CAMBRIDGE, Mass., Oct. 27, 2020 /PRNewswire/ -- Akamai
(NASDAQ: AKAM), the intelligent edge platform for securing and
delivering digital experiences, today reported financial results
for the third quarter ended September 30, 2020.
"Our excellent third quarter results were driven by the
continued strong performance of our security products and sustained
high traffic levels on the Akamai Edge platform," said Dr.
Tom Leighton, Akamai's chief
executive officer. "We're proud of how Akamai continued to deliver
fast, intelligent and secure online experiences for billions of
users around the world as we support our customers during these
unprecedented times."
Akamai delivered the following financial results for the third
quarter ended September 30, 2020:
Revenue: Revenue was $793
million, a 12% increase over third quarter 2019 revenue of
$710 million and an 11% increase when
adjusted for foreign exchange.*
Revenue by Division(1):
- Web Division revenue was $418
million, up 8% year-over-year and up 7% when adjusted for
foreign exchange*
- Media and Carrier Division revenue was $375 million, up 16% year-over-year and when
adjusted for foreign exchange*
Revenue from Cloud Security Solutions(2):
- Cloud Security Solutions revenue was $266 million, up 23% year-over-year and when
adjusted for foreign exchange*
Revenue from Internet Platform
Customers(3):
- Revenue from Internet Platform Customers was $51 million, up 15% year-over-year and when
adjusted for foreign exchange*
- Revenue excluding Internet Platform Customers was $742 million, up 11% year-over-year and when
adjusted for foreign exchange*
Revenue by Geography:
- U.S. revenue was $437 million, up
6% year-over-year
- International revenue was $355
million, up 20% year-over-year and up 18% when adjusted for
foreign exchange*
Income from operations: GAAP income from operations was
$181 million, a 26% increase from
third quarter 2019. GAAP operating margin for the third quarter was
23%, up 3 percentage points from the same period last year.
Non-GAAP income from operations* was $251
million, a 20% increase from third quarter 2019. Non-GAAP
operating margin* for the third quarter was 32%, up 3 percentage
points from the same period last year.
Net income: GAAP net income was $159 million, a 15% increase from third quarter
2019. Non-GAAP net income* was $216
million, a 19% increase from third quarter 2019.
EPS: GAAP EPS was $0.95 per
diluted share, a 13% increase from third quarter 2019 and a 12%
increase when adjusted for foreign exchange.* Non-GAAP EPS was
$1.31 per diluted share, a 19%
increase from third quarter 2019 and an 18% increase when adjusted
for foreign exchange.*
Adjusted EBITDA*: Adjusted EBITDA was $351 million, a 17% increase from third quarter
2019. Adjusted EBITDA margin* for the third quarter was 44%, up 2
percentage points from the same period last year.
Supplemental cash information: Cash from operations for
the third quarter of 2020 was $402
million, or 51% of revenue. Cash, cash equivalents and
marketable securities was $2.6
billion as of September 30, 2020.
Share repurchases: Akamai spent $13 million in the third quarter of 2020 to
repurchase 0.1 million shares of its common stock at an average
price of $109.99 per share. The
Company had 163 million shares of common stock outstanding as of
September 30, 2020.
|
*
|
See Use of Non-GAAP
Financial Measures below for definitions
|
|
|
|
(1)
|
Revenue by Division –
A customer-focused reporting view that reflects revenue from
customers that are managed by the division
|
|
|
|
(2)
|
Revenue from Cloud
Security Solutions – A product-focused reporting view that reflects
revenue from Cloud Security Solutions separately from all other
solution categories
|
|
|
|
(3)
|
Revenue from Internet
Platform Customers – Revenue from large Internet platform
companies: Amazon, Apple, Facebook, Google, Microsoft and
Netflix
|
Quarterly Conference Call
Akamai will host a
conference call today at 4:30 p.m. ET
that can be accessed through 1-844-578-9671 (or 1-508-637-5655 for
international calls) and using passcode 9551978. 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 two weeks
following the conference by calling 1-855-859-2056 (or
1-404-537-3406 for international calls) and using passcode 9551978.
The archived webcast of this event may be accessed through the
Akamai website.
About Akamai
Akamai secures and delivers digital
experiences for the world's largest companies. Akamai's intelligent
edge platform surrounds everything, from the enterprise to the
cloud, so customers and their businesses can be fast, smart and
secure. Top brands globally rely on Akamai to help them realize
competitive advantage through agile solutions that extend the power
of their multi-cloud architectures. Akamai keeps decisions, apps
and experiences closer to users than anyone – and attacks and
threats far away. Akamai's portfolio of edge security, web and
mobile performance, enterprise access and video delivery solutions
is supported by unmatched customer service, analytics and 24/7/365
monitoring. To learn why the world's top brands trust Akamai, visit
www.akamai.com, blogs.akamai.com, or @Akamai on Twitter.
|
AKAMAI
TECHNOLOGIES, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(in
thousands)
|
September 30,
2020
|
|
December 31,
2019
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
742,521
|
|
|
$
|
393,745
|
|
|
Marketable
securities
|
701,515
|
|
|
1,143,249
|
|
|
Accounts receivable,
net
|
630,406
|
|
|
551,943
|
|
|
Prepaid expenses and
other current assets
|
168,779
|
|
|
142,676
|
|
|
Total current
assets
|
2,243,221
|
|
|
2,231,613
|
|
|
Marketable
securities
|
1,110,058
|
|
|
835,384
|
|
|
Property and
equipment, net
|
1,383,480
|
|
|
1,152,153
|
|
|
Operating lease
right-of-use assets
|
745,089
|
|
|
758,450
|
|
|
Acquired intangible
assets, net
|
184,478
|
|
|
179,431
|
|
|
Goodwill
|
1,598,919
|
|
|
1,600,265
|
|
|
Deferred income tax
assets
|
97,801
|
|
|
76,528
|
|
|
Other
assets
|
151,347
|
|
|
173,062
|
|
|
Total
assets
|
$
|
7,514,393
|
|
|
$
|
7,006,886
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
114,850
|
|
|
$
|
138,946
|
|
|
Accrued
expenses
|
369,815
|
|
|
334,861
|
|
|
Deferred
revenue
|
88,942
|
|
|
71,223
|
|
|
Operating lease
liabilities
|
136,292
|
|
|
139,463
|
|
|
Other current
liabilities
|
7,225
|
|
|
8,843
|
|
|
Total current
liabilities
|
717,124
|
|
|
693,336
|
|
|
Deferred
revenue
|
3,954
|
|
|
4,368
|
|
|
Deferred income tax
liabilities
|
31,946
|
|
|
29,187
|
|
|
Convertible senior
notes
|
1,889,743
|
|
|
1,839,791
|
|
|
Operating lease
liabilities
|
682,623
|
|
|
692,181
|
|
|
Other
liabilities
|
81,386
|
|
|
90,065
|
|
|
Total
liabilities
|
3,406,776
|
|
|
3,348,928
|
|
|
Total stockholders'
equity
|
4,107,617
|
|
|
3,657,958
|
|
|
Total liabilities and
stockholders' equity
|
$
|
7,514,393
|
|
|
$
|
7,006,886
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in thousands,
except per share data)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Revenue
|
$
|
792,845
|
|
|
$
|
794,715
|
|
|
$
|
709,912
|
|
|
$
|
2,351,862
|
|
|
$
|
2,121,494
|
|
|
Costs and operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue(1) (2)
|
283,439
|
|
|
276,804
|
|
|
246,938
|
|
|
828,825
|
|
|
729,874
|
|
|
Research and
development(1)
|
66,773
|
|
|
64,090
|
|
|
64,887
|
|
|
202,087
|
|
|
192,467
|
|
|
Sales and
marketing(1)
|
122,749
|
|
|
123,469
|
|
|
122,258
|
|
|
370,004
|
|
|
383,640
|
|
|
General and
administrative(1) (2)
|
128,365
|
|
|
129,709
|
|
|
123,216
|
|
|
385,435
|
|
|
366,167
|
|
|
Amortization of
acquired intangible assets
|
10,340
|
|
|
10,381
|
|
|
9,624
|
|
|
31,155
|
|
|
28,871
|
|
|
Restructuring charge
(benefit)
|
21
|
|
|
(167)
|
|
|
(300)
|
|
|
10,439
|
|
|
6,879
|
|
|
Total costs and
operating expenses
|
611,687
|
|
|
604,286
|
|
|
566,623
|
|
|
1,827,945
|
|
|
1,707,898
|
|
|
Income from
operations
|
181,158
|
|
|
190,429
|
|
|
143,289
|
|
|
523,917
|
|
|
413,596
|
|
|
Interest
income
|
6,307
|
|
|
9,502
|
|
|
7,908
|
|
|
22,852
|
|
|
22,953
|
|
|
Interest
expense
|
(17,324)
|
|
|
(17,249)
|
|
|
(12,127)
|
|
|
(51,778)
|
|
|
(32,689)
|
|
|
Other expense,
net
|
(2,158)
|
|
|
(1,603)
|
|
|
(752)
|
|
|
(7,869)
|
|
|
(819)
|
|
|
Income before
provision for income taxes
|
167,983
|
|
|
181,079
|
|
|
138,318
|
|
|
487,122
|
|
|
403,041
|
|
|
(Provision) benefit
for income taxes
|
(8,801)
|
|
|
(18,671)
|
|
|
960
|
|
|
(41,764)
|
|
|
(42,718)
|
|
|
Loss from equity
method investment
|
(559)
|
|
|
(493)
|
|
|
(1,388)
|
|
|
(1,674)
|
|
|
(1,388)
|
|
|
Net income
|
$
|
158,623
|
|
|
$
|
161,915
|
|
|
$
|
137,890
|
|
|
$
|
443,684
|
|
|
$
|
358,935
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.97
|
|
|
$
|
1.00
|
|
|
$
|
0.85
|
|
|
$
|
2.73
|
|
|
$
|
2.20
|
|
|
Diluted
|
$
|
0.95
|
|
|
$
|
0.98
|
|
|
$
|
0.84
|
|
|
$
|
2.69
|
|
|
$
|
2.18
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
162,757
|
|
|
162,413
|
|
|
162,445
|
|
|
162,387
|
|
|
163,029
|
|
|
Diluted
|
166,519
|
|
|
164,768
|
|
|
164,558
|
|
|
164,990
|
|
|
164,788
|
|
|
|
|
(1)
|
Includes stock-based
compensation (see supplemental table for figures)
|
|
(2)
|
Includes depreciation
and amortization (see supplemental table for figures)
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
158,623
|
|
|
$
|
161,915
|
|
|
$
|
137,890
|
|
|
$
|
443,684
|
|
|
$
|
358,935
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
118,893
|
|
|
115,580
|
|
|
110,604
|
|
|
350,681
|
|
|
324,874
|
|
|
Stock-based
compensation
|
50,217
|
|
|
49,191
|
|
|
46,815
|
|
|
146,901
|
|
|
140,262
|
|
|
(Benefit) provision
for deferred income taxes
|
(33,942)
|
|
|
14,282
|
|
|
(27)
|
|
|
(22,548)
|
|
|
24,581
|
|
|
Amortization of debt
discount and issuance costs
|
15,747
|
|
|
15,677
|
|
|
11,133
|
|
|
47,057
|
|
|
30,761
|
|
|
Other non-cash
reconciling items, net
|
1,480
|
|
|
2,752
|
|
|
2,598
|
|
|
16,284
|
|
|
3,778
|
|
|
Changes in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
20,107
|
|
|
(31,633)
|
|
|
(17)
|
|
|
(85,439)
|
|
|
(38,144)
|
|
|
Prepaid expenses and
other current assets
|
(11,401)
|
|
|
455
|
|
|
11,624
|
|
|
(21,380)
|
|
|
(11,663)
|
|
|
Accounts payable and
accrued expenses
|
97,220
|
|
|
(19,944)
|
|
|
23,348
|
|
|
49,818
|
|
|
(29,441)
|
|
|
Deferred
revenue
|
(6,539)
|
|
|
(5,647)
|
|
|
(11,259)
|
|
|
14,803
|
|
|
16,714
|
|
|
Other current
liabilities
|
(523)
|
|
|
(2,043)
|
|
|
(3,111)
|
|
|
(1,638)
|
|
|
(21,850)
|
|
|
Other non-current
assets and liabilities
|
(7,909)
|
|
|
(1,894)
|
|
|
(32,213)
|
|
|
(14,316)
|
|
|
(22,643)
|
|
|
Net cash provided by
operating activities
|
401,973
|
|
|
298,691
|
|
|
297,385
|
|
|
923,907
|
|
|
776,164
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
Cash received (paid)
for business acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
106
|
|
|
(121,409)
|
|
|
Cash paid for asset
acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,376)
|
|
|
—
|
|
|
Cash paid for equity
method investment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,008)
|
|
|
Purchases of property
and equipment and capitalization of internal-use software
development costs
|
(228,759)
|
|
|
(120,239)
|
|
|
(152,633)
|
|
|
(564,427)
|
|
|
(428,411)
|
|
|
Purchases of short-
and long-term marketable securities
|
(311,010)
|
|
|
(452,737)
|
|
|
(981,805)
|
|
|
(1,153,526)
|
|
|
(1,373,563)
|
|
|
Proceeds from sales
and maturities of short- and long-term marketable
securities
|
317,163
|
|
|
483,184
|
|
|
229,796
|
|
|
1,331,163
|
|
|
879,326
|
|
|
Other non-current
assets and liabilities
|
(2,059)
|
|
|
155
|
|
|
(342)
|
|
|
(1,980)
|
|
|
1,895
|
|
|
Net cash used in
investing activities
|
(224,665)
|
|
|
(89,637)
|
|
|
(904,984)
|
|
|
(425,040)
|
|
|
(1,078,170)
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the
issuance of convertible senior notes
|
—
|
|
|
—
|
|
|
1,135,629
|
|
|
—
|
|
|
1,135,629
|
|
|
Proceeds from the
issuance of warrants
|
—
|
|
|
—
|
|
|
185,150
|
|
|
—
|
|
|
185,150
|
|
|
Purchase of note hedge
related to convertible senior notes
|
—
|
|
|
—
|
|
|
(312,225)
|
|
|
—
|
|
|
(312,225)
|
|
|
Repayment of
convertible senior notes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(690,000)
|
|
|
Proceeds from the
issuance of common stock under stock plans
|
16,007
|
|
|
10,259
|
|
|
14,432
|
|
|
45,812
|
|
|
43,204
|
|
|
Employee taxes paid
related to net share settlement of stock-based awards
|
(13,369)
|
|
|
(13,095)
|
|
|
(11,160)
|
|
|
(77,299)
|
|
|
(61,116)
|
|
|
Repurchases of common
stock
|
(13,198)
|
|
|
(27,330)
|
|
|
(175,541)
|
|
|
(121,078)
|
|
|
(291,788)
|
|
|
Other non-current
assets and liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,558)
|
|
|
Net cash (used in)
provided by financing activities
|
(10,560)
|
|
|
(30,166)
|
|
|
836,285
|
|
|
(152,565)
|
|
|
7,296
|
|
|
Effects of exchange
rate changes on cash, cash equivalents and restricted
cash
|
4,363
|
|
|
8,155
|
|
|
(5,328)
|
|
|
3,535
|
|
|
(2,650)
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
171,111
|
|
|
187,043
|
|
|
223,358
|
|
|
349,837
|
|
|
(297,360)
|
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
572,872
|
|
|
385,829
|
|
|
516,269
|
|
|
394,146
|
|
|
1,036,987
|
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
743,983
|
|
|
$
|
572,872
|
|
|
$
|
739,627
|
|
|
$
|
743,983
|
|
|
$
|
739,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
SUPPLEMENTAL
REVENUE DATA – REVENUE BY DIVISION
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Web
Division
|
$
|
418,064
|
|
|
$
|
404,342
|
|
|
$
|
387,662
|
|
|
$
|
1,228,401
|
|
|
$
|
1,139,422
|
|
|
Media and Carrier
Division
|
374,781
|
|
|
390,373
|
|
|
322,250
|
|
|
1,123,461
|
|
|
982,072
|
|
|
Total
revenue
|
$
|
792,845
|
|
|
$
|
794,715
|
|
|
$
|
709,912
|
|
|
$
|
2,351,862
|
|
|
$
|
2,121,494
|
|
|
Revenue growth
rates year-over-year:
|
|
|
|
|
|
|
|
|
|
|
Web
Division
|
8
|
%
|
|
7
|
%
|
|
9
|
%
|
|
8
|
%
|
|
8
|
%
|
|
Media and Carrier
Division
|
16
|
|
|
19
|
|
|
2
|
|
|
14
|
|
|
4
|
|
|
Total
revenue
|
12
|
%
|
|
13
|
%
|
|
6
|
%
|
|
11
|
%
|
|
6
|
%
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(2):
|
|
|
|
|
|
|
|
|
|
|
Web
Division
|
7
|
%
|
|
8
|
%
|
|
10
|
%
|
|
8
|
%
|
|
10
|
%
|
|
Media and Carrier
Division
|
16
|
|
|
20
|
|
|
3
|
|
|
15
|
|
|
5
|
|
|
Total
revenue
|
11
|
%
|
|
14
|
%
|
|
7
|
%
|
|
11
|
%
|
|
8
|
%
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
SUPPLEMENTAL
REVENUE DATA – REVENUE FROM CLOUD SECURITY SOLUTIONS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Cloud Security
Solutions
|
$
|
265,869
|
|
|
$
|
259,316
|
|
|
$
|
215,916
|
|
|
$
|
765,485
|
|
|
$
|
610,820
|
|
|
CDN and other
solutions
|
526,976
|
|
|
535,399
|
|
|
493,996
|
|
|
1,586,377
|
|
|
1,510,674
|
|
|
Total
revenue
|
$
|
792,845
|
|
|
$
|
794,715
|
|
|
$
|
709,912
|
|
|
$
|
2,351,862
|
|
|
$
|
2,121,494
|
|
|
Revenue growth
rates year-over-year:
|
|
|
|
|
|
|
|
|
|
|
Cloud Security
Solutions
|
23
|
%
|
|
27
|
%
|
|
28
|
%
|
|
25
|
%
|
|
29
|
%
|
|
CDN and other
solutions
|
7
|
|
|
7
|
|
|
(1)
|
|
|
5
|
|
|
(1)
|
|
|
Total
revenue
|
12
|
%
|
|
13
|
%
|
|
6
|
%
|
|
11
|
%
|
|
6
|
%
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(2):
|
|
|
|
|
|
|
|
|
|
|
Cloud Security
Solutions
|
23
|
%
|
|
28
|
%
|
|
29
|
%
|
|
26
|
%
|
|
31
|
%
|
|
CDN and other
solutions
|
6
|
|
|
8
|
|
|
(1)
|
|
|
5
|
|
|
—
|
|
|
Total
revenue
|
11
|
%
|
|
14
|
%
|
|
7
|
%
|
|
11
|
%
|
|
8
|
%
|
|
|
|
(1)
|
As of January 1,
2020, Akamai reassigned some of its customers between the Media and
Carrier Division and the Web Division and revised historical
results in order to reflect the most recent categorization and to
provide a comparable view for all periods presented. As the
purchasing patterns and required account expertise of customers
change over time, Akamai may reassign a customer's division from
one to another.
|
|
(2)
|
See Use of Non-GAAP
Financial Measures below for a definition
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
SUPPLEMENTAL
REVENUE DATA – REVENUE FROM INTERNET PLATFORM
CUSTOMERS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Revenue from Internet
Platform Customers
|
$
|
50,618
|
|
|
$
|
50,752
|
|
|
$
|
44,156
|
|
|
$
|
146,072
|
|
|
$
|
137,501
|
|
|
Revenue excluding
Internet Platform Customers
|
742,227
|
|
|
743,963
|
|
|
665,756
|
|
|
2,205,790
|
|
|
1,983,993
|
|
|
Total
revenue
|
$
|
792,845
|
|
|
$
|
794,715
|
|
|
$
|
709,912
|
|
|
$
|
2,351,862
|
|
|
$
|
2,121,494
|
|
|
Revenue growth
rates year-over-year:
|
|
|
|
|
|
|
|
|
|
|
Revenue from Internet
Platform Customers
|
15
|
%
|
|
10
|
%
|
|
2
|
%
|
|
6
|
%
|
|
5
|
%
|
|
Revenue excluding
Internet Platform Customers
|
11
|
|
|
13
|
|
|
6
|
|
|
11
|
|
|
6
|
|
|
Total
revenue
|
12
|
%
|
|
13
|
%
|
|
6
|
%
|
|
11
|
%
|
|
6
|
%
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(1):
|
|
|
|
|
|
|
|
|
|
|
Revenue from Internet
Platform Customers
|
15
|
%
|
|
10
|
%
|
|
2
|
%
|
|
6
|
%
|
|
5
|
%
|
|
Revenue excluding
Internet Platform Customers
|
11
|
|
|
14
|
|
|
7
|
|
|
12
|
|
|
8
|
|
|
Total
revenue
|
11
|
%
|
|
14
|
%
|
|
7
|
%
|
|
11
|
%
|
|
8
|
%
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
SUPPLEMENTAL
REVENUE DATA – REVENUE BY GEOGRAPHY
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
U.S.
|
$
|
437,381
|
|
|
$
|
443,668
|
|
|
$
|
413,116
|
|
|
$
|
1,309,979
|
|
|
$
|
1,248,175
|
|
|
International
|
355,464
|
|
|
351,047
|
|
|
296,796
|
|
|
1,041,883
|
|
|
873,319
|
|
|
Total
revenue
|
$
|
792,845
|
|
|
$
|
794,715
|
|
|
$
|
709,912
|
|
|
$
|
2,351,862
|
|
|
$
|
2,121,494
|
|
|
Revenue growth
rates year-over-year:
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
6
|
%
|
|
6
|
%
|
|
—
|
%
|
|
5
|
%
|
|
—
|
%
|
|
International
|
20
|
|
|
22
|
|
|
15
|
|
|
19
|
|
|
16
|
|
|
Total
revenue
|
12
|
%
|
|
13
|
%
|
|
6
|
%
|
|
11
|
%
|
|
6
|
%
|
|
Revenue growth
rates year-over-year, adjusted for the impact of foreign exchange
rates(1):
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
6
|
%
|
|
6
|
%
|
|
—
|
%
|
|
5
|
%
|
|
—
|
%
|
|
International
|
18
|
|
|
24
|
|
|
18
|
|
|
21
|
|
|
20
|
|
|
Total
revenue
|
11
|
%
|
|
14
|
%
|
|
7
|
%
|
|
11
|
%
|
|
8
|
%
|
|
|
|
(1)
|
See Use of Non-GAAP
Financial Measures below for a definition
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
SUPPLEMENTAL
OPERATING EXPENSE DATA
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
General and
administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
Payroll and related
costs
|
$
|
50,159
|
|
|
$
|
49,475
|
|
|
$
|
47,892
|
|
|
$
|
148,233
|
|
|
$
|
145,248
|
|
|
Stock-based
compensation
|
14,302
|
|
|
15,377
|
|
|
12,825
|
|
|
43,636
|
|
|
40,018
|
|
|
Depreciation and
amortization
|
20,554
|
|
|
20,654
|
|
|
19,269
|
|
|
61,673
|
|
|
56,420
|
|
|
Facilities-related
costs
|
25,099
|
|
|
23,898
|
|
|
21,413
|
|
|
73,669
|
|
|
63,478
|
|
|
(Benefit) provision
for doubtful accounts
|
(1,627)
|
|
|
2,893
|
|
|
623
|
|
|
3,465
|
|
|
2,338
|
|
|
Acquisition-related
costs
|
1,051
|
|
|
62
|
|
|
219
|
|
|
1,189
|
|
|
1,194
|
|
|
Legal
settlements
|
—
|
|
|
275
|
|
|
—
|
|
|
275
|
|
|
—
|
|
|
License of
patent
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,855)
|
|
|
Professional fees and
other expenses
|
18,827
|
|
|
17,075
|
|
|
20,975
|
|
|
53,295
|
|
|
66,326
|
|
|
Total general and
administrative expenses
|
$
|
128,365
|
|
|
$
|
129,709
|
|
|
$
|
123,216
|
|
|
$
|
385,435
|
|
|
$
|
366,167
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses–functional(1):
|
|
|
|
|
|
|
|
|
|
|
Global
functions
|
$
|
47,559
|
|
|
$
|
46,818
|
|
|
$
|
47,731
|
|
|
$
|
142,243
|
|
|
$
|
146,661
|
|
|
As a percentage of
revenue
|
6
|
%
|
|
6
|
%
|
|
7
|
%
|
|
6
|
%
|
|
7
|
%
|
|
Infrastructure
|
81,365
|
|
|
79,677
|
|
|
74,643
|
|
|
238,262
|
|
|
219,302
|
|
|
As a percentage of
revenue
|
10
|
%
|
|
10
|
%
|
|
11
|
%
|
|
10
|
%
|
|
10
|
%
|
|
Other
|
(559)
|
|
|
3,214
|
|
|
842
|
|
|
4,930
|
|
|
204
|
|
|
Total general and
administrative expenses
|
$
|
128,365
|
|
|
$
|
129,709
|
|
|
$
|
123,216
|
|
|
$
|
385,435
|
|
|
$
|
366,167
|
|
|
As a percentage of
revenue
|
16
|
%
|
|
16
|
%
|
|
17
|
%
|
|
16
|
%
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation:
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
6,384
|
|
|
$
|
6,254
|
|
|
$
|
5,555
|
|
|
$
|
18,374
|
|
|
$
|
16,917
|
|
|
Research and
development
|
12,722
|
|
|
11,549
|
|
|
12,842
|
|
|
36,336
|
|
|
36,943
|
|
|
Sales and
marketing
|
16,809
|
|
|
16,011
|
|
|
15,593
|
|
|
48,555
|
|
|
46,384
|
|
|
General and
administrative
|
14,302
|
|
|
15,377
|
|
|
12,825
|
|
|
43,636
|
|
|
40,018
|
|
|
Total stock-based
compensation
|
$
|
50,217
|
|
|
$
|
49,191
|
|
|
$
|
46,815
|
|
|
$
|
146,901
|
|
|
$
|
140,262
|
|
|
|
|
(1)
|
Global functions
expense includes payroll, stock-based compensation and other
employee-related costs for administrative functions, including
finance, purchasing, order entry, human resources, legal,
information technology and executive personnel, as well as
third-party professional service fees. Infrastructure expense
includes payroll, stock-based compensation and other
employee-related costs for our network infrastructure functions, as
well as facility rent expense, depreciation and amortization of
facility and IT-related assets, software and software-related
costs, business insurance and taxes. Our network infrastructure
function is responsible for network planning, sourcing,
architecture evaluation and platform security. Other expense
includes acquisition-related costs, allowance for doubtful
accounts, the license of a patent, legal settlements and
transformation costs.
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
OTHER SUPPLEMENTAL
DATA
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in thousands,
except end of period statistics)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
|
|
Network-related
depreciation
|
$
|
42,991
|
|
|
$
|
38,806
|
|
|
$
|
31,840
|
|
|
$
|
118,194
|
|
|
$
|
91,402
|
|
|
Capitalized
internal-use software development amortization
|
37,572
|
|
|
38,164
|
|
|
41,842
|
|
|
116,505
|
|
|
123,739
|
|
|
Other depreciation
and amortization
|
20,081
|
|
|
20,193
|
|
|
18,843
|
|
|
60,293
|
|
|
55,124
|
|
|
Depreciation of
property and equipment
|
100,644
|
|
|
97,163
|
|
|
92,525
|
|
|
294,992
|
|
|
270,265
|
|
|
Capitalized
stock-based compensation amortization(1)
|
7,078
|
|
|
7,185
|
|
|
7,500
|
|
|
21,894
|
|
|
22,866
|
|
|
Capitalized interest
expense amortization(1)
|
831
|
|
|
851
|
|
|
955
|
|
|
2,640
|
|
|
2,872
|
|
|
Amortization of
acquired intangible assets
|
10,340
|
|
|
10,381
|
|
|
9,624
|
|
|
31,155
|
|
|
28,871
|
|
|
Total depreciation and
amortization
|
$
|
118,893
|
|
|
$
|
115,580
|
|
|
$
|
110,604
|
|
|
$
|
350,681
|
|
|
$
|
324,874
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures, excluding stock-based compensation and interest
expense(2)(3):
|
|
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
$
|
144,155
|
|
|
$
|
142,310
|
|
|
$
|
104,345
|
|
|
$
|
371,264
|
|
|
$
|
284,294
|
|
|
Capitalized
internal-use software development costs
|
55,885
|
|
|
53,692
|
|
|
49,754
|
|
|
160,486
|
|
|
152,194
|
|
|
Total capital
expenditures, excluding stock-based compensation and interest
expense
|
$
|
200,040
|
|
|
$
|
196,002
|
|
|
$
|
154,099
|
|
|
$
|
531,750
|
|
|
$
|
436,488
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period
statistics:
|
|
|
|
|
|
|
|
|
|
|
Number of
employees
|
8,155
|
|
|
7,951
|
|
|
7,579
|
|
|
|
|
|
|
|
|
(1)
|
Amortization of
capitalized stock-based compensation and interest expense in this
table excludes amortization of capitalized stock-based compensation
and interest expense capitalized as part of the implementation of
cloud-computing arrangements. However, the amounts are included in
our total amortization of capitalized stock-based compensation and
interest expense that is excluded from our non-GAAP measures (see
reconciliations of GAAP to non-GAAP measures).
|
|
(2)
|
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, but not paid,
at period end.
|
|
(3)
|
See Use of Non-GAAP
Financial Measures below for a definition
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
RECONCILIATION OF
GAAP TO NON-GAAP INCOME FROM OPERATIONS AND NET
INCOME
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Income from
operations
|
$
|
181,158
|
|
|
$
|
190,429
|
|
|
$
|
143,289
|
|
|
$
|
523,917
|
|
|
$
|
413,596
|
|
|
GAAP operating
margin
|
23
|
%
|
|
24
|
%
|
|
20
|
%
|
|
22
|
%
|
|
19
|
%
|
|
Amortization of
acquired intangible assets
|
10,340
|
|
|
10,381
|
|
|
9,624
|
|
|
31,155
|
|
|
28,871
|
|
|
Stock-based
compensation
|
50,217
|
|
|
49,191
|
|
|
46,815
|
|
|
146,901
|
|
|
140,262
|
|
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
7,913
|
|
|
8,038
|
|
|
8,455
|
|
|
24,540
|
|
|
25,738
|
|
|
Restructuring charge
(benefit)
|
21
|
|
|
(167)
|
|
|
(300)
|
|
|
10,439
|
|
|
6,879
|
|
|
Acquisition-related
costs
|
1,051
|
|
|
62
|
|
|
219
|
|
|
1,189
|
|
|
1,194
|
|
|
Legal
settlements
|
—
|
|
|
275
|
|
|
—
|
|
|
275
|
|
|
—
|
|
|
Transformation
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,527
|
|
|
Operating
adjustments
|
69,542
|
|
|
67,780
|
|
|
64,813
|
|
|
214,499
|
|
|
208,471
|
|
|
Non-GAAP income from
operations
|
$
|
250,700
|
|
|
$
|
258,209
|
|
|
$
|
208,102
|
|
|
$
|
738,416
|
|
|
$
|
622,067
|
|
|
Non-GAAP operating
margin
|
32
|
%
|
|
32
|
%
|
|
29
|
%
|
|
31
|
%
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
158,623
|
|
|
$
|
161,915
|
|
|
$
|
137,890
|
|
|
$
|
443,684
|
|
|
$
|
358,935
|
|
|
Operating adjustments
(from above)
|
69,542
|
|
|
67,780
|
|
|
64,813
|
|
|
214,499
|
|
|
208,471
|
|
|
Amortization of debt
discount and issuance costs
|
15,747
|
|
|
15,677
|
|
|
11,133
|
|
|
47,057
|
|
|
30,761
|
|
|
Gain on
investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(440)
|
|
|
Loss from equity
method investment
|
559
|
|
|
493
|
|
|
1,388
|
|
|
1,674
|
|
|
1,388
|
|
|
Income tax-effect of
above non-GAAP adjustments and certain discrete tax
items
|
(28,689)
|
|
|
(19,347)
|
|
|
(34,631)
|
|
|
(68,481)
|
|
|
(61,389)
|
|
|
Non-GAAP net
income
|
$
|
215,782
|
|
|
$
|
226,518
|
|
|
$
|
180,593
|
|
|
$
|
638,433
|
|
|
$
|
537,726
|
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
RECONCILIATION OF
GAAP TO NON-GAAP NET INCOME PER DILUTED SHARE
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in thousands,
except per share data)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
GAAP net income per
diluted share
|
$
|
0.95
|
|
|
$
|
0.98
|
|
|
$
|
0.84
|
|
|
$
|
2.69
|
|
|
$
|
2.18
|
|
|
Adjustments to net
income:
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
0.06
|
|
|
0.06
|
|
|
0.06
|
|
|
0.19
|
|
|
0.18
|
|
|
Stock-based
compensation
|
0.30
|
|
|
0.30
|
|
|
0.28
|
|
|
0.89
|
|
|
0.85
|
|
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
0.05
|
|
|
0.05
|
|
|
0.05
|
|
|
0.15
|
|
|
0.16
|
|
|
Restructuring charge
(benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.06
|
|
|
0.04
|
|
|
Acquisition-related
costs
|
0.01
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
|
Legal
settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Transformation
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
Amortization of debt
discount and issuance costs
|
0.09
|
|
|
0.10
|
|
|
0.07
|
|
|
0.29
|
|
|
0.19
|
|
|
Gain on
investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Loss from equity
method investment
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
Income tax effect of
above non-GAAP adjustments and certain discrete tax
items
|
(0.17)
|
|
|
(0.12)
|
|
|
(0.21)
|
|
|
(0.42)
|
|
|
(0.37)
|
|
|
Adjustment for
shares(1)
|
0.02
|
|
|
0.01
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
Non-GAAP net income
per diluted share
|
$
|
1.31
|
|
|
$
|
1.38
|
|
|
$
|
1.10
|
|
|
$
|
3.89
|
|
|
$
|
3.26
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in GAAP
diluted per share calculations
|
166,519
|
|
|
164,768
|
|
|
164,558
|
|
|
164,990
|
|
|
164,788
|
|
|
Impact of benefit
from note hedge transactions(1)
|
(1,732)
|
|
|
(653)
|
|
|
—
|
|
|
(795)
|
|
|
—
|
|
|
Shares used in
non-GAAP diluted per share calculations(1)
|
164,787
|
|
|
164,115
|
|
|
164,558
|
|
|
164,195
|
|
|
164,788
|
|
|
|
|
(1)
|
Shares used in
non-GAAP diluted per share calculations have been adjusted for the
three and nine months ended September 30, 2020, for the benefit of
Akamai's note hedge transactions. During the three months ended
September 30, 2020, Akamai's average stock price was in excess of
$95.10, which is the initial conversion price of Akamai's
convertible senior notes due in 2025. See Use of Non-GAAP Financial
Measures below for further definition.
|
|
AKAMAI
TECHNOLOGIES, INC.
|
|
RECONCILIATION OF
GAAP NET INCOME TO ADJUSTED EBITDA
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in
thousands)
|
September
30,
2020
|
|
June 30,
2020
|
|
September
30,
2019
|
|
September
30,
2020
|
|
September
30,
2019
|
|
Net income
|
$
|
158,623
|
|
|
$
|
161,915
|
|
|
$
|
137,890
|
|
|
$
|
443,684
|
|
|
$
|
358,935
|
|
|
Interest
income
|
(6,307)
|
|
|
(9,502)
|
|
|
(7,908)
|
|
|
(22,852)
|
|
|
(22,953)
|
|
|
Provision (benefit)
for income taxes
|
8,801
|
|
|
18,671
|
|
|
(960)
|
|
|
41,764
|
|
|
42,718
|
|
|
Depreciation and
amortization
|
100,644
|
|
|
97,163
|
|
|
92,525
|
|
|
294,992
|
|
|
270,265
|
|
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
7,913
|
|
|
8,038
|
|
|
8,455
|
|
|
24,540
|
|
|
25,738
|
|
|
Amortization of
acquired intangible assets
|
10,340
|
|
|
10,381
|
|
|
9,624
|
|
|
31,155
|
|
|
28,871
|
|
|
Stock-based
compensation
|
50,217
|
|
|
49,191
|
|
|
46,815
|
|
|
146,901
|
|
|
140,262
|
|
|
Restructuring charge
(benefit)
|
21
|
|
|
(167)
|
|
|
(300)
|
|
|
10,439
|
|
|
6,879
|
|
|
Acquisition-related
costs
|
1,051
|
|
|
62
|
|
|
219
|
|
|
1,189
|
|
|
1,194
|
|
|
Legal
settlements
|
—
|
|
|
275
|
|
|
—
|
|
|
275
|
|
|
—
|
|
|
Transformation
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,527
|
|
|
Interest
expense
|
17,324
|
|
|
17,249
|
|
|
12,127
|
|
|
51,778
|
|
|
32,689
|
|
|
Gain on
investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(440)
|
|
|
Loss from equity
method investment
|
559
|
|
|
493
|
|
|
1,388
|
|
|
1,674
|
|
|
1,388
|
|
|
Other expense,
net
|
2,158
|
|
|
1,603
|
|
|
752
|
|
|
7,869
|
|
|
1,259
|
|
|
Adjusted
EBITDA
|
$
|
351,344
|
|
|
$
|
355,372
|
|
|
$
|
300,627
|
|
|
$
|
1,033,408
|
|
|
$
|
892,332
|
|
|
Adjusted EBITDA
margin
|
44
|
%
|
|
45
|
%
|
|
42
|
%
|
|
44
|
%
|
|
42
|
%
|
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, to measure executive compensation 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 diluted 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 the business, as
they facilitate comparison of financial results across accounting
periods and to those of our peer companies. 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
exclude expenses and gains that may be unusual in nature,
infrequent or not reflective of Akamai's ongoing operating
results.
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 and investor presentations 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 is 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, advisory 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 and do not reflect
Akamai's core operations.
- Restructuring charges – Akamai has incurred
restructuring charges that are included in its GAAP financial
statements, primarily related to workforce reductions and charges
associated with 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 August 2019, Akamai issued $1,150 million of convertible senior notes due
2027 with a coupon interest rate of 0.375%. In May 2018, Akamai issued $1,150 million of convertible senior notes due
2025 with a coupon interest rate of 0.125%. In February 2014, Akamai issued $690 million of convertible senior notes due 2019
with a coupon interest rate of 0%. The imputed interest rates of
these convertible senior notes were 3.10%, 4.26% and 3.20%,
respectively. This is a result of the debt discounts recorded for
the conversion features that are required to be separately
accounted for as equity under GAAP, thereby reducing the carrying
value of the convertible debt instruments. The debt discounts are
amortized as interest expense together with the issuance costs of
the debt. The interest expense excluded from Akamai's non-GAAP
results 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
representative of ongoing operating performance.
- Gains and losses on investments – Akamai has recorded
gains and losses from the disposition, changes to fair value and
impairment of certain investments. Akamai believes excluding these
amounts from its non-GAAP financial measures is useful to investors
as the types of events giving rise to them are not representative
of Akamai's core business operations and ongoing operating
performance.
- Legal settlements – Akamai has incurred losses related
to the settlement of legal matters. Akamai believes excluding these
amounts from its non-GAAP financial measures is useful to investors
as the types of events giving rise to them are not representative
of Akamai's core business operations.
- Transformation costs – Akamai has incurred professional
services fees associated with internal transformation programs
designed to improve its operating margins and that are part of a
planned program intended to significantly change the manner in
which business in conducted. Akamai believes excluding these
amounts from its non-GAAP financial measures is useful to investors
as the types of events and activities giving rise to them occur
infrequently and are not representative of Akamai's core business
operations and ongoing operating performance.
- Income and losses from equity method investment – Akamai
records income or losses on its share of earnings and losses of its
equity method investment. Akamai excludes such income and losses
because it lacks control over the operations of the investment and
the related income and losses are not representative of its 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 releasing 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; acquisition-related costs;
restructuring charges; gains and losses on legal settlements;
transformation costs; 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; acquisition-related costs;
restructuring charges; gains and losses on legal settlements;
transformation costs; amortization of debt discount and issuance
costs; amortization of capitalized interest expense; certain gains
and losses on investments; income and losses from equity method
investment; and other non-recurring or unusual items that may arise
from time to time.
Non-GAAP net income per diluted share – Non-GAAP net
income divided by weighted average diluted common shares
outstanding. 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
transactions entered into in connection with the issuances of
$1,150 million of convertible senior
notes due 2027 and 2025, respectively. 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
transactions and would not allow the dilution to occur, so
management believes that adjusting for this benefit provides a
meaningful view of operating performance. With respect to the
convertible senior notes due in each of 2027 and 2025, unless
Akamai's weighted average stock price is greater than $116.18 and $95.10,
respectively, 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;
acquisition-related costs; restructuring charges; gains and losses
on legal settlements; transformation costs; foreign exchange gains
and losses; interest expense; amortization of capitalized interest
expense; certain gains and losses on investments; income and losses
on equity method investment; 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, or capex, excluding stock-based
compensation and interest expense – Purchases of property
and equipment and capitalization of internal-use software
development costs presented on an accrual basis, which differs from
the cash-basis presentation included 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, but not paid,
at period end versus prior periods.
Impact of Foreign Currency Exchange Rate – 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 our foreign subsidiaries weaken, our
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 our financial results and
evaluation of performance in comparison to prior periods. The
dollar impact of changes in foreign currency exchange rates
presented is calculated by translating current period results using
monthly average foreign currency exchange rates from the
comparative period and comparing them to the reported amount. The
percentage change at constant currency presented is calculated by
comparing the prior period amounts as reported and the current
period amounts translated using the same monthly average foreign
currency exchange rates 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, including statements about expected future financial
performance. 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 continue to generate cash at the same level as prior years;
changes in geo-political conditions that impact our customers' use
of our solutions; failure of our investments in innovation to
generate solutions that are accepted in the market; 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;
impact of the COVID-19 pandemic; 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:
Gina
Sorice
Media Relations
Akamai Technologies
646-320-4107
gsorice@akamai.com
Tom Barth
Investor Relations
Akamai Technologies
617-274-7130
tbarth@akamai.com
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SOURCE Akamai Technologies, Inc.