Goldman Sachs: Equinix orders hit a record and full-year guidance rises, but fourth-quarter cash earnings face cost pressure

Why do orders deserve more attention than current-quarter revenue?

Annualized gross bookings in the third quarter of 2026 reached a record 533 million dollars, up 35% year over year and above the second quarter's 424 million dollars and Goldman Sachs's forecast of 458 million dollars. The company has achieved 60% of its fourth-quarter booking target, providing good visibility into future recurring revenue.
Orders came primarily from new enterprise customer deals, particularly financial services firms building hybrid AI infrastructure; emerging cloud providers still account for less than 2% of monthly recurring revenue.
Tight supply also provides room for pricing: prices on new deals rose 12% year over year. The company expects to deliver 13,450 cabinets in the fourth quarter, more than 20% of which have been presold; approximately 15% of retail capacity for 2027 has been presold.

Third-quarter revenue was 2.571 billion dollars, up 11% year over year and in line with market consensus, but below Goldman Sachs's forecast of 2.582 billion dollars; recurring revenue was 2.442 billion dollars, slightly below Goldman Sachs's and market expectations.
Adjusted EBITDA was 1.321 billion dollars, above the market consensus of 1.305 billion dollars but below Goldman Sachs's forecast of 1.335 billion dollars. Adjusted funds from operations (AFFO) per share were 11.64 dollars, above Goldman Sachs's forecast of 10.59 dollars and the market consensus of 10.56 dollars.
The AFFO beat was partly attributable to 54 million dollars in other income, primarily compensation related to the investment in the atNorth joint venture; other income was zero in the prior-year period.

The company raised the midpoint of its 2026 revenue guidance by 100 million dollars, to 10.325 billion–10.365 billion dollars; it raised the midpoint of adjusted EBITDA guidance by 70 million dollars, to 5.29 billion–5.33 billion dollars. AFFO per share guidance rose to 43.71–44.11 dollars.
Fourth-quarter revenue guidance is 2.684 billion–2.724 billion dollars, and adjusted EBITDA guidance is 1.328 billion–1.368 billion dollars. However, the guidance implies fourth-quarter AFFO of 951 million–991 million dollars, below the third quarter's 1.156 billion dollars.
The company noted seasonal cost increases and higher maintenance capital spending in the fourth quarter. Fourth-quarter recurring capital expenditure guidance is 141 million–161 million dollars, or 5%–6% of revenue, above the full-year proportion of approximately 3%.

Equinix plans to double the size of its asset portfolio over the long term while seeking only a modest increase in leverage. The company uses smaller campuses of 60 megawatts or less to reduce reliance on any single campus; approximately 80% of development is in the top 25 metropolitan areas, where land, power and permits are largely secured.
Expansion requires continued investment. Goldman Sachs forecasts capital expenditure of approximately 5.988 billion dollars in 2026, above operating cash flow of approximately 4.2 billion dollars, with negative free cash flow of 1.787 billion dollars; its model forecasts free cash flow will remain negative at 848 million dollars in 2027.
In light of higher expectations for orders and net additions of billed cabinets, Goldman Sachs raised its earnings forecasts and increased its 12-month price target from 1,060 dollars to 1,110 dollars, while maintaining its neutral rating.