8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report: July 25, 2007

(Date of earliest event reported)

AKAMAI TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-27275	04-3432319
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

8 Cambridge Center, Cambridge, Massachusetts	02142
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 444-3000

Item 2.02 Results of Operations and Financial Condition

On July 25, 2007, Akamai Technologies, Inc. announced its financial results for the fiscal quarter ended June 30, 2007. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1 Press Release dated July 25, 2007.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: July 25, 2007	AKAMAI TECHNOLOGIES, INC.
	/s/ J. Donald Sherman
	J. Donald Sherman
	Chief Financial Officer

3

Exhibit Index

99.1 Press Release dated July 25, 2007

4

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Contacts:
Jeff Young Media Relations Akamai Technologies 617-444-3913 jyoung@akamai.com	–or–	Sandy Smith Investor Relations Akamai Technologies 617-444-2804 ssmith@akamai.com

AKAMAI REPORTS SECOND QUARTER 2007 FINANCIAL RESULTS

• Revenue grew to $152.7 million, up 52 percent year-over-year and up 10 percent from the first quarter 2007

• GAAP net income was $21.6 million, or $0.12 per diluted share, up 92 percent year-over-year and up 13 percent over the first quarter 2007

• Normalized net income* increased 55 percent year-over-year to $55.4 million, or $0.30 per diluted share, and increased 9 percent over the first quarter 2007

CAMBRIDGE, Mass. – July 25, 2007 – Akamai Technologies, Inc. (NASDAQ: AKAM), the leading global service provider for accelerating content and applications online, today reported financial results for the second quarter ended June 30, 2007. Revenue for the second quarter 2007 was $152.7 million, a ten percent increase over first quarter 2007 revenue of $139.3 million, and a 52 percent increase over second quarter 2006 revenue of $100.6 million.

Net income in accordance with United States Generally Accepted Accounting Principles, or GAAP, for the second quarter of 2007 was $21.6 million, or $0.12 per diluted share.

The Company generated normalized net income* of $55.4 million, or $0.30 per normalized diluted share*, in the second quarter of 2007, a 9 percent increase over first quarter 2007 normalized net income of $50.7 million, or $0.28 per diluted share, and a 55 percent improvement over 2006 second quarter normalized earnings of $35.8 million, or $0.20 per diluted share. (*See Use of Non-GAAP Financial Measures below for definitions.)

“Demand for our core content delivery and application acceleration services grew in all sectors of our business,” said Paul Sagan, president and CEO of Akamai. “With our record performance in the second quarter, we are excited about the potential we see to expand our business going forward.”

Adjusted EBITDA* for the second quarter of 2007 was $65.6 million, up from $58.8 million in the first quarter 2007, and $40.0 million in the second quarter of 2006. Adjusted EBITDA margin for the second quarter was 43 percent, a three point improvement over the second quarter of last year. (*See Use of Non-GAAP Financial Measures below for definitions.)

Cash from operations was $37.3 million in the second quarter. On a year-to-date basis, cash from operations was $93.6 million, an increase of 54 percent over the same period last year. At the end of the second quarter, the Company had approximately $504 million in cash, cash equivalents and marketable securities.

The Company had approximately 165.2 million shares of common stock outstanding as of June 30, 2007.

Customers

The number of customers under long-term services contracts at the end of the second quarter increased by 74 to a record 2,555, a 24 percent increase year-over-year.

Sales through resellers and sales outside the United States accounted for 20 percent and 23 percent, respectively, of revenue for the second quarter 2007.

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. 4839771.

About Akamai

Akamai^® is the leading global service provider for accelerating content and applications online. Thousands of organizations have formed trusted relationships with Akamai, improving their revenue and reducing costs by maximizing the performance of their online businesses. Leveraging the Akamai EdgePlatform, these organizations gain business advantage today, and have the foundation for the emerging Web solutions of tomorrow. Akamai is “The Trusted Choice for Online Business.” For more information, visit www.akamai.com.

Financial Statements

Condensed Consolidated Balance Sheets

(dollar amounts in thousands)

(unaudited)

	June 30, 2007		December 31, 2006
Assets
Cash and cash equivalents	$	100,162	$	80,595
Marketable securities		255,088		188,141
Restricted marketable securities		1,233		1,105
Accounts receivable, net		99,157		86,232
Prepaid expenses and other current assets		23,986		18,600
Current assets		479,626		374,673
Marketable securities		144,341		161,511
Restricted marketable securities		3,102		3,102
Property and equipment, net		125,777		86,623
Goodwill and other intangible assets, net		468,077		298,263
Other assets		4,918		4,256
Deferred tax assets, net		294,134		319,504
Total assets	$	1,519,975	$	1,247,932
Liabilities and stockholders’ equity
Accounts payable and accrued expenses	$	71,933	$	80,713
Other current liabilities		10,994		8,551
Current liabilities		82,927		89,264
Other liabilities		6,787		3,975
Convertible notes		199,960		200,000
Total liabilities		289,674		293,239
Stockholders’ equity		1,230,301		954,693
Total liabilities and stockholders’ equity	$	1,519,975	$	1,247,932

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share data)

(unaudited)

	Three Months Ended												Six Months Ended
	June 30, 2007			March 31, 2007			June 30, 2006			March 31, 2006			June 30, 2007			June 30, 2006
Revenues	$	152,654		$	139,274		$	100,649		$	90,825		$	291,928		$	191,474
Costs and operating expenses:
Cost of revenues * †		39,759			34,480			21,195			19,316			74,239			40,511
Research and development *		11,663			10,604			8,373			6,726			22,267			15,099
Sales and marketing *		37,739			36,749			29,720			26,295			74,488			56,015
General and administrative * †		29,779			27,478			21,870			18,543			57,257			40,413
Amortization of other intangible assets		2,932			2,812			2,198			2,296			5,744			4,494
Restructuring benefit		(178	)		—			—			—			(178	)		—
Total costs and operating expenses		121,694			112,123			83,356			73,176			233,817			156,532
Operating income		30,960			27,151			17,293			17,649			58,111			34,942
Interest income, net		(5,243	)		(4,732	)		(3,336	)		(2,658	)		(9,975	)		(5,994	)
Loss on early extinguishment of debt		—			1			—			—			1			—
Gain on investments, net		—			—			(2	)		(257	)		—			(259	)
Other expense (income), net		572			204			(475	)		(186	)		776			(661	)
Income before provision for income taxes		35,631			31,678			21,106			20,751			67,309			41,857
Provision for income taxes		13,985			12,499			9,842			9,255			26,484			19,097
Net income	$	21,646		$	19,179		$	11,264		$	11,495		$	40,825		$	22,759
Net income per share:
Basic	$	0.13		$	0.12		$	0.07		$	0.07		$	0.25		$	0.15
Diluted		0.12			0.11		$	0.07		$	0.07		$	0.23		$	0.14
Shares used in per share calculations:
Basic		164,798			161,569			154,702			153,819			163,184			154,260
Diluted		185,601			183,157			175,612			173,811			184,648			175,001

* Includes stock-related compensation (see supplemental table for figures)

† Includes depreciation (see supplemental table for figures)

	Three Months Ended								Six Months Ended
	June 30, 2007		March 31, 2007		June 30, 2006		March 31, 2006		June 30, 2007		June 30, 2006
Supplemental financial data (in thousands):
Stock-related compensation:
Cost of revenues	$	847	$	739	$	533	$	273	$	1,586	$	806
Research and development		3,944		3,976		3,332		1,657		7,920		4,989
Sales and marketing		6,471		6,827		5,040		2,589		13,298		7,629
General and administrative		5,946		5,288		4,270		2,568		11,234		6,838
Total stock-related compensation	$	17,208	$	16,830	$	13,175	$	7,087	$	34,038	$	20,262
Depreciation and amortization:
Network-related depreciation	$	12,277	$	10,178	$	6,178	$	5,356	$	22,455	$	11,534
Capitalized stock-related compensation amortization		401		188		27		6		589		33
Other depreciation		1,967		1,671		1,164		1,035		3,638		2,199
Amortization of other intangible assets		2,932		2,812		2,198		2,296		5,744		4,494
Total depreciation and amortization	$	17,577	$	14,849	$	9,567	$	8,693	$	32,426	$	18,260
Capital expenditures:
Purchases of property and equipment	$	25,579	$	27,542	$	10,733	$	13,556	$	53,121	$	24,289
Capitalized internal-use software		4,113		4,001		3,494		2,618		8,114		6,112
Capitalized stock-related compensation		1,427		1,384		1,242		522		2,811		1,764
Total capital expenditures	$	31,119	$	32,927	$	15,469	$	16,696	$	64,046	$	32,165
Net increase in cash, cash equivalents, marketable securities and restricted marketable securities	$	23,895	$	45,577	$	26,059	$	27,294	$	69,472	$	53,353
End of period statistics:
Number of customers under recurring contract		2,555		2,481		2,060		1,981
Number of employees		1,261		1,213		871		833
Number of deployed servers		27,322		25,093		20,836		19,919

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	Three Months Ended												Six Months Ended
	June 30, 2007			March 31, 2007			June 30, 2006			March 31, 2006			June 30, 2007			June 30, 2006
Cash flows from operating activities:
Net income	$	21,646		$	19,179		$	11,264		$	11,495		$	40,825		$	22,759
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions:
Depreciation and amortization of intangible assets and deferred financing costs		17,788			15,059			9,778			8,903			32,847			18,681
Stock-related compensation		17,208			16,830			13,175			7,087			34,038			20,262
Non-cash portion of loss on early extinguishment of debt		—			1			—			—			1			—
Non-cash portion of restructuring benefit		(178	)		—			—			—			(178	)		—
Utilization of tax NOLs/credits and changes in deferred tax assets, net		13,437			11,701			9,178			8,764			25,138			17,942
Excess tax benefits from stock-related compensation		(3,009	)		(7,476	)		(5,467	)		(5,399	)		(10,485	)		(10,866	)
Gain on investments, property and equipment and foreign currency, net		(41	)		(448	)		(294	)		(327	)		(489	)		(621	)
Provision for doubtful accounts		594			515			279			318			1,109			597
Changes in operating assets and liabilities:
Accounts receivable, net		(12,156	)		659			(7,338	)		(3,403	)		(11,497	)		(10,741	)
Prepaid expenses and other current assets		(307	)		(5,126	)		(1,206	)		(3,113	)		(5,433	)		(4,319	)
Accounts payable, accrued expenses and other current liabilities		(15,797	)		694			(419	)		6,840			(15,103	)		6,421
Accrued restructuring		(818	)		(678	)		(494	)		(554	)		(1,496	)		(1,048	)
Deferred revenue		(1,003	)		4,117			(602	)		2,641			3,114			2,039
Other noncurrent assets and liabilities		(35	)		1,251			(108	)		(91	)		1,216			(199	)
Net cash provided by operating activities:		37,329			56,278			27,746			33,161			93,607			60,907
Cash flows from investing activities:
Business acquisitions, net of cash acquired		2,440			5,435			—			—			7,875			—
Purchases of property and equipment and capitalization of internal-use software costs		(29,692	)		(31,543	)		(14,227	)		(16,174	)		(61,235	)		(30,401	)
Purchase of investments		(152,831	)		(53,279	)		(86,923	)		(105,005	)		(206,110	)		(191,928	)
Proceeds from sales and maturities of investments		104,414			51,669			68,965			50,766			156,083			119,731
Decrease in restricted investments held for security deposits		—			—			—			400			—			400
Net cash used in investing activities		(75,669	)		(27,718	)		(32,185	)		(70,013	)		(103,387	)		(102,198	)
Cash flows from financing activities:
Payments on capital leases		(23	)		—			—			—			(23	)		—
Proceeds from the issuance of common stock under stock option														—
and employee stock purchase plans		11,059			6,692			6,822			4,643			17,751			11,465
Excess tax benefits from stock-related compensation		3,009			7,476			5,467			5,399			10,485			10,866
Net cash provided by financing activities		14,045			14,168			12,289			10,042			28,213			22,331
Effects of exchange rate translation on cash and cash equivalents		212			922			630			40			1,134			670
Net (decrease) increase in cash and cash equivalents		(24,083	)		43,650			8,480			(26,770	)		19,567			(18,290	)
Cash and cash equivalents, beginning of period		124,245			80,595			65,022			91,792			80,595			91,792
Cash and cash equivalents, end of period	$	100,162		$	124,245		$	73,502		$	65,022		$	100,162		$	73,502

*Use of Non-GAAP Financial Measures

In addition to providing financial measurements based on generally accepted accounting principles in the United States of America (GAAP), Akamai has historically provided additional financial metrics that are

not prepared in accordance with GAAP (non-GAAP). Recent legislative and regulatory changes discourage the use of and emphasis on non-GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. We believe that the inclusion of these non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts. Our management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. This measure is also used by management in their financial and operational decision-making. There are limitations associated with reliance on these non-GAAP financial metrics because they are specific to our operations and financial performance, which makes comparisons with other companies’ financial results more challenging. By providing both GAAP and non-GAAP financial measures, we believe that investors are able to compare our GAAP results to those of other companies while also gaining a better understanding of our operating performance as evaluated by management.

Akamai defines “Adjusted EBITDA” as net income, before interest, taxes, depreciation and amortization of tangible and intangible assets, stock-related compensation, depreciation of capitalized stock-related compensation, restructuring charges and benefits, certain gains and losses on equity investments, foreign exchange gains and losses, loss on early extinguishment of debt, utilization of tax NOLs/credits and release of the deferred tax asset valuation allowance. 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 that are either not part of the Company’s core operations, such as investment gains and losses, foreign exchange gains and losses, early debt extinguishment and net interest expense, or do not require a cash outlay, such as stock-related compensation and impairment of intangible assets. Adjusted EBITDA also excludes 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 “Adjusted EBITDA margin” as a percentage of Adjusted EBITDA over revenue. Akamai considers Adjusted EBITDA margin to be an indicator of the Company’s operating trend and performance of its business in relation to its revenue growth.

Akamai defines “capital expenditures” or “capex” as purchases of property and equipment and capitalization of internal-use software development costs. Capital expenditures or capex are disclosed in Akamai’s condensed consolidated Statement of Cash Flows in the company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Akamai defines “normalized net income” as net income before amortization of intangible assets, stock-related compensation, restructuring charges and benefits, certain gains and losses on equity investments, loss on early extinguishment of debt, utilization of tax NOLs/credits and release of the deferred tax asset valuation allowance. Akamai considers normalized net income 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 “normalized diluted shares” as diluted common shares outstanding used in GAAP net income per share calculation, excluding the effect of FAS 123R under the treasury stock method. Akamai considers normalized diluted shares to be another important indicator of overall performance of the Company because it eliminates the effect of a non-cash item.

Adjusted EBITDA and normalized net income should be considered in addition to, not as a substitute for, the Company’s operating income and net income, as well as other measures of financial performance reported in accordance with GAAP.

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable GAAP measures.

Reconciliation of GAAP net income to normalized net income

and Adjusted EBITDA

(amounts in thousands, except per share data)

	Three Months Ended												Six Months Ended
	June 30, 2007			March 31, 2007			June 30, 2006			March 31, 2006			June 30, 2007			June 30, 2006
Net income	$	21,646		$	19,179		$	11,264		$	11,495		$	40,825		$	22,759
Amortization of intangible assets		2,932			2,812			2,198			2,296			5,744			4,494
Stock-related compensation		17,208			16,830			13,175			7,087			34,038			20,262
Amortization of capitalized stock-related compensation		401			188			27			6			589			33
Gain on investments, net		—			—			(2	)		(257	)		—			(259	)
Utilization of tax NOLs/credits		13,437			11,701			9,178			8,764			25,138			17,942
Loss on early extinguishment of debt		—			1			—			—			1			—
Restructuring benefit		(178	)		—			—			—			(178	)		—
Total normalized net income:		55,446			50,711			35,840			29,391			106,157			65,231
Interest income, net		(5,243	)		(4,732	)		(3,336	)		(2,658	)		(9,975	)		(5,994	)
Provision for income taxes		548			798			664			491			1,346			1,155
Depreciation and amortization		14,244			11,849			7,342			6,391			26,093			13,733
Other expense (income), net		572			204			(475	)		(186	)		776			(661	)
Total Adjusted EBITDA:	$	65,567		$	58,830		$	40,035		$	33,429		$	124,397		$	73,464
Normalized net income per share:
Basic	$	0.34		$	0.31		$	0.23		$	0.19		$	0.65		$	0.42
Diluted	$	0.30		$	0.28		$	0.20		$	0.17		$	0.58		$	0.37
Shares used in normalized per share calculations:
Basic		164,798			161,569			154,702			153,819			163,184			154,260
Diluted		187,432			185,179			178,358			176,644			186,320			177,817

# # #

Akamai Statement Under the Private Securities Litigation Reform Act

This 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, including statements concerning the expected growth and development of our business and expectations with respect to revenue. 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, loss of significant customers, failure to increase our revenue and keep our expenses consistent with revenues, the effects of any attempts to intentionally disrupt our services or network by unauthorized users or others, failure to have available sufficient transmission capacity, a failure of Akamai’s services or network infrastructure, failure to maintain the prices we charge for our services, inability to realize the benefits of our net operating loss carryforward, delay in developing or failure to develop new service offerings or functionalities, and if developed, lack of market acceptance of such service offerings and functionalities, unexpected expenses associated with the acquisitions and integrations of Nine Systems, Netli and Red Swoosh, 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.

In addition, the statements in this press release represent Akamai’s expectations and beliefs as of the date of this press release. Akamai anticipates that subsequent events and developments may cause these expectations and beliefs to change. However, while Akamai may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Akamai’s expectations or beliefs as of any date subsequent to the date of this press release.