Stockholders' Equity

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Rollforward

The following tables provide a rollforward of stockholders' equity for the three and nine months ended September 30, 2019 and 2018 (in thousands):



															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			Additional Paid-in Capital			Accumulated Dividends
Balance as of December 31, 2018	81,119,117	$	81	(396,859	)	$	(145,161	)	$	10,751,313		$	(3,331,200	)	$	(945,702	)	$	889,948		$	7,219,279		$	—		$	7,219,279
Adjustment from adoption of new accounting standard update	—	—		—		—			—			—			—			(5,973		)	(5,973		)	—			(5,973		)
Net income (loss)	—	—		—		—			—			—			—			118,078			118,078			(331		)	117,747
Other comprehensive income	—	—		—		—			—			—			3,337			—			3,337			7			3,344
Issuance of common stock and release of treasury stock for employee equity awards	360,464	—		1,706		360			27,233			—			—			—			27,593			—			27,593
Issuance of common stock for equity offering	2,985,575	3		—		—			1,213,431			—			—			—			1,213,434			—			1,213,434
Dividend distribution on common stock, $2.46 per share	—	—		—		—			—			(198,933		)	—			—			(198,933		)	—			(198,933		)
Settlement of accrued dividends on vested equity awards	—	—		—		—			284			(387		)	—			—			(103		)	—			(103		)
Accrued dividends on unvested equity awards	—	—		—		—			—			(2,395		)	—			—			(2,395		)	—			(2,395		)
Stock-based compensation, net of estimated forfeitures	—	—		—		—			50,795			—			—			—			50,795			—			50,795
Balance as of March 31, 2019	84,465,156	84		(395,153	)	(144,801		)	12,043,056			(3,532,915		)	(942,365		)	1,002,053			8,425,112			(324		)	8,424,788
Net income	—	—		—		—			—			—			—			143,527			143,527			325			143,852
Other comprehensive loss	—	—		—		—			—			—			(16,078		)	—			(16,078		)	(14		)	(16,092		)
Issuance of common stock and release of treasury stock for employee equity awards	26,435	—		359		76			(76		)	—			—			—			—			—			—
Issuance of common stock under ATM Program	722,361	1		—		—			348,120			—			—			—			348,121			—			348,121
Dividend distribution on common stock, $2.46 per share	—	—		—		—			—			(207,949		)	—			—			(207,949		)	—			(207,949		)
Settlement of accrued dividends on vested equity awards	—	—		—		—			12			(33		)	—			—			(21		)	—			(21		)
Accrued dividends on unvested equity awards	—	—		—		—			—			(2,972		)	—			—			(2,972		)	—			(2,972		)



														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			Additional Paid-in Capital		Accumulated Dividends
Stock-based compensation, net of estimated forfeitures	—	—		—		—			59,502		—			—			—		59,502			—			59,502
Balance as of June 30, 2019	85,213,952	85		(394,794	)	(144,725		)	12,450,614		(3,743,869		)	(958,443		)	1,145,580		8,749,242			(13		)	8,749,229
Net income	—	—		—		—			—		—			—			120,850		120,850			(39		)	120,811
Other comprehensive loss	—	—		—		—			—		—			(81,793		)	—		(81,793		)	(28		)	(81,821		)
Issuance of common stock and release of treasury stock for employee equity awards	276,497	1		2,010		424			24,000		—			—			—		24,425			—			24,425
Issuance of common stock under ATM Program	181,194	—		—		—			99,421		—			—			—		99,421			—			99,421
Dividend distribution on common stock, $2.46 per share	—	—		—		—			—		(209,226		)	—			—		(209,226		)	—			(209,226		)
Settlement of accrued dividends on vested equity awards	—	—		—		—			12		(230		)	—			—		(218		)	—			(218		)
Accrued dividends on unvested equity awards	—	—		—		—			—		(2,993		)	—			—		(2,993		)	—			(2,993		)
Stock-based compensation, net of estimated forfeitures	—	—		—		—			61,403		—			—			—		61,403			—			61,403
Balance as of September 30, 2019	85,671,643	$	86	(392,784	)	$	(144,301	)	$	12,635,450	$	(3,956,318	)	$	(1,040,236	)	$	1,266,430	$	8,761,111		$	(80	)	$	8,761,031



									Additional Paid-in Capital			Accumulated Dividends			AOCI (Loss)			Retained Earnings		Equinix Stockholders' Equity
	Common Stock			Treasury Stock
	Shares	Amount		Shares		Amount
Balance as of December 31, 2017	79,440,404	$	79	(402,342	)	$	(146,320	)	$	10,121,323		$	(2,592,792	)	$	(785,189	)	$	252,689	$	6,849,790
Adjustment from adoption of new accounting standard update	—	—		—		—			—			—			(2,124		)	271,900		269,776
Net income	—	—		—		—			—			—			—			62,894		62,894
Other comprehensive income	—	—		—		—			—			—			69,144			—		69,144
Issuance of common stock and release of treasury stock for employee equity awards	416,512	1		2,957		625			25,221			—			—			—		25,847
Dividend distribution on common stock, $2.28 per share	—	—		—		—			—			(180,640		)	—			—		(180,640		)
Settlement of accrued dividends on vested equity awards	—	—		—		—			1,795			(530		)	—			—		1,265
Accrued dividends on unvested equity awards	—	—		—		—			—			(2,216		)	—			—		(2,216		)
Stock-based compensation, net of estimated forfeitures	—	—		—		—			44,691			—			—			—		44,691
Balance as of March 31, 2018	79,856,916	80		(399,385	)	(145,695		)	10,193,030			(2,776,178		)	(718,169		)	587,483		7,140,551
Net income	—	—		—		—			—			—			—			67,618		67,618
Other comprehensive loss	—	—		—		—			—			—			(159,825		)	—		(159,825		)
Issuance of common stock and release of treasury stock for employee equity awards	31,068	—		297		63			(50		)	—			—			—		13
Issuance of common stock under ATM Program	19,100	—		—		—			8,202			—			—			—		8,202
Dividend distribution on common stock, $2.28 per share	—	—		—		—			—			(181,207		)	—			—		(181,207		)
Settlement of accrued dividends on vested equity awards	—	—		—		—			103			(43		)	—			—		60
Accrued dividends on unvested equity awards	—	—		—		—			—			(2,755		)	—			—		(2,755		)
Stock-based compensation, net of estimated forfeitures	—	—		—		—			51,870			—			—			—		51,870
Balance as of June 30, 2018	79,907,084	80		(399,088	)	(145,632		)	10,253,155			(2,960,183		)	(877,994		)	655,101		6,924,527
Net income	—	—		—		—			—			—			—			124,825		124,825
Other comprehensive loss	—	—		—		—			—			—			(44,154		)	—		(44,154		)
Issuance of common stock and release of treasury stock for employee equity awards	268,086	—		1,968		416			23,827			—			—			—		24,243
Issuance of common stock under ATM Program	612,422	1		—		—			265,671			—			—			—		265,672
Dividend distribution on common stock, $2.28 per share	—	—		—		—			—			(182,304		)	—			—		(182,304		)
Settlement of accrued dividends on vested equity awards	—	—		—		—			367			(263		)	—			—		104
Accrued dividends on unvested equity awards	—	—		—		—			—			(2,680		)	—			—		(2,680		)
Stock-based compensation, net of estimated forfeitures	—	—		—		—			49,940			—			—			—		49,940
Balance as of September 30, 2018	80,787,592	$	81	(397,120	)	$	(145,216	)	$	10,592,960		$	(3,145,430	)	$	(922,148	)	$	779,926	$	7,160,173

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, 2018			Net Change			Balance as of September 30, 2019
Foreign currency translation adjustment ("CTA") loss	$	(998,603	)	$	(341,484	)	$	(1,340,087	)
Unrealized gain on cash flow hedges ⁽¹⁾	19,480			19,086			38,566
Net investment hedge CTA gain ⁽¹⁾	34,325			227,890			262,215
Net actuarial loss on defined benefit plans ⁽²⁾	(904		)	(26		)	(930		)
Accumulated other comprehensive loss attributable to Equinix	$	(945,702	)	$	(94,534	)	$	(1,040,236	)


⁽¹⁾	Refer to Note 6 for a discussion of the amounts reclassified from accumulated other comprehensive loss to net income.

⁽²⁾

The Company has a defined benefit pension plan covering all employees in one country where such plan is mandated by law. The Company does not have any defined benefit plans in any other countries. The unamortized gain (loss) on defined benefit plans includes gains or losses resulting from a change in the value of either the projected benefit obligation or the plan assets resulting from a change in an actuarial assumption, net of amortization.

Changes in foreign currencies can have a significant impact to the Company's consolidated balance sheets (as evidenced above in the Company's foreign currency translation loss), as well as its 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, 2019, the U.S. Dollar was generally stronger relative to certain of the currencies of the foreign countries in which the Company operates as compared to December 31, 2018. This overall strengthening of the U.S. Dollar had an overall unfavorable impact on the Company's 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, 2019 as reflected in the above table. In future periods, the volatility of the U.S. Dollar as compared to the other currencies in which the Company operates could have a significant impact on its condensed consolidated financial position and results of operations including the amount of revenue that the Company reports in future periods.

Common Stock

In March 2019, the Company issued and sold 2,985,575 shares of common stock in a public offering pursuant to a registration statement and a related prospectus and prospectus supplement. The Company received net proceeds of approximately $1,213.4 million, net of underwriting discounts, commissions and offering expenses.

In August 2017, the Company established an "at-the-market" equity offering program (the "2017 ATM Program") under which the Company may, from time to time, issue and sell shares of its common stock to or through sales agents up to an aggregate of $750.0 million. For the three and nine months ended September 30, 2018, the Company sold 612,422 shares and 631,522 shares, respectively, under the 2017 ATM Program, for approximately $265.7 million and $273.9 million, respectively, net of payment of commissions to sales agents and other offering expenses. As of December 31, 2018, no shares remained available for sale under the 2017 ATM Program. In December 2018, the Company launched another ATM program, under which it may offer and sell from time to time up to an aggregate of $750.0 million of its common stock in "at the market" transactions (the "2018 ATM Program"). For the three and nine months ended September 30, 2019, the Company sold 181,194 shares and 903,555 shares, respectively, under the 2018 ATM program, for approximately $99.4 million and $447.5 million, respectively, net of payment of commissions to sales agents and other offering expenses.

Stock-Based Compensation

For the nine months ended September 30, 2019, the Compensation Committee and/or the Stock Award Committee of the Company's Board of Directors, as the case may be, approved the issuance of an aggregate of 736,303 shares of restricted stock units to certain employees, including executive officers, pursuant to the 2000 Equity Incentive Plan. These equity awards are subject to vesting provisions and have a weighted-average grant date fair value of $440.61 and a weighted-average requisite service period of 3.65 years. The valuation of restricted stock units with only a service condition or a service and performance condition requires no significant assumptions as the fair value for these types of equity awards is based solely on the fair value of the Company's stock price on the date of grant. The Company used revenues and adjusted funds from operations ("AFFO") per share

as the performance measurements in the restricted stock units with both service and performance conditions that were granted in the nine months ended September 30, 2019.

The Company uses a Monte Carlo simulation option-pricing model to determine the fair value of restricted stock units with a service and market condition. The Company used total shareholder return ("TSR") as the performance measurement in the restricted stock units with a service and market condition that were granted in the nine months ended September 30, 2019. There were no significant changes in the assumptions used to determine the fair value of restricted stock units with a service and market condition that were granted in 2019 compared to the prior year.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues	$	7,104	$	4,600	$	18,616	$	13,106
Sales and marketing	15,794		14,166		44,252		39,980
General and administrative	40,973		28,822		111,545		86,763
Total	$	63,871	$	47,588	$	174,413	$	139,849