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Akamai Technologies (AKAM) Frank Thomson Leighton on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 26, 2016 4:30 pm ET

Executives

Tom Barth - Head-Investor Relations

Frank Thomson Leighton - Chief Executive Officer & Director

James Benson - Chief Financial Officer & Executive Vice President

Analysts

Mark Mahaney - RBC Capital Markets LLC

Rob J. Sanderson - MKM Partners LLC

Vijay K. Bhagavath - Deutsche Bank Securities, Inc.

Colby Synesael - Cowen & Co. LLC

Sterling Auty - JPMorgan Securities LLC

Jonathan Schildkraut - Evercore ISI

James D. Breen - William Blair & Co. LLC

Michael Olson - Piper Jaffray & Co (Broker)

Sitikantha Panigrahi - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Mark D. Kelleher - D.A. Davidson & Co.

Michael Bowen - Pacific Crest Securities

Michael Turits - Raymond James & Associates, Inc.

Heather Bellini - Goldman Sachs & Co.

Ed Maguire - CLSA Americas LLC

Will V. Power - Robert W. Baird & Co., Inc. (Broker)

Sameet Sinha - B. Riley & Co. LLC

Priya Parasuraman - Wells Fargo Securities LLC

Jeff Van Rhee - Craig-Hallum Capital Group LLC

Operator

Good day, ladies and gentlemen, and welcome to the Akamai Technologies Incorporated First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded.

I would like to introduce your host for today's conference, Mr. Tom Barth, Head of Investor Relations. Sir, please go ahead.

Tom Barth - Head-Investor Relations

Thank you, and good afternoon for joining – thank you for joining us on Akamai's first quarter 2016 earnings conference call.

Speaking today will be Tom Leighton, Akamai's Chief Executive Officer; and Jim Benson, Akamai's Chief Financial Officer. But before we get started, please note that today's comments include forward-looking statements, including statements regarding revenue and earnings guidance. These forward-looking statements are subject to risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied by such statements. Additional information concerning these factors is contained in Akamai's filings with the SEC, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q. The forward-looking statements included in this call represent the company's view on April 26, 2016. Akamai disclaims any obligation to update these statements to reflect future events or circumstances.

As a reminder, we will be referring to some non-GAAP financial metrics during today's call. A detailed reconciliation of GAAP and non-GAAP metrics can be found under the financial portion of the Investor Relations section of our website.

And with that, let me please turn the call over to Tom.

Frank Thomson Leighton - Chief Executive Officer & Director

Thanks, Tom, and thank you all for joining us. Q1 was a very solid quarter for Akamai and both the top and bottom lines. Revenue in the first quarter was $568 million, up 8% year-over-year, and up 9% when adjusted for foreign exchange headwinds. Excluding the contribution from our two largest customers, revenue in the first quarter was up 15% over Q1 of 2015. Our strong revenue achievement was driven by the continued robust demand for our security services, which grew 47% in constant currency over the first quarter of last year, as well as solid performance across all of our major product lines and geographies.

Non-GAAP EPS for the first quarter was $0.66 per diluted share, up 8% year-over-year and exceeding the high end of our guidance range due to our strong revenue achievement and our continued focus on efficiency across the company. Our solid performance in Q1 has gotten us off to an excellent start for the year. I was particularly pleased to see our continued strong execution during the time when we were realigning the company.