Akamai Reports Third Quarter 2021 Financial Results
"Akamai delivered another excellent quarter, highlighted by the continued very strong growth of our security business, which now accounts for nearly 40% of our overall revenue," said Dr.
Akamai delivered the following financial results for the third quarter ended
Revenue: Revenue was
Revenue by
Security Technology Group revenue was$335 million , up 26% year-over-year and up 25% when adjusted for foreign exchange*Edge Technology Group revenue was$526 million , flat year-over-year and down 1% when adjusted for foreign exchange*
Revenue by Geography:
U.S. revenue was$449 million , up 3% year-over-year- International revenue was
$412 million , up 16% year-over-year and up 15% when adjusted for foreign exchange*
Income from operations: GAAP income from operations was
Non-GAAP income from operations* was
Net income: GAAP net income was
EPS: GAAP EPS was
Adjusted EBITDA*: Adjusted EBITDA* was
Supplemental cash information: Cash from operations for the third quarter of 2021 was
Share repurchases: Akamai spent
Share repurchase program: The Company also announces today that its Board of Directors has authorized a new,
The timing and amount of any shares repurchased will be determined by the Company's management based upon the evaluation of market conditions and other factors. Repurchases will be executed in the open market subject to Rule 10b-18, and may also be made under a Rule 10b5-1 plan, which would permit the Company to repurchase shares when the Company might otherwise be precluded from doing so under insider trading laws. Other structured repurchase programs may be considered from time to time. The Company may choose to suspend, expand or discontinue the repurchase program at any time.
* |
See Use of Non-GAAP Financial Measures below for definitions |
Quarterly Conference Call
Akamai will host a conference call today at
About Akamai
Akamai powers and protects life online. The most innovative companies worldwide choose Akamai to secure and deliver their digital experiences - helping billions of people live, work, and play every day. With the world's largest and most trusted edge platform, Akamai keeps apps, code, and experiences closer to users - and threats farther away. Learn more about Akamai's security, content delivery, and edge compute products and services at www.akamai.com, blogs.akamai.com, or follow
Contacts: |
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Media Relations |
Investor Relations |
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646-320-4107 |
617-274-7130 |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(in thousands) |
2021 |
2020 |
|||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
1,264,590 |
$ |
352,917 |
|||
Marketable securities |
652,695 |
745,156 |
|||||
Accounts receivable, net |
660,092 |
660,052 |
|||||
Prepaid expenses and other current assets |
184,503 |
171,406 |
|||||
Total current assets |
2,761,880 |
1,929,531 |
|||||
Marketable securities |
835,074 |
1,398,802 |
|||||
Property and equipment, net |
1,543,301 |
1,478,272 |
|||||
Operating lease right-of-use assets |
821,033 |
793,945 |
|||||
Acquired intangible assets, net |
203,596 |
234,724 |
|||||
|
1,680,496 |
1,674,371 |
|||||
Deferred income tax assets |
136,305 |
106,918 |
|||||
Other assets |
133,790 |
147,567 |
|||||
Total assets |
$ |
8,115,475 |
$ |
7,764,130 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
98,305 |
$ |
118,546 |
|||
Accrued expenses |
376,036 |
380,468 |
|||||
Deferred revenue |
83,371 |
76,600 |
|||||
Operating lease liabilities |
164,559 |
154,801 |
|||||
Other current liabilities |
9,169 |
27,755 |
|||||
Total current liabilities |
731,440 |
758,170 |
|||||
Deferred revenue |
5,355 |
5,262 |
|||||
Deferred income tax liabilities |
35,333 |
37,458 |
|||||
Convertible senior notes |
1,958,558 |
1,906,707 |
|||||
Operating lease liabilities |
722,294 |
715,404 |
|||||
Other liabilities |
80,050 |
89,833 |
|||||
Total liabilities |
3,533,030 |
3,512,834 |
|||||
Total stockholders' equity |
4,582,445 |
4,251,296 |
|||||
Total liabilities and stockholders' equity |
$ |
8,115,475 |
$ |
7,764,130 |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands, except per share data) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Revenue |
$ |
860,333 |
$ |
852,824 |
$ |
792,845 |
$ |
2,555,865 |
$ |
2,351,862 |
|||||||||
Costs and operating expenses: |
|||||||||||||||||||
Cost of revenue(1) (2) |
316,866 |
320,000 |
283,439 |
943,553 |
828,825 |
||||||||||||||
Research and development(1) |
82,899 |
77,255 |
66,773 |
242,199 |
202,087 |
||||||||||||||
Sales and marketing(1) |
108,514 |
111,894 |
122,749 |
336,762 |
370,004 |
||||||||||||||
General and administrative(1) (2) |
134,265 |
134,295 |
128,365 |
405,275 |
385,435 |
||||||||||||||
Amortization of acquired intangible assets |
11,959 |
12,060 |
10,340 |
35,446 |
31,155 |
||||||||||||||
Restructuring charge (benefit) |
565 |
(2,114) |
21 |
5,567 |
10,439 |
||||||||||||||
Total costs and operating expenses |
655,068 |
653,390 |
611,687 |
1,968,802 |
1,827,945 |
||||||||||||||
Income from operations |
205,265 |
199,434 |
181,158 |
587,063 |
523,917 |
||||||||||||||
Interest income |
2,872 |
4,736 |
6,307 |
12,186 |
22,852 |
||||||||||||||
Interest expense |
(18,144) |
(18,037) |
(17,324) |
(54,015) |
(51,778) |
||||||||||||||
Other income (expense), net |
3,635 |
(811) |
(2,158) |
2,007 |
(7,869) |
||||||||||||||
Income before provision for income taxes |
193,628 |
185,322 |
167,983 |
547,241 |
487,122 |
||||||||||||||
Provision for income taxes |
(13,648) |
(18,009) |
(8,801) |
(43,555) |
(41,764) |
||||||||||||||
Loss from equity method investment |
(1,064) |
(10,816) |
(559) |
(12,578) |
(1,674) |
||||||||||||||
Net income |
$ |
178,916 |
$ |
156,497 |
$ |
158,623 |
$ |
491,108 |
$ |
443,684 |
|||||||||
Net income per share: |
|||||||||||||||||||
Basic |
$ |
1.10 |
$ |
0.96 |
$ |
0.97 |
$ |
3.01 |
$ |
2.73 |
|||||||||
Diluted |
$ |
1.08 |
$ |
0.94 |
$ |
0.95 |
$ |
2.96 |
$ |
2.69 |
|||||||||
Shares used in per share calculations: |
|||||||||||||||||||
Basic |
162,767 |
163,074 |
162,757 |
162,967 |
162,387 |
||||||||||||||
Diluted |
166,318 |
166,263 |
166,519 |
166,090 |
164,990 |
(1) Includes stock-based compensation (see supplemental table for figures) |
(2) Includes depreciation and amortization (see supplemental table for figures) |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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Three Months Ended |
Nine Months Ended |
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(in thousands) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Cash flows from operating activities: |
|||||||||||||||||||
Net income |
$ |
178,916 |
$ |
156,497 |
$ |
158,623 |
$ |
491,108 |
$ |
443,684 |
|||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||||||
Depreciation and amortization |
139,747 |
137,715 |
118,893 |
408,933 |
350,681 |
||||||||||||||
Stock-based compensation |
49,018 |
50,481 |
50,217 |
153,804 |
146,901 |
||||||||||||||
(Benefit) provision for deferred income taxes |
(37,560) |
5,461 |
(33,942) |
(30,335) |
(22,548) |
||||||||||||||
Amortization of debt discount and issuance costs |
16,567 |
16,460 |
15,747 |
49,284 |
47,057 |
||||||||||||||
Other non-cash reconciling items, net |
(1,639) |
12,428 |
1,480 |
12,015 |
16,284 |
||||||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|||||||||||||||||||
Accounts receivable |
(10,821) |
11,176 |
20,107 |
(15,225) |
(85,439) |
||||||||||||||
Prepaid expenses and other current assets |
(4,250) |
24,539 |
(11,401) |
(15,099) |
(21,380) |
||||||||||||||
Accounts payable and accrued expenses |
66,796 |
(10,073) |
97,220 |
(16,263) |
49,818 |
||||||||||||||
Deferred revenue |
(9,831) |
(7,345) |
(6,539) |
8,263 |
14,803 |
||||||||||||||
Other current liabilities |
(1,728) |
(15,514) |
(523) |
(17,958) |
(1,638) |
||||||||||||||
Other non-current assets and liabilities |
4,522 |
(3,692) |
(7,909) |
(10,864) |
(14,316) |
||||||||||||||
Net cash provided by operating activities |
389,737 |
378,133 |
401,973 |
1,017,663 |
923,907 |
||||||||||||||
Cash flows from investing activities: |
|||||||||||||||||||
Cash received for business acquisitions, net of cash acquired |
— |
— |
— |
(15,638) |
106 |
||||||||||||||
Cash paid for asset acquisition |
— |
— |
— |
— |
(36,376) |
||||||||||||||
Purchases of property and equipment and capitalization of internal-use software development costs |
(116,247) |
(154,569) |
(228,759) |
(435,535) |
(564,427) |
||||||||||||||
Purchases of short- and long-term marketable securities |
(229,496) |
(291,957) |
(311,010) |
(611,732) |
(1,153,526) |
||||||||||||||
Proceeds from sales and maturities of short- and long-term marketable securities |
740,179 |
287,297 |
317,163 |
1,261,625 |
1,331,163 |
||||||||||||||
Other, net |
(1,453) |
(391) |
(2,059) |
(1,665) |
(1,980) |
||||||||||||||
Net cash provided by (used in) investing activities |
392,983 |
(159,620) |
(224,665) |
197,055 |
(425,040) |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Cash flows from financing activities: |
|||||||||||||||||||
Proceeds from the issuance of common stock under stock plans |
15,820 |
9,712 |
16,007 |
46,942 |
45,812 |
||||||||||||||
Employee taxes paid related to net share settlement of stock-based awards |
(11,935) |
(12,314) |
(13,369) |
(88,195) |
(77,299) |
||||||||||||||
Repurchases of common stock |
(96,841) |
(96,175) |
(13,198) |
(251,257) |
(121,078) |
||||||||||||||
Other, net |
(201) |
(67) |
— |
(268) |
— |
||||||||||||||
Net cash used in financing activities |
(93,157) |
(98,844) |
(10,560) |
(292,778) |
(152,565) |
||||||||||||||
Effects of exchange rate changes on cash, cash equivalents and restricted cash |
(5,080) |
3,003 |
4,363 |
(9,228) |
3,535 |
||||||||||||||
Net increase in cash, cash equivalents and restricted cash |
684,483 |
122,672 |
171,111 |
912,712 |
349,837 |
||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period |
581,695 |
459,023 |
572,872 |
353,466 |
394,146 |
||||||||||||||
Cash, cash equivalents and restricted cash at end of period |
$ |
1,266,178 |
$ |
581,695 |
$ |
743,983 |
$ |
1,266,178 |
$ |
743,983 |
|
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SUPPLEMENTAL REVENUE DATA – REVENUE BY PRODUCT GROUP (1) |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
|
$ |
334,649 |
$ |
325,128 |
$ |
265,869 |
$ |
969,996 |
$ |
765,485 |
|||||||||
|
525,684 |
527,696 |
526,976 |
1,585,869 |
1,586,377 |
||||||||||||||
Total revenue |
$ |
860,333 |
$ |
852,824 |
$ |
792,845 |
$ |
2,555,865 |
$ |
2,351,862 |
|||||||||
Revenue growth rates year-over-year: |
|||||||||||||||||||
|
26 |
% |
25 |
% |
23 |
% |
27 |
% |
25 |
% |
|||||||||
|
— |
(1) |
7 |
— |
5 |
||||||||||||||
Total revenue |
9 |
% |
7 |
% |
12 |
% |
9 |
% |
11 |
% |
|||||||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): |
|||||||||||||||||||
|
25 |
% |
22 |
% |
23 |
% |
25 |
% |
26 |
% |
|||||||||
|
(1) |
(4) |
6 |
(1) |
5 |
||||||||||||||
Total revenue |
8 |
% |
5 |
% |
11 |
% |
7 |
% |
11 |
% |
|
|||||||||||||||||||
SUPPLEMENTAL REVENUE DATA – REVENUE BY GEOGRAPHY |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
|
$ |
448,792 |
$ |
449,553 |
$ |
437,381 |
$ |
1,361,525 |
$ |
1,309,979 |
|||||||||
International |
411,541 |
403,271 |
355,464 |
1,194,340 |
1,041,883 |
||||||||||||||
Total revenue |
$ |
860,333 |
$ |
852,824 |
$ |
792,845 |
$ |
2,555,865 |
$ |
2,351,862 |
|||||||||
Revenue growth rates year-over-year: |
|||||||||||||||||||
|
3 |
% |
1 |
% |
6 |
% |
4 |
% |
5 |
% |
|||||||||
International |
16 |
15 |
20 |
15 |
19 |
||||||||||||||
Total revenue |
9 |
% |
7 |
% |
12 |
% |
9 |
% |
11 |
% |
|||||||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): |
|||||||||||||||||||
|
3 |
% |
1 |
% |
6 |
% |
4 |
% |
5 |
% |
|||||||||
International |
15 |
9 |
18 |
11 |
21 |
||||||||||||||
Total revenue |
8 |
% |
5 |
% |
11 |
% |
7 |
% |
11 |
% |
(1) |
Effective |
(2) |
See Use of Non-GAAP Financial Measures below for a definition |
|
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SUPPLEMENTAL REVENUE DATA – REVENUE FROM INTERNET PLATFORM CUSTOMERS (1) |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Revenue from Internet Platform Customers |
$ |
60,482 |
$ |
63,634 |
$ |
50,618 |
$ |
183,307 |
$ |
146,072 |
|||||||||
Revenue excluding Internet Platform Customers |
799,851 |
789,190 |
742,227 |
2,372,558 |
2,205,790 |
||||||||||||||
Total revenue |
$ |
860,333 |
$ |
852,824 |
$ |
792,845 |
$ |
2,555,865 |
$ |
2,351,862 |
|||||||||
Revenue growth rates year-over-year: |
|||||||||||||||||||
Revenue from Internet Platform Customers |
19 |
% |
25 |
% |
15 |
% |
25 |
% |
6 |
% |
|||||||||
Revenue excluding Internet Platform Customers |
8 |
6 |
11 |
8 |
11 |
||||||||||||||
Total revenue |
9 |
% |
7 |
% |
12 |
% |
9 |
% |
11 |
% |
|||||||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): |
|||||||||||||||||||
Revenue from Internet Platform Customers |
19 |
% |
25 |
% |
15 |
% |
25 |
% |
6 |
% |
|||||||||
Revenue excluding Internet Platform Customers |
7 |
3 |
11 |
6 |
12 |
||||||||||||||
Total revenue |
8 |
% |
5 |
% |
11 |
% |
7 |
% |
11 |
% |
|
|||||||||||||||||||
SUPPLEMENTAL REVENUE DATA – REVENUE BY DIVISION (3) |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands) |
2021 |
2021 |
2020 (4) |
2021 |
2020 (4) |
||||||||||||||
Web Division |
$ |
432,874 |
$ |
431,521 |
$ |
414,689 |
$ |
1,291,441 |
$ |
1,218,510 |
|||||||||
Media and Carrier Division |
427,459 |
421,303 |
378,156 |
1,264,424 |
1,133,352 |
||||||||||||||
Total revenue |
$ |
860,333 |
$ |
852,824 |
$ |
792,845 |
$ |
2,555,865 |
$ |
2,351,862 |
|||||||||
Revenue growth rates year-over-year: |
|||||||||||||||||||
Web Division |
4 |
% |
8 |
% |
8 |
% |
6 |
% |
8 |
% |
|||||||||
Media and Carrier Division |
13 |
7 |
16 |
12 |
14 |
||||||||||||||
Total revenue |
9 |
% |
7 |
% |
12 |
% |
9 |
% |
11 |
% |
|||||||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): |
|||||||||||||||||||
Web Division |
4 |
% |
5 |
% |
7 |
% |
4 |
% |
8 |
% |
|||||||||
Media and Carrier Division |
13 |
5 |
16 |
10 |
15 |
||||||||||||||
Total revenue |
8 |
% |
5 |
% |
11 |
% |
7 |
% |
11 |
% |
(1) |
Revenue from large Internet platform companies: Amazon, Apple, Facebook, |
(2) |
See Use of Non-GAAP Financial Measures below for a definition |
(3) |
Prior to |
(4) |
As of |
|
|||||||||||||||||||
SUPPLEMENTAL OPERATING EXPENSE DATA |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
General and administrative expenses: |
|||||||||||||||||||
Payroll and related costs |
$ |
52,799 |
$ |
54,974 |
$ |
50,159 |
$ |
164,223 |
$ |
148,233 |
|||||||||
Stock-based compensation |
14,978 |
16,123 |
14,302 |
47,463 |
43,636 |
||||||||||||||
Depreciation and amortization |
20,549 |
20,489 |
20,554 |
61,947 |
61,673 |
||||||||||||||
Facilities-related costs |
26,056 |
24,845 |
25,099 |
75,248 |
73,669 |
||||||||||||||
Provision (benefit) for doubtful accounts |
275 |
971 |
(1,627) |
986 |
3,465 |
||||||||||||||
Acquisition-related costs |
1,316 |
140 |
1,051 |
1,520 |
1,189 |
||||||||||||||
Legal settlements |
— |
— |
— |
— |
275 |
||||||||||||||
Professional fees and other expenses |
18,292 |
16,753 |
18,827 |
53,888 |
53,295 |
||||||||||||||
Total general and administrative expenses |
$ |
134,265 |
$ |
134,295 |
$ |
128,365 |
$ |
405,275 |
$ |
385,435 |
|||||||||
General and administrative expenses–functional(1): |
|||||||||||||||||||
Global functions |
$ |
49,738 |
$ |
53,314 |
$ |
47,559 |
$ |
158,851 |
$ |
142,243 |
|||||||||
As a percentage of revenue |
6 |
% |
6 |
% |
6 |
% |
6 |
% |
6 |
% |
|||||||||
Infrastructure |
82,928 |
79,878 |
81,365 |
243,915 |
238,262 |
||||||||||||||
As a percentage of revenue |
10 |
% |
9 |
% |
10 |
% |
10 |
% |
10 |
% |
|||||||||
Other |
1,599 |
1,103 |
(559) |
2,509 |
4,930 |
||||||||||||||
Total general and administrative expenses |
$ |
134,265 |
$ |
134,295 |
$ |
128,365 |
$ |
405,275 |
$ |
385,435 |
|||||||||
As a percentage of revenue |
16 |
% |
16 |
% |
16 |
% |
16 |
% |
16 |
% |
|||||||||
Stock-based compensation: |
|||||||||||||||||||
Cost of revenue |
$ |
6,738 |
$ |
6,874 |
$ |
6,384 |
$ |
20,708 |
$ |
18,374 |
|||||||||
Research and development |
16,329 |
15,937 |
12,722 |
50,635 |
36,336 |
||||||||||||||
Sales and marketing |
10,973 |
11,547 |
16,809 |
34,998 |
48,555 |
||||||||||||||
General and administrative |
14,978 |
16,123 |
14,302 |
47,463 |
43,636 |
||||||||||||||
Total stock-based compensation |
$ |
49,018 |
$ |
50,481 |
$ |
50,217 |
$ |
153,804 |
$ |
146,901 |
(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 and legal settlements. |
|
|||||||||||||||||||
OTHER SUPPLEMENTAL DATA |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands, except end of period statistics) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Depreciation and amortization: |
|||||||||||||||||||
Network-related depreciation |
$ |
58,139 |
$ |
55,601 |
$ |
42,991 |
$ |
165,636 |
$ |
118,194 |
|||||||||
Capitalized internal-use software development amortization |
40,943 |
40,426 |
37,572 |
120,592 |
116,505 |
||||||||||||||
Other depreciation and amortization |
19,973 |
19,833 |
20,081 |
60,171 |
60,293 |
||||||||||||||
Depreciation of property and equipment |
119,055 |
115,860 |
100,644 |
346,399 |
294,992 |
||||||||||||||
Capitalized stock-based compensation amortization(1) |
7,882 |
8,916 |
7,078 |
24,491 |
21,894 |
||||||||||||||
Capitalized interest expense amortization(1) |
851 |
879 |
831 |
2,597 |
2,640 |
||||||||||||||
Amortization of acquired intangible assets |
11,959 |
12,060 |
10,340 |
35,446 |
31,155 |
||||||||||||||
Total depreciation and amortization |
$ |
139,747 |
$ |
137,715 |
$ |
118,893 |
$ |
408,933 |
$ |
350,681 |
|||||||||
Capital expenditures, excluding stock-based compensation and interest expense(2)(3): |
|||||||||||||||||||
Purchases of property and equipment |
$ |
75,687 |
$ |
81,655 |
$ |
144,155 |
$ |
252,340 |
$ |
371,264 |
|||||||||
Capitalized internal-use software development costs |
53,061 |
56,574 |
55,885 |
164,700 |
160,486 |
||||||||||||||
Total capital expenditures, excluding stock-based compensation and interest expense |
$ |
128,748 |
$ |
138,229 |
$ |
200,040 |
$ |
417,040 |
$ |
531,750 |
|||||||||
End of period statistics: |
|||||||||||||||||||
Number of employees |
8,411 |
8,275 |
8,155 |
(1) |
Amortization of capitalized stock-based compensation and interest expense in this table excludes amortization of capitalized stock-based compensation and interest expense capitalized as part of the implementation of cloud-computing arrangements and contract fulfillment costs. However, the amounts are included in our total amortization of capitalized stock-based compensation and interest expense that is excluded from our non-GAAP measures (see reconciliations of GAAP to non-GAAP measures). |
(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. |
(3) |
See Use of Non-GAAP Financial Measures below for a definition |
|
|||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS AND |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Income from operations |
$ |
205,265 |
$ |
199,434 |
$ |
181,158 |
$ |
587,063 |
$ |
523,917 |
|||||||||
GAAP operating margin |
24 |
% |
23 |
% |
23 |
% |
23 |
% |
22 |
% |
|||||||||
Amortization of acquired intangible assets |
11,959 |
12,060 |
10,340 |
35,446 |
31,155 |
||||||||||||||
Stock-based compensation |
49,018 |
50,481 |
50,217 |
153,804 |
146,901 |
||||||||||||||
Amortization of capitalized stock-based compensation and capitalized interest expense |
8,815 |
9,840 |
7,913 |
27,253 |
24,540 |
||||||||||||||
Restructuring charge (benefit) |
565 |
(2,114) |
21 |
5,567 |
10,439 |
||||||||||||||
Acquisition-related costs |
1,316 |
140 |
1,051 |
1,520 |
1,189 |
||||||||||||||
Legal settlements |
— |
— |
— |
— |
275 |
||||||||||||||
Operating adjustments |
71,673 |
70,407 |
69,542 |
223,590 |
214,499 |
||||||||||||||
Non-GAAP income from operations |
$ |
276,938 |
$ |
269,841 |
$ |
250,700 |
$ |
810,653 |
$ |
738,416 |
|||||||||
Non-GAAP operating margin |
32 |
% |
32 |
% |
32 |
% |
32 |
% |
31 |
% |
|||||||||
Net income |
$ |
178,916 |
$ |
156,497 |
$ |
158,623 |
$ |
491,108 |
$ |
443,684 |
|||||||||
Operating adjustments (from above) |
71,673 |
70,407 |
69,542 |
223,590 |
214,499 |
||||||||||||||
Amortization of debt discount and issuance costs |
16,567 |
16,460 |
15,747 |
49,284 |
47,057 |
||||||||||||||
Gain on investments |
(3,680) |
— |
— |
(3,680) |
— |
||||||||||||||
Loss from equity method investment |
1,064 |
10,816 |
559 |
12,578 |
1,674 |
||||||||||||||
Income tax-effect of above non-GAAP adjustments and certain discrete tax items |
(25,600) |
(21,428) |
(28,689) |
(73,374) |
(68,481) |
||||||||||||||
Non-GAAP net income |
$ |
238,940 |
$ |
232,752 |
$ |
215,782 |
$ |
699,506 |
$ |
638,433 |
|
|||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED SHARE |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands, except per share data) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
GAAP net income per diluted share |
$ |
1.08 |
$ |
0.94 |
$ |
0.95 |
$ |
2.96 |
$ |
2.69 |
|||||||||
Adjustments to net income: |
|||||||||||||||||||
Amortization of acquired intangible assets |
0.07 |
0.07 |
0.06 |
0.21 |
0.19 |
||||||||||||||
Stock-based compensation |
0.29 |
0.30 |
0.30 |
0.93 |
0.89 |
||||||||||||||
Amortization of capitalized stock-based compensation and capitalized interest expense |
0.05 |
0.06 |
0.05 |
0.16 |
0.15 |
||||||||||||||
Restructuring charge (benefit) |
— |
(0.01) |
— |
0.03 |
0.06 |
||||||||||||||
Acquisition-related costs |
0.01 |
— |
0.01 |
0.01 |
0.01 |
||||||||||||||
Legal settlements |
— |
— |
— |
— |
— |
||||||||||||||
Amortization of debt discount and issuance costs |
0.10 |
0.10 |
0.09 |
0.30 |
0.29 |
||||||||||||||
Gain on investments |
(0.02) |
— |
— |
(0.02) |
— |
||||||||||||||
Loss from equity method investment |
0.01 |
0.07 |
— |
0.08 |
0.01 |
||||||||||||||
Income tax effect of above non-GAAP adjustments and certain discrete tax items |
(0.15) |
(0.13) |
(0.17) |
(0.44) |
(0.42) |
||||||||||||||
Adjustment for shares(1) |
0.02 |
0.02 |
0.02 |
0.04 |
0.02 |
||||||||||||||
Non-GAAP net income per diluted share |
$ |
1.45 |
$ |
1.42 |
$ |
1.31 |
$ |
4.25 |
$ |
3.89 |
|||||||||
Shares used in GAAP per diluted share calculations |
166,318 |
166,263 |
166,519 |
166,090 |
164,990 |
||||||||||||||
Impact of benefit from note hedge transactions(1) |
(2,028) |
(1,782) |
(1,732) |
(1,589) |
(795) |
||||||||||||||
Shares used in non-GAAP per diluted share calculations(1) |
164,290 |
164,481 |
164,787 |
164,501 |
164,195 |
(1) |
Shares used in non-GAAP per diluted share calculations have been adjusted for the periods presented for the benefit of Akamai's note hedge transactions. During the periods presented Akamai's average stock price was in excess of |
|
|||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(in thousands) |
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Net income |
$ |
178,916 |
$ |
156,497 |
$ |
158,623 |
$ |
491,108 |
$ |
443,684 |
|||||||||
Interest income |
(2,872) |
(4,736) |
(6,307) |
(12,186) |
(22,852) |
||||||||||||||
Provision for income taxes |
13,648 |
18,009 |
8,801 |
43,555 |
41,764 |
||||||||||||||
Depreciation and amortization |
119,055 |
115,860 |
100,644 |
346,399 |
294,992 |
||||||||||||||
Amortization of capitalized stock-based compensation and capitalized interest expense |
8,815 |
9,840 |
7,913 |
27,253 |
24,540 |
||||||||||||||
Amortization of acquired intangible assets |
11,959 |
12,060 |
10,340 |
35,446 |
31,155 |
||||||||||||||
Stock-based compensation |
49,018 |
50,481 |
50,217 |
153,804 |
146,901 |
||||||||||||||
Restructuring charge (benefit) |
565 |
(2,114) |
21 |
5,567 |
10,439 |
||||||||||||||
Acquisition-related costs |
1,316 |
140 |
1,051 |
1,520 |
1,189 |
||||||||||||||
Legal settlements |
— |
— |
— |
— |
275 |
||||||||||||||
Interest expense |
18,144 |
18,037 |
17,324 |
54,015 |
51,778 |
||||||||||||||
Gain on investments |
(3,680) |
— |
— |
(3,680) |
— |
||||||||||||||
Loss from equity method investment |
1,064 |
10,816 |
559 |
12,578 |
1,674 |
||||||||||||||
Other expense, net |
45 |
811 |
2,158 |
1,673 |
7,869 |
||||||||||||||
Adjusted EBITDA |
$ |
395,993 |
$ |
385,701 |
$ |
351,344 |
$ |
1,157,052 |
$ |
1,033,408 |
|||||||||
Adjusted EBITDA margin |
46 |
% |
45 |
% |
44 |
% |
45 |
% |
44 |
% |
Use of Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in
Management believes that these non-GAAP financial measures reflect Akamai's ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparison of financial results across accounting periods and to those of our peer companies. Management also believes that these non-GAAP financial measures enable investors to evaluate Akamai's operating results and future prospects in the same manner as management. These non-GAAP financial measures may exclude expenses and gains that may be unusual in nature, infrequent or not reflective of Akamai's ongoing operating results.
The non-GAAP financial measures do not replace the presentation of Akamai's GAAP financial results and should only be used as a supplement to, not as a substitute for, Akamai's financial results presented in accordance with GAAP. Akamai has provided a reconciliation of each non-GAAP financial measure used in its financial reporting and investor presentations to the most directly comparable GAAP financial measure. This reconciliation captioned "Reconciliation of GAAP to Non-GAAP Financial Measures" can be found on the Investor Relations section of Akamai's website.
The non-GAAP adjustments, and Akamai's basis for excluding them from non-GAAP financial measures, are outlined below:
- Amortization of acquired intangible assets – Akamai has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions Akamai has made. The amount of an acquisition's purchase price allocated to intangible assets and term of its related amortization can vary significantly and is unique to each acquisition; therefore, Akamai excludes amortization of acquired intangible assets from its non-GAAP financial measures to provide investors with a consistent basis for comparing pre- and post-acquisition operating results.
- Stock-based compensation and amortization of capitalized stock-based compensation – Although stock-based compensation is an important aspect of the compensation paid to Akamai's employees, the grant date fair value varies based on the stock price at the time of grant, varying valuation methodologies, subjective assumptions and the variety of award types. This makes the comparison of Akamai's current financial results to previous and future periods difficult to interpret; therefore, Akamai believes it is useful to exclude stock-based compensation and amortization of capitalized stock-based compensation from its non-GAAP financial measures in order to highlight the performance of Akamai's core business and to be consistent with the way many investors evaluate its performance and compare its operating results to peer companies.
- Acquisition-related costs – Acquisition-related costs include transaction fees, advisory fees, due diligence costs and other direct costs associated with strategic activities. In addition, subsequent adjustments to Akamai's initial estimated amounts of contingent consideration and indemnification associated with specific acquisitions are included within acquisition-related costs. These amounts are impacted by the timing and size of the acquisitions. Akamai excludes acquisition-related costs from its non-GAAP financial measures to provide a useful comparison of Akamai's operating results to prior periods and to its peer companies because such amounts vary significantly based on the magnitude of the acquisition transactions and do not reflect Akamai's core operations.
- Restructuring charges – Akamai has incurred restructuring charges that are included in its GAAP financial statements, primarily related to workforce reductions and charges associated with exiting facility lease commitments. Akamai excludes these items from its non-GAAP financial measures when evaluating its continuing business performance as such items vary significantly based on the magnitude of the restructuring action and do not reflect expected future operating expenses. In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of its business.
- Amortization of debt discount and issuance costs and amortization of capitalized interest expense – In
August 2019 , Akamai issued$1,150 million of convertible senior notes due 2027 with a coupon interest rate of 0.375%. InMay 2018 , Akamai issued$1,150 million of convertible senior notes due 2025 with a coupon interest rate of 0.125%. The imputed interest rates of these convertible senior notes were 3.10% and 4.26%, respectively. This is a result of the debt discounts recorded for the conversion features that are required to be separately accounted for as equity under GAAP, thereby reducing the carrying values of the convertible debt instruments. The debt discounts are amortized as interest expense together with the issuance costs of the debt. The interest expense excluded from Akamai's non-GAAP results is comprised of these non-cash components and is excluded from management's assessment of the company's operating performance because management believes the non-cash expense is not representative of ongoing operating performance. - Gains and losses on investments – Akamai has recorded gains and losses from the disposition, changes to fair value and impairment of certain investments. Akamai believes excluding these amounts from its non-GAAP financial measures is useful to investors as the types of events giving rise to these gains and losses are not representative of Akamai's core business operations and ongoing operating performance.
- Legal settlements – Akamai has incurred losses related to the settlement of legal matters. Akamai believes excluding these amounts from its non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of Akamai's core business operations.
Endowment of Akamai Foundation – Akamai has incurred expenses to endow theAkamai Foundation , a private corporate foundation dedicated to encouraging the next generation of technology innovators by supporting math and science education. Akamai's first endowment was in 2018 to enable a permanent endowment for theAkamai Foundation to allow it to expand its reach. In the fourth quarter of 2020 Akamai supplemented the endowment to enable specific initiatives to increase diversity in the technology industry. Akamai believes excluding these amounts from non-GAAP financial measures is useful to investors as these infrequent and nearly one-time expenses are not representative of its core business operations.- Income and losses from equity method investment – Akamai records income or losses on its share of earnings and losses from its equity method investment. Akamai excludes such income and losses because it does not direct control over the operations of the investment and the related income and losses are not representative of its core business operations.
- Income tax effect of non-GAAP adjustments and certain discrete tax items – The non-GAAP adjustments described above are reported on a pre-tax basis. The income tax effect of non-GAAP adjustments is the difference between GAAP and non-GAAP income tax expense. Non-GAAP income tax expense is computed on non-GAAP pre-tax income (GAAP pre-tax income adjusted for non-GAAP adjustments) and excludes certain discrete tax items (such as recording or releasing of valuation allowances), if any. Akamai believes that applying the non-GAAP adjustments and their related income tax effect allows Akamai to highlight income attributable to its core operations.
Akamai's definitions of its non-GAAP financial measures are outlined below:
Non-GAAP income from operations – GAAP income from operations adjusted for the following items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; amortization of capitalized interest expense; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the
Non-GAAP operating margin – Non-GAAP income from operations stated as a percentage of revenue.
Non-GAAP net income – GAAP net income adjusted for the following tax-affected items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the
Non-GAAP net income per diluted share – Non-GAAP net income divided by weighted average diluted common shares outstanding. Diluted weighted average shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to Akamai pursuant to the note hedge transactions entered into in connection with the issuances of
Adjusted EBITDA – GAAP net income excluding the following items: interest income; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the
Adjusted EBITDA margin – Adjusted EBITDA stated as a percentage of revenue.
Capital expenditures, or capex, excluding stock-based compensation and interest expense – Purchases of property and equipment and capitalization of internal-use software development costs presented on an accrual basis, which differs from the cash-basis presentation included 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.
Impact of foreign currency exchange rate – Revenue and earnings from international operations have historically been an important contributor to Akamai's financial results. Consequently, Akamai's financial results have been impacted, and management expects they will continue to be impacted, by fluctuations in foreign currency exchange rates. For example, when the local currencies of our foreign subsidiaries weaken, our consolidated results stated in
Because exchange rates are a meaningful factor in understanding period-to-period comparisons, management believes the presentation of the impact of foreign currency exchange rates on revenue and earnings enhances the understanding of our financial results and evaluation of performance in comparison to prior periods. The dollar impact of changes in foreign currency exchange rates presented is calculated by translating current period results using monthly average foreign currency exchange rates from the comparative period and comparing them to the reported amount. The percentage change at constant currency presented is calculated by comparing the prior period amounts as reported and the current period amounts translated using the same monthly average foreign currency exchange rates from the comparative period.
Akamai Statement Under the Private Securities Litigation Reform Act
This release and/or our quarterly earnings conference call scheduled for later today contain 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, including statements about expected future financial performance. 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, inability to continue to generate cash at the same level as prior years; failure to realize the expected benefits from our announced reorganization; failure of our investments in innovation to generate solutions that are accepted in the market; inability to increase our revenue at the same rate as in the past and keep our expenses from increasing at a greater rate than our revenues; impact of the COVID-19 pandemic; defects or disruptions in our products or IT systems; failure of the integration of any of our acquisitions; delay in developing or failure to develop new service offerings or functionalities, and if developed, lack of market acceptance of such service offerings and functionalities or failure of such solutions to operate as expected, 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
In addition, the statements in this press release and on such call represent Akamai's expectations and beliefs as of the date of this press release. Akamai anticipates that subsequent events and developments may cause these expectations and beliefs to change. However, while Akamai may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Akamai's expectations or beliefs as of any date subsequent to the date of this press release.
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