Le Lézard
Classified in: Science and technology, Business, Covid-19 virus
Subjects: ERN, ERP

AKAMAI REPORTS SECOND QUARTER 2022 FINANCIAL RESULTS


Second quarter revenue of $903 million, up 6% year-over-year and up 9% when adjusted for foreign exchange*

Security and compute revenue represented the majority of total revenue in the second quarter and grew 26% year-over-year and grew 30% when adjusted for foreign exchange*

GAAP EPS of $0.74, down 21% year-over-year and down 15% when adjusted for foreign exchange*, and non-GAAP EPS* of $1.35, down 5% year-over-year and flat when adjusted for foreign exchange*

CAMBRIDGE, Mass., Aug. 9, 2022 /PRNewswire/ -- Akamai Technologies, Inc. (NASDAQ: AKAM), the cloud company that powers and protects life online, today reported financial results for the second quarter ended June 30, 2022.

"Despite a continued challenging macro-economic environment and foreign exchange headwinds, Akamai delivered another quarter of solid results," said Dr. Tom Leighton, Akamai's Chief Executive Officer. "Our performance continued to be led by the strong growth of our security and compute product groups, which increased 26% year-over-year and increased 30% when adjusted for foreign exchange* and represented 54% of total revenue."

Akamai delivered the following financial results for the second quarter ended June 30, 2022:

Revenue: Revenue was $903 million, a 6% increase over second quarter 2021 revenue of $853 million and a 9% increase when adjusted for foreign exchange.*

Revenue by solution:

Revenue by geography:

Income from operations: GAAP income from operations was $175 million, a 12% decrease from second quarter 2021. GAAP operating margin for the second quarter was 19%, down 4 percentage points from the same period last year.

Non-GAAP income from operations* was $262 million, a 3% decrease from second quarter 2021. Non-GAAP operating margin* for the second quarter was 29%, down 3 percentage points compared to the same period last year.

Net income: GAAP net income was $120 million, a 24% decrease from second quarter 2021. Non-GAAP net income* was $216 million, a 7% decrease from second quarter 2021.

EPS: GAAP EPS was $0.74 per diluted share, a 21% decrease from second quarter 2021 and a 15% decrease when adjusted for foreign exchange.* Non-GAAP EPS* was $1.35 per diluted share, a 5% decrease from second quarter 2021 and flat when adjusted for foreign exchange.*

Adjusted EBITDA*: Adjusted EBITDA* was $388 million, a 1% increase from second quarter 2021.

Supplemental cash information: Cash from operations for the second quarter of 2022 was $341 million, or 38% of revenue. Cash, cash equivalents and marketable securities was $1.3 billion as of June 30, 2022.

Share repurchases: Akamai spent $165 million in the second quarter of 2022 to repurchase 1.6 million shares of its common stock at an average price of $100.80 per share. The Company had 159 million shares of common stock outstanding as of June 30, 2022.

*      See Use of Non-GAAP Financial Measures below for definitions

Quarterly Conference Call

Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-833-634-5020 (or 1-412-902-4238 for international calls) and using passcode: Akamai. A live webcast of the call may be accessed at www.akamai.com in the Investor Relations section. In addition, a replay of the call will be available for two weeks following the conference by calling 1-877-344-7529 (or 1-412-317-0088 for international calls) and using passcode: 6965820. The archived webcast of this event may be accessed through the Akamai website.

About Akamai

Akamai powers and protects life online. Leading companies worldwide choose Akamai to build, deliver, and secure their digital experiences ? helping billions of people live, work, and play every day. With the world's most distributed compute platform ? from cloud to edge ? we make it easy for customers to develop and run applications, while we keep experiences closer to users and threats farther away. Learn more about Akamai's security, compute, and delivery solutions at www.akamai.com, blogs.akamai.com, or follow Akamai Technologies on Twitter and LinkedIn.

 

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS 


(in thousands)

June 30,
2022


December 31,
2021

ASSETS




Current assets:




Cash and cash equivalents

$         426,710


$         536,725

Marketable securities

263,979


541,470

Accounts receivable, net

668,425


675,926

Prepaid expenses and other current assets

207,043


166,313

Total current assets

1,566,157


1,920,434

Marketable securities

640,668


1,088,048

Property and equipment, net

1,541,875


1,534,329

Operating lease right-of-use assets

797,313


815,754

Acquired intangible assets, net

476,707


313,225

Goodwill

2,763,828


2,156,254

Deferred income tax assets

292,817


168,342

Other assets

131,689


142,287

Total assets

$     8,211,054


$     8,138,673

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$         131,649


$         109,928

Accrued expenses

306,402


411,590

Deferred revenue

111,771


86,517

Revolving credit facility

75,000


?

Operating lease liabilities

186,945


175,683

Other current liabilities

5,317


6,623

Total current liabilities

817,084


790,341

Deferred revenue

25,448


25,342

Deferred income tax liabilities

39,367


40,974

Convertible senior notes

2,283,037


1,976,167

Operating lease liabilities

679,031


707,087

Other liabilities

86,609


68,748

Total liabilities

3,930,576


3,608,659

Total stockholders' equity

4,280,478


4,530,014

Total liabilities and stockholders' equity

$     8,211,054


$     8,138,673

 

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME



Three Months Ended


Six Months Ended

(in thousands, except per share data)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Revenue

$         903,332


$         903,647


$         852,824


$     1,806,979


$     1,695,532

Costs and operating expenses:










Cost of revenue (1)  (2)

346,649


332,752


320,000


679,401


626,687

Research and development (1)

92,070


99,935


77,255


192,005


159,300

Sales and marketing (1)

126,665


122,719


111,894


249,384


228,248

General and administrative (1) (2)

141,219


153,262


134,295


294,481


271,010

Amortization of acquired intangible assets

16,972


13,644


12,060


30,616


23,487

Restructuring charge (benefit)

4,715


8,016


(2,114)


12,731


5,002

Total costs and operating expenses

728,290


730,328


653,390


1,458,618


1,313,734

Income from operations

175,042


173,319


199,434


348,361


381,798

Interest and marketable securities (loss) income, net

(2,331)


(211)


4,736


(2,542)


9,314

Interest expense

(2,932)


(2,695)


(18,037)


(5,627)


(35,871)

Other income (expense), net

816


(9,565)


(811)


(8,749)


(1,628)

Income before provision for income taxes

170,595


160,848


185,322


331,443


353,613

Provision for income taxes

(51,058)


(34,050)


(18,009)


(85,108)


(29,907)

Loss from equity method investment

?


(7,635)


(10,816)


(7,635)


(11,514)

Net income

$         119,537


$         119,163


$         156,497


$         238,700


$         312,192











Net income per share:










Basic

$               0.75


$               0.74


$               0.96


$               1.49


$               1.91

Diluted

$               0.74


$               0.73


$               0.94


$               1.47


$               1.88











Shares used in per share calculations:










Basic

160,038


160,494


163,074


160,266


163,067

Diluted

161,710


163,637


166,263


162,674


165,976



(1)

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

(2)

Includes depreciation and amortization (see supplemental table for figures)

 

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended


Six Months Ended

(in thousands)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Cash flows from operating activities:










Net income

$         119,537


$         119,163


$         156,497


$         238,700


$         312,192

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










Depreciation and amortization

150,604


142,595


137,715


293,199


269,186

Stock-based compensation

51,882


56,227


50,481


108,109


104,786

(Benefit) provision for deferred income taxes

(29,885)


(13,579)


5,461


(43,464)


7,225

Amortization of debt discount and issuance costs

1,091


1,119


16,460


2,210


32,717

(Gain) loss on investments

(641)


16,536


10,816


15,895


11,514

Other non-cash reconciling items, net

10,045


12,598


1,612


22,643


2,140

Changes in operating assets and liabilities, net of effects of acquisitions:










Accounts receivable

35,251


(39,198)


11,176


(3,947)


(4,404)

Prepaid expenses and other current assets

26,563


(64,695)


24,539


(38,132)


(10,849)

Accounts payable and accrued expenses

6,963


(66,938)


(10,073)


(59,975)


(83,059)

Deferred revenue

(29,216)


55,394


(7,345)


26,178


18,094

Other current liabilities

(4,460)


(1,441)


(15,514)


(5,901)


(16,230)

Other non-current assets and liabilities

3,697


4,670


(3,692)


8,367


(15,386)

Net cash provided by operating activities

341,431


222,451


378,133


563,882


627,926

Cash flows from investing activities:










Cash paid for acquisitions, net of cash acquired

?


(872,099)


?


(872,099)


(15,638)

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

(118,167)


(131,359)


(154,569)


(249,526)


(319,288)

Purchases of short- and long-term marketable securities

?


?


(291,957)


?


(382,236)

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

1,905


691,802


287,297


693,707


521,446

Other, net

1,036


(5,242)


(391)


(4,206)


(212)

Net cash used in investing activities

(115,226)


(316,898)


(159,620)


(432,124)


(195,928)

 

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued



Three Months Ended


Six Months Ended

(in thousands)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Cash flows from financing activities:










Net proceeds from borrowings and repayments under revolving credit facility

?


75,000


?


75,000


?

Proceeds from the issuance of common stock under stock plans

7,204


21,941


9,712


29,145


31,122

Employee taxes paid related to net share settlement of stock-based awards

(8,323)


(54,819)


(12,314)


(63,142)


(76,260)

Repurchases of common stock

(164,789)


(102,853)


(96,175)


(267,642)


(154,416)

Other, net

?


(104)


(67)


(104)


(67)

Net cash used in financing activities

(165,908)


(60,835)


(98,844)


(226,743)


(199,621)

Effects of exchange rate changes on cash, cash equivalents and restricted cash

(13,798)


(1,462)


3,003


(15,260)


(4,148)

Net increase (decrease) in cash, cash equivalents and restricted cash

46,499


(156,744)


122,672


(110,245)


228,229

Cash, cash equivalents and restricted cash at beginning of period

381,007


537,751


459,023


537,751


353,466

Cash, cash equivalents and restricted cash at end of period

$         427,506


$         381,007


$         581,695


$         427,506


$         581,695

 

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL REVENUE DATA ? REVENUE BY SOLUTION (1)



Three Months Ended


Six Months Ended

(in thousands)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Security

$     380,664


$     381,567


$     325,128


$     762,231


$     635,347

Delivery

416,678


444,148


466,739


860,826


940,408

Compute

105,990


77,932


60,957


183,922


119,777

Total revenue

$     903,332


$     903,647


$     852,824


$  1,806,979


$  1,695,532

Revenue growth rates year-over-year:










Security

17 %


23 %


25 %


20 %


27 %

Delivery

(11)


(6)


(4)


(8)


(2)

Compute

74


32


25


54


25

Total revenue

6 %


7 %


7 %


7 %


9 %

Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (2):










Security

21 %


26 %


22 %


23 %


24 %

Delivery

(8)


(4)


(6)


(6)


(4)

Compute

78


35


22


57


22

Total revenue

9 %


9 %


5 %


9 %


7 %

 

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL REVENUE DATA ? REVENUE BY GEOGRAPHY



Three Months Ended


Six Months Ended

(in thousands)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

U.S.

$     477,154


$     481,007


$     449,553


$     958,161


$     912,733

International

426,178


422,640


403,271


848,818


782,799

Total revenue

$     903,332


$     903,647


$     852,824


$  1,806,979


$  1,695,532

Revenue growth rates year-over-year:










U.S.

6 %


4 %


1 %


5 %


5 %

International

6


11


15


8


14

Total revenue

6 %


7 %


7 %


7 %


9 %

Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (2):










U.S.

6 %


4 %


1 %


5 %


5 %

International

13


16


9


15


9

Total revenue

9 %


9 %


5 %


9 %


7 %



(1)

Prior to January 1, 2022, revenue by solution was reported by product group: Security Technology Group and Edge Technology Group. Revenue from security solutions was previously presented as Security Technology Group revenue. Revenue from delivery and compute solutions was previously presented as Edge Technology Group revenue. The periods presented prior to January 1, 2022 have been revised to reflect this new presentation.

(2)

See Use of Non-GAAP Financial Measures below for a definition

 

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL OPERATING EXPENSE DATA



Three Months Ended


Six Months Ended

(in thousands)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

General and administrative expenses:










Payroll and related costs

$        52,974


$        53,317


$        54,974


$      106,291


$      111,424

Stock-based compensation

15,888


17,436


16,123


33,324


32,485

Depreciation and amortization

18,423


19,678


20,489


38,101


41,398

Facilities-related costs

26,820


26,579


24,845


53,399


49,192

Provision for doubtful accounts

529


1,288


971


1,817


711

Acquisition-related costs

2,798


10,616


140


13,414


204

Other expenses

23,787


24,348


16,753


48,135


35,596

Total general and administrative expenses

$      141,219


$      153,262


$      134,295


$      294,481


$      271,010











General and administrative expenses?functional (1):

Global functions

$        50,445


$        56,131


$        53,314


$      106,576


$      109,113

As a percentage of revenue

6 %


6 %


6 %


6 %


6 %

Infrastructure

87,447


85,199


79,878


172,646


160,987

As a percentage of revenue

10 %


9 %


9 %


10 %


9 %

Other

3,327


11,932


1,103


15,259


910

Total general and administrative expenses

$      141,219


$      153,262


$      134,295


$      294,481


$      271,010

As a percentage of revenue

16 %


17 %


16 %


16 %


16 %











Stock-based compensation:










Cost of revenue

$          7,134


$          6,233


$          6,874


$        13,367


$        13,970

Research and development

17,408


20,232


15,937


37,640


34,306

Sales and marketing

11,452


12,326


11,547


23,778


24,025

General and administrative

15,888


17,436


16,123


33,324


32,485

Total stock-based compensation

$        51,882


$        56,227


$        50,481


$      108,109


$      104,786



(1)

Global functions expense includes payroll, stock-based compensation and other employee-related costs for administrative functions, including finance, purchasing, order entry, human resources, legal, information technology and executive personnel, as well as third-party professional service fees. Infrastructure expense includes payroll, stock-based compensation and other employee-related costs for our network infrastructure functions, as well as facility rent expense, depreciation and amortization of facility and IT-related assets, software and software-related costs, business insurance and taxes. Our network infrastructure function is responsible for network planning, sourcing, architecture evaluation and platform security. Other expense includes acquisition-related costs and provision for doubtful accounts.

 

AKAMAI TECHNOLOGIES, INC.
OTHER SUPPLEMENTAL DATA



Three Months Ended


Six Months Ended

(in thousands, except end of period statistics)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Depreciation and amortization:










Network-related depreciation

$           66,724


$           61,386


$           55,601


$         128,110


$         107,497

Capitalized internal-use software development amortization

41,177


40,650


40,426


81,827


79,649

Other depreciation and amortization

17,914


19,152


19,833


37,066


40,198

Depreciation of property and equipment

125,815


121,188


115,860


247,003


227,344

Capitalized stock-based compensation amortization (1)

7,703


7,648


8,916


15,351


16,609

Capitalized interest expense

amortization (1)

114


115


879


229


1,746

Amortization of acquired intangible assets

16,972


13,644


12,060


30,616


23,487

Total depreciation and amortization

$         150,604


$         142,595


$         137,715


$         293,199


$         269,186











Capital expenditures, excluding stock-based compensation and interest expense (2) (3):










Purchases of property and equipment

$           56,743


$           63,225


$           81,655


$         119,968


$         176,653

Capitalized internal-use software development costs

47,083


53,190


56,574


100,273


111,639

Total capital expenditures, excluding stock-based compensation and interest expense

$         103,826


$         116,415


$         138,229


$         220,241


$         288,292











End of period statistics:










Number of employees

9,270


9,180


8,275







(1)

Amortization of capitalized stock-based compensation and interest expense in this table excludes amortization of capitalized stock-based compensation and interest expense capitalized as part of the implementation of cloud-computing arrangements and contract fulfillment costs. However, the amounts are included in our total amortization of capitalized stock-based compensation and interest expense that is excluded from our non-GAAP measures (see reconciliations of GAAP to non-GAAP measures).

(2)

Capital expenditures presented in this table are reported on an accrual basis, which differs from the cash-basis presentation in the statements of cash flows. The primary difference between the two is the change in purchases of property and equipment and capitalization of internal-use software development costs accrued for, but not paid, at period end.

(3)

See Use of Non-GAAP Financial Measures below for a definition

 

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS AND NET INCOME



Three Months Ended


Six Months Ended

(in thousands)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Income from operations

$      175,042


$      173,319


$      199,434


$      348,361


$      381,798

GAAP operating margin

19 %


19 %


23 %


19 %


23 %

Amortization of acquired intangible assets

16,972


13,644


12,060


30,616


23,487

Stock-based compensation

51,882


56,227


50,481


108,109


104,786

Amortization of capitalized stock-based compensation and capitalized interest expense

8,068


7,947


9,840


16,015


18,438

Restructuring charge (benefit)

4,715


8,016


(2,114)


12,731


5,002

Acquisition-related costs

5,771


10,943


140


16,714


204

Operating adjustments

87,408


96,777


70,407


184,185


151,917

Non-GAAP income from operations

$      262,450


$      270,096


$      269,841


$      532,546


$      533,715

Non-GAAP operating margin

29 %


30 %


32 %


29 %


31 %











Net income

$      119,537


$      119,163


$      156,497


$      238,700


$      312,192

Operating adjustments (from above)

87,408


96,777


70,407


184,185


151,917

Amortization of debt discount and issuance costs

1,091


1,119


16,460


2,210


32,717

(Gain) loss on investments

(641)


8,901


?


8,260


?

Loss from equity method investment

?


7,635


10,816


7,635


11,514

Income tax-effect of above non-GAAP adjustments and certain discrete tax items

9,049


(8,800)


(21,428)


249


(47,774)

Non-GAAP net income

$      216,444


$      224,795


$      232,752


$      441,239


$      460,566

 

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED SHARE



Three Months Ended


Six Months Ended

(in thousands)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

GAAP net income per diluted share

$             0.74


$             0.73


$             0.94


$             1.47


$             1.88

Adjustments to net income:










Amortization of acquired intangible assets

0.10


0.08


0.07


0.19


0.14

Stock-based compensation

0.32


0.34


0.30


0.66


0.63

Amortization of capitalized stock-based compensation and capitalized interest expense

0.05


0.05


0.06


0.10


0.11

Restructuring charge (benefit)

0.03


0.05


(0.01)


0.08


0.03

Acquisition-related costs

0.04


0.07


?


0.10


?

Amortization of debt discount and issuance costs

0.01


0.01


0.10


0.01


0.20

(Gain) loss on investments

?


0.05


?


0.05


?

Loss from equity method investment

?


0.05


0.07


0.05


0.07

Income tax effect of above non-GAAP adjustments and certain discrete tax items

0.06


(0.05)


(0.13)


?


(0.29)

Adjustment for shares (1)

0.01


0.02


0.02


0.03


0.03

Non-GAAP net income per diluted share

$             1.35


$             1.39


$             1.42


$             2.74


$             2.80











Shares used in GAAP per diluted share calculations

161,710


163,637


166,263


162,674


165,976

Impact of benefit from note hedge transactions (1)

(1,057)


(1,822)


(1,782)


(1,440)


(1,369)

Shares used in non-GAAP per diluted share calculations (1)

160,653


161,815


164,481


161,234


164,607



(1)

Shares used in non-GAAP per diluted share calculations have been adjusted for the periods presented for the benefit of Akamai's note hedge transactions. During the periods presented Akamai's average stock price was in excess of $95.10, which is the initial conversion price of Akamai's convertible senior notes due in 2025. See Use of Non-GAAP Financial Measures below for further definition.

 

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA



Three Months Ended


Six Months Ended

(in thousands)

June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Net income

$      119,537


$      119,163


$      156,497


$      238,700


$      312,192

Net income margin

13 %


13 %


18 %


13 %


18 %

Interest and marketable securities loss (income), net

2,331


211


(4,736)


2,542


(9,314)

Provision for income taxes

51,058


34,050


18,009


85,108


29,907

Depreciation and amortization

125,815


121,188


115,860


247,003


227,344

Amortization of capitalized stock-based compensation and capitalized interest expense

8,068


7,947


9,840


16,015


18,438

Amortization of acquired intangible assets

16,972


13,644


12,060


30,616


23,487

Stock-based compensation

51,882


56,227


50,481


108,109


104,786

Restructuring charge (benefit)

4,715


8,016


(2,114)


12,731


5,002

Acquisition-related costs

5,771


10,943


140


16,714


204

Interest expense

2,932


2,695


18,037


5,627


35,871

(Gain) loss on investments

(641)


8,901


?


8,260


?

Loss from equity method investment

?


7,635


10,816


7,635


11,514

Other (income) expense, net

(175)


664


811


489


1,628

Adjusted EBITDA

$      388,265


$      391,284


$      385,701


$      779,549


$      761,059

Adjusted EBITDA margin

43 %


43 %


45 %


43 %


45 %

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 provides additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes, to measure executive compensation and to evaluate Akamai's financial performance. These non-GAAP financial measures are non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, capital expenditures and impact of foreign currency exchange rates, as discussed below.

Management believes that these non-GAAP financial measures reflect Akamai's ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparison of financial results across accounting periods and to those of our peer companies. Management also believes that these non-GAAP financial measures enable investors to evaluate Akamai's operating results and future prospects in the same manner as management. These non-GAAP financial measures may exclude expenses and gains that may be unusual in nature, infrequent or not reflective of Akamai's ongoing operating results.

The non-GAAP financial measures do not replace the presentation of Akamai's GAAP financial results and should only be used as a supplement to, not as a substitute for, Akamai's financial results presented in accordance with GAAP. Akamai has provided a reconciliation of each non-GAAP financial measure used in its financial reporting and investor presentations to the most directly comparable GAAP financial measure. This reconciliation captioned "Reconciliation of GAAP to Non-GAAP Financial Measures" can be found on the Investor Relations section of Akamai's website.

The non-GAAP adjustments, and Akamai's basis for excluding them from non-GAAP financial measures, are outlined below:

Akamai's definitions of its non-GAAP financial measures are outlined below:

Non-GAAP income from operations ? GAAP income from operations adjusted for the following items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; amortization of capitalized interest expense; acquisition-related costs; restructuring charges; and other non-recurring or unusual items that may arise from time to time. 

Non-GAAP operating margin ? Non-GAAP income from operations stated as a percentage of revenue.

Non-GAAP net income ? GAAP net income adjusted for the following tax-affected items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; amortization of debt discount and issuance costs; amortization of capitalized interest expense; certain gains and losses on investments; income and losses from equity method investment; and other non-recurring or unusual items that may arise from time to time. 

Non-GAAP net income per diluted share ?  Non-GAAP net income divided by weighted average diluted common shares outstanding. Diluted weighted average shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to Akamai pursuant to the note hedge transactions entered into in connection with the issuances of $1,150 million of convertible senior notes due 2027 and 2025, respectively. Under GAAP, shares delivered under hedge transactions are not considered offsetting shares in the fully-diluted share calculation until they are delivered. However, the Company would receive a benefit from the note hedge transactions and would not allow the dilution to occur, so management believes that adjusting for this benefit provides a meaningful view of operating performance. With respect to the convertible senior notes due in each of 2027 and 2025, unless Akamai's weighted average stock price is greater than $116.18 and $95.10, respectively, the initial conversion price, there will be no difference between GAAP and non-GAAP diluted weighted average common shares outstanding.

Adjusted EBITDA ? GAAP net income excluding the following items: interest income; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; foreign exchange gains and losses; interest expense; amortization of capitalized interest expense; certain gains and losses on investments; income and losses on equity method investment; and other non-recurring or unusual items that may arise from time to time.

Adjusted EBITDA margin ? Adjusted EBITDA stated as a percentage of revenue.

Capital expenditures, or capex, excluding stock-based compensation and interest expense ? Purchases of property and equipment and capitalization of internal-use software development costs presented on an accrual basis, which differs from the cash-basis presentation included in the statements of cash flows. The primary difference between the two is the change in purchases of property and equipment and capitalization of internal-use software development costs accrued for, but not paid, at period end versus prior periods.

Impact of foreign currency exchange rate ? Revenue and earnings from international operations have historically been an important contributor to Akamai's financial results. Consequently, Akamai's financial results have been impacted, and management expects they will continue to be impacted, by fluctuations in foreign currency exchange rates. For example, when the local currencies of our foreign subsidiaries weaken, our consolidated results stated in U.S. dollars are negatively impacted.

Because exchange rates are a meaningful factor in understanding period-to-period comparisons, management believes the presentation of the impact of foreign currency exchange rates on revenue and earnings enhances the understanding of our financial results and evaluation of performance in comparison to prior periods. The dollar impact of changes in foreign currency exchange rates presented is calculated by translating current period results using monthly average foreign currency exchange rates from the comparative period and comparing them to the reported amount. The percentage change at constant currency presented is calculated by comparing the prior period amounts as reported and the current period amounts translated using the same monthly average foreign currency exchange rates from the comparative period.

Akamai Statement Under the Private Securities Litigation Reform Act

This release and/or our quarterly earnings conference call scheduled for later today contain statements that are not statements of historical fact and constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about expected future financial performance, expectations, plans and prospects of Akamai. 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, inability to continue to generate cash at the same level as prior years; failure of our investments in innovation to generate solutions that are accepted in the market; 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; effects of competition, including pricing pressure and changing business models; impact of macro-economic trends, including economic uncertainty, the effects of inflation, increasing interest rates, foreign currency exchange rate fluctuations, securities market volatility and monetary supply fluctuations; conditions and uncertainties in the geopolitical environment, including sanctions and disruptions resulting from the ongoing war in Ukraine; continuing supply chain and logistics costs, constraints, changes or disruptions; defects or disruptions in our products or IT systems, including cyber-attacks, data breaches or malware; failure to realize the expected benefits of any of our acquisitions or reorganizations; changes to economic, political and regulatory conditions in the United States and internationally; our ability to attract and retain key personnel; impact of the ongoing COVID-19 pandemic; 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 our 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 and on our quarterly earnings conference call 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.

Contacts:

Gina Sorice


Tom Barth

Media Relations


Investor Relations

Akamai Technologies


Akamai Technologies

646-320-4107


617-274-7130

gsorice@akamai.com


tbarth@akamai.com

 

 

 

SOURCE Akamai Technologies, Inc.


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