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Press Release Details

Akamai Reports Fourth Quarter 2002 and Full-year 2002 Financial Results

January 28, 2003 at 4:16 PM EST

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 28, 2003--

  • Fourth quarter revenue of $35.4 million

  • Annual revenue of $145.0 million

  • Total EdgeSuite(SM) customers increased to 270

  • Cash and marketable securities of $125.2 million at year end

Akamai Technologies, Inc. (NASDAQ: AKAM), a provider of products and services that enable the world's leading enterprises and government agencies to extend and control their e-business infrastructure, today reported financial results for the fourth quarter and full-year ended December 31, 2002. Revenue for the fourth quarter 2002 was $35.4 million. Total revenue for 2002 was $145.0 million.

"We are pleased with our fourth quarter results, especially the continuing improvement in the quality of our customer base and revenue, our business operations, and achievement of key financial milestones," said George Conrades, chairman and CEO of Akamai. "Sales were led by excellent growth in our EdgeSuite service which accounted for approximately 44% of revenue for the fourth quarter."

Net loss, in accordance with United States generally accepted accounting principles (U.S. GAAP), for fourth quarter 2002 was $53.8 million, or negative $0.47 per share, compared to a net loss for the third quarter 2002 of $47.5 million, or negative $0.42 per share. Net loss, in accordance with U.S. GAAP, for full-year 2002 was $202.6 million or negative $1.80 per share.

The Company recorded restructuring costs of $26.7 million during the fourth quarter related to real estate consolidations and a reduction in workforce, as compared to $6.1 million in the third quarter. Excluding the restructuring costs, net loss for the fourth quarter 2002 would have been $27.1 million, or negative $0.24 per share as compared to a loss of $41.4 million or negative $0.36 per share in the third quarter. The Company believes that the reduction in net loss, excluding restructuring costs, is the result of improvements made in the Company's business operations.

Fourth Quarter 2002 in Review:


At the end of the fourth quarter of 2002, Akamai had 270 EdgeSuite customers under recurring contract, compared to 243 at the end of the previous quarter. New EdgeSuite customers in the fourth quarter included American Suzuki Motor Corporation, Canon Japan, L.L.Bean, Inc., Molex Incorporated, Samsung, Sony Music Entertainment Japan, Staples Inc., Verisign, and VERITAS, among others. Resellers accounted for approximately 26% of fourth quarter revenue, up from approximately 22% in the third quarter.

Akamai continues to build on the success of EdgeSuite with the additional capabilities of EdgeComputing, enabling enterprises to process applications on Akamai's globally distributed network of servers and extend their e-business infrastructure anywhere in the world - on demand, with visibility and control. "With EdgeComputing, Akamai is breaking the application time-to-market bottleneck, while helping customers avoid costly data center build-outs and make the most of their in-place infrastructure," Conrades explained. "Just as Akamai has made the Internet predictable, scalable, and secure for content delivery, we are now doing the same for application processing and delivery. For customers, this means increased revenues, competitive advantage and better resource utilization."

The following are two examples of early customer successes:

Logitech - Requiring the assurance of 100% response to users

during an online promotional contest to give away 20,000 cordless

mouse and keyboard combinations, Logitech turned to Akamai's

EdgeComputing capabilities to provide a positive user experience

through fast performance and guaranteed availability during this

key holiday period. Uncertain as to the magnitude of traffic the

online promotion would create, making the decision to purchase

more servers both costly and impossible to estimate, Logitech

needed a solution that could scale on-demand, and be implemented

in a short timeframe to meet the marketing schedule.

EdgeComputing enabled Logitech to extend its contest application

out across the Akamai network. The successful, five-hour online

contest drove 72 million page views, resulting in a marketing

victory that delivered the desired user experience and enhanced

customer goodwill.

Sony Ericsson - Seeking increased revenues while guaranteeing a

strong user experience, Sony Ericsson implemented Akamai's

EdgeComputing for the delivery of its dealer locator application

to drive global, on-line visitors into brick and mortar Sony

Ericsson dealers. Relying on Akamai as a deployment platform for

not only its dealer locator, but many of its Internet

applications, Sony Ericsson offloaded nearly 100% of application

server processing, reducing its server infrastructure by 65%, and

increasing the performance of its global dealer locator by over

400%. Today, Sony Ericsson is using EdgeComputing to achieve

significant infrastructure savings, while improving application

time-to-market and competitive differentiation of their core



"Our fourth quarter financial results support the decision and actions we undertook during the period to reduce our overall cost structure while maintaining our high level of customer service and improving productivity. Akamai has a competitive cost structure and a strong market position," said Robert Cobuzzi, chief financial officer at Akamai. "We ended the quarter with $125.2 million in cash and marketable securities, positioning us with a strong balance sheet going into 2003."

In the fourth quarter of 2002, Akamai recorded restructuring charges of $26.7 million related to real estate consolidations and reduction in workforce. The reduction in workforce during the quarter is expected to lower operating costs between $25 and $30 million on an annual basis.

Consistent with Akamai's low capital investment requirements, capital expenditures for the quarter, principally made in connection with the development of internal-use software, network deployment, facilities and information systems, were $0.9 million, down from $7.0 million in the third quarter. Capital expenditures were reduced by a one-time tenant improvement payment of $1.7 million from the landlord of our corporate headquarters.

At December 31, 2002, the Company had 114.9 million shares of common stock outstanding. At December 31, 2002, common stock outstanding and unexercised stock options and warrants totaled 134.1 million shares.

Quarterly Conference Call

Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-888-689-4521 (or 1-706-645-9202 for international calls). A live Webcast of the call can be accessed at In addition, a replay of the call will be available for one week following the conference through the Akamai Website or by calling 1-800-642-1687 (or 1-706-645-9291 for international calls) and using conference ID No. 7300313.

About Akamai

Akamai(R) provides products and services that enable the world's leading enterprises and government agencies to extend and control their e-business infrastructure. Having deployed the world's largest, globally-distributed computing platform, Akamai ensures the highest levels of availability, reliability, security, and performance of networked information and application delivery between the origin and the destination of any e-business process. Headquartered in Cambridge, Massachusetts, with research and development centers around the world, Akamai's industry-leading products and services, matched with world-class customer care, are used by hundreds of successful enterprises, government entities, and Web businesses around the globe. For more information, visit

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 and those specific to the Internet and related industries, unexpected increases in Akamai's use of funds, the dependence on Akamai's Internet content delivery service, outsourced e-business infrastructure services and other technology products, lack or timing of market acceptance of our services, including EdgeSuite and our ability to service and repay our outstanding debt 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
                     (dollar amounts in thousands)

                                  December 31, 2002  December 31, 2001
                                  -----------------  -----------------


Cash and cash equivalents                  $111,262           $78,774
Restricted cash and
 marketable securities                        3,664           113,906
Accounts receivable, net                     17,574            20,067
Prepaid expenses and
 other current assets                         7,433            15,252
                                  ------------------ -----------------
  Current assets:                           139,933           227,999
Restricted cash                              10,244            17,831
Property and equipment, net                  63,159           132,237
Goodwill and other
 intangible assets, net                       7,410            19,351
Other assets                                  7,367            24,060
                                  ------------------ -----------------
  Total assets                             $228,113          $421,478
                                  ================== =================

Liabilities and stockholders' (deficit) equity

Accounts payable and
 accrued expenses                           $50,359           $68,312
Other current liabilities                    27,455            22,986
                                  ------------------ -----------------
  Current liabilities:                       77,814            91,298
Other liabilities                            16,589            12,946
Convertible notes                           300,000           300,000
                                  ------------------ -----------------
  Total liabilities                         394,403           404,244
Stockholders' (deficit) equity             (166,290)           17,234
                                  ------------------ -----------------
  Total liabilities and
   stockholders' (deficit) equity          $228,113          $421,478
                                  ================== =================

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

                           Three Months Ended       Year Ended
                            Dec. 31, Dec. 31,   Dec. 31,    Dec. 31,
                             2002      2001      2002        2001
                           --------- --------- ---------- ------------

Revenue                     $35,352   $37,110   $144,976     $163,214

Cost and operating
 Cost of revenue (before
  depreciation)               6,603    13,977     38,371       65,119
 Research and development     2,845     6,575     17,158       35,080
 Sales and marketing         11,760    13,355     53,068       73,796
 General and administrative  11,091    17,517     54,044       83,068
 Amortization of CNN
  advertising                 1,371     1,410      5,634        5,632
 Amortization of goodwill
  and other intangible
  assets                      2,231     4,034     11,930      255,804
 Depreciation                17,141    19,912     78,488       73,820
  compensation                5,562     7,188     21,195       31,457
 Impairment of goodwill           -         -          -    1,912,840
 Restructuring charge        26,675    14,302     45,824       40,496
                           --------- --------- ---------- ------------
  Total cost and
    operating expenses       85,279    98,270    325,712    2,577,112
                           --------- --------- ---------- ------------
Operating loss              (49,927)  (61,160)  (180,736)  (2,413,898)

Interest expense, net         4,053     3,336     15,310        6,602
Other income                      -         -          -       (1,002)
(Gain) loss on investments     (299)       (8)     6,099       14,952
                           --------- --------- ---------- ------------
Loss before provision for
 income taxes               (53,681)  (64,488)  (202,145)  (2,434,450)
Provision for income taxes      123       277        492        1,062
                           --------- --------- ---------- ------------
Net loss                   $(53,804) $(64,765) $(202,637) $(2,435,512)
                           ========= ========= ========== ============

Basic and diluted net loss
 per share                   $(0.47)   $(0.60)    $(1.80)     $(23.59)
Weighted average common
 shares outstanding         114,866   108,357    112,766      103,233

Supplemental financial data
 (in thousands):

 depreciation               $10,703   $12,098    $45,365      $42,677
Other depreciation           $6,438    $7,814    $33,123      $31,143

Capital expenditures           $893    $7,168    $14,300      $64,650

End of period statistics:
 EdgeSuite customers            270       152        270          152
 Number of customers under
  recurring contract            955     1,078        955        1,078
 Number of employees            557       841        557          841
 Number of servers           13,622    13,522     13,622       13,522
 Common stock outstanding   117,393   115,099    117,393      115,099
 Common stock outstanding
  and unexercised options
  and warrants              134,118   128,926    134,118      128,926

Cash flow data:
 Net cash used in
  operating activities     $(10,331) $(33,625)  $(65,712)   $(119,282)
 Net cash (used in)
  provided by investing
  activities                $(2,966)   $7,639    $96,091      $39,552

 Net cash provided by
  financing activities and
  effects of exchange rate
  translation                $1,065    $4,106     $2,109       $8,374

Net change in cash, cash
 equivalents, restricted
 cash and marketable
 securities                $(16,812) $(29,095)  $(85,341)   $(176,423)

--30--ma/bos* DS/bo

CONTACT: Akamai Technologies
Jeff Young, 617/444-3913 (Media Relations)
Akamai Technologies
J.C. Raby, 617/444-2555 (Investor Relations)