Equinix cuts FY revenue forecast on contract extensions

Wed Jul 24, 2013 6:49pm EDT

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(Reuters) - Data center operator Equinix Inc (EQIX.O) posted second-quarter revenue below analysts' expectations and slashed its full-year revenue outlook to account for a change in revenue recognition due to extension of contracts.

Equinix shares, which have fallen about 11 percent in the last three months, were down 8 percent in after-hours trading.

New customer contracts in North America have been extended to three years or more from one-two years, the company said in a statement.

Non-recurring fees are recognized over the expected life of the installation.

Equinix cut its full-year revenue forecast to $2.14 billion-$2.15 billion from $2.20 billion.

The company said it expects third-quarter revenue of $538 million-$542 million, below the $561.5 million analysts had expected, according to Thomson Reuters I/B/E/S.

Equinix, which counts IBM (IBM.N), Amazon Inc (AMZN.O), Facebook Inc (FB.O), Microsoft Corp (MSFT.O) and AT&T Inc (T.N) among its customers, receives 40 percent of revenue from outside the United States.

The company, which competes with Rackspace Hosting Inc (RAX.N) and Digital Realty Trust Inc (DLR.N), said revenue rose 15 percent to $525.7 million. Analysts had estimated $533.3 million.

The accounting estimate change reduced revenue by $5.8 million, the company said.

The company said average deal size reduced in the second quarter.

Churn, a key metric for Equinix that measures the predictability of its business, fell to 2.4 percent in the second quarter from 3.7 percent in the first quarter.

Equinix reported a net loss of $28.2 million, or 58 cents per share, compared with a profit of $37.6 million, or 73 cents per share, a year earlier.

The company said it repaid $93.6 million in debt in the quarter.

Equinix shares closed at $191.63 on the Nasdaq.

(Reporting by Sruthi Ramakrishnan and Chandni Doulatramani in Bangalore; Editing by Sriraj Kalluvila and Ted Kerr)

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