Equinix has just reported  its first quarterly dividend, however the data-center company’s conversion to a real estate investment trust (REIT) has resulted in tax changes and other adjustments that have led to it posting a large quarterly loss.

Equinix reported a loss of $355.1 million, or $6.42 a share, on sales of $638.1m; after adjusting for the one-time charges, the company earned $31.1m, or 56 cents a share. Equinix stock rose less than 1 percent in late trading today after closing with a 0.2 percent gain at $229.41.

Revenues were 3 percent up over the previous quarter and a 13 percent increase over the same quarter last year.  Revenues for the year ended December 31, 2014, were $2,443.8m, a 14 percent increase over 2013. Recurring revenues, consisting primarily of colocation, interconnection and managed services were $605.5m for the fourth quarter, a 3 percent increase over the previous quarter, and $2,317.8m for the year ended December 31, 2014, a 13 percent increase over 2013.

Non-recurring revenues were$32.6m for the fourth quarter and $126.0m for the year ended December 31, 2014.  MRR churn for the fourth quarter was 1.9 percent, unchanged from previous quarter and lower than prior guidance.

Missing out on the bottom line

Although these results are strong ones in this difficult market and beat analysts’ expectations of $630m, they missed out on the bottom line and forecast this quarter’s revenue and profit, and the full year, below expectations. The rising dollar is being blamed. For the full year, the company envisages revenue of greater than $2.63bn, including foreign currency affects of $100 million. Analysts are predicting $2.68 bn.

Equinix’s results come a few days after a report from Rackspace Hosting that was well received by analysts but also dropped because of alleged currency effects. Equinix shares are currently trading at $221.

Record bookings, strong performance

Steve Smith, president and CEO of Equinix  said: “In 2014, Equinix leveraged significant market momentum to deliver another year of strong financial results.  In the fourth quarter, we delivered record bookings, driven by strong performance across all three regions, new customer wins and continued expansion of our cloud ecosystem. …  I am very pleased with our position going into this year.”

Cost of revenues were $313.4 million for the fourth quarter, a 3 percent increase from the previous quarter, and $1,197.9 million for the year ended December 31, 2014, a 13 percent increase over 2013.  Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $117.5 million for the quarter and $430.3 million for the year, which it refers to as cash cost of revenues, were $195.9 million for the quarter, a slight decrease from the previous quarter, and $767.6 million for the year ended December 31, 2014, a 13 percent increase over 2013.  

More detail

Gross margins for the quarter were 51 percent, unchanged from the previous quarter and slightly decreased from 52 percent for the same quarter last year.  Gross margins were 51 percent for the year ended December 31, 2014, unchanged from the prior year.

Cash gross margins, defined as gross profit before depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 69 percent, up from 68 percent for the previous quarter and unchanged from the same quarter last year.  Cash gross margins were 69 percent for the year ended December 31, 2014, up from 68% for the year ended December 31, 2013.