Akamai Reports Fourth Quarter 2012 And Full-Year 2012 Financial Results

   Akamai Reports Fourth Quarter 2012 And Full-Year 2012 Financial Results

PR Newswire

CAMBRIDGE, Mass., Feb. 6, 2013

CAMBRIDGE, Mass., Feb. 6, 2013 /PRNewswire/ -- 

  o Fourth quarter revenue of $378 million, up 17 percent year-over-year; and
    annual revenue of $1,374 million, up 19 percent year-over-year
  o Fourth quarter GAAP net income of $68 million, up 14 percent
    year-over-year, or $0.38 per diluted share, up 15 percent year-over-year;
    and full-year GAAP net income of $204 million, up 2 percent
    year-over-year, or $1.12 per diluted share, up 5 percent year-over-year
  o Fourth quarter normalized net income* of $98 million, up 18 percent
    year-over-year, or $0.54 per diluted share, up 20 percent year-over-year;
    and full-year normalized net income* of $329 million, up 16 percent
    year-over-year, or $1.81 per diluted share, up 19 percent year-over-year
  o Board of Directors authorizes $150 million extension of share repurchase
    program

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 fourth quarter and
full-year ended December 31, 2012.  Revenue for the fourth quarter 2012 was
$378 million, a 9 percent increase over third quarter revenue of $345 million,
and a 17 percent increase over fourth quarter 2011 revenue of $324 million. 
Total revenue for 2012 was $1,374 million, a 19 percent increase over 2011
revenue of $1,159 million.

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

"With strong revenue and profit performance in the fourth quarter, Akamai
closed out 2012 with record results on both the top and bottom line," said Tom
Leighton, CEO of Akamai.  "Throughout the year, we announced new products
across every solution line, closed a record number of strategic acquisitions,
and achieved margin expansion through continued improvement in our network
efficiency even as we expanded its capacity worldwide to meet rising demand
for Akamai services.  We believe these efforts have positioned us well to help
our customers capitalize on the opportunities, and mitigate the challenges, of
conducting business online."

Net income in accordance with United States Generally Accepted Accounting
Principles, or GAAP, for the fourth quarter of 2012 was $68 million, or $0.38
per diluted share.  Full-year GAAP net income for 2012 was $204 million, or
$1.12 per diluted share.

The Company generated normalized net income* of $98 million, or $0.54 per
diluted share, in the fourth quarter of 2012, a 25 percent increase over the
prior quarter's normalized net income of $79 million, or $0.43 per diluted
share, and an 18 percent increase over fourth quarter 2011 normalized net
income of $83 million, or $0.45 per diluted share.  Full-year normalized net
income grew 16 percent year-over-year to $329 million, or $1.81 per diluted
share. (*See Use of Non-GAAP Financial Measures below for definitions.)

Adjusted EBITDA* for the fourth quarter of 2012 was $173 million, up from $157
million in the prior quarter, and $148 million in the fourth quarter of 2011. 
Adjusted EBITDA margin* for the fourth quarter was 46 percent, up a point from
the prior quarter and consistent with the same period last year.  For the full
year, adjusted EBITDA was $615 million, up from $525 million in 2011. 
Full-year adjusted EBITDA margin in 2012 was at 45 percent, consistent with
the prior year.  (*See Use of Non-GAAP Financial Measures below for
definitions.)  

Full-year cash from operations was $530 million, or 39 percent of revenue,
consistent with the prior year.  At year end, the Company had over $1 billion
of cash, cash equivalents and marketable securities.

Sales through resellers and sales outside the United States accounted for 23
percent and 29 percent, respectively, of revenue for the fourth quarter 2012.

Share Repurchase Program
The Company also announced today that its Board of Directors has authorized a
$150 million extension of its share repurchase program, effective for a
12-month period beginning on February 1, 2013.  As of this date, all prior
repurchase authorizations have expired.  The Company's goal for this program,
which is expected to be funded through its free cash flow, is primarily to
offset dilution created by its equity compensation programs.

The timing and amount of any shares repurchased will be determined by the
Company's management based on its evaluation of market conditions and other
factors. Repurchases 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.  The Company may choose to
suspend or discontinue the repurchase program at any time but cannot carry
over unused authorization amounts to future periods.

During the fourth quarter of 2012, under its current share repurchase program,
the Company spent approximately $30 million repurchasing 0.8 million shares of
its common stock, at an average price of $37.53 per share.  During 2012, the
Company spent approximately $141 million repurchasing 4.4 million shares of
its common stock, at an average price of $32.45 per share.

The Company had approximately 178 million shares of common stock outstanding
as of December 31, 2012. 

Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed
through 1-866-314-4483 (or 1-617-213-8049 for international calls) and using
passcode No. 17717131.  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. 29167666.

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)
                                           Dec. 31, 2012    Dec. 31, 2011
Assets
Cash and cash equivalents                  $       201,989  $         559,197
Marketable securities                      235,592          290,029
Accounts receivable, net                   218,777          210,936
Deferred income tax assets, current        20,422           6,444
portion
Prepaid expenses and other current assets  51,604           55,414
Current assets                             728,384          1,122,020
Marketable securities                      657,659          380,729
Property and equipment, net                345,091          293,043
Goodwill and other intangible assets, net  815,879          498,300
Other assets                               39,811           7,924
Deferred income tax assets, net            13,803           43,485
Total assets                               $    2,600,627   $      2,345,501
Liabilities and stockholders' equity
Accounts payable and accrued expenses      $       176,378  $          123,618
Other current liabilities                  26,566           24,774
Current liabilities                        202,944          148,392
Other liabilities                          51,929           40,859
Total liabilities                          254,873          189,251
Stockholders' equity                       2,345,754        2,156,250
Total liabilities and stockholders'        $    2,600,627   $       2,345,501
equity

 

Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
                     Three Months Ended               Year Ended
                     Dec. 31,   Sep. 30,   Dec. 31,   Dec. 31,     Dec. 31,
                     2012       2012       2011       2012         2011
Revenues             $          $          $          $ 1,373,947  $ 1,158,538
                     377,872    345,321    323,740
Costs and operating
expenses:  
  Cost of revenues * 111,893    109,995    102,544    431,911      374,543
†
  Research and       20,371     19,351     15,191     74,744       52,333
development *
  Sales and          85,308     75,924     66,609     304,404      227,331
marketing *
  General and        58,819     54,511     51,016     227,033      191,726
administrative * †
  Amortization of
other intangible     5,351      5,381      4,316      20,962       17,070
assets
  Restructuring      392        -          4,728      406          4,886
charge 
    Total costs and  282,134    265,162    244,404    1,059,460    867,889
operating expenses
Operating income     95,738     80,159     79,336     314,487      290,649
Interest income, net 1,590      1,593      1,863      6,455        10,921
Loss on investments, -          -          (500)      -            (500)
net
Other income         200        (241)      7,455      649          6,125
(expense), net
Income before
provision for income 97,528     81,511     88,154     321,591      307,195
taxes
Provision for income 29,236     33,280     28,073     117,602      106,291
taxes
Net income           $          $          $          $   203,989  $  
                     68,292     48,231     60,081                   200,904
Net income per
share:
    Basic            $          $          $          $            $        
                     0.38         0.27       0.34     1.15          1.09
    Diluted          $          $          $          $            $        
                     0.38         0.27       0.33     1.12          1.07
Shares used in per
share calculations:
    Basic            177,479    177,455    178,916    177,900      183,866
    Diluted          181,768    181,053    182,956    181,749      187,556
* 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 Months Ended                 Year  Ended
                       Dec. 31,    Sep. 30,    Dec. 31,   Dec. 31,   Dec. 31,
                       2012        2012        2011       2012       2011
 Cash flows from
operating activities: 
    Net income         $   68,292  $   48,231  $  60,081  $ 203,989  $ 200,904
  Adjustments to
 reconcile net income
 to net cash provided
 by operating
 activities: 
   Depreciation and    54,960      53,457      43,650     204,163    167,878
  amortization  
   Stock-based         21,405      22,635      18,840     90,585     61,305
  compensation 
  (Benefit) provision
  for deferred income  (6,645)     826         32,722     (5,819)    53,628
  taxes, net
  Excess tax benefits
  from stock-based     (5,426)     (2,540)     (1,663)    (23,015)   (13,123)
  compensation
   Loss on investments
  and disposal of      65          142         769        3          597
  property and
  equipment, net 
   Provision for       (255)       (345)       830        (316)      2,066
  doubtful accounts 
   Non-cash portion of
  restructuring        -           -           412        -          412
  charge 
   Changes in
  operating assets and
  liabilities: 
     Accounts          19,479      (27,974)    (30,016)   (2,108)    (37,837)
    receivable 
     Prepaid expenses
    and other current  (5,037)     2,131       (6,936)    6,066      (7,014)
    assets 
     Accounts payable,
    accrued expenses   4,921       44,591      20,452     59,653     15,184
    and other current
    liabilities 
     Accrued           (381)       (28)        3,752      (3,278)    3,572
    restructuring 
     Deferred revenue  (990)       1,401       (2,335)    4,552      (3,721)
     Other noncurrent
    assets and         (3,534)     (1,031)     (4,651)    (4,070)    8,704
    liabilities  
  Net cash provided by 146,854     141,496     135,907    530,405    452,555
 operating activities 
 Cash flows from
investing activities: 
   Cash paid for
  acquired businesses, (30,650)    (14,392)    -          (336,680)  (550)
  net of cash
  received 
   Purchases of
  property and
  equipment and        (60,669)    (60,294)    (46,570)   (219,846)  (182,862)
  capitalization of
  internal-use
  software costs 
   Proceeds from sales
  and maturities of
  short- and long-term 179,913     98,567      334,103    530,065    1,234,223
  marketable
  securities 
   Purchases of short-
  and long-term        (198,039)   (137,809)   (152,657)  (752,342)  (880,110)
  marketable
  securities 
   Proceeds from the
  sale of property and -           -           15         12         150
  equipment 
   Increase in other   (250)       -           -          (250)      -
  investments 
   Decrease in
  restricted           -           -           51         -          272
  investments held for
  security deposits 
   Net cash (used in)
  provided by          (109,695)   (113,928)   134,942    (779,041)  171,123
  investing
  activities 
 Cash flows from
financing activities: 
   Proceeds from the
  issuance of common
  stock under stock
  option 
     and employee
    stock purchase     16,025      6,066       11,947     44,660     25,252
    plans 
   Excess tax benefits
  from stock-based     5,426       2,540       1,663      23,015     13,123
  compensation 
   Taxes paid related
  to net share         (8,124)     (2,370)     (2,713)    (34,690)   (8,393)
  settlement of equity
  awards 
   Repurchase of       (29,819)    (36,523)    (76,332)   (141,468)  (324,070)
  common stock 
   Net cash used in
  financing            (16,492)    (30,287)    (65,435)   (108,483)  (294,088)
  activities 
  Effects of exchange
 rate changes on cash  (1,328)     2,373       (1,816)    (89)       (2,259)
 and cash equivalents 
  Net increase
 (decrease) in cash    19,339      (346)       203,598    (357,208)  327,331
 and cash equivalents 
  Cash and cash
 equivalents,          182,650     182,996     355,599    559,197    231,866
 beginning of period 
  Cash and cash
 equivalents, end of   $ 201,989   $ 182,650   $ 559,197  $ 201,989  $ 559,197
 period 

 

                         Three Months Ended            Year Ended
                         Dec. 31,  Sep. 30,  Dec. 31,  Dec. 31,     Dec. 31,
                         2012      2012      2011      2012         2011
Supplemental financial
data (in thousands):
Stock-based
compensation:
Cost of revenues         $         $         $         $     2,871  $    2,360
                          620       684       581
Research and             4,017     4,427     3,610     17,275       11,125
development 
Sales and marketing      10,736    10,896    8,878     42,760       27,990
General and              6,032     6,628     5,771     27,679       19,830
administrative 
     Total stock-based   $ 21,405  $ 22,635  $ 18,840  $   90,585   $  61,305
compensation 
Depreciation and
amortization:
Network-related          $ 42,143  $ 41,022  $ 33,170  $ 155,759    $ 126,764
depreciation
Capitalized stock-based
compensation             1,961     2,025     1,713     7,680        7,308
amortization
Other depreciation and   5,505     5,029     4,451     19,762       16,736
amortization
Amortization of other    5,351     5,381     4,316     20,962       17,070
intangible assets
Total depreciation and   $ 54,960  $ 53,457  $ 43,650  $ 204,163    $ 167,878
amortization
Capital expenditures:
Purchases of property    $ 46,386  $ 46,635  $ 34,450  $ 165,642    $ 140,219
and equipment
Capitalized internal-use 14,283    13,659    12,120    54,204       42,643
software
Capitalized stock-based  2,582     2,561     2,067     9,276        7,473
compensation
Total capital            $ 63,251  $ 62,855  $ 48,637  $ 229,122    $ 190,335
expenditures
Net increase (decrease)
in cash, cash            $ 36,906  $ 39,889  $ 38,960  $(134,715)   $(13,447)
equivalents, marketable
securities and
restricted cash and
marketable securities
End of period
statistics:
Number of employees      3,074     2,884     2,380
Number of deployed       127,638   119,370   105,111
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 Ended                  Year Ended
                      Dec. 31,    Sep. 30,    Dec. 31,    Dec. 31,   Dec. 31,
                      2012        2012        2011        2012       2011
Net income            $   68,292  $   48,231  $   60,081  $ 203,989  $ 200,904
Amortization of other 5,351       5,381       4,316       20,962     17,070
intangible assets
Stock-based           21,405      22,635      18,840      90,585     61,305
compensation
Amortization of
capitalized           1,961       2,025       1,713       7,680      7,308
stock-based
compensation
Loss on investments,  -           -           500         -          500
net
Acquisition related   680         279         1,020       5,787      580
costs 
Legal settlements,    -           -           (8,043)     -          (8,043)
net
Restructuring charge  392         -           4,728       406        4,886
Total normalized net  98,081      78,551      83,155      329,409    284,510
income:
Interest income, net  (1,590)     (1,593)     (1,863)     (6,455)    (10,921)
Provision for income  29,236      33,280      28,073      117,602    106,291
taxes
Depreciation and      47,648      46,051      37,621      175,521    143,500
amortization
Other (income)        (200)       241         588         (649)      1,918
expense, net
Total Adjusted        $ 173,175   $ 156,530   $ 147,574   $ 615,428  $ 525,298
EBITDA:
Normalized net income
per share:
    Basic             $           $           $           $          $      
                      0.55        0.44        0.46        1.85       1.55
    Diluted           $           $           $           $          $      
                      0.54        0.43        0.45        1.81       1.52
Shares used in
normalized per share
calculations:
    Basic             177,479     177,455     178,916     177,900    183,866
    Diluted           181,768     181,053     182,956     181,749    187,556

Akamai Statement Under the Private Securities Litigation Reform Act
This release contains information about future expectations, plans and
prospects of Akamai's management that constitute forward-looking statements
for purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995, including statements about future business
opportunities. Actual results may differ materially from those indicated by
these forward-looking statements as a result of various important factors
including, but not limited to, effects of increased competition including
potential failure to maintain the prices we charge for our services and loss
of significant customers; failure of the markets we address or plan to address
to develop as we expect or at all; inability to increase our revenue at the
same rate as in the past and keep our expenses from increasing at a greater
rate than our revenues; a failure of Akamai's services or network
infrastructure; delay in developing or failure to develop new service
offerings or functionalities, and if developed, lack of market acceptance of
such service offerings and functionalities or failure of such solutions to
operate as expected, and other factors that are discussed in the Company's
Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other
documents periodically filed with the SEC.

In addition, the statements in this press release represent Akamai's
expectations and beliefs as of the date of this press release.  Akamai
anticipates that subsequent events and developments may cause these
expectations and beliefs to change.  However, while Akamai may elect to update
these forward-looking statements at some point in the future, it specifically
disclaims any obligation to do so.  These forward-looking statements should
not be relied upon as representing Akamai's expectations or beliefs as of any
date subsequent to the date of this press release.

Contacts:
Jeff Young                 Natalie Temple
Media Relations            Investor Relations
Akamai Technologies --or-- Akamai Technologies
617-444-3913               617-444-3635
jyoung@akamai.com
                           ntemple@akamai.com

SOURCE Akamai Technologies, Inc.

Website: http://www.akamai.com