Akamai Reports Fourth Quarter 1999 Results.Business/Technology Editors CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 27, 2000 - Fourth quarter revenue of $2.7 million, up 206% from third quarter - Customer list grows from 44 to 227 Web properties during quarter - Akamai network expands to over 2,000 servers spanning more than 100 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. in over 40 countries - EdgeAdvantage(TM) unveiled as platform for content, streaming, and applications delivery 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 foremost provider of global, high performance services for the delivery of 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 content, streaming media See streaming audio, streaming video and digital media hub. , and applications, today reported fourth quarter 1999 revenue of $2.7 million, up 206% from third quarter revenue of $0.9 million, with 227 signed customers as of year end up from 44 at the end of the third quarter. &uot;Akamai's significant increase in revenue for the fourth quarter is a direct result of the phenomenal pace at which Akamai has been able to acquire customers and expand our global network, while continuing to unveil new innovation and technology,&uot; 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. &uot;Following our successful IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. last quarter, we have seen the adoption of our services accelerate among today's leading Web properties. With well over 200 customers, Akamai has established itself as the service of choice for many of today's leading eBusinesses that are seeking high quality, fast and reliable delivery of all forms of Internet content, streaming media, and applications.&uot; Net loss for the fourth quarter and the year ended December 31, 1999 before extraordinary loss from early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt and equity-related non-cash compensation charges was $23.5 million and $44.2 million, respectively, or $0.40 and $1.46 per share, respectively. The 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 (earnings before interest, taxes, depreciation, amortization, 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. ) loss for the fourth quarter and year ended December 31, 1999 was $23.8 million and $43.0 million, respectively. Net loss attributable to common stockholders for the fourth quarter and the year ended December 31, 1999 was $29.8 million and $59.8 million, respectively, or $0.51 and $1.98 per share, respectively. Customers Since going public in October of 1999, Akamai has quadrupled its customer base, and serves 227 Web properties across all business sectors as of year-end. This number includes only those customers that have signed contracts of one year or more in duration. Some of Akamai's customers include: Apple, Britannica.com, CBS Corporation
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. Interactive, Discovery Channel Online, iVillage.com, KBkids.com, Lycos, marthastewart.com, Monster.com, The Motley Fool, NBCi, Oxygen Media, Inc., Paramount Digital Entertainment, QUALCOMM Eudora Products, SEND.COM, Symantec, Time Inc., and Yahoo!, among others. Network Akamai continues to expand its network on a global scale and over the last quarter has increased its deployment of servers from 1,400 to over 2,000. Akamai has established its worldwide presence with servers in over 40 countries and across more than 100 telecommunications networks. Akamai has built relationships with top-notch network providers and ISPs who provide the Company with the ability to expand its network globally. Each of Akamai's carrier and ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. partners also offer Akamai access to their respective user base. Every network provider that Akamai partners with becomes a key enabler in Akamai's effort to make the Internet a more enriching and interactive medium for major Web site owners and their customers. Technology Akamai is building upon its core technology with the introduction of EdgeAdvantage, providing eBusinesses access to a broad array of new services from the edge of the Internet. Along with Akamai's first two services - FreeFlow(SM) and FreeFlow Streaming - EdgeAdvantage extends Akamai's reach in the Internet content delivery space by allowing application vendors to use the platform as a service channel for reaching content providers. Its open and scalable approach to delivering content has been endorsed by over 60 partners. With the recent acquisition of Network24 Communications in January 2000, Akamai extends the functionality of its high-performance streaming service to include interactive Webcast features such as audience management, broadcast management, network management and navigation and feedback. The added functionality will enable content providers to monitor and manage streamed content and use self-service features to administer events and provide detailed reporting on program registration and real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. audience feedback. Financials &uot;Marketplace acceptance of the FreeFlow content, streaming media, and application services See ASP and Web services. has provided us with strong financial performance right out of the gate,&uot; said Timothy Weller, CFO See Chief Financial Officer. at Akamai. &uot;During the fourth quarter, our customer count more than quadrupled, contract sizes and duration increased, and the sales cycle shortened short·en v. short·ened, short·en·ing, short·ens v.tr. 1. To make short or shorter. 2. versus our third quarter metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. , all while remaining within our cost and capital budget. The operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. from offering new services on the EdgeAdvantage platform will be even more apparent in 2000.&uot; On October 28, 1999, the Company raised $234 million in its initial public offering (IPO). At year-end, cash, cash equivalents, and short-term investments were $270 million. A portion of the IPO proceeds was used to extinguish Extinguish Retire or pay off debt. the $15 million of debt, which is the source of the extraordinary item reported. At December 31, 1999, the Company had 92.5 million shares of common stock outstanding and 109 million shares of fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common stock. About Akamai Akamai Technologies is headquartered 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. , and has offices in San Mateo, California San Mateo is a city in San Mateo County, California, in the San Francisco Bay Area. It is one of the larger suburbs on the San Francisco Peninsula, located between Burlingame to the north, Foster City to the East, and Belmont to the south. and Europe. Akamai provides global Internet content and applications delivery services for hundreds of customers, improving Web site speed and reliability and enabling richer, more engaging Web site content. Currently, Akamai has deployed more than 2,000 servers in 40 countries across more than 100 different telecommunications networks. Akamai (pronounced AH kuh my) is Hawaiian for intelligent, clever and cool. 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 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 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, the dependence on Akamai's Internet content delivery service, a failure of its network infrastructure, market acceptance of our EdgeAdvantage service, the complexity of its service and the networks on which the service is deployed, the failure to obtain access to transmission capacity and other factors that are discussed in the Company's Registration Statement on Form S-1 and other documents periodically filed with the SEC.
Akamai Technologies, Inc.
Consolidated Statement of Operations
Three-month Three-month
period ended period ended Year ended
Dec. 31, 1999 Sept. 30, 1999 Dec. 31, 1999
------------------------------------------------
Revenue $ 2,698,784 $ 883,196 $ 3,985,929
-------------- -------------- -------------
Operating expenses:
Cost of service 4,469,289 3,125,034 9,002,442
Engineering and
development 6,375,044 3,320,291 11,748,781
Sales, general and
administrative 17,592,249 6,832,710 29,667,506
Equity related
compensation 2,386,459 6,280,149 10,005,216
-------------- ------------- -------------
Total operating
expenses 30,823,041 19,558,184 60,423,945
--------------- ------------- -------------
Operating loss (28,124,257) (18,674,988) (56,438,016)
Interest income, net 2,278,981 133,392 2,268,357
Loss before extraordinary
loss from early
extinguishment of debt (25,845,276) (18,541,596) (54,169,659)
--------------- -------------- -------------
Extraordinary loss from
early extinguishment
of debt 3,389,614 - 3,389,614
--------------- -------------- -------------
Net loss (29,234,890) (18,541,596) (57,559,273)
Dividends and accretion
to preferred stock
redemption value 596,455 1,349,954 2,241,281
-------------- -------------- -------------
Net loss attributable
to common stockholders $ (29,831,345) $ (19,891,550) $ (59,800,554)
================ =============== =============
Basic and diluted
net loss per share $ (0.51) $ (0.80) $ (1.98)
Weighted average common
shares outstanding 59,033,295 24,848,784 30,177,376
Supplemental Financial Data:
Depreciation and
amortization $ 1,854,967 $ 1,008,188 $ 3,434,078
EBITDA (1) (23,882,831) (11,386,651) (42,998,722)
Capital expenditures 12,945,106 7,459,863 25,712,790
Number of signed customers 227 44 227
Number of employees 382 227 382
(1) Earnings before interest, taxes, depreciation, amortization and
other non-cash charges
Akamai Technologies, Inc.
Condensed Consolidated Balance Sheets
December 31,
1999 1998
----------- -----------
Assets
Current assets:
Cash, cash equivalents
and short-term investments $ 269,553,794 $ 6,804,789
Accounts receivable, net 1,587,918 -
Prepaid expenses and
other current assets 2,520,765 56,589
--------------- --------------
Total current assets 273,662,477 6,861,378
Property and equipment, net 23,875,492 1,522,980
Other assets 3,277,011 481,282
--------------- --------------
Total assets $ 300,814,980 $ 8,865,640
================= ================
Liabilities, convertible preferred stock
and stockholders' equity (deficit)
Current liabilities:
Accounts payable and
accrued expenses $ 14,684,160 $ 692,997
Other current liabilities 3,953,212 12,350
-------------- ----------------
Total current liabilities 18,637,372 705,347
Long-term liabilities 732,626 24,859
-------------- ----------------
Total liabilities 19,369,998 730,206
Total convertible preferred stock - 8,283,758
Total stockholders' equity (deficit) 281,444,982 (148,324)
-------------- ----------------
Total liabilities, convertible
preferred stock and
stockholders' equity $ 300,814,980 $ 8,865,640
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