Published: February 09, 2011
Akamai Reports Fourth Quarter 2010 and Full-Year 2010 Financial Results
CAMBRIDGE, Mass., Feb. 9, 2011 /PRNewswire/ --
-- Fourth quarter revenue grew to $284.7 million, up 12 percent from the
prior quarter and 19 percent year-over-year, and annual revenue
increased 19 percent year-over-year to $1,023.6 million
-- Fourth quarter GAAP net income increased 32 percent quarter-over-quarter
and 31 percent year-over-year to $52.5 million, or $0.27 per diluted
share, and full-year GAAP net income increased 17 percent year-over-year
to $171.2 million, or $0.90 per diluted share
-- Fourth quarter normalized net income* increased 19 percent
quarter-over-quarter and 22 percent year-over-year to $76.5 million, or
$0.40 per diluted share, and full-year normalized net income* increased
19 percent year-over-year to $271.7 million, or $1.43 per diluted share
-- Full-year cash from operations of $402.5 million: year-end cash, cash
equivalents and marketable securities of over $1.2 billion
Akamai Technologies, Inc. (Nasdaq: AKAM), the leading provider of cloud optimization services, today reported financial results for the fourth quarter and full-year ended December 31, 2010. Revenue for the fourth quarter 2010 was $284.7 million, a 12 percent increase over third quarter revenue of $253.6 million, and a 19 percent increase over fourth quarter 2009 revenue of $238.3 million. Total revenue for 2010 was $1,023.6 million, a 19 percent increase over 2009 revenue of $859.8 million.
(Logo: http://photos.prnewswire.com/prnh/20100225/AKAMAILOGO )
"With strength across cloud computing and online digital media solutions, Akamai completed its first $1 billion revenue year in 2010," said Paul Sagan, CEO of Akamai. "With our unique, distributed network and growing portfolio of solutions, we believe we are well positioned to help our customers grow as use of cloud computing, online commerce, software-as-a-service, and online media continue to proliferate around the world."
Net income in accordance with United States Generally Accepted Accounting Principles, or GAAP, for the fourth quarter of 2010 was $52.5 million, or $0.27 per diluted share. Full-year GAAP net income for 2010 was $171.2 million, or $0.90 per diluted share.
The Company generated normalized net income* of $76.5 million, or $0.40 per diluted share, in the fourth quarter of 2010, a 19 percent increase over prior quarter normalized net income of $64.2 million, or $0.34 per diluted share, and a 22 percent increase over fourth quarter 2009 normalized net income of $62.9 million, or $0.34 per diluted share. Full-year normalized net income grew 19 percent year-over-year to $271.7 million, or $1.43 per diluted share. (*See Use of Non-GAAP Financial Measures below for definitions.)
Adjusted EBITDA* for the fourth quarter of 2010 was $129.2 million, up from $114.1 million in the prior quarter, and $111.6 million in the fourth quarter of 2009. Adjusted EBITDA margin for the fourth quarter was 45 percent, consistent with the prior quarter and 2 points below the same period last year. For the full year, adjusted EBITDA was $473.6 million, up from $405.2 million in 2009. Full-year adjusted EBITDA margin in 2010 was at 46 percent, down a point from 2009. (*See Use of Non-GAAP Financial Measures below for definitions.)
Full-year cash from operations was $402.5 million, or 39 percent of revenue, down 5 percent from the prior year. At year end, the Company had over $1.2 billion of cash, cash equivalents and marketable securities.
Sales through resellers and sales outside the United States accounted for 18 percent and 27 percent, respectively, of revenue for the fourth quarter 2010.
During the fourth quarter of 2010, under a share repurchase program that was approved by the Board of Directors in April 2009 and extended in April 2010, the Company repurchased approximately 560,000 shares of common stock for $26.9 million at an average price of $48.06 per share. As of December 31, 2010, the Company had repurchased 5.8 million shares of common stock for $158.3 million at an average price of $27.38 per share
The Company had approximately 186.6 million shares of common stock outstanding as of December 31, 2010.
Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-800-884-5695 (or 1-617-786-2960 for international calls) and using passcode No. 30950348. 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. 44458971.
About Akamai
Akamai(®) provides market-leading, cloud-based services for optimizing Web and mobile content and applications, online HD video, and secure e-commerce. Combining highly-distributed, energy-efficient computing with intelligent software, Akamai's global platform is transforming the cloud into a more viable place to inform, entertain, advertise, transact and collaborate. To learn how the world's leading enterprises are optimizing their business in the cloud, please visit www.akamai.com and follow @Akamai on Twitter.
Condensed Consolidated Balance Sheets
(dollar amounts in thousands)
(unaudited)
Dec. 31, Dec. 31,
2010 2009
--------- ---------
Assets
Cash and cash
equivalents $231,866 $181,305
Marketable
securities 374,733 384,834
Restricted
marketable
securities 272 602
Accounts receivable,
net 175,366 154,269
Deferred income tax
assets, current
portion 28,201 8,514
Prepaid expenses and
other current
assets 48,029 31,649
------ ------
Current assets 858,467 761,173
Marketable
securities 636,486 494,707
Restricted
marketable
securities 45 36
Property and
equipment, net 255,929 182,404
Goodwill and other
intangible assets,
net 515,370 517,620
Other assets 11,153 4,416
Deferred income tax
assets, net 75,226 127,154
------ -------
Total assets $2,352,676 $2,087,510
========== ==========
Liabilities and
stockholders'
equity
Accounts payable and
accrued expenses $120,046 $92,563
Other current
liabilities 25,105 34,975
Convertible notes,
current portion - 199,755
--- -------
Current liabilities 145,151 327,293
Other liabilities 29,920 21,495
------ ------
Total liabilities 175,071 348,788
Stockholders' equity 2,177,605 1,738,722
--------- ---------
Total liabilities
and stockholders'
equity $2,352,676 $2,087,510
========== ==========
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended
------------------
Dec. 31, Sept. 30, Dec. 31,
2010 2010 2009
---- ---- ----
Revenues $284,688 $253,551 $238,305
Costs and operating
expenses:
Cost of revenues * + 86,277 77,812 67,580
Research and
development * 13,775 14,235 12,520
Sales and marketing * 66,230 55,603 51,608
General and
administrative * + 41,793 42,729 40,233
Amortization of other
intangible assets 4,267 4,130 4,142
Restructuring charge - - -
Total costs and
operating expenses 212,342 194,509 176,083
------- ------- -------
Operating income 72,346 59,042 62,222
Interest income, net (2,793) (2,636) (2,841)
Loss on early
extinguishment of debt 5 - -
Gain on investments,
net - - (2)
Other loss (income),
net 1,149 1,366 496
----- ----- ---
Income before provision
for income taxes 73,985 60,312 64,569
Provision for income
taxes 21,475 20,603 24,489
------ ------ ------
Net income $52,510 $39,709 $40,080
======= ======= =======
Net income per share:
Basic $0.29 $0.22 $0.23
Diluted $0.27 $0.21 $0.21
Shares used in per
share calculations:
Basic 183,362 181,457 170,936
Diluted 191,837 191,271 188,621
Year Ended
----------
Dec. 31, Dec. 31,
2010 2009
---- ----
Revenues $1,023,586 $859,773
Costs and operating expenses:
Cost of revenues * + 303,403 249,938
Research and development * 54,766 43,658
Sales and marketing * 226,704 179,421
General and administrative * + 167,779 146,100
Amortization of other intangible
assets 16,657 16,722
Restructuring charge - 454
Total costs and operating expenses 769,309 636,293
------- -------
Operating income 254,277 223,480
Interest income, net (10,862) (13,132)
Loss on early extinguishment of
debt 299 -
Gain on investments, net - (457)
Other loss (income), net 2,468 (163)
----- ----
Income before provision for income
taxes 262,372 237,232
Provision for income taxes 91,152 91,319
------ ------
Net income $171,220 $145,913
======== ========
Net income per share:
Basic $0.97 $0.85
Diluted $0.90 $0.78
Shares used in per share
calculations:
Basic 177,309 171,425
Diluted 190,650 188,658
* 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
Dec. 31, Sept. 30, Dec. 31,
2010 2010 2009
---- ---- ----
Cash flows from
operating
activities:
Net income $52,510 $39,709 $40,080
Adjustments to
reconcile net
income to net cash
provided by
operating
activities:
Depreciation and
amortization of
intangible assets
and deferred
financing costs 39,179 36,542 32,783
Stock-based
compensation 18,495 18,589 16,798
Provision for
deferred income
taxes, net (37,080) 22,287 19,922
Excess tax benefits
from stock-based
compensation (6,594) (9,456) (865)
(Gain) loss on
investments and
disposal of
property and
equipment, net (205) 22 (24)
Gain on divesture of
certain assets - - -
Provision for
doubtful accounts (561) 662 2,466
Non-cash portion of
loss on early
extinguishment of
debt 5 - -
Changes in operating
assets and
liabilities:
Accounts receivable (17,221) 10,064 (5,054)
Prepaid expenses and
other current
assets 29,304 (1,109) 5,707
Accounts payable,
accrued expenses
and other current
liabilities 32,600 8,695 13,692
Accrued
restructuring (450) (74) (45)
Deferred revenue (2,328) (5,807) 3,610
Other noncurrent
assets and
liabilities 2,705 (2,161) (4,201)
----- ------ ------
Net cash provided by
operating
activities 110,359 117,963 124,869
------- ------- -------
Cash flows from
investing
activities:
Cash paid for
acquired business,
net of cash
received (458) (200) -
Proceeds from the
divesture of
certain assets - - -
Purchases of
property and
equipment and
capitalization of
internal-use
software costs (48,700) (42,058) (29,244)
Proceeds from sales
and maturities of
short- and long-
term marketable
securities 226,651 284,460 148,801
Purchases of short-
and long-term
marketable
securities (246,406) (285,408) (259,557)
Proceeds from the
sale of property
and equipment 124 14 61
Increase in other
investments - - -
Decrease in
restricted
investments held
for security
deposits 330 - -
--- --- ---
Net cash used in
investing
activities (68,459) (43,192) (139,939)
------- ------- --------
Cash flows from
financing
activities:
Proceeds from the
issuance of common
stock under stock
option
and employee stock
purchase plans 13,830 10,953 7,965
Excess tax benefits
from stock-based
compensation 6,594 9,456 865
Repurchase of common
stock (27,299) (22,505) (14,929)
------- ------- -------
Net cash used in
financing
activities (6,875) (2,096) (6,099)
------ ------ ------
Effects of exchange
rate changes on
cash and cash
equivalents (726) 4,386 (328)
---- ----- ----
Net increase
(decrease) in cash
and cash
equivalents 34,299 77,061 (21,497)
Cash and cash
equivalents,
beginning of period 197,567 120,506 202,802
Cash and cash
equivalents, end of
period $231,866 $197,567 $181,305
======== ======== ========
Year Ended
----------
Dec. 31, Dec. 31,
2010 2009
---- ----
Cash flows from operating
activities:
Net income $171,220 $145,913
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization of
intangible assets and deferred
financing costs 143,749 123,334
Stock-based compensation 76,468 58,797
Provision for deferred income
taxes, net 29,818 81,706
Excess tax benefits from stock-
based compensation (28,973) (2,236)
(Gain) loss on investments and
disposal of property and
equipment, net (428) (391)
Gain on divesture of certain
assets - (1,062)
Provision for doubtful accounts 1,546 6,727
Non-cash portion of loss on
early extinguishment of debt 299 -
Changes in operating assets and
liabilities:
Accounts receivable (23,563) (1,159)
Prepaid expenses and other
current assets (12,089) (5,020)
Accounts payable, accrued
expenses and other current
liabilities 53,173 10,255
Accrued restructuring (617) (1,067)
Deferred revenue (9,454) 5,871
Other noncurrent assets and
liabilities 1,306 2,744
----- -----
Net cash provided by operating
activities 402,455 424,412
------- -------
Cash flows from investing
activities:
Cash paid for acquired business,
net of cash received (12,668) (5,779)
Proceeds from the divesture of
certain assets - 1,350
Purchases of property and
equipment and capitalization of
internal-use software costs (192,045) (108,147)
Proceeds from sales and
maturities of short- and long-
term marketable securities 1,015,833 545,103
Purchases of short- and long-
term marketable securities (1,146,493) (790,351)
Proceeds from the sale of
property and equipment 176 93
Increase in other investments (500) -
Decrease in restricted
investments held for security
deposits 338 233
--- ---
Net cash used in investing
activities (335,359) (357,498)
-------- --------
Cash flows from financing
activities:
Proceeds from the issuance of
common stock under stock option
and employee stock purchase
plans 45,776 21,724
Excess tax benefits from stock-
based compensation 28,973 2,236
Repurchase of common stock (92,425) (66,497)
------- -------
Net cash used in financing
activities (17,676) (42,537)
------- -------
Effects of exchange rate changes
on cash and cash equivalents 1,141 854
----- ---
Net increase (decrease) in cash
and cash equivalents 50,561 25,231
Cash and cash equivalents,
beginning of period 181,305 156,074
Cash and cash equivalents, end
of period $231,866 $181,305
======== ========
Three Months Ended Year Ended
------------------ ----------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2010 2010 2009 2010 2009
---- ---- ---- ---- ----
Supplemental
financial data (in
thousands):
Stock-based
compensation:
Cost of revenues $696 $702 $613 $2,806 $2,195
Research and
development 3,317 3,687 3,364 14,539 10,967
Sales and marketing 8,863 8,862 7,560 35,525 27,411
General and
administrative 5,619 5,338 5,261 23,598 18,224
----- ----- ----- ------ ------
Total stock-based
compensation $18,495 $18,589 $16,798 $76,468 $58,797
Depreciation and
amortization:
Network-related
depreciation $28,807 $26,504 $22,737 $103,071 $84,027
Capitalized stock-
based compensation
amortization 1,987 1,817 1,851 7,509 6,413
Other depreciation
and amortization 4,068 4,028 3,843 16,005 15,331
Amortization of
other intangible
assets 4,267 4,130 4,142 16,657 16,722
----- ----- ----- ------ ------
Total depreciation
and amortization $39,129 $36,479 $32,573 $143,242 $122,493
Capital
expenditures:
Purchases of
property and
equipment $39,684 $33,145 $22,462 $159,275 $80,917
Capitalized
internal-use
software 9,016 8,913 6,782 32,770 27,230
Capitalized stock-
based compensation 2,221 1,918 1,755 7,818 6,280
----- ----- ----- ----- -----
Total capital
expenditures $50,921 $43,976 $30,999 $199,863 $114,427
Net increase in
cash, cash
equivalents,
marketable
securities and
restricted
marketable
securities $53,197 $77,930 $88,208 $181,918 $289,857
End of period
statistics:
Number of customers
under recurring
contract 3,483 3,438 3,122
Number of employees 2,200 2,108 1,750
Number of deployed
servers 84,259 77,885 61,553
*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 changes 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 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 makes 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 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 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 historic 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 "fully taxed 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 and loss on early extinguishment of debt. Akamai considers fully taxed 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 "fully taxed normalized net income per share" as fully taxed 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 fully taxed normalized net income per share to be another important indicator of overall performance of the Company because it eliminates the effect of a non-cash item.
Adjusted EBITDA and fully taxed 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 Fully taxed normalized net income
and Adjusted EBITDA
(amounts in thousands, except per share data)
Three Months Ended
------------------
Sept.
Dec. 31, 30, Dec. 31,
2010 2010 2009
---- ---- ----
Net income $52,510 $39,709 $40,080
Amortization of other
intangible assets 4,267 4,130 4,142
Stock-based compensation 18,495 18,589 16,798
Amortization of
capitalized stock-based
compensation 1,987 1,817 1,851
Gain on investments, net - - (2)
Utilization of tax NOLs/
credits * - - -
Loss on early
extinguishment of debt 5 - -
Acquisition related costs
(benefits) (760) - -
Restructuring charge - - -
--- --- ---
Total fully taxed
normalized net income: 76,504 64,245 62,869
Interest income, net (2,793) (2,636) (2,841)
Provision for income
taxes 21,475 20,603 24,489
Depreciation and
amortization 32,875 30,532 26,580
Other loss (income), net 1,149 1,366 496
----- ----- ---
Total Adjusted EBITDA: $129,210 $114,110 $111,593
======== ======== ========
Fully taxed normalized
net income per share:
Basic $0.42 $0.35 $0.37
Diluted $0.40 $0.34 $0.34
Shares used in fully
taxed normalized per
share calculations:
Basic 183,362 181,457 170,936
Diluted 191,837 191,271 188,621
* Previously reported
Utilization of tax NOLs/
credits $- $- $22,553
Year Ended
----------
Dec. 31, Dec. 31,
2010 2009
---- ----
Net income $171,220 $145,913
Amortization of other
intangible assets 16,657 16,722
Stock-based compensation 76,468 58,797
Amortization of
capitalized stock-based
compensation 7,509 6,413
Gain on investments, net - (457)
Utilization of tax NOLs/
credits * - -
Loss on early
extinguishment of debt 299 -
Acquisition related costs
(benefits) (415) -
Restructuring charge - 454
--- ---
Total fully taxed
normalized net income: 271,738 227,842
Interest income, net (10,862) (13,132)
Provision for income
taxes 91,152 91,319
Depreciation and
amortization 119,076 99,358
Other loss (income), net 2,468 (163)
----- ----
Total Adjusted EBITDA: $473,572 $405,224
======== ========
Fully taxed normalized
net income per share:
Basic $1.53 $1.33
Diluted $1.43 $1.22
Shares used in fully
taxed normalized per
share calculations:
Basic 177,309 171,425
Diluted 190,650 188,658
* Previously reported
Utilization of tax NOLs/
credits $- $84,203
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 concerning the expected growth and development of our business and the markets in which we operate, the strength of our business model and cost structure and the superiority of our service offerings. 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, failure to maintain the prices we charge for our services, loss of significant customers, failure to increase our revenue and keep our expenses consistent with revenues, inability to continue to generate positive cash flow, the effects of any attempts to intentionally disrupt our services or network by unauthorized users or others, failure to have available sufficient transmission capacity, 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, 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:
--or-
Jeff Young - Natalie Temple
Media Relations Investor Relations
Akamai Technologies Akamai Technologies
617-444-3913 617-444-3635
jyoung@akamai.com ntemple@akamai.com
SOURCE Akamai Technologies, Inc.
Copyright © 2012, PRNewswire
Copyright © 2012, NewsBlaze,
Daily News
Search News
