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, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,357,497	$	1,906,421

Accounts receivable, net of allowance of $20,199 and $12,225	1,030,694		855,380
Other current assets	497,189		459,138
Assets held for sale	—		84,316
Total current assets	3,885,380		3,305,255

Property, plant and equipment, net	17,370,577		16,649,534
Operating lease right-of-use assets	1,516,011		1,427,950
Goodwill	5,589,124		5,654,217
Intangible assets, net	1,730,538		1,897,649
Other assets	1,592,972		1,376,137
Total assets	$	31,684,602	$	30,310,742
Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	1,058,235	$	1,004,800
Accrued property, plant and equipment	363,549		281,347
Current portion of operating lease liabilities	135,636		139,538
Current portion of finance lease liabilities	133,360		151,420
Current portion of mortgage and loans payable	8,211		9,847

Other current liabilities	194,700		251,346

Total current liabilities	1,893,691		1,838,298
Operating lease liabilities, less current portion	1,399,852		1,272,812
Finance lease liabilities, less current portion	2,121,382		2,143,690
Mortgage and loans payable, less current portion	637,625		642,708
Senior notes	12,945,222		12,109,539
Other liabilities	775,271		797,863
Total liabilities	19,773,043		18,804,910
Commitments and contingencies (Note 11)
Redeemable non-controlling interest	25,000		—
Equinix stockholders’ equity:
Common stock, $0.001 par value per share: 300,000,000 shares authorized; 94,036,882 issued and 93,883,296 outstanding in 2023 and 92,813,976 issued and 92,620,703 outstanding in 2022	94		93
Additional paid-in capital	18,051,150		17,320,017
Treasury stock, at cost; 153,586 shares in 2023 and 193,273 shares in 2022	(57,199)		(71,966)
Accumulated dividends	(8,287,599)		(7,317,570)
Accumulated other comprehensive loss	(1,526,010)		(1,389,446)
Retained earnings	3,706,448		2,964,838
Total Equinix stockholders' equity	11,886,884		11,505,966
Non-controlling interests	(325)		(134)
Total stockholders’ equity	11,886,559		11,505,832
Total liabilities, redeemable non-controlling interest and stockholders’ equity	$	31,684,602	$	30,310,742

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,
	2023		2022		2023		2022
	(Unaudited)
Revenues	$	2,061,030	$	1,840,659	$	6,077,647	$	5,392,260
Costs and operating expenses:
Cost of revenues	1,068,991		934,669		3,135,882		2,780,801
Sales and marketing	212,506		193,089		638,193		579,327
General and administrative	403,890		375,483		1,205,193		1,098,518
Transaction costs	(775)		2,007		6,543		11,310
(Gain) loss on asset sales	(3,933)		2,252		(5,022)		3,976
Total costs and operating expenses	1,680,679		1,507,500		4,980,789		4,473,932
Income from operations	380,351		333,159		1,096,858		918,328
Interest income	23,111		11,192		66,002		17,806
Interest expense	(101,385)		(91,346)		(298,839)		(262,137)
Other expense	(5,972)		(6,735)		(9,987)		(22,522)
Gain (loss) on debt extinguishment	(360)		75		(106)		184
Income before income taxes	295,745		246,345		853,928		651,659
Income tax expense	(19,985)		(34,606)		(112,425)		(75,985)
Net income	275,760		211,739		741,503		575,674
Net (income) loss attributable to non-controlling interests	34		68		107		(92)
Net income attributable to Equinix	$	275,794	$	211,807	$	741,610	$	575,582
Earnings per share (“EPS”) attributable to Equinix:
Basic EPS	$	2.94	$	2.30	$	7.94	$	6.31
Weighted-average shares for basic EPS	93,683		91,896		93,396		91,234
Diluted EPS	$	2.93	$	2.30	$	7.91	$	6.29
Weighted-average shares for diluted EPS	94,168		92,135		93,788		91,519

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,
	2023		2022		2023		2022
	(Unaudited)
Net income	$	275,760	$	211,739	$	741,503	$	575,674
Other comprehensive loss, net of tax:
Foreign currency translation adjustment (“CTA”) loss, net of tax effects of $0, $0, $0 and $0	(412,910)		(703,640)		(229,773)		(1,566,602)
Net investment hedge CTA gain, net of tax effects of $0, $0, $0 and $0	149,608		360,350		85,462		805,661

Unrealized gain on cash flow hedges, net of tax effects of $(9,333), $(2,250), $(4,378) and $(14,268)	25,685		6,120		8,012		90,774
Net actuarial loss on defined benefit plans, net of tax effects of $29, $5, $84 and $14	(119)		(19)		(350)		(59)
Total other comprehensive loss, net of tax	(237,736)		(337,189)		(136,649)		(670,226)
Comprehensive income (loss), net of tax	38,024		(125,450)		604,854		(94,552)
Net (income) loss attributable to non-controlling interests	34		68		107		(92)
Other comprehensive loss attributable to non-controlling interests	182		28		85		60
Comprehensive income (loss) attributable to Equinix	$	38,240	$	(125,354)	$	605,046	$	(94,584)

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,
	2023		2022
	(Unaudited)
Cash flows from operating activities:
Net income	$	741,503	$	575,674
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	1,224,476		1,145,485
Stock-based compensation	301,707		296,464
Amortization of intangible assets	157,199		153,317
Amortization of debt issuance costs and debt discounts	13,927		13,273
Provision for credit loss allowance	14,873		5,534

(Gain) Loss on asset sales	(5,022)		3,976

(Gain) Loss on debt extinguishment	106		(184)
Other items	26,992		18,964
Changes in operating assets and liabilities:
Accounts receivable	(199,703)		(97,206)
Income taxes, net	(6,585)		9,874
Other assets	(127,695)		(145,376)
Operating lease right-of-use assets	117,080		112,923
Operating lease liabilities	(98,964)		(98,245)
Accounts payable and accrued expenses	84,949		83,089
Other liabilities	(26,962)		125,431
Net cash provided by operating activities	2,217,881		2,202,993
Cash flows from investing activities:
Purchases of investments	(81,347)		(109,420)
Sales of investments	—		22,073
Business acquisitions, net of cash and restricted cash acquired	—		(964,010)
Real estate acquisitions	(153,293)		(39,899)
Purchases of other property, plant and equipment	(1,785,298)		(1,450,077)
Proceeds from sale of assets, net of cash transferred	76,936		249,906
Net cash used in investing activities	(1,943,002)		(2,291,427)
Cash flows from financing activities:
Proceeds from employee equity programs	86,963		81,543
Payment of dividends	(970,992)		(863,886)
Proceeds from public offering of common stock, net of issuance costs	300,775		796,018
Proceeds from senior notes, net of debt discounts	902,092		1,193,688
Proceed from mortgage and loans payable	—		676,850
Repayment of finance lease liabilities	(98,091)		(97,808)
Proceeds from redeemable non-controlling interest	25,000		—
Repayment of mortgage and loans payable	(5,556)		(586,227)


Debt issuance costs	(7,239)		(17,731)

Net cash provided by financing activities	232,952		1,182,447
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash	(57,825)		(135,599)

Net increase in cash, cash equivalents and restricted cash	450,006		958,414
Cash, cash equivalents and restricted cash at beginning of period	1,908,248		1,549,454
Cash, cash equivalents and restricted cash at end of period	$	2,358,254	$	2,507,868

Cash and cash equivalents	$	2,357,497	$	2,500,816
Current portion of restricted cash included in other current assets	666		2,529
Non-current portion of restricted cash included in other assets	91		4,523
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows	$	2,358,254	$	2,507,868

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.

Our condensed consolidated balance sheet data as of December 31, 2022 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" or "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 17, 2023. 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 the acquisitions of:

Four data centers as well as a subsea cable and terrestrial fiber network in West Africa acquired from MainOne Cable Company ("MainOne") starting from April 1, 2022; and
Four data centers in Chile and a data center in Peru acquired from Empresa Nacional De Telecomunicaciones S.A. ("Entel") starting from May 2, 2022 and August 1, 2022, respectively.

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 dividends paid 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 13.2% and 11.7% for the nine months ended September 30, 2023 and 2022, respectively. The increase in the effective tax rate for the nine months ended September 30, 2023 as compared to the same period in 2022 is primarily due to the reversal of uncertain tax positions from the settlement of tax audits in the EMEA region of approximately $40.0 million in the prior period versus $13.4 million in the current period.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Recent Accounting Pronouncements

Accounting Standards Adopted

Supplier Finance Programs

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, "Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations". This guidance requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023. On January 1, 2023, we adopted this ASU and the adoption of this standard did not have an impact on our condensed consolidated financial statements.

Reference Rate Reform

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 2021-01 is effective upon issuance and ASU 2020-04 was effective for all entities as of March 12, 2020, and together remained effective through December 31, 2022. In December 2022, FASB issued ASU 2022-06, Reference Rate Reform ("Topic 848"): Deferral of the Sunset Date of Topic 848. Because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in this Update defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. We adopted these ASUs upon their respective issuances and there was no impact on our 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.

Debt with Conversion and Other Options

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. On January 1, 2022, we adopted this ASU on a prospective basis and the adoption of this standard did not have a material impact on our condensed consolidated financial statements.

Business Combinations

In October 2021, FASB issued 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. On April 1, 2022, we early adopted this ASU and the adoption of this standard did not have a material impact on our condensed consolidated financial statements.

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, 2023	$	855,380	$	27,608	$	55,405	$	132,090	$	155,334
Closing balances as of September 30, 2023	1,030,694		31,366		74,786		116,937		153,129
Increase (Decrease)	$	175,314	$	3,758	$	19,381	$	(15,153)	$	(2,205)

(1) The net change in our allowance for credit losses was insignificant during the nine months ended September 30, 2023.

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, 2023 from the opening deferred revenue balance as of January 1, 2023 was $80.0 million.

Remaining performance obligations

As of September 30, 2023, approximately $9.8 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 contract renewals. 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 deployment 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, point-in-time services, variable price increases, and 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,
	2023		2022		2023		2022
Net income	$	275,760	$	211,739	$	741,503	$	575,674
Net (income) loss attributable to non-controlling interests	34		68		107		(92)
Net income attributable to Equinix	$	275,794	$	211,807	$	741,610	$	575,582

Weighted-average shares used to calculate basic EPS	93,683		91,896		93,396		91,234
Effect of dilutive securities:
Employee equity awards	485		239		392		285
Weighted-average shares used to calculate diluted EPS	94,168		92,135		93,788		91,519

EPS attributable to Equinix:
Basic EPS	$	2.94	$	2.30	$	7.94	$	6.31
Diluted EPS	$	2.93	$	2.30	$	7.91	$	6.29

We have excluded common stock related to employee equity awards in the diluted EPS calculation above of approximately 25,000 and 351,000 shares for the three months ended September 30, 2023 and 2022, respectively, and approximately 79,000 and 379,000 shares for the nine months ended September 30, 2023 and 2022, respectively, because its effect would be anti-dilutive.

4. Acquisitions

2022 Acquisitions

Acquisition of Entel Chile Data Centers (the "Entel Chile Acquisition") and Entel Peru Data Center (the "Entel Peru Acquisition")

On May 2, 2022, we further expanded in Latin America through an acquisition of four data centers in Chile from Entel, a leading Chilean telecommunications provider, for a total purchase consideration of $638.3 million at the exchange rate in effect on that date. On August 1, 2022, we completed the acquisition of a data center in Peru from Entel for a total purchase consideration of $80.3 million at the exchange rate in effect on that date. The Entel Chile Acquisition and Entel Peru Acquisition support our ongoing expansion to meet customer demand in the Latin American market.

Acquisition of MainOne (the "MainOne Acquisition")

On April 1, 2022, we completed the acquisition of all outstanding shares of MainOne, which consisted of four data centers as well as a subsea cable and terrestrial fiber network. We acquired MainOne and its assets for a total purchase consideration of $278.4 million. The MainOne Acquisition supports our ongoing expansion to meet customer demand in the West African market.

Purchase Price Allocation

Each of the acquisitions noted above 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, except where alternative measurement is required under GAAP.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

During the nine months ended September 30, 2023, we completed the detailed valuation analysis and the final allocation of purchase price for the Entel Chile, Entel Peru, and MainOne Acquisitions.

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


	Entel Chile		Entel Peru		MainOne
Cash and cash equivalents	$	—	$	—	$	33,026
Accounts receivable	—		—		9,431
Other current assets	12,424		—		21,988
Property, plant and equipment	81,132		13,423		239,583

Intangible assets	153,489		10,000		54,800
Goodwill	380,867		46,285		110,665
Deferred tax and other assets	12,090		10,801		5,879
Total assets acquired	640,002		80,509		475,372
Accounts payable and accrued liabilities	(195)		—		(18,525)
Other current liabilities (1)	—		—		(13,061)


Mortgage and loans payable	—		—		(25,944)
Deferred tax and other liabilities (1)	(1,463)		(167)		(139,492)
Net assets acquired	$	638,344	$	80,342	$	278,350

(1)For the MainOne Acquisition, other current liabilities includes $9.9 million of deferred revenue - current and the other liabilities includes $95.4 million of deferred revenue - non-current.

Property, plant and equipment - The fair values of property, plant and equipment acquired from these three 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)	Discount Rate
Entel Chile:
Customer relationships (1)	$	153,489	12.0 - 15.0	14.0	8.5% - 9.5%
Entel Peru:
Customer relationships (1)	10,000		15.0	15.0	7.0	%
MainOne:
Customer relationships (1)	51,500		10.0 - 15.0	14.0	11.5	%
Trade names (2)	3,300		5.0	5.0	11.5	%

(1)The fair value was estimated by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue and/or by using benchmarking. The rates reflect 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.

(2)The fair value of the MainOne trade name was estimated using the relief from royalty method under the income approach. We applied a relief from royalty rate of 1.0%.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

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 the acquisition. Goodwill from the Entel Chile and Entel Peru acquisitions is attributable to the Americas region. Goodwill from the Entel Chile acquisition is amortizable for local tax purposes, while goodwill from the Entel Peru acquisition is not expected to be amortizable for local tax purposes. Goodwill from the MainOne Acquisition is attributable to the EMEA region and is generally not deductible for local tax purposes.

5. Assets Held for Sale

In June 2021, we entered into an agreement to form a joint venture in the form of a limited liability partnership with GIC Private Limited, Singapore's sovereign wealth fund ("GIC"), to develop and operate xScaleTM data centers in Europe and the Americas (the “EMEA 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 solutions. The transaction was structured to close in phases over the course of approximately two years, pending regulatory approval and other closing conditions. The assets and liabilities of the Warsaw 4 ("WA4") data center site, which were included within our EMEA region, were classified as held for sale as of June 30, 2021. In June 2022, we sold the WA4 data center in exchange for a total consideration of $61.5 million. We recognized an insignificant gain on the sale of the WA4 data center.

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 xScale data centers in Asia-Pacific (the "Asia-Pacific 2 Joint Venture"). The assets and liabilities of the Sydney 9 ("SY9") data center site, which were included within our Asia-Pacific region, were classified as held for sale as of September 30, 2021. Upon closing the joint venture in March 2022, we sold the SY9 data center in exchange for a total consideration of $201.3 million, which was comprised of $165.6 million of net cash proceeds, a 20% partnership interest in the Asia-Pacific 2 Joint Venture with a fair value of $29.8 million, and $5.9 million of receivables. We recognized an insignificant loss on the sale of the SY9 data center.

In March 2022, we entered into an agreement to sell the Mexico 3 ("MX3") data center site in connection with the formation of a new joint venture with GIC (the "AMER 1 Joint Venture") to develop and operate xScale data centers in the Americas. The assets and liabilities of the MX3 data center, which were included within our Americas region, were classified as held for sale as of September 30, 2021. Upon closing of the joint venture in March 2023, we sold the MX3 data center in exchange for a total consideration of $75.1 million, which was comprised of $63.9 million of net cash proceeds, a 20% partnership interest in the AMER 1 Joint Venture with a fair value of $8.4 million, and $2.8 million of receivables. During the nine months ended September 30, 2023, we recognized an insignificant loss on the sale of the MX3 data center.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

6. Equity Method Investments

We hold various equity method investments, primarily joint venture or partnership arrangements, in order to invest in certain entities that are in line with our business development objectives, including the development and operation of xScale data centers. Some of these xScale joint ventures are classified as Variable Interest Entities ("VIEs"), as discussed further below. The Asia-Pacific 1, Asia-Pacific 2, Asia-Pacific 3, EMEA 2 and AMER 1 Joint Ventures as noted below (the "VIE Joint Ventures") share a similar purpose, design and nature of assets. 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, 2023		December 31, 2022
EMEA 1 Joint Venture with GIC	20%	$	150,165	$	148,895
VIE Joint Ventures	20%	243,540		191,680
Other	Various	10,245		7,570
Total		$	403,950	$	348,145

Non - VIE Joint Venture

EMEA 1 Joint Venture

We invested in 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 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, 2023 and 2022 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, 2023, we had future equity contribution commitments of $6.3 million.

VIE Joint Ventures

Preceding 2022, we invested in partnerships with GIC to develop and operate xScale data centers in Asia-Pacific (the "Asia-Pacific 1 Joint Venture") and in Europe and the Americas (the EMEA 2 Joint Venture, see Note 5 above).

On March 11, 2022, we entered into the Asia-Pacific 2 Joint Venture with PGIM to develop and operate additional xScale data centers in Asia-Pacific (see Note 5 above).

On April 6, 2022, we entered into a partnership with GIC (the "Asia-Pacific 3 Joint Venture") to develop and operate additional xScale data centers in Seoul, Korea. Upon closing, we contributed $17.0 million in exchange for a 20% partnership interest in the joint venture.

On March 10, 2023, we entered into the AMER 1 Joint Venture with GIC to develop and operate xScale data centers in the Americas (see Note 5 above). Upon closing, we contributed $8.4 million in exchange for a 20% partnership interest in the joint venture.

The VIE Joint Ventures are considered VIEs because they do not have sufficient funds from operations to be self-sustaining. While we provide certain management services to their operations and earn fees for the performance of such services, the power to direct the activities of these joint ventures that most significantly impact economic performance is shared equally between us and either GIC or PGIM, as applicable. 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 Equinix and either GIC or PGIM, as applicable. We concluded that neither party is deemed to have predominant control over the VIE Joint Ventures and neither party is

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

considered to be the primary beneficiary. Our share of losses of equity method investments from these joint ventures were insignificant for the three months ended September 30, 2023 and 2022, respectively, and $8.0 million and $5.5 million for the nine months ended September 30, 2023 and 2022, respectively. These amounts were included in other income (expense) on the condensed consolidated statement of operations.

The following table summarizes our maximum exposure to loss related to the VIE Joint Ventures as of September 30, 2023 (in thousands):


	VIE Joint Ventures
Equity Investment	$	243,540
Outstanding Receivables	26,706
Future Equity Contribution Commitments (1)	45,211
Maximum Future Payments under Debt Guarantees (2)	144,522
Total	$	459,979

(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. A portion of the guarantees related to our AMER 1 Joint Venture (see Note 11).

Other Related Party Transactions

We have lease arrangements and provide various services to the EMEA 1 Joint Venture and the VIE Joint Ventures (collectively, the "Joint Ventures") through multiple agreements, including sales and marketing, development management, facilities management, and asset management. 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	Nature of Transaction	2023		2022		2023		2022
EMEA 1 Joint Venture	Revenues	$	8,520	$	5,957	$	22,512	$	31,138
EMEA 1 Joint Venture	Expenses (1)	4,406		2,010		12,650		5,422
VIE Joint Ventures (2)	Revenues	13,153		9,551		52,220		29,739

(1)Balances primarily consist of rent expenses for a 15-year sub-lease agreement with the EMEA 1 Joint Venture for a London data center.

(2)Expenses from transactions with VIE Joint Ventures were insignificant for the three and nine months ended September 30, 2023 and 2022.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

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


Related Party		Balance Sheet Line Item		September 30, 2023			December 31, 2022
EMEA 1 Joint Venture		Receivables		$	32,824		$	73,929
	Contract Assets		7,170			7,261
	Finance Lease Right-of-Use Assets		95,409			100,968
	Operating Lease Right-of-Use Assets		1,443			—

	Operating Lease Right-of-Use Liabilities		1,495			—
	Other Liabilities and Payables (1)		40,844			20,160
	Deferred Revenue		14,853			15,470
	Finance Lease Right-of-Use Liabilities		106,857			108,603
VIE Joint Ventures		Receivables		26,706			19,935
		Contract Assets		22,679			5,281
		Finance Lease Right-of-Use Assets		71,308			—
		Operating Lease Right-of-Use Assets		1,153			—
		Operating Lease Right-of-Use Liabilities		1,100			—
		Other Liabilities and Payables		55			—
		Deferred Revenue		5,038			—
		Finance Lease Right-of-Use Liabilities		73,750			—

(1)The balance primarily relates to the obligation to pay for future construction for certain sites sold as a part of the EMEA 1 Joint Venture transaction.

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 both September 30, 2023 and December 31, 2022, the total principal amounts of foreign currency debt obligations designated as net investment hedges was $1.5 billion.

We also utilize cross-currency interest rate swaps, designated as net investment hedges, 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, 2023 and December 31, 2022, the total notional amount of cross-currency interest rate swaps designated as net investment hedges were $3.5 billion and $3.9 billion respectively, with maturity dates ranging through 2026.

From time to time, we use foreign currency forward contracts, which are designated as net investment hedges, to hedge against the effect of foreign exchange rate fluctuations on our net investment in our foreign subsidiaries. As of September 30, 2023 and December 31, 2022, the total notional amount of foreign currency forward contracts designated as net investment hedges were $359.8 million and $373.4 million, respectively.

Certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved are deemed to have foreign currency forward contracts embedded in them. 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. We use these forward contracts embedded within our customer agreements to hedge against the effect of foreign exchange rate fluctuations on our net investment in our foreign subsidiaries.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

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, 2023 and 2022 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,
			2023			2022			2023			2022
Foreign currency debt			$	51,080		$	125,840		$	11,830		$	283,431
Cross-currency interest rate swaps (included component) (1)			100,788			228,210			79,700			571,532
Cross-currency interest rate swaps (excluded component) (2)			(11,957)			(23,959)			(14,775)			(92,913)
Foreign currency forward contracts (included component) (1)			9,822			33,257			8,701			48,900
Foreign currency forward contracts (excluded component) (3)			(125)			(2,998)			6			(5,289)
Total			$	149,608		$	360,350		$	85,462		$	805,661

Amount of gain or (loss) recognized in earnings:
	Location of gain or (loss)		Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
Cross-currency interest rate swaps (excluded component) (2)	Interest expense		$	10,636		$	12,739		$	34,676		$	37,346
Foreign currency forward contracts (excluded component) (3)	Interest expense		492			(154)			1,136			(317)
Total			$	11,128		$	12,585		$	35,812		$	37,029

(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 and Euro. The foreign currency forward and option contracts that we use to hedge this exposure are designated as cash flow hedges. As of September 30, 2023 and December 31, 2022, the total notional amounts of these foreign exchange contracts were $856.2 million and $490.8 million, respectively.

As of September 30, 2023, our foreign currency cash flow hedge instruments had maturity dates ranging from October 2023 to December 2024 and we had a net gain of $17.8 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses for cash flow hedges that will mature in the next 12 months. As of December 31, 2022, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2023 to February 2024 and we had a net gain of $8.2 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses for cash flow hedges that will 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.

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 both September 30, 2023 and December 31, 2022, we had no interest rate locks outstanding. 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, 2023 and December 31,

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

2022, we had a net gain of $1.2 million and $1.4 million, respectively, recorded within accumulated other comprehensive income (loss) to be reclassified to interest expense in the next 12 months for interest rate locks.

We also use cross-currency swaps, which are designated as cash flow hedges, to manage the foreign currency exposure associated with a portion of our foreign currency-denominated debt. As of both September 30, 2023 and December 31, 2022, the total notional amount of cross-currency interest rate swaps, designated as cash flow hedges, was $280.3 million.

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, 2023 and 2022 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,
		2023		2022		2023		2022
Foreign currency forward and option contracts (included component) (1)		$	36,171	$	8,720	$	19,351	$	55,300

Cross-currency interest rate swaps		(865)		—		(2,280)		—
Interest rate locks		(288)		(350)		(4,681)		49,742
Total		$	35,018	$	8,370	$	12,390	$	105,042

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)	2023		2022		2023		2022
Foreign currency forward contracts	Revenues	$	(12,192)	$	53,874	$	(6,596)	$	89,275
Foreign currency forward contracts	Costs and operating expenses	8,676		(25,869)		12,863		(42,974)
Interest rate locks	Interest Expense	288		350		892		(376)
Total		$	(3,228)	$	28,355	$	7,159	$	45,925

(1)Included component represents foreign exchange spot rates.

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. As described above, certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved are deemed to have foreign currency forward contracts embedded in them.

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.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

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 September 30, 2023 and December 31, 2022, the total notional amounts of these foreign currency contracts were $2.2 billion and $3.0 billion, respectively.

Cross-currency Interest Rate Swaps. During the three months ended September 30, 2023, we elected to de-designate a portion of our cross-currency interest rate swaps previously designated as net investment hedges. Gains and losses subsequent to the de-designation will be recognized in earnings to offset remeasurement gains and losses from foreign currency monetary assets and liabilities. We also entered into $167.7 million of cross-currency interest rate swaps, which were not previously designated as hedging instruments. As of September 30, 2023, the total notional amount of cross-currency interest rate swaps which were not designated as hedging instruments was $544.8 million.

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)	2023		2022		2023		2022
Embedded derivatives (1)	Revenues	$	—	$	—	$	—	$	(568)
Economic hedge of embedded derivatives (2)	Revenues	—		—		—		(983)
Foreign currency forward contracts	Other income (expense)	77,823		138,725		81,591		272,342
Cross-currency interest rate swaps	Other income (expense)	2,651		—		2,651		—
Total		$	80,474	$	138,725	$	84,242	$	270,791

(1)Embedded derivatives which are considered foreign currency forward contracts were designated as net investment hedges beginning March 31, 2022.

(2)As of September 30, 2023, we had no economic hedge of embedded derivatives outstanding.

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, excluding accrued interest, as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023				December 31, 2022
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Designated as hedging instruments:
Cash flow hedges
Foreign currency forward and option contracts	$	29,798	$	6,333	$	27,812	$	21,352
Cross-currency interest rate swaps	22,144		—		19,239		—
Net investment hedges
Foreign currency forward contracts	15,089		1,875		25,077		4,805
Cross-currency interest rate swaps	282,483		—		274,234		—
Total designated as hedging	349,514		8,208		346,362		26,157

Not designated as hedging instruments:


Foreign currency forward contracts	31,441		3,380		58,230		7,531
Cross-currency interest rate swaps	68,512		8,758		—		—
Total not designated as hedging	99,953		12,138		58,230		7,531
Total Derivatives	$	449,467	$	20,346	$	404,592	$	33,688

(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, inclusive of accrued interest, as of September 30, 2023 and December 31, 2022 (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, 2023
Derivative assets	$	475,060	$	—	$	475,060	$	(32,408)	$	442,652
Derivative liabilities	34,284		—		34,284		(32,408)		1,876

December 31, 2022
Derivative assets	$	424,516	$	—	$	424,516	$	(34,429)	$	390,087
Derivative liabilities	39,234		—		39,234		(34,429)		4,805

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, 2023 and December 31, 2022 were as follows (in thousands):


	September 30, 2023							December 31, 2022
	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	$	1,228,428	$	1,228,428	$	—		$	764,628		$	764,628	$	—


Derivative instruments (1)	449,467		—		449,467			404,592			—		404,592
Total	$	1,677,895	$	1,228,428	$	449,467		$	1,169,220		$	764,628	$	404,592
Liabilities:
Derivative instruments (1)	$	20,346	$	—	$	20,346		$	33,688		$	—	$	33,688

(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 Level 3 financial assets or financial liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.

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, 2023 (in thousands):


				Renewal/Termination Options excluded (1)				Net Incremental (2)
Lease	Quarter	Transaction			Lease Classification		ROU assets			ROU liabilities
Chicago 1/2/4 ("CH1/2/4") data center lease expansion	Q2	Expanded CH1 to additional space within the building (3)		One 10-year renewal option		Operating Lease		$	150,990		$	176,316
			Finance Lease	78,073		52,747

(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. Certain complementary leases contain one additional 10-year renewal option.

(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) The incremental balance includes the impact of reassessing lease terms of complementary leases of CH1, resulting in new lease end dates ranging from June 2037 to October 2040 from including renewal options that are reasonably certain to be exercised and in certain complementary leases changing classification.

Lease Expenses

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Finance lease cost
Amortization of right-of-use assets (1)	$	46,428	$	39,456	$	131,481	$	120,684
Interest on lease liabilities	28,422		27,742		85,100		84,986
Total finance lease cost	74,850		67,198		216,581		205,670

Operating lease cost	57,803		55,031		168,896		159,632
Variable lease cost	17,273		12,721		46,847		30,003
Total lease cost	$	149,926	$	134,950	$	432,324	$	395,305

(1) Amortization of right-of-use assets is included within 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, except years and percent):


	Nine Months Ended September 30,
	2023			2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	82,864		$	82,841
Operating cash flows from operating leases	150,779			144,954
Financing cash flows from finance leases	98,091			97,808

Right-of-use assets obtained in exchange for lease obligations: (1)
Finance leases	$	193,667		$	78,432
Operating leases	254,822			318,882

	September 30, 2023			December 31, 2022
Weighted-average remaining lease term - finance leases (2)	14 years			15 years
Weighted-average remaining lease term - operating leases (2)	13 years			12 years
Weighted-average discount rate - finance leases	6		%	6		%
Weighted-average discount rate - operating leases	5		%	4		%
Finance lease right-of-use assets (3)	$	1,991,556		$	2,018,070

(1) Represents all non-cash changes in right-of-use assets.

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

(3) As of September 30, 2023 and December 31, 2022, we recorded accumulated amortization of finance lease right-of-use assets of $856.5 million and $840.0 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, 2023 are as follows (in thousands):


	Operating Leases		Finance Leases		Total
2023 (3 months remaining)	$	39,947	$	56,103	$	96,050
2024	212,645		253,239		465,884
2025	202,434		273,817		476,251
2026	195,717		242,464		438,181
2027	179,302		247,062		426,364
Thereafter	1,300,666		2,327,007		3,627,673
Total lease payments	2,130,711		3,399,692		5,530,403

Less imputed interest	(595,223)		(1,144,950)		(1,740,173)


Total	$	1,535,488	$	2,254,742	$	3,790,230

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, 2023. These leases will commence between year 2023 and 2026, with lease terms of 5 to 20 years and total lease commitments of approximately $509.4 million.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

10. Debt Facilities

Mortgage and Loans Payable

As of September 30, 2023 and December 31, 2022, our mortgage and loans payable consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Term loans	$	616,833	$	619,090

Mortgage payable and loans payable	29,780		34,527
	646,613		653,617
Less amount representing unamortized debt discount and debt issuance cost	(777)		(1,062)

	645,836		652,555
Less current portion	(8,211)		(9,847)
	$	637,625	$	642,708

Senior Credit Facility and Refinancing

On January 7, 2022, we entered into a credit agreement (the "2022 Credit Agreement") with a group of lenders for a senior unsecured credit facility, comprised of a $4.0 billion senior unsecured multicurrency revolving credit facility (the "2022 Revolving Facility") and a £500.0 million senior unsecured term loan facility (the "2022 Term Loan Facility" and, together with the 2022 Revolving Facility, collectively, the "2022 Credit Facilities"). The total debt issuance costs for the 2022 Revolving Facility and 2022 Term Loan Facility are $6.5 million and $0.8 million, respectively. We borrowed the full £500.0 million available under the 2022 Term Loan Facility, or approximately $676.9 million at the exchange rates in effect on that date. On that same day, using a portion of the proceeds from the 2022 Term Loan Facility, we prepaid in full all of the $549.6 million of indebtedness outstanding under the 2017 Term Loan Facility, at the exchange rates in effect on January 7, 2022 and terminated the 2017 Credit Agreement. In connection with the repayment and termination, we incurred an insignificant amount of loss on debt extinguishment. The remaining unamortized debt issuance costs of the 2017 Credit Facilities will continue to be amortized over the contract terms of the 2022 Credit Facilities.

The 2022 Credit Facilities have a maturity date of January 7, 2027. We may borrow, repay and reborrow amounts under the 2022 Revolving Facility until the Maturity Date, at which time all amounts outstanding under the 2022 Revolving Facility must be repaid in full. The term loan made under the 2022 Term Loan Facility has no scheduled principal amortization and must be repaid in full on the maturity date. The 2022 Revolving Credit Facility provides for extensions of credit in U.S. Dollars as well as certain other foreign currencies. Borrowings under the 2022 Revolving Facility bear interest at a rate based on the daily Secured Overnight Financing Rate ("SOFR"), term SOFR, an alternative currency daily rate, or an alternative currency term rate plus a spread adjustment, plus a margin that can vary from 0.555% to 1.200%. Borrowings under the 2022 Term Loan Facility bear interest at a rate based on the daily Sterling Overnight Index Average ("SONIA"), plus a spread adjustment, plus a margin that can vary from 0.625% to 1.450%. We are also required to pay a quarterly letter of credit fee on the face amount of each letter of credit, which fee is based on the same margin that applies from time to time to SOFR-indexed borrowings under the revolving credit line. The margin is dependent on either our consolidated net leverage ratio or our credit ratings. We are also required to pay a quarterly facility fee ranging from 0.07% to 0.25% per annum. The 2022 Credit Agreement contains customary covenants, including financial ratio covenants that are required to be maintained as of each quarter end.

As of September 30, 2023 and December 31, 2022, the total amounts outstanding under the 2022 Term Loan Facility, net of debt issuance costs, were $608.8 million and $603.0 million, respectively.

As of September 30, 2023, we had 51 irrevocable letters of credit totaling $79.4 million issued and outstanding under the 2022 Revolving Facility, with approximately $3.9 billion remaining available to borrow under the 2022 Revolving Facility.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Senior Notes

As of September 30, 2023 and December 31, 2022, our senior notes consisted of the following (in thousands):


	September 30, 2023				December 31, 2022
	Amount		Effective Rate		Amount		Effective Rate
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	%
1.450% Senior Notes due 2026	700,000		1.64	%	700,000		1.64	%
0.250% Euro Senior Notes due 2027	528,300		0.45	%	534,950		0.45	%
1.800% Senior Notes due 2027	500,000		1.96	%	500,000		1.96	%
1.550% Senior Notes due 2028	650,000		1.67	%	650,000		1.67	%
2.000% Senior Notes due 2028	400,000		2.21	%	400,000		2.21	%
2.875% Swiss Franc Senior Notes due 2028	327,546		3.07	%	—		—	%
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	%	1,000,000		2.65	%
3.900% Senior Notes due 2032	1,200,000		4.07	%	1,200,000		4.07	%
1.000% Euro Senior Notes due 2033	633,960		1.18	%	641,940		1.18	%
2.000% Japanese Yen Senior Notes Series A due 2035	251,872		2.07	%	—		—	%
2.130% Japanese Yen Senior Notes Series C due 2035	99,009		2.20	%	—		—	%
2.370% Japanese Yen Senior Notes Series B due 2043	68,436		2.42	%	—		—	%
2.570% Japanese Yen Senior Notes Series D due 2043	30,773		2.62	%	—		—	%
2.570% Japanese Yen Senior Notes Series E due 2043	66,899		2.62	%	—		—	%
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	%	500,000		3.50	%
	13,056,795				12,226,890
Less amount representing unamortized debt issuance cost	(111,573)				(117,351)

	$	12,945,222			$	12,109,539

3.900% Senior Notes due 2032

On April 5, 2022, we issued $1.2 billion aggregate principal amount of 3.900% Senior Notes due 2032 (the "2032 Notes"). Interest on the 2032 Notes is payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2022. Debt issuance costs and debt discounts related to the 2032 Notes were $16.3 million.

2.000% Japanese Yen Senior Notes Series A due 2035, 2.370% Japanese Yen Senior Notes Series B due 2043, 2.130% Japanese Yen Senior Notes Series C due 2035, 2.570% Japanese Yen Senior Notes Series D due 2043 and 2.570% Japanese Yen Senior Notes Series E due 2043

On February 16, 2023, we issued ¥10.0 billion, or approximately $74.5 million in U.S. dollars, at the exchange rate in effect on that date, aggregate principal amount of 2.570% senior notes due March 8, 2043 (the "2043 Japanese Yen Series E Notes").

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

On March 8, 2023, and at the exchange rate in effect on that date, we issued ¥37.7 billion, or approximately $274.7 million in U.S. dollars, aggregate principal amount of 2.000% senior notes due March 8, 2035 (the "2035 Japanese Yen Series A Notes"), ¥10.2 billion, or approximately $74.6 million in U.S. dollars, aggregate principal amount of 2.370% senior notes due March 8, 2043 (the "2043 Japanese Yen Series B Notes"), ¥14.8 billion, or approximately $107.9 million in U.S. dollars, aggregate principal amount of 2.130% senior notes due March 8, 2035 (the "2035 Japanese Yen Series C Notes") and ¥4.6 billion, or approximately $33.5 million in U.S. dollars, aggregate principal amount of 2.570% senior notes due March 8, 2043 (the "2043 Japanese Yen Series D Notes").

Interest on the notes is payable semi-annually in arrears on March 8 and September 8 of each year, commencing on September 8, 2023. Total debt issuance costs related to the 2035 Japanese Yen Series A Notes, the 2043 Japanese Yen Series B Notes, the 2035 Japanese Yen Series C Notes, the 2043 Japanese Yen Series D Notes and the 2043 Japanese Yen Series E Notes were $2.0 million, $0.6 million, $0.8 million, $0.3 million and $0.6 million, respectively.

2.875% Swiss Franc Senior Notes due 2028

On September 12, 2023, we issued CHF300.0 million, or approximately $336.9 million in U.S. dollars, at the exchange rate in effect on that date, aggregate principal amount of 2.875% senior notes due September 12, 2028 (the "2028 CHF Notes"). Interest on the notes is payable annually in arrears on September 12 of each year, commencing on September 12, 2024. Total debt issuance costs related to the 2028 CHF Notes were $3.0 million.

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 and debt discounts, as of September 30, 2023 (in thousands):


Years ending:
2023 (3 months remaining)	$	2,129
2024	1,007,758
2025	1,206,548
2026	1,306,348
2027	1,642,825
Thereafter	8,537,800
Total	$	13,703,408

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 (in thousands):


	September 30, 2023							December 31, 2022
	Fair Value		Fair Value Measurement Using					Fair Value			Fair Value Measurement Using
	Level 1		Level 2				Level 1			Level 2
Mortgage and loans payable	$	657,705	$	—	$	657,705		$	666,387		$	—	$	666,387
Senior notes	10,917,739		10,398,907		518,832			10,196,933			10,196,933		—

The inputs used to estimate the fair value of debt instruments include:

Level 1: quoted market prices; and

*•*Level 2: our credit rating and current prices of similar debt instruments that are publicly traded.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

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,
	2023		2022		2023		2022
Interest expense	$	101,385	$	91,346	$	298,839	$	262,137
Interest capitalized	6,699		5,512		18,635		14,267
Interest charges incurred	$	108,084	$	96,858	$	317,474	$	276,404

Total interest paid in cash, net of capitalized interest, during the three months ended September 30, 2023 and 2022 was $90.5 million and $85.9 million, respectively. Total interest paid in cash, net of capitalized interest, during the nine months ended September 30, 2023 and 2022 was $316.6 million and $287.4 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, 2023, we were contractually committed for approximately $2.1 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, 2023, such as commitments to purchase power in select locations through the remainder of 2023 and thereafter, and other open purchase orders for goods or services to be delivered or provided during the remainder of 2023 and thereafter. Such other miscellaneous purchase commitments totaled approximately $1.8 billion as of September 30, 2023. 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.

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 several indirect tax audits and appealing a tentative assessment in Brazil. The final settlement of the audits and the outcomes 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.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Employment Agreements

We have entered into a severance agreement with certain of our executive officers that provides for a severance payment equal to 100% of the executive officer's annual base salary and maximum bonus in the event his or her employment is terminated for any reason other than cause or he or she voluntarily resigns under certain circumstances as described in the agreement, or 200% of the executive officer's annual base salary and maximum bonus in the event this occurs after a change-in-control of our company. For certain other executive officers, these benefits are only triggered after a change-in-control of our company, in which case the officer is entitled to 200% of the executive officer's annual base salary and maximum bonus. In addition, under these agreements, the executive officer is entitled to the payment of his or her monthly health care premiums under the Consolidated Omnibus Budget Reconciliation Act for up to 24 months.

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, in the event of a legal action, we have purchased insurance that could limit our exposure, depending upon the details of the claim and the coverage provided. As a result, our estimated fair value of these indemnification agreements is minimal. We have no liabilities recorded for these agreements as of September 30, 2023.

We enter into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, we may agree to indemnify, hold harmless, and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally a business partner or a customer, in connection with matters such as any U.S. patent, or any copyright or other intellectual property infringement claim by any third party with respect to our offerings; a breach of confidentiality obligations and certain other contractual warranties; our gross negligence, willful misconduct, fraud, misrepresentation, or violation of law; and/or if we cause tangible property damage, personal injury or death. The term of any such indemnification agreement is generally perpetual 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. In addition, in the event of a legal action, we have purchased insurance that could limit our exposure, depending upon the details of the claim and the coverage provided. As a result, our estimated fair value of these agreements is minimal. We do not have significant liabilities recorded for these agreements as of September 30, 2023.

We enter into arrangements with certain 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 certain acts, such as personal property damage, by our subcontractors. 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. In addition, in the event of a legal action, we have purchased insurance that could limit our exposure, depending upon the details of the claim and the coverage provided. As a result, our estimated fair value of these agreements is minimal. We do not have significant liabilities recorded for these agreements as of September 30, 2023.

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 obligations to these customers. While we have purchased insurance that could limit our exposure, our liability insurance may not be adequate to cover those expenses. In addition, any loss of service, equipment damage or inability to meet our service level commitment obligations could reduce the confidence our customers have in us, 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, 2023.

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 $1.3 billion in total at the exchange rate in effect on September 30, 2023, 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 $288.5 million in total at the exchange rate in effect on September 30, 2023. As of September 30, 2023, the maximum potential amount of our future payments under these guarantees was approximately $144.5 million, at the exchange rates in effect on that date. We and our co-investor entered into an ancillary agreement to allocate funding under the credit facility agreement for use of our AMER 1 Joint Venture. As of September 30, 2023, $8.6 million of the guarantees related to AMER 1. 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 months ended September 30, 2023 and 2022 (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, 2022	92,813,976	$	93	(193,273)	$	(71,966)	$	17,320,017	$	(7,317,570)	$	(1,389,446)	$	2,964,838	$	11,505,966	$	(134)	$	11,505,832

Net income (loss)	—	—		—	—		—		—		—		258,786		258,786		(56)		258,730
Other comprehensive income	—	—		—	—		—		—		104,258		—		104,258		—		104,258
Issuance of common stock and release of treasury stock for employee equity awards	419,490	—		16,066	5,978		38,565		—		—		—		44,543		1		44,544
Issuance of common stock under ATM Program	458,459	1		—	—		300,774		—		—		—		300,775		—		300,775
Dividend distribution on common stock,$3.41 per share	—	—		—	—		—		(318,736)		—		—		(318,736)		—		(318,736)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(483)		—		—		(483)		—		(483)
Accrued dividends on unvested equity awards	—	—		—	—		—		(2,406)		—		—		(2,406)		—		(2,406)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		136,345		—		—		—		136,345		—		136,345

Balance as of March 31, 2023	93,691,925	94		(177,207)	(65,988)		17,795,701		(7,639,195)		(1,285,188)		3,223,624		12,029,048		(189)		12,028,859

Net income (loss)		—		—	—		—		—		—		207,030		207,030		(17)		207,013
Other comprehensive income (loss)	—	—		—	—		—		—		(3,268)		—		(3,268)		97		(3,171)
Issuance of common stock and release of treasury stock for employee equity awards	44,734	—		5,417	2,015		527		—		—		—		2,542		—		2,542


Dividend distribution on common stock, $3.41 per share	—	—		—	—		—		(318,914)		—		—		(318,914)		—		(318,914)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(86)		—		—		(86)		—		(86)
Accrued dividends on unvested equity awards	—	—		—	—		—		(5,058)		—		—		(5,058)		—		(5,058)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		112,815		—		—		—		112,815		—		112,815

Balance as of June 30, 2023	93,736,659	94		(171,790)	(63,973)		17,909,043		(7,963,253)		(1,288,456)		3,430,654		12,024,109		(109)		12,024,000

Net income (loss)	—	—		—	—		—		—		—		275,794		275,794		(34)		275,760
Other comprehensive loss	—	—		—	—		—		—		(237,554)		—		(237,554)		(182)		(237,736)
Issuance of common stock and release of treasury stock for employee equity awards	300,223	—		18,204	6,774		35,645		—		—		—		42,419		—		42,419

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, $3.41 per share	—	—		—	—		—		(319,308)		—		—		(319,308)		—		(319,308)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(343)		—		—		(343)		—		(343)
Accrued dividends on unvested equity awards	—	—		—	—		—		(4,695)		—		—		(4,695)		—		(4,695)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		106,462		—		—		—		106,462		—		106,462

Balance as of September 30, 2023	94,036,882	$	94	(153,586)	$	(57,199)	$	18,051,150	$	(8,287,599)	$	(1,526,010)	$	3,706,448	$	11,886,884	$	(325)	$	11,886,559

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, 2021	90,872,826	$	91	(301,420)	$	(112,208)	$	15,984,597	$	(6,165,140)	$	(1,085,751)	$	2,260,493	$	10,882,082	$	(318)	$	10,881,764

Net income	—	—		—	—		—		—		—		147,453		147,453		240		147,693
Other comprehensive income	—	—		—	—		—		—		32,837		—		32,837		3		32,840
Issuance of common stock and release of treasury stock for employee equity awards	430,973	—		11,445	4,259		39,617		—		—		—		43,876		—		43,876

Dividend distribution on common stock, $3.10 per share	—	—		—	—		—		(282,031)		—		—		(282,031)		—		(282,031)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(497)		—		—		(497)		—		(497)
Accrued dividends on unvested equity awards	—	—		—	—		—		(2,045)		—		—		(2,045)		—		(2,045)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		121,210		—		—		—		121,210		—		121,210

Balance as of March 31, 2022	91,303,799	91		(289,975)	(107,949)		16,145,424		(6,449,713)		(1,052,914)		2,407,946		10,942,885		(75)		10,942,810

Net income (loss)	—	—		—	—		—		—		—		216,322		216,322		(80)		216,242
Other comprehensive loss	—	—		—	—		—		—		(365,842)		—		(365,842)		(35)		(365,877)
Issuance of common stock and release of treasury stock for employee equity awards	36,682	—		24,609	9,157		4,882		—		—		—		14,039		—		14,039


Dividend distribution on common stock, $3.10 per share	—	—		—	—		—		(282,168)		—		—		(282,168)		—		(282,168)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(57)		—		—		(57)		—		(57)
Accrued dividends on unvested equity awards	—	—		—	—		—		(4,400)		—		—		(4,400)		—		(4,400)
Stock-based compensation, net of estimated forfeitures	—	—		—	—		109,005		—		—		—		109,005		—		109,005

Balance as of June 30, 2022	91,340,481	91		(265,366)	(98,792)		16,259,311		(6,736,338)		(1,418,756)		2,624,268		10,629,784		(190)		10,629,594













Net income (loss)	—	—		—	—		—		—		—		211,807		211,807		(68)		211,739
Other comprehensive loss	—	—		—	—		—		—		(337,161)		—		(337,161)		(28)		(337,189)
Issuance of common stock and release of treasury stock for employee equity awards	285,176	1		15,982	5,947		31,719		—		—		—		37,667		—		37,667
Issuance of common stock under ATM Program	1,160,706	1		—	—		796,018		—		—		—		796,019		—		796,019
Dividend distribution on common stock, $3.10 per share	—	—		—	—		—		(286,136)		—		—		(286,136)		—		(286,136)
Settlement of accrued dividends on vested equity awards	—	—		—	—		—		(327)		—		—		(327)		—		(327)
Accrued dividends on unvested equity awards	—	—		—	—		—		(4,031)		—		—		(4,031)		—		(4,031)

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
Stock-based compensation, net of estimated forfeitures	—	—		—	—		106,757		—		—		—		106,757		—		106,757

Balance as of Balance as of September 30, 2022	92,786,363	$	93	(249,384)	$	(92,845)	$	17,193,805	$	(7,026,832)	$	(1,755,917)	$	2,836,075	$	11,154,379	$	(286)	$	11,154,093

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, 2022		Net Change		Balance as of September 30, 2023
Foreign currency translation adjustment (“CTA”) loss	$	(1,838,237)	$	(229,688)	$	(2,067,925)
Unrealized gain on cash flow hedges (1)	33,953		8,012		41,965
Net investment hedge CTA gain (1)	415,749		85,462		501,211
Net actuarial loss on defined benefit plans (2)	(911)		(350)		(1,261)
	$	(1,389,446)	$	(136,564)	$	(1,526,010)

(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 plans are mandated by law. We do not have any defined benefit plans in any other countries.

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 its condensed 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, 2023, 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, 2022. 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, 2023 as reflected in the above table. 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 "at the market" equity offering program (the "2020 ATM Program"), under which we could, from time to time, offer and sell shares of our common stock to or through sales agents up to an aggregate of $1.5 billion. In February 2022, we entered into a forward sale amendment to the 2020 ATM Program, under which we could, from time to time, offer and sell shares under the equity distribution agreement pursuant to forward sale transactions (the "Equity Forward Amendment"). In November 2022, we established a successor ATM program, also with substantially the same terms as the Equity Forward Amendment noted above, under which we may, from time to time, offer and sell on a spot or forward basis up to an aggregate of $1.5 billion of our common stock to or through sales agents in "at the market" transactions (the "2022 ATM Program"). The forward sale agreements provide three settlement alternatives to us: physical settlement, cash settlement or net share settlement. In accordance with ASC 815, the forward sale agreements are classified as equity for balance sheet purposes.

During the nine months ended September 30, 2022, we executed five forward sale agreements under the 2020 ATM Program to sell 579,873 shares of our common stock. On August 3, 2022, we physically settled these forward sale shares for approximately $393.6 million, net of payment of commissions to sales agents and other offering expenses, at an aggregate weighted-average forward sale price of $678.72 per share.

During the nine months ended September 30, 2022, we sold an additional 580,833 shares under the 2020 ATM Program, excluding the settled forward sale transactions noted above, through spot sales for approximately $403.6 million, net of payment of commissions to sales agents and other offering expenses.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

In the fourth quarter of 2022, we executed three additional forward sale agreements to sell 458,459 shares of our common stock with maturity dates ranging from February 2023 to November 2023. Of this amount, 308,875 shares were executed under the 2020 ATM Program and the remaining 149,584 shares were executed under the 2022 ATM Program. As of December 31, 2022, no shares remained available for sale under the 2020 ATM Program. On February 28, 2023, we physically settled these forward sale shares for approximately $301.6 million, net of payment of commissions to sales agents and other offering expenses, at an aggregate weighted-average forward sale price of $657.75 per share.

During the nine months ended September 30, 2023, we executed five forward sale agreements to sell 564,126 shares of our common stock with maturity dates ranging from February 2024 to March 2024. As of September 30, 2023, the estimated net settlement value for the forward sale agreements was approximately $431.4 million at an aggregate weighted-average forward sale price of $764.78 per share. The weighted-average forward sale price that we expect to receive upon physical settlement will be subject to adjustments for a discount rate factor equal to a specified benchmark rate less a spread minus scheduled dividends during the terms of the agreements.

As of September 30, 2023, we had approximately $1.0 billion of common stock available for sale under the 2022 ATM Program, which amount gives effect to the unsettled forward sale transactions noted above. For the three and nine months ended September 30, 2023, other than as noted above, we sold no additional shares under the 2022 ATM Program.

Stock-Based Compensation

For the nine months ended September 30, 2023, the Talent, Culture and Compensation Committee and/or the Stock Award Committee of our Board of Directors, as the case may be, granted an aggregate of 943,224 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 $694.34 per share and a weighted-average requisite service period of 3.52 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, adjusted funds from operations ("AFFO") per share and digital services revenues as the performance measurements in the RSUs with both service and performance conditions that were granted in the nine months ended September 30, 2023.

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, 2023. 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 2023 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,
	2023		2022		2023		2022
Cost of revenues	$	12,389	$	10,732	$	36,111	$	33,053
Sales and marketing	22,638		22,507		64,697		65,862
General and administrative	63,419		68,591		200,899		197,549
Total	$	98,446	$	101,830	$	301,707	$	296,464

Redeemable Non-controlling Interest

On April 3, 2023, we issued additional shares in our Indonesian operating entity to a third party investor for $25.0 million, which resulted in the third party investor owning a 25% interest in the entity.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The Indonesian operating entity is a VIE because it does not have sufficient funds from its operations to be self-sustaining. We provide certain management services to the entity and earn fees for the performance of such services. We have the power to direct the activities that most significantly impact the economic performance of the entity and have concluded that we are its primary beneficiary.

Under the terms of the shareholders’ agreement, the investor may put its 25% ownership stake in the entity to us for a maximum exercise price of $25.0 million, subject to certain contingent conditions. Accordingly, we present the investor’s contingently redeemable non-controlling interest ("NCI") outside of permanent equity at the higher of its maximum redemption amount of $25.0 million and its balance after attribution of gains and losses in the condensed consolidated balance sheets. There were no changes in the carrying value of the redeemable NCI for the three and nine months ended September 30, 2023.

As of September 30, 2023, the carrying value of the assets and liabilities of the Indonesian VIE, which were included in other assets and other liabilities on the condensed consolidated balance sheets were $29.4 million and $2.1 million, respectively.

The income and losses attributable to us as well as to the redeemable NCI from the Indonesian VIE were insignificant for the three and nine months ended September 30, 2023.

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, 2023								Nine Months Ended September 30, 2023
	Americas		EMEA		Asia-Pacific		Total		Americas		EMEA		Asia-Pacific		Total
Colocation (1)	$	596,871	$	538,256	$	329,054	$	1,464,181	$	1,754,537	$	1,571,233	$	970,875	$	4,296,645
Interconnection	206,552		78,795		67,411		352,758		609,457		227,718		199,428		1,036,603
Managed infrastructure	63,356		32,790		17,484		113,630		184,755		97,105		54,642		336,502
Other (1)	5,503		23,283		1,688		30,474		15,461		74,775		8,707		98,943
Recurring revenues	872,282		673,124		415,637		1,961,043		2,564,210		1,970,831		1,233,652		5,768,693
Non-recurring revenues	41,411		35,590		22,986		99,987		121,571		115,857		71,526		308,954
Total	$	913,693	$	708,714	$	438,623	$	2,061,030	$	2,685,781	$	2,086,688	$	1,305,178	$	6,077,647

(1) Includes some leasing and hedging activities.


	Three Months Ended September 30, 2022								Nine Months Ended September 30, 2022
	Americas		EMEA		Asia-Pacific		Total		Americas		EMEA		Asia-Pacific		Total
Colocation (1)	$	555,352	$	445,733	$	295,008	$	1,296,093	$	1,619,511	$	1,293,641	$	859,258	$	3,772,410
Interconnection	190,283		66,703		61,264		318,250		558,877		201,688		182,092		942,657
Managed infrastructure	54,704		28,493		19,269		102,466		159,255		89,930		59,827		309,012
Other (1)	5,127		23,105		3,091		31,323		15,842		51,567		6,419		73,828
Recurring revenues	805,466		564,034		378,632		1,748,132		2,353,485		1,636,826		1,107,596		5,097,907
Non-recurring revenues	40,695		27,778		24,054		92,527		123,961		104,667		65,725		294,353
Total	$	846,161	$	591,812	$	402,686	$	1,840,659	$	2,477,446	$	1,741,493	$	1,173,321	$	5,392,260

(1) Includes some leasing and hedging activities.

EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Total revenues attributed to the U.S. were $771.5 million and $2.3 billion during the three and nine months ended September 30, 2023, respectively, and $722.6 million and $2.1 billion during the three and nine months ended September 30, 2022, respectively. For the three and nine months ended September 30, 2023, we derived revenues of $218.3 million and $607.6 million, respectively, from the United Kingdom, which is the only country outside of the U.S. from which we derived revenues that exceeded 10% of our total revenues during either of these periods. There was no country outside of the U.S. from which we derived revenues that exceeded 10% of revenues for the three and nine months ended September 30, 2022. No single customer accounted for 10% or greater of our accounts receivable or revenues for the three and nine months ended September 30, 2023 and 2022.

We define adjusted EBITDA as net income excluding income tax expense, interest income, interest expense, other income or expense, gain or loss on debt extinguishment, 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,
	2023		2022		2023		2022
Adjusted EBITDA:
Americas	$	404,897	$	395,159	$	1,202,732	$	1,127,938
EMEA	310,172		283,286		931,499		839,013
Asia-Pacific	220,862		192,471		647,153		564,009
Total adjusted EBITDA	935,931		870,916		2,781,384		2,530,960
Depreciation, amortization and accretion expense	(461,842)		(431,668)		(1,381,298)		(1,300,882)
Stock-based compensation expense	(98,446)		(101,830)		(301,707)		(296,464)

Transaction costs	775		(2,007)		(6,543)		(11,310)
Gain (loss) on asset sales	3,933		(2,252)		5,022		(3,976)
Interest income	23,111		11,192		66,002		17,806
Interest expense	(101,385)		(91,346)		(298,839)		(262,137)
Other expense	(5,972)		(6,735)		(9,987)		(22,522)
Gain (loss) on debt extinguishment	(360)		75		(106)		184
Income before income taxes	$	295,745	$	246,345	$	853,928	$	651,659

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Depreciation and amortization:
Americas	$	251,963	$	234,300	$	749,459	$	693,232
EMEA	126,665		111,879		373,679		342,552
Asia-Pacific	84,311		84,013		258,537		263,018
Total	$	462,939	$	430,192	$	1,381,675	$	1,298,802
Capital expenditures:
Americas	$	382,800	$	278,487	$	1,076,339	$	688,635
EMEA	146,776		168,481		449,008		528,808
Asia-Pacific	87,963		105,761		259,951		232,634
Total	$	617,539	$	552,729	$	1,785,298	$	1,450,077

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, 2023		December 31, 2022
Americas	$	8,284,052	$	7,532,125
EMEA	5,712,711		5,577,498
Asia-Pacific	3,373,814		3,539,911
Total property, plant and equipment, net	$	17,370,577	$	16,649,534

Americas	$	422,468	$	263,148
EMEA	437,873		440,139
Asia-Pacific	655,670		724,663
Total operating lease right-of-use assets	$	1,516,011	$	1,427,950

14. Subsequent Events

Declaration of dividends

On October 25, 2023, we declared a quarterly cash dividend of $4.26 per share, which is payable on December 13, 2023 to our common stockholders of record as of the close of business on November 15, 2023.

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