Akamai Technologies to Expand Presence in Latin America By Acquiring Exceda
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Exceda became an
Exceda operates in seven Latin American countries, with offices in
"We look forward to leveraging our
The all-cash transaction is expected to close in the fourth quarter of 2019.
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*Use of Non-GAAP Financial Measures
The forward-looking financial measures provided in this release have not been prepared in accordance with accounting principles generally accepted in
Management uses the non-GAAP measure reflected in this release, as well as GAAP financial measures and other non-GAAP metrics, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes, to measure executive compensation and to evaluate
Management believes that these non-GAAP financial measures reflect
The non-GAAP financial measures do not replace the presentation of
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 from professional service providers related to a non-routine stockholder matter; costs incurred related to the establishment of an endowment 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 from professional service providers related to a non-routine stockholder matter; costs incurred related to the establishment of an endowment to the
Non-GAAP net income per share – Non-GAAP net income divided by basic weighted average or diluted common shares outstanding. Basic weighted average shares outstanding are those used in GAAP net income per share calculations. Diluted weighted average shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to
The non-GAAP adjustments, and
- Amortization of acquired intangible assets –
Akamai has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitionsAkamai has made. The amount of an acquisition's purchase price allocated to intangible assets and term of its related amortization can vary significantly and are 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 ofAkamai'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 ofAkamai'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 ofAkamai'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 reflectAkamai's core operations. - Restructuring charges –
Akamai has incurred restructuring charges that are included in its GAAP financial statements, primarily related to workforce reductions and estimated costs of existing 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
May 2018 ,Akamai issued$1,150 million of convertible senior notes due 2025 with a coupon interest rate of 0.125%. InFebruary 2014 ,Akamai issued$690 million of convertible senior notes due 2019 with a coupon interest rate of 0%. The imputed interest rates of these convertible senior notes were 4.26% and 3.20%, 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 value 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 fromAkamai'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 them are not representative ofAkamai's core business operations and ongoing operating performance. - Legal and stockholder matter costs –
Akamai has incurred losses related to the settlement of legal matters, costs from professional service providers related to a non-routine stockholder matter and costs with respect to its internal U.S. Foreign Corrupt Practices Act ("FCPA") investigation.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 ofAkamai's core business operations. Endowment of Akamai Foundation – During the second quarter of 2018,Akamai incurred a charge to endow theAkamai Foundation .Akamai believes excluding these amounts from non-GAAP financial measures is useful to investors as this one-time expense is not representative of its core business operations.- Transformation costs –
Akamai has incurred professional services fees associated with internal transformation programs designed to improve its operating margins and that are part of a planned program intended to significantly change the manner in which business is conducted.Akamai believes excluding these amounts from its non-GAAP financial measures is useful to investors as the types of events and activities giving rise to them occur infrequently and are not representative ofAkamai's core business operations and ongoing operating performance. - 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 allowsAkamai to highlight income attributable to its core operations.
The release contains information about future expectations, plans and prospects of
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