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 7, 2017 |
Dated: | February 7, 2017 | AKAMAI TECHNOLOGIES, INC. | |
/s/ James Benson | |||
James Benson | |||
Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press Release dated February 7, 2017 |
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 $616 million, up 6% year-over-year and up 7% adjusted for foreign exchange* |
• | Revenue excluding Internet Platform Customers(1) up 14% year-over-year and up 15% when adjusted for foreign exchange* |
• | GAAP EPS of $0.52 per diluted share, up 6% year-over-year and when adjusted for foreign exchange* |
• | Non-GAAP EPS* of $0.72 per diluted share, consistent year-over-year and when adjusted for foreign exchange* (fourth quarter 2015 included $0.06 per diluted share benefit from the reinstatement of the federal R&D tax credit) |
• | Revenue of $2.3 billion, up 6% year-over-year and up 7% adjusted for foreign exchange* |
• | Revenue excluding Internet Platform Customers(1) up 15% year-over-year and when adjusted for foreign exchange* |
• | GAAP EPS of $1.79 per diluted share, up 1% year-over-year and down 1% when adjusted for foreign exchange* |
• | Non-GAAP EPS* of $2.70 per diluted share, up 7% year-over-year and up 6% when adjusted for foreign exchange* |
• | Performance and Security Solutions revenue for the fourth quarter was $367 million, up 17% year-over-year and when adjusted for foreign exchange.* Performance and Security Solutions revenue for 2016 was $1.355 billion, up 17% year-over-year and when adjusted for foreign exchange.* |
• | Cloud Security Solutions revenue, which is a component of Performance and Security Solutions revenue, was $102 million for the fourth quarter, up 41% year-over-year and when adjusted for foreign exchange.* Cloud Security Solutions revenue for 2016 was $365 million, up 43% year-over-year and up 44% when adjusted for foreign exchange.* |
• | Media Delivery Solutions revenue for the fourth quarter was $196 million, down 10% year-over-year and when adjusted for foreign exchange.* Media Delivery Solutions revenue for 2016 was $787 million, down 9% year-over-year and down 10% when adjusted for foreign exchange.* |
• | Service and Support Solutions revenue for the fourth quarter was $53 million, up 14% year-over-year and when adjusted for foreign exchange.* Service and Support Solutions revenue for 2016 was $198 million, up 16% year-over-year and when adjusted for foreign exchange.* |
• | U.S. revenue was $424 million for the fourth quarter, a 2% increase over fourth quarter 2015 revenue. U.S. revenue for 2016 was $1.620 billion, a 1% increase over 2015 revenue. |
• | International revenue was $193 million for the fourth quarter, an 18% increase over fourth quarter 2015 revenue and a 19% increase when adjusted for foreign exchange.* International revenue for 2016 was $720 million, a 21% increase over 2015 revenue and a 22% increase when adjusted for foreign exchange.* |
• | Media Division revenue for the fourth quarter was $301 million, down 1% year-over-year and flat when adjusted for foreign exchange.* Media Division revenue for 2016 was $1.165 billion, down 2% year-over-year and when adjusted for foreign exchange.* |
• | Web Division revenue for the fourth quarter was $300 million, up 13% year-over-year and up 14% when adjusted for foreign exchange.* Web Division revenue for 2016 was $1.120 billion, up 16% year-over-year and when adjusted for foreign exchange.* |
• | Enterprise and Carrier Division revenue for the fourth quarter was $15 million, up 26% year-over-year and when adjusted for foreign exchange.* Enterprise and Carrier Division revenue for 2016 was $55 million, up 33% year-over-year and when adjusted for foreign exchange.* |
• | Revenue from Internet Platform Customers for the fourth quarter was $58 million, down 36% year-over-year and when adjusted for foreign exchange.* Internet Platform Customer revenue for 2016 was $250 million, down 34% year-over-year and when adjusted for foreign exchange.* |
• | Revenue excluding Internet Platform Customers for the fourth quarter was $558 million, up 14% year-over-year and up 15% when adjusted for foreign exchange.* Revenue excluding Internet Platform Customers for 2016 was $2.090 billion, up 15% year-over-year and when adjusted for foreign exchange.* |
* | See Use of Non-GAAP Financial Measures below for definitions |
(1) | Internet Platform Customers – Six customers that are large Internet platform companies: Amazon, Apple, Facebook, Google, Microsoft and Netflix |
(2) | Revenue by solution category – A product-focused reporting view that reflects revenue by solution purchased |
(3) | Customer revenue by division – A customer-focused reporting view that reflects revenue from customers that are managed by the division |
(in thousands) | December 31, 2016 | December 31, 2015 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 324,169 | $ | 289,473 | |||
Marketable securities | 512,849 | 460,088 | |||||
Accounts receivable, net | 368,596 | 380,399 | |||||
Prepaid expenses and other current assets | 104,303 | 123,228 | |||||
Total current assets | 1,309,917 | 1,253,188 | |||||
Property and equipment, net | 801,017 | 753,180 | |||||
Marketable securities | 779,311 | 774,674 | |||||
Goodwill | 1,228,503 | 1,150,244 | |||||
Acquired intangible assets, net | 149,463 | 156,095 | |||||
Deferred income tax assets | 8,982 | 4,700 | |||||
Other assets | 95,953 | 89,603 | |||||
Total assets | $ | 4,373,146 | $ | 4,181,684 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 76,120 | $ | 61,982 | |||
Accrued expenses | 238,777 | 216,166 | |||||
Deferred revenue | 52,972 | 54,154 | |||||
Other current liabilities | 6,719 | 138 | |||||
Total current liabilities | 374,588 | 332,440 | |||||
Deferred revenue | 3,758 | 4,163 | |||||
Deferred income tax liabilities | 11,652 | 12,888 | |||||
Convertible senior notes | 640,087 | 618,047 | |||||
Other liabilities | 118,691 | 93,268 | |||||
Total liabilities | 1,148,776 | 1,060,806 | |||||
Total stockholders’ equity | 3,224,370 | 3,120,878 | |||||
Total liabilities and stockholders’ equity | $ | 4,373,146 | $ | 4,181,684 |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands, except per share data) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||
Revenue | $ | 616,124 | $ | 584,065 | $ | 579,159 | $ | 2,340,049 | $ | 2,197,448 | |||||||||
Costs and operating expenses: | |||||||||||||||||||
Cost of revenue (1) (2) | 203,475 | 204,467 | 193,212 | 809,001 | 725,620 | ||||||||||||||
Research and development (1) | 46,755 | 42,341 | 37,674 | 167,628 | 148,591 | ||||||||||||||
Sales and marketing (1) | 118,907 | 102,626 | 118,582 | 426,967 | 440,988 | ||||||||||||||
General and administrative (1) (2) | 116,775 | 113,320 | 99,978 | 439,916 | 388,265 | ||||||||||||||
Amortization of acquired intangible assets | 6,617 | 6,598 | 6,783 | 26,642 | 27,067 | ||||||||||||||
Restructuring charges | 65 | 2,948 | 250 | 10,301 | 767 | ||||||||||||||
Total costs and operating expenses | 492,594 | 472,300 | 456,479 | 1,880,455 | 1,731,298 | ||||||||||||||
Income from operations | 123,530 | 111,765 | 122,680 | 459,594 | 466,150 | ||||||||||||||
Interest income | 4,180 | 3,809 | 2,935 | 14,702 | 11,200 | ||||||||||||||
Interest expense | (4,680 | ) | (4,666 | ) | (4,641 | ) | (18,638 | ) | (18,525 | ) | |||||||||
Other income (expense), net | 2,784 | 778 | (499 | ) | 3,788 | (2,201 | ) | ||||||||||||
Income before provision for income taxes | 125,814 | 111,686 | 120,475 | 459,446 | 456,624 | ||||||||||||||
Provision for income taxes | 34,175 | 35,686 | 32,055 | 143,314 | 135,218 | ||||||||||||||
Net income | $ | 91,639 | $ | 76,000 | $ | 88,420 | $ | 316,132 | $ | 321,406 | |||||||||
Net income per share: | |||||||||||||||||||
Basic | $ | 0.53 | $ | 0.44 | $ | 0.50 | $ | 1.81 | $ | 1.80 | |||||||||
Diluted | $ | 0.52 | $ | 0.43 | $ | 0.49 | $ | 1.79 | $ | 1.78 | |||||||||
Shares used in per share calculations: | |||||||||||||||||||
Basic | 173,337 | 174,429 | 177,788 | 174,917 | 178,391 | ||||||||||||||
Diluted | 175,284 | 175,617 | 179,732 | 176,215 | 180,415 |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income | $ | 91,639 | $ | 76,000 | $ | 88,420 | $ | 316,132 | $ | 321,406 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 84,008 | 84,511 | 80,329 | 334,302 | 299,563 | ||||||||||||||
Stock-based compensation | 39,202 | 38,652 | 33,711 | 144,506 | 126,677 | ||||||||||||||
Excess tax benefits from stock-based compensation | (2,434 | ) | (448 | ) | (4,450 | ) | (5,514 | ) | (29,301 | ) | |||||||||
Provision (benefit) for deferred income taxes | 21,169 | (16,646 | ) | 22,039 | 7,308 | 4,098 | |||||||||||||
Amortization of debt discount and issuance costs | 4,680 | 4,666 | 4,641 | 18,638 | 18,525 | ||||||||||||||
Other non-cash reconciling items, net | 2,461 | 4,866 | 2,533 | 10,574 | 5,804 | ||||||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||||||||||||||
Accounts receivable | (19,375 | ) | 4,691 | (15,540 | ) | 3,356 | (56,247 | ) | |||||||||||
Prepaid expenses and other current assets | 19,867 | 15,005 | (8,982 | ) | 23,881 | 7,137 | |||||||||||||
Accounts payable and accrued expenses | (36,401 | ) | 42,610 | 25,526 | 18,491 | 51,624 | |||||||||||||
Deferred revenue | (8,098 | ) | (5,241 | ) | (3,684 | ) | (1,213 | ) | 3,224 | ||||||||||
Other current liabilities | 814 | (2,301 | ) | (491 | ) | 5,484 | (345 | ) | |||||||||||
Other non-current assets and liabilities | (15,744 | ) | 5,035 | (6,261 | ) | (9,647 | ) | 11,986 | |||||||||||
Net cash provided by operating activities | 181,788 | 251,400 | 217,791 | 866,298 | 764,151 | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Cash paid for acquired businesses, net of cash acquired | (92,503 | ) | (2,936 | ) | (18,702 | ) | (95,439 | ) | (141,147 | ) | |||||||||
Purchases of property and equipment and capitalization of internal-use software development costs | (75,938 | ) | (79,870 | ) | (78,837 | ) | (316,289 | ) | (444,983 | ) | |||||||||
Purchases of short- and long-term marketable securities | (166,253 | ) | (230,223 | ) | (108,690 | ) | (781,061 | ) | (692,879 | ) | |||||||||
Proceeds from sales and maturities of short- and long-term marketable securities | 166,044 | 204,190 | 118,814 | 722,577 | 845,939 | ||||||||||||||
Other non-current assets and liabilities | 3,927 | (1,633 | ) | 543 | 782 | (2,494 | ) | ||||||||||||
Net cash used in investing activities | (164,723 | ) | (110,472 | ) | (86,872 | ) | (469,430 | ) | (435,564 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from the issuance of common stock under stock plans | 17,221 | 15,244 | 7,503 | 59,560 | 61,791 | ||||||||||||||
Excess tax benefit from stock-based compensation | 2,434 | 448 | 4,450 | 5,514 | 29,301 | ||||||||||||||
Employee taxes paid related to net share settlement of stock-based awards | (6,985 | ) | (6,150 | ) | (6,993 | ) | (45,545 | ) | (54,164 | ) | |||||||||
Repurchases of common stock | (78,927 | ) | (95,157 | ) | (100,180 | ) | (373,794 | ) | (302,606 | ) | |||||||||
Other non-current assets and liabilities | — | — | — | — | (2,050 | ) | |||||||||||||
Net cash used in financing activities | (66,257 | ) | (85,615 | ) | (95,220 | ) | (354,265 | ) | (267,728 | ) | |||||||||
Effects of exchange rate changes on cash and cash equivalents | (8,442 | ) | (154 | ) | (2,697 | ) | (7,907 | ) | (10,036 | ) | |||||||||
Net (decrease) increase in cash and cash equivalents | (57,634 | ) | 55,159 | 33,002 | 34,696 | 50,823 | |||||||||||||
Cash and cash equivalents at beginning of period | 381,803 | 326,644 | 256,471 | 289,473 | 238,650 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 324,169 | $ | 381,803 | $ | 289,473 | $ | 324,169 | $ | 289,473 |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands, except per share data) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||
Income from operations | $ | 123,530 | $ | 111,765 | $ | 122,680 | $ | 459,594 | $ | 466,150 | |||||||||
GAAP operating margin | 20 | % | 19 | % | 21 | % | 20 | % | 21 | % | |||||||||
Amortization of acquired intangible assets | 6,617 | 6,598 | 6,783 | 26,642 | 27,067 | ||||||||||||||
Stock-based compensation | 39,202 | 38,652 | 33,711 | 144,506 | 126,677 | ||||||||||||||
Amortization of capitalized stock-based compensation and capitalized interest expense | 3,777 | 3,983 | 3,722 | 15,439 | 13,618 | ||||||||||||||
Restructuring charges | 65 | 2,948 | 250 | 10,301 | 767 | ||||||||||||||
Acquisition-related costs | 541 | 241 | 741 | 1,064 | 865 | ||||||||||||||
Legal matter costs | — | — | 76 | 890 | 3,291 | ||||||||||||||
Operating adjustments | 50,202 | 52,422 | 45,283 | 198,842 | 172,285 | ||||||||||||||
Non-GAAP income from operations | $ | 173,732 | $ | 164,187 | $ | 167,963 | $ | 658,436 | $ | 638,435 | |||||||||
Non-GAAP operating margin | 28 | % | 28 | % | 29 | % | 28 | % | 29 | % | |||||||||
Net income | $ | 91,639 | $ | 76,000 | $ | 88,420 | $ | 316,132 | $ | 321,406 | |||||||||
Operating adjustments (from above) | 50,202 | 52,422 | 45,283 | 198,842 | 172,285 | ||||||||||||||
Amortization of debt discount and issuance costs | 4,680 | 4,666 | 4,641 | 18,638 | 18,525 | ||||||||||||||
(Gain) loss on investments | (4,807 | ) | — | — | (4,807 | ) | 25 | ||||||||||||
Income tax-effect of above non-GAAP adjustments and certain discrete tax items | (15,567 | ) | (12,939 | ) | (9,631 | ) | (52,661 | ) | (58,309 | ) | |||||||||
Non-GAAP net income | 126,147 | 120,149 | 128,713 | 476,144 | 453,932 | ||||||||||||||
Depreciation and amortization | 73,614 | 73,930 | 69,824 | 292,221 | 258,878 | ||||||||||||||
Interest income | (4,180 | ) | (3,809 | ) | (2,935 | ) | (14,702 | ) | (11,200 | ) | |||||||||
Other expense (income), net | 2,023 | (778 | ) | 499 | 1,019 | 2,176 | |||||||||||||
Provision for GAAP income taxes | 34,175 | 35,686 | 32,055 | 143,314 | 135,218 | ||||||||||||||
Income tax-effect of above non-GAAP adjustments and certain discrete tax items | 15,567 | 12,939 | 9,631 | 52,661 | 58,309 | ||||||||||||||
Adjusted EBITDA | $ | 247,346 | $ | 238,117 | $ | 237,787 | $ | 950,657 | $ | 897,313 | |||||||||
Adjusted EBITDA margin | 40 | % | 41 | % | 41 | % | 41 | % | 41 | % | |||||||||
Non-GAAP net income per share: | |||||||||||||||||||
Basic | $ | 0.73 | $ | 0.69 | $ | 0.72 | $ | 2.72 | $ | 2.54 | |||||||||
Diluted | $ | 0.72 | $ | 0.68 | $ | 0.72 | $ | 2.70 | $ | 2.52 | |||||||||
Shares used in non-GAAP per share calculations: | |||||||||||||||||||
Basic | 173,337 | 174,429 | 177,788 | 174,917 | 178,391 | ||||||||||||||
Diluted | 175,284 | 175,617 | 179,732 | 176,215 | 180,415 |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||
Revenue by solution category(1): | |||||||||||||||||||
Performance and Security Solutions | $ | 367,407 | $ | 345,118 | $ | 314,885 | $ | 1,355,030 | $ | 1,158,281 | |||||||||
Media Delivery Solutions | 196,088 | 188,075 | 218,267 | 787,179 | 868,820 | ||||||||||||||
Services and Support Solutions | 52,629 | 50,872 | 46,007 | 197,840 | 170,347 | ||||||||||||||
Total revenue | $ | 616,124 | $ | 584,065 | $ | 579,159 | $ | 2,340,049 | $ | 2,197,448 | |||||||||
Cloud Security Solutions revenue | $ | 102,072 | $ | 95,232 | $ | 72,537 | $ | 364,944 | $ | 254,394 | |||||||||
Revenue growth rates year-over-year: | |||||||||||||||||||
Performance and Security Solutions | 17 | % | 19 | % | 15 | % | 17 | % | 15 | % | |||||||||
Media Delivery Solutions | (10 | ) | (14 | ) | (3 | ) | (9 | ) | 7 | ||||||||||
Services and Support Solutions | 14 | 17 | 18 | 16 | 16 | ||||||||||||||
Total revenue | 6 | % | 6 | % | 8 | % | 6 | % | 12 | % | |||||||||
Cloud Security Solutions revenue growth rates | 41 | % | 46 | % | 46 | % | 43 | % | 50 | % | |||||||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): | |||||||||||||||||||
Performance and Security Solutions | 17 | % | 19 | % | 18 | % | 17 | % | 19 | % | |||||||||
Media Delivery Solutions | (10 | ) | (15 | ) | — | (10 | ) | 11 | |||||||||||
Services and Support Solutions | 14 | 16 | 21 | 16 | 20 | ||||||||||||||
Total revenue | 7 | % | 5 | % | 11 | % | 7 | % | 16 | % | |||||||||
Cloud Security Solutions revenue growth rates(2) | 41 | % | 46 | % | 50 | % | 44 | % | 54 | % |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||
Revenue by geography: | |||||||||||||||||||
U.S. | $ | 423,588 | $ | 404,065 | $ | 415,835 | $ | 1,620,021 | $ | 1,604,492 | |||||||||
International | 192,536 | 180,000 | 163,324 | 720,028 | 592,956 | ||||||||||||||
Total revenue | $ | 616,124 | $ | 584,065 | $ | 579,159 | $ | 2,340,049 | $ | 2,197,448 | |||||||||
Revenue growth rates year-over-year: | |||||||||||||||||||
U.S. | 2 | % | 1 | % | 5 | % | 1 | % | 12 | % | |||||||||
International | 18 | 20 | 17 | 21 | 11 | ||||||||||||||
Total revenue | 6 | % | 6 | % | 8 | % | 6 | % | 12 | % | |||||||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): | |||||||||||||||||||
U.S. | 2 | % | 1 | % | 5 | % | 1 | % | 12 | % | |||||||||
International | 19 | 17 | 27 | 22 | 24 | ||||||||||||||
Total revenue | 7 | % | 5 | % | 11 | % | 7 | % | 16 | % |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||
Customer revenue by division(1): | |||||||||||||||||||
Media Division | $ | 300,809 | $ | 284,107 | $ | 302,367 | $ | 1,165,281 | $ | 1,187,732 | |||||||||
Web Division | 300,302 | 284,629 | 264,897 | 1,120,001 | 968,584 | ||||||||||||||
Enterprise and Carrier Division | 15,013 | 15,329 | 11,895 | 54,767 | 41,132 | ||||||||||||||
Total revenue | $ | 616,124 | $ | 584,065 | $ | 579,159 | $ | 2,340,049 | $ | 2,197,448 | |||||||||
Revenue growth rates year-over-year: | |||||||||||||||||||
Media Division | (1 | )% | (4 | )% | — | % | (2 | )% | 7 | % | |||||||||
Web Division | 13 | % | 17 | 17 | 16 | 18 | |||||||||||||
Enterprise and Carrier Division | 26 | % | 43 | 53 | 33 | 38 | |||||||||||||
Total revenue | 6 | % | 6 | % | 8 | % | 6 | % | 12 | % | |||||||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): | |||||||||||||||||||
Media Division | — | % | (5 | )% | 2 | % | (2 | )% | 10 | % | |||||||||
Web Division | 14 | 16 | 20 | 16 | 22 | ||||||||||||||
Enterprise and Carrier Division | 26 | 43 | 55 | 33 | 39 | ||||||||||||||
Total revenue | 7 | % | 5 | % | 11 | % | 7 | % | 16 | % |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||
Revenue from Internet Platform Customers(3) | $ | 58,378 | $ | 58,012 | $ | 91,679 | $ | 250,392 | $ | 379,291 | |||||||||
Revenue excluding Internet Platform Customers | 557,746 | 526,053 | 487,480 | 2,089,657 | 1,818,157 | ||||||||||||||
Total revenue | $ | 616,124 | $ | 584,065 | $ | 579,159 | $ | 2,340,049 | $ | 2,197,448 | |||||||||
Revenue growth rates year-over-year: | |||||||||||||||||||
Revenue from Internet Platform Customers | (36 | )% | (39 | )% | (13 | )% | (34 | )% | 6 | % | |||||||||
Revenue excluding Internet Platform Customers | 14 | 15 | 13 | 15 | 13 | ||||||||||||||
Total revenue | 6 | % | 6 | % | 8 | % | 6 | % | 12 | % | |||||||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): | |||||||||||||||||||
Revenue from Internet Platform Customers | (36 | )% | (40 | )% | (12 | )% | (34 | )% | 7 | % | |||||||||
Revenue excluding Internet Platform Customers | 15 | 15 | 16 | 15 | 17 | ||||||||||||||
Total revenue | 7 | % | 5 | % | 11 | % | 7 | % | 16 | % |
Three Months Ended | Year Ended | ||||||||||||||||||
(in thousands, except end of period statistics) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||
Stock-based compensation: | |||||||||||||||||||
Cost of revenue | $ | 5,063 | $ | 4,701 | $ | 3,901 | $ | 18,287 | $ | 14,145 | |||||||||
Research and development | 8,822 | 7,727 | 6,570 | 29,739 | 23,927 | ||||||||||||||
Sales and marketing | 15,067 | 14,729 | 14,247 | 55,407 | 53,542 | ||||||||||||||
General and administrative | 10,250 | 11,495 | 8,993 | 41,073 | 35,063 | ||||||||||||||
Total stock-based compensation | $ | 39,202 | $ | 38,652 | $ | 33,711 | $ | 144,506 | $ | 126,677 | |||||||||
Depreciation and amortization: | |||||||||||||||||||
Network-related depreciation | $ | 56,205 | $ | 57,521 | $ | 54,978 | $ | 227,515 | $ | 205,048 | |||||||||
Other depreciation and amortization | 17,409 | 16,409 | 14,846 | 64,706 | 53,830 | ||||||||||||||
Depreciation of property and equipment | 73,614 | 73,930 | 69,824 | 292,221 | 258,878 | ||||||||||||||
Capitalized stock-based compensation amortization | 3,323 | 3,544 | 3,414 | 13,752 | 12,717 | ||||||||||||||
Capitalized interest expense amortization | 454 | 439 | 308 | 1,687 | 901 | ||||||||||||||
Amortization of acquired intangible assets | 6,617 | 6,598 | 6,783 | 26,642 | 27,067 | ||||||||||||||
Total depreciation and amortization | $ | 84,008 | $ | 84,511 | $ | 80,329 | $ | 334,302 | $ | 299,563 | |||||||||
Capital expenditures(1)(2): | |||||||||||||||||||
Purchases of property and equipment | $ | 44,646 | $ | 51,332 | $ | 58,541 | $ | 196,771 | $ | 289,591 | |||||||||
Capitalized internal-use software development costs | 33,114 | 35,507 | 30,017 | 140,081 | 128,236 | ||||||||||||||
Capitalized stock-based compensation | 6,007 | 5,662 | 5,199 | 23,081 | 18,332 | ||||||||||||||
Capitalized interest expense | 938 | 887 | 791 | 3,478 | 2,845 | ||||||||||||||
Total capital expenditures | $ | 84,705 | $ | 93,388 | $ | 94,548 | $ | 363,411 | $ | 439,004 | |||||||||
Net (decrease) increase in cash, cash equivalents and marketable securities | $ | (62,581 | ) | $ | 78,972 | $ | 19,362 | $ | 92,094 | $ | (104,049 | ) | |||||||
End of period statistics: | |||||||||||||||||||
Number of employees | 6,490 | 6,334 | 6,084 |
• | 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 from its non-GAAP financial measures 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, the grant date fair value varies based on the stock price 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 from its non-GAAP financial measures in order to highlight the performance of Akamai's core business and to be consistent with the way many investors evaluate its performance and compare its operating results to peer companies. |
• | Acquisition-related costs – Acquisition-related costs include transaction fees, advisory fees, due diligence costs and other direct costs associated with strategic activities. In addition, subsequent adjustments to Akamai's initial estimated amounts of contingent consideration and indemnification 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 its 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 the acquisition transactions. |
• | Restructuring charges – Akamai has incurred restructuring 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 its non-GAAP financial measures when evaluating its continuing business performance as such items vary significantly based on the magnitude of the restructuring action and do not reflect expected future operating expenses. In addition, these charges do not necessarily 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 not considered part of its core business operations. |
• | Amortization of debt discount and issuance costs and amortization of capitalized interest expense – In February 2014, 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 under GAAP, 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. 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 representative of ongoing operating performance. |
• | Gains and losses on investments – Akamai has recorded gains and losses from the disposition and impairment of certain investments. Akamai believes excluding these amounts from its non-GAAP financial measures is useful to investors as the types of events giving rise to them occur infrequently and are not representative of Akamai's core business operations and ongoing operating performance. |
• | Legal matter costs – Akamai has incurred losses from the settlement of legal matters and costs with respect to its internal U.S. Foreign Corrupt Practices Act ("FCPA") investigation in addition to the disgorgement Akamai was required to pay to resolve it. Akamai believes excluding these amounts from its non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of Akamai's core business operations. |
• | 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 releasing of valuation allowances), if any. Akamai believes that applying the non-GAAP adjustments and their related income tax effect allows Akamai to highlight income attributable to its core operations. |