 - 6,332 - Europe restructuring charges - - - - - Europe gain on asset sale - - - - - --------- --------- --------- --------- --------- Europe EBITDA 11,274 10,763 - 22,037 - --------- --------- --------- --------- --------- EBITDA $ 69,134 $ 62,269 $ 35,311 $131,403 $ 67,689 ========= ========= ========= ========= ========= (9) We define cash gross margins as cash gross profit divided by revenues. Our cash gross margins by geographic region is presented below: U.S. cash gross margins 69% 67% 64% 68% 64% ========= ========= ========= ========= ========= Asia-Pacific cash gross margins 57% 57% 57% 57% 57% ========= ========= ========= ========= ========= Europe cash gross margins 47% 49% n/a 48% n/a ========= ========= ========= ========= ========= (10)We define EBITDA flow-through rate as incremental EBITDA growth divided by incremental revenue growth as follows: EBITDA - current period $ 69,134 $ 62,269 $ 35,311 $131,403 $ 67,689 Less EBITDA - prior period (62,269) (47,062) (32,378) (87,701) (55,199) --------- --------- --------- --------- --------- EBITDA growth $ 6,865 $ 15,207 $ 2,933 $ 43,702 $ 12,490 ========= ========= ========= ========= ========= Revenues - current period $172,044 $158,218 $ 91,837 $330,262 $176,946 Less revenues - prior period (158,218) (138,714) (85,109) (242,496) (153,498) --------- --------- --------- --------- --------- Revenue growth $ 13,826 $ 19,504 $ 6,728 $ 87,766 $ 23,448 ========= ========= ========= ========= ========= EBITDA flow- through rate 50% 78% 44% 50% 53% ========= ========= ========= ========= =========

EQUINIX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) Assets June 30, December 31, 2008 2007 ------------ ------------ Cash, cash equivalents and investments $ 324,749 $ 383,900 Accounts receivable, net 63,105 60,089 Property and equipment, net 1,331,017 1,162,720 Goodwill and other intangible assets, net 530,381 505,628 Debt issuance costs, net 19,720 21,333 Deposits 17,704 16,731 Restricted cash 16,075 1,982 Prepaid expenses 12,948 11,070 Deferred tax assets 6,808 6,404 Taxes receivable 2,575 3,437 Other assets 5,900 4,069 ------------ ------------ Total assets $ 2,330,982 $ 2,177,363 ============ ============ Liabilities and Stockholders' Equity Accounts payable $ 17,840 $ 14,816 Accrued expenses 56,882 50,280 Accrued property and equipment 53,029 76,504 Accrued restructuring charges 11,059 12,140 Capital lease and other financing obligations 101,399 97,412 Mortgage and loans payable 412,397 330,496 Convertible debt 678,236 678,236 Deferred rent 30,557 26,912 Deferred installation revenue 33,143 26,537 Deferred tax liabilities 24,115 21,249 Deferred recurring revenue 10,428 9,556 Asset retirement obligations 10,715 8,759 Customer deposits 10,931 8,844 Other liabilities 1,578 989 ------------ ------------ Total liabilities 1,452,309 1,362,730 ------------ ------------ Common stock 37 37 Additional paid-in capital 1,425,778 1,376,915 Accumulated other comprehensive income 3,840 (3,687) Accumulated deficit (550,982) (558,632) ------------ ------------ Total stockholders' equity 878,673 814,633 ------------ ------------ Total liabilities and stockholders' equity $ 2,330,982 $ 2,177,363 ============ ============ --------------------------------------------------------- ------------ Ending headcount by geographic region is as follows: U.S. headcount 591 546 Asia-pacific headcount 181 187 Europe headcount 246 178 ------------ ------------ Total headcount 1,018 911 ============ ============

EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended Six Months Ended -------------------------------- --------------------- June 30, March 31, June 30, June 30, June 30, 2008 2008 2007 2008 2007 ---------- ---------- ---------- ---------- ---------- Net cash provided by operating activities $ 64,958 $ 62,984 $ 37,862 $ 127,942 $ 57,712 Net cash used in investing activities (216,215) (136,200) (181,892) (352,415) (229,949) Net cash provided by financing activities 41,924 44,598 50,519 86,522 323,772 Effect of foreign currency exchange rates on cash and cash equivalents (374) (1,181) 449 (1,555) 500 ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents (109,707) (29,799) (93,062) (139,506) 152,035 Cash and cash equivalents at beginning of period 260,834 290,633 327,660 290,633 82,563 ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents at end of period $ 151,127 $ 260,834 $ 234,598 $ 151,127 $ 234,598 ========== ========== ========== ========== ========== In addition to the above condensed consolidated statements of cash flows presented on a GAAP basis, the Company presents non-GAAP condensed consolidated statements of cash flows which combine the Company's short-term and long-term investments with our cash and cash equivalents in an effort to present our total unrestricted cash and equivalent balances as presented herein in our condensed consolidated balance sheets. Following is a reconciliation of our cash and cash equivalents to our cash, cash equivalents and investments, which is the basis of how our non-GAAP condensed consolidated statements of cash flows are presented on the following page: Cash and cash equivalents $ 151,127 $ 260,834 $ 234,598 $ 151,127 $ 234,598 Short-term investments 64,980 37,694 67,728 64,980 67,728 Long-term investments 108,642 26,998 21,640 108,642 21,640 ---------- ---------- ---------- ---------- ---------- Cash, cash equivalents and investments as presented on condensed balance sheet presented herein $ 324,749 $ 325,526 $ 323,966 $ 324,749 $ 323,966 ========== ========== ========== ========== ==========

EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - NON-GAAP PRESENTATION (1) (in thousands) (unaudited) Three Months Ended Six Months Ended ------------------------------- --------------------- June 30, March 31, June 30, June 30, June 30, 2008 2008 2007 2008 2007 --------- ---------- ---------- ---------- ---------- Cash flows from operating activities: Net income (loss) $ 2,229 $ 5,421 $ 1,217 $ 7,650 $ (3,239) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization and accretion 38,785 35,923 22,412 74,708 43,486 Stock-based compensation 17,048 12,341 10,045 29,389 20,543 Debt issuance costs 1,178 1,403 784 2,581 1,173 Restructuring charges - - 407 - 407 Other reconciling items 268 533 138 801 145 Changes in operating assets and liabilities: Accounts receivable (4,037) 2,506 (494) (1,531) (1,410) Accounts payable and accrued expenses 4,430 1,107 7,950 5,537 5,293 Accrued restructuring charges (695) (745) (3,354) (1,440) (6,897) Other assets and liabilities 7,275 4,643 (965) 11,918 (1,267) --------- ---------- ---------- ---------- ---------- Net cash provided by operating activities 66,481 63,132 38,140 129,613 58,234 --------- ---------- ---------- ---------- ---------- Cash flows from investing activities: Purchase of Virtu, less cash acquired - (23,241) - (23,241) - Purchase of Los Angeles IBX property - - (49,040) - (49,040) Purchase of San Jose IBX property - - - - (6,500) Purchases of other property and equipment (84,458) (125,643) (139,832) (210,101) (206,888) Accrued property and equipment (23,176) (3,065) 31,425 (26,241) 47,879 Proceeds from asset sales - - - - - Other investing activities (732) (13,169) - (13,901) (470) --------- ---------- ---------- ---------- ---------- Net cash used in investing activities (108,366) (165,118) (157,447) (273,484) (215,019) --------- ---------- ---------- ---------- ---------- Cash flows from financing activities: Proceeds from stock options and employee stock purchase plans 12,000 7,238 6,876 19,238 17,162 Proceeds from convertible subordinated notes - - - - 250,000 Proceeds from mortgage and loans payable 35,643 41,882 44,656 77,525 69,263 Repayment of capital lease and other financing obligations (952) (966) (480) (1,918) (945) Repayment of mortgage and loans payable (4,330) (3,092) (533) (7,422) (1,030) Debt issuance costs (437) (464) - (901) (10,678) Other financing activities - - - - - --------- ---------- ---------- ---------- ---------- Net cash provided by financing activities 41,924 44,598 50,519 86,522 323,772 --------- ---------- ---------- ---------- ---------- Effect of foreign currency exchange rates on cash and cash equivalents (816) (986) 355 (1,802) 498 --------- ---------- ---------- ---------- ---------- Net increase (decrease) in cash, cash equivalents and investments (777) (58,374) (68,433) (59,151) 167,485 Cash, cash equivalents and investments at beginning of period 325,526 383,900 392,399 383,900 156,481 --------- ---------- ---------- ---------- ---------- Cash, cash equivalents and investments at end of period $324,749 $ 325,526 $ 323,966 $ 324,749 $ 323,966 ========= ========== ========== ========== ========== Free cash flow (2) $(41,885) $(101,986) $(119,307) $(143,871) $(156,785) ========= ========== ========== ========== ========== Adjusted free cash flow (3) $(41,885) $ (78,745) $ (70,267) $(120,630) $(101,245) ========= ========== ========== ========== ========== ---------------- (1)The cash flow statements presented herein combine our short-term and long-term investments with our cash and cash equivalents in an effort to present our total unrestricted cash and equivalent balances. In our quarterly filings with the SEC on Forms 10-Q and 10-K, the purchases, sales and maturities of our short-term and long-term investments will be presented as activities within the investing activities portion of the cash flow statements. (2)We define free cash flow as net cash provided by operating activities plus net cash used in investing activities (excluding the purchases, sales and maturities of short-term and long-term investments) as presented below: Net cash provided by operating activities as presented above $ 66,481 $ 63,132 $ 38,140 $ 129,613 $ 58,234 Net cash used in investing activities as presented above (108,366) (165,118) (157,447) (273,484) (215,019) --------- ---------- ---------- ---------- ---------- Free cash flow $(41,885) $(101,986) $(119,307) $(143,871) $(156,785) ========= ========== ========== ========== ========== (3)We define adjusted free cash flow as free cash flow (as defined above) excluding any purchases or sales of real estate and acquisitions and proceeds from asset sales as presented below: Free cash flow (as defined above) $(41,885) $(101,986) $(119,307) $(143,871) $(156,785) Less purchase of Virtu, less cash acquired - 23,241 - 23,241 - Less purchase of Los Angeles IBX property - - 49,040 - 49,040 Less purchase of San Jose IBX property - - - - 6,500 Less proceeds from asset sales - - - - - --------- ---------- ---------- ---------- ---------- Adjusted free cash flow $(41,885) $ (78,745) $ (70,267) $(120,630) $(101,245) ========= ========== ========== ========== ==========

SOURCE: Equinix, Inc.

K/F Communications, Inc. for Equinix David Fonkalsrud, 415-255-6506 (Media) dave@kfcomm.com or Equinix, Inc. Jason Starr, 650-513-7402 (Investor Relations) jstarr@equinix.com