CAMBRIDGE, Mass., April 26, 2016 /PRNewswire/ --
- Revenue of $568 million, up 8%
year-over-year and up 9% when adjusted for foreign
exchange*
- GAAP EPS of $0.42 per diluted
share, down 2% year-over-year
- Non-GAAP EPS of $0.66 per
diluted share, up 8% year-over-year
Akamai Technologies, Inc. (NASDAQ: AKAM), the global leader in
Content Delivery Network (CDN) services, today reported financial
results for the first quarter ended March 31, 2016.
"Q1 was a very solid quarter for Akamai on both the top and
bottom lines, representing a great start to 2016," said Dr.
Tom Leighton, Chief Executive
Officer. "We delivered earnings that exceeded our expectations and
saw continued strong revenue growth from our Cloud Security
Solutions, which grew 47% year-over-year in constant currency."
Akamai delivered the following results for the first quarter
ended March 31, 2016:
Revenue: Revenue was $568
million, an 8% increase over first quarter 2015 revenue of
$527 million and a 9% increase when
adjusted for foreign exchange.*
Revenue by Solution Category**:
- Performance and Security Solutions revenue was $316 million, up 16% year-over-year and up 17%
when adjusted for foreign exchange*
- Cloud Security Solutions revenue, a component of Performance
and Security, was $81 million, up 46%
year-over-year and up 47% when adjusted for foreign exchange*
- Media Delivery Solutions revenue was $206 million, down 4% year-over-year and down 4%
when adjusted for foreign exchange*
- Services and Support Solutions revenue was $46 million, up 16% year-over-year and up 16%
when adjusted for foreign exchange*
Revenue by Geography:
- U.S. revenue was $397 million, up
2% year-over-year
- International revenue was $170
million, up 24% year-over-year and up 27% when adjusted for
foreign exchange*
Customer Revenue by Division***:
Effective in 2016, the Company is now managing the business in a
new division structure. Revenue from the customers in the Company's
three major divisions is reported below.
- Media Division revenue was $292
million, down 1% year-over-year and consistent
year-over-year when adjusted for foreign exchange*
- Web Division revenue was $264
million, up 18% year-over-year and up 18% when adjusted for
foreign exchange*
- Enterprise and Carrier Division revenue was $12 million, up 45% year-over-year and up 44%
when adjusted for foreign exchange*
Income from operations: GAAP income from operations was
$114 million, a 6% decrease from
first quarter 2015. GAAP operating margin for the first quarter was
20%, down 3 percentage points from the same period last year.
Non-GAAP income from operations* was $164
million, a 1% increase from first quarter 2015. Non-GAAP
operating margin* for the first quarter was 29%, down 2 percentage
points from the same period last year.
Net income: GAAP net income was $75 million, a 4% decrease from first quarter
2015. Non-GAAP net income* was $118
million, a 6% increase from first quarter 2015.
EPS: GAAP EPS was $0.42 per
diluted share, a 2% decrease from first quarter 2015 and a 2%
decrease when adjusted for foreign exchange*. Non-GAAP EPS was
$0.66 per diluted share, an 8%
increase from first quarter 2015 and an 8% increase when
adjusted for foreign exchange.*
Adjusted EBITDA*: Adjusted EBITDA was $234 million, a 5% increase from first quarter
2015. Adjusted EBITDA margin* was 41%, down 1 percentage point from
the first quarter of 2015.
Other first quarter 2016 results included:
- Cash from operations was $190
million, or 34% of revenue
- Cash, cash equivalents and marketable securities as of
March 31, 2016 was $1.5 billion
- The Company spent $109 million to
repurchase 2.2 million shares of its common stock at an average
price of $48.97 per share
- The Company had approximately 176 million shares of common
stock outstanding as of March 31,
2016
* See Use of Non-GAAP Financial
Measures below for definitions
** Revenue by solution category – A
product-focused reporting view that reflects revenue by solution
purchased.
*** Customer revenue by division – A customer-focused
reporting view that reflects revenue from customers that are
managed by the division. Historical division revenue can be found
on the Investor Relations section of Akamai.com.
Quarterly Conference Call
Akamai will host a
conference call today at 4:30 p.m. ET
that can be accessed through 1-877-258-4918 (or 1-480-405-6743 for
international calls) and using passcode No. 81892715. 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
1-855-859-2056 (or 1-404-537-3406 for international calls) and
using passcode No. 81892715. 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)
|
March 31,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
312,912
|
|
|
$
|
289,473
|
|
Marketable
securities
|
524,958
|
|
|
460,088
|
|
Accounts receivable,
net
|
365,103
|
|
|
380,399
|
|
Prepaid expenses and
other current assets
|
127,855
|
|
|
123,228
|
|
Total current
assets
|
1,330,828
|
|
|
1,253,188
|
|
Property and
equipment, net
|
770,197
|
|
|
753,180
|
|
Marketable
securities
|
685,362
|
|
|
774,674
|
|
Goodwill
|
1,152,376
|
|
|
1,150,244
|
|
Acquired intangible
assets, net
|
149,379
|
|
|
156,095
|
|
Deferred income tax
assets
|
3,490
|
|
|
4,700
|
|
Other
assets
|
92,120
|
|
|
89,603
|
|
Total
assets
|
$
|
4,183,752
|
|
|
$
|
4,181,684
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
63,822
|
|
|
$
|
61,982
|
|
Accrued
expenses
|
197,487
|
|
|
216,166
|
|
Deferred
revenue
|
64,905
|
|
|
54,154
|
|
Other current
liabilities
|
7,019
|
|
|
138
|
|
Total current
liabilities
|
333,233
|
|
|
332,440
|
|
Deferred
revenue
|
4,238
|
|
|
4,163
|
|
Deferred income tax
liabilities
|
11,706
|
|
|
12,888
|
|
Convertible senior
notes
|
623,485
|
|
|
618,047
|
|
Other
liabilities
|
97,508
|
|
|
93,268
|
|
Total
liabilities
|
1,070,170
|
|
|
1,060,806
|
|
Total stockholders'
equity
|
3,113,582
|
|
|
3,120,878
|
|
Total liabilities and
stockholders' equity
|
$
|
4,183,752
|
|
|
$
|
4,181,684
|
|
AKAMAI
TECHNOLOGIES, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months
Ended
|
(in thousands,
except per share data)
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
Revenue
|
$
|
567,725
|
|
|
$
|
579,159
|
|
|
$
|
526,536
|
|
Costs and operating
expenses:
|
|
|
|
|
|
Cost of revenue
(1) (2)
|
194,736
|
|
|
193,212
|
|
|
169,294
|
|
Research and
development (1)
|
40,842
|
|
|
37,674
|
|
|
35,828
|
|
Sales and marketing
(1)
|
102,211
|
|
|
118,582
|
|
|
103,479
|
|
General and
administrative (1) (2)
|
102,283
|
|
|
99,978
|
|
|
89,592
|
|
Amortization of
acquired intangible assets
|
6,716
|
|
|
6,783
|
|
|
6,780
|
|
Restructuring
charges
|
6,818
|
|
|
250
|
|
|
42
|
|
Total costs and
operating expenses
|
453,606
|
|
|
456,479
|
|
|
405,015
|
|
Income from
operations
|
114,119
|
|
|
122,680
|
|
|
121,521
|
|
Interest
income
|
3,320
|
|
|
2,935
|
|
|
3,001
|
|
Interest
expense
|
(4,653)
|
|
|
(4,641)
|
|
|
(4,576)
|
|
Other expense,
net
|
(189)
|
|
|
(499)
|
|
|
(301)
|
|
Income before
provision for income taxes
|
112,597
|
|
|
120,475
|
|
|
119,645
|
|
Provision for income
taxes
|
37,739
|
|
|
32,055
|
|
|
41,899
|
|
Net income
|
$
|
74,858
|
|
|
$
|
88,420
|
|
|
$
|
77,746
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
Basic
|
$
|
0.42
|
|
|
$
|
0.50
|
|
|
$
|
0.44
|
|
Diluted
|
$
|
0.42
|
|
|
$
|
0.49
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
Basic
|
176,403
|
|
|
177,788
|
|
|
178,545
|
|
Diluted
|
177,539
|
|
|
179,732
|
|
|
180,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
(in
thousands)
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
74,858
|
|
|
$
|
88,420
|
|
|
$
|
77,746
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
80,669
|
|
|
80,329
|
|
|
70,460
|
|
Stock-based
compensation
|
31,741
|
|
|
33,711
|
|
|
29,669
|
|
Excess tax benefits
from stock-based compensation
|
(1,135)
|
|
|
(4,450)
|
|
|
(13,128)
|
|
Provision for
deferred income taxes
|
1,072
|
|
|
22,039
|
|
|
8,305
|
|
Amortization of debt
discount and issuance costs
|
4,653
|
|
|
4,641
|
|
|
4,576
|
|
Other non-cash
reconciling items, net
|
2,752
|
|
|
2,533
|
|
|
443
|
|
Changes in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
15,906
|
|
|
(15,540)
|
|
|
(32,552)
|
|
Prepaid expenses and
other current assets
|
(3,481)
|
|
|
(8,982)
|
|
|
(1,817)
|
|
Accounts payable and
accrued expenses
|
(32,377)
|
|
|
25,526
|
|
|
(52,703)
|
|
Deferred
revenue
|
10,653
|
|
|
(3,684)
|
|
|
6,947
|
|
Other current
liabilities
|
6,876
|
|
|
(491)
|
|
|
42
|
|
Other non-current
assets and liabilities
|
(1,949)
|
|
|
(6,261)
|
|
|
1,741
|
|
Net cash provided by
operating activities
|
190,238
|
|
|
217,791
|
|
|
99,729
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Cash paid for
acquired businesses, net of cash acquired
|
—
|
|
|
(18,702)
|
|
|
(16,062)
|
|
Purchases of property
and equipment and capitalization of internal-use software
development costs
|
(82,340)
|
|
|
(78,837)
|
|
|
(137,069)
|
|
Purchases of short-
and long-term marketable securities
|
(95,843)
|
|
|
(108,690)
|
|
|
(97,304)
|
|
Proceeds from sales
and maturities of short- and long-term marketable
securities
|
125,109
|
|
|
118,814
|
|
|
307,655
|
|
Other non-current
assets and liabilities
|
(2,354)
|
|
|
543
|
|
|
(82)
|
|
Net cash (used in)
provided by investing activities
|
(55,428)
|
|
|
(86,872)
|
|
|
57,138
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from the
issuance of common stock under stock plans
|
18,350
|
|
|
7,503
|
|
|
24,440
|
|
Excess tax benefits
from stock-based compensation
|
1,135
|
|
|
4,450
|
|
|
13,128
|
|
Employee taxes paid
related to net share settlement of stock-based awards
|
(26,496)
|
|
|
(6,993)
|
|
|
(31,101)
|
|
Repurchases of common
stock
|
(108,725)
|
|
|
(100,180)
|
|
|
(62,680)
|
|
Net cash used in
financing activities
|
(115,736)
|
|
|
(95,220)
|
|
|
(56,213)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
4,365
|
|
|
(2,697)
|
|
|
(6,747)
|
|
Net increase in cash
and cash equivalents
|
23,439
|
|
|
33,002
|
|
|
93,907
|
|
Cash and cash
equivalents at beginning of period
|
289,473
|
|
|
256,471
|
|
|
238,650
|
|
Cash and cash
equivalents at end of period
|
$
|
312,912
|
|
|
$
|
289,473
|
|
|
$
|
332,557
|
|
AKAMAI
TECHNOLOGIES, INC.
RECONCILIATION OF
GAAP TO NON-GAAP INCOME FROM OPERATIONS, NET INCOME AND ADJUSTED
EBITDA
|
|
|
Three Months
Ended
|
(in thousands,
except per share data)
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
Income from
operations
|
$
|
114,119
|
|
|
$
|
122,680
|
|
|
$
|
121,521
|
|
GAAP operating
margin
|
20
|
%
|
|
21
|
%
|
|
23
|
%
|
Amortization of
acquired intangible assets
|
6,716
|
|
|
6,783
|
|
|
6,780
|
|
Stock-based
compensation
|
31,741
|
|
|
33,711
|
|
|
29,669
|
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
3,608
|
|
|
3,722
|
|
|
3,108
|
|
Other operating
expenses(1)
|
7,528
|
|
|
1,067
|
|
|
1,709
|
|
Operating
adjustments
|
49,593
|
|
|
45,283
|
|
|
41,266
|
|
Non-GAAP income from
operations
|
$
|
163,712
|
|
|
$
|
167,963
|
|
|
$
|
162,787
|
|
Non-GAAP operating
margin
|
29
|
%
|
|
29
|
%
|
|
31
|
%
|
|
|
|
|
|
|
Net income
|
$
|
74,858
|
|
|
$
|
88,420
|
|
|
$
|
77,746
|
|
Operating adjustments
(from above)
|
49,593
|
|
|
45,283
|
|
|
41,266
|
|
Amortization of debt
discount and issuance costs
|
4,653
|
|
|
4,641
|
|
|
4,576
|
|
Loss on
investments
|
—
|
|
|
—
|
|
|
25
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
(11,323)
|
|
|
(9,631)
|
|
|
(12,437)
|
|
Non-GAAP net
income
|
117,781
|
|
|
128,713
|
|
|
111,176
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
70,345
|
|
|
69,824
|
|
|
60,572
|
|
Interest
income
|
(3,320)
|
|
|
(2,935)
|
|
|
(3,001)
|
|
Other expense,
net
|
189
|
|
|
499
|
|
|
276
|
|
Provision for GAAP
income taxes
|
37,739
|
|
|
32,055
|
|
|
41,899
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
11,323
|
|
|
9,631
|
|
|
12,437
|
|
Adjusted
EBITDA
|
$
|
234,057
|
|
|
$
|
237,787
|
|
|
$
|
223,359
|
|
Adjusted EBITDA
margin
|
41
|
%
|
|
41
|
%
|
|
42
|
%
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
Basic
|
$
|
0.67
|
|
|
$
|
0.72
|
|
|
$
|
0.62
|
|
Diluted
|
$
|
0.66
|
|
|
$
|
0.72
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
Shares used in
non-GAAP per share calculations:
|
|
|
|
|
|
Basic
|
176,403
|
|
|
177,788
|
|
|
178,545
|
|
Diluted
|
177,539
|
|
|
179,732
|
|
|
180,825
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
(in
thousands)
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
Revenue by
solution category(1):
|
|
|
|
|
|
Performance and
Security Solutions
|
$
|
315,863
|
|
|
$
|
314,885
|
|
|
$
|
271,959
|
|
Media Delivery
Solutions
|
205,939
|
|
|
218,267
|
|
|
214,865
|
|
Services and Support
Solutions
|
45,923
|
|
|
46,007
|
|
|
39,712
|
|
Total
revenue
|
$
|
567,725
|
|
|
$
|
579,159
|
|
|
$
|
526,536
|
|
Cloud Security
Solutions revenue
|
$
|
80,660
|
|
|
$
|
72,537
|
|
|
$
|
55,183
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year:
|
|
|
|
|
|
Performance and
Security Solutions
|
16
|
%
|
|
15
|
%
|
|
19
|
%
|
Media Delivery
Solutions
|
(4)
|
|
|
(3)
|
|
|
13
|
|
Services and Support
Solutions
|
16
|
|
|
18
|
|
|
12
|
|
Total
revenue
|
8
|
%
|
|
8
|
%
|
|
16
|
%
|
Cloud Security
Solutions revenue growth rates
|
46
|
%
|
|
46
|
%
|
|
83
|
%
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(2):
|
|
|
|
|
|
Performance and
Security Solutions
|
17
|
%
|
|
18
|
%
|
|
23
|
%
|
Media Delivery
Solutions
|
(4)
|
|
|
—
|
|
|
17
|
|
Services and Support
Solutions
|
16
|
|
|
21
|
|
|
16
|
|
Total
revenue
|
9
|
%
|
|
11
|
%
|
|
20
|
%
|
Cloud Security
Solutions revenue growth rates(2)
|
47
|
%
|
|
50
|
%
|
|
88
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See revenue by
solution category definition in press release
|
(2)
|
See Use of
Non-GAAP Financial Measures below for a definition
|
AKAMAI
TECHNOLOGIES, INC.
SUPPLEMENTAL
REVENUE DATA BY DIVISION
|
|
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
Customer revenue
by division(1):
|
|
|
|
|
|
Media
Division
|
$
|
291,933
|
|
|
$
|
302,367
|
|
|
$
|
293,966
|
|
Web
Division
|
263,743
|
|
|
264,897
|
|
|
224,240
|
|
Enterprise and
Carrier Division
|
12,049
|
|
|
11,895
|
|
|
8,330
|
|
Total
revenue
|
$
|
567,725
|
|
|
$
|
579,159
|
|
|
$
|
526,536
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year:
|
|
|
|
|
|
Media
Division
|
(1)%
|
|
|
—
|
%
|
|
14
|
%
|
Web
Division
|
18
|
|
|
17
|
|
|
18
|
|
Enterprise and
Carrier Division
|
45
|
|
|
53
|
|
|
32
|
|
Total
revenue
|
8
|
%
|
|
8
|
%
|
|
16
|
%
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(2):
|
|
|
|
|
|
Media
Division
|
—
|
%
|
|
2
|
%
|
|
18
|
%
|
Web
Division
|
18
|
|
|
20
|
|
|
22
|
|
Enterprise and
Carrier Division
|
44
|
|
|
55
|
|
|
33
|
|
Total
revenue
|
9
|
%
|
|
11
|
%
|
|
20
|
%
|
AKAMAI
TECHNOLOGIES, INC.
SUPPLEMENTAL
REVENUE DATA BY GEOGRAPHY
|
|
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
Revenue by
geography:
|
|
|
|
|
|
U.S.
|
$
|
397,283
|
|
|
$
|
415,835
|
|
|
$
|
388,973
|
|
International
|
170,442
|
|
|
163,324
|
|
|
137,563
|
|
Total
revenue
|
$
|
567,725
|
|
|
$
|
579,159
|
|
|
$
|
526,536
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year:
|
|
|
|
|
|
U.S.
|
2
|
%
|
|
5
|
%
|
|
20
|
%
|
International
|
24
|
|
|
17
|
|
|
7
|
|
Total
revenue
|
8
|
%
|
|
8
|
%
|
|
16
|
%
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(2):
|
|
|
|
|
|
U.S.
|
2
|
%
|
|
5
|
%
|
|
20
|
%
|
International
|
27
|
|
|
27
|
|
|
21
|
|
Total
revenue
|
9
|
%
|
|
11
|
%
|
|
20
|
%
|
|
|
|
|
(1)
|
See customer revenue
by division definition in press release
|
(2)
|
See Use of Non-GAAP
Financial Measures below for a definition
|
AKAMAI
TECHNOLOGIES, INC.
OTHER SUPPLEMENTAL
FINANCIAL DATA
|
|
|
Three Months
Ended
|
(in thousands,
except end of period statistics)
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
Stock-based
compensation:
|
|
|
|
|
|
Cost of
revenue
|
$
|
3,970
|
|
|
$
|
3,901
|
|
|
$
|
3,163
|
|
Research and
development
|
6,438
|
|
|
6,570
|
|
|
5,366
|
|
Sales and
marketing
|
12,352
|
|
|
14,247
|
|
|
12,983
|
|
General and
administrative
|
8,981
|
|
|
8,993
|
|
|
8,157
|
|
Total stock-based
compensation
|
$
|
31,741
|
|
|
$
|
33,711
|
|
|
$
|
29,669
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
Network-related
depreciation
|
$
|
55,174
|
|
|
$
|
54,978
|
|
|
$
|
48,988
|
|
Other depreciation
and amortization
|
15,171
|
|
|
14,846
|
|
|
11,584
|
|
Depreciation of
property and equipment
|
70,345
|
|
|
69,824
|
|
|
60,572
|
|
Capitalized
stock-based compensation amortization
|
3,257
|
|
|
3,414
|
|
|
2,952
|
|
Capitalized interest
expense amortization
|
351
|
|
|
308
|
|
|
156
|
|
Amortization of
acquired intangible assets
|
6,716
|
|
|
6,783
|
|
|
6,780
|
|
Total depreciation
and amortization
|
$
|
80,669
|
|
|
$
|
80,329
|
|
|
$
|
70,460
|
|
|
|
|
|
|
|
Capital
expenditures(1)(2):
|
|
|
|
|
|
Purchases of property
and equipment
|
$
|
50,067
|
|
|
$
|
58,541
|
|
|
$
|
89,129
|
|
Capitalized
internal-use software development costs
|
35,172
|
|
|
30,017
|
|
|
33,983
|
|
Capitalized
stock-based compensation
|
5,203
|
|
|
5,199
|
|
|
4,144
|
|
Capitalized interest
expense
|
785
|
|
|
791
|
|
|
675
|
|
Total capital
expenditures
|
$
|
91,227
|
|
|
$
|
94,548
|
|
|
$
|
127,931
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash, cash equivalents and marketable
securities
|
$
|
(1,003)
|
|
|
$
|
19,362
|
|
|
$
|
(113,145)
|
|
|
|
|
|
|
|
End of period
statistics:
|
|
|
|
|
|
Number of
employees
|
6,119
|
|
|
6,084
|
|
|
5,409
|
|
Number of deployed
servers
|
216,435
|
|
|
210,533
|
|
|
175,094
|
|
|
|
|
|
(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 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,
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 expenses. In addition, these
charges do not necessarily 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. 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. Unless and 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.
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 and/or our quarterly earnings
conference call scheduled for later today contain 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. 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, 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;
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 and on such
call 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.