Akamai Reports First Quarter 2002 Results.Business/Technology Editors CAMBRIDGE Cambridge, city, Canada Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. , Mass.--(BUSINESS WIRE)--April 18, 2002 --First quarter revenue of $37.9 million --Total EdgeSuite(SM) customers increased to 185 --First quarter 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 $5.8 million --First quarter normalized net loss is $0.27 per share, compared to First Call's consensus summary net loss of $0.32 per share 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 ), a leading provider of secure, outsourced e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. infrastructure services and software, today reported financial results for the first quarter ended March 31, 2002. Revenue for the first quarter 2002 was $37.9 million. "Our first quarter of 2002 was marked by positive but modest growth," said George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). 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 (Akamai Technologies, Inc., Cambridge, MA, www.akamai.com) A company that provides Internet content delivery with guaranteed performance using its own worldwide network. Founded in 1998 by a group of MIT scientists and Internet professionals, Akamai licensed routing algorithms developed . "We continued to significantly improve our customer quality and sales of our higher margin EdgeSuite service, while improving the bottom line. This reflects our focus on profitability while maintaining a healthy balance sheet as we drive toward our goal of becoming free cash flow positive in 2003." Net loss for the first quarter 2002 before interest, taxes, depreciation, amortization and other one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. and 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 $5.8 million, lower than the fourth quarter 2001 EBITDA loss of $14.3 million, and down about 84% from the first quarter 2001 EBITDA loss of $36.5 million. EBITDA (earnings before interest, taxes, depreciation, amortization and other one-time and non-cash charges) is calculated as gross profit less research and development expenses, sales and marketing expenses and general and administrative expenses. Normalized net loss for first quarter 2002 totaled $29.5 million, or $0.27 per share, compared to First Call's consensus summary net loss of $0.32 per share. Normalized net loss is calculated as EBITDA less net interest expense, provision for income taxes and depreciation. Fourth quarter 2001 normalized net loss was $37.8 million, or $0.35 per share, and first quarter 2001 normalized net loss was $52.5 million, or $0.53 per share. Net loss, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , for first quarter 2002 was $59.1 million, or $0.54 per share, compared to a net loss in accordance with GAAP for the fourth quarter 2001 of $64.8 million, or $0.60 per share, and for the first quarter 2001 a loss of $2,222.8 million, or $22.50 per share. First Quarter 2002 Highlights: Customers At the end of the first quarter of 2002, Akamai had 185 EdgeSuite customers 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. contract, compared to 152 at the end of the previous quarter. New EdgeSuite customers in the first quarter included DaimlerChrysler, Edmunds Edmunds is a surname, and may refer to
adj. 1. Almost exact or correct: the approximate time of the accident. 2. 25% of first quarter revenue, consistent with levels from the fourth quarter of last year. "We saw continued market acceptance of our EdgeSuite offering in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a difficult IT spending environment," said Conrades. "Revenue from EdgeSuite, our primary growth driver, was 27% of total revenue for the quarter, up from 20% in the fourth quarter. This is a 35% sequential One after the other in some consecutive order such as by name or number. increase quarter over quarter." The combination of Akamai's wholly owned European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations plus the Akamai Technologies Japan K.K. joint venture contributed approximately 13% of revenue in the first quarter of 2002, compared to 12% in the prior quarter. Network In the first quarter, Akamai continued to extend its deployment in 66 countries into a total of 1,047 networks, up from 1,036 networks at the end of the prior quarter. Akamai now has 12,674 servers deployed versus 13,522 servers at the end of the prior quarter. Quarterly server deployment contracted slightly principally as Akamai removed servers from several bankrupt BANKRUPT. A person who has done, or suffered some act to be done, which is by law declared an act of bankruptcy; in such case he may be declared a bankrupt. 2. It is proper to notice that there is much difference between a bankrupt and an insolvent. ISPs, completed consolidation of some network assets, and replaced selected servers with more powerful models. Technology During the first quarter of 2002, Akamai furthered its evolution from Edge Delivery to Edge Computing Edge computing provides application processing load balancing capacity to corporate and other large-scale web servers. It is like an application cache, where the cache is in the Internet itself. with the addition of new functionality to EdgeSuite, including: --EdgeSuite Edge Processing - extends and accelerates an enterprise's e-business applications by performing authorization The right or permission to use a system resource; the process of granting access. See access control. , assembly, and transformation processing at optimal locations within the global Akamai platform; --Akamai SureRoute(SM) - advanced technology that determines the optimal route between the customer's origin servers and the edge 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 to optimize optimize - optimisation delivery for all types of content, including dynamic, uncacheable content; --EdgeSuite Site Shield(SM) - an industry-leading solution for protecting a Web site from the wide range of threats on the public Internet; and, --Last Mile Compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. - enables accelerated delivery of HTML/text content to end-users resulting in faster downloads with no hardware or software installation or maintenance required. Financials "Our 2002 first quarter operating results, strong customer collections with 45 days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). , and the real estate settlement with our Cambridge landlord, all strengthened our cash outlook," said Timothy Timothy, epistles in the New Testament Timothy, two letters of the New Testament. With Titus they comprise the Pastoral Epistles, in which St. Paul addresses his coworkers as the guardians and transmitters of his teaching. Weller Wel·ler , Thomas Huckle Born 1915. American microbiologist. He shared a 1954 Nobel Prize for work on the cultivation of the polio virus. , chief financial officer at Akamai. "Not only did we end the first quarter with over $170 million of cash and 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 , we took major steps to cut our future burn rate, ensuring that our fully-funded business plan remains stronger than ever." In the first quarter 2002, Akamai reached an agreement to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. the Company's leases with MIT MIT - Massachusetts Institute of Technology at 500 and 600 Technology Square in Cambridge for an upfront payment of $15 million, thus reducing Akamai's 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. capital lease agreements by over $100 million. The Company expects to achieve $8-10 million of annual cash savings from this transaction. At March 31, 2002, the Company had approximately $171.7 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 marketable securities as compared to $210.5 million at December December: see month. 31, 2001. Capital expenditures, principally made in connection with network deployment, facilities and information systems, for the quarter were $2.8 million. At March 31, 2002, the Company had 115.7 million shares of common stock outstanding. At March 31, 2002, common stock outstanding and unexercised stock options and warrants totaled 130.6 million shares. Quarterly Conference Call Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 800-274-4379 (or 1+ 706-645-9202 for international calls). A live Webcast of the call can be accessed at www.akamai.com. In addition, a replay of the call will be available for one week following the conference through the Akamai Website or by calling 800-642-1687 (or 1+ 706-645-9291 for international calls) and using conference ID No. 3728348. About Akamai Akamai is a leading provider of secure, outsourced e-business infrastructure services and software. These services and software enable companies to reduce the complexity and cost of deploying and operating a uniform Web infrastructure while ensuring unmatched performance, reliability, scalability How much a system can be expanded. See scalable. scalability - How well a solution to some problem will work when the size of the problem increases. For example, a central server of some kind with ten clients may perform adequately but with a thousand clients it and manageability man·age·a·ble adj. That can be managed or controlled: manageable problems. man . Akamai's services give businesses a distinct competitive advantage and provide an unparalleled Internet experience for their customers. Akamai's intelligent edge platform for content, streaming media See streaming audio, streaming video and digital media hub. , and application delivery comprises more than 12,600 servers within over 1,000 networks in 66 countries. With headquarters in Cambridge, Massachusetts This article is about the city of Cambridge in Massachusetts. For the English university town, see Cambridge, England. For other places, see Cambridge (disambiguation). Cambridge, Massachusetts is a city in the Greater Boston area of Massachusetts, United States. , Akamai provides services and industry-renowned customer care to hundreds of enterprises worldwide, including dozens of Fortune 500 businesses. For information on Delivering a Better Internet(SM), visit www.akamai.com. 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, unexpected increases in Akamai's use of funds, the dependence on Akamai's Internet content delivery service, outsourced e-business infrastructure services and other technology products, lack of market acceptance of our services, including EdgeSuite, a failure by us to successfully enter into any license, technology development or other technology partnership agreement within the time periods expected by us or at all, the sometimes lengthy and unpredictable amount of time required to engage a customer, failure to achieve incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue growth through increased sales resources in a timely fashion or at all, the complexity of our services and the networks on which our services are deployed, and human error in operating the same, a failure of Akamai's network infrastructure, failure to lease new space under desirable economic terms, changes in regulations or laws relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc privacy or other aspects of the Internet 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. , quarterly reports on Form 10-Q Form 10-Q See 10-Q. , and other documents periodically filed with the SEC. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any obligation to do so, even if our estimates change. -O-
Akamai Technologies, Inc.
Condensed Consolidated Balance Sheets
(dollar amounts in thousands)
(unaudited)
March 31, 2002 December 31, 2001
-------------- -----------------
Assets
Current assets:
Cash and cash equivalents $ 63,809 $ 78,774
Marketable securities 100,313 113,906
Accounts receivable, net 17,294 20,067
Prepaid expenses and other
current assets 16,542 15,253
------- --------
Total current assets 197,958 228,000
Property and equipment, net 114,717 132,237
Goodwill and other intangible
assets, net 14,104 19,351
Marketable securities 7,603 17,831
Other assets 16,423 24,059
-------- --------
Total assets $350,805 $421,478
========= =========
Liabilities and stockholders' (deficit) equity
Current liabilities:
Accounts payable and
accrued expenses $ 57,096 $ 68,311
Other current liabilities 21,390 22,987
--------- ---------
Total current liabilities 78,486 91,298
Other liabilities 7,200 12,947
Convertible notes 300,000 300,000
--------- ---------
Total liabilities 385,686 404,245
Stockholders' (deficit)
equity (34,881) 17,233
--------- ---------
Total liabilities and
stockholders' (deficit) equity $ 350,805 $ 421,478
========== =========
Akamai Technologies, Inc.
Condensed Consolidated Statements of Operations
(dollar amounts in thousands, except per share data)
(unaudited)
------------------Three Months Ended----------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2002 2001 2001 2001 2001
-------- -------- -------- -------- -----------
Revenue $ 37,927 $ 37,110 $ 42,754 $ 43,141 $ 40,209
Cost of service
(before
network-related
depreciation)(4) 11,242 13,977 15,869 16,439 18,834
-------- -------- -------- -------- -----------
Gross profit 26,685 23,133 26,885 26,702 21,375
-------- -------- -------- -------- -----------
Gross margin % 70.4% 62.3% 62.9% 61.9% 53.2%
Operating
expenses: (4)
Research and
development 4,869 6,575 7,627 9,595 11,284
Sales and
marketing 13,610 13,355 17,432 19,072 23,937
General and
administrative 13,966 17,517 18,396 24,532 22,622
Amortization of
CNN advertising 1,246 1,410 1,818 2,013 391
Amortization
of goodwill
and other
intangible
assets 5,237 4,034 7,440 5,392 238,938
Depreciation 20,010 19,912 19,116 18,340 16,452
Equity-related
compensation 6,371 7,188 8,717 11,038 4,514
Restructuring
charge 12,409 14,302 -- 26,194 --
Impairment of
goodwill -- -- -- -- 1,912,840
-------- -------- -------- -------- -----------
Total operating
expenses 77,718 84,293 80,546 116,176 2,230,978
-------- -------- -------- -------- -----------
Operating loss (51,033) (61,160) (53,661) (89,474) (2,209,603)
Interest income
(expense), net (3,574) (3,336) (2,210) (1,637) 581
Other income -- -- 1,002 -- --
Equity in losses
of affiliate -- -- -- (153) (1,847)
Loss on
investments (4,328) 8 (213) (1,000) (11,747)
-------- -------- -------- -------- -----------
Loss before
provision for
income taxes (58,935) (64,488) (55,082) (92,264) (2,222,616)
Provision for
income taxes 123 277 277 344 164
-------- -------- -------- -------- -----------
Net loss $(59,058) $(64,765) $(55,359) $(92,608) $(2,222,780)
======== ======== ======== ======== ===========
Basic and
diluted net
loss per share $ (0.54) $ (0.60) $ (0.53) $ (0.91) $ (22.50)
Weighted average
common shares
outstanding 109,693 108,357 104,166 101,629 98,780
Supplemental
financial data
(dollars and
shares in
thousands):
Normalized
net loss (1) $(29,467) $(37,839) $(38,173) $(46,818) $ (52,503)
Normalized basic
and diluted net
loss per share $ (0.27) $ (0.35) $ (0.37) $ (0.46) $ (0.53)
EBITDA (2) $ (5,760) $(14,314) $(16,570) $(26,497) $ (36,468)
Recurring free
cash flow (3) $(12,121) $(24,818) $(33,523) $(46,379) $ (60,381)
Network-related
depreciation $ 11,807 $ 12,098 $ 10,991 $ 10,276 $ 9,312
Other
depreciation $ 8,203 $ 7,814 $ 8,125 $ 8,064 $ 7,140
Capital
expenditures $ 2,787 $ 7,168 $ 14,743 $ 18,245 $ 24,494
End of period
statistics:
EdgeSuite
customers 185 152 100 51 16
Number of
customers
under
recurring
contract 1,055 1,078 1,096 1,208 1,377
Number of
employees 822 841 1,111 1,129 1,299
Number of
servers 12,674 13,522 13,036 11,689 9,743
Common stock
outstanding 115,723 115,099 115,281 115,071 109,215
Common stock
outstanding
and
unexercised
options
and warrants 130,594 128,926 126,090 125,470 127,372
End of period
ratios:
Annualized
average revenue
per employee $ 182.5 $ 152.1 $ 152.7 $ 142.1 $ 123.8
Cost of service
as a % of
revenue 29.6% 37.7% 37.1% 38.1% 46.8%
Research and
development as
a % of revenue 12.8% 17.7% 17.8% 22.2% 28.1%
Sales and
marketing as
a % of revenue 35.9% 36.0% 40.8% 44.2% 59.5%
General and
administrative
as a % of
revenue 36.8% 47.2% 43.0% 56.9% 56.3%
Capital
expenditures as
a % of revenue 7.3% 19.3% 34.5% 42.3% 60.9%
Days sales
outstanding
of accounts
receivable 45 49 48 52 53
(1) Normalized net loss (net loss before amortization and other
one-time and non-cash charges) is calculated as EBITDA less net
interest expense, provision for income taxes and depreciation. See
Supplemental Financial Information for reconciliation to GAAP net
loss.
(2) EBITDA (earnings before interest, taxes, depreciation,
amortization and other one-time and non-cash charges) is calculated as
gross profit less research and development, sales and marketing and
general and administrative expenses. See Supplemental Financial
Information for reconciliation to GAAP net loss.
(3) Recurring free cash flow is calculated as EBITDA less capital
expenditures less net interest expense. See Supplemental Financial
Information for reconciliation to GAAP net loss.
(4) Akamai's Condensed, Consolidated Statements of Operations are
shown in a new format. In the old format, the engineering and
development line included research and development; network
operations, which has been moved to cost of service in the new format;
and information technology, which has been moved to general and
administrative in the new format. The sales, general and
administrative line in the old format has been separated into two
lines called sales and marketing, and general and administrative in
the new format. All other expense lines are the same in both format.
Each expense line which is different in the old and new format is
presented in both formats in the Supplemental Financial Information.
Akamai Technologies, Inc.
Supplemental Financial Information
Reconciliation from GAAP to
Normalized net loss, EBITDA
and Recurring free cash flow
-------------------Three Months Ended------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2002 2001 2001 2001 2001
--------- -------- --------- -------- ----------
Net loss in
accordance
with GAAP $(59,058) $(64,765) $(55,359) $(92,608) $(2,222,780)
Adjustments to
reconcile net
loss to Normalized
net loss, EBITDA
and Recurring free
cash flow:
Amortization of
goodwill,
intangibles
and CNN
advertising 6,483 5,444 9,258 7,405 239,329
Equity-related
compensation 6,371 7,188 8,717 11,038 4,514
Impairment of
goodwill -- -- -- -- 1,912,840
Restructuring
charge 12,409 14,302 -- 26,194 --
Equity in losses
of affiliate -- -- -- 153 1,847
Loss on
investments 4,328 (8) 213 1,000 11,747
Other income -- -- (1,002) -- --
-------- -------- --------- -------- --------
(1) Normalized
net loss (29,467) (37,839) (38,173) (46,818) (52,503)
Interest expense
(income), net 3,574 3,336 2,210 1,637 (581)
Provision for
income taxes 123 277 277 344 164
Depreciation 20,010 19,912 19,116 18,340 16,452
------ ------ ------ ------ ------
(2) EBITDA (5,760) (14,314) (16,570) (26,497) (36,468)
Interest (expense)
income, net (3,574) (3,336) (2,210) (1,637) 581
Capital
expenditures (2,787) (7,168) (14,743) (18,245) (24,494)
-------- -------- --------- -------- --------
(3) Recurring
free cash
flow $(12,121) $(24,818) $(33,523) $(46,379) $(60,381)
========= ========= ========= ========= =========
Condensed Consolidated Statements
of Operations format changes
----------------Three Months Ended-----------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2002 2001 2001 2001 2001
-------- -------- --------- -------- ---------
(4) Comparison of
old format and new
format expense lines
Old format:
Cost of service 9,697 11,948 13,402 13,622 16,160
Engineering
and development 9,098 12,254 13,828 16,737 18,632
Sales, general
and
administrative 24,892 27,222 32,094 39,279 41,885
------ ------ ------ ------ ------
43,687 51,424 59,324 69,638 76,677
====== ====== ====== ====== ======
New format:
Cost of service 11,242 13,977 15,869 16,439 18,834
Research and
development 4,869 6,575 7,627 9,595 11,284
Sales and
marketing 13,610 13,355 17,432 19,072 23,937
General and
administrative 13,966 17,517 18,396 24,532 22,622
------ ------ ------ ------ ------
43,687 51,424 59,324 69,638 76,677
====== ====== ====== ====== ======
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