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Akamai Reports Second Quarter 2003 Results
Net loss, in accordance with United States generally accepted accounting principles (GAAP) for second quarter 2003 was $14.6 million, or negative $0.13 per share, compared to a net loss for first quarter 2003 of $8.6 million, or negative $0.07 per share, and compared to a loss of $42.2 million, or negative $0.38 per share in second quarter 2002.
The Company's net losses include a real estate restructuring charge of $1.3 million for the second quarter of 2003, and a real estate restructuring benefit of $9.8 million for the first quarter of 2003.
Net loss for the six months ended June 30, 2003 was $23.3 million, or negative $0.20 per share, compared to a net loss of $101.3 million, or negative $0.91 per share, for the six months ended June 30, 2002.
Normalized net loss* for second quarter 2003 was $10.1 million, or negative $0.09 per share, compared to normalized net loss for the prior quarter of $13.3 million, or negative $0.11 per share, and compared to First Call's consensus summary normalized net loss of $0.10 per share.
(* See Use of Non-GAAP Financial Measures for definition of normalized net loss.)
Normalized net loss* for second quarter 2003 also represents a 69 percent improvement as compared to normalized net loss of $32.8 million, or negative $0.29 per share in second quarter 2002. Normalized net loss* for the six months ended June 30, 2003 was $23.3 million, or negative $0.20 per share, compared to a normalized net loss of $62.2 million, or negative $0.56 per share, for the six months ended June 30, 2002.
(* See Use of Non-GAAP Financial Measures for definition of normalized net loss.)
Adjusted EBITDA* for second quarter 2003 was $7.7 million, up 22 percent from $6.3 million in the prior quarter, and up 193 percent from an Adjusted EBITDA loss of $8.3 million in second quarter 2002.
(* See Use of Non-GAAP Financial Measures for definition of Adjusted EBITDA.)
"In the second quarter, we improved our operating results year over year and grew revenue quarter over quarter and year over year, while building valuable relationships with a large and healthy base of enterprise and government clients," said George Conrades, chairman and CEO of Akamai.
Net cash consumption declined for the third consecutive quarter to $13.6 million, including cash payments of $16.1 million to restructure real estate lease obligations, ending the quarter with $96.3 million in cash and cash equivalents, restricted cash and marketable securities.
The settlement payments of $16.1 million to restructure real estate lease obligations will result in average annual cash savings of over $8 million per year starting in 2004, or over $50 million by the end of the original lease period in 2010.
"We believe we are well-positioned to reach our goal of generating positive free cash flow* for the fourth quarter," said Robert Cobuzzi, chief financial officer of Akamai.
(* See Use of Non-GAAP Financial Measures for definition of free cash flow.)
At June 30, 2003, the Company had 118.8 million shares of common stock outstanding. At June 30, 2003, common stock outstanding and unexercised stock options and warrants totaled 135.2 million shares.
Customers
At the end of the second quarter of 2003, Akamai had 434 EdgeSuite customers under recurring contract, compared to 346 at the end of the previous quarter, and up from 211 EdgeSuite clients at the end of second quarter of 2002.
New EdgeSuite customers in the second quarter included ATI Technologies Inc., BBC Technology, BearingPoint, Inc., The Dow Chemical Company, Fuji Heavy Industries, Ltd. (Subaru), The Princeton Review, Inc., Red Hat Inc., Reebok International Ltd., and Warner Music Group, among others.
Resellers accounted for approximately 27 percent of second quarter revenue, as compared to approximately 24 percent in the first quarter of 2003.
Network
The size, scale and functionality of Akamai's underlying global network remain key to the value proposition of all Akamai services. Akamai's global network at the end of the second quarter consisted of 14,372 servers in 1,134 networks, in 70 countries. The geographic reach and capacity of Akamai's network is unprecedented in its ability to serve the needs of enterprise customers, government agencies and major Web-centric businesses.
Use of Non-GAAP Financial Measures
The Company has historically provided financial metrics, some of which are based on GAAP and others that are not prepared in accordance with GAAP (non-GAAP). Recent legislative and regulatory changes encourage the use of GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors.
Akamai defines "Adjusted EBITDA" as net loss, before interest, taxes, depreciation, amortization, equity-related compensation, restructuring charges and benefits, and certain gains and losses on equity investments. 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 which are either not part of the Company's core operations, such as investment gains and losses, net interest expense and restructuring activities, or do not require a cash outlay, such as equity-related compensation and impairment of intangible assets. Adjusted EBITDA also eliminates 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 historic cost incurred to build out the Company's deployed network, and may not be indicative of current or future capital expenditures.
Akamai defines "normalized net loss" as net loss before amortization, equity-related compensation, restructuring charges and benefits, and certain gains and losses on equity investments. Akamai considers normalized net loss 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 "free cash flow" as the net change in cash and cash equivalents, restricted cash and marketable securities quarter-over-quarter. Akamai considers free cash flow to be an important indicator of the Company's ability to generate cash to finance operations, service its debt and make strategic investments.
Adjusted EBITDA, free cash flow and normalized net loss should be considered in addition to, not as a substitute for, the Company's operating loss, net loss, and various cash flow measures (e.g., cash used in operations), as well as other measures of financial performance reported in accordance with generally accepted accounting principles.
Reconciliation of Non-GAAP Financial Measures
In accordance with the requirements of Regulation G, the Company is presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial metrics to the comparable GAAP measures.
CLICK HERE FOR A LARGER VIEW
Net increase (decrease) in cash and cash equivalents as reported on the consolidated statements of cash flows, which are prepared in accordance with GAAP, is the financial measure most directly comparable to Free Cash Flow. This measure is not accessible on a forward-looking basis because it would include estimates that cannot be reasonably forecasted. These estimates include future changes in the balance of marketable securities and restricted cash, which may be significant.
CLICK HERE FOR A LARGER VIEW
CLICK HERE FOR A LARGER VIEW
Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-888-689-4521 (or 1-706-645-9202 for international calls). 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 1-800-642-1687 (or 1-706-645-9291 for international calls) and using conference ID No. 1565261.
About Akamai
Akamai® provides services that enable the world's leading enterprises and government agencies to extend and control their e-business infrastructure. Having deployed the world's largest, globally-distributed computing platform, Akamai ensures the highest levels of availability, reliability, security, and performance of networked information and application delivery. Headquartered in Cambridge, Massachusetts, Akamai's industry-leading services, matched with world-class customer care, are used by hundreds of successful enterprises, government entities, and Web businesses around the globe. For more information, visit www.akamai.com.
# # # Akamai Statement Under the Private Securities Litigation Reform Act
The 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. 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, unexpected increases in Akamai's use of funds, lack of market acceptance of our services, failure to achieve incremental revenue growth, the effects of any attempts to intentionally disrupt our services or network by hackers or others, failure to have available sufficient transmission capacity, a failure of Akamai's network infrastructure, 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.
| Contacts: |
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| Jeff Young Media Relations Akamai Technologies Inc. 617-444-3913 jyoung@akamai.com |
--or-- | J.C. Raby Investor Relations Akamai Technologies Inc. 617-444-2555 jraby@akamai.com |
- Revenue grows to $37.8 million
- Total EdgeSuite® customers increase by 88 to 434
- Net loss of $14.6 million, or negative $0.13 per share, declines from a net loss of $42.2 million, or negative $0.38 per share, in the second quarter of 2002
- Cash and cash equivalents, restricted cash and marketable securities of $96.3 million at quarter end
Net loss, in accordance with United States generally accepted accounting principles (GAAP) for second quarter 2003 was $14.6 million, or negative $0.13 per share, compared to a net loss for first quarter 2003 of $8.6 million, or negative $0.07 per share, and compared to a loss of $42.2 million, or negative $0.38 per share in second quarter 2002.
The Company's net losses include a real estate restructuring charge of $1.3 million for the second quarter of 2003, and a real estate restructuring benefit of $9.8 million for the first quarter of 2003.
Net loss for the six months ended June 30, 2003 was $23.3 million, or negative $0.20 per share, compared to a net loss of $101.3 million, or negative $0.91 per share, for the six months ended June 30, 2002.
Normalized net loss* for second quarter 2003 was $10.1 million, or negative $0.09 per share, compared to normalized net loss for the prior quarter of $13.3 million, or negative $0.11 per share, and compared to First Call's consensus summary normalized net loss of $0.10 per share.
(* See Use of Non-GAAP Financial Measures for definition of normalized net loss.)
Normalized net loss* for second quarter 2003 also represents a 69 percent improvement as compared to normalized net loss of $32.8 million, or negative $0.29 per share in second quarter 2002. Normalized net loss* for the six months ended June 30, 2003 was $23.3 million, or negative $0.20 per share, compared to a normalized net loss of $62.2 million, or negative $0.56 per share, for the six months ended June 30, 2002.
(* See Use of Non-GAAP Financial Measures for definition of normalized net loss.)
Adjusted EBITDA* for second quarter 2003 was $7.7 million, up 22 percent from $6.3 million in the prior quarter, and up 193 percent from an Adjusted EBITDA loss of $8.3 million in second quarter 2002.
(* See Use of Non-GAAP Financial Measures for definition of Adjusted EBITDA.)
"In the second quarter, we improved our operating results year over year and grew revenue quarter over quarter and year over year, while building valuable relationships with a large and healthy base of enterprise and government clients," said George Conrades, chairman and CEO of Akamai.
Net cash consumption declined for the third consecutive quarter to $13.6 million, including cash payments of $16.1 million to restructure real estate lease obligations, ending the quarter with $96.3 million in cash and cash equivalents, restricted cash and marketable securities.
The settlement payments of $16.1 million to restructure real estate lease obligations will result in average annual cash savings of over $8 million per year starting in 2004, or over $50 million by the end of the original lease period in 2010.
"We believe we are well-positioned to reach our goal of generating positive free cash flow* for the fourth quarter," said Robert Cobuzzi, chief financial officer of Akamai.
(* See Use of Non-GAAP Financial Measures for definition of free cash flow.)
At June 30, 2003, the Company had 118.8 million shares of common stock outstanding. At June 30, 2003, common stock outstanding and unexercised stock options and warrants totaled 135.2 million shares.
Customers
At the end of the second quarter of 2003, Akamai had 434 EdgeSuite customers under recurring contract, compared to 346 at the end of the previous quarter, and up from 211 EdgeSuite clients at the end of second quarter of 2002.
New EdgeSuite customers in the second quarter included ATI Technologies Inc., BBC Technology, BearingPoint, Inc., The Dow Chemical Company, Fuji Heavy Industries, Ltd. (Subaru), The Princeton Review, Inc., Red Hat Inc., Reebok International Ltd., and Warner Music Group, among others.
Resellers accounted for approximately 27 percent of second quarter revenue, as compared to approximately 24 percent in the first quarter of 2003.
Network
The size, scale and functionality of Akamai's underlying global network remain key to the value proposition of all Akamai services. Akamai's global network at the end of the second quarter consisted of 14,372 servers in 1,134 networks, in 70 countries. The geographic reach and capacity of Akamai's network is unprecedented in its ability to serve the needs of enterprise customers, government agencies and major Web-centric businesses.
Use of Non-GAAP Financial Measures
The Company has historically provided financial metrics, some of which are based on GAAP and others that are not prepared in accordance with GAAP (non-GAAP). Recent legislative and regulatory changes encourage the use of GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors.
Akamai defines "Adjusted EBITDA" as net loss, before interest, taxes, depreciation, amortization, equity-related compensation, restructuring charges and benefits, and certain gains and losses on equity investments. 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 which are either not part of the Company's core operations, such as investment gains and losses, net interest expense and restructuring activities, or do not require a cash outlay, such as equity-related compensation and impairment of intangible assets. Adjusted EBITDA also eliminates 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 historic cost incurred to build out the Company's deployed network, and may not be indicative of current or future capital expenditures.
Akamai defines "normalized net loss" as net loss before amortization, equity-related compensation, restructuring charges and benefits, and certain gains and losses on equity investments. Akamai considers normalized net loss 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 "free cash flow" as the net change in cash and cash equivalents, restricted cash and marketable securities quarter-over-quarter. Akamai considers free cash flow to be an important indicator of the Company's ability to generate cash to finance operations, service its debt and make strategic investments.
Adjusted EBITDA, free cash flow and normalized net loss should be considered in addition to, not as a substitute for, the Company's operating loss, net loss, and various cash flow measures (e.g., cash used in operations), as well as other measures of financial performance reported in accordance with generally accepted accounting principles.
Reconciliation of Non-GAAP Financial Measures
In accordance with the requirements of Regulation G, the Company is presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial metrics to the comparable GAAP measures.
CLICK HERE FOR A LARGER VIEW
Net increase (decrease) in cash and cash equivalents as reported on the consolidated statements of cash flows, which are prepared in accordance with GAAP, is the financial measure most directly comparable to Free Cash Flow. This measure is not accessible on a forward-looking basis because it would include estimates that cannot be reasonably forecasted. These estimates include future changes in the balance of marketable securities and restricted cash, which may be significant.
CLICK HERE FOR A LARGER VIEW
CLICK HERE FOR A LARGER VIEW
Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-888-689-4521 (or 1-706-645-9202 for international calls). 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 1-800-642-1687 (or 1-706-645-9291 for international calls) and using conference ID No. 1565261.
About Akamai
Akamai® provides services that enable the world's leading enterprises and government agencies to extend and control their e-business infrastructure. Having deployed the world's largest, globally-distributed computing platform, Akamai ensures the highest levels of availability, reliability, security, and performance of networked information and application delivery. Headquartered in Cambridge, Massachusetts, Akamai's industry-leading services, matched with world-class customer care, are used by hundreds of successful enterprises, government entities, and Web businesses around the globe. For more information, visit www.akamai.com.
The 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. 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, unexpected increases in Akamai's use of funds, lack of market acceptance of our services, failure to achieve incremental revenue growth, the effects of any attempts to intentionally disrupt our services or network by hackers or others, failure to have available sufficient transmission capacity, a failure of Akamai's network infrastructure, 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.
