Equinix Inc’s (EQIX) third quarter 2009 EPS of 49 cents exceeded the consensus estimate of 30 cents per share.

Revenue

Revenue for the third quarter was $227.6 million up 7.0% over the previous quarter and 24.0% over the same quarter last year. This reflects the continued benefit of strong demand across all three geographic regions. Fluctuations in the U.S dollar resulted in a $1.3 million currency benefit in the quarter.

Recurring revenues, consisting primarily of colocation, interconnection and managed services were $218.3 million (95.9% of total revenues), a 6.0% increase over the previous quarter and a 26.0% increase over the same quarter last year. Non-recurring revenues were $9.3 million (4.1% of total revenues), an increase of 17.4% from the previous quarter and 9.8% from the same quarter last year.

Operating Result

Cash gross margins, (defined as gross profit less depreciation, amortization, accretion and stock-based compensation, divided by revenues) for the quarter was 64%, down from 65% in the previous quarter and up from 62.0% in the same quarter last year. The cash gross margin across all three regions increased on a year-over-year basis, a result of continued fiscal discipline related to the company’s discretionary costs, slower-than-expected hiring and favorable tax recoveries. Europe experienced a gross margin decline of 1% sequentially.

Operating expenses were comparatively high in the quarter. Selling, general and administrative (SG&A) expenses were $54.6 million, a 1.0% increase from the previous quarter and a 6.0% increase over the same quarter last year. This apart, an acquisition cost of $1.4 million also increased the operating expense.

Adjusted EBITDA, defined as income or loss from operations before depreciation and amortization, accretion, stock-based compensation expense and restructuring charges for the quarter was $106.0 million, an increase of 7.0% from the previous quarter, and up 38.0% from the same quarter last year.

Net income for the quarter came in at $18.8 million or 49 cents per diluted share versus net income of $17.4 million or 46 cents per diluted share in the previous quarter and net income of $5.6 million or 15 cents per share in the year-ago quarter.

Cash Flow

During the quarter, Equinix generated $107.5 million from operating activities versus $78.7 million in the second quarter. Capital expenditures in the third quarter were $88.7 million, of which $14.7 million was attributed to ongoing capital expenditures and $74.0 million was attributed to expansion capital expenditures. The company exited the quarter with $283.1 million in total cash and cash equivalent (unrestricted and restricted) versus $284.0 million in the previous quarter.

Guidance

For the full year 2009, total revenues are expected to be in the range of $875.0 to $880.0 million. The cash gross margins are expected to range between 63% and 64%. Cash SG&A expenses are expected to be $160.0 million. Adjusted EBITDA for the year is expected to be between $395.0 and $400.0 million. Capital expenditures for 2009 are expected to be in the range of $390.0 to $400.0 million, comprised of approximately $60.0 million of ongoing capital expenditures and $330.0 to $340.0 million related to expansion activity.

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