Akamai Reports First Quarter 2001 Results.CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 18, 2001 -- First quarter revenue of $40.2 million, up over 450% from same period last year -- EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become loss narrows to $36.5 million from $45.1 million in previous quarter -- Capital expenditures decline to $24.5 million from $35.2 million in previous quarter -- Network grows to over 9,700 servers inside more than 650 networks in 56 countries Akamai Technologies Akamai Technologies, Inc. (NASDAQ: AKAM) is a company that provides a distributed computing platform for global Internet content and application delivery, headquartered in Cambridge, Massachusetts. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : AKAM AKAM Akamai Technologies, Inc. (stock abbreviation) AKAM Automated Key Access Machine ), the leading Content Delivery Service Provider (CDSP (Content Delivery Service Provider) A global network that provides faster delivery of Web pages over the Internet. Using servers stationed around the world with duplicate content, the server closest to the user's request is the one that responds. ), today reported financial results for the first quarter ended March 31, 2001. Revenue for the quarter was $40.2 million, compared to revenue of $37.2 million for the previous quarter, and represents a 456.8% increase compared to revenue of $7.2 million for the first quarter of 2000. "Akamai continued to grow in a challenging environment while simultaneously reducing spending," said George Conrades, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Akamai. "Our EBITDA loss narrowed this quarter, and we expect it to continue to decline throughout the year. By continuing to grow revenues and achieving significant efficiencies with an emphasis on cost control, we expect to reach EBITDA break-even in the second quarter of next year - a key milestone of our fully funded business plan." First quarter earnings before interest, taxes, depreciation, amortization, equity related compensation, and other non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. (EBITDA) was a loss of $36.5 million, lower than the fourth quarter EBITDA loss of $45.1 million. Normalized net loss for first quarter 2001, before equity related non-cash compensation charges, amortization, and other non-cash charges, totaled $52.5 million, or $0.53 per share, compared to First Call's consensus summary net loss of $0.55 per share. Fourth quarter 2000 normalized net loss was $56.2 million, or $0.59 per share. First Quarter 2001 In Review: Customers. Akamai's customer base under recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. contracts grew to 1,473 compared to 1,337 recurring contract customers at the end of the fourth quarter 2000. "Our customer base expanded despite the general weakness in the economy and continued fallout fallout, minute particles of radioactive material produced by nuclear explosions (see atomic bomb; hydrogen bomb; Chernobyl) or by discharge from nuclear-power or atomic installations and scattered throughout the earth's atmosphere by winds and convection currents. among dot-com (1) Refers to the period (dot) followed by the abbreviation of the commercial domain (.com) at the end of an Internet address. Since the .com domain is so widely used, the Internet became known as the "dot-com" world, and dot-com companies are those formed to offer services or customers," Conrades said. Customer additions included strong sales of Akamai's new flagship EdgeSuite(SM) service, which ended the quarter with 17 customers. "EdgeSuite provides compelling return on investment (ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot). ) benefits for enterprise customers and is extremely attractive in this time of smarter information technology spending," Conrades explained. EdgeSuite offers a complete set of integrated services In computer networking, IntServ or integrated services is an architecture that specifies the elements to guarantee quality of service (QoS) on networks. IntServ can for example be used to allow video and sound to reach the receiver without interruption. that enables the generation and delivery of Websites - including static and dynamic content, embedded Inserted into. See embedded system. objects, streaming media See streaming audio, streaming video and digital media hub. , and HTML HTML in full HyperText Markup Language Markup language derived from SGML that is used to prepare hypertext documents. Relatively easy for nonprogrammers to master, HTML is the language used for documents on the World Wide Web. - from Akamai's network of servers deployed at the edges of the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . Akamai added several new reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. partners during the quarter, including Broadwing and SiteSmith, a subsidiary of Metromedia Fiber Network, Inc. Some channel partners became EdgeSuite resellers, including Broadwing and Internap. Akamai's indirect channels contributed 17% of first quarter revenue. Akamai and SOFTBANK Broadmedia Corporation, a subsidiary of SOFTBANK Group, announced the creation of a Japan-based joint venture, Akamai Technologies Japan KK, which will be the exclusive entity that sells, distributes, markets, resells and supports Akamai's Internet content delivery services See CDN. in the Japanese market. Network. Akamai extended its globally distributed network to include 9,743 servers, up from 8,004 in the fourth quarter. Akamai's servers are now deployed within more than 650 networks in 56 countries including Internet backbone (communications, networking) Internet backbone - High-speed networks that carry Internet traffic. These communications networks are provided by companies such as AT&T, GTE, IBM, MCI, Netcom, Sprint, UUNET and consist of high-speed links in the T1, T3, OC1 and OC3 ranges. providers, ISPs, cable providers, DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary providers, and satellite facilities. "Our low capital expense server network, combined with our innovative technology, provides our customers with an efficient, effective outsourced service and unprecedented global scalability for their Web operations Web operations is a domain of expertise within IT systems management that involves the deployment, operation, maintenance, tuning, and repair of web-based applications. With the rise of web technologies since mid-1995, specialists have emerged that understand the complexities of ," Conrades said. Technology. Akamai extended its EdgeAdvantage(SM) platform with several key technology milestones in the quarter, including commercial availability and acceptance of Akamai's EdgeSuite service, and introduction of EdgeScape(SM) Pro, through which Akamai continued its success in licensing software technology to partners. "We saw a year of technology development bear fruit with the early success of our EdgeSuite rollout," Conrades said. "Also of note, we began to license selected technology last year and will continue to do so, because it proliferates our technology in our partners' offerings while bringing us an additional source of revenue." Financials. "Our strong balance sheet has advanced our competitive position, and it is great to be past our startup losses and to have a fully funded business plan," said CFO See Chief Financial Officer. Timothy Weller Wel·ler , Thomas Huckle Born 1915. American microbiologist. He shared a 1954 Nobel Prize for work on the cultivation of the polio virus. . "Combining our revenue growth with limiting our losses and capital expenditures, we arrive at a plan that's fully funded, even without utilizing our signed commitments for $25 million of vendor financing Vendor Financing The lending of money by a company to one of its customers so that the customer can buy products from it. By doing this, the company increases its sales even though it is basically buying its own products. . Consequently, we have no immediate plans to raise capital beyond working to secure additional commitments for vendor financing." In the supplemental financial data, the Company has revised the presentation of EBITDA and normalized net loss to remove the non-cash amortization of CNN CNN or Cable News Network Subsidiary company of Turner Broadcasting Systems. It was created by Ted Turner in 1980 to present 24-hour live news broadcasts, using satellites to transmit reports from news bureaus around the world. advertising. Revised and historical data is provided for comparison. The change is intended to make EBITDA more accurately reflect the operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of the Company. At March 31, 2001, the company had approximately $313.1 million of cash, cash equivalents, and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has as compared to $386.9 million at December 31, 2000. Capital expenditures, principally made in connection with network deployment, facilities and information systems, for the quarter were $24.5 million, down from $35.2 million in the previous quarter. The Company also recorded a write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of $1,925 million in connection with a review of the fair value of goodwill acquired in the purchase of INTERVU Inc. and Network24 Communications, and equity investments. At March 31, 2001, the Company had 109.2 million shares of common stock outstanding. At March 31, 2001, common stock outstanding and unexercised stock options and warrants totaled 127.4 million shares. Quarterly Conference Call Akamai will host a conference call to discuss first quarter 2001 results today at 4:30 PM Eastern Time. A live Webcast of Akamai's conference call can be accessed at www.akamai.com. In addition, a replay of the call will be available for 48 hours following the conference call and can be accessed through the Akamai Website or by calling 800-642-1687 (or 1+ 706-645-9291 for international calls) and using conference ID No. 505981. About Akamai Akamai is the leading Content Delivery Service Provider, serving thousands of customers worldwide. Akamai has the broadest deployment of servers for content, streaming media, and applications delivery with more than 9,700 servers in 56 countries directly connected within over 650 different telecommunications networks A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. . Akamai Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and The release contains information about future expectations, plans and prospects of Akamai's management that constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. for purposes of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions under The Private Securities Litigation Reform Act of 1995. 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, general economic conditions, inability to collect amounts owed to Akamai by customers, any material, unexpected increases in Akamai's use of funds, the dependence on Akamai's Internet content delivery service, lack of market acceptance of new services, a failure of Akamai's network infrastructure, and other factors that are discussed in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other documents periodically filed with the SEC. Copyright (c) 2001 Akamai Technologies, Inc. All Rights Reserved. Akamai, EdgeSuite, FreeFlow, Delivering a Better Internet, EdgeAdvantage, and the blue multi-wave logo are all trademarks or registered trademarks of Akamai Technologies. All other company and product names referenced herein are the trademarks or registered trademarks of their respective holders.
Akamai Technologies, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, 2001 December 31, 2000
----------------- -----------------
Assets
Current assets:
Cash, cash equivalents and
short-term marketable securities $ 313,114 $ 309,652
Accounts receivable, net 23,865 22,670
Prepaid expenses and
other current assets 23,050 23,022
----------------- -----------------
Total current assets 360,029 355,344
Property and equipment, net 151,089 143,041
Goodwill and other
intangible assets, net 35,904 2,186,157
Marketable securities -- 77,282
Other assets 29,631 28,953
----------------- -----------------
Total assets $ 576,653 $2,790,777
================= =================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued
expenses $ 72,431 $ 79,481
Other current liabilities 7,164 5,467
----------------- -----------------
Total current liabilities 79,595 84,948
Long-term liabilities 301,497 301,430
----------------- -----------------
Total liabilities 381,092 386,378
Stockholders' equity 195,561 2,404,399
Total liabilities and
----------------- -----------------
stockholders' equity $ 576,653 $2,790,777
================= =================
Akamai Technologies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
For the For the For the For the For the
three three three three three
months months months months months
ended ended ended ended ended
March December September June March
31, 2001 31, 2000 30, 2000 30, 2000 31, 2000
----------- --------- --------- --------- ---------
Revenue $ 40,209 $ 37,244 $ 27,156 $ 18,144 $ 7,222
Cost of
revenue
(before
network-
related
depreciation) 16,160 16,264 12,056 8,631 5,030
----------- --------- --------- --------- ---------
Gross Profit 24,049 20,980 15,100 9,513 2,192
Gross
Margin % 59.8% 56.3% 55.6% 52.4% 30.4%
Operating
Expenses:
Engineering
and
development 18,632 17,408 18,352 12,868 6,915
Sales,
general and
administrative 42,276 51,307 44,863 36,436 20,005
Depreciation
(network-
related
and other) 16,452 14,006 11,211 7,305 3,063
Amortization of
goodwill and
other
intangible
assets 238,938 239,329 238,700 190,452 9,000
Equity related
compensation 4,514 4,884 9,653 9,421 2,189
Impairment of
goodwill 1,912,840 -- -- -- --
----------- --------- --------- --------- ---------
Total operating
expenses 2,233,652 326,934 322,779 256,482 41,172
----------- --------- --------- --------- ---------
Operating loss (2,209,603) (305,954) (307,679) (246,969) (38,980)
Interest
income,
net 581 2,932 3,624 3,803 3,625
Income (loss)
from
equity-method
investments (1,847) -- -- -- --
Loss on
investments (11,747) -- -- -- --
----------- --------- --------- --------- ---------
Loss before
provision
for income
taxes (2,222,616) (303,022) (304,055) (243,166) (35,355)
Provision for
income taxes 164 55 20 70 42
----------- --------- --------- --------- ---------
Net loss $(2,222,780) $(303,077) $(304,075) $(243,236) $(35,397)
=========== ========== ========== ========== =========
Basic and
diluted net
loss per
share $ (22.50) $ (3.16) $ (3.27) $ (2.78) $ (0.47)
Weighted
average
common
shares
outstanding 98,780 95,970 93,099 87,374 75,029
Supplemental Financial Data (dollars and shares in thousands):
Normalized
net loss
(revised) (1) $ (52,503) $ (56,236) $ (51,977) $ (42,579) $ (24,208)
Normalized
basic and
diluted
net loss
per share
(revised) $ (0.53) $ (0.59) $ (0.56) $ (0.49) $ (0.32)
Normalized
net loss
(historical)
(2) $ (52,894) $ (58,864) $ (55,722) $ (43,363) $ (24,208)
Normalized
basic and
diluted net
loss per
share
(historical) $ (0.54) $ (0.61) $ (0.60) $ (0.50) $ (0.32)
EBITDA
(revised)
(3) $ (36,468) $ (45,107) $ (44,370) $ (39,007) $ (24,728)
EBITDA
(historical)
(4) $ (36,859) $ (47,735) $ (48,115) $ (39,791) $ (24,728)
Network-
related
depreciation $ 9,312 $ 7,773 $ 6,126 $ 4,016 $ 1,606
Other
depreciation $ 7,140 $ 6,233 $ 5,085 $ 3,289 $ 1,457
Capital
expenditures $ 24,494 $ 35,201 $ 40,457 $ 33,537 $ 22,665
End of period
statistics:
Number of
customers
under
recurring
contract 1,473 1,337 1,115 895 418
Number of
customers,
total 3,389 3,675 2,872 2,100 425
Number of
employees 1,299 1,299 1,229 1,063 517
Number of
servers 9,743 8,004 6,060 4,250 2,800
Common stock
outstanding 109,215 108,203 107,298 105,873 93,800
Common stock
outstanding
and
unexercised
options and
warrants 127,372 125,413 125,292 123,187 109,896
(1) Normalized net loss (revised) is loss before amortization
(including CNN advertising), equity related compensation, loss on
investments and impairment of goodwill
(2) Normalized net loss (historical) is loss before amortization
(excluding CNN advertising), equity related compensation, loss on
investments and impairment of goodwill
(3) EBITDA (revised) is earnings (loss) before interest, taxes,
depreciation, amortization (including CNN advertising), equity related
compensation, loss on investments and impairment of goodwill
(4) EBITDA (historical) is earnings (loss) before interest, taxes,
depreciation, amortization (excluding CNN advertising), equity related
compensation, loss on investments and impairment of goodwill
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