Akamai Technologies, Inc. : Akamai Reports Second Quarter 2012 Financial Results
07/25/2012| 04:05pm US/Eastern
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CAMBRIDGE, Mass., July 25, 2012 /PRNewswire/ --
-- Second quarter revenue of $331 million, up 20 percent year-over-year
-- GAAP net income of $44 million, down 8 percent year-over-year; or $0.24
per diluted share, down 4 percent year-over-year
-- Normalized 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(TM) 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, current portion 6,444 6,444
Prepaid expenses and other current assets 47,285 55,414
------ ------
Current assets 756,605 1,122,020
Marketable securities 521,885 380,729
Property and equipment, net 315,866 293,043
Goodwill and other intangible assets, net 793,724 498,300
Other assets 14,314 7,924
Deferred income tax assets, net 43,182 43,485
------ ------
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 Months Ended--------------------------
----------- ----------Six Months Ended----------
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Revenues $331,306 $319,448 $276,989 $650,754 $552,942
Costs and operating expenses:
Cost of revenues * + 107,457 102,566 89,647 210,023 178,715
Research and development * 17,542 17,480 11,006 35,022 23,600
Sales and marketing * 75,882 67,290 52,837 143,172 106,202
General and administrative * + 57,997 55,706 45,975 113,703 89,876
Amortization of other intangible assets 5,463 4,767 4,292 10,230 8,569
Restructuring (benefit) charge (46) 60 - 14 -
--- --- --- --- ---
Total costs and operating expenses 264,295 247,869 203,757 512,164 406,962
------- ------- ------- ------- -------
Operating income 67,011 71,579 73,232 138,590 145,980
Interest income, net 1,626 1,646 3,096 3,272 6,056
Other income (expense) , net 1,131 (441) (107) 690 (1,142)
----- ---- ---- --- ------
Income before provision for income taxes 69,768 72,784 76,221 142,552 150,894
Provision for income taxes 25,529 29,557 28,300 55,086 52,356
------ ------ ------ ------ ------
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
Months Ended--------------------- Ended----------
---- ----------Six Months
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Cash flows from operating activities:
Net income $44,239 $43,227 $47,921 $87,466 $98,538
Adjustments to reconcile net income to net cash provided by operating
activities:
50,112 45,634 41,333 95,746 82,467
Depreciation and amortization
25,621 20,924 11,612 46,545 27,324
Stock-based compensation
(1,635) (13,414) (1,838) (15,049) (10,850)
Excess tax benefits from stock-based compensation
(107) (97) (113) (204) 4
(Gain) loss on investments and disposal of property and equipment, net
(86) 370 132 284 454
Provision for doubtful accounts
7,803 (1,416) (7,101) 6,387 456
Accounts receivable
4,663 4,309 6,917 8,972 841
Prepaid expenses and other current assets
Accounts payable, accrued expenses and other current liabilities 15,939 (5,798) 2,678 10,141 (5,713)
(725) (2,144) (32) (2,869) (32)
Accrued restructuring
2,667 1,474 1,271 4,141 (2,182)
Deferred revenue
1,061 (566) 9,068 495 9,052
Other noncurrent assets and liabilities
---
Net cash provided by operating activities 149,552 92,503 111,848 242,055 200,359
-------
Cash flows from investing activities:
- (291,638) (375) (291,638) (550)
Cash paid for acquired businesses, net of cash received
(55,539) (43,344) (42,740) (98,883) (88,975)
Purchases of property and equipment and capitalization of internal-use
software costs
134,171 117,414 263,870 251,585 511,137
Proceeds from sales and maturities of short- and long-term marketable
securities
(135,845) (280,649) (302,520) (416,494) (578,135)
Purchases of short- and long-term marketable securities
2 10 63 12 88
Proceeds from the sale of property and equipment
- - - - 221
Decrease in restricted investments held for security deposits
(57,211) (498,207) (81,702) (555,418) (156,214)
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from the issuance of common stock under stock option
15,491 7,078 8,163 22,569 12,122
and employee stock purchase plans
1,635 13,414 1,838 15,049 10,850
Excess tax benefits from stock-based compensation
(2,541) (21,655) (3,507) (24,196) (3,507)
Taxes paid related to net share settlement of equity awards
(67,213) (7,913) (48,935) (75,126) (92,613)
Repurchase of common stock
Net cash used in financing activities (52,628) (9,076) (42,441) (61,704) (73,148)
--------
Effects of exchange rate changes on cash and cash equivalents (1,441) 307 750 (1,134) 2,766
-------
Net increase (decrease) in cash and cash equivalents 38,272 (414,473) (11,545) (376,201) (26,237)
Cash and cash equivalents, beginning of period 144,724 559,197 217,174 559,197 231,866
Cash and cash equivalents, end of period $182,996 $144,724 $205,629 $182,996 $205,629
========
-------------------------Three
Months Ended--------------------- Ended----------
---- ----------Six Months
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 development 4,901 3,930 2,124 8,831 4,886
Sales and marketing 10,994 10,134 5,315 21,128 12,161
General and administrative 8,842 6,177 3,583 15,019 9,132
----- ----- ----- ------ -----
Total stock-based compensation $25,621 $20,924 $11,612 $46,545 $27,324
Depreciation and amortization:
Network-related depreciation $37,989 $34,605 $31,245 $72,594 $61,932
Capitalized stock-based compensation amortization 1,939 1,755 1,938 3,694 4,003
Other depreciation and amortization 4,721 4,507 3,858 9,228 7,963
Amortization of other intangible assets 5,463 4,767 4,292 10,230 8,569
----- ----- ----- ------ -----
Total depreciation and amortization $50,112 $45,634 $41,333 $95,746 $82,467
Capital expenditures:
Purchases of property and equipment $42,188 $30,433 $32,925 $72,621 $68,525
Capitalized internal-use software 13,351 12,911 9,815 26,262 20,450
Capitalized stock-based compensation 1,835 2,298 1,641 4,133 3,465
----- ----- ----- ----- -----
Total capital expenditures $57,374 $45,642 $44,381 $103,016 $92,440
Net increase (decrease) in cash, cash equivalents, marketable
securities and restricted marketable securities $39,725 $(251,235) $28,236 $(211,510) $42,071
End of period statistics:
Number of employees 2,654 2,539 2,244
Number of deployed servers 115,008 108,507 95,811
*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---------------------- Ended----------
--- ----------Six Months
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Net income $44,239 $43,227 $47,921 $87,466 $98,538
Amortization of other intangible assets 5,463 4,767 4,292 10,230 8,569
Stock-based compensation 25,621 20,924 11,612 46,545 27,324
Amortization of capitalized stock-based compensation 1,939 1,755 1,938 3,694 4,003
Acquisition related costs (benefits) 376 4,452 - 4,828 (440)
Restructuring (benefit) charge (46) 60 - 14 -
--- --- --- --- ---
Total normalized net income: 77,592 75,185 65,763 152,777 137,994
Interest income, net (1,626) (1,646) (3,096) (3,272) (6,056)
Provision for income taxes 25,529 29,557 28,300 55,086 52,356
Depreciation and amortization 42,710 39,112 35,103 81,822 69,895
Other (income) expense, net (1,131) 441 107 (690) 1,142
------ --- --- ---- -----
Total Adjusted EBITDA: $143,074 $142,649 $126,177 $285,723 $255,331
======== ======== ======== ======== ========
Normalized net income per share:
Basic $0.43 $0.42 $0.35 $0.86 $0.74
Diluted $0.43 $0.41 $0.35 $0.84 $0.72
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 --or-- 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.
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