Delaware | 0-27275 | 04-3432319 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
99.1 | Press Release dated February 10, 2015 |
Dated: | February 10, 2015 | AKAMAI TECHNOLOGIES, INC. | |
/s/ James Benson | |||
James Benson | |||
Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press Release dated February 10, 2015 |
Contacts: | ||
Jeff Young | Tom Barth | |
Media Relations | Investor Relations | |
Akamai Technologies | Akamai Technologies | |
617-444-3913 | 617-274-7130 | |
jyoung@akamai.com | tbarth@akamai.com |
• | Revenue of $536 million, up 23% year-over-year, and up 25% adjusted for foreign exchange |
• | GAAP net income of $97 million, up 21% year-over-year, or $0.54 per diluted share, up 23% year-over-year |
• | Non-GAAP net income* of $127 million, or $0.70 per diluted share, up 27% year-over-year (includes $9 million, or $0.05 per diluted share, tax benefit from the reinstatement of the federal R&D tax credit) |
• | Revenue of $1,964 million, up 24% year-over-year, and up 25% adjusted for foreign exchange |
• | GAAP net income of $334 million, or $1.84 per diluted share, up 14% year-over-year |
• | Non-GAAP net income* of $449 million, up 22% year-over-year, or $2.48 per diluted share, up 23% year-over-year |
(in thousands) | December 31, 2014 | December 31, 2013 | |||||
ASSETS | |||||||
Cash and cash equivalents | $ | 238,650 | $ | 333,891 | |||
Marketable securities | 519,642 | 340,005 | |||||
Accounts receivable, net | 329,578 | 271,988 | |||||
Prepaid expenses and other current assets | 128,981 | 62,096 | |||||
Deferred income tax assets | 45,704 | 21,734 | |||||
Current assets | 1,262,555 | 1,029,714 | |||||
Property and equipment, net | 601,591 | 450,287 | |||||
Marketable securities | 869,992 | 573,026 | |||||
Goodwill and acquired intangible assets, net | 1,183,706 | 834,797 | |||||
Deferred income tax assets | 1,955 | 2,325 | |||||
Other assets | 81,747 | 67,536 | |||||
Total assets | $ | 4,001,546 | $ | 2,957,685 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Accounts payable and accrued expenses | $ | 282,098 | $ | 224,095 | |||
Other current liabilities | 51,913 | 39,071 | |||||
Current liabilities | 334,011 | 263,166 | |||||
Deferred income tax liabilities | 39,299 | 4,737 | |||||
Convertible senior notes | 604,851 | — | |||||
Other liabilities | 78,050 | 60,351 | |||||
Total liabilities | 1,056,211 | 328,254 | |||||
Stockholders' equity | 2,945,335 | 2,629,431 | |||||
Total liabilities and stockholders' equity | $ | 4,001,546 | $ | 2,957,685 |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands, except per share data) | December 31, 2014 | September 30, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | ||||||||||||||
Revenue | $ | 536,295 | $ | 498,042 | $ | 435,980 | $ | 1,963,874 | $ | 1,577,922 | |||||||||
Costs and operating expenses: | |||||||||||||||||||
Cost of revenue (1) (2) | 163,201 | 158,812 | 133,951 | 610,943 | 511,087 | ||||||||||||||
Research and development (1) | 32,417 | 32,583 | 26,520 | 125,286 | 93,879 | ||||||||||||||
Sales and marketing (1) | 110,293 | 96,215 | 82,054 | 379,035 | 280,380 | ||||||||||||||
General and administrative (1) (2) | 85,899 | 81,905 | 71,853 | 325,845 | 255,218 | ||||||||||||||
Amortization of acquired intangible assets | 8,403 | 8,403 | 4,894 | 32,057 | 21,547 | ||||||||||||||
Restructuring (benefits) charges | — | (115 | ) | 952 | 1,189 | 1,843 | |||||||||||||
Total costs and operating expenses | 400,213 | 377,803 | 320,224 | 1,474,355 | 1,163,954 | ||||||||||||||
Income from operations | 136,082 | 120,239 | 115,756 | 489,519 | 413,968 | ||||||||||||||
Interest income | 2,291 | 2,010 | 1,534 | 7,680 | 6,077 | ||||||||||||||
Interest expense | (4,524 | ) | (4,482 | ) | — | (15,463 | ) | — | |||||||||||
Other income (expense), net | 8 | (188 | ) | (395 | ) | (1,960 | ) | (491 | ) | ||||||||||
Income before provision for income taxes | 133,857 | 117,579 | 116,895 | 479,776 | 419,554 | ||||||||||||||
Provision for income taxes | 36,750 | 26,424 | 36,546 | 145,828 | 126,067 | ||||||||||||||
Net income | $ | 97,107 | $ | 91,155 | $ | 80,349 | $ | 333,948 | $ | 293,487 | |||||||||
Net income per share: | |||||||||||||||||||
Basic | $ | 0.55 | $ | 0.51 | $ | 0.45 | $ | 1.87 | $ | 1.65 | |||||||||
Diluted | $ | 0.54 | $ | 0.50 | $ | 0.44 | $ | 1.84 | $ | 1.61 | |||||||||
Shares used in per share calculations: | |||||||||||||||||||
Basic | 178,144 | 178,186 | 178,758 | 178,279 | 178,196 | ||||||||||||||
Diluted | 180,910 | 180,955 | 182,258 | 181,186 | 181,783 |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands) | December 31, 2014 | September 30, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income | $ | 97,107 | $ | 91,155 | $ | 80,349 | $ | 333,948 | $ | 293,487 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 67,763 | 67,415 | 49,976 | 247,406 | 184,431 | ||||||||||||||
Stock-based compensation | 27,196 | 28,008 | 23,673 | 111,996 | 95,884 | ||||||||||||||
Provision for doubtful accounts | 464 | 1,053 | 280 | 1,981 | 1,169 | ||||||||||||||
Excess tax benefits from stock-based compensation | (8,280 | ) | (4,297 | ) | (4,649 | ) | (32,238 | ) | (22,801 | ) | |||||||||
(Benefit) provision for deferred income taxes | (36,502 | ) | (11,218 | ) | 27,343 | (25,880 | ) | 27,343 | |||||||||||
Amortization of debt discount | 4,524 | 4,482 | — | 15,463 | — | ||||||||||||||
(Gain) loss on disposal of property and equipment | (484 | ) | 287 | 429 | (159 | ) | 414 | ||||||||||||
Gain from divestiture of a business | — | — | — | — | (1,188 | ) | |||||||||||||
Noncash portion of restructuring charges | — | — | 781 | — | 781 | ||||||||||||||
Loss on investments | 50 | — | — | 443 | — | ||||||||||||||
Change in fair value of contingent consideration | — | — | — | 300 | — | ||||||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||||||||||||||
Accounts receivable | (8,184 | ) | (8,959 | ) | (15,863 | ) | (58,397 | ) | (67,184 | ) | |||||||||
Prepaid expenses and other current assets | (38,442 | ) | (9,348 | ) | 5,424 | (60,788 | ) | (3,842 | ) | ||||||||||
Accounts payable and accrued expenses | 57,822 | 15,417 | (3,197 | ) | 94,698 | 40,533 | |||||||||||||
Deferred revenue | 37 | 2,938 | 504 | 7,725 | 11,495 | ||||||||||||||
Other current liabilities | 1 | (2,122 | ) | 20 | (702 | ) | 52 | ||||||||||||
Other non-current assets and liabilities | 32,469 | (1,529 | ) | 6,662 | 22,274 | 3,334 | |||||||||||||
Net cash provided by operating activities | 195,541 | 173,282 | 171,732 | 658,070 | 563,908 | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Cash paid for acquired businesses, net of cash acquired | — | — | (3,237 | ) | (386,532 | ) | (30,657 | ) | |||||||||||
Purchases of property and equipment and capitalization of internal-use software costs | (92,320 | ) | (71,782 | ) | (62,335 | ) | (318,627 | ) | (260,073 | ) | |||||||||
Purchases of short- and long-term marketable securities | (157,211 | ) | (204,607 | ) | (91,329 | ) | (1,225,409 | ) | (494,885 | ) | |||||||||
Proceeds from sales and maturities of short- and long-term marketable securities | 114,595 | 93,300 | 130,433 | 746,017 | 475,135 | ||||||||||||||
Proceeds from the sale of property and equipment | 569 | 218 | 66 | 1,371 | 827 | ||||||||||||||
Other non-current assets and liabilities | (2,046 | ) | 4,976 | (135 | ) | 4,374 | (3,455 | ) | |||||||||||
Net cash used in investing activities | (136,413 | ) | (177,895 | ) | (26,537 | ) | (1,178,806 | ) | (313,108 | ) |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands) | December 31, 2014 | September 30, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | ||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from the issuance of convertible senior notes, net of issuance costs | — | — | — | 678,735 | — | ||||||||||||||
Proceeds from the issuance of warrants | — | — | — | 77,970 | — | ||||||||||||||
Payment for bond hedge | — | — | — | (101,292 | ) | — | |||||||||||||
Repayment of acquired debt and capital leases | — | — | — | (17,862 | ) | — | |||||||||||||
Payment of contingent consideration related to acquired business | — | (1,575 | ) | — | (1,575 | ) | — | ||||||||||||
Proceeds from the issuance of common stock under stock plans | 11,748 | 17,362 | 9,289 | 87,109 | 63,707 | ||||||||||||||
Excess tax benefits from stock-based compensation | 8,280 | 4,297 | 4,649 | 32,238 | 22,801 | ||||||||||||||
Employee taxes paid related to net share settlement of stock-based awards | (7,444 | ) | (8,957 | ) | (12,773 | ) | (50,649 | ) | (41,332 | ) | |||||||||
Repurchases of common stock | (42,134 | ) | (39,022 | ) | (48,011 | ) | (268,647 | ) | (160,419 | ) | |||||||||
Net cash used in financing activities | (29,550 | ) | (27,895 | ) | (46,846 | ) | 436,027 | (115,243 | ) | ||||||||||
Effects of exchange rate changes on cash and cash equivalents | (5,267 | ) | (7,318 | ) | 527 | (10,532 | ) | (3,655 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 24,311 | (39,826 | ) | 98,876 | (95,241 | ) | 131,902 | ||||||||||||
Cash and cash equivalents at beginning of period | 214,339 | 254,165 | 235,015 | 333,891 | 201,989 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 238,650 | $ | 214,339 | $ | 333,891 | $ | 238,650 | $ | 333,891 |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands, except per share data) | December 31, 2014 | September 30, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | ||||||||||||||
Income from operations | $ | 136,082 | $ | 120,239 | $ | 115,756 | $ | 489,519 | $ | 413,968 | |||||||||
Amortization of acquired intangible assets | 8,403 | 8,403 | 4,894 | 32,057 | 21,547 | ||||||||||||||
Stock-based compensation | 27,196 | 28,008 | 23,673 | 111,996 | 95,884 | ||||||||||||||
Amortization of capitalized stock-based compensation | 2,845 | 3,556 | 1,974 | 10,345 | 8,077 | ||||||||||||||
Amortization of capitalized interest expense | 98 | 45 | — | 161 | — | ||||||||||||||
Acquisition-related costs | 353 | 270 | 1,266 | 4,807 | 1,853 | ||||||||||||||
Legal settlements | 285 | — | — | 285 | — | ||||||||||||||
Restructuring (benefits) charges | — | (115 | ) | 952 | 1,189 | 1,843 | |||||||||||||
Benefit from adoption of software development activities | — | (2,670 | ) | — | (2,670 | ) | — | ||||||||||||
Gain from divestiture of a business | — | — | — | — | (1,188 | ) | |||||||||||||
Operating adjustments | 39,180 | 37,497 | 32,759 | 158,170 | 128,016 | ||||||||||||||
Non-GAAP income from operations | $ | 175,262 | $ | 157,736 | $ | 148,515 | $ | 647,689 | $ | 541,984 | |||||||||
Non-GAAP operating margin | 33 | % | 32 | % | 34 | % | 33 | % | 34 | % | |||||||||
Net income | $ | 97,107 | $ | 91,155 | $ | 80,349 | $ | 333,948 | $ | 293,487 | |||||||||
Operating adjustments (from above) | 39,180 | 37,497 | 32,759 | 158,170 | 128,016 | ||||||||||||||
Amortization of debt discount and issuance costs | 4,524 | 4,482 | — | 15,463 | — | ||||||||||||||
Loss on investments | 50 | — | — | 443 | — | ||||||||||||||
Income tax-effect of above non-GAAP adjustments | (13,869 | ) | (21,771 | ) | (13,233 | ) | (59,202 | ) | (54,124 | ) | |||||||||
Non-GAAP net income | 126,992 | 111,363 | 99,875 | 448,822 | 367,379 | ||||||||||||||
Depreciation and amortization | 56,417 | 55,411 | 43,108 | 204,843 | 154,807 | ||||||||||||||
Interest income | (2,291 | ) | (2,010 | ) | (1,534 | ) | (7,680 | ) | (6,077 | ) | |||||||||
Other (income) expense, net | (58 | ) | 188 | 395 | 1,517 | 491 | |||||||||||||
Provision for GAAP income taxes | 36,750 | 26,424 | 36,546 | 145,828 | 126,067 | ||||||||||||||
Income tax-effect of above non-GAAP adjustments | 13,869 | 21,771 | 13,233 | 59,202 | 54,124 | ||||||||||||||
Adjusted EBITDA | $ | 231,679 | $ | 213,147 | $ | 191,623 | $ | 852,532 | $ | 696,791 | |||||||||
Adjusted EBITDA margin | 43 | % | 43 | % | 44 | % | 43 | % | 44 | % | |||||||||
Non-GAAP net income per share: | |||||||||||||||||||
Basic | $ | 0.71 | $ | 0.62 | $ | 0.56 | $ | 2.52 | $ | 2.06 | |||||||||
Diluted | $ | 0.70 | $ | 0.62 | $ | 0.55 | $ | 2.48 | $ | 2.02 | |||||||||
Shares used in non-GAAP per share calculations: | |||||||||||||||||||
Basic | 178,144 | 178,186 | 178,758 | 178,279 | 178,196 | ||||||||||||||
Diluted | 180,910 | 180,955 | 182,258 | 181,186 | 181,783 |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands, except end of period statistics) | December 31, 2014 | September 30, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | ||||||||||||||
Revenue by solution category: | |||||||||||||||||||
Media Delivery Solutions | $ | 250,132 | $ | 230,576 | $ | 207,475 | $ | 911,715 | $ | 757,147 | |||||||||
Performance and Security Solutions | 239,660 | 224,169 | 192,172 | 879,221 | 690,559 | ||||||||||||||
Service and Support Solutions | 46,503 | 43,297 | 36,333 | 172,938 | 128,087 | ||||||||||||||
Advertising Decision Solutions and other | — | — | — | — | 2,129 | ||||||||||||||
Total revenue | $ | 536,295 | $ | 498,042 | $ | 435,980 | $ | 1,963,874 | $ | 1,577,922 | |||||||||
Stock-based compensation: | |||||||||||||||||||
Cost of revenue | $ | 3,033 | $ | 3,030 | $ | 2,637 | $ | 11,934 | $ | 10,867 | |||||||||
Research and development | 4,824 | 4,979 | 4,653 | 19,341 | 17,472 | ||||||||||||||
Sales and marketing | 12,132 | 12,110 | 10,012 | 47,570 | 39,290 | ||||||||||||||
General and administrative | 7,207 | 7,889 | 6,371 | 33,151 | 28,255 | ||||||||||||||
Total stock-based compensation | $ | 27,196 | $ | 28,008 | $ | 23,673 | $ | 111,996 | $ | 95,884 | |||||||||
Depreciation and amortization: | |||||||||||||||||||
Network-related depreciation | $ | 45,433 | $ | 44,617 | $ | 35,066 | $ | 165,211 | $ | 128,194 | |||||||||
Other depreciation and amortization | 10,984 | 10,794 | 8,042 | 39,632 | 26,613 | ||||||||||||||
Depreciation of property and equipment | 56,417 | 55,411 | 43,108 | 204,843 | 154,807 | ||||||||||||||
Capitalized stock-based compensation amortization | 2,845 | 3,556 | 1,974 | 10,345 | 8,077 | ||||||||||||||
Capitalized interest amortization | 98 | 45 | — | 161 | — | ||||||||||||||
Amortization of acquired intangible assets | 8,403 | 8,403 | 4,894 | 32,057 | 21,547 | ||||||||||||||
Total depreciation and amortization | $ | 67,763 | $ | 67,415 | $ | 49,976 | $ | 247,406 | $ | 184,431 | |||||||||
Capital expenditures: | |||||||||||||||||||
Purchases of property and equipment | $ | 66,285 | $ | 47,034 | $ | 42,751 | $ | 223,565 | $ | 183,146 | |||||||||
Capitalized internal-use software development costs | 31,630 | 31,466 | 20,118 | 116,062 | 75,234 | ||||||||||||||
Capitalized stock-based compensation | 3,649 | 3,850 | 3,073 | 15,226 | 12,325 | ||||||||||||||
Capitalized interest expense | 680 | 679 | — | 2,193 | — | ||||||||||||||
Total capital expenditures* | $ | 102,244 | $ | 83,029 | $ | 65,942 | $ | 357,046 | $ | 270,705 | |||||||||
Net increase in cash, cash equivalents and marketable securities | $ | 66,525 | $ | 69,357 | $ | 60,403 | $ | 381,362 | $ | 151,682 | |||||||||
End of period statistics: | |||||||||||||||||||
Number of employees | 5,105 | 4,858 | 3,908 | ||||||||||||||||
Number of deployed servers | 170,295 | 161,273 | 147,468 |
• | Amortization of acquired intangible assets – Akamai has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions Akamai 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 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 and executives, the expense varies with changes in the stock price and market conditions at the time of grant, varying valuation methodologies, subjective assumptions and the variety of award types. This makes the comparison of Akamai'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 in order to better understand the performance of Akamai's core business performance and to be consistent with the way investors evaluate its performance and comparison of its operating results to peer companies. |
• | Acquisition-related costs – Acquisition-related costs include transaction fees, due diligence costs and other one-time direct costs associated with strategic activities. In addition, subsequent adjustments to Akamai's initial estimated amount of contingent consideration 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 non-GAAP financial measures to provide a useful comparison of Akamai's operating results to prior periods and to its peer companies because such amounts vary significantly based on the magnitude of its acquisition transactions. |
• | Restructuring (benefits) charges – Akamai has incurred restructuring (benefits) charges that are included in its GAAP financial statements, primarily related to workforce reductions and estimated costs of exiting facility lease commitments. Akamai excludes these items from non-GAAP financial measures when evaluating its continuing business performance as such items are not consistently recurring and do not reflect expected future operating expense, nor provide meaningful insight into the fundamentals of current or past operations of its business. |
• | Benefit from adoption of software development activities – Akamai recognized a benefit to non-income-related tax expense associated with the adoption of software development activities. Akamai excluded this item from its non-GAAP financial measures because transactions of this nature occur infrequently and are not considered part of Akamai’s core business operations. |
• | Gains and other activity related to divestiture of a business – Akamai recognized a gain and other activity related to the divestiture of its Advertising Decision Solutions business. Akamai excludes gains and other activity related to divestiture of a business from non-GAAP financial measures because transactions of this nature occur infrequently and are not considered part of Akamai's core business operations. |
• | Amortization of debt discount and issuance costs and amortization of capitalized interest expense – Akamai issued $690 million of convertible senior notes due 2019 with a coupon interest rate of 0%. The imputed interest rate of the convertible senior notes was approximately 3.2%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity, thereby reducing the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt which are recorded as an asset in the consolidated balance sheet. All of Akamai's interest expense 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 indicative of ongoing operating performance. |
• | Loss on investments and legal settlements – Akamai has incurred losses from the impairment of certain investments and the settlement of legal matters. Akamai believes excluding these amounts from non-GAAP financial measures is useful to investors as they occur infrequently, are not representative of Akamai's core business operations or meaningful in evaluating Akamai’s business results. |
• | 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 release of valuation allowances), if any. Akamai believes that applying the non-GAAP adjustments and their related income tax effect allows Akamai to more properly reflect the income attributable to its core operations. |