CAMBRIDGE, Mass., April 28, 2015 /PRNewswire/ --
- First quarter revenue of $527
million, up 16% year-over-year and up 20% adjusted for
foreign exchange*
- First quarter GAAP net income of $78
million, up 7% year-over-year, or $0.43 per diluted share, up 8% year-over-year and
up 16% adjusted for foreign exchange*
- First quarter non-GAAP net income* of $111 million, up 6% year-over-year, or
$0.61 per diluted share, up 5%
year-over-year and up 12% adjusted for foreign exchange*
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, 2015. Revenue
for the first quarter of 2015 was $527
million, a 16% increase over first quarter 2014 revenue of
$454 million and a 20% increase when
adjusted for foreign exchange*.
"Q1 was another strong quarter for Akamai driven by continued
solid revenue performance across all of our geographies and all of
our major product lines, with especially strong growth from our
Cloud Security Solutions," said Dr. Tom
Leighton, CEO of Akamai. "We continued to make major
investments in the expansion of our platform and product portfolio
to make the Internet fast, reliable and secure for our
customers."
GAAP net income for the first quarter of 2015 was $78 million, or $0.43 per diluted share, a decrease from the
prior quarter's GAAP net income of $97
million, and a 7% increase over first quarter 2014 GAAP net
income of $73 million, or
$0.40 per diluted share.
Non-GAAP net income* for the first quarter of 2015 was
$111 million, or $0.61 per diluted share, a decrease from the
prior quarter's non-GAAP net income of $127
million, and a 6% increase over first quarter 2014 non-GAAP
net income of $105 million, or
$0.58 per diluted share.
Adjusted EBITDA* for the first quarter of 2015 was $223 million, a decrease from the prior quarter's
Adjusted EBITDA of $232 million and
up from $204 million in the first
quarter of 2014. Adjusted EBITDA margin* for the first quarter of
2015 was 42%, down a percentage point from the prior quarter and
down three percentage points from the same period last year.
GAAP income from operations for the first quarter of 2015 was
$122 million, a decrease from the
prior quarter's GAAP income from operations of $136 million and up from $121 million in the first quarter of 2014. GAAP
operating margin for the first quarter of 2015 was 23%, down two
percentage points from the prior quarter and down four percentage
points from the same period last year.
Non-GAAP income from operations* for the first quarter of 2015
was $163 million, a decrease from the
prior quarter's non-GAAP income from operations of $175 million and up from $159 million in the first quarter of 2014.
Non-GAAP operating margin* for the first quarter of 2015 was 31%,
down two percentage points from the prior quarter and down four
percentage points from the same period last year.
Cash from operations for the first quarter of 2015 was
$100 million, or 19% of revenue. The
Company had $1.5 billion of cash,
cash equivalents and marketable securities as of March 31,
2015.
Share Repurchase Program
During the first quarter of
2015, under the share repurchase program authorized by the Board of
Directors in October 2013, the
Company spent $63 million to
repurchase 0.9 million shares of its common stock at an average
price of $67.24 per share. The
Company had approximately 179 million shares of common stock
outstanding as of March 31, 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 1-866-314-5232 (or 1-617-213-8052 for
international calls) and using passcode No. 67440042. 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 through the Akamai
website or by calling 1-888-286-8010 (or 1-617-801-6888 for
international calls) and using passcode No. 49904142.
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,
2015
|
|
December 31,
2014
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
332,557
|
|
|
$
|
238,650
|
|
Marketable
securities
|
380,728
|
|
|
519,642
|
|
Accounts receivable,
net
|
356,629
|
|
|
329,578
|
|
Prepaid expenses and
other current assets
|
130,041
|
|
|
128,981
|
|
Deferred income tax
assets
|
41,624
|
|
|
45,704
|
|
Current
assets
|
1,241,579
|
|
|
1,262,555
|
|
Property and
equipment, net
|
666,093
|
|
|
601,591
|
|
Marketable
securities
|
801,854
|
|
|
869,992
|
|
Goodwill and acquired
intangible assets, net
|
1,194,681
|
|
|
1,183,706
|
|
Deferred income tax
assets
|
1,892
|
|
|
1,955
|
|
Other
assets
|
80,814
|
|
|
81,747
|
|
Total
assets
|
$
|
3,986,913
|
|
|
$
|
4,001,546
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
211,754
|
|
|
$
|
282,098
|
|
Other current
liabilities
|
57,577
|
|
|
51,913
|
|
Current
liabilities
|
269,331
|
|
|
334,011
|
|
Deferred income tax
liabilities
|
44,580
|
|
|
39,299
|
|
Convertible senior
notes
|
609,647
|
|
|
604,851
|
|
Other
liabilities
|
81,673
|
|
|
78,050
|
|
Total
liabilities
|
1,005,231
|
|
|
1,056,211
|
|
Stockholders'
equity
|
2,981,682
|
|
|
2,945,335
|
|
Total liabilities and
stockholders' equity
|
$
|
3,986,913
|
|
|
$
|
4,001,546
|
|
AKAMAI
TECHNOLOGIES, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months
Ended
|
(in thousands,
except per share data)
|
March 31,
2015
|
|
December 31,
2014
|
|
March 31,
2014
|
Revenue
|
$
|
526,536
|
|
|
$
|
536,295
|
|
|
$
|
453,502
|
|
Costs and operating
expenses:
|
|
|
|
|
|
Cost of revenue
(1) (2)
|
169,294
|
|
|
163,201
|
|
|
139,612
|
|
Research and
development (1)
|
35,828
|
|
|
32,417
|
|
|
28,234
|
|
Sales and marketing
(1)
|
103,479
|
|
|
110,293
|
|
|
81,065
|
|
General and
administrative (1) (2)
|
89,592
|
|
|
85,899
|
|
|
76,161
|
|
Amortization of
acquired intangible assets
|
6,780
|
|
|
8,403
|
|
|
6,848
|
|
Restructuring
charges
|
42
|
|
|
—
|
|
|
735
|
|
Total costs and
operating expenses
|
405,015
|
|
|
400,213
|
|
|
332,655
|
|
Income from
operations
|
121,521
|
|
|
136,082
|
|
|
120,847
|
|
Interest
income
|
3,001
|
|
|
2,291
|
|
|
1,639
|
|
Interest
expense
|
(4,576)
|
|
|
(4,524)
|
|
|
(1,941)
|
|
Other (expense)
income, net
|
(301)
|
|
|
8
|
|
|
(881)
|
|
Income before
provision for income taxes
|
119,645
|
|
|
133,857
|
|
|
119,664
|
|
Provision for income
taxes
|
41,899
|
|
|
36,750
|
|
|
46,864
|
|
Net income
|
$
|
77,746
|
|
|
$
|
97,107
|
|
|
$
|
72,800
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
Basic
|
$
|
0.44
|
|
|
$
|
0.55
|
|
|
$
|
0.41
|
|
Diluted
|
$
|
0.43
|
|
|
$
|
0.54
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
Basic
|
178,545
|
|
|
178,144
|
|
|
178,705
|
|
Diluted
|
180,825
|
|
|
180,910
|
|
|
182,038
|
|
(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,
2015
|
|
December 31,
2014
|
|
March 31,
2014
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
77,746
|
|
|
$
|
97,107
|
|
|
$
|
72,800
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
70,460
|
|
|
67,763
|
|
|
53,516
|
|
Stock-based
compensation
|
29,669
|
|
|
27,196
|
|
|
25,114
|
|
Excess tax benefits
from stock-based compensation
|
(13,128)
|
|
|
(8,280)
|
|
|
(15,178)
|
|
Provision (benefit)
for deferred income taxes
|
8,305
|
|
|
(36,502)
|
|
|
1,660
|
|
Amortization of debt
discount and issuance costs
|
4,576
|
|
|
4,524
|
|
|
1,941
|
|
Other non-cash items,
net
|
443
|
|
|
30
|
|
|
302
|
|
Changes in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
(32,552)
|
|
|
(8,184)
|
|
|
(18,137)
|
|
Prepaid expenses and
other current assets
|
(1,817)
|
|
|
(38,442)
|
|
|
(20,961)
|
|
Accounts payable and
accrued expenses
|
(52,703)
|
|
|
57,822
|
|
|
(22,511)
|
|
Deferred
revenue
|
6,947
|
|
|
37
|
|
|
5,159
|
|
Other current
liabilities
|
42
|
|
|
1
|
|
|
1,287
|
|
Other non-current
assets and liabilities
|
1,741
|
|
|
32,469
|
|
|
4,031
|
|
Net cash provided by
operating activities
|
99,729
|
|
|
195,541
|
|
|
89,023
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Cash paid for
acquired businesses, net of cash acquired
|
(16,062)
|
|
|
—
|
|
|
(386,647)
|
|
Purchases of property
and equipment and capitalization of internal-use software
development costs
|
(137,069)
|
|
|
(92,320)
|
|
|
(84,006)
|
|
Purchases of short-
and long-term marketable securities
|
(97,304)
|
|
|
(157,211)
|
|
|
(658,943)
|
|
Proceeds from sales
and maturities of short- and long-term marketable
securities
|
307,655
|
|
|
114,595
|
|
|
399,970
|
|
Other non-current
assets and liabilities
|
(82)
|
|
|
(1,477)
|
|
|
(832)
|
|
Net cash provided by
(used in) investing activities
|
57,138
|
|
|
(136,413)
|
|
|
(730,458)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from the
issuance of convertible senior notes, net
|
—
|
|
|
—
|
|
|
679,603
|
|
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
|
24,440
|
|
|
11,748
|
|
|
44,329
|
|
Excess tax benefits
from stock-based compensation
|
13,128
|
|
|
8,280
|
|
|
15,178
|
|
Employee taxes paid
related to net share settlement of stock-based awards
|
(31,101)
|
|
|
(7,444)
|
|
|
(26,271)
|
|
Repurchases of common
stock
|
(62,680)
|
|
|
(42,134)
|
|
|
(116,147)
|
|
Net cash (used in)
provided by financing activities
|
(56,213)
|
|
|
(29,550)
|
|
|
555,508
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
(6,747)
|
|
|
(5,267)
|
|
|
762
|
|
Net increase
(decrease) in cash and cash equivalents
|
93,907
|
|
|
24,311
|
|
|
(85,165)
|
|
Cash and cash
equivalents at beginning of period
|
238,650
|
|
|
214,339
|
|
|
333,891
|
|
Cash and cash
equivalents at end of period
|
$
|
332,557
|
|
|
$
|
238,650
|
|
|
$
|
248,726
|
|
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,
2015
|
|
December 31,
2014
|
|
March 31,
2014
|
Income from
operations
|
$
|
121,521
|
|
|
$
|
136,082
|
|
|
$
|
120,847
|
|
GAAP operating
margin
|
23
|
%
|
|
25
|
%
|
|
27
|
%
|
Amortization of
acquired intangible assets
|
6,780
|
|
|
8,403
|
|
|
6,848
|
|
Stock-based
compensation
|
29,669
|
|
|
27,196
|
|
|
25,114
|
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
3,108
|
|
|
2,943
|
|
|
1,928
|
|
Other operating
expenses(1)
|
1,709
|
|
|
638
|
|
|
4,127
|
|
Operating
adjustments
|
41,266
|
|
|
39,180
|
|
|
38,017
|
|
Non-GAAP income from
operations
|
$
|
162,787
|
|
|
$
|
175,262
|
|
|
$
|
158,864
|
|
Non-GAAP operating
margin
|
31
|
%
|
|
33
|
%
|
|
35
|
%
|
|
|
|
|
|
|
Net income
|
$
|
77,746
|
|
|
$
|
97,107
|
|
|
$
|
72,800
|
|
Operating adjustments
(from above)
|
41,266
|
|
|
39,180
|
|
|
38,017
|
|
Amortization of debt
discount and issuance costs
|
4,576
|
|
|
4,524
|
|
|
1,941
|
|
Loss on
investments
|
25
|
|
|
50
|
|
|
—
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
(12,437)
|
|
|
(13,869)
|
|
|
(7,841)
|
|
Non-GAAP net
income
|
111,176
|
|
|
126,992
|
|
|
104,917
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
60,572
|
|
|
56,417
|
|
|
44,740
|
|
Interest
income
|
(3,001)
|
|
|
(2,291)
|
|
|
(1,639)
|
|
Other expense
(income)
|
276
|
|
|
(58)
|
|
|
881
|
|
Provision for GAAP
income taxes
|
41,899
|
|
|
36,750
|
|
|
46,864
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
12,437
|
|
|
13,869
|
|
|
7,841
|
|
Adjusted
EBITDA
|
$
|
223,359
|
|
|
$
|
231,679
|
|
|
$
|
203,604
|
|
Adjusted EBITDA
margin
|
42
|
%
|
|
43
|
%
|
|
45
|
%
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
Basic
|
$
|
0.62
|
|
|
$
|
0.71
|
|
|
$
|
0.59
|
|
Diluted
|
$
|
0.61
|
|
|
$
|
0.70
|
|
|
$
|
0.58
|
|
|
|
|
|
|
|
Shares used in
non-GAAP per share calculations:
|
|
|
|
|
|
Basic
|
178,545
|
|
|
178,144
|
|
|
178,705
|
|
Diluted
|
180,825
|
|
|
180,910
|
|
|
182,038
|
|
(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,
2015
|
|
December 31,
2014
|
|
March 31,
2014
|
Media Delivery
Solutions
|
$
|
241,842
|
|
|
$
|
251,550
|
|
|
$
|
215,889
|
|
Performance and
Security Solutions
|
244,982
|
|
|
245,687
|
|
|
202,179
|
|
Service and Support
Solutions
|
39,712
|
|
|
39,058
|
|
|
35,434
|
|
Total
revenue
|
$
|
526,536
|
|
|
$
|
536,295
|
|
|
$
|
453,502
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year(1):
|
|
|
|
|
|
Media Delivery
Solutions
|
12
|
%
|
|
21
|
%
|
|
19
|
%
|
Performance and
Security Solutions
|
21
|
|
|
26
|
|
|
28
|
|
Service and Support
Solutions
|
12
|
|
|
21
|
|
|
37
|
|
Total
revenue
|
16
|
%
|
|
23
|
%
|
|
24
|
%
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(1)(2):
|
|
|
|
|
|
Media Delivery
Solutions
|
16
|
%
|
|
23
|
%
|
|
19
|
%
|
Performance and
Security Solutions
|
25
|
|
|
28
|
|
|
29
|
|
Service and Support
Solutions
|
16
|
|
|
23
|
|
|
38
|
|
Total
revenue
|
20
|
%
|
|
25
|
%
|
|
25
|
%
|
AKAMAI
TECHNOLOGIES, INC.
SUPPLEMENTAL
REVENUE DATA BY GEOGRAPHY
|
|
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2015
|
|
December 31,
2014
|
|
March 31,
2014
|
U.S.
|
$
|
388,973
|
|
|
$
|
397,182
|
|
|
$
|
325,184
|
|
International
|
137,563
|
|
|
139,113
|
|
|
128,318
|
|
Total
revenue
|
$
|
526,536
|
|
|
$
|
536,295
|
|
|
$
|
453,502
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year(1):
|
|
|
|
|
|
U.S.
|
20
|
%
|
|
26
|
%
|
|
24
|
%
|
International
|
7
|
|
|
16
|
|
|
24
|
|
Total
revenue
|
16
|
%
|
|
23
|
%
|
|
24
|
%
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(1)(2):
|
|
|
|
|
|
U.S.
|
20
|
%
|
|
26
|
%
|
|
24
|
%
|
International
|
21
|
|
|
24
|
|
|
26
|
|
Total
revenue
|
20
|
%
|
|
25
|
%
|
|
25
|
%
|
(1)
|
Growth rates for the
three months ended March 31, 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
|
(in thousands,
except end of period statistics)
|
March 31,
2015
|
|
December 31,
2014
|
|
March 31,
2014
|
Stock-based
compensation:
|
|
|
|
|
|
Cost of
revenue
|
$
|
3,163
|
|
|
$
|
3,033
|
|
|
$
|
2,795
|
|
Research and
development
|
5,366
|
|
|
4,824
|
|
|
4,477
|
|
Sales and
marketing
|
12,983
|
|
|
12,132
|
|
|
10,532
|
|
General and
administrative
|
8,157
|
|
|
7,207
|
|
|
7,310
|
|
Total stock-based
compensation
|
$
|
29,669
|
|
|
$
|
27,196
|
|
|
$
|
25,114
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
Network-related
depreciation
|
$
|
48,988
|
|
|
$
|
45,433
|
|
|
$
|
36,665
|
|
Other depreciation
and amortization
|
11,584
|
|
|
10,984
|
|
|
8,075
|
|
Depreciation of
property and equipment
|
60,572
|
|
|
56,417
|
|
|
44,740
|
|
Capitalized
stock-based compensation amortization
|
2,952
|
|
|
2,845
|
|
|
1,928
|
|
Capitalized interest
expense amortization
|
156
|
|
|
98
|
|
|
—
|
|
Amortization of
acquired intangible assets
|
6,780
|
|
|
8,403
|
|
|
6,848
|
|
Total depreciation
and amortization
|
$
|
70,460
|
|
|
$
|
67,763
|
|
|
$
|
53,516
|
|
|
|
|
|
|
|
Capital
expenditures(1):
|
|
|
|
|
|
Purchases of property
and equipment
|
$
|
89,129
|
|
|
$
|
66,285
|
|
|
$
|
59,283
|
|
Capitalized
internal-use software development costs
|
33,983
|
|
|
31,630
|
|
|
24,701
|
|
Capitalized
stock-based compensation
|
4,144
|
|
|
3,649
|
|
|
3,784
|
|
Capitalized interest
expense
|
675
|
|
|
680
|
|
|
237
|
|
Total capital
expenditures
|
$
|
127,931
|
|
|
$
|
102,244
|
|
|
$
|
88,005
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash, cash equivalents and marketable
securities
|
$
|
(113,145)
|
|
|
$
|
66,525
|
|
|
$
|
172,479
|
|
|
|
|
|
|
|
End of period
statistics:
|
|
|
|
|
|
Number of
employees
|
5,409
|
|
|
5,105
|
|
|
4,290
|
|
Number of deployed
servers
|
175,094
|
|
|
170,295
|
|
|
149,533
|
|
(1)
|
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 expense varies with changes in the stock price
and market conditions 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 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 one-time
direct costs associated with strategic activities. In addition,
subsequent adjustments to Akamai's initial estimated amounts of
contingent consideration and indemnifications 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 are not consistently
recurring 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, 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 non-GAAP financial measures is useful to
investors as they 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-effected 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; 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.