Akamai Reports Second Quarter 2012 Financial Results

CAMBRIDGE, Mass., July 25, 2012 /PRNewswire/ -- 

  • Second quarter revenue of $331 million, up 20 percent year-over-year
  • GAAP net income of $44 million, down 8 percent year-over-year; or $0.24 per diluted share, down 4 percent year-over-year
  • Normalized net income* of $78 million, up 18 percent year-over-year; or $0.43 per diluted share, up 23 percent year-over-year

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 second quarter ended June 30, 2012.  Revenue for the second quarter of 2012 was $331 million, a 20 percent increase over second quarter 2011 revenue of $277 million.

(Logo: http://photos.prnewswire.com/prnh/20100225/AKAMAILOGO )

Net income in accordance with United States Generally Accepted Accounting Principles, or GAAP, for the second quarter of 2012 was $44 million, or $0.24 per diluted share, an 8 percent decrease from second quarter 2011 GAAP net income of $48 million, or $0.25 per diluted share, and a 2 percent increase from first quarter 2012 GAAP net income of $43 million, or $0.24 per diluted share.

The Company generated normalized net income* of $78 million, or $0.43 per diluted share, in the second quarter of 2012, an 18 percent increase over second quarter 2011 normalized net income of $66 million, or $0.35 per diluted share, and a 3 percent increase from the prior quarter normalized net income of $75 million, or $0.41 per diluted share. (*See Use of Non-GAAP Financial Measures below for definitions.)

"Akamai's very strong second quarter results were driven on the top line by increased adoption of our cloud infrastructure solutions as well as continued growth of content delivery solutions," said Paul Sagan, President and CEO of Akamai. "Our bottom line performance was the result of significant benefits we have begun to realize from improvements we are making to scale our network operations."

Adjusted EBITDA* for the second quarter of 2012 was $143 million, up 13 percent from $126 million in the second quarter of 2011, and flat with the prior quarter.  Adjusted EBITDA margin* for the second quarter was 43 percent, down 2 points from the prior quarter and down 3 points from the same period last year.  (*See Use of Non-GAAP Financial Measures below for definitions.)

Cash from operations was $150 million in the second quarter of 2012, or 45 percent of revenue.  At the end of the second quarter of 2012, the Company had just over $1 billion in cash, cash equivalents and marketable securities.

Sales through resellers and sales outside the United States accounted for 21 percent and 27 percent, respectively, of revenue for the second quarter of 2012.

Share Repurchase Program

During the second quarter of 2012, under a share repurchase program that was approved by the Board of Directors in April 2011 and expanded in May 2012, the Company repurchased approximately 2 million shares of its common stock for $67 million, at an average price of $30.78 per share.  As of June 30, 2012, the Company had repurchased 20 million shares of its common stock for $558 million, at an average price of $27.27 per share since April 2009.

The Company had approximately 178 million shares of common stock outstanding as of June 30, 2012. 

Quarterly Conference Call

Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-800-291-5365 (or 1-617-614-3922 for international calls) and using passcode No. 94771540.  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. 25706113.

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)








Jun. 30, 2012


Dec. 31, 2011

Assets





Cash and cash equivalents


$                             182,996


$                        559,197

Marketable securities


313,564


290,029

Accounts receivable, net 


206,316


210,936

Deferred income tax assets, current portion


6,444


6,444

Prepaid expenses and other current assets


47,285


55,414

Current assets


756,605


1,122,020

Marketable securities


521,885


380,729

Property and equipment, net 


315,866


293,043

Goodwill and other intangible assets, net


793,724


498,300

Other assets


14,314


7,924

Deferred income tax assets, net


43,182


43,485

Total assets


$                          2,445,576


$                     2,345,501






Liabilities and stockholders' equity





Accounts payable and accrued expenses


$                             139,154


$                        123,618

Other current liabilities


26,698


24,774

Current liabilities


165,852


148,392

Other liabilities


65,091


40,859

Total liabilities


230,943


189,251

Stockholders' equity


2,214,633


2,156,250

Total liabilities and stockholders' equity


$                          2,445,576


$                     2,345,501

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share data)

(unaudited)














-------------------------------------Three Months Ended-------------------------------------


----------Six Months Ended----------



Jun. 30,


Mar. 31,


Jun. 30,


Jun. 30,


Jun. 30,



2012


2012


2011


2012


2011













Revenues

$               331,306


$                   319,448


$                   276,989


$           650,754


$           552,942













Costs and operating expenses:  











Cost of revenues * +

107,457


102,566


89,647


210,023


178,715


Research and development *

17,542


17,480


11,006


35,022


23,600


Sales and marketing *

75,882


67,290


52,837


143,172


106,202


General and administrative * +

57,997


55,706


45,975


113,703


89,876


Amortization of other intangible assets

5,463


4,767


4,292


10,230


8,569


Restructuring (benefit) charge

(46)


60


-


14


-


Total costs and operating expenses

264,295


247,869


203,757


512,164


406,962


Operating income

67,011


71,579


73,232


138,590


145,980













Interest income, net

1,626


1,646


3,096


3,272


6,056


Other income (expense) , net

1,131


(441)


(107)


690


(1,142)


Income before provision for income taxes

69,768


72,784


76,221


142,552


150,894


Provision for income taxes

25,529


29,557


28,300


55,086


52,356


Net income

$                 44,239


$                     43,227


$                     47,921


$             87,466


$             98,538













Net income per share:











    Basic

$                     0.25


$                         0.24


$                         0.26


$                 0.49


$                 0.53


    Diluted

$                     0.24


$                         0.24


$                         0.25


$                 0.48


$                 0.52













Shares used in per share calculations:











    Basic

178,547


178,120


186,612


178,333


186,731


    Diluted

181,817


182,342


190,179


182,080


190,781













* 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-------------------------


----------Six Months Ended----------



Jun. 30,


Mar. 31,


Jun. 30,


Jun. 30,


Jun. 30,



2012


2012


2011


2012


2011












Cash flows from operating activities: 











 Net income 

$              44,239


$            43,227


$            47,921


$            87,466


$           98,538


 Adjustments to reconcile net income to net cash provided by operating activities: 











        Depreciation and amortization 

50,112


45,634


41,333


95,746


82,467


        Stock-based compensation 

25,621


20,924


11,612


46,545


27,324













        Excess tax benefits from stock-based compensation

(1,635)


(13,414)


(1,838)


(15,049)


(10,850)


        (Gain) loss on investments and disposal of property and equipment, net 

(107)


(97)


(113)


(204)


4


         Provision for doubtful accounts 

(86)


370


132


284


454













                Accounts receivable 

7,803


(1,416)


(7,101)


6,387


456













                Prepaid expenses and other current assets 

4,663


4,309


6,917


8,972


841













                Accounts payable, accrued expenses and other current liabilities 

15,939


(5,798)


2,678


10,141


(5,713)













                Accrued restructuring 

(725)


(2,144)


(32)


(2,869)


(32)


                Deferred revenue 

2,667


1,474


1,271


4,141


(2,182)













                Other noncurrent assets and liabilities  

1,061


(566)


9,068


495


9,052


Net cash provided by operating activities 

149,552


92,503


111,848


242,055


200,359












Cash flows from investing activities: 





















        Cash paid for acquired businesses, net of cash received 

-


(291,638)


(375)


(291,638)


(550)


        Purchases of property and equipment and capitalization of internal-use software costs 

(55,539)


(43,344)


(42,740)


(98,883)


(88,975)


        Proceeds from sales and maturities of short- and long-term marketable securities 

134,171


117,414


263,870


251,585


511,137













        Purchases of short- and long-term marketable securities 

(135,845)


(280,649)


(302,520)


(416,494)


(578,135)


        Proceeds from the sale of property and equipment 

2


10


63


12


88


        Decrease in restricted investments held for security deposits 

-


-


-


-


221

           Net cash used in investing activities 

(57,211)


(498,207)


(81,702)


(555,418)


(156,214)












 Cash flows from financing activities: 











        Proceeds from the issuance of common stock under stock option 











                and employee stock purchase plans 

15,491


7,078


8,163


22,569


12,122


        Excess tax benefits from stock-based compensation 

1,635


13,414


1,838


15,049


10,850













        Taxes paid related to net share settlement of equity awards 

(2,541)


(21,655)


(3,507)


(24,196)


(3,507)


        Repurchase of common stock 

(67,213)


(7,913)


(48,935)


(75,126)


(92,613)


Net cash used in financing activities 

(52,628)


(9,076)


(42,441)


(61,704)


(73,148)













Effects of exchange rate changes on cash and cash equivalents 

(1,441)


307


750


(1,134)


2,766













Net increase (decrease) in cash and cash equivalents 

38,272


(414,473)


(11,545)


(376,201)


(26,237)


Cash and cash equivalents, beginning of period 

144,724


559,197


217,174


559,197


231,866


Cash and cash equivalents, end of period 

$            182,996


$          144,724


$          205,629


$          182,996


$         205,629












 

 






















-------------------------Three Months Ended-------------------------


----------Six Months Ended----------


Jun. 30,


Mar. 31,


Jun. 30,


Jun. 30,


Jun. 30,


2012


2012


2011


2012


2011

Supplemental financial data (in thousands):




















Stock-based compensation:










Cost of revenues 

$                  884


$                 683


$                590


$               1,567


$              1,145

Research and development 

4,901


3,930


2,124


8,831


4,886

Sales and marketing 

10,994


10,134


5,315


21,128


12,161

General and administrative 

8,842


6,177


3,583


15,019


9,132

     Total stock-based compensation 

$             25,621


$            20,924


$           11,612


$             46,545


$            27,324











Depreciation and amortization:










Network-related depreciation

$             37,989


$            34,605


$           31,245


$             72,594


$            61,932

Capitalized stock-based compensation amortization

1,939


1,755


1,938


3,694


4,003

Other depreciation and amortization

4,721


4,507


3,858


9,228


7,963

Amortization of other intangible assets

5,463


4,767


4,292


10,230


8,569

Total depreciation and amortization

$             50,112


$            45,634


$           41,333


$             95,746


$            82,467











Capital expenditures:










Purchases of property and equipment

$             42,188


$            30,433


$           32,925


$             72,621


$            68,525

Capitalized internal-use software

13,351


12,911


9,815


26,262