Equinix to Pay $41.5m to Settle Malpractice Lawsuit

Equinix has agreed to pay $41.5 million as a settlement with the plaintiffs in a class action that alleged it misled its shareholders. According to Hindenburg’s March 2024 report, Equinix overstated its adjusted funds from operations (AFFO), a key profitability metric for REITs.

It claimed that when Equinix became a REIT in 2015, it began using AFFO as a key metric to determine executive bonuses, and that same year reported a sudden 47 percent drop in maintenance CapEx, leading to a 19 percent increase in the AFFO. Hindenburg also stated that the company has been misclassifying "maintenance CapEx" as "growth CapEx," which in turn makes the company's maintenance costs look lower and Equinix seem more profitable.

An Equinix spokesperson confirmed a settlement had been reached, and said: "Equinix has consistently denied the allegations raised in the lawsuit and is settling to avoid the time, costs, and uncertainties associated with protracted litigation. The settlement is not an admission or finding of fault or wrongdoing, and it is subject to court approval. It is expected to be entirely funded by insurance, with no payment made by Equinix.