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: February 6, 2013

(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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On February 6, 2013, Akamai Technologies, Inc. (“Akamai” or the “Company”) announced its financial results for its fiscal year ended December 31, 2012. 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 provided under Item 2.02 of 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 February 6, 2013

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: February 6, 2013	AKAMAI TECHNOLOGIES, INC.
	/s/ James Benson
	James Benson
	Chief Financial Officer

3

Exhibit Index

99.1 Press Release dated February 6, 2013

4

EX-99.1

Exhibit 99.1

Contacts:
Jeff Young Media Relations Akamai Technologies 617-444-3913 jyoung@akamai.com	—or—	Natalie Temple Investor Relations Akamai Technologies 617-444-3635 ntemple@akamai.com

AKAMAI REPORTS FOURTH QUARTER 2012 AND

FULL-YEAR 2012 FINANCIAL RESULTS

• Fourth quarter revenue of $378 million, up 17 percent year-over-year; and annual revenue of $1,374 million, up 19 percent year-over-year

• Fourth quarter GAAP net income of $68 million, up 14 percent year-over-year, or $0.38 per diluted share, up 15 percent year-over-year; and full-year GAAP net income of $204 million, up 2 percent year-over-year, or $1.12 per diluted share, up 5 percent year-over-year

• Fourth quarter normalized net income* of $98 million, up 18 percent year-over-year, or $0.54 per diluted share, up 20 percent year-over-year; and full-year normalized net income* of $329 million, up 16 percent year-over-year, or $1.81 per diluted share, up 19 percent year-over-year

• Board of Directors authorizes $150 million extension of share repurchase program

CAMBRIDGE, Mass. – February 6, 2013 – Akamai Technologies, Inc. (NASDAQ: AKAM), the leading cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere, today reported financial results for the fourth quarter and full-year ended December 31, 2012. Revenue for the fourth quarter 2012 was $378 million, a 9 percent increase over third quarter revenue of $345 million, and a 17 percent increase over fourth quarter 2011 revenue of $324 million. Total revenue for 2012 was $1,374 million, a 19 percent increase over 2011 revenue of $1,159 million.

“With strong revenue and profit performance in the fourth quarter, Akamai closed out 2012 with record results on both the top and bottom line,” said Tom Leighton, CEO of Akamai. “Throughout the year, we announced new products across every solution line, closed a record number of strategic acquisitions, and achieved margin expansion through continued improvement in our network efficiency even as we expanded its capacity worldwide to meet rising demand for Akamai services. We believe these efforts have positioned us well to help our customers capitalize on the opportunities, and mitigate the challenges, of conducting business online.”

Net income in accordance with United States Generally Accepted Accounting Principles, or GAAP, for the fourth quarter of 2012 was $68 million, or $0.38 per diluted share. Full-year GAAP net income for 2012 was $204 million, or $1.12 per diluted share.

The Company generated normalized net income* of $98 million, or $0.54 per diluted share, in the fourth quarter of 2012, a 25 percent increase over the prior quarter’s normalized net income of $79 million, or $0.43 per diluted share, and an 18 percent increase over fourth quarter 2011 normalized net income of $83 million, or $0.45 per diluted share. Full-year normalized net income grew 16 percent year-over-year to $329 million, or $1.81 per diluted share. (*See Use of Non-GAAP Financial Measures below for definitions.)

Adjusted EBITDA* for the fourth quarter of 2012 was $173 million, up from $157 million in the prior quarter, and $148 million in the fourth quarter of 2011. Adjusted EBITDA margin* for the fourth quarter was 46 percent, up a point from the prior quarter and consistent with the same period last year. For the full year, adjusted EBITDA was $615 million, up from $525 million in 2011. Full-year adjusted EBITDA margin in 2012 was at 45 percent, consistent with the prior year. (*See Use of Non-GAAP Financial Measures below for definitions.)

Full-year cash from operations was $530 million, or 39 percent of revenue, consistent with the prior year. At year end, the Company had over $1 billion of cash, cash equivalents and marketable securities.

Sales through resellers and sales outside the United States accounted for 23 percent and 29 percent, respectively, of revenue for the fourth quarter 2012.

Share Repurchase Program

The Company also announced today that its Board of Directors has authorized a $150 million extension of its share repurchase program, effective for a 12-month period beginning on February 1, 2013. As of this date, all prior repurchase authorizations have expired. The Company’s goal for this program, which is expected to be funded through its free cash flow, is primarily to offset dilution created by its equity compensation programs.

The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. Repurchases may also be made under a Rule 10b5-1 plan, which would permit the Company to repurchase shares when the Company might otherwise be precluded from doing so under insider trading laws. The Company may choose to suspend or discontinue the repurchase program at any time but cannot carry over unused authorization amounts to future periods.

During the fourth quarter of 2012, under its current share repurchase program, the Company spent approximately $30 million repurchasing 0.8 million shares of its common stock, at an average price of $37.53 per share. During 2012, the Company spent approximately $141 million repurchasing 4.4 million shares of its common stock, at an average price of $32.45 per share.

The Company had approximately 178 million shares of common stock outstanding as of December 31, 2012.

Quarterly Conference Call

Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-866-314-4483 (or 1-617-213-8049 for international calls) and using passcode No. 17717131. 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 1-888-286-8010 (or 1-617-801-6888 for international calls) and using passcode No. 29167666.

About Akamai

Akamai^® is the leading cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere. At the core of the Company’s solutions is the Akamai Intelligent Platform™ providing extensive reach, coupled with unmatched reliability, security, visibility and expertise. Akamai removes the complexities of connecting the increasingly mobile world, supporting 24/7 consumer demand, and enabling enterprises to securely leverage the cloud. To learn more about how Akamai is accelerating the pace of innovation in a hyperconnected world, please visit www.akamai.com or blogs.akamai.com, and follow @Akamai on Twitter.

Condensed Consolidated Balance Sheets

(dollar amounts in thousands)

(unaudited)

	Dec. 31, 2012		Dec. 31, 2011
Assets
Cash and cash equivalents	$	201,989	$	559,197
Marketable securities		235,592		290,029
Accounts receivable, net		218,777		210,936
Deferred income tax assets, current portion		20,422		6,444
Prepaid expenses and other current assets		51,604		55,414
Current assets		728,384		1,122,020
Marketable securities		657,659		380,729
Property and equipment, net		345,091		293,043
Goodwill and other intangible assets, net		815,879		498,300
Other assets		39,811		7,924
Deferred income tax assets, net		13,803		43,485
Total assets	$	2,600,627	$	2,345,501
Liabilities and stockholders’ equity
Accounts payable and accrued expenses	$	176,378	$	123,618
Other current liabilities		26,566		24,774
Current liabilities		202,944		148,392
Other liabilities		51,929		40,859
Total liabilities		254,873		189,251
Stockholders’ equity		2,345,754		2,156,250
Total liabilities and stockholders’ equity	$	2,600,627	$	2,345,501

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share data)

(unaudited)

	Three Months Ended								Year Ended
	Dec. 31,		Sep. 30,			Dec. 31,			Dec. 31,		Dec. 31,
	2012		2012			2011			2012		2011
Revenues	$	377,872	$	345,321		$	323,740		$	1,373,947	$	1,158,538
Costs and operating expenses:
Cost of revenues * †		111,893		109,995			102,544			431,911		374,543
Research and development *		20,371		19,351			15,191			74,744		52,333
Sales and marketing *		85,308		75,924			66,609			304,404		227,331
General and administrative * †		58,819		54,511			51,016			227,033		191,726
Amortization of other intangible assets		5,351		5,381			4,316			20,962		17,070
Restructuring charge		392		—			4,728			406		4,886
Total costs and operating expenses		282,134		265,162			244,404			1,059,460		867,889
Operating income		95,738		80,159			79,336			314,487		290,649
Interest income, net		1,590		1,593			1,863			6,455		10,921
Loss on investments, net		—		—			(500	)		—		(500	)
Other income (expense), net		200		(241	)		7,455			649		6,125
Income before provision for income taxes		97,528		81,511			88,154			321,591		307,195
Provision for income taxes		29,236		33,280			28,073			117,602		106,291
Net income	$	68,292	$	48,231		$	60,081		$	203,989	$	200,904
Net income per share:
Basic	$	0.38	$	0.27		$	0.34		$	1.15	$	1.09
Diluted	$	0.38	$	0.27		$	0.33		$	1.12	$	1.07
Shares used in per share calculations:
Basic		177,479		177,455			178,916			177,900		183,866
Diluted		181,768		181,053			182,956			181,749		187,556

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

† Includes depreciation and amortization (see supplemental table for figures)

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	Three Months Ended									Year Ended
	Dec. 31,			Sep. 30,			Dec. 31,			Dec. 31,			Dec. 31,
	2012			2012			2011			2012			2011
Cash flows from operating activities:
Net income	$	68,292		$	48,231		$	60,081		$	203,989		$	200,904
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		54,960			53,457			43,650			204,163			167,878
Stock-based compensation		21,405			22,635			18,840			90,585			61,305
(Benefit) provision for deferred income taxes, net		(6,645	)		826			32,722			(5,819	)		53,628
Excess tax benefits from stock-based compensation		(5,426	)		(2,540	)		(1,663	)		(23,015	)		(13,123	)
Loss on investments and disposal of property and equipment, net		65			142			769			3			597
Provision for doubtful accounts		(255	)		(345	)		830			(316	)		2,066
Non-cash portion of restructuring charge		—			—			412			—			412
Changes in operating assets and liabilities:
Accounts receivable		19,479			(27,974	)		(30,016	)		(2,108	)		(37,837	)
Prepaid expenses and other current assets		(5,037	)		2,131			(6,936	)		6,066			(7,014	)
Accounts payable, accrued expenses and other current liabilities		4,921			44,591			20,452			59,653			15,184
Accrued restructuring		(381	)		(28	)		3,752			(3,278	)		3,572
Deferred revenue		(990	)		1,401			(2,335	)		4,552			(3,721	)
Other noncurrent assets and liabilities		(3,534	)		(1,031	)		(4,651	)		(4,070	)		8,704
Net cash provided by operating activities		146,854			141,496			135,907			530,405			452,555
Cash flows from investing activities:
Cash paid for acquired businesses, net of cash received		(30,650	)		(14,392	)		—			(336,680	)		(550	)
Purchases of property and equipment and capitalization of internal-use software costs		(60,669	)		(60,294	)		(46,570	)		(219,846	)		(182,862	)
Proceeds from sales and maturities of short- and long-term marketable securities		179,913			98,567			334,103			530,065			1,234,223
Purchases of short- and long-term marketable securities		(198,039	)		(137,809	)		(152,657	)		(752,342	)		(880,110	)
Proceeds from the sale of property and equipment		—			—			15			12			150
Increase in other investments		(250	)		—			—			(250	)		—
Decrease in restricted investments held for security deposits		—			—			51			—			272
Net cash (used in) provided by investing activities		(109,695	)		(113,928	)		134,942			(779,041	)		171,123
Cash flows from financing activities:
Proceeds from the issuance of common stock under stock option and employee stock purchase plans		16,025			6,066			11,947			44,660			25,252
Excess tax benefits from stock-based compensation		5,426			2,540			1,663			23,015			13,123
Taxes paid related to net share settlement of equity awards		(8,124	)		(2,370	)		(2,713	)		(34,690	)		(8,393	)
Repurchase of common stock		(29,819	)		(36,523	)		(76,332	)		(141,468	)		(324,070	)
Net cash used in financing activities		(16,492	)		(30,287	)		(65,435	)		(108,483	)		(294,088	)
Effects of exchange rate changes on cash and cash equivalents		(1,328	)		2,373			(1,816	)		(89	)		(2,259	)
Net increase (decrease) in cash and cash equivalents		19,339			(346	)		203,598			(357,208	)		327,331
Cash and cash equivalents, beginning of period		182,650			182,996			355,599			559,197			231,866
Cash and cash equivalents, end of period	$	201,989		$	182,650		$	559,197		$	201,989		$	559,197

	Three Months Ended						Year Ended
	Dec. 31,		Sep. 30,		Dec. 31,		Dec. 31,			Dec. 31,
	2012		2012		2011		2012			2011
Supplemental financial data (in thousands):
Stock-based compensation:
Cost of revenues	$	620	$	684	$	581	$	2,871		$	2,360
Research and development		4,017		4,427		3,610		17,275			11,125
Sales and marketing		10,736		10,896		8,878		42,760			27,990
General and administrative		6,032		6,628		5,771		27,679			19,830
Total stock-based compensation	$	21,405	$	22,635	$	18,840	$	90,585		$	61,305
Depreciation and amortization:
Network-related depreciation	$	42,143	$	41,022	$	33,170	$	155,759		$	126,764
Capitalized stock-based compensation amortization		1,961		2,025		1,713		7,680			7,308
Other depreciation and amortization		5,505		5,029		4,451		19,762			16,736
Amortization of other intangible assets		5,351		5,381		4,316		20,962			17,070
Total depreciation and amortization	$	54,960	$	53,457	$	43,650	$	204,163		$	167,878
Capital expenditures:
Purchases of property and equipment	$	46,386	$	46,635	$	34,450	$	165,642		$	140,219
Capitalized internal-use software		14,283		13,659		12,120		54,204			42,643
Capitalized stock-based compensation		2,582		2,561		2,067		9,276			7,473
Total capital expenditures	$	63,251	$	62,855	$	48,637	$	229,122		$	190,335
Net increase (decrease) in cash, cash equivalents, marketable securities and restricted cash and marketable securities	$	36,906	$	39,889	$	38,960	$	(134,715	)	$	(13,447	)
End of period statistics:
Number of employees		3,074		2,884		2,380
Number of deployed servers		127,638		119,370		105,111

*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). Legislative and regulatory pronouncements 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 and our earnings call helps investors to gain a meaningful understanding of our past performance and 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. These measures are also used by management in its 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 may make 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, income taxes, depreciation and amortization of tangible and intangible assets, stock-based compensation expense, amortization of

capitalized stock-based compensation, restructuring charges and benefits, acquisition related costs and benefits, certain gains and losses on investments, foreign exchange gains and losses, loss on early extinguishment of debt and gains and losses on legal settlements. 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 income, or that do not require a cash outlay, such as stock-based compensation. 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 the historical 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 as a percentage of revenues. 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, capitalization of internal-use software development costs and capitalization of stock-based compensation. Capital expenditures or capex are disclosed in Akamai’s 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 other intangible assets, stock-based compensation expense, amortization of capitalized stock-based compensation, restructuring charges and benefits, acquisition related costs and benefits, certain gains and losses on investments, loss on early extinguishment of debt and gains and losses on legal settlements. 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 net income per share” as normalized net income, plus interest add-back for diluted share calculation, divided by the basic weighted average or diluted common shares outstanding used in GAAP net income per share calculations. Akamai considers normalized net income per share to be another important indicator of overall performance of the Company because it eliminates the effect of non-cash items. 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									Year Ended
	Dec. 31,			Sep. 30,			Dec. 31,			Dec. 31,			Dec. 31,
	2012			2012			2011			2012			2011
Net income	$	68,292		$	48,231		$	60,081		$	203,989		$	200,904
Amortization of other intangible assets		5,351			5,381			4,316			20,962			17,070
Stock-based compensation		21,405			22,635			18,840			90,585			61,305
Amortization of capitalized stock-based compensation		1,961			2,025			1,713			7,680			7,308
Loss on investments, net		—			—			500			—			500
Acquisition related costs		680			279			1,020			5,787			580
Legal settlements, net		—			—			(8,043	)		—			(8,043	)
Restructuring charge		392			—			4,728			406			4,886
Total normalized net income:		98,081			78,551			83,155			329,409			284,510
Interest income, net		(1,590	)		(1,593	)		(1,863	)		(6,455	)		(10,921	)
Provision for income taxes		29,236			33,280			28,073			117,602			106,291
Depreciation and amortization		47,648			46,051			37,621			175,521			143,500
Other (income) expense, net		(200	)		241			588			(649	)		1,918
Total Adjusted EBITDA:	$	173,175		$	156,530		$	147,574		$	615,428		$	525,298
Normalized net income per share:
Basic	$	0.55		$	0.44		$	0.46		$	1.85		$	1.55
Diluted	$	0.54		$	0.43		$	0.45		$	1.81		$	1.52
Shares used in normalized per share calculations:
Basic		177,479			177,455			178,916			177,900			183,866
Diluted		181,768			181,053			182,956			181,749			187,556

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 about future business opportunities. 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, effects of increased competition including potential failure to maintain the prices we charge for our services and loss of significant customers; failure of the markets we address or plan to address to develop as we expect or at all; inability to increase our revenue at the same rate as in the past and keep our expenses from increasing at a greater rate than our revenues; a failure of Akamai’s services or network infrastructure; 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 or failure of such solutions to operate as expected, 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.