Fast, Intelligent and Secure at the Edge

Press Release Details

Akamai Reports Fourth Quarter 2019 and Full-Year 2019 Financial Results

February 11, 2020 at 4:01 PM EST
Fourth quarter revenue of $772 million, up 8% year-over-year and up 9% when adjusted for foreign exchange*
Cloud Security Solutions revenue grew 29% year-over-year
GAAP EPS of $0.73, up 28% year-over-year, and non-GAAP EPS* of $1.23, up 15% year-over-year

CAMBRIDGE, Mass., Feb. 11, 2020 /PRNewswire/ -- Akamai Technologies, Inc. (NASDAQ: AKAM), the intelligent edge platform for securing and delivering digital experiences, today reported financial results for the fourth quarter and full-year ended December 31, 2019.

Akamai Technologies, Inc. logo (PRNewsfoto/Akamai Technologies, Inc.)

"We were very pleased with our 2019 performance. Both revenue and earnings exceeded our expectations due to the rapid growth of our cloud security business, robust seasonal traffic on our network and our continued focus on operational excellence," said Dr. Tom Leighton, Chief Executive Officer of Akamai. "As a result, we achieved another year of strong revenue growth and operating margin expansion, and we believe that we are well-positioned to achieve our 30% non-GAAP operating margin goal in 2020, as we continue to invest in innovation and new products to drive future growth."

Akamai delivered the following results for the fourth quarter and full-year ended December 31, 2019:

Revenue: Revenue for the fourth quarter was $772 million, an 8% increase over fourth quarter 2018 revenue of $713 million and a 9% increase when adjusted for foreign exchange.* Total revenue for 2019 was $2.894 billion compared to $2.714 billion for 2018, up 7% year-over-year and up 8% when adjusted for foreign exchange.*

Revenue by Division(1):

  • Web Division revenue for the fourth quarter was $420 million, up 9% year-over-year and when adjusted for foreign exchange.* Web Division revenue for 2019 was $1.566 billion, up 8% year-over-year and up 9% when adjusted for foreign exchange.*
  • Media and Carrier Division revenue for the fourth quarter was $353 million, up 8% year-over-year and when adjusted for foreign exchange.* Media and Carrier Division revenue for 2019 was $1.327 billion, up 5% year-over-year and up 6% when adjusted for foreign exchange.*

Revenue from Cloud Security Solutions(2):

  • Cloud Security Solutions revenue for the fourth quarter was $238 million, up 29% year-over-year and when adjusted for foreign exchange.* Cloud Security Solutions revenue for 2019 was $849 million, up 29% year-over-year and up 30% when adjusted for foreign exchange.*

Revenue from Internet Platform Customers(3):

  • Revenue from Internet Platform Customers for the fourth quarter was $52 million, up 20% year-over-year and when adjusted for foreign exchange.* Internet Platform Customers revenue for 2019 was $189 million, up 8% year-over-year and when adjusted for foreign exchange.*
  • Revenue excluding Internet Platform Customers for the fourth quarter was $720 million, up 7% year-over-year and up 8% when adjusted for foreign exchange.* Revenue excluding Internet Platform Customers for 2019 was $2.704 billion, up 6% year-over-year and up 8% when adjusted for foreign exchange.*

Revenue by Geography:

  • U.S. revenue for the fourth quarter was $446 million, up 3% year-over-year. U.S. revenue for 2019 was $1.694 billion, up 1% year-over-year.
  • International revenue for the fourth quarter was $326 million, up 17% year-over-year and up 18% when adjusted for foreign exchange.* International revenue for 2019 was $1.199 billion, up 16% year-over-year and up 20% when adjusted for foreign exchange.*

2019 items: Effective January 1, 2019, the expected average useful life of our network assets, primarily servers, increased from four years to five years, due to software and hardware initiatives undertaken to manage our global network more efficiently. As a result, fourth quarter year-over-year growth rates for GAAP and non-GAAP income from operations, net income and EPS in the paragraphs below were benefited by $7 million, or $6 million net of tax and $0.04 per share. Full-year growth rates for GAAP and non-GAAP income from operations, net income and EPS in the paragraphs below were benefited by $32 million, or $26 million net of tax and $0.16 per share.

Full-year GAAP growth rates were also impacted by a one-time $50 million endowment to the Akamai Foundation recognized in the second quarter of 2018, which did not recur in 2019.

Income from operations: GAAP income from operations for the fourth quarter was $135 million, a 12% increase from fourth quarter 2018 income from operations of $120 million. GAAP operating margin for the fourth quarter was 18%, up 1 percentage point from the same period last year. GAAP income from operations for 2019 was $549 million, a 51% increase from the prior year's GAAP income from operations of $362 million. Full-year GAAP operating margin was 19%, up 6 percentage points from the same period last year.

Non-GAAP income from operations* for the fourth quarter was $222 million, a 10% increase from fourth quarter 2018 non-GAAP income from operations of $201 million. Non-GAAP operating margin* for the fourth quarter was 29%, up 1 percentage point from the same period last year. Non-GAAP income from operations* for 2019 was $844 million, a 17% increase from the prior year's non-GAAP income from operations of $720 million. Full year non-GAAP operating margin* was 29%, up 2 percentage points from the same period last year.

Net income: GAAP net income for the fourth quarter was $119 million, a 27% increase from fourth quarter 2018 GAAP net income of $94 million. GAAP net income for 2019 was $478 million, a 60% increase from the prior year's GAAP net income of $298 million.

Non-GAAP net income* for the fourth quarter was $202 million, a 15% increase from fourth quarter 2018 non-GAAP net income of $176 million. Non-GAAP net income* for 2019 was $739 million, a 21% increase from the prior year's non-GAAP net income of $612 million.

EPS: GAAP EPS for the fourth quarter was $0.73 per diluted share, a 28% increase from fourth quarter 2018 GAAP EPS of $0.57 and a 29% increase when adjusted for foreign exchange.* GAAP EPS for 2019 was $2.90 per diluted share, a 65% increase from prior year's GAAP EPS of $1.76 per diluted share and a 69% increase when adjusted for foreign exchange.*

Non-GAAP EPS* for the fourth quarter was $1.23 per diluted share, a 15% increase from fourth quarter 2018 non-GAAP EPS of $1.07 and a 16% increase when adjusted for foreign exchange.* Non-GAAP EPS* for 2019 was $4.49 per diluted share, a 24% increase from prior year's non-GAAP EPS of $3.62 per diluted share and a 26% increase when adjusted for foreign exchange.*

Adjusted EBITDA*: Adjusted EBITDA* for the fourth quarter was $319 million, a 6% increase from fourth quarter 2018 Adjusted EBITDA of $301 million. Adjusted EBITDA margin* for the fourth quarter was 41%, down 1 percentage point from the same period last year. Adjusted EBITDA* for 2019 was $1.211 billion, an 11% increase from the prior year's Adjusted EBITDA of $1.092 billion. Adjusted EBITDA margin* was 42%, up 2 percentage points from the same period last year.

Supplemental cash information: Cash from operations for the quarter was $282 million, or 37% of revenue. Cash from operations for 2019 was $1.058 billion, or 37% of revenue. Cash, cash equivalents and marketable securities was $2.4 billion as of December 31, 2019.

Share repurchases: The Company spent $43 million in the fourth quarter to repurchase 0.5 million shares of its common stock at an average price of $88.48 per share. For the full-year, the Company spent $335 million to repurchase 4.0 million shares of its common stock at an average price of $82.90 per share. The Company had 162 million shares of common stock outstanding as of December 31, 2019.

*      See Use of Non-GAAP Financial Measures below for definitions

(1)  Revenue by Division – A customer-focused reporting view that reflects revenue from customers that are managed by the division

(2)  Revenue from Cloud Security Solutions – A product-focused reporting view that reflects revenue from Cloud Security Solutions separately from all other solution categories

(3)  Revenue from Internet Platform Customers – Revenue from six customers that are large Internet platform companies: Amazon, Apple, Facebook, Google, Microsoft and Netflix

Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-844-578-9671 (or 1-508-637-5655 for international calls) and using passcode 7619277. 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 two weeks following the conference by calling 1-855-859-2056 (or 1-404-537-3406 for international calls) and using passcode 7619277. The archived webcast of this event may be accessed through the Akamai website.

About Akamai
Akamai secures and delivers digital experiences for the world's largest companies. Akamai's intelligent edge platform surrounds everything, from the enterprise to the cloud, so customers and their businesses can be fast, smart and secure. Top brands globally rely on Akamai to help them realize competitive advantage through agile solutions that extend the power of their multi-cloud architectures. Akamai keeps decisions, apps and experiences closer to users than anyone – and attacks and threats far away. Akamai's portfolio of edge security, web and mobile performance, enterprise access and video delivery solutions is supported by unmatched customer service, analytics and 24/7/365 monitoring. To learn why the world's top brands trust Akamai, visit www.akamai.com, blogs.akamai.com, or @Akamai on Twitter.

 

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)

December 31,

2019 (1)


December 31,
 2018

ASSETS




Current assets:




Cash and cash equivalents

$

543,745



$

1,036,455


Marketable securities

993,249



855,650


Accounts receivable, net

551,943



479,889


Prepaid expenses and other current assets

142,676



163,360


Total current assets

2,231,613



2,535,354


Marketable securities

835,384



209,066


Property and equipment, net

1,152,153



910,618


Operating lease right-of-use assets

758,450




Acquired intangible assets, net

179,431



168,348


Goodwill

1,600,265



1,487,404


Deferred income tax assets

76,528



34,913


Other assets

173,062



116,067


Total assets

$

7,006,886



$

5,461,770


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

138,946



$

99,089


Accrued expenses

334,861



328,304


Deferred revenue

71,223



69,083


Convertible senior notes



686,552


Operating lease liabilities

139,463




Other current liabilities

8,843



27,681


Total current liabilities

693,336



1,210,709


Deferred revenue

4,368



4,557


Deferred income tax liabilities

29,187



19,624


Convertible senior notes

1,839,791



874,080


Operating lease liabilities

692,181




Other liabilities

90,065



160,940


Total liabilities

3,348,928



2,269,910


Total stockholders' equity

3,657,958



3,191,860


Total liabilities and stockholders' equity

$

7,006,886



$

5,461,770




(1)

On January 1, 2019, Akamai adopted the new lease accounting standard on a modified retrospective basis by applying the new standard to its lease portfolio as of January 1, 2019, while continuing to apply legacy guidance in the comparative periods. Adoption of the standard required Akamai to record right-of-use assets and lease liabilities for its operating leases related to real estate and co-location arrangements. The adoption of the standard also resulted in elimination of related accrued expenses and deferred rent liabilities, as of January 1, 2019, that are now included in the new lease balances.


 

 

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME



Three Months Ended


Year Ended

(in thousands, except per share data)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

Revenue

$

772,123



$

709,912



$

713,363



$

2,893,617



$

2,714,474


Costs and operating expenses:










Cost of revenue (1) (2)

257,750



246,938



243,927



987,624



953,485


Research and development (1)

68,898



64,887



60,342



261,365



246,165


Sales and marketing (1)

140,243



122,258



137,797



523,883



517,353


General and administrative (1) (2)

149,926



123,216



129,565



516,093



574,067


Amortization of acquired intangible assets

9,710



9,624



8,292



38,581



33,311


Restructuring charge (benefit)

10,274



(300)



13,152



17,153



27,594


Total costs and operating expenses

636,801



566,623



593,075



2,344,699



2,351,975


Income from operations

135,322



143,289



120,288



548,918



362,499


Interest income

11,402



7,908



7,308



34,355



26,940


Interest expense

(16,675)



(12,127)



(14,582)



(49,364)



(43,202)


Other (expense) income, net

(609)



(752)



59



(1,428)



(3,148)


Income before (provision) benefit for income taxes

129,440



138,318



113,073



532,481



343,089


(Provision) benefit for income taxes

(10,632)



960



(19,058)



(53,350)



(44,716)


Income (loss) from equity method investment

292



(1,388)





(1,096)




Net income

$

119,100



$

137,890



$

94,015



$

478,035



$

298,373












Net income per share:










Basic

$

0.74



$

0.85



$

0.58



$

2.94



$

1.78


Diluted

$

0.73



$

0.84



$

0.57



$

2.90



$

1.76












Shares used in per share calculations:










Basic

161,737



162,445



162,958



162,706



167,312


Diluted

163,930



164,558



164,540



164,573



169,188




(1)

Includes stock-based compensation (see supplemental table for figures)

(2)

Includes depreciation and amortization (see supplemental table for figures)

 

 

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended


Year Ended

(in thousands)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

Cash flows from operating activities:










Net income

$

119,100



$

137,890



$

94,015



$

478,035



$

298,373


Adjustments to reconcile net income to net cash provided by operating activities:










Depreciation and amortization

115,800



110,604



116,294



440,674



434,520


Stock-based compensation

46,878



46,815



44,998



187,140



183,813


(Benefit) provision for deferred income taxes

(23,648)



(27)



(10,567)



933



2,339


Amortization of debt discount and issuance costs

15,096



11,133



14,114



45,857



41,958


Restructuring-related software charges

3,784





2,122



3,784



4,940


Other non-cash reconciling items, net

966



2,598



2,718



4,744



12,078


Changes in operating assets and liabilities, net of effects of acquisitions:










Accounts receivable

(26,327)



(17)



(16,834)



(64,471)



(30,445)


Prepaid expenses and other current assets

23,352



11,624



(2,048)



11,689



(4,132)


Accounts payable and accrued expenses

38,210



23,348



34,317



8,769



42,238


Deferred revenue

(30,261)



(11,259)



(24,846)



(13,547)



(919)


Other current liabilities

4,620



(3,111)



7,392



(17,230)



9,422


Other non-current assets and liabilities

(5,430)



(32,213)



24,480



(28,073)



14,142


Net cash provided by operating activities

282,140



297,385



286,155



1,058,304



1,008,327


Cash flows from investing activities:










Cash paid for acquired businesses, net of cash acquired

(43,920)







(165,329)



(79)


Cash paid for equity method investment







(36,008)




Purchases of property and equipment and capitalization of internal-use software development costs

(133,666)



(152,633)



(117,334)



(562,077)



(405,741)


Purchases of short- and long-term marketable securities

(466,585)



(981,805)



(91,611)



(1,840,148)



(873,697)


Proceeds from sales and maturities of short- and long-term marketable securities

205,903



229,796



380,034



1,085,229



775,050


Other non-current assets and liabilities

(1,496)



(342)



612



399



(2,066)


Net cash (used in) provided by investing activities

(439,764)



(904,984)



171,701



(1,517,934)



(506,533)


 

 

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued



Three Months Ended


Year Ended

(in thousands)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

Cash flows from financing activities:










Proceeds from the issuance of convertible senior notes



1,135,629





1,135,629



1,132,185


Proceeds from the issuance of warrants



185,150





185,150



119,945


Purchase of note hedge related to convertible senior notes



(312,225)





(312,225)



(261,740)


Repayment of convertible senior notes







(690,000)




Proceeds from the issuance of common stock under stock plans

13,908



14,432



10,111



57,112



62,608


Employee taxes paid related to net share settlement of stock-based awards

(14,150)



(11,160)



(12,160)



(75,266)



(64,305)


Repurchases of common stock

(42,731)



(175,541)



(124,075)



(334,519)



(750,000)


Other non-current assets and liabilities







(1,558)



(5,085)


Net cash (used in) provided by financing activities

(42,973)



836,285



(126,124)



(35,677)



233,608


Effects of exchange rate changes on cash and cash equivalents

5,116



(5,328)



(1,316)



2,466



(12,844)


Net (decrease) increase in cash, cash equivalents and restricted cash

(195,481)



223,358



330,416



(492,841)



722,558


Cash, cash equivalents and restricted cash at beginning of period

739,627



516,269



706,571



1,036,987



314,429


Cash, cash equivalents and restricted cash at end of period

$

544,146



$

739,627



$

1,036,987



$

544,146



$

1,036,987






















 

 

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL REVENUE DATA REVENUE BY DIVISION



Three Months Ended


Year Ended

(in thousands)

December 31,
 2019


September 30,
 2019


December 31,

2018 (1)


December 31,
 2019


December 31,

2018 (1)

Web Division

$

419,529



$

390,223



$

386,268



$

1,566,401



$

1,448,644


Media and Carrier Division

352,594



319,689



327,095



1,327,216



1,265,830


Total revenue

$

772,123



$

709,912



$

713,363



$

2,893,617



$

2,714,474


Revenue growth rates year-over-year:










Web Division

9

%


9

%


9

%


8

%


11

%

Media and Carrier Division

8



2



8



5



7


Total revenue

8

%


6

%


8

%


7

%


9

%

Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2):










Web Division

9

%


10

%


10

%


9

%


10

%

Media and Carrier Division

8



3



9



6



7


Total revenue

9

%


7

%


10

%


8

%


9

%

 

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL REVENUE DATA  REVENUE FROM CLOUD SECURITY SOLUTIONS



Three Months Ended


Year Ended

(in thousands)

December 31,
 2019


September 30,
 2019


December 31,

2018 (3)


December 31,
 2019


December 31,

2018 (3)

Cloud Security Solutions

$

237,913



$

215,916



$

184,769



$

848,733



$

658,747


CDN and other solutions

534,210



493,996



528,594



2,044,884



2,055,727


Total revenue

$

772,123



$

709,912



$

713,363



$

2,893,617



$

2,714,474


Revenue growth rates year-over-year:










Cloud Security Solutions

29

%


28

%


35

%


29

%


35

%

CDN and other solutions

1



(1)



1



(1)



3


Total revenue

8

%


6

%


8

%


7

%


9

%

Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2):










Cloud Security Solutions

29

%


29

%


37

%


30

%


35

%

CDN and other solutions

1



(1)



2



1



2


Total revenue

9

%


7

%


10

%


8

%


9

%



(1)

As of January 1, 2019, Akamai reassigned some of its customers from the Media and Carrier Division to the Web Division and revised historical results in order to reflect the most recent categorization and to provide a comparable view for all periods presented. As the purchasing patterns and required account expertise of customers change over time, Akamai may reassign a customer's division from one to another.

(2)

See Use of Non-GAAP Financial Measures below for a definition

(3)

As of January 1, 2019, Akamai updated its methodology for allocating revenue to specific solutions when solutions are sold as a bundle. Revenue amounts were reassigned from CDN and other solutions revenue to Cloud Security Solutions revenue as a result of this change and historical results were revised in order to reflect the most recent allocation methodologies and to provide a comparable view for all periods presented.

 

 

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL REVENUE DATA  REVENUE FROM INTERNET PLATFORM CUSTOMERS



Three Months Ended


Year Ended

(in thousands)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

Revenue from Internet Platform Customers

$

51,927



$

44,156



$

43,218



$

189,428



$

174,757


Revenue excluding Internet Platform Customers

720,196



665,756



670,145



2,704,189



2,539,717


Total revenue

$

772,123



$

709,912



$

713,363



$

2,893,617



$

2,714,474


Revenue growth rates year-over-year:










Revenue from Internet Platform Customers

20

%


2

%


(14)

%


8

%


(14)

%

Revenue excluding Internet Platform Customers

7



6



10



6



11


Total revenue

8

%


6

%


8

%


7

%


9

%

Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(1):










Revenue from Internet Platform Customers

20

%


2

%


(14)

%


8

%


(14)

%

Revenue excluding Internet Platform Customers

8



7



11



8



11


Total revenue

9

%


7

%


10

%


8

%


9

%

 

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL REVENUE DATA REVENUE BY GEOGRAPHY



Three Months Ended


Year Ended

(in thousands)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

U.S.

$

446,036



$

413,116



$

434,231



$

1,694,211



$

1,683,272


International

326,087



296,796



279,132



1,199,406



1,031,202


Total revenue

$

772,123



$

709,912



$

713,363



$

2,893,617



$

2,714,474


Revenue growth rates year-over-year:










U.S.

3

%


%


2

%


1

%


3

%

International

17



15



20



16



21


Total revenue

8

%


6

%


8

%


7

%


9

%

Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(1):










U.S.

3

%


%


2

%


1

%


3

%

International

18



18



23



20



20


Total revenue

9

%


7

%


10

%


8

%


9

%



(1)

See Use of Non-GAAP Financial Measures below for a definition


 

 

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL OPERATING EXPENSE DATA



Three Months Ended


Year Ended

(in thousands)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

General and administrative expenses:










Payroll and related costs

$

48,984



$

47,892



$

43,001



$

194,232



$

188,635


Stock-based compensation

12,808



12,825



13,269



52,826



53,514


Depreciation and amortization

22,167



19,269



20,273



78,587



80,014


Facilities-related costs

27,196



21,413



22,216



90,674



86,107


(Benefit) provision for doubtful accounts

(414)



623



1,079



1,924



2,672


Acquisition-related costs

726



219



896



1,920



2,868


Legal and stockholder matter costs

10,000







10,000



23,091


License of patent





(4,355)



(8,855)



(17,146)


Endowment of Akamai Foundation









50,000


Professional fees and other expenses

28,459



20,975



33,186



94,785



104,312


Total general and administrative expenses

$

149,926



$

123,216



$

129,565



$

516,093



$

574,067












General and administrative expenses–functional(1):










Global functions

$

51,416



$

47,731



$

47,547



$

198,077



$

197,377


As a percentage of revenue

7

%


7

%


7

%


7

%


7

%

Infrastructure

88,198



74,643



80,659



307,500



308,915


As a percentage of revenue

11

%


11

%


11

%


11

%


11

%

Other

10,312



842



1,359



10,516



67,775


Total general and administrative expenses

$

149,926



$

123,216



$

129,565



$

516,093



$

574,067


As a percentage of revenue

19

%


17

%


18

%


18

%


21

%











Stock-based compensation:










Cost of revenue

$

5,562



$

5,555



$

5,549



$

22,479



$

21,892


Research and development

12,742



12,842



11,350



49,685



44,034


Sales and marketing

15,766



15,593



14,830



62,150



64,373


General and administrative

12,808



12,825



13,269



52,826



53,514


Total stock-based compensation

$

46,878



$

46,815



$

44,998



$

187,140



$

183,813




(1)

Global functions expense includes payroll, stock-based compensation and other employee-related costs for administrative functions, including finance, purchasing, order entry, human resources, legal, information technology and executive personnel, as well as third-party professional service fees. Infrastructure expense includes payroll, stock-based compensation and other employee-related costs for our network infrastructure functions, as well as facility rent expense, depreciation and amortization of facility and IT-related assets, software and software-related costs, business insurance and taxes. Our network infrastructure function is responsible for network planning, sourcing, architecture evaluation and platform security. Other expense includes acquisition-related costs, provision for doubtful accounts, the license of a patent, legal and stockholder matter costs, transformation costs and the endowment to the Akamai Foundation.


 

 

AKAMAI TECHNOLOGIES, INC.
OTHER SUPPLEMENTAL DATA



Three Months Ended


Year Ended

(in thousands, except end of period statistics)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

Depreciation and amortization:










Network-related depreciation (1)

$

34,186



$

31,840



$

37,592



$

125,588



$

150,458


Capitalized internal-use software development amortization

41,501



41,842



42,440



165,240



143,752


Other depreciation and amortization

21,703



18,843



19,802



76,827



78,396


Depreciation of property and equipment

97,390



92,525



99,834



367,655



372,606


Capitalized stock-based compensation amortization

7,747



7,500



7,175



30,613



25,237


Capitalized interest expense amortization

953



955



993



3,825



3,366


Amortization of acquired intangible assets

9,710



9,624



8,292



38,581



33,311


Total depreciation and amortization

$

115,800



$

110,604



$

116,294



$

440,674



$

434,520












Capital expenditures, excluding stock-based compensation and interest expense(2)(3):










Purchases of property and equipment

$

122,560



$

104,345



$

74,262



$

406,854



$

229,744


Capitalized internal-use software development costs

50,497



49,754



50,920



202,691



198,327


Total capital expenditures, excluding stock-based compensation and interest expense

$

173,057



$

154,099



$

125,182



$

609,545



$

428,071












End of period statistics:










Number of employees

7,724



7,579



7,519








(1)

As of January 1, 2019, due to the software and hardware initiatives undertaken to manage global network more efficiently, Akamai changed the estimated useful life of its network assets, primarily servers, from 4 years to 5 years. This prospective change decreased depreciation expense in 2019, as compared to the comparative periods presented in 2018.

(2)

Capital expenditures presented in this table are reported on an accrual basis, which differs from the cash-basis presentation in the statements of cash flows. The primary difference between the two is the change in purchases of property and equipment and capitalization of internal-use software development costs accrued for, but not paid, at period end versus prior periods.

(3)

See Use of Non-GAAP Financial Measures below for a definition.

 

 

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS AND NET INCOME



Three Months Ended


Year Ended

(in thousands)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

Income from operations

$

135,322



$

143,289



$

120,288



$

548,918



$

362,499


GAAP operating margin

18

%


20

%


17

%


19

%


13

%

Amortization of acquired intangible assets

9,710



9,624



8,292



38,581



33,311


Stock-based compensation

46,878



46,815



44,998



187,140



183,813


Amortization of capitalized stock-based compensation and capitalized interest expense

8,700



8,455



8,168



34,438



28,603


Restructuring charge (benefit)

10,274



(300)



13,152



17,153



27,594


Acquisition-related costs

726



219



896



1,920



2,868


Legal and stockholder matter costs

10,000







10,000



23,091


Endowment of Akamai Foundation









50,000


Transformation costs





5,178



5,527



7,730


Operating adjustments

86,288



64,813



80,684



294,759



357,010


Non-GAAP income from operations

$

221,610



$

208,102



$

200,972



$

843,677



$

719,509


Non-GAAP operating margin

29

%


29

%


28

%


29

%


27

%











Net income

$

119,100



$

137,890



$

94,015



$

478,035



$

298,373


Operating adjustments (from above)

86,288



64,813



80,684



294,759



357,010


Amortization of debt discount and issuance costs

15,096



11,133



14,114



45,857



41,958


Loss on investments

500







60



1,481


(Income) loss from equity method investment

(292)



1,388





1,096




Income tax-effect of above non-GAAP adjustments and certain discrete tax items

(19,099)



(34,631)



(12,959)



(80,488)



(86,391)


Non-GAAP net income

$

201,593



$

180,593



$

175,854



$

739,319



$

612,431


 

 

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED SHARE



Three Months Ended


Year Ended

(in thousands, except per share data)

December 31,
 2019


September 30,
 2019


December 31,
 2018


December 31,
 2019


December 31,
 2018

GAAP net income per diluted share

$

0.73



$

0.84



$

0.57



$

2.90



$

1.76


Amortization of acquired intangible assets

0.06



0.06



0.05



0.23



0.20


Stock-based compensation

0.29



0.28



0.27



1.14



1.09


Amortization of capitalized stock-based compensation and capitalized interest expense

0.05



0.05



0.05



0.21



0.17


Restructuring charge (benefit)

0.06





0.08



0.10



0.16


Acquisition-related costs





0.01



0.01



0.02


Legal and stockholder matter costs

0.06







0.06



0.14


Endowment of Akamai Foundation









0.30


Transformation costs





0.03



0.03



0.05


Amortization of debt discount and issuance costs

0.09



0.07



0.09



0.28



0.25


Loss on investments









0.01


(Income) loss from equity method investment



0.01





0.01




Income tax effect of above non-GAAP adjustments and certain discrete tax items

(0.12)



(0.21)



(0.08)



(0.49)



(0.51)


Non-GAAP net income per diluted share

$

1.23



$

1.10



$

1.07



$

4.49



$

3.62












Shares used in diluted per share calculations

163,930



164,558



164,540



164,573



169,188


 

 

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA



Three Months Ended


Year Ended

(in thousands)

December 31, 2019


September 30, 2019


December 31, 2018


December 31,

2019


December 31,

2018

Net income

$

119,100



$

137,890



$

94,015



$

478,035



$

298,373


Interest income

(11,402)



(7,908)



(7,308)



(34,355)



(26,940)


Provision (benefit) for income taxes

10,632



(960)



19,058



53,350



44,716


Depreciation and amortization

97,390



92,525



99,834



367,655



372,606


Amortization of capitalized stock-based compensation and capitalized interest expense

8,700



8,455



8,168



34,438



28,603


Amortization of acquired intangible assets

9,710



9,624



8,292



38,581



33,311


Stock-based compensation

46,878



46,815



44,998



187,140



183,813


Restructuring charge (benefit)

10,274



(300)



13,152



17,153



27,594


Acquisition-related costs