US-based data centre player Equinix reported another quarter of strong growth overnight. Q4 revenue was up 25%, and would have been a few percentage points higher but for some currency headwinds. Full-year revenue was up 32% at $1.61bn. Adjusted EBITDA margin for the quarter improved to 46%, compared to 43% in Q4 2010.
The resulting dip in Equinix’s stock price (it’s down 5% in after hours trading) reflects a miss on earnings caused chiefly it appears by currency and tax. It also reflects the very high expectations that this company carries – the stock remains up 25% so far this year.
So, in a similar vein to Telecity (which reported earlier this week - see Telecity results impress once again), Equinix continues to benefit from demand for data centre capacity and connectivity in major city centres. In EMEA, headline revenue in Q4 was up 21% y-on-y, with currency fluctuations taking a few percentage points off that growth. London remains Equinix’s biggest market in EMEA, and CFO Keith Taylor highlighted “strong traction with the financial community” as a key factor in London’s growth. We’d be surprised if Equinix’s London operation weren’t also benefiting significantly from demand from media content players and infrastructure/cloud service players. And while there’s no indication of UK revenue as such, our earlier estimate for the year doesn’t look out of line (see Equinix rides the infrastructure wave to growth).
While the comparisons with Telecity are useful, it’s also worth highlighting a significant difference (over and above the obvious geographic one). While Telecity sticks steadfastly to carrier-neutral co-location, Equinix is less hands-off. A key part of the company’s vision – and current business model - is the use of its data centre assets and connectivity aggregation to build “Platform Equinix”, an “ecosystem” (to use the company‘s parlance) across which content providers, infrastructure players and others are connected together and able to transact. The company is even going so far as enabling its salesforce to sell in conjunction with connected clients like Amazon Web Services (although it’s not actually selling others’ services – yet). The indicators are that Platform Equinix is growing rapidly. It needs to - the success of this ecosystem vision relies on Equinix’s ability to connect a vast number of players from all points in a multitude of supply chains.