Akamai Reports Fourth Quarter 2001 and Full-Year 2001 Financial Results
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 23, 2002--Akamai Technologies, Inc. (NASDAQ: AKAM):
-
Fourth quarter revenue of $37.1 million
-
Annual revenue of $163.2 million, up 82% from prior year
-
Total EdgeSuite(SM) customers increased to 152
-
Fourth quarter EBITDA loss narrows to $14.3 million
-
Cash and marketable securities of $210.5 million at year-end
Akamai Technologies, Inc. (NASDAQ: AKAM), a leading provider of secure, outsourced e-business infrastructure services and software, today reported financial results for the fourth quarter and full-year ended December 31, 2001. Revenue for the fourth quarter 2001 was $37.1 million. Total revenue for 2001 was $163.2 million, representing an 82% increase over revenue of $89.8 million for 2000.
"Our positive fourth quarter results capped a year marked by strong performance that allowed us to maintain our healthy balance sheet," said George Conrades, chairman and CEO of Akamai. "Revenue of over $37 million, above our $34-36 million forecast, was led by excellent growth in our EdgeSuite service, which accounted for approximately 20% of revenue for the fourth quarter, up from zero just one year earlier."
Fourth quarter 2001 earnings before interest, taxes, depreciation, amortization and other one-time and non-cash charges (EBITDA) were a loss of $14.3 million, lower than the third quarter 2001 EBITDA loss of $16.6 million, and down almost 70% from the fourth quarter 2000 EBITDA loss of $45.1 million.
Conrades continued, "On the revenue side, due in large part to the recurring nature of most of our business, we believe that we will grow revenue sequentially every quarter in 2002. Our plan for this year reflects measured growth despite today's still uncertain macroeconomic environment."
Normalized net loss for fourth quarter 2001, which is net loss in accordance with GAAP before amortization and other one-time and non-cash charges, totaled $37.8 million, or $0.35 per share, compared to First Call's consensus summary net loss of $0.39 per share. Third quarter 2001 normalized net loss was $38.2 million, or $0.37 per share. Normalized net loss for full-year 2001 totaled $175.3 million, or $1.70 per share, compared to First Call's consensus summary net loss of $1.73 per share.
Net loss, in accordance with GAAP, for fourth quarter 2001 was $64.8 million, or $0.60 per share. Net loss, in accordance with GAAP, for full-year 2001 was $2.4 billion or $23.59 per share, including amortization and other one-time and non-cash charges of $2.26 billion, or $21.89 per share.
Fourth Quarter 2001 and Year in Review:
Customers
At the end of the fourth quarter of 2001, Akamai had 152 EdgeSuite customers under recurring contract, compared to 100 at the end of the previous quarter. New EdgeSuite customers in the fourth quarter included All Nippon Airways (ANA), Amtrak, The Centers for Disease Control and Prevention (CDC), Cognos, Corel Corp., Houghton Mifflin, Lowe's Companies, Inc., and Whirlpool Corp., among others. Resellers accounted for approximately 25% of fourth quarter revenue, up from approximately 16% in the third quarter.
Conrades continued, "With EdgeSuite continuing to grow each quarter as a larger portion of our business, we believe our customer base will be even stronger by the end of the year. That means our number one opportunity is accelerating enterprise adoption of EdgeSuite, which we are doing by improving direct sales efforts and continuing to leverage our increasingly productive channel partners, including many of the major hosting companies and system integrators."
Akamai's customer base has evolved to include today's leading enterprises, with dozens of the Fortune 500 companies now using Akamai services, including Apple, Barnes & Noble, Best Buy, Federal Express, General Motors, Target, and Xerox.
Akamai's visibility grew in the government market by carrying sites for the CDC, the U.S. Geological Survey's Earthquake Hazards Program (USGS EHP), the U.S. Government Printing Office, and other key agencies.
Akamai also continued its international expansion during the past year, launching Akamai Technologies Japan K.K. through a joint venture with SOFTBANK. The combination of Akamai's wholly owned European operations plus the efforts of Akamai Technologies Japan K.K. contributed over 10% of revenue in the fourth quarter.
Network
In the fourth quarter, Akamai extended its globally distributed platform to include 13,522 servers. Akamai's servers are now deployed within 1,036 networks in 66 countries including Internet backbone providers, ISPs, cable and DSL providers, and other telecommunications facilities.
Technology
During the quarter, Akamai continued to enhance its current EdgeSuite offering through the introduction of new solutions for specific verticals and enterprise decision makers. Akamai introduced EdgeSuite for Business Continuity with new features for site protection, Denial of Service (DoS) mitigation, and 100% uptime. The EdgeSuite solution bundles include EdgeSuite for Site Delivery, addressing a CIO's demands for simplified Web infrastructure, dynamic scalability of infrastructure capacity, and guaranteed performance; and EdgeSuite for Integrated Marketing, providing a foundation for Web marketing initiatives while speeding time to market, improving the customer experience and increasing business insight.
Financials
"Our fourth quarter recurring free cash flow, which we define as EBITDA minus net interest expense minus capital expenditures, was a loss of $24.8 million, an improvement over the $33.5 million loss in the third quarter, and down almost 70% from a $77.4 million quarterly loss a year earlier," said Timothy Weller, chief financial officer at Akamai. "More than any other metric, we believe this performance testifies to the progress we've made in cutting operating and capital expenditures, while not increasing debt load, as we drive to produce free cash flow."
In the fourth quarter and full-year 2001, Akamai recorded restructuring charges of $14.3 million and $40.5 million, respectively, in conjunction with headcount reductions and related office space consolidations.
At December 31, 2001, the Company had approximately $210.5 million of cash, cash equivalents, and short-term and long-term marketable securities as compared to $239.6 million at September 30, 2001. Capital expenditures, principally made in connection with network deployment, facilities and information systems, for the quarter were $7.2 million, down from $14.7 million in the third quarter.
At December 31, 2001, the Company had 115.1 million shares of common stock outstanding. At December 31, 2001, common stock outstanding and unexercised stock options and warrants totaled 128.9 million shares.
Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. EST that can be accessed through 800-274-4379 (or 1+ 706-645-9202 for international calls). A live Webcast of the call can be accessed at www.akamai.com. In addition, a replay of the call will be available for seven business days following the conference through the Akamai Website or by calling 800-642-1687 (or 1+ 706-645-9291 for international calls) and using conference ID No. 2841495.
About Akamai
Akamai is a leading provider of secure, outsourced e-business infrastructure services and software. These services and software enable companies to reduce the complexity and cost of deploying and operating a uniform Web infrastructure while ensuring unmatched performance, reliability, scalability and manageability. Akamai's services give businesses a distinct competitive advantage and provide an unparalleled Internet experience for their customers. Akamai's intelligent edge platform for content, streaming media, and application delivery comprises more than 13,500 servers within over 1,000 networks in 66 countries. With headquarters in Cambridge, Massachusetts, Akamai provides services and industry-renowned customer care to hundreds of enterprises worldwide, including dozens of Fortune 500 businesses. For information on Delivering a Better Internet(SM), visit www.akamai.com.
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, general economic conditions, any material, unexpected increases in Akamai's use of funds, the dependence on Akamai's Internet content delivery service and technology products, lack of market acceptance of new services, including EdgeSuite, a failure by us to successfully enter into any license, technology development or other technology partnership agreement within the time periods expected by us or at all, a failure of Akamai's network infrastructure, changes in regulations or laws relating to privacy or other aspects of the Internet 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, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.
Akamai Technologies, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31,
2001 2000
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 78,774 $ 150,130
Marketable securities 113,906 159,522
Accounts receivable, net 20,067 22,670
Prepaid expenses and
other current assets 15,253 23,022
---------- ----------
Total current assets 228,000 355,344
Property and equipment, net 132,237 143,041
Goodwill and other
intangible assets, net 19,351 2,186,157
Marketable securities 17,831 77,282
Other assets 24,059 28,953
---------- ----------
Total assets $ 421,478 $2,790,777
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and
accrued expenses $ 68,311 $ 79,533
Other current liabilities 22,987 5,415
---------- ----------
Total current liabilities 91,298 84,948
Other liabilities 12,947 1,430
Convertible notes 300,000 300,000
---------- ----------
Total liabilities 404,245 386,378
Stockholders' equity 17,233 2,404,399
---------- ----------
Total liabilities and
stockholders' equity $ 421,478 $2,790,777
========== ==========
Akamai Technologies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data and statistical amounts)
(unaudited)
Three Months Ended
Dec. 31, Sept. 30, June 30, March 31,
2001 2001 2001 2001
-------- -------- -------- -----------
Revenue $ 37,110 $ 42,754 $ 43,141 $ 40,209
Cost of service (before
network-related
depreciation) 11,948 13,402 13,622 16,160
-------- -------- -------- -----------
Gross profit 25,162 29,352 29,519 24,049
-------- -------- -------- -----------
Gross margin % 67.8% 68.7% 68.4% 59.8%
Operating expenses:
Engineering and
development 12,254 13,828 16,737 18,632
Sales, general and
administrative 27,222 32,094 39,279 41,885
Amortization of
CNN advertising 1,410 1,818 2,013 391
Amortization of
goodwill and other
intangible assets 4,034 7,440 5,392 238,938
Depreciation 19,912 19,116 18,340 16,452
Equity-related
compensation 7,188 8,717 11,038 4,514
Restructuring charge 14,302 -- 26,194 --
Impairment of goodwill -- -- -- 1,912,840
-------- -------- -------- -----------
Total operating expenses 86,322 83,013 118,993 2,233,652
-------- -------- -------- -----------
Operating loss (61,160) (53,661) (89,474) (2,209,603)
Interest income
(expense), net (3,336) (2,210) (1,637) 581
Other income -- 1,002 -- --
Equity in losses
of affiliate -- -- (153) (1,847)
Loss on investments 8 (213) (1,000) (11,747)
-------- -------- -------- -----------
Loss before
provision for
income taxes (64,488) (55,082) (92,264) (2,222,616)
Provision for
income taxes 277 277 344 164
-------- -------- -------- -----------
Net loss $(64,765) $(55,359) $(92,608) $(2,222,780)
======== ======== ======== ===========
Basic and diluted
net loss per share $ (0.60) $ (0.53) $ (0.91) $ (22.50)
Weighted average
common shares
outstanding 108,357 104,166 101,629 98,780
Supplemental financial data (dollars and shares in thousands):
Normalized net loss(1) $(37,839) $(38,173) $(46,818) $ (52,503)
Normalized basic
and diluted net
loss per share $ (0.35) $ (0.37) $ (0.46) $ (0.53)
EBITDA(2) $(14,314) $(16,570) $(26,497) $ (36,468)
Recurring free
cash flow(3) $(24,818) $(33,523) $(46,379) $ (60,381)
Network-related
depreciation $ 12,098 $ 10,991 $ 10,276 $ 9,312
Other depreciation $ 7,814 $ 8,125 $ 8,064 $ 7,140
Capital expenditures $ 7,168 $ 14,743 $ 18,245 $ 24,494
End of period statistics:
EdgeSuite customers 152 100 51 16
Number of customers
under recurring
contract (new format
excludes reserve) 1,078 1,096 1,208 1,377
Number of customers
under recurring
contract (old format) 1,214 1,210 1,333 1,473
Number of employees 841 1,111 1,129 1,299
Number of servers 13,522 13,036 11,689 9,743
Common stock outstanding 115,099 115,281 115,071 109,215
Common stock outstanding
and unexercised options
and warrants 128,926 126,090 125,470 127,372
(1) Normalized net loss (net loss before amortization and other
one-time and non-cash charges) is calculated as EBITDA less net
interest expense, provision for income taxes and depreciation.
(2) EBITDA (earnings before interest, taxes, depreciation,
amortization and other one-time and non-cash charges) is calculated as
gross profit less engineering and development expenses and sales,
general and administrative expenses.
(3) Recurring free cash flow is calculated as EBITDA less capital
expenditures less net interest expense.
Akamai Technologies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data and statistical amounts)
(unaudited)
Twelve Months Ended December 31,
2001 2000
------------- -------------
Revenue $ 163,214 $ 89,766
Cost of service (before
network-related depreciation) 55,132 41,980
------------- -------------
Gross profit 108,082 47,786
------------- -------------
Gross margin % 66.2% 53.2%
Operating expenses:
Engineering and development 61,451 55,606
Sales, general and administrative 140,480 145,391
Amortization of CNN advertising 5,632 7,157
Amortization of goodwill and
other intangible assets 255,804 677,481
Depreciation 73,820 35,586
Equity-related compensation 31,457 26,147
Restructuring charge 40,496 --
Impairment of goodwill 1,912,840 --
------------- -------------
Total operating expenses 2,521,980 947,368
------------- -------------
Operating loss (2,413,898) (899,582)
Interest income (expense), net (6,602) 13,984
Other income 1,002 --
Equity in losses of affiliate (2,000) --
Loss on investments (12,952) --
------------- -------------
Loss before provision for
income taxes (2,434,450) (885,598)
Provision for income taxes 1,062 187
------------- -------------
Net loss $ (2,435,512) $ (885,785)
============== =============
Basic and diluted net loss
per share $ (23.59) $ (10.07)
Weighted average common
shares outstanding 103,233 87,959
Supplemental financial data
(dollars and shares in
thousands):
Normalized net loss (1) $ (175,333) $ (175,000)
Normalized basic and diluted
net loss per share $ (1.70) $ (1.99)
EBITDA (2) $ (93,849) $ (153,211)
Recurring free cash flow (3) $ (165,101) $ (271,086)
Network-related depreciation $ 42,677 $ 19,522
Other depreciation $ 31,143 $ 16,064
Capital expenditures $ 64,650 $ 131,859
End of period statistics:
EdgeSuite customers 152 --
Number of customers under
recurring contract (new format
excludes reserve) 1,078 1,252
Number of customers under
recurring contract (old format) 1,214 1,337
Number of employees 841 1,299
Number of servers 13,522 8,004
Common stock outstanding 115,099 108,203
Common stock outstanding and
unexercised options and warrants 128,926 125,413
(1) Normalized net loss (net loss before amortization and other one-
time and non-cash charges) is calculated as EBITDA less net
interest expense, provision for income taxes and depreciation.
(2) EBITDA (earnings before interest, taxes, depreciation,
amortization and other one-time and non-cash charges) is
calculated as gross profit less engineering and development
expenses and sales, general and administrative expenses.
(3) Recurring free cash flow is calculated as EBITDA less capital
expenditures less net interest expense.
Akamai Technologies, Inc.
Supplemental Financial Information
(in thousands)
The following is a reconciliation from net loss in accordance with
Generally Accepted Accounting Principles ("GAAP") to Normalized net
loss, EBITDA and Recurring free cash flow:
Three Months Ended
Dec. 31, Sept. 30, June 30, March 31,
2001 2001 2001 2001
------------- ------------- ---------- -----------
Net loss in accordance
with GAAP $(64,765) $(55,359) $(92,608) $(2,222,780)
Adjustments to reconcile
net loss to Normalized
net loss, EBITDA and
Recurring free
cash flow:
Amortization of goodwill,
intangibles and CNN
advertising 5,444 9,258 7,405 239,329
Equity-related
compensation 7,188 8,717 11,038 4,514
Impairment of
goodwill -- -- -- 1,912,840
Restructuring
charge 14,302 -- 26,194 --
Equity in losses
of affiliate -- -- 153 1,847
Loss on investments (8) 213 1,000 11,747
Other income -- (1,002) -- --
------------- ------------- ----------- ------------
(1) Normalized
net loss (37,839) (38,173) (46,818) (52,503)
Interest expense
(income), net 3,336 2,210 1,637 (581)
Provision for income
taxes 277 277 344 164
Depreciation 19,912 19,116 18,340 16,452
------------- ------------- ----------- ------------
(2) EBITDA (14,314) (16,570) (26,497) (36,468)
Interest (expense)
income, net (3,336) (2,210) (1,637) 581
Capital expenditures (7,168) (14,743) (18,245) (24,494)
------------- ------------- ----------- ------------
(3) Recurring free
cash flow $(24,818) $(33,523) $(46,379) $(60,381)
============= ============= =========== ============
Twelve Months Ended December 31,
2001 2000
------------- -------------
Net loss in accordance with GAAP $ (2,435,512) $ (885,785)
Adjustments to reconcile net loss
to Normalized net loss, EBITDA
and Recurring free cash flow:
Amortization of goodwill,
intangibles and CNN advertising 261,436 684,638
Equity-related compensation 31,457 26,147
Impairment of goodwill 1,912,840 --
Restructuring charge 40,496 --
Equity in losses of affiliate 2,000 --
Loss on investments 12,952 --
Other income (1,002) --
------------- -------------
(1) Normalized net loss (175,333) (175,000)
Interest expense (income), net 6,602 (13,984)
Provision for income taxes 1,062 187
Depreciation 73,820 35,586
------------- -------------
(2) EBITDA (93,849) (153,211)
Interest (expense) income, net (6,602) 13,984
Capital expenditures (64,650) (131,859)
------------- -------------
(3) Recurring free cash flow $ (165,101) $ (271,086)
============= =============
--30--slk/bos* dp/bos
| CONTACT: | Akamai Technologies, Inc. |
|---|---|
| Felicia Spagnoli, 617/613-2525 (Media Relations) | |
| spagnoli@akamai.com | |
| Steven J. Wolfe, 617/250-4724 (Investor Relations) | |
| swolfe@akamai.com | |