CAMBRIDGE, Mass., Oct. 27, 2015 /PRNewswire/ --
- Revenue of $551 million, up
11% year-over-year and up 15% adjusted for foreign
exchange*
- GAAP EPS of $0.49 per diluted
share, down 2% year-over-year and up 3% adjusted for foreign
exchange*
- Non-GAAP EPS of $0.62 per
diluted share, consistent year-over-year and up 5% adjusted for
foreign exchange*
Akamai Technologies, Inc. (NASDAQ: AKAM), the global leader in
Content Delivery Network (CDN) services, today reported financial
results for the third quarter ended September 30, 2015.
"The third quarter was another solid quarter for Akamai on both
the top and bottom lines. We delivered earnings that exceeded
our expectations, even as we continued to invest in innovation, new
products and global infrastructure to meet future demand," said Dr.
Tom Leighton, Chief Executive
Officer. "We were particularly pleased with the continued,
very strong growth of our Cloud Security Solutions. Revenue
from our Cloud Security Solutions grew 44% year-over-year in
constant currency, and now exceeds an annualized run rate of
$250 million, making Akamai one of
the world's largest cloud security service providers."
Akamai delivered the following results for the third quarter
ended September 30, 2015:
Revenue: Revenue was $551
million, an 11% increase over third quarter 2014 revenue of
$498 million and a 15% increase when
adjusted for foreign exchange*.
Revenue by Solution Category:
- Media Delivery Solutions revenue was $245 million, up 5% year-over-year and up 10%
when adjusted for foreign exchange*
- Performance and Security Solutions revenue was $263 million, up 15% year-over-year and up 18%
when adjusted for foreign exchange*
- Cloud Security Solutions revenue, a component of Performance
and Security, was $65 million, up 39%
year-over-year and up 44% when adjusted for foreign exchange*
- Service and Support Solutions revenue was $43 million, up 19% year-over-year and up 24%
when adjusted for foreign exchange*
Revenue by Geography:
- U.S. revenue was $401 million, a
10% increase over third quarter 2014
- International revenue was $150
million, a 12% increase over third quarter 2014 and a 27%
increase when adjusted for foreign exchange*
Income from operations: GAAP income from operations was
$116 million, a 4% decrease over
third quarter 2014 GAAP income from operations of $120 million. GAAP operating margin for the third
quarter of 2015 was 21%, down three percentage points from the same
period last year.
Non-GAAP income from operations* was $157
million, relatively consistent with third quarter 2014
non-GAAP income from operations of $158
million. Non-GAAP operating margin* for the third quarter of
2015 was 29%, down three percentage points from the same period
last year.
Net income: GAAP net income was $88 million, a 3% decrease over third quarter
2014 GAAP net income of $91 million.
Non-GAAP net income* was $112
million, relatively consistent with third quarter 2014
non-GAAP net income of $111
million.
EPS: GAAP EPS was $0.49 per
diluted share, a 2% decrease over third quarter 2014 GAAP EPS of
$0.50, and a 3% increase when
adjusted for foreign exchange*. GAAP EPS for the quarter included a
$0.06 per diluted share tax benefit
from the retroactive application of a U.S. tax court ruling with
respect to the treatment of stock-based compensation in
intercompany transactions.
Non-GAAP EPS was $0.62 per diluted
share, consistent with third quarter 2014 non-GAAP EPS and a 5%
increase when adjusted for foreign exchange*.
Adjusted EBITDA*: Adjusted EBITDA was $222 million, a 4% increase over third quarter
2014 Adjusted EBITDA of $213 million.
Adjusted EBITDA margin* for the third quarter of 2015 was 40%, down
three percentage points from the same period last year.
Other third quarter 2015 results included:
- Cash from operations was $183
million, or 33% of revenue
- Cash, cash equivalents and marketable securities as of
September 30, 2015 was $1.5
billion
- The Company spent $76 million to
repurchase 1.1 million shares of its common stock at an average
price of $72.02 per share
- The Company had approximately 178 million shares of common
stock outstanding as of September 30, 2015
*See Use of Non-GAAP Financial Measures below for
definitions.
Quarterly Conference Call
Akamai will host a
conference call today at 4:30 p.m. ET
that can be accessed through 1-877-703-6109 (or 1-857-244-7308 for
international calls) and using passcode No. 16030768. A live
webcast of the call may be accessed at www.akamai.com in the
Investor section. In addition, a replay of the call will be
available for one week following the conference by calling
1-888-286-8010 (or 1-617-801-6888 for international calls) and
using passcode No. 32698839. The archived webcast of this event may
be accessed through the Akamai website.
About Akamai
As the global leader in Content Delivery
Network (CDN) services, Akamai makes the Internet fast, reliable
and secure for its customers. The company's advanced web
performance, mobile performance, cloud security and media delivery
solutions are revolutionizing how businesses optimize consumer,
enterprise and entertainment experiences for any device, anywhere.
To learn how Akamai solutions and its team of Internet experts
are helping businesses move faster forward, please
visit www.akamai.com or blogs.akamai.com, and follow @Akamai
on Twitter.
|
AKAMAI
TECHNOLOGIES, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(in
thousands)
|
September 30,
2015
|
|
December 31,
2014
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
|
256,471
|
|
|
$
|
238,650
|
|
|
Marketable
securities
|
411,382
|
|
|
519,642
|
|
|
Accounts receivable,
net
|
365,957
|
|
|
329,578
|
|
|
Prepaid expenses and
other current assets
|
115,601
|
|
|
128,981
|
|
|
Deferred income tax
assets
|
61,574
|
|
|
45,704
|
|
|
Current
assets
|
1,210,985
|
|
|
1,262,555
|
|
|
Property and
equipment, net
|
734,540
|
|
|
601,591
|
|
|
Marketable
securities
|
837,020
|
|
|
869,992
|
|
|
Goodwill and acquired
intangible assets, net
|
1,294,478
|
|
|
1,183,706
|
|
|
Deferred income tax
assets
|
1,888
|
|
|
1,955
|
|
|
Other
assets
|
105,898
|
|
|
81,747
|
|
|
Total
assets
|
$
|
4,184,809
|
|
|
$
|
4,001,546
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
276,192
|
|
|
$
|
282,098
|
|
|
Other current
liabilities
|
55,814
|
|
|
51,913
|
|
|
Current
liabilities
|
332,006
|
|
|
334,011
|
|
|
Deferred income tax
liabilities
|
49,925
|
|
|
39,299
|
|
|
Convertible senior
notes
|
619,365
|
|
|
604,851
|
|
|
Other
liabilities
|
97,850
|
|
|
78,050
|
|
|
Total
liabilities
|
1,099,146
|
|
|
1,056,211
|
|
|
Stockholders'
equity
|
3,085,663
|
|
|
2,945,335
|
|
|
Total liabilities and
stockholders' equity
|
$
|
4,184,809
|
|
|
$
|
4,001,546
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in thousands,
except per share data)
|
September
30, 2015
|
|
June 30,
2015
|
|
September
30, 2014
|
|
September
30, 2015
|
|
September
30, 2014
|
|
Revenue
|
$
|
551,030
|
|
|
$
|
540,723
|
|
|
$
|
498,042
|
|
|
$
|
1,618,289
|
|
|
$
|
1,427,579
|
|
|
Costs and operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(1) (2)
|
183,204
|
|
|
179,910
|
|
|
158,812
|
|
|
532,408
|
|
|
447,742
|
|
|
Research and
development (1)
|
38,396
|
|
|
36,693
|
|
|
32,583
|
|
|
110,917
|
|
|
92,869
|
|
|
Sales and marketing
(1)
|
107,426
|
|
|
111,501
|
|
|
96,215
|
|
|
322,406
|
|
|
268,742
|
|
|
General and
administrative (1) (2)
|
99,543
|
|
|
99,152
|
|
|
81,905
|
|
|
288,287
|
|
|
239,946
|
|
|
Amortization of
acquired intangible assets
|
6,752
|
|
|
6,752
|
|
|
8,403
|
|
|
20,284
|
|
|
23,654
|
|
|
Restructuring charges
(benefits)
|
20
|
|
|
455
|
|
|
(115)
|
|
|
517
|
|
|
1,189
|
|
|
Total costs and
operating expenses
|
435,341
|
|
|
434,463
|
|
|
377,803
|
|
|
1,274,819
|
|
|
1,074,142
|
|
|
Income from
operations
|
115,689
|
|
|
106,260
|
|
|
120,239
|
|
|
343,470
|
|
|
353,437
|
|
|
Interest
income
|
2,723
|
|
|
2,541
|
|
|
2,010
|
|
|
8,265
|
|
|
5,389
|
|
|
Interest
expense
|
(4,630)
|
|
|
(4,678)
|
|
|
(4,482)
|
|
|
(13,884)
|
|
|
(10,939)
|
|
|
Other income
(expense), net
|
204
|
|
|
(1,605)
|
|
|
(188)
|
|
|
(1,702)
|
|
|
(1,968)
|
|
|
Income before
provision for income taxes
|
113,986
|
|
|
102,518
|
|
|
117,579
|
|
|
336,149
|
|
|
345,919
|
|
|
Provision for income
taxes
|
25,946
|
|
|
35,318
|
|
|
26,424
|
|
|
103,163
|
|
|
109,078
|
|
|
Net income
|
$
|
88,040
|
|
|
$
|
67,200
|
|
|
$
|
91,155
|
|
|
$
|
232,986
|
|
|
$
|
236,841
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.49
|
|
|
$
|
0.38
|
|
|
$
|
0.51
|
|
|
$
|
1.30
|
|
|
$
|
1.33
|
|
|
Diluted
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.50
|
|
|
$
|
1.29
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
178,547
|
|
|
178,682
|
|
|
178,186
|
|
|
178,591
|
|
|
178,324
|
|
|
Diluted
|
180,364
|
|
|
180,738
|
|
|
180,955
|
|
|
180,642
|
|
|
181,278
|
|
|
(1) Includes
stock-based compensation (see supplemental table for
figures)
|
|
(2) Includes
depreciation and amortization (see supplemental table for
figures)
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30, 2015
|
|
June 30,
2015
|
|
September
30, 2014
|
|
September
30, 2015
|
|
September
30, 2014
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
88,040
|
|
|
$
|
67,200
|
|
|
$
|
91,155
|
|
|
$
|
232,986
|
|
|
$
|
236,841
|
|
|
Adjustments to
reconcile net income to net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
74,785
|
|
|
73,989
|
|
|
67,415
|
|
|
219,234
|
|
|
179,643
|
|
|
Stock-based
compensation
|
31,046
|
|
|
32,251
|
|
|
28,008
|
|
|
92,966
|
|
|
84,800
|
|
|
Excess tax benefits
from stock-based compensation
|
(2,114)
|
|
|
(9,609)
|
|
|
(4,297)
|
|
|
(24,851)
|
|
|
(23,958)
|
|
|
(Benefit) provision
for deferred income taxes
|
(1,666)
|
|
|
(24,580)
|
|
|
(11,218)
|
|
|
(17,941)
|
|
|
10,622
|
|
|
Amortization of debt
discount and issuance costs
|
4,630
|
|
|
4,677
|
|
|
4,482
|
|
|
13,884
|
|
|
10,939
|
|
|
Other non-cash
reconciling items, net
|
2,126
|
|
|
703
|
|
|
1,340
|
|
|
3,271
|
|
|
2,535
|
|
|
Changes in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(26,415)
|
|
|
18,260
|
|
|
(8,959)
|
|
|
(40,707)
|
|
|
(50,213)
|
|
|
Prepaid expenses and
other current assets
|
4,097
|
|
|
13,839
|
|
|
(9,348)
|
|
|
16,119
|
|
|
(22,346)
|
|
|
Accounts payable and
accrued expenses
|
(5,575)
|
|
|
84,376
|
|
|
15,417
|
|
|
26,098
|
|
|
36,876
|
|
|
Deferred
revenue
|
(115)
|
|
|
76
|
|
|
2,938
|
|
|
6,908
|
|
|
7,688
|
|
|
Other current
liabilities
|
(53)
|
|
|
157
|
|
|
(2,122)
|
|
|
146
|
|
|
(703)
|
|
|
Other non-current
assets and liabilities
|
13,822
|
|
|
2,684
|
|
|
(1,529)
|
|
|
18,247
|
|
|
(10,195)
|
|
|
Net cash provided by
operating activities
|
182,608
|
|
|
264,023
|
|
|
173,282
|
|
|
546,360
|
|
|
462,529
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
Cash received (paid)
for acquired businesses, net of cash acquired
|
500
|
|
|
(106,883)
|
|
|
—
|
|
|
(122,445)
|
|
|
(386,532)
|
|
|
Purchases of property
and equipment and capitalization of internal-use software
development costs
|
(133,064)
|
|
|
(96,013)
|
|
|
(71,782)
|
|
|
(366,146)
|
|
|
(226,307)
|
|
|
Purchases of short-
and long-term marketable securities
|
(178,200)
|
|
|
(308,685)
|
|
|
(204,607)
|
|
|
(584,189)
|
|
|
(1,068,198)
|
|
|
Proceeds from sales
and maturities of short- and long-term marketable
securities
|
197,440
|
|
|
222,030
|
|
|
93,300
|
|
|
727,125
|
|
|
631,422
|
|
|
Other non-current
assets and liabilities
|
(1,128)
|
|
|
(1,827)
|
|
|
5,194
|
|
|
(3,037)
|
|
|
7,222
|
|
|
Net cash used in
investing activities
|
(114,452)
|
|
|
(291,378)
|
|
|
(177,895)
|
|
|
(348,692)
|
|
|
(1,042,393)
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30, 2015
|
|
June 30,
2015
|
|
September
30, 2014
|
|
September
30, 2015
|
|
September 30,
2014
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the
issuance of convertible senior notes, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
678,735
|
|
|
Proceeds from the
issuance of warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,970
|
|
|
Payment for bond
hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(101,292)
|
|
|
Repayment of acquired
debt and capital leases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,862)
|
|
|
Proceeds from the
issuance of common stock under stock plans
|
17,776
|
|
|
12,072
|
|
|
17,362
|
|
|
54,288
|
|
|
75,361
|
|
|
Excess tax benefits
from stock-based compensation
|
2,114
|
|
|
9,609
|
|
|
4,297
|
|
|
24,851
|
|
|
23,958
|
|
|
Employee taxes paid
related to net share settlement of stock-based awards
|
(7,817)
|
|
|
(8,253)
|
|
|
(8,957)
|
|
|
(47,171)
|
|
|
(43,205)
|
|
|
Repurchases of common
stock
|
(76,358)
|
|
|
(63,388)
|
|
|
(39,022)
|
|
|
(202,426)
|
|
|
(226,513)
|
|
|
Other non-current
assets and liabilities
|
(800)
|
|
|
(1,250)
|
|
|
(1,575)
|
|
|
(2,050)
|
|
|
(1,575)
|
|
|
Net cash (used in)
provided by
financing activities
|
(65,085)
|
|
|
(51,210)
|
|
|
(27,895)
|
|
|
(172,508)
|
|
|
465,577
|
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
(4,048)
|
|
|
3,456
|
|
|
(7,318)
|
|
|
(7,339)
|
|
|
(5,265)
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
(977)
|
|
|
(75,109)
|
|
|
(39,826)
|
|
|
17,821
|
|
|
(119,552)
|
|
|
Cash and cash
equivalents at beginning of period
|
257,448
|
|
|
332,557
|
|
|
254,165
|
|
|
238,650
|
|
|
333,891
|
|
|
Cash and cash
equivalents at end of period
|
$
|
256,471
|
|
|
$
|
257,448
|
|
|
$
|
214,339
|
|
|
$
|
256,471
|
|
|
$
|
214,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
RECONCILIATION OF
GAAP TO NON-GAAP INCOME FROM OPERATIONS, NET INCOME AND ADJUSTED
EBITDA
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in thousands,
except per share data)
|
September
30, 2015
|
|
June 30,
2015
|
|
September
30, 2014
|
|
September
30, 2015
|
|
September
30, 2014
|
|
Income from
operations
|
$
|
115,689
|
|
|
$
|
106,260
|
|
|
$
|
120,239
|
|
|
$
|
343,470
|
|
|
$
|
353,437
|
|
|
GAAP operating
margin
|
21
|
%
|
|
20
|
%
|
|
24
|
%
|
|
21
|
%
|
|
25
|
%
|
|
Amortization of
acquired intangible assets
|
6,752
|
|
|
6,752
|
|
|
8,403
|
|
|
20,284
|
|
|
23,654
|
|
|
Stock-based
compensation
|
31,046
|
|
|
32,251
|
|
|
28,008
|
|
|
92,966
|
|
|
84,800
|
|
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
3,152
|
|
|
3,636
|
|
|
3,601
|
|
|
9,896
|
|
|
7,563
|
|
|
Other operating
expenses(1)
|
708
|
|
|
1,439
|
|
|
(2,515)
|
|
|
3,856
|
|
|
2,973
|
|
|
Operating
adjustments
|
41,658
|
|
|
44,078
|
|
|
37,497
|
|
|
127,002
|
|
|
118,990
|
|
|
Non-GAAP income from
operations
|
$
|
157,347
|
|
|
$
|
150,338
|
|
|
$
|
157,736
|
|
|
$
|
470,472
|
|
|
$
|
472,427
|
|
|
Non-GAAP operating
margin
|
29
|
%
|
|
28
|
%
|
|
32
|
%
|
|
29
|
%
|
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
88,040
|
|
|
$
|
67,200
|
|
|
$
|
91,155
|
|
|
$
|
232,986
|
|
|
$
|
236,841
|
|
|
Operating adjustments
(from above)
|
41,658
|
|
|
44,078
|
|
|
37,497
|
|
|
127,002
|
|
|
118,990
|
|
|
Amortization of debt
discount and issuance costs
|
4,630
|
|
|
4,678
|
|
|
4,482
|
|
|
13,884
|
|
|
10,939
|
|
|
Loss on
investments
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
393
|
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
(22,453)
|
|
|
(13,788)
|
|
|
(21,771)
|
|
|
(48,678)
|
|
|
(45,333)
|
|
|
Non-GAAP net
income
|
111,875
|
|
|
102,168
|
|
|
111,363
|
|
|
325,219
|
|
|
321,830
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
64,881
|
|
|
63,601
|
|
|
55,411
|
|
|
189,054
|
|
|
148,426
|
|
|
Interest
income
|
(2,723)
|
|
|
(2,541)
|
|
|
(2,010)
|
|
|
(8,265)
|
|
|
(5,389)
|
|
|
Other (income)
expense, net
|
(204)
|
|
|
1,605
|
|
|
188
|
|
|
1,677
|
|
|
1,575
|
|
|
Provision for GAAP
income taxes
|
25,946
|
|
|
35,318
|
|
|
26,424
|
|
|
103,163
|
|
|
109,078
|
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
22,453
|
|
|
13,788
|
|
|
21,771
|
|
|
48,678
|
|
|
45,333
|
|
|
Adjusted
EBITDA
|
$
|
222,228
|
|
|
$
|
213,939
|
|
|
$
|
213,147
|
|
|
$
|
659,526
|
|
|
$
|
620,853
|
|
|
Adjusted EBITDA
margin
|
40
|
%
|
|
40
|
%
|
|
43
|
%
|
|
41
|
%
|
|
43
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.63
|
|
|
$
|
0.57
|
|
|
$
|
0.62
|
|
|
$
|
1.82
|
|
|
$
|
1.80
|
|
|
Diluted
|
$
|
0.62
|
|
|
$
|
0.57
|
|
|
$
|
0.62
|
|
|
$
|
1.80
|
|
|
$
|
1.78
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
non-GAAP per share calculations:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
178,547
|
|
|
178,682
|
|
|
178,186
|
|
|
178,591
|
|
|
178,324
|
|
|
Diluted
|
180,364
|
|
|
180,738
|
|
|
180,955
|
|
|
180,642
|
|
|
181,278
|
|
|
(1)
|
Other operating
expenses excluded from non-GAAP results include:
acquisition-related costs, restructuring charges and certain legal
matter costs. See the
|
|
non-GAAP adjustment
definitions below for additional information.
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
SUPPLEMENTAL
REVENUE DATA BY SOLUTION CATEGORY
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30, 2015
|
|
June 30,
2015
|
|
September
30, 2014
|
|
September
30, 2015
|
|
September
30, 2014
|
|
Revenue by
solution category:
|
|
|
|
|
|
|
|
|
|
|
Media Delivery
Solutions
|
$
|
244,887
|
|
|
$
|
243,503
|
|
|
$
|
232,368
|
|
|
$
|
730,232
|
|
|
$
|
665,857
|
|
|
Performance and
Security Solutions
|
262,696
|
|
|
256,039
|
|
|
229,204
|
|
|
763,717
|
|
|
653,545
|
|
|
Service and Support
Solutions
|
43,447
|
|
|
41,181
|
|
|
36,470
|
|
|
124,340
|
|
|
108,177
|
|
|
Total
revenue
|
$
|
551,030
|
|
|
$
|
540,723
|
|
|
$
|
498,042
|
|
|
$
|
1,618,289
|
|
|
$
|
1,427,579
|
|
|
Cloud Security
Solutions revenue
|
$
|
64,672
|
|
|
$
|
60,973
|
|
|
$
|
46,517
|
|
|
$
|
180,684
|
|
|
$
|
120,404
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year(1):
|
|
|
|
|
|
|
|
|
|
|
Media Delivery
Solutions
|
5
|
%
|
|
12
|
%
|
|
22
|
%
|
|
10
|
%
|
|
21
|
%
|
|
Performance and
Security Solutions
|
15
|
|
|
15
|
|
|
30
|
|
|
17
|
|
|
30
|
|
|
Service and Support
Solutions
|
19
|
|
|
14
|
|
|
21
|
|
|
15
|
|
|
27
|
|
|
Total
revenue
|
11
|
%
|
|
14
|
%
|
|
26
|
%
|
|
13
|
%
|
|
25
|
%
|
|
Cloud Security
Solutions revenue growth rates
|
39
|
%
|
|
39
|
%
|
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted
for the impact of foreign exchange
rates(1)(2):
|
|
|
|
|
|
|
|
|
|
|
Media Delivery
Solutions
|
10
|
%
|
|
17
|
%
|
|
23
|
%
|
|
14
|
%
|
|
21
|
%
|
|
Performance and
Security Solutions
|
18
|
|
|
19
|
|
|
30
|
|
|
21
|
|
|
30
|
|
|
Service and Support
Solutions
|
24
|
|
|
18
|
|
|
21
|
|
|
19
|
|
|
27
|
|
|
Total
revenue
|
15
|
%
|
|
18
|
%
|
|
26
|
%
|
|
17
|
%
|
|
25
|
%
|
|
Cloud Security
Solutions revenue growth rates(2)
|
44
|
%
|
|
44
|
%
|
|
|
|
55
|
%
|
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
SUPPLEMENTAL
REVENUE DATA BY GEOGRAPHY
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30, 2015
|
|
June 30,
2015
|
|
September
30, 2014
|
|
September
30, 2015
|
|
September
30, 2014
|
|
Revenue by
geography:
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
$
|
400,581
|
|
|
$
|
399,103
|
|
|
$
|
363,469
|
|
|
$
|
1,188,657
|
|
|
$
|
1,031,878
|
|
|
International
|
150,449
|
|
|
141,620
|
|
|
134,573
|
|
|
429,632
|
|
|
395,701
|
|
|
Total
revenue
|
$
|
551,030
|
|
|
$
|
540,723
|
|
|
$
|
498,042
|
|
|
$
|
1,618,289
|
|
|
$
|
1,427,579
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year(1):
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
10
|
%
|
|
16
|
%
|
|
25
|
%
|
|
15
|
%
|
|
24
|
%
|
|
International
|
12
|
|
|
7
|
|
|
28
|
|
|
9
|
|
|
26
|
|
|
Total
revenue
|
11
|
%
|
|
14
|
%
|
|
26
|
%
|
|
13
|
%
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted
for the impact of foreign exchange
rates(1)(2):
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
10
|
%
|
|
16
|
%
|
|
25
|
%
|
|
15
|
%
|
|
24
|
%
|
|
International
|
27
|
|
|
22
|
|
|
27
|
|
|
23
|
|
|
26
|
|
|
Total
revenue
|
15
|
%
|
|
18
|
%
|
|
26
|
%
|
|
17
|
%
|
|
25
|
%
|
|
|
|
(1)
|
Growth rates for the
nine months ended September 30, 2014 exclude the impact of revenue
from the Advertising Decision Solutions (ADS) business
that
|
|
was divested during
the three months ended March 31, 2013
|
|
(2)
|
See Use of Non-GAAP
Financial Measures below for a definition
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
OTHER SUPPLEMENTAL
FINANCIAL DATA
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in thousands,
except end of period statistics)
|
September
30, 2015
|
|
June 30,
2015
|
|
September
30, 2014
|
|
September
30, 2015
|
|
September
30, 2014
|
|
Stock-based
compensation:
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
3,579
|
|
|
$
|
3,502
|
|
|
$
|
3,030
|
|
|
$
|
10,244
|
|
|
$
|
8,901
|
|
|
Research and
development
|
5,982
|
|
|
6,009
|
|
|
4,979
|
|
|
17,357
|
|
|
14,517
|
|
|
Sales and
marketing
|
13,465
|
|
|
12,847
|
|
|
12,110
|
|
|
39,295
|
|
|
35,438
|
|
|
General and
administrative
|
8,020
|
|
|
9,893
|
|
|
7,889
|
|
|
26,070
|
|
|
25,944
|
|
|
Total stock-based
compensation
|
$
|
31,046
|
|
|
$
|
32,251
|
|
|
$
|
28,008
|
|
|
$
|
92,966
|
|
|
$
|
84,800
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
|
|
Network-related
depreciation
|
$
|
50,937
|
|
|
$
|
50,145
|
|
|
$
|
44,617
|
|
|
$
|
150,070
|
|
|
$
|
119,778
|
|
|
Other depreciation
and amortization
|
13,944
|
|
|
13,456
|
|
|
10,794
|
|
|
38,984
|
|
|
28,648
|
|
|
Depreciation of
property and equipment
|
64,881
|
|
|
63,601
|
|
|
55,411
|
|
|
189,054
|
|
|
148,426
|
|
|
Capitalized
stock-based compensation amortization
|
2,916
|
|
|
3,435
|
|
|
3,556
|
|
|
9,303
|
|
|
7,500
|
|
|
Capitalized interest
expense amortization
|
236
|
|
|
201
|
|
|
45
|
|
|
593
|
|
|
63
|
|
|
Amortization of
acquired intangible assets
|
6,752
|
|
|
6,752
|
|
|
8,403
|
|
|
20,284
|
|
|
23,654
|
|
|
Total depreciation
and amortization
|
$
|
74,785
|
|
|
$
|
73,989
|
|
|
$
|
67,415
|
|
|
$
|
219,234
|
|
|
$
|
179,643
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures(1)(2):
|
|
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
$
|
65,429
|
|
|
$
|
76,492
|
|
|
$
|
47,034
|
|
|
$
|
231,050
|
|
|
$
|
157,280
|
|
|
Capitalized
internal-use software development costs
|
33,401
|
|
|
30,835
|
|
|
31,466
|
|
|
98,219
|
|
|
84,432
|
|
|
Capitalized
stock-based compensation
|
4,518
|
|
|
4,471
|
|
|
3,850
|
|
|
13,133
|
|
|
11,577
|
|
|
Capitalized interest
expense
|
760
|
|
|
619
|
|
|
679
|
|
|
2,054
|
|
|
1,513
|
|
|
Total capital
expenditures
|
$
|
104,108
|
|
|
$
|
112,417
|
|
|
$
|
83,029
|
|
|
$
|
344,456
|
|
|
$
|
254,802
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash, cash equivalents and marketable
securities
|
$
|
(20,082)
|
|
|
$
|
9,816
|
|
|
$
|
69,357
|
|
|
$
|
(123,411)
|
|
|
$
|
314,837
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period
statistics:
|
|
|
|
|
|
|
|
|
|
|
Number of
employees
|
5,943
|
|
|
5,733
|
|
|
4,858
|
|
|
|
|
|
|
Number of deployed
servers
|
199,962
|
|
|
189,136
|
|
|
161,273
|
|
|
|
|
|
|
|
|
(1)
|
Capital expenditures
presented in this table are reported on an accrual basis, which
differs from the cash-basis presentation in the statements of cash
flows.
|
|
The primary
difference between the two is the change in purchases of property
and equipment and capitalization of internal-use software
development
|
|
costs accrued for at
period end.
|
|
(2)
|
See Use of Non-GAAP
Financial Measures below for a definition
|
Use of Non-GAAP Financial Measures
In addition to
providing financial measurements based on generally accepted
accounting principles in the United
States of America (GAAP), Akamai provides additional
financial metrics that are not prepared in accordance with GAAP
(non-GAAP). Management uses non-GAAP financial measures, in
addition to GAAP financial measures, to understand and compare
operating results across accounting periods, for financial and
operational decision making, for planning and forecasting purposes
and to evaluate Akamai's financial performance. These non-GAAP
financial measures are non-GAAP income from operations, non-GAAP
operating margin, non-GAAP net income, non-GAAP net income per
share, Adjusted EBITDA, Adjusted EBITDA margin, capital
expenditures, revenue adjusted for ADS divestiture and impact of
foreign currency exchange rates, as discussed below.
Management believes that these non-GAAP financial measures
reflect Akamai's ongoing business in a manner that allows for
meaningful comparisons and analysis of trends in its business, as
they exclude expenses and gains that may be infrequent, unusual in
nature or not reflective of Akamai's ongoing operating results.
Management also believes that these non-GAAP financial measures
enable investors to evaluate Akamai's operating results and future
prospects in the same manner as management. These non-GAAP
financial measures may also facilitate comparing financial results
across accounting periods and to those of peer companies.
The non-GAAP financial measures do not replace the presentation
of Akamai's GAAP financial results and should only be used as a
supplement to, not as a substitute for, Akamai's financial results
presented in accordance with GAAP. Akamai has provided a
reconciliation of each non-GAAP financial measure used in its
financial reporting to the most directly comparable GAAP financial
measure. This reconciliation captioned "Reconciliation of GAAP to
Non-GAAP Financial Measures" can be found on the Investor Relations
section of Akamai's website.
The non-GAAP adjustments, and Akamai's basis for excluding them
from non-GAAP financial measures, are outlined below:
- Amortization of acquired intangible assets – Akamai has
incurred amortization of intangible assets, included in its GAAP
financial statements, related to various acquisitions Akamai has
made. The amount of an acquisition's purchase price allocated to
intangible assets and term of its related amortization can vary
significantly and are unique to each acquisition; therefore, Akamai
excludes amortization of acquired intangible assets from its
non-GAAP financial measures to provide investors with a consistent
basis for comparing pre- and post-acquisition operating
results.
- Stock-based compensation and amortization of capitalized
stock-based compensation – Although stock-based
compensation is an important aspect of the compensation paid to
Akamai's employees and executives, the grant date fair value varies
based on the stock price at the time of grant, varying valuation
methodologies, subjective assumptions and the variety of award
types. This makes the comparison of Akamai's current financial
results to previous and future periods difficult to interpret;
therefore, Akamai believes it is useful to exclude stock-based
compensation and amortization of capitalized stock-based
compensation from its non-GAAP financial measures in order to
highlight the performance of Akamai's core business and to be
consistent with the way many investors evaluate its performance and
compare its operating results to peer companies.
- Acquisition-related costs – Acquisition-related costs
include transaction fees, due diligence costs and other direct
costs associated with strategic activities. In addition, subsequent
adjustments to Akamai's initial estimated amounts of contingent
consideration and indemnification associated with specific
acquisitions are included within acquisition-related costs. These
amounts are impacted by the timing and size of the acquisitions.
Akamai excludes acquisition-related costs from its non-GAAP
financial measures to provide a useful comparison of Akamai's
operating results to prior periods and to its peer companies
because such amounts vary significantly based on the magnitude of
the acquisition transactions.
- Restructuring charges – Akamai has incurred
restructuring charges that are included in its GAAP financial
statements, primarily related to workforce reductions and estimated
costs of exiting facility lease commitments. Akamai excludes these
items from its non-GAAP financial measures when evaluating its
continuing business performance as such items vary significantly
based on the magnitude of the restructuring action and do not
reflect expected future operating expense, nor provide meaningful
insight into the fundamentals of current or past operations of its
business.
- Amortization of debt discount and issuance costs and
amortization of capitalized interest expense – In February 2014, Akamai issued $690 million of convertible senior notes due 2019
with a coupon interest rate of 0%. The imputed interest rate of the
convertible senior notes was approximately 3.2%. This is a result
of the debt discount recorded for the conversion feature that is
required to be separately accounted for as equity under GAAP,
thereby reducing the carrying value of the convertible debt
instrument. The debt discount is amortized as interest expense
together with the issuance costs of the debt which are recorded as
an asset in the consolidated balance sheet. All of Akamai's
interest expense is comprised of these non-cash components and is
excluded from management's assessment of the company's operating
performance because management believes the non-cash expense is not
indicative of ongoing operating performance.
- Loss on investments and legal matters – Akamai has
incurred losses from the impairment of certain investments and the
settlement of legal matters. In addition, Akamai has incurred costs
with respect to its internal investigation relating to sales
practices in a country outside the U.S. Akamai believes excluding
these amounts from its non-GAAP financial measures is useful to
investors as the types of events giving rise to them occur
infrequently and are not representative of Akamai's core business
operations.
- Income tax effect of non-GAAP adjustments and certain
discrete tax items – The non-GAAP adjustments described above
are reported on a pre-tax basis. The income tax effect of non-GAAP
adjustments is the difference between GAAP and non-GAAP income tax
expense. Non-GAAP income tax expense is computed on non-GAAP
pre-tax income (GAAP pre-tax income adjusted for non-GAAP
adjustments) and excludes certain discrete tax items (such as
recording or release of valuation allowances), if any. Akamai
believes that applying the non-GAAP adjustments and their related
income tax effect allows Akamai to highlight income attributable to
its core operations.
Akamai's definitions of its non-GAAP financial measures are
outlined below:
Non-GAAP income from operations – GAAP income from
operations adjusted for the following items: amortization of
acquired intangible assets; stock-based compensation; amortization
of capitalized stock-based compensation; amortization of
capitalized interest expense; other operating expenses (comprised
of acquisition-related costs; restructuring charges; benefit from
adoption of software development activities; gains and other
activity related to divestiture of a business; gains and losses on
legal settlements; and costs incurred with respect to Akamai's
internal investigation relating to sales practices in a country
outside the U.S); and other non-recurring or unusual items that may
arise from time to time.
Non-GAAP operating margin – Non-GAAP income from
operations stated as a percentage of revenue.
Non-GAAP net income – GAAP net income adjusted for
the following tax-affected items: amortization of acquired
intangible assets; stock-based compensation; amortization of
capitalized stock-based compensation; other operating expenses
(comprised of acquisition-related costs, restructuring charges,
benefit from adoption of software development activities, gains and
other activity related to divestiture of a business, gains and
losses on legal settlements, and costs incurred with respect to
Akamai's internal investigation relating to sales practices in a
country outside the U.S.); loss on early extinguishment of
debt; amortization of debt discount and issuance costs;
amortization of capitalized interest expense; certain gains and
losses on investments; and other non-recurring or unusual items
that may arise from time to time.
Non-GAAP net income per share – Non-GAAP net income
divided by basic weighted average or diluted common shares
outstanding. Basic weighted average shares outstanding are those
used in GAAP net income per share calculations. Diluted weighted
average shares outstanding are adjusted in non-GAAP per share
calculations for the shares that would be delivered to Akamai
pursuant to the note hedge transaction entered into in connection
with the issuance of $690 million of
convertible senior notes due 2019. Under GAAP, shares delivered
under hedge transactions are not considered offsetting shares in
the fully-diluted share calculation until they are delivered.
However, the company would receive a benefit from the note hedge
transaction and would not allow the dilution to occur, so
management believes that adjusting for this benefit provides a
meaningful view of net income per share. Until Akamai's weighted
average stock price is greater than $89.56, the initial conversion price, there will
be no difference between GAAP and non-GAAP diluted weighted average
common shares outstanding.
Adjusted EBITDA – GAAP net income excluding the following
items: interest income; income taxes; depreciation and amortization
of tangible and intangible assets; stock-based compensation;
amortization of capitalized stock-based compensation; other
operating expenses (comprised of acquisition-related costs;
restructuring charges; benefit from adoption of software
development activities; gains and other activity related to
divestiture of a business; gains and losses on legal
settlements; and costs incurred with respect to Akamai's
internal investigation relating to sales practices in a country
outside the U.S.); foreign exchange gains and losses; loss on early
extinguishment of debt; amortization of debt discount and issuance
costs; amortization of capitalized interest expense; certain gains
and losses on investments; and other non-recurring or unusual items
that may arise from time to time.
Adjusted EBITDA margin – Adjusted EBITDA stated as a
percentage of revenue.
Capital expenditures – Purchases of property and
equipment, capitalization of internal-use software development
costs, capitalization of stock-based compensation and
capitalization of interest expense.
Revenue, adjusted for ADS divestiture – Revenue excluding
the impact of Akamai's Advertising Decision Solutions (ADS)
divestiture.
Impact of Foreign Currency Exchange Rates – Revenue and
earnings from international operations have historically been an
important contributor to Akamai's financial results.
Consequently, Akamai's financial results have been impacted, and
management expects they will continue to be impacted, by
fluctuations in foreign currency exchange rates. For example,
when the local currencies of Akamai's foreign subsidiaries weaken,
consolidated results stated in U.S. dollars are negatively
impacted.
Because exchange rates are a meaningful factor in understanding
period-to-period comparisons, management believes the presentation
of the impact of foreign currency exchange rates on revenue and
earnings enhances the understanding of financial results and
evaluation of performance in comparison to prior periods. The
information presented is calculated by translating current period
results using the same average foreign currency exchange rates per
month from the comparative period.
Akamai Statement Under the Private Securities Litigation
Reform Act
This release contains information about future
expectations, plans and prospects of Akamai's management that
constitute forward-looking statements for purposes of the safe
harbor provisions under The Private Securities Litigation Reform
Act of 1995, including statements about future business plans and
opportunities. Actual results may differ materially from those
indicated by these forward-looking statements as a result of
various important factors including, but not limited to, effects of
increased competition including potential failure to maintain the
prices we charge for our services and loss of significant
customers; failure of the markets we address or plan to address to
develop as we expect or at all; failure to maintain growth in cloud
security revenue, inability to increase our revenue at the same
rate as in the past and keep our expenses from increasing at a
greater rate than our revenues; a failure of Akamai's services or
network infrastructure; delay in developing or failure to develop
new service offerings or functionalities, and if developed, lack of
market acceptance of such service offerings and functionalities or
failure of such solutions to operate as expected, and other factors
that are discussed in the Company's Annual Report on Form 10-K,
quarterly reports on Form 10-Q, and other documents periodically
filed with the SEC.
In addition, the statements in this press release represent
Akamai's expectations and beliefs as of the date of this press
release. Akamai anticipates that subsequent events and developments
may cause these expectations and beliefs to change. However, while
Akamai may elect to update these forward-looking statements at some
point in the future, it specifically disclaims any obligation to do
so. These forward-looking statements should not be relied upon as
representing Akamai's expectations or beliefs as of any date
subsequent to the date of this press release.
|
Contacts:
|
|
Jeff Young
|
|
Tom Barth
|
|
Media
Relations
|
|
Investor
Relations
|
|
Akamai
Technologies
|
|
Akamai
Technologies
|
|
617-444-3913
|
|
617-274-7130
|
|
jyoung@akamai.com
|
|
tbarth@akamai.com
|
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SOURCE Akamai Technologies, Inc.