Fast, Intelligent and Secure at the Edge

Press Release Details

Akamai Reports Second Quarter Results

July 24, 2000 at 4:13 PM EDT

CAMBRIDGE, Mass.--(BUSINESS WIRE)--July 24, 2000--

-- Second quarter revenue of $18.1 million, up 151.2% from first


-- Customer list grows to 2,100 signed customers, including 895

customers under recurring contract

-- Four new services commercially introduced from the

EdgeAdvantage(TM) platform

-- Delivery of more than 2,500 live video and audio streaming

events during the second quarter

-- Network grows to 4,250 servers located in 225

telecommunications networks in 50 countries

Akamai Technologies, Inc. (NASDAQ:AKAM), the foremost provider of global, high performance services for the delivery of Internet content, streaming media, and applications, today reported financial results for the second quarter ended June 30, 2000. Revenue for the quarter increased 151.2% to $18.1 million, compared to revenue of $7.2 million for the previous quarter, and increased significantly compared to revenue of $0.4 million in the second quarter last year.

"Akamai continues to sustain its market-leading position by succeeding in our three strategic core areas--customer growth, network partnerships, and technology development--as this quarter's strong financial results and other metrics demonstrate," said George Conrades, chairman and CEO at Akamai. "This quarter we continued to leverage the power of the EdgeAdvantage platform and rolled out four new services to our content provider customers. Furthermore, we strengthened our value proposition to our network and technology partners and are generating revenue growth for both Akamai and our partners."

Normalized net loss for the second quarter 2000, before equity related non-cash compensation charges and amortization of intangible assets, totaled $43.4 million, or $0.50 per share, compared to First Call's consensus summary net loss of $0.57 per share, and first quarter 2000 normalized net loss of $24.2 million, or $0.32 per share. Net loss attributable to common stockholders for the second quarter of 2000 and the first quarter of 2000 was $243.2 million and $35.4 million, or $2.78 per share and $0.47 per share, respectively.


During the quarter, Akamai had 2,100 signed customers, including 895 under recurring contract, more than double the comparable number of 425 reported at the end of the first quarter.

Akamai delivered content for hundreds of the Web's most trafficked sites and streaming media for many high-profile events during the quarter, demonstrating the company's ability to fulfill the increasing demand for high-quality, robust and reliable Internet content and streaming media services. Some of those events included:

-- The 53rd Cannes Film Festival

-- Victoria's Secret's Online Fashion Show

-- New Line Cinema's release of the "Lord of the Rings" trailer

--'s record-breaking online response to the ILOVEYOU

virus, which contained critical information, updates and

downloads of protection files

Akamai also announced that Yahoo! extended its agreement to use Akamai's content delivery services, and that C-SPAN selected Akamai to deliver streaming and interactive media services during the upcoming Democratic and Republican national conventions. Other new customers of Akamai's FreeFlow(SM) Streaming service included BBC America, Microsoft, and Paramount Digital Entertainment.

Akamai continued to expand its reseller channel and added several new partners, including Genuity, KPNQwest and LoudCloud. These companies joined Akamai's existing resellers, including CacheFlow, Digex, Global Center, IBM and NaviSite. In addition, Akamai announced its Streaming Provider Program for companies that market and resell Akamai's full range of streaming media services as co-branded offerings. Akamai announced five new streaming providers during the quarter, including Loudeye and Virage. The reseller channel contributed approximately 11% of second quarter revenue, continuing to represent an important growth catalyst for customer acquisition.


Akamai today operates the largest globally distributed network for the delivery of Internet content, streaming media and applications, and during the quarter increased the number of deployed servers from 2,800 to 4,250. Akamai has established its worldwide presence with servers now in 50 countries within 225 networks, up from 160 at the end of the previous quarter. These include Internet backbones, ISPs, cable providers, DSL providers and satellite facilities. The importance of this large and rapidly growing deployment, located ever-closer to Internet users to minimize delay and congestion, is reflected in Akamai's competitive advantage in content delivery performance and reliability, and streaming quality. During the quarter, Akamai announced strategic relationships with several top-tier network providers, including Cable & Wireless, Cidera, Excite@Home, Genuity, and Loral Cyberstar, further expanding the global reach of Akamai's delivery network.


Akamai continued to leverage its EdgeAdvantage platform to commercially introduce new and expanded services. During the quarter, the company announced:

EdgeScape(SM)--a new managed service, built upon the core geographic location capabilities in EdgeAdvantage, that allows content providers to determine in real-time the location of Web site visitors and the type of access network each visitor is using. A content provider, using this Akamai service, can make real-time decisions about which content to serve to each Web site visitor.

Traffic Analyzer--a real-time and historical reporting service for quantifying Web site performance. With this service, Akamai customers have access to important information that enables them to evaluate the effectiveness of their Web content. By leveraging this data, Akamai customers can gain insight to Web site usage and make more productive business decisions that can increase Web site traffic and maximize revenue.

FirstPoint(SM)--a unique global traffic management service for content providers with geographically distributed Web servers. Already in use by some of the Internet's most highly trafficked sites, including Yahoo! and Ticketmaster Online-CitySearch, Inc., FirstPoint leverages the real-time global Internet status tracking from the EdgeAdvantage platform to ensure that Web site visitors reach the optimal server location for each Web page request.

Akamai Conference--the company's new suite of conference-casting solutions, which incorporates live audio and video streaming and interactive components into traditional conference call services in an automated offering.


"Top-line strength comes from a world-class sales and support team and a technology group that is delivering services that our customers want to buy. We continued to show positive trends in key operating metrics such as revenue per customer, number of customers with multiple services, and revenue per server," said Timothy Weller, CFO at Akamai. "Bottom line improvement comes from two sources--the scale economics of being the market leader and the inherent operating leverage in offering multiple services to customers on our common technology platform, EdgeAdvantage. Also, our increased positive gross margin and low network capital expenditures continued to highlight the underlying potential return on invested capital."

In June 2000, Akamai raised $300.0 million of cash through a convertible debt offering. On June 30, 2000, the company had $515.7 million of cash, cash equivalents, and short-term investments as compared to $225.2 million on March 31, 2000. Capital expenditures for the quarter were $33.5 million, which were principally used for network deployment, facilities and information systems.

Akamai completed its acquisition of INTERVU Inc. on April 20, 2000, and issued approximately 10.0 million shares of common stock, and options and warrants exercisable for 2.2 million shares of common stock in the acquisition. The acquisition was accounted for using the purchase method and resulted in approximately $2.6 billion of goodwill and other intangibles, which will be amortized over approximately 3 years. On June 30, 2000, the Company had 105.9 million shares of common stock outstanding and 123.2 million shares of fully-diluted common stock, which includes outstanding common stock options and warrants.

About Akamai

Akamai is the foremost provider of global, high performance services for the delivery of Internet content, streaming media, and applications, serving over 2,100 customers. Akamai has the broadest deployment of servers for content, streaming media, and applications delivery with 4,250 servers in 50 countries directly connected to 225 different telecommunications networks. Akamai (pronounced AH kuh my) is Hawaiian for intelligent, clever and cool.

The release contains information about future expectations and plans of Akamai's management and prospects of Akamai's business 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, market acceptance of its EdgeAdvantage service, the complexity of its service and the networks on which the service is deployed, the failure to obtain access to transmission capacity and other factors that are discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 and other documents periodically filed with the SEC. -0-


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

                                      June 30, 2000 Dec. 31, 1999
                                      ------------- -------------
Current assets:
 Cash, cash equivalents and
  short-term investments                 $  515,673   $  269,554
 Accounts receivable, net                    11,650        1,588
 Prepaid expenses and other
  current assets                             10,472        2,521
                                      ------------- ------------
 Total current assets                       537,795      273,663
 Property and equipment, net                 92,563       23,875
 Goodwill and other
  intangible assets, net                  2,656,074          434
 Long-term investments                       17,558           --
 Other assets                                31,823        2,843
                                      ------------- ------------
 Total assets                            $3,335,813   $  300,815
                                      ============= ============

  Liabilities and stockholders' equity
Current liabilities:
 Accounts payable and
  accrued expenses                       $   44,104   $   14,684
 Other current liabilities                    5,572        3,953
                                      ------------- ------------
  Total current liabilities                  49,676       18,637
 Long -term liabilities                     301,424          733
                                      ------------- ------------
  Total liabilities                         351,100       19,370
 Total stockholders' equity               2,984,713      281,445
                                      ------------- ------------
  Total liabilities
   and stockholders' equity              $3,335,813   $  300,815
                                      ============= ============

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

                                       For the    For the    For the
                                         three      three        six
                                        months     months     months
                                         ended      ended      ended
                                       June 30,  March 31,   June 30,
                                          2000       2000       2000
                                     ---------  ---------  ---------
Revenue                              $  18,144  $   7,222  $  25,366
Operating expenses:
 Cost of service                        12,647      6,636     19,283
  and development                       12,931      6,915     19,846
 Sales, general
  and administrative                    39,662     21,462     61,124
 Amortization of
  intangible assets                    190,452      9,000    199,452
 Equity related
  compensation                           9,421      2,189     11,610
                                     ---------  ---------  ---------
   Total operating expenses            265,113     46,202    311,315
                                     ---------  ---------  ---------
Operating loss                        (246,969)   (38,980)  (285,949)
Interest income, net                     3,803      3,625      7,428
                                     ---------  ---------  ---------
Loss before income taxes              (243,166)   (35,355)  (278,521)
Provision for income taxes                  70         42        112
                                     ---------  ---------  ---------
Net loss attributable to
 common stockholders                 $(243,236) $ (35,397) $(278,633)
                                     ========== ========== =========
Basic and diluted net
 loss per share                      $   (2.78) $   (0.47) $   (3.43)
Weighted average common
 shares outstanding                     87,374     75,029     81,251

Normalized loss (1)                  $ (43,363) $ (24,208) $ (67,571)
Normalized basic and diluted
 net loss per share                  $   (0.50) $   (0.32) $   (0.83)

Supplemental Financial Data
 (dollars and shares in thousands):
Depreciation                             7,305      3,063     10,368
EBITDA (2)                             (39,791)   (24,728)   (64,519)
Capital expenditures                    33,537     22,665     56,202
End of period statistics:
 Number of signed customers              2,100         NA      2,100
 Number of customers under
  recurring contract                       895        425        895
 Number of employees                     1,063        517      1,063
 Number of servers                       4,250      2,800      4,250
 Common stock outstanding              105,873     93,800    105,873
 Common stock outstanding and
  unexercised options and warrants     123,187    109,896    123,187

    (1) Normalized loss is loss before equity related compensation,
amortization and other non-cash charges
    (2) EBITDA is earnings before interest, taxes, depreciation,
amortization and other non-cash charges


    CONTACT: Akamai Technologies, Inc.
             Jeff Young, Media Relations
             Ken Ruggiero, Investor Relations