Item 1. Condensed Consolidated Financial Statements

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Item 1. Condensed Consolidated Financial Statements

EQUINIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	September 30, 2021		December 31, 2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,379,100	$	1,604,869
Short-term investments	—		4,532
Accounts receivable, net of allowance of $11,581 and $10,677	792,101		676,738
Other current assets	492,832		323,016
Assets held for sale	235,330		—
Total current assets	2,899,363		2,609,155

Property, plant and equipment, net	15,307,049		14,503,084
Operating lease right-of-use assets	1,325,872		1,475,057
Goodwill	5,401,744		5,472,553
Intangible assets, net	1,994,023		2,170,945
Other assets	846,080		776,047
Total assets	$	27,774,131	$	27,006,841
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	844,056	$	844,862
Accrued property, plant and equipment	347,003		301,155
Current portion of operating lease liabilities	150,490		154,207
Current portion of finance lease liabilities	148,522		137,683
Current portion of mortgage and loans payable	67,571		82,289
Current portion of senior notes	—		150,186
Other current liabilities	223,494		354,368

Total current liabilities	1,781,136		2,024,750
Operating lease liabilities, less current portion	1,147,490		1,308,627
Finance lease liabilities, less current portion	1,986,266		1,784,816
Mortgage and loans payable, less current portion	560,733		1,287,254
Senior notes, less current portion	11,000,669		9,018,277
Other liabilities	729,264		948,999
Total liabilities	17,205,558		16,372,723
Commitments and contingencies (Note 11)
Equinix stockholders' equity
Common stock, $0.001 par value per share: 300,000,000 shares authorized; 90,343,931 issued and 90,041,200 outstanding in 2021 and 89,462,304 issued and 89,134,252 outstanding in 2020	90		89
Additional paid-in capital	15,488,848		15,028,357
Treasury stock, at cost; 302,731 shares in 2021 and 328,052 shares in 2020	(112,696)		(122,118)
Accumulated dividends	(5,902,937)		(5,119,274)
Accumulated other comprehensive loss	(1,041,761)		(913,368)
Retained earnings	2,137,219		1,760,302
Total Equinix stockholders' equity	10,568,763		10,633,988
Non-controlling interests	(190)		130
Total stockholders' equity	10,568,573		10,634,118
Total liabilities and stockholders' equity	$	27,774,131	$	27,006,841

See accompanying notes to condensed consolidated financial statements.

Table of Contents

EQUINIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(Unaudited)
Revenues	$	1,675,176	$	1,519,767	$	4,929,159	$	4,434,430
Costs and operating expenses:
Cost of revenues	885,650		767,979		2,561,987		2,243,605
Sales and marketing	182,997		172,727		551,434		531,301
General and administrative	334,625		279,350		958,086		797,837
Transaction costs	5,197		5,840		13,364		30,987
Impairment charges	—		7,306		—		7,306
Gain on asset sales	(15,414)		(1,785)		(14,149)		(928)
Total costs and operating expenses	1,393,055		1,231,417		4,070,722		3,610,108
Income from operations	282,121		288,350		858,437		824,322
Interest income	411		1,452		1,514		7,410
Interest expense	(78,943)		(99,736)		(255,855)		(315,554)
Other income (expense)	1,482		162		(44,845)		9,610
Gain (loss) on debt extinguishment	179		(93,494)		(115,339)		(101,803)
Income before income taxes	205,250		96,734		443,912		423,985
Income tax expense	(53,224)		(29,903)		(67,325)		(104,847)
Net income	152,026		66,831		376,587		319,138
Net (income) loss attributable to non-controlling interests	190		(144)		330		(355)
Net income attributable to Equinix	$	152,216	$	66,687	$	376,917	$	318,783
Earnings per share ("EPS") attributable to Equinix:
Basic EPS	$	1.69	$	0.75	$	4.21	$	3.65
Weighted-average shares for basic EPS	89,858		88,806		89,614		87,226
Diluted EPS	$	1.68	$	0.74	$	4.18	$	3.63
Weighted-average shares for diluted EPS	90,467		89,519		90,202		87,925

See accompanying notes to condensed consolidated financial statements.

Table of Contents

EQUINIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(Unaudited)
Net income	$	152,026	$	66,831	$	376,587	$	319,138
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment ("CTA") gain (loss), net of tax effects of $0, $0, $0 and $0	(260,011)		299,441		(444,691)		66,935
Net investment hedge CTA gain (loss), net of tax effect of $0, $0, $0 and $0	131,080		(227,101)		264,219		(179,213)

Unrealized gain (loss) on cash flow hedges, net of tax effects of $(6,965), $8,708, $(15,304) and $7,113	28,270		(33,842)		52,048		(54,966)
Net actuarial gain on defined benefit plans, net of tax effects of $(4), $(6), $(12) and $(3)	14		22		41		77
Total other comprehensive income (loss), net of tax	(100,647)		38,520		(128,383)		(167,167)
Comprehensive income, net of tax	51,379		105,351		248,204		151,971
Net (income) loss attributable to non-controlling interests	190		(144)		330		(355)
Other comprehensive income attributable to non-controlling interests	—		(30)		(10)		(21)
Comprehensive income attributable to Equinix	$	51,569	$	105,177	$	248,524	$	151,595

See accompanying notes to condensed consolidated financial statements.

Table of Contents

EQUINIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Nine Months Ended September 30,
	2021		2020
	(Unaudited)
Cash flows from operating activities:
Net income	$	376,587	$	319,138
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	1,074,761		897,075
Stock-based compensation	267,395		215,591
Amortization of intangible assets	155,428		148,075
Amortization of debt issuance costs and debt discounts and premiums	12,760		11,788
Provision for credit loss allowance	7,604		6,466
Impairment charges	—		7,306
Gain on asset sales	(14,149)		(928)

Loss on debt extinguishment	115,339		101,803
Other items	22,377		14,764
Changes in operating assets and liabilities:
Accounts receivable	(111,313)		(38,104)
Income taxes, net	(44,200)		(20,193)
Other assets	(124,573)		(127,535)
Operating lease right-of-use assets	102,728		114,611
Operating lease liabilities	(137,751)		(107,391)
Accounts payable and accrued expenses	9,968		35,846
Other liabilities	(57,860)		45,366
Net cash provided by operating activities	1,655,101		1,623,678
Cash flows from investing activities:
Purchases of investments	(77,139)		(55,993)
Sales of investments	4,057		19,681
Business acquisitions, net of cash and restricted cash acquired	(158,498)		(478,248)
Real estate acquisitions	(194,849)		(124,462)
Purchases of other property, plant and equipment	(1,934,107)		(1,448,174)
Proceeds from sale of assets, net of cash transferred	174,494		—
Net cash used in investing activities	(2,186,042)		(2,087,196)
Cash flows from financing activities:
Proceeds from employee equity awards	77,628		62,118
Payment of dividends	(783,454)		(710,177)
Proceeds from public offering of common stock, net of issuance costs	99,599		1,981,375
Proceeds from senior notes, net of debt discounts	3,878,662		2,585,736
Proceeds from mortgage and loans payable	—		750,790
Repayments of finance lease liabilities	(130,129)		(74,446)
Repayments of mortgage and loans payable	(706,426)		(808,609)
Repayment of senior notes	(1,990,650)		(2,440,761)
Debt extinguishment costs	(99,185)		(82,404)
Debt issuance costs	(25,102)		(26,266)

Net cash provided by financing activities	320,943		1,237,356
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash	(24,139)		5,637

Net increase (decrease) in cash, cash equivalents and restricted cash	(234,137)		779,475
Cash, cash equivalents and restricted cash at beginning of period	1,625,695		1,886,613
Cash, cash equivalents and restricted cash at end of period	$	1,391,558	$	2,666,088

Cash and cash equivalents	$	1,379,100	$	2,645,045
Current portion of restricted cash included in other current assets	11,567		11,375
Non-current portion of restricted cash included in other assets	891		9,668
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows	$	1,391,558	$	2,666,088

See accompanying notes to condensed consolidated financial statements.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Equinix, Inc. (collectively with its consolidated subsidiaries referred to as "Equinix," the "Company," "we," "our," or "us") and reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state the financial position and the results of operations for the interim periods presented. In the preparation of our condensed consolidated financial statements, we have considered potential impacts of the COVID-19 pandemic on our critical and significant accounting estimates. There was no significant impact to our condensed consolidated financial statements. We will continue to evaluate the nature and extent of the potential impacts to our business and our condensed consolidated financial statements.

Our condensed consolidated balance sheet data as of December 31, 2020 has been derived from audited consolidated financial statements as of that date. Our condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission ("SEC"), but omit certain information and footnote disclosure necessary to present the statements in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For further information, refer to the Consolidated Financial Statements and Notes thereto included in our Form 10-K as filed with the SEC on February 19, 2021. Results for the interim periods are not necessarily indicative of results for the entire fiscal year.

Consolidation

The accompanying unaudited condensed consolidated financial statements include our acquisitions of two data centers in Mumbai, India from India operations of GPX Global Systems, Inc. ("GPX India") from September 1, 2021, 12 data center sites across Canada from BCE Inc. ("Bell") from October 1, 2020 and one additional data center site from November 2, 2020, Packet Host, Inc. (“Packet”) from March 2, 2020, and three data centers in Mexico acquired from Axtel S.A.B. de C.V ("Axtel") from January 8, 2020. All intercompany accounts and transactions have been eliminated in consolidation.

Income Taxes

We elected to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") beginning with our 2015 taxable year. As a result, we may deduct the distributions made to our stockholders from taxable income generated by our REIT and qualified REIT subsidiaries ("QRSs"). Our dividends paid deduction generally eliminates the U.S. federal taxable income of our REIT and QRSs, resulting in no U.S. federal income tax due. However, our domestic taxable REIT subsidiaries ("TRSs") are subject to U.S. corporate income taxes on any taxable income generated by them. In addition, our foreign operations are subject to local income taxes regardless of whether the foreign operations are operated as QRSs or TRSs.

We accrue for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as our operating performance, tax law changes and future business acquisitions.

Our effective tax rates were 15.2% and 24.7% for the nine months ended September 30, 2021 and 2020, respectively. The decrease in the effective tax rate for the nine months ended September 30, 2021 as compared to the same period in 2020 is primarily due to the favorable resolution of uncertain tax positions of approximately $70.0 million resulting from the settlement of various tax audits in the United Kingdom ("UK"), Germany, and Australia, partially offset by $10.9 million resulting from the revaluation of our deferred tax liabilities due to the UK corporate tax rate increase from 19% to 25% enacted in the current period.

Of the unrecognized tax benefits being realized in the nine months ended September 30, 2021, $32.3 million is related to the uncertain tax position inherited from the Metronode acquisition closed in 2018. The uncertain tax position was covered by an indemnification agreement with the Seller. The realization of the unrecognized tax benefits resulted in an impairment of the indemnification asset for the same amount, which has been included in

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Other Income (Expense) on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021.

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08 Business Combinations ("Topic 805"): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. We are currently evaluating the extent of the impact of this ASU, but do not expect the adoption of this standard to have a significant impact on our condensed consolidated financial statements.

In August 2020, FASB issued ASU 2020-06: Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock and modifies the disclosure requirement for the convertible instruments. Additionally, this ASU improves the consistency of EPS calculations by eliminating the use of the treasury stock method to calculate diluted EPS for convertible instruments and clarifies certain areas under the current EPS guidance. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted at the beginning of the fiscal year after December 15, 2020. We are currently evaluating the extent of the impact of this ASU, but do not expect the adoption of this standard to have a significant impact on our condensed consolidated financial statements.

Accounting Standards Adopted

In December 2019, FASB issued ASU 2019-12, Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes. The ASU simplifies accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also improves consistent application of and simplifies generally accepted accounting principles ("GAAP") for other areas of Topic 740 by clarifying and amending existing guidance. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted including adoption in any interim period for periods for which financial statements have not yet been issued. On January 1, 2021, we adopted this ASU on a prospective basis and the adoption of this standard did not have an impact on our condensed consolidated financial statements.

In March 2020, FASB issued ASU 2020-04, Reference Rate Reform ("Topic 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In addition, FASB issued ASU 2021-01, Reference Rate Reform ("Topic 848"), which clarifies the scope of Topic 848. Collectively, the guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 was effective for all entities as of March 12, 2020 through December 31, 2022 and ASU 2021-01 is effective upon issuance. We adopted these ASUs upon their respective issuances and there was no impact on our condensed consolidated financial statements as a result of adopting the guidance. We will evaluate our debt, derivative and lease contracts that may become eligible for modification relief and may apply the elections prospectively as needed.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

2. Revenue

Contract Balances

The following table summarizes the opening and closing balances of our accounts receivable, net; contract assets, current; contract assets, non-current; deferred revenue, current; and deferred revenue, non-current (in thousands):


	Accounts receivable, net (1)		Contract assets, current		Contract assets, non-current		Deferred revenue, current		Deferred revenue, non-current
Beginning balances as of January 1, 2021	$	676,738	$	13,534	$	54,050	$	101,258	$	71,242
Closing balances as of September 30, 2021	792,101		49,793		51,452		112,952		66,318
Increase (Decrease)	$	115,363	$	36,259	$	(2,598)	$	11,694	$	(4,924)

(1) The net change in our allowance for credit losses was insignificant during the nine months ended September 30, 2021.

The difference between the opening and closing balances of our accounts receivable, net, contract assets and deferred revenues primarily results from revenue growth and the timing difference between the satisfaction of our performance obligation and the customer's payment. The amount of revenue recognized during the nine months ended September 30, 2021 from the opening deferred revenue balance as of January 1, 2021 was $72.0 million.

Remaining performance obligations

As of September 30, 2021, approximately $8.5 billion of total revenues, including deferred installation revenues, are expected to be recognized in future periods. Most of our revenue contracts have an initial term varying from one to three years, and thereafter, automatically renew in one-year increments. Included in the remaining performance obligations are contracts that are either under the initial term or under one-year renewal periods. We expect to recognize approximately 70% of our remaining performance obligations as revenues over the next two years, with more revenues expected to be recognized in the first year due to the impact of contracts renewal. The remainder of the balance is generally expected to be recognized over the next three to five years. We estimate our remaining performance obligations at a point in time. Actual amounts and timing of revenue recognition may differ from these estimates due to changes in actual deployments dates, contract modifications, renewals and/or terminations.

The remaining performance obligations do not include variable consideration related to unsatisfied performance obligations such as the usage of metered power, service fees from xScaleTM data centers, which are calculated based on future events or actual costs incurred in the future, or any contracts that could be terminated without any significant penalties such as the majority of interconnection revenues. The remaining performance obligations above include revenues to be recognized in the future related to arrangements where we are considered the lessor.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

3. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share ("EPS") for the periods presented (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	152,026	$	66,831	$	376,587	$	319,138
Net (income) loss attributable to non-controlling interests	190		(144)		330		(355)
Net income attributable to Equinix	$	152,216	$	66,687	$	376,917	$	318,783

Weighted-average shares used to calculate basic EPS	89,858		88,806		89,614		87,226
Effect of dilutive securities:
Employee equity awards	609		713		588		699
Weighted-average shares used to calculate diluted EPS	90,467		89,519		90,202		87,925

EPS attributable to Equinix:
Basic EPS	$	1.69	$	0.75	$	4.21	$	3.65
Diluted EPS	$	1.68	$	0.74	$	4.18	$	3.63

We have excluded common stock related to employee equity awards in the diluted EPS calculation above of approximately 17,000 shares and 16,000 shares for the three months ended September 30, 2021 and 2020, respectively, and approximately 212,000 and 31,000 shares for the nine months ended September 30, 2021 and 2020, because their effect would be anti-dilutive.

4. Acquisitions

2021 Acquisitions

Acquisition of GPX India (the "GPX India Acquisition")

On September 1, 2021, we completed the acquisition of GPX India, representing two data centers in Mumbai, India, for a total purchase consideration of approximately INR12.5 billion, or $170.5 million at the exchange rate in effect on that date. The GPX India Acquisition supports our ongoing expansion to meet customer demand in the Indian market.

2020 Acquisitions

Acquisition of Bell Data Centers (the "Bell Acquisition")

On October 1, 2020, we completed the acquisition of 12 data center sites across Canada from Bell, with one additional data center in Ottawa Canada acquired on November 2, 2020, for a total combined purchase consideration of approximately C$934.3 million, or $704.0 million at the exchange rates in effect on those dates. The acquisition supports our ongoing expansion to meet customer demand in Canada.

Acquisition of Packet (the "Packet Acquisition")

On March 2, 2020, we acquired all outstanding shares and equity awards of Packet Host, Inc. (“Packet”), a leading bare metal automation platform for a total purchase consideration of approximately $290.3 million in cash. In addition, we paid $16.1 million in cash to accelerate the vesting of unvested Packet equity awards for certain Packet employees, which was recorded as stock-based compensation expense during the three months ended March 31, 2020. In connection with the acquisition, we also issued restricted stock awards with an aggregated fair value of $30.2 million and a three-year vesting period, which will be recognized as stock-based compensation costs over the

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

vesting period. The acquisition, combined with Equinix MetalTM, is expected to accelerate our strategy to help enterprises deploy hybrid multicloud architectures on our data center platform.

Acquisition of data centers from Axtel (the "Axtel Acquisition")

On January 8, 2020, we completed the acquisition of three data centers in Mexico from Axtel S.A.B. de C.V. (“Axtel”) for a total purchase consideration of approximately $189.0 million, including $175.0 million in cash and $14.0 million we paid to the seller for recoverable value-added taxes ("VAT") incurred prior to the acquisition, which related to a corresponding VAT receivable acquired upon acquisition. The acquisition supports our ongoing expansion to meet customer demand in our Americas region.

Purchase Price Allocation

Each of these acquisitions constitute a business under the accounting standard for business combinations and, therefore, were accounted for as business combinations using the acquisition method of accounting. Under this method, the total purchase price is allocated to the assets acquired and liabilities assumed measured at fair value on the date of acquisition.

As of September 30, 2021, we had not completed the detailed valuation analysis to derive the fair value of assets acquired and liabilities assumed from the GPX India Acquisition, including property, plant and equipment, intangible assets and the related tax impacts; therefore, the purchase price allocation is based on provisional estimates and subject to continuing management analysis.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

A summary of the allocation of total purchase consideration is presented as follows (in thousands):


	GPX India		Bell		Packet		Axtel
	Provisional		Final
Cash and cash equivalents	$	9,406	$	—	$	1,068	$	—
Accounts receivable	4,399		—		5,098		—
Other current assets	8,771		696		299		14,048
Property, plant and equipment	88,108		538,717		27,945		76,407
Operating lease right-of-use assets	62		14,359		1,519		1,646
Intangible assets	15,472		75,857		58,500		22,750
Goodwill	77,296		172,387		230,620		78,902
Deferred tax and other assets	20		722		138		—
Total assets acquired	203,534		802,738		325,187		193,753
Accounts payable and accrued liabilities	(1,591)		(895)		(1,275)		(238)
Other current liabilities	(478)		—		(860)		—
Operating lease liabilities	(62)		(13,340)		(1,519)		(1,586)
Finance lease liabilities	(20,565)		(80,026)		(27,945)		—
Deferred tax and other liabilities	(10,373)		(4,495)		(3,290)		(2,911)
Net assets acquired	$	170,465	$	703,982	$	290,298	$	189,018

Property, plant and equipment - The fair values of property, plant and equipment acquired from these four acquisitions were estimated by applying the cost approach, with the exception of land, which we estimated by applying the market approach. The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence, economic useful life, remaining useful life, age and effective age.

Intangible assets - The following table presents certain information on the acquired intangible assets (in thousands):


Intangible Assets	Fair Value		Estimated Useful Lives (Years)	Weighted-average Estimated Useful Lives (Years)
GPX India:
Customer relationships	$	15,472	15.0	15.0
Bell:
Customer relationships	75,857		15.0	15.0
Packet:
Trade names	1,300		3.0	3.0
Existing technology	5,100		3.0	3.0
Customer relationships	52,100		10.0	10.0
Axtel:
Customer relationships	22,750		15.0	15.0

The fair values of customer relationships acquired from these acquisitions were estimated from applying an income approach, by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue. We applied a discount rate of 11.0% for GPX India, 8.0% for Bell, 8.0% for Packet and 13.3% for Axtel, which reflects the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows, as well as the risk of the country within which the acquired business operates.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The fair value of the Packet trade name was estimated using the relief from royalty method under the income approach. We applied a relief from royalty rate of 1.0% and a discount rate of 8.0%. The fair value of existing technology was estimated under the cost approach by projecting the cost to recreate a new asset with an equivalent utility of the existing technology. The key assumptions of the cost approach include total cost, time to recreate and functional obsolescence.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is attributable to the workforce of the acquired business and the projected revenue increase expected to arise from future customers after these acquisitions. Goodwill from the Bell, Packet, and Axtel acquisitions is attributable to our Americas region and goodwill from the GPX India Acquisition is attributable to the Asia-Pacific region. Goodwill from the Bell Acquisition is expected to be deductible for local tax purposes while goodwill from the GPX India, Packet and Axtel Acquisitions are not deductible for local tax purposes.

Revenues and net income and loss from operations

The operating results of the GPX India Acquisition are reported in the Asia-Pacific region following the date of acquisition. During the three and nine months ended September 30, 2021, our results of operations from the GPX India Acquisition were insignificant.

Transaction costs

During the nine months ended September 30, 2021, the transaction costs for the GPX India Acquisition were insignificant.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

5. Assets Held for Sale

In October 2021, we entered into an agreement to form a joint venture in the form of a limited liability partnership with PGIM Real Estate ("PGIM"), to develop and operate xScaleTM data centers in Asia-Pacific (the "Asia-Pacific 2 Joint Venture"). xScale data centers are engineered to meet the technical and operational requirements and price points of core hyperscale workload deployments and also offer access to our comprehensive suite of interconnection and edge services. Upon closing, PGIM will contribute cash in exchange for an 80% partnership interest in the Asia-Pacific 2 Joint Venture. We agreed to sell the Sydney 9 ("SY9") data center site in exchange for a 20% partnership interest in the Asia-Pacific 2 Joint Venture and cash proceeds. The assets and liabilities of the SY9 data center, which are currently included within our Asia-Pacific region, were classified as held for sale as of September 30, 2021.

In June 2021, we entered into an agreement to form another joint venture in the form of a limited liability partnership with GIC, Singapore's sovereign wealth fund ("GIC"), to develop and operate additional xScale data centers in Europe and the Americas (the “EMEA 2 Joint Venture”). The assets and liabilities of the data center sites expected to be sold to the EMEA 2 Joint Venture within a year were classified as held for sale as of June 30, 2021. The transaction is structured to close in phases over the course of two years, pending regulatory approval and other closing conditions. The first phase of the transaction, comprised of data center sites located in Frankfurt, Helsinki, Madrid, Milan and Paris, closed in September 2021. Upon closing, we sold these data center sites in exchange for a total consideration of $144.0 million, which is comprised of $106.4 million of net cash proceeds, a 20% partnership interest in the EMEA 2 Joint Venture with a fair value of $30.4 million, and $7.2 million of receivables. During the three months ended September 30, 2021, we recognized an insignificant gain on the sale of the xScale data center facilities. The assets and liabilities of Warsaw 4 ("WA4") and Sao Paulo 5 ("SP5") data center sites, which are currently included within our EMEA and Americas regions respectively, were expected to be sold to the EMEA 2 Joint Venture in the next phases and remained classified as held for sale as of September 30, 2021. The sale of the SP5 data center closed in October 2021 (see Note 14 below).

Additionally, we entered negotiations to sell the Mexico 3 ("MX3") data center site in connection with the formation of a new joint venture with GIC. Given that the key terms of the sale had been substantially agreed upon as of September 30, 2021, the assets and liabilities of the MX3 data center, which are currently included within our Americas region, were classified as held for sale as of September 30, 2021.

In May 2021, we entered into an agreement to sell the Dublin 5 ("DB5") data center site to the EMEA 1 Joint Venture (as defined in note 6 below). The assets and liabilities of the DB5 data center, which were included within our EMEA region, were classified as held for sale as of June 30, 2021. In July 2021, we sold the DB5 data center in exchange for a total consideration of $77.9 million. During the three months ended September 30, 2021, we recognized a total gain of $15.8 million on the sale of the DB5 data center.

All assets and liabilities classified as held for sale are reported at the lower of their carrying amounts or fair values less costs to sell. The following table summarizes the assets and liabilities that were classified as assets and liabilities held for sale in the condensed consolidated balance sheet as of September 30, 2021 (in thousands):


	September 30, 2021

Operating lease right-of-use assets	$	10,990
Property, plant and equipment	223,318
Other assets	1,022
Total assets held for sale	$	235,330



Accrued property, plant and equipment	$	24,085
Total liabilities held for sale (1)	$	24,085

(1)Liabilities held for sale were included within other current liabilities on the condensed consolidated balance sheet.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

6. Equity Method Investments

The following table summarizes our equity method investments (in thousands), which were included in other assets on the condensed consolidated balance sheets:


Investee	Ownership Percentage	September 30, 2021		December 31, 2020
EMEA 1 Joint Venture with GIC	20%	$	114,836	$	101,892
EMEA 2 Joint Venture with GIC	20%	30,386		—
Asia-Pacific 1 Joint Venture with GIC	20%	56,566		43,432
Other	Various	18,790		17,747
Total		$	220,578	$	163,071

Non - Variable Interest Entity (VIE) Joint Venture

EMEA 1 Joint Venture

In 2019, we entered into a joint venture in the form of a limited liability partnership with GIC (the "EMEA 1 Joint Venture"), to develop and operate xScale data centers in Europe. The EMEA 1 Joint Venture is not a variable interest entity ("VIE") given that both equity investors' interests have the characteristics of a controlling financial interest and it is sufficiently capitalized to sustain its operations, requiring additional funding from its partners only when expanding operations. Our share of income and losses of equity method investments from this joint venture was insignificant for the three and nine months ended September 30, 2021 and 2020 and was included in other income (expense) on the condensed consolidated statement of operations.

We committed to make future equity contributions to the EMEA 1 Joint Venture for funding its future development. As of September 30, 2021, we had future equity contribution commitments of $43.6 million.

VIE Joint Ventures

Asia-Pacific 1 and EMEA 2 Joint Ventures

In 2020, we entered into a second joint venture in the form of a limited liability partnership with GIC (the "Asia-Pacific 1 Joint Venture") to develop and operate xScale data centers in Asia-Pacific.

In 2021, we entered into another joint venture in the form of a limited liability partnership with GIC (the "EMEA 2 Joint Venture") to develop and operate additional xScale data centers in Europe and the Americas (see Note 5 above).

For both the Asia-Pacific 1 Joint Venture and the EMEA 2 Joint Venture, we provide certain management services to their operations and earn fees for the performance of such services. Both joint ventures do not have sufficient funds from operations to be self-sustaining, thus are considered VIEs. The power to direct the activities of these joint ventures that most significantly impact economic performance is shared equally between GIC and us. These activities include data center construction and operations, sales and marketing, financing, and real estate purchases or sales. Decisions about these activities require the consent of both GIC and us. We concluded that neither party is deemed to have predominant control over the Asia-Pacific 1 Joint Venture and EMEA 2 Joint Venture and neither party is considered to be the primary beneficiary. During the three and nine months ended September 30, 2021, our share of income and losses of equity method investments from these joint ventures was insignificant both individually and in aggregate, and was included in other income (expense) on the condensed consolidated statement of operations.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table summarizes our maximum exposure to loss related to the Asia-Pacific 1 Joint Venture and EMEA 2 Joint Venture as of September 30, 2021 (in thousands):


	Asia-Pacific 1 Joint Venture		EMEA 2 Joint Venture
Equity Investment	$	56,566	$	30,386
Outstanding Receivables	3,844		11,451
Future Equity Contribution Commitments 1	1,098		57,662
Maximum Future Payments under Debt Guarantees 2	N/A 3		30,389
Total	$	61,508	$	129,888

(1)The joint ventures' partners are required to make additional equity contributions proportionately upon certain occurrences, such as a shortfall in capital necessary to complete certain construction phases or make interest payments on their outstanding debt.

(2)In connection with our 20% equity investment in the EMEA 2 Joint Venture, we provided the lenders with our guarantees covering 20% of all payments of principal and interest due under EMEA 2 Joint Venture's credit facility agreements (see Note 11).

(3)The Asia-Pacific 1 Joint Venture’s debt is secured by the net assets of the Asia-Pacific 1 Joint Venture without recourse to its partners.

Other Related Party Transactions

We have lease arrangements and provide various services to the EMEA 1 Joint Venture, Asia-Pacific 1 Joint Venture and EMEA 2 Joint Venture (the "Joint Ventures") through multiple agreements, including sales and marketing, development management, facilities management, and asset management services. These transactions are generally considered to have been negotiated at arm's length. The following table presents the revenues and expenses from these arrangements with the Joint Ventures in our condensed consolidated statements of operations (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
Related Party	Location of Revenues (Expenses)	2021		2020		2021		2020
EMEA 1 Joint Venture	Revenues	$	11,698	$	6,061	$	30,548	$	14,609
EMEA 1 Joint Venture	Expenses (1)	(4,006)		(3,369)		(12,786)		(10,560)
Asia-Pacific 1 Joint Venture	Revenues	4,044		—		18,489		—
EMEA 2 Joint Venture	Revenues	884		—		884		—

(1)We have a sub-lease agreement with the EMEA 1 Joint Venture to sub-lease a portion of London ("LD") 10-2 data center or former LD10 data center, for a total of 15 years. Balances primarily consist of rent expenses for the LD10-2 data center.

The following table presents the assets and liabilities from related party transactions with the Joint Ventures in our condensed consolidated balance sheets (in thousands):

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


Related Party		Balance Sheet Line Item		September 30, 2021			December 31, 2020
EMEA 1 Joint Venture		Receivables (1)		$	35,466		$	6,459
	Contract Assets (2)		37,322			5,614
	Finance Lease Right of Use Assets (3)		120,616			127,197
	Other Liabilities and Payables (4)		18,541			17,646
	Finance Lease Right of Use Liabilities (3)		126,080			130,756
Asia- Pacific 1 Joint Venture		Receivables (1)		3,844			16,936
EMEA 2 Joint Venture		Receivables (1)		11,451			—

(1)Balances primarily consist of amounts due under commercial service agreements.

(2)A portion of the contract asset balance relates to commitments to the EMEA 1 Joint Venture to complete a residual portion of the PA9 data center sold to the EMEA 1 Joint Venture, which is reimbursable in full upon completion. The remaining balance represents contract assets recorded under our commercial service agreements.

(3)Balances pertain to the LD10-2 data center sub-lease as described above.

(4)We have an agreement to lease to the EMEA 1 Joint Venture a portion of land for the Frankfurt 9 xScale data center and a new building that is under construction on the land. As of September 30, 2021, the lease has not commenced yet. Balance primarily consists of liabilities recorded in connection with the construction of the Frankfurt 9 xScale data center. The remaining balance pertains to meter and power charge accruals under the LD 10-2 sublease.

We received contingent consideration from the sales of xScale data centers to the EMEA 1 Joint Venture, which become receivable upon completion of certain performance milestones, primarily contingent on the local regulatory approvals for certain sites. The contingent consideration are considered derivatives and are remeasured at fair value each reporting period using inputs such as probabilities of payment, discount rates, foreign currency forward rates and projected payment dates. The fair value measurements were based on significant inputs that are not observable in the market and thus represent Level 3 measurements. The contingencies were partially met during the nine months ended September 30, 2021 upon achieving the performance milestone for one of the sites. As of September 30, 2021 and December 31, 2020, the total fair value of the remaining contingent consideration was $15.2 million and $44.2 million, respectively, which was included in other current assets on the condensed consolidated balance sheets. Changes in the fair value of the contingent consideration were recorded in gain (loss) on asset sales on the condensed consolidated statement of operations.

7. Derivatives and Hedging Activities

Derivatives Designated as Hedging Instruments

Net Investment Hedges. We are exposed to the impact of foreign exchange rate fluctuations on the value of investments in our foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, we have entered into various foreign currency debt obligations, which are designated as hedges against our net investments in foreign subsidiaries. As of September 30, 2021 and December 31, 2020, the total principal amounts of foreign currency debt obligations designated as net investment hedges were $1.5 billion and $1.9 billion, respectively.

We also use cross-currency interest rate swaps, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt, to hedge the currency exposure associated with our net investment in our foreign subsidiaries. As of September 30, 2021 and December 31, 2020, we had cross-currency interest rate swaps outstanding with notional amounts of $4.0 billion and $3.3 billion respectively, with maturity dates ranging through 2026.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

From time to time, we use foreign currency forward contracts to hedge against the effect of foreign exchange rate fluctuations on our net investment in our foreign subsidiaries. As of September 30, 2021 and December 31, 2020, the total notional amount of foreign currency forward contracts designated as net investment hedges were $375.7 million and $355.6 million respectively.

The effect of net investment hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021			2020
Foreign currency debt			$	36,308		$	(130,774)		$	81,290		$	(116,887)
Cross-currency interest rate swaps (included component) (1)			89,494			(78,226)			207,598			(74,419)
Cross-currency interest rate swaps (excluded component) (2)			(2,527)			(16,588)			(27,944)			13,606
Foreign currency forward contracts (included component) (1)			7,858			(1,485)			3,302			(1,485)
Foreign currency forward contracts (excluded component) (3)			(53)			(28)			(27)			(28)
Total			$	131,080		$	(227,101)		$	264,219		$	(179,213)

Amount of gain or (loss) recognized in earnings:
	Location of gain or (loss)		Three Months Ended September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020
Cross-currency interest rate swaps (excluded component) (2)	Interest expense		$	11,863		$	6,613		$	32,478		$	17,161
Foreign currency forward contracts (excluded component) (3)	Interest expense		38			1			242			1
Total			$	11,901		$	6,614		$	32,720		$	17,162

(1)Included component represents foreign exchange spot rates.

(2)Excluded component represents cross-currency basis spread and interest rates.

(3)Excluded component represents foreign currency forward points.

Cash Flow Hedges. We hedge our foreign currency transaction exposure for forecasted revenues and expenses in our EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona and Swiss Franc. The foreign currency forward and option contracts that we use to hedge this exposure are designated as cash flow hedges. As of September 30, 2021 and December 31, 2020, the total notional amounts of these foreign exchange contracts were $898.5 million and $912.9 million, respectively.

As of September 30, 2021, our foreign currency cash flow hedge instruments had maturity dates ranging from October 2021 to September 2023 and we had a net gain of $1.6 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses relating to these cash flow hedges as they mature in the next 12 months. As of December 31, 2020, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2021 to December 2022 and we had a net loss of $35.4 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses relating to these cash flow hedges as they mature in the next 12 months.

We enter into intercompany hedging instruments ("intercompany derivatives") with our wholly-owned subsidiaries in order to hedge certain forecasted revenues and expenses denominated in currencies other than the U.S. Dollar. Simultaneously, we enter into derivative contracts with unrelated third parties to externally hedge the net exposure created by such intercompany derivatives.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

We hedge the interest rate exposure created by anticipated fixed rate debt issuances through the use of treasury locks and swap locks (collectively, interest rate locks), which are designated as cash flow hedges. As of September 30, 2021, the total notional amount of interest rate locks outstanding was $350.0 million. As of December 31, 2020, we had no interest rate locks outstanding. During the nine months ended September 30, 2021, interest rate locks with a combined aggregate notional amount of $1.3 billion were settled related to the issuance of senior notes during the year. When interest rate locks are settled, any gain or loss from the transactions is deferred and included as a component of other comprehensive income (loss) and is amortized to interest expense over the term of the forecasted hedged transaction which is equivalent to the term of the interest rate locks. As of September 30, 2021 and December 31, 2020, we had a net loss of $4.2 million and $4.1 million, respectively, recorded within accumulated other comprehensive income (loss) to be reclassified to interest expense in the next 12 months for interest rate locks.

The effect of cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Foreign currency forward and option contracts (included component) (1)		$	27,860	$	(40,770)	$	61,067	$	(35,092)
Foreign currency option contracts (excluded component) (2)		—		639		151		2,315
Interest rate locks		7,374		(2,420)		6,135		(29,302)
Total		$	35,234	$	(42,551)	$	67,353	$	(62,079)

Amount of gain or (loss) reclassified from accumulated other comprehensive income to income:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2021		2020		2021		2020
Foreign currency forward contracts	Revenues	$	(11,863)	$	2,904	$	(41,397)	$	44,681
Foreign currency forward contracts	Costs and operating expenses	5,872		(1,951)		21,659		(23,449)
Interest rate locks	Interest Expense	(1,101)		(731)		(2,955)		(473)
Total		$	(7,092)	$	222	$	(22,693)	$	20,759

Amount of gain or (loss) excluded from effectiveness testing included in income:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2021		2020		2021		2020

Foreign currency option contracts (excluded component) (2)	Revenues	$	—	$	(430)	$	(244)	$	(1,454)
Total		$	—	$	(430)	$	(244)	$	(1,454)

(1)Included component represents foreign exchange spot rates.

(2)Excluded component represents option's time value.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. We are deemed to have foreign currency forward contracts embedded in certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved. These embedded derivatives are separated from their host contracts and carried on our balance sheet at their fair value. The majority of these embedded derivatives arise as a result of our foreign subsidiaries pricing their customer contracts in U.S. Dollars.

Economic Hedges of Embedded Derivatives. We use foreign currency forward contracts to manage the foreign exchange risk associated with our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved ("economic hedges of embedded derivatives"). Foreign currency forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date.

Foreign Currency Forward Contracts. We also use foreign currency forward contracts to manage the foreign exchange risk associated with certain foreign currency-denominated monetary assets and liabilities. As a result of foreign currency fluctuations, the U.S. Dollar equivalent values of our foreign currency-denominated monetary assets and liabilities change. Gains and losses on these contracts are included in other income (expense), on a net basis, along with the foreign currency gains and losses of the related foreign currency-denominated monetary assets and liabilities associated with these foreign currency forward contracts. As of both September 30, 2021 and December 31, 2020, the total notional amounts of these foreign currency contracts was $3.4 billion.

The following table presents the effect of derivatives not designated as hedging instruments in our condensed consolidated statements of operations (in thousands):


Amount of gain or (loss) recognized in earnings:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2021		2020		2021		2020
Embedded derivatives	Revenues	$	1,023	$	(3,308)	$	6,168	$	1,402
Economic hedge of embedded derivatives	Revenues	(1,532)		3,259		(6,024)		(2,342)
Foreign currency forward contracts	Other income (expense)	62,840		(50,022)		127,615		(29,214)
Total		$	62,331	$	(50,071)	$	127,759	$	(30,154)

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Fair Value of Derivative Instruments

The following table presents the fair value of derivative instruments recognized in our condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020 (in thousands):


	September 30, 2021				December 31, 2020
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Designated as hedging instruments:
Cash flow hedges
Foreign currency forward and option contracts	$	19,026	$	10,471	$	351	$	52,804
Interest rate locks	6,273		—		—		—
Net investment hedges
Cross-currency interest rate swaps	31,855		45,140		—		192,939
Foreign currency forward contracts	742		—		—		17,041
Total designated as hedging	57,896		55,611		351		262,784

Not designated as hedging instruments:
Embedded derivatives	6,339		991		3,255		3,858
Economic hedges of embedded derivatives	—		1,999		4,372		12
Foreign currency forward contracts	95,360		17,179		3,721		133,805
Total not designated as hedging	101,699		20,169		11,348		137,675
Total Derivatives	$	159,595	$	75,780	$	11,699	$	400,459

(1)As presented in our condensed consolidated balance sheets within other current assets and other assets.

(2)As presented in our condensed consolidated balance sheets within other current liabilities and other liabilities.

Offsetting Derivative Assets and Liabilities

We enter into master netting agreements with our counterparties for transactions other than embedded derivatives to mitigate credit risk exposure to any single counterparty. Master netting agreements allow for individual derivative contracts with a single counterparty to offset in the event of default. For presentation on the condensed consolidated balance sheets, we do not offset fair value amounts recognized for derivative instruments or the accrued interest related to cross-currency interest rate swaps under master netting arrangements. The following table presents information related to these offsetting arrangements as of September 30, 2021 and December 31, 2020 (in thousands):


	Gross Amounts Offset in Consolidated Balance Sheet
	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Net Amounts		Gross Amounts not Offset in the Balance Sheet		Net
September 30, 2021
Derivative assets	$	190,938	$	—	$	190,938	$	(88,534)	$	102,404
Derivative liabilities	93,401		—		93,401		(88,534)		4,867

December 31, 2020
Derivative assets	$	38,447	$	—	$	38,447	$	(35,100)	$	3,347
Derivative liabilities	415,628		—		415,628		(35,100)		380,528

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

8. Fair Value Measurements

We perform fair value measurements in accordance with ASC 820, Fair Value Measurement, which establishes three levels of inputs that we use to measure fair value:

Level 1: quoted prices in active markets for identical assets or liabilities.

*•*Level 2: observable inputs (e.g. spot rates and other data from the third-party pricing vendors for our derivative instruments) other than quoted market prices included within Level 1 that are observable, either directly or indirectly, for the assets or liabilities.

Level 3: unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

Our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 were as follows (in thousands):


	As of September 30, 2021							As of December 31, 2020
	Fair Value		Fair Value Measurement Using					Fair Value			Fair Value Measurement Using
	Level 1		Level 2				Level 1			Level 2
Assets:
Money market and deposit accounts	$	390,997	$	390,997	$	—		$	611,071		$	611,071	$	—
Publicly traded equity securities	—		—		—			159			159		—
Certificates of deposit	—		—		—			4,373			—		4,373
Derivative instruments (1)	159,595		—		159,595			11,699			—		11,699
Total	$	550,592	$	390,997	$	159,595		$	627,302		$	611,230	$	16,072
Liabilities:
Derivative instruments (1)	$	75,780	$	—	$	75,780		$	400,459		$	—	$	400,459

(1)Amounts are included within other current assets, other assets, others current liabilities and other liabilities in the condensed consolidated balance sheets.

We did not have any nonfinancial assets or liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020.

Other than the contingent consideration related to the EMEA 1 Joint Venture as described in Note 6 above, we did not have any Level 3 financial assets or financial liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

9. Leases

Significant Lease Transactions

The following table summarizes the significant lease transactions during the nine months ended September 30, 2021 (in thousands):


				Renewal/Termination Options Excluded (1)				Net Incremental (2)
Lease	Quarter	Transaction			Lease Classification		ROU assets			ROU liabilities
Silicon Valley 8 ("SV8") data center lease extended (3)	Q1	Extended lease term by 16 years		Two 10-year renewal options		Finance Lease		$	98,141		$	100,043
			Operating Lease	(13,685)		(15,586)
Hong Kong 3 ("HK3") data center lease extended (3)	Q1	Extended lease by 10 years, which included a 5-year renewal option		N/A		Finance Lease - Building		37,987			37,987
Operating Lease - Land	6,592	6,592
Osaka 3 ("OS3") new data center and office lease	Q2	New lease-15 year term		2-year renewal option on a rolling basis		Finance Lease		144,122			144,122

(1) These renewal/termination options are not included in determining the lease terms as we are not reasonably certain to exercise them at this time.

(2) The net incremental amounts represent the adjustments to the right of use ("ROU") assets and liabilities recorded during the quarter that the transactions were entered.

(3) These leases had components previously classified as operating leases.

Lease Expenses

The components of lease expenses are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Finance lease cost
Amortization of ROU assets (1)	$	41,983	$	31,900	$	115,221	$	85,962
Interest on lease liabilities	28,672		28,443		88,688		84,706
Total finance lease cost	70,655		60,343		203,909		170,668

Operating lease cost	54,340		55,135		167,839		161,482
Variable lease cost	8,323		3,363		23,993		8,829
Total lease cost	$	133,318	$	118,841	$	395,741	$	340,979

(1) Amortization of ROU assets is included with depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the condensed consolidated statements of operations.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Other Information

Other information related to leases is as follows (in thousands):


	Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	85,141		$	81,827
Operating cash flows from operating leases	202,861			154,262
Financing cash flows from finance leases	130,129			74,446

ROU assets obtained in exchange for lease obligations: (1)
Finance leases	$	374,529		$	357,137
Operating leases	9,359			65,906

	As of September 30, 2021			As of December 31, 2020
Weighted-average remaining lease term - finance leases (2)	14 years			14 years
Weighted-average remaining lease term - operating leases (2)	12 years			12 years
Weighted-average discount rate - finance leases	7		%	7		%
Weighted-average discount rate - operating leases	4		%	4		%
Finance lease assets (3)	$	1,889,573		$	1,688,032

(1) Represents all non-cash changes in ROU assets.

(2) Includes lease renewal options that are reasonably certain to be exercised.

(3) As of September 30, 2021 and December 31, 2020, we recorded accumulated amortization of finance lease assets of $689.2 million and $604.1 million, respectively. Finance lease assets are recorded within property, plant and equipment, net on the condensed consolidated balance sheets.

Maturities of Lease Liabilities

Maturities of lease liabilities as of September 30, 2021 are as follows (in thousands):


	Operating Leases		Finance Leases		Total
2021 (3 months remaining)	$	41,573	$	66,721	$	108,294
2022	196,671		236,967		433,638
2023	181,865		235,093		416,958
2024	166,317		233,592		399,909
2025	156,285		230,231		386,516
Thereafter	995,474		2,177,517		3,172,991
Total lease payments	1,738,185		3,180,121		4,918,306
Plus amount representing residual property value	—		16,037		16,037
Less imputed interest	(440,205)		(1,061,370)		(1,501,575)


Total	$	1,297,980	$	2,134,788	$	3,432,768

We entered into agreements with various landlords primarily to lease data center spaces and ground leases which have not yet commenced as of September 30, 2021. These leases will commence between year 2021 and 2023, with lease terms of 8 to 30 years and total lease commitments of approximately $387.1 million.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

10. Debt Facilities

Mortgage and Loans Payable

As of September 30, 2021 and December 31, 2020, our mortgage and loans payable consisted of the following (in thousands):


	September 30, 2021		December 31, 2020
Term loans	$	555,720	$	1,292,067

Mortgage payable and loans payable	71,358		78,903
	627,078		1,370,970
Less amount representing unamortized debt discount and debt issuance cost	(452)		(3,288)
Add amount representing unamortized mortgage premium	1,678		1,861
	628,304		1,369,543
Less current portion	(67,571)		(82,289)
Total	$	560,733	$	1,287,254

Senior Credit Facility

In 2017, we entered into a credit agreement with a group of lenders for a $3.0 billion credit facility ("Senior Credit Facility"), comprised of a $2.0 billion senior unsecured multicurrency revolving credit facility ("Revolving Facility") and an approximately $1.0 billion senior unsecured multicurrency term loan facility (the "Term Loan Facility"). The credit agreement was subsequently amended to provide an additional senior unsecured term loan in Japanese Yen for approximately $424.7 million at the exchange rate effective on the transaction date.

On May 17, 2021, using a portion of the net cash proceeds from the 2026 Notes, 2028 Notes, 2031 Notes, and 2052 Notes as described below, we repaid our outstanding term loans in Swedish Krona and Japanese Yen under our Term Loan Facility for $285.4 million and $374.5 million in U.S. Dollars, respectively, at the exchange rates in effect on May 17, 2021. As of September 30, 2021 and December 31, 2020, the total amounts outstanding under the Term Loan Facility, net of debt issuance costs, were $555.3 million and $1.3 billion, respectively.

As of September 30, 2021, we had 38 irrevocable letters of credit totaling $69.6 million issued and outstanding under the Revolving Facility, with approximately $1.9 billion remaining available to borrow under the Revolving Facility.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Senior Notes

As of September 30, 2021 and December 31, 2020, our senior notes consisted of the following (in thousands):


	September 30, 2021				December 31, 2020
	Amount		Effective Rate		Amount		Effective Rate
5.000% Infomart Senior Notes	$	—	—	%	$	150,000	4.51	%
2.625% Senior Notes due 2024	1,000,000		2.79	%	1,000,000		2.79	%
1.250% Senior Notes due 2025	500,000		1.46	%	500,000		1.46	%
1.000% Senior Notes Due 2025	700,000		1.18	%	700,000		1.18	%
2.900% Senior Notes due 2026	600,000		3.04	%	600,000		3.04	%
2.875% Euro Senior Notes due 2026	—		—	%	611,050		3.04	%
1.450% Senior Notes due 2026	700,000		1.64	%	—		—	%
0.250% Euro Senior Notes due 2027	578,500		0.45	%	—		—	%
1.800% Senior Notes due 2027	500,000		1.96	%	500,000		1.96	%
5.375% Senior Notes due 2027	—		—	%	1,250,000		5.51	%
1.550% Senior Notes due 2028	650,000		1.67	%	650,000		1.67	%
2.000% Senior Notes due 2028	400,000		2.21	%	—		—	%
3.200% Senior Notes due 2029	1,200,000		3.30	%	1,200,000		3.30	%
2.150% Senior Notes due 2030	1,100,000		2.27	%	1,100,000		2.27	%
2.500% Senior Notes due 2031	1,000,000		2.65	%	—		—	%
1.000% Euro Senior Notes due 2033	694,200		1.18	%	—		—	%
3.000% Senior Notes due 2050	500,000		3.09	%	500,000		3.09	%
2.950% Senior Notes due 2051	500,000		3.00	%	500,000		3.00	%
3.400% Senior Notes due 2052	500,000		3.50	%	—		—	%
	11,122,700				9,261,050
Less amount representing unamortized debt issuance cost	(122,031)				(92,773)
Add amount representing unamortized debt premium	—				186
	11,000,669				9,168,463
Less current portion	—				(150,186)
Total	$	11,000,669			$	9,018,277

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

0.250% Euro Senior Notes due 2027 and 1.000% Euro Senior Notes due 2033

On March 10, 2021, we issued €500.0 million, or approximately $594.9 million in U.S. dollars, at the exchange rate in effect on March 10, 2021, aggregate principal amount of 0.250% senior notes due March 15, 2027 (the "2027 Euro Notes") and €600.0 million, or approximately $713.8 million in U.S. dollars, at the exchange rate in effect on March 10, 2021, aggregate principal amount of 1.000% senior notes due March 15, 2033 (the "2033 Euro Notes").

Interest on the notes is payable annually in arrears on March 15 of each year, commencing on March 15, 2022. Total debt issuance costs and debt discounts related to the 2027 Euro Notes and the 2033 Euro Notes were $7.0 million and $14.1 million, respectively.

Redemption of 2.875% Euro Senior Notes due 2026

On March 24, 2021, using a portion of the net cash proceeds from the 2027 Euro Senior Notes and 2033 Euro Senior Notes, we redeemed the remaining outstanding 2.875% Euro Senior Notes due 2026 for $590.7 million in U.S. dollars, at the exchange rate in effect on March 24, 2021. In connection with the redemption, we incurred $13.2 million of loss on debt extinguishment, including $8.5 million in redemption premium that was paid in cash and $4.7 million related to the write-off of unamortized debt issuance costs, during the three months ended March 31, 2021.

1.450% Senior Notes due 2026, 2.000% Senior Notes due 2028, 2.500% Senior Notes due 2031 and 3.400% Senior Notes due 2052

On May 17, 2021, we issued $700.0 million aggregate principal amount of 1.450% senior notes due 2026 (the "2026 Notes"), $400.0 million aggregate principal amount of 2.000% senior notes due 2028 (the "2028 Notes"), $1.0 billion aggregate principal amount of 2.500% senior notes due 2031 (the "2031 Notes"), and $500.0 million aggregate principal amount of 3.400% senior notes due 2052 (the "2052 Notes").

Interest on the 2026, 2028 and 2031 notes are payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 2021. Interest on the 2052 notes are payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2022. Total debt issuance costs and debt discounts related to the 2026 Notes, 2028 Notes, 2031 Notes and 2052 Notes were $6.4 million, $5.3 million, $13.0 million and $9.3 million, respectively.

Redemption of 5.375% Senior Notes due 2027

On June 2, 2021, we redeemed all outstanding principal amount under the 5.375% Senior Notes due 2027 with a portion of the net cash proceeds from the issuance of the 2026 Notes, 2028 Notes, 2031 Notes, and 2052 Notes as described above. In connection with the redemption, we incurred $100.6 million of loss on debt extinguishment, including $90.7 million redemption premium that was paid in cash and $9.9 million related to the write-off of unamortized debt issuance costs.

Maturities of Debt Instruments

The following table sets forth maturities of our debt, including mortgage and loans payable, and senior notes, gross of debt issuance costs, debt discounts and debt premiums, as of September 30, 2021 (in thousands):


Years ending:
2021 (3 months remaining)	$	10,563
2022	580,889
2023	6,730
2024	1,006,278
2025	1,204,632
Thereafter	8,942,364
Total	$	11,751,456

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Fair Value of Debt Instruments

The following table sets forth the estimated fair values of our mortgage and loans payable and senior notes, including current maturities, as of (in thousands):


	September 30, 2021		December 31, 2020
Mortgage and loans payable	$	631,390	$	1,379,129
Senior notes	11,235,382		9,705,486

The fair values of the mortgage and loans payable, which are not publicly traded, were estimated by considering our credit rating, current rates available to us for debt of the same remaining maturities and terms of the debt (Level 2). The fair value of the senior notes, which are traded in the public debt market, was based on quoted market prices (Level 1).

Interest Charges

The following table sets forth total interest costs incurred, and total interest costs capitalized for the periods presented (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Interest expense	$	78,943	$	99,736	$	255,855	$	315,554
Interest capitalized	6,426		7,091		19,217		20,002
Interest charges incurred	$	85,369	$	106,827	$	275,072	$	335,556

Total interest paid in cash, net of capitalized interest, during the three months ended September 30, 2021 and 2020 was $80.0 million and $108.1 million, respectively. Total interest paid in cash, net of capitalized interest, during the nine months ended September 30, 2021 and 2020 was $296.9 million and $346.7 million, respectively.

11. Commitments and Contingencies

Purchase and Other Commitments

As a result of our various IBX data center expansion projects, as of September 30, 2021, we were contractually committed for approximately $1.0 billion of unaccrued capital expenditures, primarily for IBX infrastructure equipment not yet delivered and labor not yet provided, in connection with the work necessary to open these IBX data centers and make them available to our customers for installation. We also had numerous other, non-capital purchase commitments in place as of September 30, 2021, such as commitments to purchase power in select locations through the remainder of 2021 and thereafter, and other open purchase orders for goods or services to be delivered or provided during the remainder of 2021 and thereafter. Such other miscellaneous purchase commitments totaled approximately $1.2 billion as of September 30, 2021. For further information on equity contribution commitments and lease commitments, see Note 6 and Note 9, respectively, above.

Contingent Liabilities

We estimate our exposure on certain liabilities, such as indirect and property taxes, based on the best information available at the time of determination. With respect to real and personal property taxes, we record what we can reasonably estimate based on prior payment history, assessed value by the assessor's office, current landlord estimates or estimates based on current or changing fixed asset values in each specific municipality, as applicable. However, there are circumstances beyond our control whereby the underlying value of the property or basis for which the tax is calculated on the property may change, such as a landlord selling the underlying property of one of our IBX data center leases or a municipality changing the assessment value in a jurisdiction and, as a result, our property tax obligations may vary from period to period. Based upon the most current facts and circumstances, we make the necessary property tax accruals for each of our reporting periods. However, revisions in our estimates of the potential or actual liability could materially impact our financial position, results of operations or cash flows.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Our indirect and property tax filings in various jurisdictions are subject to examination by local tax authorities. Although we believe that we have adequately assessed and accounted for our potential tax liabilities, and that our tax estimates are reasonable, there can be no certainty that additional taxes will not be due upon audit of our tax returns or as a result of further changes to the tax laws and interpretations thereof. For example, we are currently undergoing an audit and appealing the tentative assessment in Brazil. The final settlement of the audit and the outcome of the appeal are uncertain and may not be resolved in our favor. We regularly assess the likelihood of adverse outcomes resulting from these examinations and appeals that would affect the adequacy of our tax accruals for each of the reporting periods. If any issues arising from the tax examinations and appeals are resolved in a manner inconsistent with our expectations, the revision of the estimates of the potential or actual liabilities could materially impact our financial position, results of operations, or cash flows.

Indemnification and Guarantor Arrangements

As permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was serving, at our request in such capacity. The term of the indemnification period is for the officer's or director's lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have a director and officer insurance policy that could limit our exposure and enable us to recover a portion of any future amounts paid. As a result of our insurance policy that could limit our exposure and enable us to recover some or all of amounts paid, our estimated fair value of these indemnification agreements is minimal. We have no liabilities recorded for these agreements as of September 30, 2021.

We enter into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, we indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally our business partners or customers, in connection with any U.S. patent, or any copyright or other intellectual property infringement claim by any third party with respect to our offerings. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have never incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, our estimated fair value of these agreements is minimal. We have no liabilities recorded for these agreements as of September 30, 2021.

We enter into arrangements with our business partners, whereby the business partner agrees to provide services as a subcontractor for our installations. Accordingly, we enter into standard indemnification agreements with our customers, whereby we indemnify them for other acts, such as personal property damage, of our subcontractors. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have general and umbrella insurance policies that could enable us to recover a portion of any amounts paid. We have never incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, our estimated fair value of these agreements is minimal. We have no liabilities recorded for these agreements as of September 30, 2021.

We have service level commitment obligations to certain of our customers. As a result, service interruptions or significant equipment damage in our IBX data centers, whether or not within our control, could result in service level commitments to these customers. Our liability insurance may not be adequate to cover those expenses. In addition, any loss of services, equipment damage or inability to meet our service level commitment obligations could reduce the confidence of our customers and could consequently impair our ability to obtain and retain customers, which would adversely affect both our ability to generate revenues and our operating results. We generally have the ability to determine such service level credits prior to the associated revenue being recognized. We do not have significant liabilities in connection with service level credits as of September 30, 2021.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Concurrent with the closing of the EMEA 2 Joint Venture, the EMEA 2 Joint Venture entered into credit facility agreements with a group of lenders under which it could borrow up to approximately $1.5 billion in total at the exchange rate in effect on September 30, 2021, with such facilities maturing in 2025 and 2026. In connection with our 20% equity investment in the EMEA 2 Joint Venture, we provided the lenders with guarantees covering 20% of all payments of principal and interest due and payable by the EMEA 2 Joint Venture under these credit facilities, up to a limit of $315.9 million in total at the exchange rate in effect on September 30, 2021. As of September 30, 2021, the maximum potential amount of our future payments under these guarantees was approximately $30.4 million, at the exchange rates in effect on that date. Our estimated fair value of these guarantees is minimal as the likelihood of making a payout under the guarantees is low.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

12. Stockholders' Equity

Stockholders' Equity Rollforward

The following tables provide a rollforward of our stockholders' equity for the three and nine months ended September 30, 2021 and 2020 (in thousands, except share and per share data):


											AOCI (Loss)		Retained Earnings		Equinix Stockholders' Equity		Non-controlling Interests		Total Stockholders' Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Dividends
	Shares	Amount		Shares	Amount
Balance as of December 31, 2020	89,462,304	$	89	(328,052)	$	(122,118)	$	15,028,357	$	(5,119,274)	$	(913,368)	$	1,760,302	$	10,633,988	$	130	$	10,634,118

Net income (loss)	—	—		—	—		—		—		—		156,362		156,362		(288)		156,074
Other comprehensive loss	—	—		—	—		—		—		(95,480)		—		(95,480)		(1)		(95,481)
Issuance of common stock and release of treasury stock for employee equity awards	428,618	1		11,640	4,332		35,701		—		—		—		40,034		—		40,034

Dividend distribution on common stock, $2.87 per share	—	—		—	—		—		(256,321)		—		—		(256,321)		—		(256,321)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(437)		—		—		(437)		—		(437)
Accrued dividends on unvested equity awards	—	—		—	—		—		(3,661)		—		—		(3,661)		—		(3,661)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		102,349		—		—		—		102,349		—		102,349

Balance as of March 31, 2021	89,890,922	90		(316,412)	(117,786)		15,166,407		(5,379,693)		(1,008,848)		1,916,664		10,576,834		(159)		10,576,675

Net income	—	—		—	—		—		—		—		68,339		68,339		148		68,487
Other comprehensive income	—	—		—	—		—		—		67,734		—		67,734		11		67,745
Issuance of common stock and release of treasury stock for employee equity awards	36,674	—		1,389	516		(516)		—		—		—		—		—		—
Issuance of common stock under ATM Program	137,604	—		—	—		99,599		—		—		—		99,599		—		99,599

Dividend distribution on common stock, $2.87 per share	—	—		—	—		—		(257,199)		—		—		(257,199)		—		(257,199)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(55)		—		—		(55)		—		(55)
Accrued dividends on unvested equity awards	—	—		—	—		—		(4,016)		—		—		(4,016)		—		(4,016)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		95,236		—		—		—		95,236		—		95,236

Balance as of June 30, 2021	90,065,200	90		(315,023)	(117,270)		15,360,726		(5,640,963)		(941,114)		1,985,003		10,646,472		—		10,646,472

Net income	—	—		—	—		—		—		—		152,216		152,216		(190)		152,026
Other comprehensive loss	—	—		—	—		—		—		(100,647)		—		(100,647)		—		(100,647)
Issuance of common stock and release of treasury stock for employee equity awards	278,731	—		12,292	4,574		33,021		—		—		—		37,595		—		37,595

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


											AOCI (Loss)		Retained Earnings		Equinix Stockholders' Equity		Non-controlling Interests		Total Stockholders' Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Dividends
	Shares	Amount		Shares	Amount
Dividend distribution on common stock, $2.87 per share	—	—		—	—		—		(257,769)		—		—		(257,769)		—		(257,769)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(299)		—		—		(299)		—		(299)
Accrued dividends on unvested equity awards	—	—		—	—		—		(3,906)		—		—		(3,906)		—		(3,906)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		95,101		—		—		—		95,101		—		95,101

Balance as of September 30, 2021	90,343,931	$	90	(302,731)	$	(112,696)	$	15,488,848	$	(5,902,937)	$	(1,041,761)	$	2,137,219	$	10,568,763	$	(190)	$	10,568,573

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


							Additional Paid-in Capital		Accumulated Dividends		AOCI (Loss)		Retained Earnings		Equinix Stockholders' Equity		Non-controlling interests		Total Stockholders' Equity
	Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount
Balance as of December 31, 2019	85,700,953	$	86	(392,567)	$	(144,256)	$	12,696,433	$	(4,168,469)	$	(934,613)	$	1,391,425	$	8,840,606	$	(224)	$	8,840,382
Adjustment from adoption of new accounting standard update	—	—		—	—		—		—		—		(900)		(900)		—		(900)
Net income	—	—		—	—		—		—		—		118,792		118,792		165		118,957
Other comprehensive loss	—	—		—	—		—		—		(272,056)		—		(272,056)		(11)		(272,067)
Issuance of common stock and release of treasury stock for employee equity awards	405,550	—		50,594	16,958		13,432		—		—		—		30,390		—		30,390
Issuance of common stock under ATM Program	162,530	—		—	—		101,791		—		—		—		101,791		—		101,791
Dividend distribution on common stock, $2.66 per share	—	—		—	—		—		(227,387)		—		—		(227,387)		—		(227,387)
Settlement of accrued dividends on vested equity awards	—	—		—	—		109		(403)		—		—		(294)		—		(294)
Accrued dividends on unvested equity awards	—	—		—	—		—		(3,268)		—		—		(3,268)		—		(3,268)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		81,690		—		—		—		81,690		—		81,690

Balance as of March 31, 2020	86,269,033	86		(341,973)	(127,298)		12,893,455		(4,399,527)		(1,206,669)		1,509,317		8,669,364		(70)		8,669,294

Net income	—	—		—	—		—		—		—		133,304		133,304		46		133,350
Other comprehensive income	—	—		—	—		—		—		66,378		—		66,378		2		66,380
Issuance of common stock and release of treasury stock for employee equity awards	34,146	—		688	256		(256)		—		—		—		—		—		—

Issuance of common stock for equity offering	2,587,500	3		—	—		1,683,103		—		—		—		1,683,106		—		1,683,106
Dividend distribution on common stock, $2.66 per share	—	—		—	—		—		(235,334)		—		—		(235,334)		—		(235,334)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(44)		—		—		(44)		—		(44)
Accrued dividends on unvested equity awards	—	—		—	—		—		(4,136)		—		—		(4,136)		—		(4,136)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		75,642		—		—		—		75,642		—		75,642

Balance as of June 30, 2020	88,890,679	89		(341,285)	(127,042)		14,651,944		(4,639,041)		(1,140,291)		1,642,621		10,388,280		(22)		10,388,258













Net income	—	—		—	—		—		—		—		66,687		66,687		144		66,831
Other comprehensive loss	—	—		—	—		—		—		38,490		—		38,490		30		38,520
Issuance of common stock and release of treasury stock for employee equity awards	287,635	—		11,705	4,356		27,372		—		—		—		31,728		—		31,728
Issuance of common stock under ATM Program	252,982	—		—	—		196,477		—		—		—		196,477		—		196,477

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


							Additional Paid-in Capital		Accumulated Dividends		AOCI (Loss)		Retained Earnings		Equinix Stockholders' Equity		Non-controlling interests		Total Stockholders' Equity
	Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount
Dividend distribution on common stock, $2.66 per share	—	—		—	—		—		(236,538)		—		—		(236,538)		—		(236,538)
Settlement of accrued dividends on vested equity awards	—	—		—	—		81		(275)		—		—		(194)		—		(194)
Accrued dividends on unvested equity awards	—	—		—	—		—		(3,764)		—		—		(3,764)		—		(3,764)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		74,648		—		—		—		74,648		—		74,648

Balance as of September 30, 2020	89,431,296	$	89	(329,580)	$	(122,686)	$	14,950,522	$	(4,879,618)	$	(1,101,801)	$	1,709,308	$	10,555,814	$	152	$	10,555,966

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):


	Balance as of December 31, 2020		Net Change		Balance as of September 30, 2021
Foreign currency translation adjustment ("CTA") gain (loss)	$	(508,415)	$	(444,701)	$	(953,116)
Unrealized gain (loss) on cash flow hedges (1)	(67,152)		52,048		(15,104)
Net investment hedge CTA gain (loss) (1)	(336,934)		264,219		(72,715)
Net actuarial gain (loss) on defined benefit plans (2)	(867)		41		(826)
Accumulated other comprehensive loss attributable to Equinix	$	(913,368)	$	(128,393)	$	(1,041,761)

**(1)**Refer to Note 7 for a discussion of the amounts reclassified from accumulated other comprehensive loss to net income.

(2)We have two defined benefit pension plans covering all employees in two countries where such plan is mandated by law.

Changes in foreign currencies can have a significant impact to our condensed consolidated balance sheets (as evidenced above in our foreign currency translation loss), as well as our consolidated results of operations, as amounts in foreign currencies are generally translated into more U.S. Dollars when the U.S. Dollar weakens or fewer U.S. Dollars when the U.S. Dollar strengthens. As of September 30, 2021, the U.S. Dollar was generally stronger relative to certain of the currencies of the foreign countries in which we operate as compared to December 31, 2020. Because of this, the U.S. Dollar had an overall unfavorable impact on our condensed consolidated financial position because the foreign denominations translated into fewer U.S. Dollars as evidenced by an increase in foreign currency translation loss for the nine months ended September 30, 2021 as reflected in the condensed consolidated statements of comprehensive income (loss). The volatility of the U.S. Dollar as compared to the other currencies in which we operate could have a significant impact on our condensed consolidated financial position and results of operations including the amount of revenue that we report in future periods.

Common Stock

In October 2020, we established an ATM program, under which we may, from time to time, offer and sell up to an aggregate of $1.5 billion of our common stock to or through sales agents in "at the market" transactions (the "2020 ATM Program"). For the three months ended September 30, 2021, we did not sell any shares under the 2020 ATM Program. For the nine months ended September 30, 2021, we sold 137,604 shares under the 2020 ATM Program, for approximately $99.6 million, net of payment of commissions to sales agents and other offering expenses. As of September 30, 2021, we had $1.4 billion available for sale under the 2020 ATM Program. For the three and nine months ended September 30, 2020, we sold 252,982 shares and 415,512 shares respectively, under our prior ATM program, for approximately $196.5 million and $298.3 million, respectively, net of payment of commissions to sales agents and other offering expenses.

In May 2020, we issued and sold 2,587,500 shares of common stock in a public offering pursuant to a registration statement and a related prospectus and prospectus supplement. We received net proceeds of approximately $1.7 billion, net of underwriting discounts, commissions and offering expenses.

Stock-Based Compensation

For the nine months ended September 30, 2021, the Compensation Committee and/or the Stock Award Committee of our Board of Directors, as the case may be, approved the issuance of an aggregate of 735,818 shares of restricted stock units ("RSUs") to certain employees, including executive officers. These equity awards are subject to vesting provisions and have a weighted-average grant date fair value of $671.89 per share and a weighted-average requisite service period of 3.60 years. The valuation of RSUs with only a service condition or a service and performance condition require no significant assumptions as the fair value for these types of equity awards is based solely on the fair value of our stock price on the date of grant. We use revenues and adjusted

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

funds from operations ("AFFO") per share as the performance measurements in the RSUs with both service and performance conditions that were granted in the nine months ended September 30, 2021.

We use a Monte Carlo simulation option-pricing model to determine the fair value of RSUs with a service and market condition. We used total shareholder return ("TSR") as the performance measurement in the RSUs with a service and market condition that were granted in the nine months ended September 30, 2021. There were no significant changes in the assumptions used to determine the fair value of RSUs with a service and market condition that were granted in 2021 compared to the prior year.

The following table presents, by operating expense category, our stock-based compensation expense recognized in our condensed consolidated statements of operations (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenues	$	9,713	$	7,856	$	28,188	$	24,854
Sales and marketing	20,565		17,630		59,047		54,390
General and administrative	64,432		49,762		180,160		152,414
Total	$	94,710	$	75,248	$	267,395	$	231,658

13. Segment Information

While we have one primary line of business, which is the design, build-out and operation of IBX data centers, we have determined that we have three reportable segments comprised of our Americas, EMEA and Asia-Pacific geographic regions. Our chief operating decision-maker evaluates performance, makes operating decisions and allocates resources based on our revenues and adjusted EBITDA performance both on a consolidated basis and based on these three reportable segments. Intercompany transactions between segments are excluded for management reporting purposes.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following tables present revenue information disaggregated by product lines and geographic areas, (in thousands):


	Three Months Ended September 30, 2021								Nine Months Ended September 30, 2021
	Americas		EMEA		Asia-Pacific		Total		Americas		EMEA		Asia-Pacific		Total
Colocation (1)	$	504,711	$	400,395	$	259,092	$	1,164,198	$	1,489,829	$	1,187,373	$	773,223	$	3,450,425
Interconnection	168,511		65,809		56,789		291,109		501,016		192,717		164,869		858,602
Managed infrastructure	43,313		31,445		21,572		96,330		122,532		94,732		66,415		283,679
Other (1)	4,757		5,639		1,583		11,979		7,246		14,367		2,692		24,305
Recurring revenues	721,292		503,288		339,036		1,563,616		2,120,623		1,489,189		1,007,199		4,617,011
Non-recurring revenues	41,761		41,939		27,860		111,560		119,013		112,684		80,451		312,148
Total	$	763,053	$	545,227	$	366,896	$	1,675,176	$	2,239,636	$	1,601,873	$	1,087,650	$	4,929,159

(1) Includes some leasing and hedging activities.


	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
	Americas		EMEA		Asia-Pacific		Total		Americas		EMEA		Asia-Pacific		Total
Colocation (1)	$	450,030	$	391,773	$	236,762	$	1,078,565	$	1,348,482	$	1,135,247	$	686,658	$	3,170,387
Interconnection	156,677		55,700		48,565		260,942		460,993		155,145		136,376		752,514
Managed infrastructure	28,954		30,690		22,614		82,258		83,372		89,839		66,588		239,799
Other (1)	3,911		5,581		815		10,307		14,212		14,177		815		29,204
Recurring revenues	639,572		483,744		308,756		1,432,072		1,907,059		1,394,408		890,437		4,191,904
Non-recurring revenues	32,760		34,339		20,596		87,695		88,597		90,674		63,255		242,526
Total	$	672,332	$	518,083	$	329,352	$	1,519,767	$	1,995,656	$	1,485,082	$	953,692	$	4,434,430

(1) Includes some leasing and hedging activities.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

No single customer accounted for 10% or greater of our accounts receivable or revenues for the three and nine months ended September 30, 2021 and 2020. There is no country outside of the U.S. from which we derived revenues that exceeded 10% of our total revenues for the three and nine months ended September 30, 2021 and 2020.

We define adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales as presented below (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Adjusted EBITDA:
Americas	$	321,768	$	290,550	$	992,184	$	886,270
EMEA	267,553		263,216		773,642		736,971
Asia-Pacific	196,977		183,479		590,981		518,255
Total adjusted EBITDA	786,298		737,245		2,356,807		2,141,496
Depreciation, amortization and accretion expense	(419,684)		(362,286)		(1,231,760)		(1,048,151)
Stock-based compensation expense	(94,710)		(75,248)		(267,395)		(231,658)
Impairment charges	—		(7,306)		—		(7,306)
Transaction costs	(5,197)		(5,840)		(13,364)		(30,987)
Gain on asset sales	15,414		1,785		14,149		928
Income from operations	$	282,121	$	288,350	$	858,437	$	824,322

We also provide the following additional segment disclosures (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Depreciation and amortization:
Americas	$	218,749	$	182,537	$	644,316	$	534,545
EMEA	114,494		100,861		340,435		286,247
Asia-Pacific	85,688		77,290		245,438		224,358
Total	$	418,931	$	360,688	$	1,230,189	$	1,045,150
Capital expenditures:
Americas	$	246,497	$	237,737	$	702,013	$	604,051
EMEA	277,124		249,310		765,342		568,702
Asia-Pacific	154,656		78,238		466,752		275,421
Total	$	678,277	$	565,285	$	1,934,107	$	1,448,174

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Our long-lived assets, including property, plant and equipment, net and operating lease right-of-use assets, located in the following geographic areas as of (in thousands):


	September 30, 2021		December 31, 2020
Americas	$	6,703,449	$	6,429,861
EMEA	5,117,439		5,002,271
Asia-Pacific	3,486,161		3,070,952
Total property, plant and equipment, net	$	15,307,049	$	14,503,084

Americas	$	313,589	$	363,515
EMEA	478,418		547,547
Asia-Pacific	533,865		563,995
Total operating lease right-of-use assets	$	1,325,872	$	1,475,057

14. Subsequent Events

Declaration of dividends

On November 3, 2021, we declared a quarterly cash dividend of $2.87 per share, which is payable on December 15, 2021 to our common stockholders of record as of the close of business on November 17, 2021.

Asia-Pacific 2 Joint Venture

On October 15, 2021, we entered into an agreement to form a joint venture in the form of a limited liability partnership with PGIM, to develop and operate xScale data centers in Asia-Pacific (the "Asia-Pacific 2 Joint Venture"). Upon closing, PGIM will contribute cash in exchange for an 80% partnership interest in the Asia-Pacific 2 Joint Venture. We will sell our SY9 data center site to the Asia-Pacific 2 Joint Venture in exchange for a 20% partnership interest in the Asia-Pacific 2 Joint Venture and cash proceeds. The transaction is expected to close in the fourth quarter of 2021, pending regulatory approval and other closing conditions. The assets and liabilities of the SY9 data center were classified as held for sale as of September 30, 2021 (see Note 5 above).

Close of SP5 Sale

On October 14, 2021, we completed the sale of our SP5 data center to the EMEA 2 Joint Venture for cash proceeds of approximately R$187.8 million, or $34.1 million at the exchange rate in effect on that date. The assets and liabilities of the SP5 data center were classified as held for sale as of September 30, 2021 (see Note 5 above).

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