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Akamai Reports First Quarter 2016 Financial Results

CAMBRIDGE, Mass., April 26, 2016 /PRNewswire/ --

  • Revenue of $568 million, up 8% year-over-year and up 9% when adjusted for foreign exchange*
  • GAAP EPS of $0.42 per diluted share, down 2% year-over-year
  • Non-GAAP EPS of $0.66 per diluted share, up 8% year-over-year

Akamai Technologies, Inc. AKAM, +3.27% the global leader in Content Delivery Network (CDN) services, today reported financial results for the first quarter ended March 31, 2016.

"Q1 was a very solid quarter for Akamai on both the top and bottom lines, representing a great start to 2016," said Dr. Tom Leighton, Chief Executive Officer. "We delivered earnings that exceeded our expectations and saw continued strong revenue growth from our Cloud Security Solutions, which grew 47% year-over-year in constant currency."

Akamai delivered the following results for the first quarter ended March 31, 2016:

Revenue: Revenue was $568 million, an 8% increase over first quarter 2015 revenue of $527 million and a 9% increase when adjusted for foreign exchange.*

Revenue by Solution Category**:

  • Performance and Security Solutions revenue was $316 million, up 16% year-over-year and up 17% when adjusted for foreign exchange*
  • Cloud Security Solutions revenue, a component of Performance and Security, was $81 million, up 46% year-over-year and up 47% when adjusted for foreign exchange*
  • Media Delivery Solutions revenue was $206 million, down 4% year-over-year and down 4% when adjusted for foreign exchange*
  • Services and Support Solutions revenue was $46 million, up 16% year-over-year and up 16% when adjusted for foreign exchange*

Revenue by Geography:

  • U.S. revenue was $397 million, up 2% year-over-year
  • International revenue was $170 million, up 24% year-over-year and up 27% when adjusted for foreign exchange*

Customer Revenue by Division***:

Effective in 2016, the Company is now managing the business in a new division structure. Revenue from the customers in the Company's three major divisions is reported below.

  • Media Division revenue was $292 million, down 1% year-over-year and consistent year-over-year when adjusted for foreign exchange*
  • Web Division revenue was $264 million, up 18% year-over-year and up 18% when adjusted for foreign exchange*
  • Enterprise and Carrier Division revenue was $12 million, up 45% year-over-year and up 44% when adjusted for foreign exchange*

Income from operations: GAAP income from operations was $114 million, a 6% decrease from first quarter 2015. GAAP operating margin for the first quarter was 20%, down 3 percentage points from the same period last year.

Non-GAAP income from operations* was $164 million, a 1% increase from first quarter 2015. Non-GAAP operating margin* for the first quarter was 29%, down 2 percentage points from the same period last year.

Net income: GAAP net income was $75 million, a 4% decrease from first quarter 2015. Non-GAAP net income* was $118 million, a 6% increase from first quarter 2015.

EPS: GAAP EPS was $0.42 per diluted share, a 2% decrease from first quarter 2015 and a 2% decrease when adjusted for foreign exchange*. Non-GAAP EPS was $0.66 per diluted share, an 8% increase from first quarter 2015 and an 8% increase when adjusted for foreign exchange.*

Adjusted EBITDA*: Adjusted EBITDA was $234 million, a 5% increase from first quarter 2015. Adjusted EBITDA margin* was 41%, down 1 percentage point from the first quarter of 2015.

Other first quarter 2016 results included:

  • Cash from operations was $190 million, or 34% of revenue
  • Cash, cash equivalents and marketable securities as of March 31, 2016 was $1.5 billion
  • The Company spent $109 million to repurchase 2.2 million shares of its common stock at an average price of $48.97 per share
  • The Company had approximately 176 million shares of common stock outstanding as of March 31, 2016

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

** Revenue by solution category – A product-focused reporting view that reflects revenue by solution purchased.

*** Customer revenue by division – A customer-focused reporting view that reflects revenue from customers that are managed by the division. Historical division revenue can be found on the Investor Relations section of Akamai.com.

Quarterly Conference Call Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-877-258-4918 (or 1-480-405-6743 for international calls) and using passcode No. 81892715. 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 by calling 1-855-859-2056 (or 1-404-537-3406 for international calls) and using passcode No. 81892715. The archived webcast of this event may be accessed through the Akamai website.

About Akamai As the global leader in Content Delivery Network (CDN) services, Akamai makes the Internet fast, reliable and secure for its customers. The company's advanced web performance, mobile performance, cloud security and media delivery solutions are revolutionizing how businesses optimize consumer, enterprise and entertainment experiences for any device, anywhere. To learn how Akamai solutions and its team of Internet experts are helping businesses move faster forward, please visit www.akamai.com or blogs.akamai.com, and follow @Akamai on Twitter.

AKAMAI TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)

March 31, 2016


December 31, 2015

ASSETS




Current assets:




Cash and cash equivalents

$

312,912



$

289,473


Marketable securities

524,958



460,088


Accounts receivable, net

365,103



380,399


Prepaid expenses and other current assets

127,855



123,228


Total current assets

1,330,828



1,253,188


Property and equipment, net

770,197



753,180


Marketable securities

685,362



774,674


Goodwill

1,152,376



1,150,244


Acquired intangible assets, net

149,379



156,095


Deferred income tax assets

3,490



4,700


Other assets

92,120



89,603


Total assets

$

4,183,752



$

4,181,684


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

63,822



$

61,982


Accrued expenses

197,487



216,166


Deferred revenue

64,905



54,154


Other current liabilities

7,019



138


Total current liabilities

333,233



332,440


Deferred revenue

4,238



4,163


Deferred income tax liabilities

11,706



12,888


Convertible senior notes

623,485



618,047


Other liabilities

97,508



93,268


Total liabilities

1,070,170



1,060,806


Total stockholders' equity

3,113,582



3,120,878


Total liabilities and stockholders' equity

$

4,183,752



$

4,181,684


AKAMAI TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME



Three Months Ended

(in thousands, except per share data)

March 31, 2016


December 31, 2015


March 31, 2015

Revenue

$

567,725



$

579,159



$

526,536


Costs and operating expenses:






Cost of revenue (1) (2)

194,736



193,212



169,294


Research and development (1)

40,842



37,674



35,828


Sales and marketing (1)

102,211



118,582



103,479


General and administrative (1) (2)

102,283



99,978



89,592


Amortization of acquired intangible assets

6,716



6,783



6,780


Restructuring charges

6,818



250



42


Total costs and operating expenses

453,606



456,479



405,015


Income from operations

114,119



122,680



121,521


Interest income

3,320



2,935



3,001


Interest expense

(4,653)



(4,641)



(4,576)


Other expense, net

(189)



(499)



(301)


Income before provision for income taxes

112,597



120,475



119,645


Provision for income taxes

37,739



32,055



41,899


Net income

$

74,858



$

88,420



$

77,746








Net income per share:






Basic

$

0.42



$

0.50



$

0.44


Diluted

$

0.42



$

0.49



$

0.43








Shares used in per share calculations:






Basic

176,403



177,788



178,545


Diluted

177,539



179,732



180,825




















(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

(in thousands)

March 31, 2016


December 31, 2015


March 31, 2015

Cash flows from operating activities:






Net income

$

74,858



$

88,420



$

77,746


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






Depreciation and amortization

80,669



80,329



70,460


Stock-based compensation

31,741



33,711



29,669


Excess tax benefits from stock-based compensation

(1,135)



(4,450)



(13,128)


Provision for deferred income taxes

1,072



22,039



8,305


Amortization of debt discount and issuance costs

4,653



4,641



4,576


Other non-cash reconciling items, net

2,752



2,533



443


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






Accounts receivable

15,906



(15,540)



(32,552)


Prepaid expenses and other current assets

(3,481)



(8,982)



(1,817)


Accounts payable and accrued expenses

(32,377)



25,526



(52,703)


Deferred revenue

10,653



(3,684)



6,947


Other current liabilities

6,876



(491)



42


Other non-current assets and liabilities

(1,949)



(6,261)



1,741


Net cash provided by operating activities

190,238



217,791



99,729


Cash flows from investing activities:






Cash paid for...


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