CAMBRIDGE, Mass., July 28, 2015 /PRNewswire/ --
- Revenue of $541 million, up
14% year-over-year and up 18% adjusted for foreign
exchange*
- GAAP EPS of $0.37 per diluted
share, down 8% year-over-year and down 2% adjusted for foreign
exchange*
- Non-GAAP EPS of $0.57 per
diluted share, down 2% year-over-year and up 3% adjusted for
foreign exchange*
Akamai Technologies, Inc. (NASDAQ: AKAM), the global leader in
Content Delivery Network (CDN) services, today reported financial
results for the second quarter ended June 30, 2015.
"Akamai delivered a solid second quarter with strong revenue
growth across every geography and solution category, with
particularly strong growth in our Cloud Security Solutions," said
Dr. Tom Leighton, Chief Executive
Officer. "We are continuing to make major investments in
innovation and the expansion of our platform to develop new
products and to accommodate the potential for substantially
increased OTT traffic in 2016."
Akamai delivered the following results for the second quarter
ended June 30, 2015:
Revenue: Revenue was $541
million, a 14% increase over second quarter 2014 revenue of
$476 million and an 18% increase when
adjusted for foreign exchange*.
Revenue by Solution Category:
- Media Delivery Solutions revenue was $244 million, up 12% year-over-year and up 17%
when adjusted for foreign exchange*
- Performance and Security Solutions revenue was $256 million, up 15% year-over-year and up 19%
when adjusted for foreign exchange*, which includes Cloud Security
Solutions revenue of $61 million, up
39% year-over-year and up 44% when adjusted for foreign
exchange*
- Service and Support Solutions revenue was $41 million, up 14% year-over-year and up 18%
when adjusted for foreign exchange*
Revenue by Geography:
- U.S. revenue was $399 million, a
16% increase over second quarter 2014
- International revenue was $142
million, a 7% increase over second quarter 2014 and a 22%
increase when adjusted for foreign exchange*
Income from operations: GAAP income from operations was
$106 million, a decrease over second
quarter 2014 GAAP income from operations of $112 million. GAAP operating margin for the
second quarter of 2015 was 20%, down four percentage points from
the same period last year.
Non-GAAP income from operations* was $150
million, a decrease from $156
million in the second quarter 2014. Non-GAAP operating
margin* for the second quarter of 2015 was 28%, down five
percentage points from the same period last year.
Net income: GAAP net income was $67 million, an 8% decrease over second quarter
2014 GAAP net income of $73 million.
Non-GAAP net income* was $102
million, a 3% decrease over second quarter 2014 non-GAAP net
income of $106 million.
EPS: GAAP EPS was $0.37 per
diluted share, an 8% decrease over second quarter 2014 GAAP EPS of
$0.40, and down 2% when adjusted for
foreign exchange*.
Non-GAAP EPS was $0.57 per diluted
share, a 2% decrease over second quarter 2014 non-GAAP EPS of
$0.58 and up 3% when adjusted for
foreign exchange*.
Adjusted EBITDA*: Adjusted EBITDA was $214 million, up from $204
million in the second quarter of 2014. Adjusted EBITDA
margin* for the second quarter of 2015 was 40%, down three
percentage points from the same period last year.
Other second quarter 2015 results included:
- Cash from operations was $264
million, or 49% of revenue
- Cash, cash equivalents and marketable securities as of
June 30, 2015 was $1.5
billion
- The Company spent $63 million to
repurchase 0.9 million shares of its common stock at an average
price of $74.12 per share
- The Company had approximately 179 million shares of common
stock outstanding as of June 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
1-877-703-6102 (or 1-857-244-7301 for international calls) and
using passcode No. 86468839. 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. 51036774.
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)
|
June 30,
2015
|
|
December
31, 2014
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
257,448
|
|
|
$
|
238,650
|
|
Marketable
securities
|
386,055
|
|
|
519,642
|
|
Accounts receivable,
net
|
342,930
|
|
|
329,578
|
|
Prepaid expenses and
other current assets
|
119,365
|
|
|
128,981
|
|
Deferred income tax
assets
|
45,678
|
|
|
45,704
|
|
Current
assets
|
1,151,476
|
|
|
1,262,555
|
|
Property and
equipment, net
|
704,571
|
|
|
601,591
|
|
Marketable
securities
|
881,452
|
|
|
869,992
|
|
Goodwill and acquired
intangible assets, net
|
1,301,677
|
|
|
1,183,706
|
|
Deferred income tax
assets
|
1,890
|
|
|
1,955
|
|
Other
assets
|
90,039
|
|
|
81,747
|
|
Total
assets
|
$
|
4,131,105
|
|
|
$
|
4,001,546
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
290,684
|
|
|
$
|
282,098
|
|
Other current
liabilities
|
57,558
|
|
|
51,913
|
|
Current
liabilities
|
348,242
|
|
|
334,011
|
|
Deferred income tax
liabilities
|
38,833
|
|
|
39,299
|
|
Convertible senior
notes
|
614,484
|
|
|
604,851
|
|
Other
liabilities
|
84,234
|
|
|
78,050
|
|
Total
liabilities
|
1,085,793
|
|
|
1,056,211
|
|
Stockholders'
equity
|
3,045,312
|
|
|
2,945,335
|
|
Total liabilities and
stockholders' equity
|
$
|
4,131,105
|
|
|
$
|
4,001,546
|
|
AKAMAI
TECHNOLOGIES, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in thousands,
except per share data)
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Revenue
|
$
|
540,723
|
|
|
$
|
526,536
|
|
|
$
|
476,035
|
|
|
$
|
1,067,259
|
|
|
$
|
929,537
|
|
Costs and operating
expenses:
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(1) (2)
|
179,910
|
|
|
169,294
|
|
|
149,318
|
|
|
349,204
|
|
|
288,930
|
|
Research and
development (1)
|
36,693
|
|
|
35,828
|
|
|
32,052
|
|
|
72,521
|
|
|
60,286
|
|
Sales and marketing
(1)
|
111,501
|
|
|
103,479
|
|
|
91,462
|
|
|
214,980
|
|
|
172,527
|
|
General and
administrative (1) (2)
|
99,152
|
|
|
89,592
|
|
|
81,880
|
|
|
188,744
|
|
|
158,041
|
|
Amortization of
acquired intangible assets
|
6,752
|
|
|
6,780
|
|
|
8,403
|
|
|
13,532
|
|
|
15,251
|
|
Restructuring
charges
|
455
|
|
|
42
|
|
|
569
|
|
|
497
|
|
|
1,304
|
|
Total costs and
operating expenses
|
434,463
|
|
|
405,015
|
|
|
363,684
|
|
|
839,478
|
|
|
696,339
|
|
Income from
operations
|
106,260
|
|
|
121,521
|
|
|
112,351
|
|
|
227,781
|
|
|
233,198
|
|
Interest
income
|
2,541
|
|
|
3,001
|
|
|
1,740
|
|
|
5,542
|
|
|
3,379
|
|
Interest
expense
|
(4,678)
|
|
|
(4,576)
|
|
|
(4,516)
|
|
|
(9,254)
|
|
|
(6,457)
|
|
Other expense,
net
|
(1,605)
|
|
|
(301)
|
|
|
(899)
|
|
|
(1,906)
|
|
|
(1,780)
|
|
Income before
provision for income taxes
|
102,518
|
|
|
119,645
|
|
|
108,676
|
|
|
222,163
|
|
|
228,340
|
|
Provision for income
taxes
|
35,318
|
|
|
41,899
|
|
|
35,790
|
|
|
77,217
|
|
|
82,654
|
|
Net income
|
$
|
67,200
|
|
|
$
|
77,746
|
|
|
$
|
72,886
|
|
|
$
|
144,946
|
|
|
$
|
145,686
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.38
|
|
|
$
|
0.44
|
|
|
$
|
0.41
|
|
|
$
|
0.81
|
|
|
$
|
0.82
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.43
|
|
|
$
|
0.40
|
|
|
$
|
0.80
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
|
|
|
|
Basic
|
178,682
|
|
|
178,545
|
|
|
178,081
|
|
|
178,614
|
|
|
178,393
|
|
Diluted
|
180,738
|
|
|
180,825
|
|
|
180,841
|
|
|
180,782
|
|
|
181,439
|
|
|
(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
|
|
Six Months
Ended
|
(in
thousands)
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
67,200
|
|
|
$
|
77,746
|
|
|
$
|
72,886
|
|
|
$
|
144,946
|
|
|
$
|
145,686
|
|
Adjustments to
reconcile net income to net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
73,989
|
|
|
70,460
|
|
|
58,712
|
|
|
144,449
|
|
|
112,228
|
|
Stock-based
compensation
|
32,251
|
|
|
29,669
|
|
|
31,678
|
|
|
61,920
|
|
|
56,792
|
|
Excess tax benefits
from stock-based
compensation
|
(9,609)
|
|
|
(13,128)
|
|
|
(4,483)
|
|
|
(22,737)
|
|
|
(19,661)
|
|
(Benefit) provision
for deferred income
taxes
|
(24,580)
|
|
|
8,305
|
|
|
20,180
|
|
|
(16,275)
|
|
|
21,840
|
|
Amortization of debt
discount and issuance costs
|
4,677
|
|
|
4,576
|
|
|
4,516
|
|
|
9,253
|
|
|
6,457
|
|
Other non-cash
reconciling items, net
|
703
|
|
|
443
|
|
|
893
|
|
|
1,146
|
|
|
1,195
|
|
Changes in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
18,260
|
|
|
(32,552)
|
|
|
(23,117)
|
|
|
(14,292)
|
|
|
(41,254)
|
|
Prepaid expenses and
other current assets
|
13,839
|
|
|
(1,817)
|
|
|
7,963
|
|
|
12,022
|
|
|
(12,998)
|
|
Accounts payable and
accrued expenses
|
84,376
|
|
|
(52,703)
|
|
|
43,970
|
|
|
31,673
|
|
|
21,459
|
|
Deferred
revenue
|
76
|
|
|
6,947
|
|
|
(409)
|
|
|
7,023
|
|
|
4,750
|
|
Other current
liabilities
|
157
|
|
|
42
|
|
|
132
|
|
|
199
|
|
|
1,419
|
|
Other non-current
assets and liabilities
|
2,684
|
|
|
1,741
|
|
|
(12,697)
|
|
|
4,425
|
|
|
(8,666)
|
|
Net cash provided by
operating activities
|
264,023
|
|
|
99,729
|
|
|
200,224
|
|
|
363,752
|
|
|
289,247
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Cash paid for
acquired businesses, net of cash acquired
|
(106,883)
|
|
|
(16,062)
|
|
|
115
|
|
|
(122,945)
|
|
|
(386,532)
|
|
Purchases of property
and equipment and capitalization of internal-use software
development costs
|
(96,013)
|
|
|
(137,069)
|
|
|
(70,519)
|
|
|
(233,082)
|
|
|
(154,525)
|
|
Purchases of short-
and long-term marketable securities
|
(308,685)
|
|
|
(97,304)
|
|
|
(204,648)
|
|
|
(405,989)
|
|
|
(863,591)
|
|
Proceeds from sales
and maturities of short- and long-term marketable
securities
|
222,030
|
|
|
307,655
|
|
|
138,152
|
|
|
529,685
|
|
|
538,122
|
|
Other non-current
assets and liabilities
|
(1,827)
|
|
|
(82)
|
|
|
2,860
|
|
|
(1,909)
|
|
|
2,028
|
|
Net cash (used in)
provided by investing activities
|
(291,378)
|
|
|
57,138
|
|
|
(134,040)
|
|
|
(234,240)
|
|
|
(864,498)
|
|
AKAMAI
TECHNOLOGIES, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in
thousands)
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from the
issuance of convertible
senior notes, net
|
—
|
|
|
—
|
|
|
(868)
|
|
|
—
|
|
|
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
|
12,072
|
|
|
24,440
|
|
|
13,670
|
|
|
36,512
|
|
|
57,999
|
|
Excess tax benefits
from stock-based compensation
|
9,609
|
|
|
13,128
|
|
|
4,483
|
|
|
22,737
|
|
|
19,661
|
|
Employee taxes paid
related to net share settlement of stock-based awards
|
(8,253)
|
|
|
(31,101)
|
|
|
(7,977)
|
|
|
(39,354)
|
|
|
(34,248)
|
|
Repurchases of common
stock
|
(63,388)
|
|
|
(62,680)
|
|
|
(71,344)
|
|
|
(126,068)
|
|
|
(187,491)
|
|
Other non-current
assets and liabilities
|
(1,250)
|
|
|
—
|
|
|
—
|
|
|
(1,250)
|
|
|
—
|
|
Net cash (used in)
provided by financing activities
|
(51,210)
|
|
|
(56,213)
|
|
|
(62,036)
|
|
|
(107,423)
|
|
|
493,472
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
3,456
|
|
|
(6,747)
|
|
|
1,291
|
|
|
(3,291)
|
|
|
2,053
|
|
Net (decrease)
increase in cash and cash equivalents
|
(75,109)
|
|
|
93,907
|
|
|
5,439
|
|
|
18,798
|
|
|
(79,726)
|
|
Cash and cash
equivalents at beginning of period
|
332,557
|
|
|
238,650
|
|
|
248,726
|
|
|
238,650
|
|
|
333,891
|
|
Cash and cash
equivalents at end of period
|
$
|
257,448
|
|
|
$
|
332,557
|
|
|
$
|
254,165
|
|
|
$
|
257,448
|
|
|
$
|
254,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP INCOME FROM OPERATIONS, NET INCOME AND ADJUSTED
EBITDA
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in thousands,
except per share data)
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Income from
operations
|
$
|
106,260
|
|
|
$
|
121,521
|
|
|
$
|
112,351
|
|
|
$
|
227,781
|
|
|
$
|
233,198
|
|
GAAP operating
margin
|
20
|
%
|
|
23
|
%
|
|
24
|
%
|
|
|
|
|
Amortization of
acquired intangible assets
|
6,752
|
|
|
6,780
|
|
|
8,403
|
|
|
13,532
|
|
|
15,251
|
|
Stock-based
compensation
|
32,251
|
|
|
29,669
|
|
|
31,678
|
|
|
61,920
|
|
|
56,792
|
|
Amortization of
capitalized stock-based
compensation and capitalized interest expense
|
3,636
|
|
|
3,108
|
|
|
2,034
|
|
|
6,744
|
|
|
3,962
|
|
Other operating
expenses(1)
|
1,439
|
|
|
1,709
|
|
|
1,361
|
|
|
3,148
|
|
|
5,488
|
|
Operating
adjustments
|
44,078
|
|
|
41,266
|
|
|
43,476
|
|
|
85,344
|
|
|
81,493
|
|
Non-GAAP income from
operations
|
$
|
150,338
|
|
|
$
|
162,787
|
|
|
$
|
155,827
|
|
|
$
|
313,125
|
|
|
$
|
314,691
|
|
Non-GAAP operating
margin
|
28
|
%
|
|
31
|
%
|
|
33
|
%
|
|
29
|
%
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
67,200
|
|
|
$
|
77,746
|
|
|
$
|
72,886
|
|
|
$
|
144,946
|
|
|
$
|
145,686
|
|
Operating adjustments
(from above)
|
44,078
|
|
|
41,266
|
|
|
43,476
|
|
|
85,344
|
|
|
81,493
|
|
Amortization of debt
discount and issuance costs
|
4,678
|
|
|
4,576
|
|
|
4,516
|
|
|
9,254
|
|
|
6,457
|
|
Loss on
investments
|
—
|
|
|
25
|
|
|
393
|
|
|
25
|
|
|
393
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
(13,788)
|
|
|
(12,437)
|
|
|
(15,721)
|
|
|
(26,225)
|
|
|
(23,562)
|
|
Non-GAAP net
income
|
102,168
|
|
|
111,176
|
|
|
105,550
|
|
|
213,344
|
|
|
210,467
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
63,601
|
|
|
60,572
|
|
|
48,275
|
|
|
124,173
|
|
|
93,015
|
|
Interest
income
|
(2,541)
|
|
|
(3,001)
|
|
|
(1,740)
|
|
|
(5,542)
|
|
|
(3,379)
|
|
Other expense,
net
|
1,605
|
|
|
276
|
|
|
506
|
|
|
1,881
|
|
|
1,387
|
|
Provision for GAAP
income taxes
|
35,318
|
|
|
41,899
|
|
|
35,790
|
|
|
77,217
|
|
|
82,654
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
13,788
|
|
|
12,437
|
|
|
15,721
|
|
|
26,225
|
|
|
23,562
|
|
Adjusted
EBITDA
|
$
|
213,939
|
|
|
$
|
223,359
|
|
|
$
|
204,102
|
|
|
$
|
437,298
|
|
|
$
|
407,706
|
|
Adjusted EBITDA
margin
|
40
|
%
|
|
42
|
%
|
|
43
|
%
|
|
41
|
%
|
|
44
|
%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.57
|
|
|
$
|
0.62
|
|
|
$
|
0.59
|
|
|
$
|
1.19
|
|
|
$
|
1.18
|
|
Diluted
|
$
|
0.57
|
|
|
$
|
0.61
|
|
|
$
|
0.58
|
|
|
$
|
1.18
|
|
|
$
|
1.16
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
non-GAAP per share calculations:
|
|
|
|
|
|
|
|
|
|
Basic
|
178,682
|
|
|
178,545
|
|
|
178,081
|
|
|
178,614
|
|
|
178,393
|
|
Diluted
|
180,738
|
|
|
180,825
|
|
|
180,841
|
|
|
180,782
|
|
|
181,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
Six Months
Ended
|
(in
thousands)
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Revenue by
solution category
|
|
|
|
|
|
|
|
|
|
Media Delivery
Solutions
|
$
|
243,503
|
|
|
$
|
241,842
|
|
|
$
|
217,600
|
|
|
$
|
485,345
|
|
|
$
|
433,489
|
|
Performance and
Security Solutions
|
256,039
|
|
|
244,982
|
|
|
222,162
|
|
|
501,021
|
|
|
424,341
|
|
Service and Support
Solutions
|
41,181
|
|
|
39,712
|
|
|
36,273
|
|
|
80,893
|
|
|
71,707
|
|
Total
revenue
|
$
|
540,723
|
|
|
$
|
526,536
|
|
|
$
|
476,035
|
|
|
$
|
1,067,259
|
|
|
$
|
929,537
|
|
Cloud Security
Solutions revenue
|
$
|
60,973
|
|
|
$
|
55,040
|
|
|
$
|
43,724
|
|
|
$
|
116,013
|
|
|
$
|
73,887
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year(1):
|
|
|
|
|
|
|
|
|
|
Media Delivery
Solutions
|
12
|
%
|
|
12
|
%
|
|
21
|
%
|
|
12
|
%
|
|
20
|
%
|
Performance and
Security Solutions
|
15
|
|
|
21
|
|
|
31
|
|
|
18
|
|
|
30
|
|
Service and Support
Solutions
|
14
|
|
|
12
|
|
|
24
|
|
|
13
|
|
|
30
|
|
Total
revenue
|
14
|
%
|
|
16
|
%
|
|
26
|
%
|
|
15
|
%
|
|
25
|
%
|
Cloud Security
Solutions revenue growth rates
|
39
|
%
|
|
82
|
%
|
|
|
|
57
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted
for the impact of foreign exchange
rates(1)(2):
|
|
|
|
|
|
|
|
|
|
Media Delivery
Solutions
|
17
|
%
|
|
16
|
%
|
|
20
|
%
|
|
16
|
%
|
|
20
|
%
|
Performance and
Security Solutions
|
19
|
|
|
25
|
|
|
30
|
|
|
22
|
|
|
30
|
|
Service and Support
Solutions
|
18
|
|
|
16
|
|
|
24
|
|
|
17
|
|
|
30
|
|
Total
revenue
|
18
|
%
|
|
20
|
%
|
|
25
|
%
|
|
19
|
%
|
|
24
|
%
|
Cloud Security
Solutions revenue growth rates(2)
|
44
|
%
|
|
87
|
%
|
|
|
|
62
|
%
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
SUPPLEMENTAL
REVENUE DATA BY GEOGRAPHY
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in
thousands)
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Revenue by
geography
|
|
|
|
|
|
|
|
|
|
U.S.
|
$
|
399,103
|
|
|
$
|
388,973
|
|
|
$
|
343,228
|
|
|
$
|
788,076
|
|
|
$
|
668,412
|
|
International
|
141,620
|
|
|
137,563
|
|
|
132,807
|
|
|
279,183
|
|
|
261,125
|
|
Total
revenue
|
$
|
540,723
|
|
|
$
|
526,536
|
|
|
$
|
476,035
|
|
|
$
|
1,067,259
|
|
|
$
|
929,537
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year(1):
|
|
|
|
|
|
|
|
|
|
U.S.
|
16
|
%
|
|
20
|
%
|
|
25
|
%
|
|
18
|
%
|
|
24
|
%
|
International
|
7
|
|
|
7
|
|
|
27
|
|
|
7
|
|
|
26
|
|
Total
revenue
|
14
|
%
|
|
16
|
%
|
|
26
|
%
|
|
15
|
%
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
Revenue growth
rates year-over-year, adjusted
for the impact of foreign exchange
rates(1)(2):
|
|
|
|
|
|
|
|
|
|
U.S.
|
16
|
%
|
|
20
|
%
|
|
25
|
%
|
|
18
|
%
|
|
24
|
%
|
International
|
22
|
|
|
21
|
|
|
24
|
|
|
21
|
|
|
25
|
|
Total
revenue
|
18
|
%
|
|
20
|
%
|
|
25
|
%
|
|
19
|
%
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Growth
rates for the six months ended June 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
|
|
Six Months
Ended
|
(in thousands,
except end of period statistics)
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Stock-based
compensation:
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
3,502
|
|
|
$
|
3,163
|
|
|
$
|
3,076
|
|
|
$
|
6,665
|
|
|
$
|
5,871
|
|
Research and
development
|
6,009
|
|
|
5,366
|
|
|
5,061
|
|
|
11,375
|
|
|
9,538
|
|
Sales and
marketing
|
12,847
|
|
|
12,983
|
|
|
12,796
|
|
|
25,830
|
|
|
23,328
|
|
General and
administrative
|
9,893
|
|
|
8,157
|
|
|
10,745
|
|
|
18,050
|
|
|
18,055
|
|
Total stock-based
compensation
|
$
|
32,251
|
|
|
$
|
29,669
|
|
|
$
|
31,678
|
|
|
$
|
61,920
|
|
|
$
|
56,792
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
|
Network-related
depreciation
|
$
|
50,145
|
|
|
$
|
48,988
|
|
|
$
|
38,496
|
|
|
$
|
99,133
|
|
|
$
|
75,161
|
|
Other depreciation
and amortization
|
13,456
|
|
|
11,584
|
|
|
9,779
|
|
|
25,040
|
|
|
17,854
|
|
Depreciation of
property and equipment
|
63,601
|
|
|
60,572
|
|
|
48,275
|
|
|
124,173
|
|
|
93,015
|
|
Capitalized
stock-based compensation amortization
|
3,435
|
|
|
2,952
|
|
|
2,016
|
|
|
6,387
|
|
|
3,944
|
|
Capitalized interest
expense amortization
|
201
|
|
|
156
|
|
|
18
|
|
|
357
|
|
|
18
|
|
Amortization of
acquired intangible assets
|
6,752
|
|
|
6,780
|
|
|
8,403
|
|
|
13,532
|
|
|
15,251
|
|
Total depreciation
and amortization
|
$
|
73,989
|
|
|
$
|
70,460
|
|
|
$
|
58,712
|
|
|
$
|
144,449
|
|
|
$
|
112,228
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures(1):
|
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
$
|
76,492
|
|
|
$
|
89,129
|
|
|
$
|
50,963
|
|
|
$
|
165,621
|
|
|
$
|
110,246
|
|
Capitalized
internal-use software development costs
|
30,835
|
|
|
33,983
|
|
|
28,265
|
|
|
64,818
|
|
|
52,966
|
|
Capitalized
stock-based compensation
|
4,471
|
|
|
4,144
|
|
|
3,943
|
|
|
8,615
|
|
|
7,727
|
|
Capitalized interest
expense
|
619
|
|
|
675
|
|
|
597
|
|
|
1,294
|
|
|
834
|
|
Total capital
expenditures
|
$
|
112,417
|
|
|
$
|
127,931
|
|
|
$
|
83,768
|
|
|
$
|
240,348
|
|
|
$
|
171,773
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash, cash equivalents and marketable
securities
|
$
|
9,816
|
|
|
$
|
(113,145)
|
|
|
$
|
73,001
|
|
|
$
|
(103,329)
|
|
|
$
|
245,480
|
|
|
|
|
|
|
|
|
|
|
|
End of period
statistics:
|
|
|
|
|
|
|
|
|
|
Number of
employees
|
5,733
|
|
|
5,409
|
|
|
4,558
|
|
|
|
|
|
Number of deployed
servers
|
189,136
|
|
|
175,094
|
|
|
154,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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 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 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 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; 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.