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Akamai Reports Fourth Quarter 2012 And Full-Year 2012 Financial Results
Submitted by admin on 2/6/2013 @ 1:01 PM
Companies mentioned in this article:
Akamai Technologies, Inc.
CAMBRIDGE, Mass., Feb. 6, 2013 /PRNewswire/ --
-- Fourth quarter revenue of $378 million, up 17 percent year-over-year;
and annual revenue of $1,374 million, up 19 percent year-over-year
-- Fourth quarter GAAP net income of $68 million, up 14 percent
year-over-year, or $0.38 per diluted share, up 15 percent
year-over-year; and full-year GAAP net income of $204 million, up 2
percent year-over-year, or $1.12 per diluted share, up 5 percent
year-over-year
-- Fourth quarter normalized net income* of $98 million, up 18 percent
year-over-year, or $0.54 per diluted share, up 20 percent
year-over-year; and full-year normalized net income* of $329 million, up
16 percent year-over-year, or $1.81 per diluted share, up 19 percent
year-over-year
-- Board of Directors authorizes $150 million extension of share repurchase
program
Akamai Technologies, Inc. (NASDAQ: AKAM), the leading cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere, today reported financial results for the fourth quarter and full-year ended December 31, 2012. Revenue for the fourth quarter 2012 was $378 million, a 9 percent increase over third quarter revenue of $345 million, and a 17 percent increase over fourth quarter 2011 revenue of $324 million. Total revenue for 2012 was $1,374 million, a 19 percent increase over 2011 revenue of $1,159 million.
(Logo: http://photos.prnewswire.com/prnh/20100225/AKAMAILOGO )
"With strong revenue and profit performance in the fourth quarter, Akamai closed out 2012 with record results on both the top and bottom line," said Tom Leighton, CEO of Akamai. "Throughout the year, we announced new products across every solution line, closed a record number of strategic acquisitions, and achieved margin expansion through continued improvement in our network efficiency even as we expanded its capacity worldwide to meet rising demand for Akamai services. We believe these efforts have positioned us well to help our customers capitalize on the opportunities, and mitigate the challenges, of conducting business online."
Net income in accordance with United States Generally Accepted Accounting Principles, or GAAP, for the fourth quarter of 2012 was $68 million, or $0.38 per diluted share. Full-year GAAP net income for 2012 was $204 million, or $1.12 per diluted share.
The Company generated normalized net income* of $98 million, or $0.54 per diluted share, in the fourth quarter of 2012, a 25 percent increase over the prior quarter's normalized net income of $79 million, or $0.43 per diluted share, and an 18 percent increase over fourth quarter 2011 normalized net income of $83 million, or $0.45 per diluted share. Full-year normalized net income grew 16 percent year-over-year to $329 million, or $1.81 per diluted share. (*See Use of Non-GAAP Financial Measures below for definitions.)
Adjusted EBITDA* for the fourth quarter of 2012 was $173 million, up from $157 million in the prior quarter, and $148 million in the fourth quarter of 2011. Adjusted EBITDA margin* for the fourth quarter was 46 percent, up a point from the prior quarter and consistent with the same period last year. For the full year, adjusted EBITDA was $615 million, up from $525 million in 2011. Full-year adjusted EBITDA margin in 2012 was at 45 percent, consistent with the prior year. (*See Use of Non-GAAP Financial Measures below for definitions.)
Full-year cash from operations was $530 million, or 39 percent of revenue, consistent with the prior year. At year end, the Company had over $1 billion of cash, cash equivalents and marketable securities.
Sales through resellers and sales outside the United States accounted for 23 percent and 29 percent, respectively, of revenue for the fourth quarter 2012.
Share Repurchase Program
The Company also announced today that its Board of Directors has authorized a $150 million extension of its share repurchase program, effective for a 12-month period beginning on February 1, 2013. As of this date, all prior repurchase authorizations have expired. The Company's goal for this program, which is expected to be funded through its free cash flow, is primarily to offset dilution created by its equity compensation programs.
The timing and amount of any shares repurchased will be determined by the Company's management based on its evaluation of market conditions and other factors. Repurchases 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. The Company may choose to suspend or discontinue the repurchase program at any time but cannot carry over unused authorization amounts to future periods.
During the fourth quarter of 2012, under its current share repurchase program, the Company spent approximately $30 million repurchasing 0.8 million shares of its common stock, at an average price of $37.53 per share. During 2012, the Company spent approximately $141 million repurchasing 4.4 million shares of its common stock, at an average price of $32.45 per share.
The Company had approximately 178 million shares of common stock outstanding as of December 31, 2012.
Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-866-314-4483 (or 1-617-213-8049 for international calls) and using passcode No. 17717131. 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 one week following the conference through the Akamai Website or by calling 1-888-286-8010 (or 1-617-801-6888 for international calls) and using passcode No. 29167666.
About Akamai
Akamai(®) is the leading cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere. At the core of the Company's solutions is the Akamai Intelligent Platform(TM) providing extensive reach, coupled with unmatched reliability, security, visibility and expertise. Akamai removes the complexities of connecting the increasingly mobile world, supporting 24/7 consumer demand, and enabling enterprises to securely leverage the cloud. To learn more about how Akamai is accelerating the pace of innovation in a hyperconnected world, please visit www.akamai.com or blogs.akamai.com, and follow @Akamai on Twitter.
Condensed Consolidated Balance Sheets
(dollar amounts in thousands)
(unaudited)
Dec. 31, 2012 Dec. 31, 2011
------------- -------------
Assets
Cash and
cash
equivalents $201,989 $559,197
Marketable
securities 235,592 290,029
Accounts
receivable,
net 218,777 210,936
Deferred
income tax
assets,
current
portion 20,422 6,444
Prepaid
expenses
and other
current
assets 51,604 55,414
------ ------
Current
assets 728,384 1,122,020
Marketable
securities 657,659 380,729
Property and
equipment,
net 345,091 293,043
Goodwill and
other
intangible
assets, net 815,879 498,300
Other assets 39,811 7,924
Deferred
income tax
assets, net 13,803 43,485
------ ------
Total assets $2,600,627 $2,345,501
========== ==========
Liabilities
and
stockholders'
equity
Accounts
payable and
accrued
expenses $176,378 $123,618
Other
current
liabilities 26,566 24,774
------ ------
Current
liabilities 202,944 148,392
Other
liabilities 51,929 40,859
------ ------
Total
liabilities 254,873 189,251
Stockholders'
equity 2,345,754 2,156,250
--------- ---------
Total
liabilities
and
stockholders'
equity $2,600,627 $2,345,501
========== ==========
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Year Ended
------------------ ----------
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
$377,872 $345,321 $323,740 $1,373,947 $1,158,538
Revenues
Costs and operating expenses:
111,893 109,995 102,544 431,911 374,543
Cost of revenues * **
20,371 19,351 15,191 74,744 52,333
Research and development *
85,308 75,924 66,609 304,404 227,331
Sales and marketing *
58,819 54,511 51,016 227,033 191,726
General and administrative * **
5,351 5,381 4,316 20,962 17,070
Amortization of other intangible assets
392 - 4,728 406 4,886
Restructuring charge
282,134 265,162 244,404 1,059,460 867,889
Total costs and operating expenses
95,738 80,159 79,336 314,487 290,649
Operating income
1,590 1,593 1,863 6,455 10,921
Interest income, net
- - (500) - (500)
Loss on investments, net
200 (241) 7,455 649 6,125
Other income (expense), net
97,528 81,511 88,154 321,591 307,195
Income before provision for income taxes
29,236 33,280 28,073 117,602 106,291
Provision for income taxes
$68,292 $48,231 $60,081 $203,989 $200,904
Net income
===
Net income per share:
$0.38 $0.27 $0.34 $1.15 $1.09
Basic
$0.38 $0.27 $0.33 $1.12 $1.07
Diluted
Shares used in per share calculations:
177,479 177,455 178,916 177,900 183,866
Basic
181,768 181,053 182,956 181,749 187,556
Diluted
* Includes stock-based compensation (see supplemental table for figures)
** Includes depreciation and amortization (see supplemental table for figures)
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
Three Months Ended Year Ended
------------------ -----------
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Cash flows from operating activities:
$68,292 $48,231 $60,081 $203,989 $200,904
Net income
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 54,960 53,457 43,650 204,163 167,878
Stock-based
compensation 21,405 22,635 18,840 90,585 61,305
(Benefit)
provision for
deferred income
taxes, net (6,645) 826 32,722 (5,819) 53,628
Excess tax
benefits from
stock-based
compensation (5,426) (2,540) (1,663) (23,015) (13,123)
Loss on
investments and
disposal of
property and
equipment, net 65 142 769 3 597
Provision for
doubtful accounts (255) (345) 830 (316) 2,066
Non-cash portion
of restructuring
charge - - 412 - 412
Changes in
operating assets
and liabilities:
Accounts
receivable 19,479 (27,974) (30,016) (2,108) (37,837)
Prepaid
expenses and
other
current
assets (5,037) 2,131 (6,936) 6,066 (7,014)
Accounts
payable,
accrued
expenses and
other
current
liabilities 4,921 44,591 20,452 59,653 15,184
Accrued
restructuring (381) (28) 3,752 (3,278) 3,572
Deferred
revenue (990) 1,401 (2,335) 4,552 (3,721)
Other
noncurrent
assets and
liabilities (3,534) (1,031) (4,651) (4,070) 8,704
------ ------ ------ ------ -----
Net cash provided by
operating activities 146,854 141,496 135,907 530,405 452,555
-------
Cash flows from investing activities:
Cash paid for
acquired
businesses, net
of cash received (30,650) (14,392) - (336,680) (550)
Purchases of
property and
equipment and
capitalization of
internal-use
software costs (60,669) (60,294) (46,570) (219,846) (182,862)
Proceeds from
sales and
maturities of
short- and long-
term marketable
securities 179,913 98,567 334,103 530,065 1,234,223
Purchases of
short- and long-
term marketable
securities (198,039) (137,809) (152,657) (752,342) (880,110)
Proceeds from the
sale of property
and equipment - - 15 12 150
Increase in other
investments (250) - - (250) -
Decrease in
restricted
investments held
for security
deposits - - 51 - 272
Net cash (used in)
provided by
investing
activities (109,695) (113,928) 134,942 (779,041) 171,123
-------- -------- ------- -------- -------
Cash flows from financing activities:
Proceeds from the
issuance of
common stock
under stock
option
and employee
stock
purchase
plans 16,025 6,066 11,947 44,660 25,252
Excess tax
benefits from
stock-based
compensation 5,426 2,540 1,663 23,015 13,123
Taxes paid related
to net share
settlement of
equity awards (8,124) (2,370) (2,713) (34,690) (8,393)
Repurchase of
common stock (29,819) (36,523) (76,332) (141,468) (324,070)
------- ------- -------
Net cash used in
financing
activities (16,492) (30,287) (65,435) (108,483) (294,088)
------- ------- ------- -------- --------
Effects of exchange
rate changes on cash
and cash equivalents (1,328) 2,373 (1,816) (89) (2,259)
Net increase
(decrease) in cash
and cash equivalents 19,339 (346) 203,598 (357,208) 327,331
Cash and cash
equivalents,
beginning of period 182,650 182,996 355,599 559,197 231,866
-------
Cash and cash
equivalents, end of
period $201,989 $182,650 $559,197 $201,989 $559,197
========
Three Months Ended Year Ended
------------------ ----------
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Supplemental financial
data (in thousands):
Stock-based compensation:
Cost of revenues $620 $684 $581 $2,871 $2,360
Research and development 4,017 4,427 3,610 17,275 11,125
Sales and marketing 10,736 10,896 8,878 42,760 27,990
General and
administrative 6,032 6,628 5,771 27,679 19,830
----- ----- ----- ------ ------
Total stock-based
compensation $21,405 $22,635 $18,840 $90,585 $61,305
Depreciation and
amortization:
Network-related
depreciation $42,143 $41,022 $33,170 $155,759 $126,764
Capitalized stock-based
compensation
amortization 1,961 2,025 1,713 7,680 7,308
Other depreciation and
amortization 5,505 5,029 4,451 19,762 16,736
Amortization of other
intangible assets 5,351 5,381 4,316 20,962 17,070
----- ----- ----- ------ ------
Total depreciation and
amortization $54,960 $53,457 $43,650 $204,163 $167,878
Capital expenditures:
Purchases of property and
equipment $46,386 $46,635 $34,450 $165,642 $140,219
Capitalized internal-use
software 14,283 13,659 12,120 54,204 42,643
Capitalized stock-based
compensation 2,582 2,561 2,067 9,276 7,473
----- ----- ----- ----- -----
Total capital
expenditures $63,251 $62,855 $48,637 $229,122 $190,335
Net increase (decrease)
in cash, cash
equivalents, marketable $36,906 $39,889 $38,960 $(134,715) $(13,447)
securities and restricted
cash and marketable
securities
End of period statistics:
Number of employees 3,074 2,884 2,380
Number of deployed
servers 127,638 119,370 105,111
*Use of Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the United States of America (GAAP), Akamai has historically provided additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). Legislative and regulatory pronouncements discourage the use of and emphasis on non-GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. We believe that the inclusion of these non-GAAP financial measures in this press release and our earnings call helps investors to gain a meaningful understanding of our past performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts. Our management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. These measures are also used by management in its financial and operational decision-making. There are limitations associated with reliance on these non-GAAP financial metrics because they are specific to our operations and financial performance, which may make comparisons with other companies' financial results more challenging. By providing both GAAP and non-GAAP financial measures, we believe that investors are able to compare our GAAP results to those of other companies while also gaining a better understanding of our operating performance as evaluated by management.
Akamai defines "Adjusted EBITDA" as net income, before interest, income taxes, depreciation and amortization of tangible and intangible assets, stock-based compensation expense, amortization of capitalized stock-based compensation, restructuring charges and benefits, acquisition related costs and benefits, certain gains and losses on investments, foreign exchange gains and losses, loss on early extinguishment of debt and gains and losses on legal settlements. Akamai considers Adjusted EBITDA to be an important indicator of the Company's operational strength and performance of its business and a good measure of the Company's historical operating trend.
Adjusted EBITDA eliminates items that are either not part of the Company's core operations, such as investment gains and losses, foreign exchange gains and losses, early debt extinguishment and net interest income, or that do not require a cash outlay, such as stock-based compensation. Adjusted EBITDA also excludes depreciation and amortization expense, which is based on the Company's estimate of the useful life of tangible and intangible assets. These estimates could vary from actual performance of the asset, are based on the historical cost incurred to build out the Company's deployed network, and may not be indicative of current or future capital expenditures.
Akamai defines "Adjusted EBITDA margin" as a percentage of Adjusted EBITDA as a percentage of revenues. Akamai considers Adjusted EBITDA margin to be an indicator of the Company's operating trend and performance of its business in relation to its revenue growth.
Akamai defines "capital expenditures" or "capex" as purchases of property and equipment, capitalization of internal-use software development costs and capitalization of stock-based compensation. Capital expenditures or capex are disclosed in Akamai's consolidated Statement of Cash Flows in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Akamai defines "normalized net income" as net income before amortization of other intangible assets, stock-based compensation expense, amortization of capitalized stock-based compensation, restructuring charges and benefits, acquisition related costs and benefits, certain gains and losses on investments, loss on early extinguishment of debt and gains and losses on legal settlements. Akamai considers normalized net income to be another important indicator of the overall performance of the Company because it eliminates the effects of events that are either not part of the Company's core operations or are non-cash.
Akamai defines "normalized net income per share" as normalized net income, plus interest add-back for diluted share calculation, divided by the basic weighted average or diluted common shares outstanding used in GAAP net income per share calculations. Akamai considers normalized net income per share to be another important indicator of overall performance of the Company because it eliminates the effect of non-cash items. Adjusted EBITDA and normalized net income should be considered in addition to, not as a substitute for, the Company's operating income and net income, as well as other measures of financial performance reported in accordance with GAAP.
Reconciliation of Non-GAAP Financial Measures
In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable GAAP measures.
Reconciliation of GAAP net income to Normalized net income
and Adjusted EBITDA
(amounts in thousands, except per share data)
Three Months Ended Year Ended
------------------ ----------
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Net income $68,292 $48,231 $60,081 $203,989 $200,904
Amortization of other intangible assets 5,351 5,381 4,316 20,962 17,070
Stock-based compensation 21,405 22,635 18,840 90,585 61,305
Amortization of capitalized stock-based
compensation 1,961 2,025 1,713 7,680 7,308
Loss on investments, net - - 500 - 500
Acquisition related costs 680 279 1,020 5,787 580
Legal settlements, net - - (8,043) - (8,043)
Restructuring charge 392 - 4,728 406 4,886
--- --- ----- --- -----
Total normalized net income: 98,081 78,551 83,155 329,409 284,510
Interest income, net (1,590) (1,593) (1,863) (6,455) (10,921)
Provision for income taxes 29,236 33,280 28,073 117,602 106,291
Depreciation and amortization 47,648 46,051 37,621 175,521 143,500
Other (income) expense, net (200) 241 588 (649) 1,918
---- --- --- ---- -----
Total Adjusted EBITDA: $173,175 $156,530 $147,574 $615,428 $525,298
======== ======== ======== ======== ========
Normalized net income per share:
Basic $0.55 $0.44 $0.46 $1.85 $1.55
Diluted $0.54 $0.43 $0.45 $1.81 $1.52
Shares used in normalized per share calculations:
Basic 177,479 177,455 178,916 177,900 183,866
Diluted 181,768 181,053 182,956 181,749 187,556
Akamai Statement Under the Private Securities Litigation Reform Act
This release contains information about future expectations, plans and prospects of Akamai's management that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995, including statements about future business opportunities. 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, effects of increased competition including potential failure to maintain the prices we charge for our services and loss of significant customers; failure of the markets we address or plan to address to develop as we expect or at all; 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; a failure of Akamai's services or network infrastructure; 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 SEC.
In addition, the statements in this press release 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.
Contacts:
Jeff Young --or-- Natalie Temple
Media Relations Investor Relations
Akamai Technologies Akamai Technologies
617-444-3913 617-444-3635
jyoung@akamai.com ntemple@akamai.com
SOURCE Akamai Technologies, Inc.