Akamai Reports Second Quarter 2012 Financial Results

             Akamai Reports Second Quarter 2012 Financial Results

PR Newswire

CAMBRIDGE, Mass., July 25, 2012

CAMBRIDGE, Mass., July 25, 2012 /PRNewswire/ --

  oSecond quarter revenue of $331 million, up 20 percent year-over-year
  oGAAP net income of $44 million, down 8 percent year-over-year; or $0.24
    per diluted share, down 4 percent year-over-year
  oNormalized net income* of $78 million, up 18 percent year-over-year; or
    $0.43 per diluted share, up 23 percent year-over-year

Akamai Technologies, Inc. (NASDAQ: AKAM), the leading cloud platform for
helping enterprises provide secure, high-performing user experiences on any
device, anywhere, today reported financial results for the second quarter
ended June 30, 2012. Revenue for the second quarter of 2012 was $331 million,
a 20 percent increase over second quarter 2011 revenue of $277 million.

(Logo: http://photos.prnewswire.com/prnh/20100225/AKAMAILOGO )

Net income in accordance with United States Generally Accepted Accounting
Principles, or GAAP, for the second quarter of 2012 was $44 million, or $0.24
per diluted share, an 8 percent decrease from second quarter 2011 GAAP net
income of $48 million, or $0.25 per diluted share, and a 2 percent increase
from first quarter 2012 GAAP net income of $43 million, or $0.24 per diluted
share.

The Company generated normalized net income* of $78 million, or $0.43 per
diluted share, in the second quarter of 2012, an 18 percent increase over
second quarter 2011 normalized net income of $66 million, or $0.35 per diluted
share, and a 3 percent increase from the prior quarter normalized net income
of $75 million, or $0.41 per diluted share. (*See Use of Non-GAAP Financial
Measures below for definitions.)

"Akamai's very strong second quarter results were driven on the top line by
increased adoption of our cloud infrastructure solutions as well as continued
growth of content delivery solutions," said Paul Sagan, President and CEO of
Akamai. "Our bottom line performance was the result of significant benefits we
have begun to realize from improvements we are making to scale our network
operations."

Adjusted EBITDA* for the second quarter of 2012 was $143 million, up 13
percent from $126 million in the second quarter of 2011, and flat with the
prior quarter. Adjusted EBITDA margin* for the second quarter was 43 percent,
down 2 points from the prior quarter and down 3 points from the same period
last year. (*See Use of Non-GAAP Financial Measures below for definitions.)

Cash from operations was $150 million in the second quarter of 2012, or 45
percent of revenue. At the end of the second quarter of 2012, the Company had
just over $1 billion in cash, cash equivalents and marketable securities.

Sales through resellers and sales outside the United States accounted for 21
percent and 27 percent, respectively, of revenue for the second quarter of
2012.

Share Repurchase Program

During the second quarter of 2012, under a share repurchase program that was
approved by the Board of Directors in April 2011 and expanded in May 2012, the
Company repurchased approximately 2 million shares of its common stock for $67
million, at an average price of $30.78 per share. As of June 30, 2012, the
Company had repurchased 20 million shares of its common stock for $558
million, at an average price of $27.27 per share since April 2009.

The Company had approximately 178 million shares of common stock outstanding
as of June 30, 2012.

Quarterly Conference Call

Akamai will host a conference call today at 4:30 p.m. ET that can be accessed
through 1-800-291-5365 (or 1-617-614-3922 for international calls) and using
passcode No. 94771540. 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. 25706113.

About Akamai

Akamai^® is the leading cloud platform for helping enterprises provide secure,
high-performing user experiences on any device, anywhere. At the core of the
Company's solutions is the Akamai Intelligent Platform™ providing extensive
reach, coupled with unmatched reliability, security, visibility and
expertise. Akamai removes the complexities of connecting the increasingly
mobile world, supporting 24/7 consumer demand, and enabling enterprises to
securely leverage the cloud. To learn more about how Akamai is accelerating
the pace of innovation in a hyperconnected world, please visit www.akamai.com
or blogs.akamai.com, and follow @Akamai on Twitter.

Condensed Consolidated Balance Sheets
(dollar amounts in thousands)
(unaudited)
                              Jun. 30, 2012            Dec. 31, 2011
Assets
Cash and cash equivalents     $             $          
                                 182,996             559,197
Marketable securities         313,564                  290,029
Accounts receivable, net     206,316                  210,936
Deferred income tax assets,   6,444                    6,444
current portion
Prepaid expenses and other    47,285                   55,414
current assets
Current assets                756,605                  1,122,020
Marketable securities         521,885                  380,729
Property and equipment, net  315,866                  293,043
Goodwill and other            793,724                  498,300
intangible assets, net
Other assets                  14,314                   7,924
Deferred income tax assets,   43,182                   43,485
net
Total assets                  $             $          
                               2,445,576             2,345,501
Liabilities and
stockholders' equity
Accounts payable and accrued  $             $          
expenses                         139,154             123,618
Other current liabilities     26,698                   24,774
Current liabilities           165,852                  148,392
Other liabilities             65,091                   40,859
Total liabilities             230,943                  189,251
Stockholders' equity          2,214,633                2,156,250
Total liabilities and         $             $          
stockholders' equity           2,445,576             2,345,501

Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
                -------------------------------------Three  ----------Six
                Months                                      Months
                Ended-------------------------------------  Ended----------
                Jun. 30,         Mar. 31,      Jun. 30,     Jun.     Jun.
                                                            30,      30,
                2012             2012          2011         2012     2011
                $          $        $       $     $   
 Revenues        331,306                                   
                                 319,448       276,989      650,754  552,942
 Costs and
 operating
 expenses:
 Cost of        107,457          102,566       89,647       210,023  178,715
 revenues * +
 Research and   17,542           17,480        11,006       35,022   23,600
 development *
 Sales and      75,882           67,290        52,837       143,172  106,202
 marketing *
 General and
 administrative 57,997           55,706        45,975       113,703  89,876
 * +
 Amortization
 of other       5,463            4,767         4,292        10,230   8,569
 intangible
 assets
 Restructuring
 (benefit)      (46)             60            -            14       -
 charge
 Total costs
 and operating  264,295          247,869       203,757      512,164  406,962
 expenses
 Operating      67,011           71,579        73,232       138,590  145,980
 income
 Interest       1,626            1,646         3,096        3,272    6,056
 income, net
 Other income
 (expense) ,    1,131            (441)         (107)        690      (1,142)
 net
 Income before
 provision for  69,768           72,784        76,221       142,552  150,894
 income taxes
 Provision for  25,529           29,557        28,300       55,086   52,356
 income taxes
                $          $        $       $     $   
 Net income       44,239                                
                                 43,227        47,921       87,466   98,538
 Net income per
 share:
                $          $        $       $     $   
  Basic          0.25                            
                                  0.24         0.26        0.49    0.53
                $          $        $       $     $   
  Diluted        0.24                            
                                  0.24         0.25        0.48    0.52
 Shares used in
 per share
 calculations:
  Basic      178,547          178,120       186,612      178,333  186,731
  Diluted    181,817          182,342       190,179      182,080  190,781
 * Includes stock-based compensation (see supplemental table for
 figures)
 +Includes depreciation and amortization (see supplemental table
 for figures)



Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
                      -------------------------Three   ----------Six Months
                      Months                           Ended----------
                      Ended-------------------------
                      Jun. 30,   Mar. 31,   Jun. 30,   Jun. 30,   Jun. 30,
                      2012       2012       2011       2012       2011
Cash flows from
operating
activities:
                      $      $      $      $      $    
 Net income                   43,227   47,921   87,466   98,538
                      44,239
 Adjustments to
 reconcile net income
 to net cash provided
 by operating
 activities:
  Depreciation 50,112     45,634     41,333     95,746     82,467
 and amortization
  Stock-based  25,621     20,924     11,612     46,545     27,324
 compensation
  Excess tax
 benefits from        (1,635)    (13,414)   (1,838)    (15,049)   (10,850)
 stock-based
 compensation
  (Gain) loss
 on investments and   (107)      (97)       (113)      (204)      4
 disposal of property
 and equipment, net
  Provision
 for doubtful         (86)       370        132        284        454
 accounts
 
 Accounts            7,803      (1,416)    (7,101)    6,387      456
 receivable
 
 Prepaid expenses and 4,663      4,309      6,917      8,972      841
 other current
 assets
 
 Accounts payable,
 accrued expenses and 15,939     (5,798)    2,678      10,141     (5,713)
 other current
 liabilities
 
 Accrued              (725)      (2,144)    (32)       (2,869)    (32)
 restructuring
       2,667      1,474      1,271      4,141      (2,182)
 Deferred revenue
 
 Other noncurrent     1,061      (566)      9,068      495        9,052
 assets and
 liabilities
 Net cash provided by
 operating            149,552    92,503     111,848    242,055    200,359
 activities
Cash flows from
investing
activities:
 Cash paid
 for acquired         -          (291,638)  (375)      (291,638)  (550)
 businesses, net of
 cash received
  Purchases of
 property and
 equipment and        (55,539)   (43,344)   (42,740)   (98,883)   (88,975)
 capitalization of
 internal-use
 software costs
  Proceeds
 from sales and
 maturities of short- 134,171    117,414    263,870    251,585    511,137
 and long-term
 marketable
 securities
 Purchases of
 short- and long-term (135,845)  (280,649)  (302,520)  (416,494)  (578,135)
 marketable
 securities
  Proceeds
 from the sale of     2          10         63         12         88
 property and
 equipment
  Decrease in
 restricted           -          -          -          -          221
 investments held for
 security deposits
Net cash
used in investing     (57,211)   (498,207)  (81,702)   (555,418)  (156,214)
activities
Cash flows from
financing
activities:
  Proceeds
 from the issuance of
 common stock under
 stock option
  and
 employee stock       15,491     7,078      8,163      22,569     12,122
 purchase plans
  Excess tax
 benefits from        1,635      13,414     1,838      15,049     10,850
 stock-based
 compensation
  Taxes paid
 related to net share (2,541)    (21,655)   (3,507)    (24,196)   (3,507)
 settlement of equity
 awards
  Repurchase   (67,213)   (7,913)    (48,935)   (75,126)   (92,613)
 of common stock
 Net cash used in
 financing            (52,628)   (9,076)    (42,441)   (61,704)   (73,148)
 activities
 Effects of exchange
 rate changes on cash (1,441)    307        750        (1,134)    2,766
 and cash
 equivalents
 Net increase
 (decrease) in cash   38,272     (414,473)  (11,545)   (376,201)  (26,237)
 and cash
 equivalents
 Cash and cash
 equivalents,         144,724    559,197    217,174    559,197    231,866
 beginning of period
 Cash and cash        $      $      $      $      $    
 equivalents, end of            144,724   205,629   182,996   205,629
 period              182,996





                    -------------------------Three        ----------Six Months
                    Months                                Ended----------
                    Ended-------------------------
                    Jun. 30,     Mar. 31,       Jun. 30,  Jun. 30,    Jun. 30,
                    2012         2012           2011      2012        2011
Supplemental
financial data (in
thousands):
Stock-based
compensation:
                    $       $        $      $       $   
Cost of revenues      884     683                         
                                                590      1,567       1,145
Research and        4,901        3,930          2,124     8,831       4,886
development
Sales and           10,994       10,134         5,315     21,128      12,161
marketing
General and         8,842        6,177          3,583     15,019      9,132
administrative
 Total          $       $         $      $       $   
stock-based          25,621     20,924                  46,545   
compensation                                   11,612                27,324
Depreciation and
amortization:
Network-related     $       $         $      $       $   
depreciation         37,989     34,605                  72,594   
                                                31,245                61,932
Capitalized
stock-based         1,939        1,755          1,938     3,694       4,003
compensation
amortization
Other depreciation  4,721        4,507          3,858     9,228       7,963
and amortization
Amortization of
other intangible    5,463        4,767          4,292     10,230      8,569
assets
Total depreciation  $       $         $      $       $   
and amortization     50,112     45,634                  95,746   
                                                41,333                82,467
Capital
expenditures:
Purchases of        $       $         $      $       $   
property and         42,188     30,433                  72,621   
equipment                                       32,925                68,525
Capitalized
internal-use        13,351       12,911         9,815     26,262      20,450
software
Capitalized
stock-based         1,835        2,298          1,641     4,133       3,465
compensation
Total capital       $       $         $      $       $   
expenditures         57,374     45,642                 103,016    
                                                44,381                92,440
Net increase
(decrease) in cash,
cash equivalents,
marketable
securities and                                  $                  $   
restricted          $       $                   $        
marketable           39,725     (251,235)     28,236    (211,510)   42,071
securities
End of period
statistics:
Number of employees 2,654        2,539          2,244
Number of deployed  115,008      108,507        95,811
servers

*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 has
historically provided additional financial metrics that are not prepared in
accordance with GAAP (non-GAAP). Legislative and regulatory pronouncements
discourage the use of and emphasis on non-GAAP financial metrics and require
companies to explain why non-GAAP financial metrics are relevant to management
and investors. We believe that the inclusion of these non-GAAP financial
measures in this press release and our earnings call helps investors to gain a
meaningful understanding of our past performance and future prospects,
consistent with how management measures and forecasts our performance,
especially when comparing such results to previous periods or forecasts. Our
management uses these non-GAAP measures, in addition to GAAP financial
measures, as the basis for measuring our core operating performance and
comparing such performance to that of prior periods and to the performance of
our competitors. These measures are also used by management in its financial
and operational decision-making. There are limitations associated with
reliance on these non-GAAP financial metrics because they are specific to our
operations and financial performance, which may make comparisons with other
companies' financial results more challenging. By providing both GAAP and
non-GAAP financial measures, we believe that investors are able to compare our
GAAP results to those of other companies while also gaining a better
understanding of our operating performance as evaluated by management.

Akamai defines "Adjusted EBITDA" as net income, before interest, income taxes,
depreciation and amortization of tangible and intangible assets, stock-based
compensation expense, amortization of capitalized stock-based compensation,
restructuring charges and benefits, acquisition related costs and benefits,
certain gains and losses on investments, foreign exchange gains and losses,
loss on early extinguishment of debt and gains and losses on legal
settlements. Akamai considers Adjusted EBITDA to be an important indicator of
the Company's operational strength and performance of its business and a good
measure of the Company's historical operating trend.

Adjusted EBITDA eliminates items that are either not part of the Company's
core operations, such as investment gains and losses, foreign exchange gains
and losses, early debt extinguishment and net interest income, or that do not
require a cash outlay, such as stock-based compensation. Adjusted EBITDA also
excludes depreciation and amortization expense, which is based on the
Company's estimate of the useful life of tangible and intangible assets. These
estimates could vary from actual performance of the asset, are based on the
historical cost incurred to build out the Company's deployed network, and may
not be indicative of current or future capital expenditures.

Akamai defines "Adjusted EBITDA margin" as a percentage of Adjusted EBITDA as
a percentage of revenues. Akamai considers Adjusted EBITDA margin to be an
indicator of the Company's operating trend and performance of its business in
relation to its revenue growth.

Akamai defines "capital expenditures" or "capex" as purchases of property and
equipment, capitalization of internal-use software development costs and
capitalization of stock-based compensation. Capital expenditures or capex are
disclosed in Akamai's consolidated Statement of Cash Flows in the Company's
most recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission.

Akamai defines "normalized net income" as net income before amortization of
other intangible assets, stock-based compensation expense, amortization of
capitalized stock-based compensation, restructuring charges and benefits,
acquisition related costs and benefits, certain gains and losses on
investments, loss on early extinguishment of debt and gains and losses on
legal settlements. Akamai considers normalized net income to be another
important indicator of the overall performance of the Company because it
eliminates the effects of events that are either not part of the Company's
core operations or are non-cash.

Akamai defines "normalized net income per share" as normalized net income,
plus interest add-back for diluted share calculation, divided by the basic
weighted average or diluted common shares outstanding used in GAAP net income
per share calculations. Akamai considers normalized net income per share to be
another important indicator of overall performance of the Company because it
eliminates the effect of non-cash items. Adjusted EBITDA and normalized net
income should be considered in addition to, not as a substitute for, the
Company's operating income and net income, as well as other measures of
financial performance reported in accordance with GAAP.

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Regulation G issued by the Securities
and Exchange Commission, the Company is presenting the most directly
comparable GAAP financial measures and reconciling the non-GAAP financial
metrics to the comparable GAAP measures.

Reconciliation of GAAP net income to Normalized net income
and Adjusted EBITDA
(amounts in thousands, except per share data)
                   -------------------------Three Months  ----------Six Months
                   Ended-------------------------         Ended----------
                   Jun. 30,       Mar. 31,     Jun. 30,   Jun. 30,   Jun. 30,
                   2012           2012         2011       2012       2011
                   $        $       $       $       $   
Net income                     43,227    47,921    87,466    98,538
                   44,239
Amortization of
other intangible   5,463          4,767        4,292      10,230     8,569
assets
Stock-based        25,621         20,924       11,612     46,545     27,324
compensation
Amortization of
capitalized        1,939          1,755        1,938      3,694      4,003
stock-based
compensation
Acquisition
related costs      376            4,452        -          4,828      (440)
(benefits)
Restructuring      (46)           60           -          14         -
(benefit) charge
Total normalized   77,592         75,185       65,763     152,777    137,994
net income:
Interest income,   (1,626)        (1,646)      (3,096)    (3,272)    (6,056)
net
Provision for      25,529         29,557       28,300     55,086     52,356
income taxes
Depreciation and   42,710         39,112       35,103     81,822     69,895
amortization
Other (income)     (1,131)        441          107        (690)      1,142
expense, net
Total Adjusted     $        $       $        $        $  
EBITDA:               143,074  142,649     126,177   285,723   255,331
Normalized net
income per share:
                   $        $       $      $      $    
 Basic                      0.42   0.35     0.86     0.74
                   0.43
                   $        $       $      $      $    
 Diluted                    0.41   0.35     0.84     0.72
                   0.43
Shares used in
normalized per
share
calculations:
 Basic          178,547        178,120      186,612    178,333    186,731
 Diluted        181,817        182,342      190,179    182,080    190,781

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 revenue
growth. 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 potentially
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                 Natalie Temple

Media Relations            Investor Relations
                    --or--
Akamai Technologies        Akamai Technologies
617-444-3913               617-444-3635
jyoung@akamai.com
                           ntemple@akamai.com

SOURCE Akamai Technologies, Inc.

Website: http://www.akamai.com