First quarter revenue
of $987 million, up 8%
year-over-year and when adjusted for foreign exchange*
Security and compute revenue represented 64%
of total revenue in the first quarter and combined grew 22%
year-over-year and when adjusted for foreign exchange*
GAAP net income per diluted share of
$1.11, up 79% year-over-year and up
81% when adjusted for foreign exchange*, and non-GAAP net income
per diluted share* of $1.64, up 17%
year-over-year and up 18% when adjusted for foreign
exchange*
Board of directors authorizes a new,
three-year, $2.0 billion share
repurchase program
CAMBRIDGE, Mass.,
May 9,
2024 /PRNewswire/ -- Akamai Technologies, Inc.
(NASDAQ: AKAM), the cloud company that powers and protects life
online, today reported financial results for the first quarter
ended March 31, 2024.
"We are pleased with our continuing execution on our long-term
strategy to drive revenue growth in our security and compute
solutions," said Dr. Tom Leighton,
Akamai's Chief Executive Officer. "Both solutions had a strong
start to 2024 and collectively grew more than 20% year-over-year,
representing almost two-thirds of total revenue. We're particularly
excited about our planned acquisition of Noname Security, which
will enhance Akamai's existing API Security solution and accelerate
our ability to meet growing customer demand."
Akamai delivered the following results for the first quarter
ended March 31, 2024:
Revenue: Revenue was $987
million, an 8% increase over first quarter 2023 revenue of
$916 million and an 8% increase when
adjusted for foreign exchange.*
Revenue by solution:
- Security revenue was $491
million, up 21% year-over-year and when adjusted for foreign
exchange*
- Delivery revenue was $352
million, down 11% year-over-year and down 10% when adjusted
for foreign exchange*
- Compute revenue was $145 million,
up 25% year-over-year and when adjusted for foreign exchange*
Revenue by geography:
- U.S. revenue was $512 million, up
8% year-over-year
- International revenue was $475
million, up 7% year-over-year and up 8% when adjusted for
foreign exchange*
Income from operations: GAAP income from operations was
$167 million, a 32% increase from
first quarter 2023. GAAP operating margin for the first quarter was
17%, up 3 percentage points from the same period last year.
Non-GAAP income from operations* was $292
million, an 11% increase from first quarter 2023. Non-GAAP
operating margin* for the first quarter was 30%, up 1 percentage
point from the same period last year.
Net income: GAAP net income was $175 million, an 81% increase from first quarter
2023. Non-GAAP net income* was $255
million, a 17% increase from first quarter 2023.
EPS: GAAP net income per diluted share was $1.11, a 79% increase from first quarter 2023 and
an 81% increase when adjusted for foreign exchange.* Non-GAAP net
income per diluted share* was $1.64,
a 17% increase from first quarter 2023 and an 18% increase when
adjusted for foreign exchange.*
Adjusted EBITDA*: Adjusted EBITDA* was $417 million, an 11% increase from first quarter
2023.
Supplemental cash information: Cash from operations for
the first quarter of 2024 was $352
million, or 36% of revenue. Cash, cash equivalents and
marketable securities was $2.3
billion as of March 31, 2024.
Share repurchases: The Company spent $125 million in the first quarter of 2024 to
repurchase 1.1 million shares of its common stock at an average
price of $109.79 per share. The
Company had 152 million shares of common stock outstanding as of
March 31, 2024.
Share repurchase program: The Company also announces
today that its board of directors has authorized a new,
$2.0 billion share repurchase
program, effective from today through June
30, 2027. The new authorization is in addition to the
Company's remaining stock purchase authorization of $412 million (as of March
31, 2024), which expires at the end of 2024. The Company's
goals for the share repurchase program are to offset the dilution
created by its employee equity compensation programs over time and
provide the flexibility to return capital to shareholders as
business and market conditions warrant, while still preserving its
ability to pursue other strategic opportunities.
The timing and amount of any shares repurchased will be
determined by the Company's management based upon the evaluation of
market conditions and other factors. Repurchases will be executed
in the open market subject to Rule 10b-18, and may also be made under a Rule 10b5-1
plan, which would permit the Company to repurchase shares when the
Company might otherwise be precluded from doing so under insider
trading laws. Other structured repurchase programs may be
considered from time to time. The Company may choose to suspend,
expand or discontinue the repurchase program at any time.
Financial guidance:
"Our updated full year 2024 guidance reflects the impacts of the
strengthening U.S. dollar, a large social media customer optimizing
costs and slowing traffic growth across the industry," said
Ed McGowan, Akamai's Executive Vice
President and Chief Financial Officer. "It also reflects increased
full year expectations for our security and compute
solutions.''
The Company reports the following financial guidance for the
second quarter and full year 2024:
|
Three Months
Ended
June 30,
2024
|
|
Year Ended
December 31,
2024
|
|
Low End
|
|
High End
|
|
Low End
|
|
High End
|
Revenue (in
millions)
|
$
967
|
|
$
986
|
|
$
3,950
|
|
$
4,020
|
Security revenue
growth rates year-over-year *
|
|
|
|
|
15 %
|
|
17 %
|
Compute revenue growth
rates year-over-year *
|
|
|
|
|
21 %
|
|
23 %
|
Non-GAAP operating
margin *
|
28 %
|
|
29 %
|
|
28 %
|
|
29 %
|
Non-GAAP net income per
diluted share *
|
$ 1.51
|
|
$ 1.56
|
|
$ 6.20
|
|
$ 6.40
|
Non-GAAP tax
rate*
|
19.0 %
|
|
19.5 %
|
|
19.0 %
|
|
19.5 %
|
Shares used in non-GAAP
per diluted share calculations * (in millions)
|
155
|
|
155
|
|
155
|
|
155
|
Capex as a percentage
of revenue *
|
18 %
|
|
19 %
|
|
16 %
|
|
16 %
|
This guidance is provided on a non-GAAP basis and cannot be
reconciled to the closest GAAP measures without unreasonable effort
because of the unpredictability of the amounts and timing of events
affecting the items Akamai excludes from non-GAAP measures. For
example, stock-based compensation is unpredictable for Akamai's
performance-based awards, which can fluctuate significantly based
on current expectations of the future achievement of
performance-based targets. Amortization of intangible assets,
acquisition-related costs and restructuring costs are all impacted
by the timing and size of potential future actions, which are
difficult to predict. In addition, from time to time, Akamai
excludes certain items that occur infrequently, which are also
inherently difficult to predict and estimate. It is also difficult
to predict the tax effect of the items Akamai excludes and to
estimate certain discrete tax items, such as the resolution of tax
audits or changes to tax laws. As such, the costs that are being
excluded from non-GAAP guidance are difficult to predict and a
reconciliation or a range of results could lead to disclosure that
would be imprecise or potentially misleading. Material changes to
any one of the exclusions could have a significant effect on our
guidance and future GAAP results.
* 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 1-833-634-5020 (or 1-412-902-4238 for
international calls) and using passcode Akamai Technologies call. A
live webcast of the call may be accessed at www.akamai.com in the
Investor Relations section. In addition, a replay of the call will
be available for two weeks following the conference by calling
1-877-344-7529 (or 1-412-317-0088 for international calls) and
using passcode 6371585. The archived webcast of this event may be
accessed through the Akamai website.
About Akamai
Akamai powers and protects life online.
Leading companies worldwide choose Akamai to build, deliver, and
secure their digital experiences – helping billions of people live,
work, and play every day. Akamai Connected Cloud, a massively
distributed edge and cloud platform, puts apps and experiences
closer to users and keeps threats farther away. Learn more about
Akamai's cloud computing, security, and content delivery solutions
at akamai.com and akamai.com/blog, or follow Akamai Technologies on
X, formerly known as Twitter, and LinkedIn.
AKAMAI TECHNOLOGIES,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(in
thousands)
|
March 31,
2024
|
|
December 31,
2023
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
467,717
|
|
$
489,468
|
Marketable
securities
|
1,206,971
|
|
374,971
|
Accounts receivable,
net
|
716,638
|
|
724,302
|
Prepaid expenses and
other current assets
|
233,853
|
|
216,114
|
Total current
assets
|
2,625,179
|
|
1,804,855
|
Marketable
securities
|
582,023
|
|
1,431,354
|
Property and equipment,
net
|
1,864,307
|
|
1,825,944
|
Operating lease
right-of-use assets
|
947,049
|
|
908,634
|
Acquired intangible
assets, net
|
512,554
|
|
536,143
|
Goodwill
|
2,846,535
|
|
2,850,470
|
Deferred income tax
assets
|
430,428
|
|
418,297
|
Other assets
|
127,531
|
|
124,340
|
Total
assets
|
$ 9,935,606
|
|
$ 9,900,037
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
134,677
|
|
$
146,927
|
Accrued
expenses
|
291,986
|
|
352,181
|
Deferred
revenue
|
142,527
|
|
107,544
|
Operating lease
liabilities
|
232,731
|
|
222,944
|
Other current
liabilities
|
7,017
|
|
6,442
|
Total current
liabilities
|
808,938
|
|
836,038
|
Deferred
revenue
|
20,929
|
|
23,006
|
Deferred income tax
liabilities
|
24,977
|
|
24,622
|
Convertible senior
notes
|
3,540,120
|
|
3,538,229
|
Operating lease
liabilities
|
800,107
|
|
774,806
|
Other
liabilities
|
106,768
|
|
106,181
|
Total
liabilities
|
5,301,839
|
|
5,302,882
|
Total stockholders'
equity
|
4,633,767
|
|
4,597,155
|
Total liabilities and
stockholders' equity
|
$ 9,935,606
|
|
$ 9,900,037
|
AKAMAI TECHNOLOGIES,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months
Ended
|
(in thousands,
except per share data)
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Revenue
|
$
986,970
|
|
$
995,017
|
|
$
915,698
|
Costs and operating
expenses:
|
|
|
|
|
|
Cost of revenue
(1) (2)
|
394,743
|
|
393,397
|
|
361,316
|
Research and
development (1)
|
116,932
|
|
109,202
|
|
91,863
|
Sales and marketing
(1)
|
134,570
|
|
135,256
|
|
129,107
|
General and
administrative (1) (2)
|
152,430
|
|
155,575
|
|
146,139
|
Amortization of
acquired intangible assets
|
21,023
|
|
16,833
|
|
15,912
|
Restructuring charge
(benefit)
|
544
|
|
(32)
|
|
44,723
|
Total costs and
operating expenses
|
820,242
|
|
810,231
|
|
789,060
|
Income from
operations
|
166,728
|
|
184,786
|
|
126,638
|
Interest and
marketable securities income, net
|
27,841
|
|
23,981
|
|
5,292
|
Interest
expense
|
(6,818)
|
|
(6,884)
|
|
(2,681)
|
Other income
(expense), net
|
511
|
|
(5,642)
|
|
(2,363)
|
Income before provision
for income taxes
|
188,262
|
|
196,241
|
|
126,886
|
Provision for income
taxes
|
(12,844)
|
|
(35,076)
|
|
(29,780)
|
Net income
|
$
175,418
|
|
$
161,165
|
|
$
97,106
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
Basic
|
$
1.16
|
|
$
1.07
|
|
$
0.62
|
Diluted
|
$
1.11
|
|
$
1.03
|
|
$
0.62
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
Basic
|
151,628
|
|
150,979
|
|
155,637
|
Diluted
|
157,466
|
|
157,024
|
|
156,135
|
|
(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,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
175,418
|
|
$
161,165
|
|
$
97,106
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
156,183
|
|
147,634
|
|
135,457
|
Stock-based
compensation
|
93,260
|
|
92,123
|
|
61,883
|
(Benefit) provision
for deferred income taxes
|
(10,467)
|
|
(13,224)
|
|
4,925
|
Amortization of debt
issuance costs
|
1,682
|
|
1,741
|
|
1,098
|
Gain on
investments
|
—
|
|
—
|
|
(174)
|
Other non-cash
reconciling items, net
|
2,062
|
|
5,019
|
|
21,602
|
Changes in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
(736)
|
|
(2,941)
|
|
(25,251)
|
Prepaid expenses and
other current assets
|
(26,016)
|
|
(2,623)
|
|
(26,009)
|
Accounts payable and
accrued expenses
|
(66,949)
|
|
20,345
|
|
(97,263)
|
Deferred
revenue
|
34,316
|
|
(24,098)
|
|
36,449
|
Other current
liabilities
|
356
|
|
(774)
|
|
25,834
|
Other non-current
assets and liabilities
|
(7,231)
|
|
4,826
|
|
(2,158)
|
Net cash provided by
operating activities
|
351,878
|
|
389,193
|
|
233,499
|
Cash flows from
investing activities:
|
|
|
|
|
|
Cash paid for business
acquisition, net of cash acquired
|
—
|
|
—
|
|
(20,070)
|
Cash paid for asset
acquisitions
|
—
|
|
(84,637)
|
|
—
|
Purchases of property
and equipment and capitalization of internal-use software
development costs
|
(173,754)
|
|
(133,887)
|
|
(222,245)
|
Purchases of short-
and long-term marketable securities
|
(170,019)
|
|
(277,053)
|
|
(134,191)
|
Proceeds from sales,
maturities and redemptions of short- and long-term marketable
securities
|
182,255
|
|
178,382
|
|
276,886
|
Other, net
|
9,935
|
|
1,362
|
|
(20,268)
|
Net cash used in
investing activities
|
(151,583)
|
|
(315,833)
|
|
(119,888)
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from the
issuance of common stock under stock plans
|
20,310
|
|
13,426
|
|
21,257
|
Employee taxes paid
related to net share settlement of stock-based awards
|
(109,333)
|
|
(15,312)
|
|
(29,894)
|
Repurchases of common
stock
|
(125,449)
|
|
(54,891)
|
|
(348,600)
|
Other, net
|
(1,509)
|
|
—
|
|
(52)
|
Net cash used in
financing activities
|
(215,981)
|
|
(56,777)
|
|
(357,289)
|
Effects of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(4,013)
|
|
11,597
|
|
2,297
|
Net (decrease) increase
in cash, cash equivalents and restricted cash
|
(19,699)
|
|
28,180
|
|
(241,381)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
490,470
|
|
462,290
|
|
543,022
|
Cash, cash equivalents
and restricted cash at end of period
|
$
470,771
|
|
$
490,470
|
|
$
301,641
|
AKAMAI TECHNOLOGIES,
INC.
SUPPLEMENTAL REVENUE
DATA – REVENUE BY SOLUTION
|
|
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Security
|
$ 490,681
|
|
$ 470,977
|
|
$ 405,552
|
Delivery
|
351,758
|
|
389,048
|
|
394,384
|
Compute
|
144,531
|
|
134,992
|
|
115,762
|
Total
revenue
|
$ 986,970
|
|
$ 995,017
|
|
$ 915,698
|
Revenue growth rates
year-over-year:
|
|
|
|
|
|
Security
|
21 %
|
|
18 %
|
|
6 %
|
Delivery
|
(11)
|
|
(6)
|
|
(11)
|
Compute
|
25
|
|
20
|
|
49
|
Total
revenue
|
8 %
|
|
7 %
|
|
1 %
|
Revenue growth rates
year-over-year, adjusted for the impact of foreign exchange rates
(1):
|
|
|
|
|
|
Security
|
21 %
|
|
17 %
|
|
9 %
|
Delivery
|
(10)
|
|
(7)
|
|
(9)
|
Compute
|
25
|
|
20
|
|
51
|
Total
revenue
|
8 %
|
|
7 %
|
|
4 %
|
|
|
AKAMAI TECHNOLOGIES,
INC.
SUPPLEMENTAL REVENUE
DATA – REVENUE BY GEOGRAPHY
|
|
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
U.S.
|
$ 512,347
|
|
$ 516,348
|
|
$ 473,833
|
International
|
474,623
|
|
478,669
|
|
441,865
|
Total
revenue
|
$ 986,970
|
|
$ 995,017
|
|
$ 915,698
|
Revenue growth rates
year-over-year:
|
|
|
|
|
|
U.S.
|
8 %
|
|
7 %
|
|
(1) %
|
International
|
7
|
|
8
|
|
5
|
Total
revenue
|
8 %
|
|
7 %
|
|
1 %
|
Revenue growth rates
year-over-year, adjusted for the impact of foreign exchange rates
(1):
|
|
|
|
|
|
U.S.
|
8 %
|
|
7 %
|
|
(1) %
|
International
|
8
|
|
6
|
|
9
|
Total
revenue
|
8 %
|
|
7 %
|
|
4 %
|
|
(1) See
Use of Non-GAAP Financial Measures below for a
definition
|
AKAMAI TECHNOLOGIES,
INC.
OTHER SUPPLEMENTAL
DATA
|
|
|
Three Months
Ended
|
(in thousands,
except end of period statistics)
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Stock-based
compensation:
|
|
|
|
|
|
Cost of
revenue
|
$
12,618
|
|
$
11,898
|
|
$
9,329
|
Research and
development
|
38,045
|
|
36,428
|
|
21,844
|
Sales and
marketing
|
18,811
|
|
17,895
|
|
13,545
|
General and
administrative
|
23,786
|
|
25,902
|
|
17,165
|
Total stock-based
compensation
|
$
93,260
|
|
$
92,123
|
|
$
61,883
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
Network-related
depreciation
|
$
65,675
|
|
$
63,225
|
|
$
52,176
|
Capitalized
internal-use software development amortization
|
43,632
|
|
43,919
|
|
43,477
|
Other depreciation and
amortization
|
16,030
|
|
16,170
|
|
16,234
|
Depreciation of
property and equipment
|
125,337
|
|
123,314
|
|
111,887
|
Capitalized stock-based
compensation amortization (1)
|
9,712
|
|
7,379
|
|
7,533
|
Capitalized interest
expense amortization (1)
|
111
|
|
108
|
|
125
|
Amortization of
acquired intangible assets
|
21,023
|
|
16,833
|
|
15,912
|
Total depreciation and
amortization
|
$ 156,183
|
|
$ 147,634
|
|
$ 135,457
|
|
|
|
|
|
|
Capital
expenditures, excluding stock-based compensation and interest
expense (2)
(3):
|
|
|
|
|
|
Purchases of property
and equipment
|
$
74,635
|
|
$
80,408
|
|
$ 157,530
|
Capitalized
internal-use software development costs
|
77,491
|
|
62,355
|
|
66,264
|
Total capital
expenditures, excluding stock-based compensation and interest
expense
|
$ 152,126
|
|
$ 142,763
|
|
$ 223,794
|
Capex as a
percentage of revenue (3)
|
15 %
|
|
14 %
|
|
24 %
|
|
|
|
|
|
|
End of period
statistics:
|
|
|
|
|
|
Number of
employees
|
10,533
|
|
10,281
|
|
9,960
|
|
|
(1)
|
Amortization of
capitalized stock-based compensation and interest expense in this
table excludes amortization of capitalized stock-based compensation
and interest expense capitalized related to cloud-computing
arrangements and contract fulfillment costs. 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 versus prior periods.
|
(3)
|
See Use of Non-GAAP
Financial Measures below for a definition
|
AKAMAI TECHNOLOGIES,
INC.
RECONCILIATION OF
GAAP TO NON-GAAP INCOME FROM OPERATIONS, NET INCOME AND TAX
RATE
|
|
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Income from
operations
|
$ 166,728
|
|
$ 184,786
|
|
$ 126,638
|
GAAP operating
margin
|
17 %
|
|
19 %
|
|
14 %
|
Amortization of
acquired intangible assets
|
21,023
|
|
16,833
|
|
15,912
|
Stock-based
compensation
|
93,260
|
|
92,123
|
|
61,883
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
10,123
|
|
7,774
|
|
7,913
|
Restructuring charge
(benefit)
|
544
|
|
(32)
|
|
44,723
|
Acquisition-related
costs
|
172
|
|
1,189
|
|
6,768
|
Operating
adjustments
|
125,122
|
|
117,887
|
|
137,199
|
Non-GAAP income from
operations
|
$ 291,850
|
|
$ 302,673
|
|
$ 263,837
|
Non-GAAP operating
margin
|
30 %
|
|
30 %
|
|
29 %
|
|
|
|
|
|
|
Net income
|
$ 175,418
|
|
$ 161,165
|
|
$
97,106
|
Operating adjustments
(from above)
|
125,122
|
|
117,887
|
|
137,199
|
Amortization of debt
issuance costs
|
1,682
|
|
1,741
|
|
1,098
|
Gain on
investments
|
—
|
|
—
|
|
(174)
|
Income tax effect of
above non-GAAP adjustments and certain discrete tax
items
|
(46,727)
|
|
(18,162)
|
|
(16,915)
|
Non-GAAP net
income
|
$ 255,495
|
|
$ 262,631
|
|
$ 218,314
|
|
|
|
|
|
|
GAAP tax
rate
|
7 %
|
|
18 %
|
|
23 %
|
Income tax effect of
non-GAAP adjustments and certain discrete tax items
|
12
|
|
(1)
|
|
(5)
|
Non-GAAP tax
rate
|
19 %
|
|
17 %
|
|
18 %
|
AKAMAI TECHNOLOGIES,
INC.
RECONCILIATION OF
GAAP TO NON-GAAP NET INCOME PER DILUTED SHARE
|
|
|
Three Months
Ended
|
(in thousands,
except per share data)
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
GAAP net income per
diluted share
|
$
1.11
|
|
$
1.03
|
|
$
0.62
|
Adjustments to net
income:
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
0.13
|
|
0.11
|
|
0.10
|
Stock-based
compensation
|
0.59
|
|
0.59
|
|
0.40
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
0.06
|
|
0.05
|
|
0.05
|
Restructuring charge
(benefit)
|
—
|
|
—
|
|
0.29
|
Acquisition-related
costs
|
—
|
|
0.01
|
|
0.04
|
Amortization of debt
issuance costs
|
0.01
|
|
0.01
|
|
0.01
|
Gain on
investments
|
—
|
|
—
|
|
—
|
Income tax effect of
above non-GAAP adjustments and certain discrete tax
items
|
(0.30)
|
|
(0.12)
|
|
(0.11)
|
Adjustment for shares
(1)
|
0.02
|
|
0.02
|
|
—
|
Non-GAAP net income per
diluted share
|
$
1.64
|
|
$
1.69
|
|
$
1.40
|
|
|
|
|
|
|
Shares used in GAAP per
diluted share calculations
|
157,466
|
|
157,024
|
|
156,135
|
Impact of benefit from
note hedge transactions (1)
|
(2,114)
|
|
(1,755)
|
|
—
|
Shares used in non-GAAP
per diluted share calculations (1)
|
155,352
|
|
155,269
|
|
156,135
|
|
|
(1)
|
Shares used in non-GAAP
per diluted share calculations have been adjusted for the three
months ended March 31, 2024 and December 31, 2023 for the benefit
of Akamai's note hedge transactions. During those periods, 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
|
(in
thousands)
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Net income
|
$ 175,418
|
|
$ 161,165
|
|
$
97,106
|
Net income
margin
|
18 %
|
|
16 %
|
|
11 %
|
Interest and
marketable securities income, net
|
(27,841)
|
|
(23,981)
|
|
(5,292)
|
Provision for income
taxes
|
12,844
|
|
35,076
|
|
29,780
|
Depreciation and
amortization
|
125,337
|
|
123,314
|
|
111,887
|
Amortization of
capitalized stock-based compensation and capitalized interest
expense
|
10,123
|
|
7,774
|
|
7,913
|
Amortization of
acquired intangible assets
|
21,023
|
|
16,833
|
|
15,912
|
Stock-based
compensation
|
93,260
|
|
92,123
|
|
61,883
|
Restructuring charge
(benefit)
|
544
|
|
(32)
|
|
44,723
|
Acquisition-related
costs
|
172
|
|
1,189
|
|
6,768
|
Interest
expense
|
6,818
|
|
6,884
|
|
2,681
|
Gain on
investments
|
—
|
|
—
|
|
(174)
|
Other (income)
expense, net
|
(511)
|
|
5,642
|
|
2,537
|
Adjusted
EBITDA
|
$ 417,187
|
|
$ 425,987
|
|
$ 375,724
|
Adjusted EBITDA
margin
|
42 %
|
|
43 %
|
|
41 %
|
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 financial measures). 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,
non-GAAP tax rate, 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 measures 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, as well as
certain additional compensation costs payable to employees acquired
from the Linode acquisition if employed for a certain period of
time. The additional compensation cost was initiated by and
determined by the seller, and is in addition to normal levels of
compensation, including retention programs, offered by Akamai.
Acquisition-related costs are impacted by the timing and size of
the acquisitions, and Akamai excludes acquisition-related costs
from its non-GAAP financial measures to provide a useful comparison
of operating results to prior periods and to peer companies because
such amounts vary significantly based on the magnitude of the
acquisition transactions and do not reflect Akamai's core
operations.
- Restructuring charge – Akamai has incurred restructuring
charges from programs that have significantly changed either the
scope of the business undertaken by the Company or the manner in
which that business is conducted. These charges include severance
and related expenses for workforce reductions, impairments of
long-lived assets that will no longer be used in operations
(including right-of-use assets, other facility-related property and
equipment and internal-use software) and termination fees for any
contracts cancelled as part of these programs. 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 issuance costs and capitalized interest
expense – Akamai has convertible senior notes outstanding that
mature in 2029, 2027 and 2025. The issuance costs of the
convertible senior notes are amortized to interest expense and are
excluded from Akamai's non-GAAP results because management believes
the non-cash amortization 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 these gains and losses are
not representative of Akamai's core business operations and ongoing
operating performance.
- Gains and losses from equity method investment – Akamai
records income or losses on its share of earnings and losses from
its equity method investment, and any gains from returns of
investments or impairments. Akamai excludes such income and losses
because it does not have direct 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 the
impact of intercompany sales of intellectual property related to
acquisitions), 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; 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; amortization of debt issuance costs;
amortization of capitalized interest expense; certain gains and
losses on investments; gains and losses from equity method
investment; and other non-recurring or unusual items that may arise
from time to time.
Non-GAAP tax rate – GAAP tax rate excluding the tax
effect of non-GAAP adjustments and certain discrete tax items.
Non-GAAP net income per diluted share, or EPS –
Non-GAAP net income divided by weighted average diluted common
shares outstanding. Diluted weighted average common 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
$1,265 million of convertible senior
notes due 2029 and 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, Akamai 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 2029, 2027
and 2025, unless Akamai's weighted average stock price is greater
than $126.31, $116.18 and $95.10,
respectively, the initial conversion prices, 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 and marketable securities income and
losses; income taxes; depreciation and amortization of tangible and
intangible assets; stock-based compensation; amortization of
capitalized stock-based compensation; acquisition-related costs;
restructuring charges; foreign exchange gains and losses; interest
expense; amortization of capitalized interest expense; certain
gains and losses on investments; gains and losses from 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.
Capex as a percentage of revenue – Capital
expenditures, or capex, excluding stock-based compensation and
interest expense, stated as a percentage of revenue.
Impact of foreign currency exchange rate – Revenue
and earnings from international operations have historically been
important contributors 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 international 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 statements that are not
statements of historical fact and constitute forward-looking
statements for purposes of the safe harbor provisions under The
Private Securities Litigation Reform Act of 1995, including, but
not limited to, statements about expected future financial
performance, expectations, plans and prospects of Akamai. 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; 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; effects of competition, including pricing
pressure and changing business models; impact of macroeconomic
trends, including economic uncertainty, turmoil in the financial
services industry, the effects of inflation, rising and fluctuating
interest rates, foreign currency exchange rate fluctuations,
securities market volatility and monetary supply fluctuations;
conditions and uncertainties in the geopolitical environment,
including sanctions and disruptions resulting from the ongoing war
in Ukraine; continuing supply
chain and logistics costs, constraints, changes or disruptions;
defects or disruptions in our products or IT systems, including
cyber-attacks, data breaches or malware; failure to realize the
expected benefits of any of our acquisitions or reorganizations;
changes to economic, political and regulatory conditions in
the United States and
internationally; our ability to attract and retain key personnel;
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 our Annual Report
on Form 10-K, quarterly reports on Form 10-Q, and other documents
filed with the SEC.
In addition, the statements in this press release and on our
quarterly earnings conference 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
|
|
Mark
Stoutenberg
|
Media
Relations
|
|
Investor
Relations
|
Akamai
Technologies
|
|
Akamai
Technologies
|
646-320-4107
|
|
857-227-4491
|
gsorice@akamai.com
|
|
mstouten@akamai.com
|
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SOURCE Akamai Technologies, Inc.