Fast, Intelligent and Secure at the Edge

Press Release Details

Akamai Reports Fourth Quarter 2000 and Fiscal Year 2000 Financial Results

January 24, 2001 at 4:07 PM EST

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 24, 2001--

  • Fourth quarter revenue over $37 million, up 37% from third quarter and up almost 1,300% from same period the year before

  • Annual revenue of nearly $90 million, up over 2,100% from prior year

  • Total customers increased to 3,675; including 1,337 under recurring contracts, an increase of nearly 20% over the 1,115 recurring customers at the end of the third quarter

  • EBITDA loss narrows and capital expenditures decline over third quarter

  • Network grows to over 8,000 servers inside 473 networks in 55 countries, further extending Akamai's industry-leading value proposition

Akamai Technologies, Inc. (NASDAQ: AKAM), the leading Content Delivery Service Provider (CDSP), today reported financial results for the fiscal fourth quarter and fiscal year ended December 31, 2000. Revenue for the quarter increased 37% to $37.2 million, compared to revenue of $27.2 million for the previous quarter, and increased significantly compared to revenue of $2.7 million for the fourth quarter of 1999. Total revenue for fiscal 2000 was $89.8 million, representing a 2,152% increase over revenue of $4.0 million for fiscal 1999.

"Akamai has again demonstrated exceptional execution in customer acquisition and service, while rapidly expanding our preeminent edge network for improved Web site performance, scalability and cost savings," said George Conrades, chairman and CEO of Akamai. "At the same time, our cash burn rate has declined, and we believe our current cash position plus available vendor financing allow Akamai to be fully funded today to achieve our business plan."

Conrades continued, "We enter 2001 in our strongest competitive position with a well-established blue chip customer base accessing a full suite of services running on the world's largest uniform, distributed computing platform. Our customers have come to expect improved performance and reliability and are now discovering that our versatile platform also allows them to realize significant cost savings by sharing in our global economies of scale, which uniquely differentiates Akamai in this period of smarter I.T. spending."

Normalized net loss for the fourth quarter 2000, before equity related non-cash compensation charges and amortization of intangible assets, totaled $58.9 million, or $0.61 per share, compared to First Call's consensus summary net loss of $0.68 per share. Third quarter 2000 normalized net loss was $55.7 million, or $0.60 per share. Normalized net loss for fiscal 2000 totaled $182.2 million, or $2.07 per share, compared to First Call's consensus summary net loss of $2.14 per share.

Fourth Quarter 2000 In Review:

Customers. Akamai served 3,675 customers, including 1,337 under recurring contracts, compared to 1,115 recurring customers at the end of the third quarter. Akamai delivered content for thousands of the Web's most popular sites, handling billions of hits per day, including streaming media for many high-profile events. Highlights include helping CNN Interactive deliver more than 100 million page impressions to 6.3 million unique visitors on election day; saving Tower Records over $2 million and Victoria's Secret over $1 million in capital expenditures from their Web site infrastructure costs; and working with BMG Entertainment to deliver online music videos with enhanced quality and reliability to listeners worldwide.

Akamai added several new reseller partners, including BT Ignite Content Hosting, Intel Online Services, InterNAP, and Telefonica, bringing the total to over 40. Indirect channels contributed approximately 17% of fourth quarter revenue, up from 15% in the third quarter.

Network. Akamai extended its globally distributed network to include 8,004 servers, up from 6,060 in the third quarter, and is now deployed within 473 networks in 55 countries. During the fourth quarter, Akamai installed on average 150 servers per week and in more than one new network per day. These networks include Internet backbone providers, ISPs, cable providers, DSL providers and satellite facilities. "We believe the massive reach, power and capacity of our network offers customers unique benefits of speed, reliability, functionality and cost savings unrivaled by any other network in the world," Conrades said.

Technology. Akamai extended its EdgeAdvantage(SM) platform by introducing EdgeSuite(SM), a content delivery solution for e-businesses that redefines the way content providers will create and deliver their Web sites. The EdgeSuite solution includes a set of complementary services that provides a full range of capabilities to assemble, deliver and manage dynamic Web content, offering I.T. professionals a cost-effective means to generate and deliver content from locations optimized for each end-user. By outsourcing their content delivery requirements to Akamai, customers benefit from site uptime insurance and peak crowd protection across their entire site while saving on infrastructure costs. As an example customer of Akamai's EdgeSuite service,, the world's leading online ticketing and live event site, successfully handled many thousands of simultaneous customers quickly and efficiently when it recently released tickets for a U2 concert.

In addition, Akamai introduced several technology initiatives aimed at helping customers achieve greater return on investment for their rich media assets. For example, MediaPlus is a family of applications designed to address customer needs to facilitate the monetization of streaming media and the distribution of digital assets over the Internet.

Akamai also introduced I.AM.AKAMAI(SM), offering customers and partners a single point of access through the Web to Akamai analytical tools, information on products and services offered by Akamai and its partners, and other resources for e-businesses.


"With our startup expenditures largely behind us and the growth in the fixed-cost aspects of our network moderating later this year, we are poised to make a strong move toward profitability and demonstrate the operating leverage of a large global network offering multiple new high-margin services," said Timothy Weller, chief financial officer at Akamai. "EBITDA losses are narrowing, capital efficiency is rising rapidly, and the balance sheet is healthy."

At December 31, 2000, the company had approximately $386.9 million of cash, cash equivalents, and short-term and long-term marketable securities as compared to $445.0 million at September 30, 2000. Capital expenditures, principally made in connection with network deployment, facilities and information systems, for the quarter were $35.2 million, down from $40.5 million in the third quarter.

In the fourth quarter, earnings before interest, taxes, depreciation, amortization and equity related compensation (EBITDA) were a negative $47.7 million, slightly lower than the negative EBITDA of $48.1 million in the third quarter.

At December 31, 2000, the Company had 108.2 million shares of common stock outstanding. At December 31, 2000, common stock outstanding and unexercised stock options and warrants totaled 125.4 million shares.

Highlights of Year 2000:

Akamai experienced tremendous growth in the strategic areas on which management focuses most resources - customer acquisition and retention, network growth and performance, and technology innovation, product development and service enhancements.

Customers. Akamai began the year with a recurring revenue customer base of 227 and grew it by 489% to 1,337 at the end of the year. Notable new customers added in 2000 included 3Com, AltaVista, Barnes&, Best Buy,, Cablevision, CNET, C-SPAN, E! Online, FedEx, General Motors, Harley-Davidson, Merck, Motorola, MSNBC, MTVi, NBCi, Nike,, Radio Free Virgin, Ralph Lauren,, Saks Fifth Avenue, Subaru, Tower, and Victoria's Secret. These clients joined many early adopters of Akamai's services, including Apple Computer, CBS, CNN Interactive, JCPenney, Lycos,, Microsoft, NASDAQ, and Yahoo!. Customer and revenue growth was helped by further development of Akamai's indirect channel program, which accounted for 6% of revenue in the first quarter of 2000 and grew to represent 17% in the fourth quarter. Among the company's more than 40 channel partners, notable additions in 2000 included BT Ignite Content Hosting, CacheFlow, COPE/Mount10, EDS, Genuity, IBM, Intel Online Services, InterNAP, KPNQwest, Loudcloud,, PSINet, Telefonica and Virage.

Network. The largest content delivery network, Akamai has deployed thousands of servers located at the edge of the Internet to optimize the delivery of e-business content and applications to end-users anywhere in the world. Akamai grew its deployed servers from 2,000 at the start of the year to over 8,000 to optimize the routing of content across the thousands of different networks that comprise the Internet. In raising the number of networks in which Akamai has deployed servers from 100 at the start of the year to 473, Akamai gained presence inside numerous major networks including America Online, British Telecom, AT&T, Cable & Wireless, Deutsche Telekom, Excite@Home, France Telecom, Impsat, KPNQwest, Loral CyberStar, NTT, PSINet, RoadRunner, Telia, UUNet and numerous other RBOCs, DSL providers, and satellite carriers.

Technology. Since development began at MIT in 1995, Akamai founders and engineers have been working on the core technology that enables the EdgeAdvantage platform, which now includes a portfolio of five patents. In 1999 Akamai began commercial operations by introducing two products. The first, FreeFlow(SM), is the company's flagship service that delivers Web content and applications faster and more efficiently than using other means. The second, FreeFlow(SM) Streaming, optimizes the delivery of video and audio on the Internet. In 2000, Akamai significantly expanded its service offerings into complementary areas that included Web traffic reporting and load balancing, data storage, interactive Webcasting, and digital rights management.

Acquisitions. The Company completed three acquisitions during the year. In February, Akamai acquired Network24 Communications, Inc., a privately held provider of Internet broadcasting software and services. In April, Akamai completed the acquisition of INTERVU, Inc., a public company that provided Web site owners and content publishers with automated streaming media services for live and on-demand video and audio content over the Internet. INTERVU's customer base spanned many industry sectors from business to entertainment, from news and sports to advertising, and included marquee clients such as CNET, House of Blues, Microsoft, MSNBC, NBC, Quokka Sports, Saatchi & Saatchi, and Turner Broadcasting. In July, Akamai completed the acquisition of CallTheShots, Inc., a privately held company that developed technology for Web site personalization and content aggregation and had been selected by Red Herring magazine as one of the top 20 most promising emerging technology companies.

Quarterly Conference Call

Akamai will host a conference call to discuss fourth quarter 2000 and fiscal year 2000 results today at 4:15 PM Eastern Time. A live Webcast of Akamai's conference call can be accessed at In addition, a replay of the call will be available for 48 hours following the conference call and be accessed through the Web site or by calling (800) 642-1687 or (706) 645-9291 (for international calls), conference ID No. 560990.

About Akamai

Akamai is the leading Content Delivery Service Provider, serving 3,675 customers, including 1,337 recurring customers under contract worldwide. Akamai has the broadest deployment of servers for content, streaming media, and applications delivery with more than 8,000 servers in 55 countries directly connected within 473 different telecommunications networks.

Akamai Statement Under the Private Securities Litigation Reform Act

The 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. 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, the dependence on Akamai's Internet content delivery service, a failure of its network infrastructure, changes in general economic conditions, failure of a significant number of customers to pay their obligations, any inability to secure vendor financing, unexpected increases in expenses, the failure to obtain access to transmission capacity and other factors that are discussed in the Company's Annual Report on Form 10-K and other documents periodically filed with the SEC.

Copyright (c) 2001 Akamai Technologies, Inc. All Rights Reserved. Akamai, FreeFlow, Delivering a Better Internet, EdgeAdvantage, and the blue multi-wave logo are all trademarks or registered trademarks of Akamai Technologies. All other company and product names referenced herein are the trademarks or registered trademarks of their respective holders.

                       Akamai Technologies, Inc.
                 Condensed Consolidated Balance Sheets
                            (in thousands)

                                December 31, 2000   December 31, 1999
                                -----------------   -----------------
Current assets:
 Cash, cash equivalents
  and short-term marketable
  securities                        $ 309,652           $ 269,554
 Accounts receivable,
  net                                  22,670               1,588
 Prepaid expenses and
  other current assets                 23,022               2,521
                                -----------------   -----------------
   Total current assets               355,344             273,663
 Property and equipment, net          143,041              23,875
 Goodwill and other intangible
  assets, net                       2,186,157                 434
 Marketable securities                 77,282                  -
 Other assets                          28,953               2,843
                                -----------------   -----------------
  Total assets                    $ 2,790,777           $ 300,815
                                -----------------   -----------------
                                -----------------   -----------------

               Liabilities and stockholders' equity
Current liabilities:
 Accounts payable and
  accrued expenses                   $ 79,481            $ 14,684
 Other current liabilities              5,467               3,953
                                -----------------   -----------------
  Total current liabilities            84,948              18,637
Long-term liabilities                 301,430                 733
                                -----------------   -----------------
  Total liabilities                   386,378              19,370
Stockholders' equity                2,404,399             281,445
                                -----------------   -----------------
  Total liabilities and
   stockholders' equity           $ 2,790,777           $ 300,815
                                -----------------   -----------------
                                -----------------   -----------------

                       Akamai Technologies, Inc.
            Condensed Consolidated Statements of Operations
                 (in thousands, except per share data)

                       For the         For the             For the
                    three months     three months       twelve months
                        ended           ended               ended
                    December 31,     September 30,      December 31,
                        2000            2000                2000
                    ------------     ------------       ------------
Revenue              $ 37,244         $ 27,156            $ 89,766
                    ------------     ------------       ------------
Operating expenses:
 Cost of services      24,037           18,182              61,502
 Engineering and
  development          17,409           18,352              55,606
 Sales, general and
  administrative       57,540           49,948             168,612
 Amortization of
  intangible assets   239,329          238,700             677,481
 Equity related
  compensation          4,884            9,653              26,147
                    ------------     ------------       ------------
   Total operating
    expenses          343,199          334,835             989,348
                    ------------     ------------       ------------
Operating loss       (305,955)        (307,679)           (899,582)
Interest income,
 net                    2,932            3,624              13,985
                    ------------     ------------       ------------
Loss before provision
 for income taxes    (303,023)        (304,055)           (885,597)
Provision for income
 taxes                     55               20                 187
                    ------------     ------------       ------------
Net loss           $ (303,078)      $ (304,075)         $ (885,784)
                    ------------     ------------       ------------
                    ------------     ------------       ------------
Basic and diluted
 net loss per share   $ (3.16)         $ (3.27)           $ (10.07)
Weighted average
 common shares
 outstanding           95,970           93,099              87,959

Normalized loss(1)  $ (58,865)       $ (55,722)         $ (182,156)
Normalized basic
 and diluted net
 loss per share       $ (0.61)         $ (0.60)            $ (2.07)

Supplemental Financial Data (dollars and shares in thousands):
Depreciation         $ 14,006         $ 11,211            $ 35,586
EBITDA(2)           $ (47,736)       $ (48,115)         $ (160,368)
 expenditures        $ 35,201         $ 40,457           $ 131,859
End of period statistics:
  Number of signed
   customers            3,675            2,872               3,675
  Number of customers
   under recurring
   contract             1,337            1,115               1,337
  Number of employees   1,299            1,229               1,299
  Number of servers     8,004            6,060               8,004
  Common stock
   outstanding        108,203          107,298             108,203
  Common stock
   outstanding and
   unexercised options
   and warrants       125,413          125,292             125,413

   (1) Normalized loss is loss before equity related compensation and
amortization of intangible assets
   (2) EBITDA is earnings (loss) before interest, taxes,
depreciation, amortization of intangible assets and equity related

CONTACT: Media Relations Contact:
Akamai Technologies
Jeff Young
Investor Relations Contact:
Akamai Technologies
Steven J. Wolfe