Equinix Inc (EQIX) 2005 Q2 法說會逐字稿

Hello, and welcome to the Q2 2005 Conference Call. [OPERATOR INSTRUCTIONS.] I would now like to introduce the host of today’s conference, Mr. Jason Starr, Director of Investor Relations. Sir, you may begin.

Good afternoon, and welcome to our Q2 results conference call. Before we get started, I would like to remind everyone that some of the statements that we’ll be making today are forward-looking in nature, and involve risks and uncertainties. Actual results may vary significantly from those statements, and may be affected by the risks we identified in today’s press release, and those identified in our filings with the SEC, including our Form 10-K filed on March 10, 2005, and Form 10-Q filed on May 4, 2005.

In addition, we’ll provide non-GAAP measures on today’s conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures, and a list of the reasons why the Company uses these measures in today’s press release and on the Equinix Investor Relations page at www.Equinix.com.

With us today are Peter Van Camp, Equinix Chief Executive Officer, Renee Lanam, Equinix Chief Financial Officer, and Keith Taylor, Equinix Vice-President of Finance and Chief Accounting Officer. At this time, I’ll turn the call over to Peter.

Thanks Jason. Good afternoon everyone, and thanks for joining the call. As I imagine everyone has seen in our press release, we had another strong quarter as we hit the mid point of ’05. On today’s call, I’ll quickly cover some of the highlights, before turning it over to Renee, to take you through the specifics of our Q2 performance. Then I’ll come back to touch on our recent expansion, as well as some of the contributing factors to our growth, such as the launch of our next generation exchange platform, and some of the new customer applications we’re seeing.

Some Q2 highlights. Total revenue for the Company was $52.5 million. This represents a 33% increase over same quarter last year, and an 8% increase over Q1. EBITDA came in at $16.1 million, which is more than double the second quarter of last year, and a 12% increase sequentially. This contributed to a free cash flow result of $11.4 million.

Equinix closed 70 new customers in the quarter. Key wins included SalesForce.com, NASA, the Department of the Interior, D.E. Shaw, Fox Sports, Samsung, MySpace.com, AON Warranty Group, and in Asia, Ikea Asia Pacific, and Merrill Lynch. These new wins combined with strong contribution from the installed base, to make our second quarter bookings the best result we’ve seen. Over 50% of incremental bookings were from the installed base.

In support of our future growth opportunity, we announced an additional expansion in the Silicon Valley in the quarter, while we also recently announced Chicago. This brings our total footprint to over 1.6 million square feet.

On a last note, I should also mention we experienced a service outage in our Chicago Center at the end of the quarter. As a result, we worked hard in identifying root cause, and have taken the necessary steps in our service monitoring and management across all of our IBX’s, to prevent a recurrence of this nature. The impact on results was a service level agreement payout of approximately $360,000 in the quarter.

So now let me turn it over to Renee to provide the details.

Thanks Peter. Well, Q2 was another great quarter for Equinix. We once again met or exceeded all of our key financial metrics. And our backlog remains very healthy, after yet another quarter of strong bookings. So let’s go ahead and dive into the numbers.

With respect to revenues, as Peter mentioned, Q2 revenues came in at $52.5 million, up 8% from the previous quarter, and up greater than 33% over the same quarter last year. This represented a sequential dollar increase of $3.8 million, our largest quarter over quarter increase in terms of absolute dollars, since the acquisition of our Asia Pacific centers.

The core of our business, our recurring revenues, were $49.4 million, a sequential 8% increase over the previous quarter, and a 33% increase over the same quarter last year. Non-recurring revenues for the quarter were $3.1 million, and were derived from installation fees and professional services.

The non-recurring revenues included a [counter] [ph] revenue charge of approximately $360,000, for SLA payments to our customers effected by the Chicago outage. With respect to churn, in Q2 our cabinet churn was 1.1% for the entire quarter, while our MRR or monthly recurring revenue churn, came in at 2.1%.

As a reminder, we calculate MRR churn based on the amount of MRR churn in the quarter as a percentage of total MRR booked at the beginning of the quarter. We continue to believe that a 1% churn per month, or 3% per quarter, is appropriate for modeling purposes.

With respect to gross profit and cash gross margins, the company recognized gross profit of $13.7 million for the quarter, compared to $11.8 million the previous quarter, and $5.3 million for the same quarter last year. Our cash gross margins increased to 56%, up from 55% last quarter, despite additional cost associated with our expansion, IBX’s in D.C. and Silicon Valley. This better than expected result reflects, once again, our strong discipline on discretionary spending.

Let me now briefly touch base on the accounting treatment for our new centers. We continue to believe that each IBX expansion will be unique from an accounting perspective. Whether each expansion lease is deemed an operating lease, a capital lease, or an IBX-related debt obligation will depend on a number of factors, including whether or not we buy or lease the leasehold improvements in the building, and what the prevailing market rates for leased space in that area are.

In the case of our recent Silicon Valley expansion, approximately 75% of this lease will be treated as a capital lease, commencing in October of this year, with the remainder being treated as an operating lease. With respect to our Chicago expansion, we expect to see this lease weighted more evenly between a capital and operating lease.

With respect to utilization rates in our IBX centers, at the end of Q2 our cabinet capacity was approximately 26,100. This does not include any of the capacity from the recently announced Silicon Valley and Chicago IBX expansion, as they will not be available for customers until 2006. Once these expansions are available to customers, our cabinet capacity will increase to approximately 29,000.

At the end of Q2, approximately 12,400 cabinets or about 47% of our total cabinets, were billing. This compares to 11,700 cabinets that were billing at the end of the previous quarter. Looking at utilization on a weighted average basis, meaning calculating the utilization rate, taking into account when in the quarter a cabinet starting billing, our utilization rate was approximately 46%, or 12,100 cabinets billing on average in the quarter.

Again, these percentages relate solely to cabinet utilization. As we discussed in our last earnings call, equally important is power utilization in our centers, which is something that could be a more meaningful metric over time, and as a result is something we watch closely. Looking at revenue per cabinet on a weighted average basis, our average MRR per cabinet increased to $1,360 from $1,339 the previous quarter.

On to SG&A expenses, SG&A expenses in the quarter were $16.2 million, a 6% increase over the previous quarter, and a 30% increase over the same quarter last year. As previously disclosed, earlier this year the Board approved a restricted stock grant, vesting over a four year period, initially valued at $14.4 million, with vesting tied directly to stock appreciation targets.

This stock-based compensation charge is being amortized on an accelerated basis over its vesting period. And at current stock prices, over half of this charge will be amortized by the end of this year. This charge will fluctuate each quarter, based upon stock performance.

For Q2, this charge was $2.4 million. Going forward, at the current stock price of approximately $45 a share, the charge will be approximately $1.7 million for each Q3 and Q4 of this year. If the stock price appreciates or depreciates say 10% over current levels, the quarterly charge would fluctuate between $1.1 million to $2.2 million in each of the last two quarters of the year.

On the cash side, excluding stock-based comps and depreciation and amortization, our cash SG&A expenses came in at $13.1 million, a 6% increase over the previous quarter, and a 16% increase over the same quarter last year. Contributing to this increase were costs associated with additional hiring at the corporate level, to support our expansion efforts, and increased performance-related compensation, primarily sales commissions, for increased bookings.

On EBITDA, we came in just above the mid-point of our increased expectations at $16.1 million, a 12% increase quarter over quarter. This result included a $360,000 charge against revenues, attributed to the Chicago outage, and approximately $960,000 of costs related to our two recently opened IBX’s.

Excluding these costs, EBITDA would have been $17.4 million, or an approximately flow through rate on incremental revenues of 70%. On a regional basis, the U.S. generated positive EBITDA of $15.6 million, and Asia generated positive EBITDA of $496,000.

From a tax perspective, and consistent with our discussion on the last call, our income tax provision is largely attributed to alternative minimum taxes. The cash component of our income taxes will be largely offset by our NOL carry forwards, plus the benefit derived from our stock option deductions. We continue to believe that our income tax provision and related cash outflow will not be greater than $500,000 in either 2005 or 2006.

Interest expense, due to the conversion of 95% of STT’s convertible secured notes in Q1, decreased to $1.9 million from $2.5 million. For Q3, we anticipate interest expense to remain flat.

Our net loss for the quarter was $3.4 million or $0.14 per share, which includes $2.5 million of stock-based compensation expense, again largely associated with the previously discussed restricted stock grants. Excluding stock-based comp expenses, our net loss per share would have been $0.04. On a cash basis, our cash net income improved to $15.4 million, a 19% increase over the prior quarter.

Turning to the balance sheet, at the end of Q2, our cash, cash equivalents and investments increased by almost $14 million, to just over $132 million. Our DSO level remains below the 30 day level. CapEx for the quarter was $9.9 million. Our expansion CapEx for our new centers was $4.5 million, while our ongoing CapEx was $5.4 million.

Next, moving on to our statement of cash flows, our net cash generated from operating activities was $18.1 million, [contributed] [ph] a quarter over quarter increase of $2.8 million or 18%. Net cash used in investing activities for the quarter was $6.7 million, primarily related to $9.9 million of CapEx, offset by an increase of $3.2 million of accrued property and equipment.

This translates into $11.4 million of free cash flow in the quarter, a $2.2 million or 24% improvement over the previous quarter, and partially attributed to a larger than expected accrued property and equipment balance at the end of the quarter.

Our net cash generated from financing activities in the quarter was $2.5 million, comprised of the exercise of warrants and employee stock options, offset by principal repayments on our capital leases and IBX related debt facilities.

Finally, with respect to our equity capital structure at the end of the quarter, we had approximately 23.9 million shares of common stock outstanding, which includes 4.1 million shares issued to STT last quarter, for their 95% conversion. Assuming the conversion of STT’s remaining holdings, we would have approximately 26.9 million shares outstanding at the end of Q2.

This number excludes the 2.2 million shares related to our convertible subordinated debentures, and the 4.7 million shares related to employee stock plans and other warrants, the majority of which will vest over the next 2-4 years. With that, let me turn the call back over to Peter.

Now let’s turn to our expansion activity. As you saw in the July 18 press release, we’ve now added more capacity in Chicago. Of course, we’ve talked about our interest in this one for some time. Following a lengthy review of available properties, in what I must say is a tight market, and evaluation of our best strategy set in this market, we came to the conclusion that additional capacity adjacent to our current center made the most sense.

As a result, we’ve acquired a former barrier facility, the floor above our IBX, in the Lakeside Technology Center. This location afforded us three benefits. First, easy interconnection with the exchange services and networks; second, continuous growth of our financial exchange customer set, which has been a big driver of our success in Chicago, and then the obvious management and cost efficiency of an adjacent expansion.

Also noted in the press release, we’ve estimated that $16 million of capital will be required to Equinize the center, delivering 1,100 sellable cabinets. The majority of this capital will be spent to significantly augment the power and cooling infrastructure. It did increase our investment on a per cabinet basis as compared to other expansions, such as our most recent one in the Silicon Valley. Yet this made sense in light of the benefits mentioned above.

Chicago now represents our fifth expansion, as we continue to build towards a company capable of generating $500 million in revenue. We’re very pleased with these efforts. In reviewing our most recent openings in the D.C. and Silicon Valley markets, I am pleased to report that once all customers booked to date are installed and billing, our D.C. center will be generating positive cash flow, which includes the cost of our capital lease. In Silicon Valley, which opened three months later, it has also had strong early success, positioning it on a similar trajectory.

Beyond expanding our footprint, you may have also seen an announcement regarding our industry leading exchange service, which we are upgrading to include the delivery of 10-gigabits per second over a single exchange port, or 10 times the previous capacity. As announced, our beta is underway with a number of customers in the D.C. market. And we’ll be rolling this out in four of our markets by year end.

A driver of growth we talk about is the proliferation of broadband. This is enabling new applications to reach end users, such as music and video, which certainly require higher capacities between the suppliers of this content and the networks that reach these broadband end users. We can already see this with our initial beta customers. Reacting to an increasing level of beta traffic that Time Warner Telecom is exchanging among their peers, they readily saw value in upgrading to 10-gigs.

Limelight Networks, a content distribution network focused on digital media, sees our 10-gig upgrade as an important component in their growth, as the extra capacity enables them to easily manage and absorb large, unpredictable spikes of traffic from the rich media content that they distribute, such as music downloads or even movie previews from DreamWorks.

This, in addition to their increasing data traffic among their networking peers, 10-gig makes sense. We believe this upgrade is important to our leadership position in the content and network community. Of course, this investment in our exchange service continues to reflect the importance of our network critical mass. This remains an attractive draw to new customers.

Let me highlight a couple examples from the quarter. In the media space, Fox Sports is coming into the IBX as they launch a new initiative with MSN to roll out football, baseball and basketball as a set up Fantasy Sports offering. This made significant sense to do at Equinix, where they could interconnect with multiple networks, and have the opportunity to (inaudible) in reaching a broad set of Fantasy Sports users.

Another interesting application is from the government sector, where we saw significant growth in the quarter. This one is NASA. They’re rearchitecting their Wide Area Network, NASA-Net, and deploying the four IBX’s as network aggregation hubs. The critical mass of networks at Equinix allowed them to effectively reach large capacities at reasonable costs, which allowed them to implement their national WAN.

What’s also interesting about these two customers is these were new initiatives for deployment. We continue to believe our unique model allows us to win a disproportionate share of our market’s growth.

And just a last note, before I get to guidance, we saw an industry affirmation of our unique position, which we believe has been driven by our business model and service quality. The Gartner Group recently surveyed the collocation segment, and recognized Equinix as the only provider with their strong positive rating.

Now let’s talk about the quarter, and some more color to the outlook for the year. For the third quarter, we expect to see revenues in the range of $55.5 million to $56.5 million. We expect cash gross margins to be approximately 56%, which includes some of the incremental costs in hiring for our recently opened IBX’s and some level of seasonal costs in utilities.

Cash SG&A expenses are expected to be in the range of $13-14 million. We expect EBITDA to be in the range of $17-18 million for the quarter. CapEx in the quarter will be in the range of $8-10 million, which includes approximately $5 million for expansion CapEx for the newly acquired Silicon Valley and Chicago Centers.

As we look to the remainder of the full year, we are tightening our expectations from our mid-June update. We now expect revenue to be in the range of $216 million to $219 million, which is a slight increase to the mid-point, taking it now to $217.5 million. Cash gross margins are expected to be between 55% and 56%, up from previous expectations of 53% to 56%. Cash SG&A is expected to be approximately $53 million for the full year.

EBITDA is expected to range between $66 million and $68 million, which is up $1 million at the mid-point. We are increasing the lower end of our CapEx guidance, to now range between $40 million and $45 million, up from our previous range of $38 million to $45 million. This consists of $17-18 million of ongoing CapEx, and $23-27 million of expansion CapEx, which reflects the investments we are now making into the Equinization of now the four expansions in D.C., Chicago and the Silicon Valley markets in 2005.

We continue to expect free cash flow to be greater than $30 million, even with these additional investments. So, again, at the mid-point of ’05, we’re feeling very good about our performance, and where we’re positioned for the second half of the year. If you recall, as we entered ’05, we outlined a year of solid growth, but also investment, as we expanded to meet our opportunity for market leadership.

As you look at the annual guidance just provided, I am pleased to note that we anticipate a flow through of 58% of our growth to the EBITDA line. This flow through percentage is actually up over our initial guidance this year, which had not contemplated the full scope of the expansions we’ve been able to now accomplish. So with that, Operator, let’s open up for questions.

[OPERATOR INSTRUCTIONS.] Tom Watts, S.G. Cowen.

Congratulations on another good quarter. On the CapEx guidance, you had mentioned the previous range was 38 to 45. I was just looking back at the June 15 press release. I was a little confused. They had 33 to 37 there. And I was trying to understand the difference. And also, are there benefits at all to accelerating CapEx further?

Hey Tom, it’s Keith here. So let me deal with the first question. Then I’ll defer the second question to Peter. On the CapEx itself, we did tighten the range up from what we previously reported. That was primarily because with the sort of the momentum we’re seeing in the marketplace, we want to accelerate some of our CapEx investments. And as a result, we’re going to tighten the range on the CapEx for the latter half of the year. And again, we are focusing on the Chicago and the Silicon Valley markets.

Okay.

You had a second half of that question Tom?

Sure. And I think with the Chicago increase, you noted that the revenue increase, just in that facility, had been over 40% over the prior 12 months. Are there other market -- ? Historically you’ve seen a lot of market growth in San Francisco and the Washington, D.C. area. Are there other markets that you think have the same growth potential as you’ve seen in Chicago recently?

Clearly, I would put Chicago on the list of strong growth markets, like the Valley and Northern Virginia. Frankly, L.A. has been a market that’s been good for us in the past few quarters as well. So we’ve just seen a lot of success. I think even one of the customers I just talked about, kind of a new application with Fox Sports, is also a L.A. success.

Okay. Thanks very much.

And Tom, just one thing I wanted to clarify there. On the CapEx itself, you referred to the June press release. As you probably know, we issued a press release last week for the Chicago CapEx investment. And that might be a little bit of a difference as well between what you’re expecting.

That’s the additional $4 million that you expected this year?

Yeah.

Got it. Okay. Thanks so much.

Jonathan Schildkraut with Jefferies.

I have multiple questions. First, I missed a couple of comments. The 360,000 in [counter] [ph] revenue charge, did you include that in your non-recurring revenue line?

Yes.

Okay. You mentioned that the Silicon Valley IBX was going to be a 75% cap lease starting in October. I was wondering if that was beginning, end of the month, middle. And if I am correct on the size of that, it was 34.5 million?

Yeah, Jonathan, it’s going to be approximately 75%. It will start at the beginning of the month. That is October. And we still, as far as size is concerned, we’re estimating total capital commitment -- sort of the total lease commitment over the life of the lease is $45 million.

$45 million.

Yes. And so that will be apportioned accordingly, of which some will be put on the balance sheet. And then there will be interest attributed to that over the lease term.

Okay great. Could you also give us the size of the commitment in the Chicago facility?

Yeah. The Chicago facility, it’s going to be roughly the same size. We’re estimating it’s going to be in the range of about $2.4 million a year, over a 10 year period. So about a $24 million to $25 million in size, for total lease commitment.

I am sorry. I thought you said 45 at the Silicon Valley.

I am sorry. 45 for Silicon Valley. This one will be 24-25 million over the lease term. It’s a shorter lease term.

Okay. Great. Thank you. Alright. Still want to talk a little bit about the bookings. You’ve mentioned that it was the best bookings quarter that you ever had. I am wondering about, in the past you’ve talked about a delay from bookings to the time that revenues start to hit the P&L. I am wondering if we saw the impact of that great bookings quarter in the second quarter, if we’ll begin to see that roll-in in the third quarter.

Yeah. I mean historically we’ve seen 30-60 days Jonathan, as the amount of time for bookings to take hold and have an impact. Clearly we saw a good second quarter. But the guidance we’ve outlined for the second half, and that uplift we did in this special call we did at mid-quarter, really reflects the roll-in of that revenue from this very good quarter we’re having right now.

Wonderful. And I was hoping that maybe you could talk a little bit about vertical penetration. I know that travel and tickets have been two areas where you have been focused. In the past, I know that you got a piece of Ticketmaster. And recently you announced that you scored another ticket provider in your Chicago IBX, I believe. I was wondering if you could talk a little bit about the approach towards penetrating verticals and any success stories there.

Yeah. Well, maybe taking it from the top, we didn’t note in our prepared comments, was both the financial and government sector continue to have some strong momentum together. I think now they’re up to $20 million in annual contract value for us. So just out of those two groups, we’ve seen some good success there.

Although you’re noting Ticketmaster, as well as some other efforts in that sector, it’s not a big one. And I would say we’re really focusing more towards digital media, as we look at our current customer set, and what we think our opportunity to really make a difference is. Now clearly, when we look at a vertical, we’re looking to see if we can also drive interconnection at an interesting level out of that vertical, like it’s done so well for us in the FX opportunity.

So digital media and the value of peering, as you might guess when you’re looking at large content, reaching broadband end users, as I even described in that one customer example, that’s the one where we’re really putting more energy right now.

The travel one’s interesting from some customer targets. But creating just this critical mass of travel companies in one data center looks like a bigger hurdle than driving interconnection out of something like digital media. So our real focus is going to be there.

Excellent. Just a couple of data points. I know that you added a number of customers this quarter. But you usually give us an end of period customer number, the same for cross-connects and ports on the Gig-E exchange.

Jonathan, the net customer adds, we took it up to just under 1,049. So net 44 adds for the quarter.

And ports and cross-connects?

Ports are currently at 351. Just pulling some numbers for you Jonathan.

Thank you.

We’ll get back to you on the exact cross-connect. I didn’t have it handy. My apologies.

Okay. I’ve got one last question for Keith. I know that there’s a $1.9 million payment to Verio for the assets that you’re acquiring in the Chicago IBX. I’m wondering what the timing on that is, if that’s included in your CapEx numbers.

The $1.9 million is going to be paid in Q3. And right now we’re anticipating it will be in the range of 40-45.

Thanks a lot. Another excellent quarter.

Jonathan, just real quick, our current cross-connect is 10,392.

Thank you.

Mark Kelleher with Adams, Harkness.

How about the competitive environment? Certainly the market seems to be very strong. Your gross margins were up a little bit. So are you seeing any stirrings from AT&T, some of your larger ones? Or what’s going on there?

Well, I think that the consistent guys at the table are still AT&T and [Satus] [ph]. I do sense an uplift in the market, certainly an interest in the market, as you look at other players’ press releases and their activities. Actually, I’ve even noticed, Tier One Research came out with a little different estimate. They’ve historically been in single digits from a market growth standpoint. And they’ve now bumped that to 15% as an annual growth rate now for the market we’re obviously competing in.

So not seeing a different sense of competitors out there so much right now, although I think for some time we’ve been feeling, because of our growth in these new applications that we talk about, we’re seeing some of that market expansion take place. So I wasn’t surprised to see that number out of Tier One.

So the strong demand is allowing pricing for everybody to hang in there?

Yeah. I think that’s right. I think we’ve heard that on other earnings calls from others in the space that have already been out. So my guess is this is firming for everybody.

Alright. And just one quick questions. How many people?

I am sorry. We lost the second half of that.

Sorry. The people at the end of the quarter?

How many employees.

Sorry, what was that?

509 employees at the end of the quarter.

Great.

Our last question comes from Andy Schroepfer with Tier One Research.

On the interconnection and port counts, just trying to digest them, since you just gave them out. But the percentage of recurring revenues, is there anything systemic about the fact that it’s going slower than the overall business? Or is it just that you’re getting so much big business right now, that that’s why it’s trailing off a little bit. And kind of what do you see an inflection point? That goes back to growing in step with space.

Yeah Andy, good question. The reality is that with these new expansions, and some of the anchor tenant deals we’ve done in these new buildings, obviously the good news about how quickly we’re getting these buildings to a cash return does have an impact in the overall mix of revenue and percentages, because we’ve done some larger deals. So I think that’s some of what you’re seeing in the number. Although if you think about where we’re focusing on a vertical market level, and certainly the roll-out of 10-gig, and some of the other focus that we have on that business, we still feel good about the prospects for the exchange component too.

Great. Great. On 10-Gig E, I hope your investor base is going to understand this. I think all of us on the call are going to do our best to help the market understand it. But maybe one statement to put it into number format will be can you maybe estimate what percent of your customer base now do you think already has a need for it, whether or not they’re ready to buy it, but how many have a need to switch for it, and then also talk about the pricing dynamics, the cost differential, to move from a 1-Gig port to a 10-Gig port?

Right now, this is somewhat anecdotal from just our customer contact and so forth. But I’d say one in four, maybe 25% of customers have already got the need. They’re just seeing it in the growth of their capacities. So certainly that’s there. The other aspect of it, from a pricing standpoint, I think you’d see these pricing patterns in any expansion of things like bandwidth or even processing power. My guess as this thing burns in, we’re somewhere two and a half times the current price point of just a gig port when you roll out a 10-Gig port.

So you think that has an influence in ’05 on the -- at least the interconnection revenue? Or is that in ’06?

No. I think that’s over time. Yeah. But we’ll be rolling out. It’s just the first center, that’s been launched. And that’s only at beta right now. But we’ll have four centers in place by year-end. But that’s next year’s impact.

Yeah. Two other questions. One on pipeline and one on Asia Pacific. On pipeline, I know you’ve had a couple of awesome booking quarters. And I would assume that your pipeline remains kind of undepleted, to be blunt. Maybe some comments on how quickly you’re seeing pipeline replenish, or if it’s just that your pipeline is that big, that you’re going to have many quarters like this.

Yeah. I don’t see it as a replenishment of the pipeline. Even as we look at the pipeline, we look at it as what will close in the next 90-120 days. And that’s how we really get a sense and visibility of what our outward even quarters look like. And we exclude other things. But, of course, with time, then the pipeline is filling up with things that we’re frankly already aware of.

So I think it’s pretty much a smooth understanding of the pipeline, and smooth management of it. I will say it was a fantastic quarter. And it’s early in this quarter to say what we’re going to do as we get full bookings into this quarter. But activity is still strong. And interest is still strong for sure.

Got you. And since I don’t -- I can’t see the press release in front of me -- do you have the Asia Pacific numbers in there?

Yes we do.

Great. I’ll be able to look at that later. I assume everything that -- what was the incremental up tick in Asia Pacific EBITDA contribution?

What was it?

It was 500,000 for the quarter Andy.

Good work to the team over there.

Yeah.

And then maybe one other question. On the vertical side, do you have a formal vertical strategy that you’re talking to particular verticals on, like you do with the financial exchange yet? Or is it still -- ?

Yeah. In the digital media, we’ve got a lot of energy around it right now.

Is it a formal offering that you’re talking about to the customer base, like you do the financial exchange?

Not as specific as the bundled capabilities yet. But interesting aspects between the exchange and Equinix direct are very meaningful to that sector. So any special product bundles are still being defined.

Is that significant to I guess the way we would need to track the market in terms of how quickly that can be adopted to the formalization of a bundle matter? Or is it that you’re going to get the wins anyway?

I don’t think it’s going to matter to revenue. I mean it’s a different way of packaging it, that makes it attractive and easy for our customers to accept and understand and implement. But that doesn’t shift the revenue in any way, or the returns in any way.

Fair enough. Well congratulations again. I’ll pass it on.

This concludes our conference call today. Thank you for joining us.