Akamai Reports Fourth Quarter 2003 and Full-Year 2003 Financial Results
Net loss, in accordance with United States Generally Accepted Accounting Principles (GAAP), for the fourth quarter 2003 was $2.1 million, or $0.02 per share, compared to a net loss for the third quarter 2003 of $3.9 million, or $0.03 per share, and compared to a net loss of $55.6 million, or $0.48 per share, in the fourth quarter of 2002. Included in the fourth quarter 2003 net loss is $2.1 million of expenses associated with the retirement of debt.
For the first time in its history, the Company achieved positive earnings per share of $0.01 on a normalized basis*, generating $1.5 million positive net income for the fourth quarter, compared to a normalized net loss* for the prior quarter of $0.03 per share, or $3.5 million, and compared to First Call's consensus estimate for the fourth quarter of a normalized net loss of $0.01 per share. (*See Use of Non-GAAP Financial Measures below for definitions.)
Akamai ended the year with $208.4 million in cash, cash equivalents, restricted cash, marketable securities and restricted marketable securities, including $95.8 million in net debt proceeds and redemptions, an increase from $99.0 million at the end of the third quarter.
"The fourth quarter of 2003 was our best quarter to date," said George Conrades, chairman and CEO of Akamai. "We achieved the most revenue of any quarter; the most cash flow from operations in any quarter; and, marking the most important improvement in our five-year history, we generated positive earnings per share on a normalized basis. All of this capped a year of consistent revenue growth and rapidly declining losses."
Adjusted EBITDA* for the fourth quarter of 2003 was $14.2 million, a 21 percent increase from $11.7 million in the prior quarter, and over a ten fold increase over Adjusted EBITDA of $1.3 million in the fourth quarter of 2002. (*See Use of Non-GAAP Financial Measures below for definitions.)
"With revenue growth in 2003 of 11 percent year-over-year, improvement in gross margins, and a decrease in cash operating expenses of 25 percent year-over-year, we're clearly seeing the leverage in our model," continued Conrades.
Customers
The number of recurring customers grew in the fourth quarter by 70 net new accounts for a total of 1,126 customers under long-term services contracts, the highest level in more than two years. For the full year, the Company's customer count increased almost 18 percent.
New Akamai EdgeSuite® customers in the fourth quarter included Americanas (Brazil's leading e-retailer), AUDI AG, Bayer AG, Brylane, Christian Dior, Knight Ridder Digital, Learning.com, Muze Inc., OfficeMax Inc., Overstock.com, ScanAlert and Tourism New Zealand, among others.
Resellers accounted for approximately 25 percent of 2003 fourth quarter revenue, as compared to approximately 22 percent in the prior quarter and 26 percent in the fourth quarter of 2002.
Network
Akamai's global network at the end of the fourth quarter consisted of 14,733 servers in 1,072 networks, in 71 countries. The geographic reach and capacity of Akamai's network is unprecedented in its ability to serve the needs of enterprise customers, government agencies and major Web-centric businesses.
Financial Statements
*Use of Non-GAAP Financial Measures
In addition to providing GAAP-based financial measurements, Akamai has historically provided additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). Recent legislative and regulatory changes encourage use of and emphasis on GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors.
Akamai defines "Adjusted EBITDA" as net loss, before interest, taxes, depreciation, amortization, equity-related compensation, restructuring charges and benefits, certain gains and losses on equity investments, and loss on early extinguishment of debt. Akamai considers Adjusted EBITDA to be an important indicator of the company's operational strength and performance of its business and a good measure of the company's historical operating trend.
Adjusted EBITDA eliminates items which are either not part of the company's core operations, such as investment gains and losses, early debt extinguishment, net interest expense and restructuring activities, or do not require a cash outlay, such as equity-related compensation and impairment of intangible assets. Adjusted EBITDA also excludes depreciation and amortization expense, which is based on the company's estimate of the useful life of tangible and intangible assets. These estimates could vary from actual performance of the asset, are based on historic cost incurred to build out the company's deployed network, and may not be indicative of current or future capital expenditures.
Akamai defines "capital expenditures" or "capex" as purchases of property and equipment and the capitalization of internal-use software development costs. Capital expenditures or capex are disclosed in Akamai's consolidated statement of cash flows in the company's most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission.
Akamai defines "normalized net income(loss)" as net income(loss) before amortization, equity-related compensation, restructuring charges and benefits, certain gains and losses on equity investments, and loss on early extinguishment of debt. Akamai considers normalized net income(loss) to be another important indicator of the overall performance of the company because it eliminates the effects of events that are either not part of the company's core operations or are non-cash.
Adjusted EBITDA and normalized net loss should be considered in addition to, not as a substitute for, the company's operating loss and net loss, as well as other measures of financial performance reported in accordance with generally accepted accounting principles.
Reconciliation of Non-GAAP Financial Measures
In accordance with the requirements of Regulation G, the company is presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial metrics to the comparable GAAP measures.
Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-888-689-4521 (or 1-706-645-9202 for international calls). A live Webcast of the call may be accessed at www.akamai.com in the Investor section. In addition, a replay of the call will be available for one week following the conference through the Akamai Website or by calling 1-800-642-1687 (or 1-706-645-9291 for international calls) and using conference ID No. 4766875.
About Akamai
Akamai® is the global leader in distributed computing solutions and services, making the Internet predictable, scalable, and secure for conducting profitable e-business. The Akamai on demand platform enables customers to easily extend their Web operations - with full control - anywhere, anytime, without the cost of building out infrastructure. Headquartered in Cambridge, Massachusetts, Akamai serves hundreds of today's most successful enterprises and government agencies around the globe. Akamai is The Business Internet. For more information, visit www.akamai.com.
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Akamai Statement Under the Private Securities Litigation Reform Act
The release contains information about future expectations, plans and prospects of Akamai's management that constitute forward-looking statements for purposes of the safe harbor 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, unexpected increases in Akamai's use of funds, unexpected loss of key large customers, failure to increase our revenue and keep our expenses consistent with revenues, the effects of any attempts to intentionally disrupt our services or network by unauthorized users or others, failure to have available sufficient transmission capacity, a failure of Akamai's network infrastructure, inability to service and repay our outstanding debt and other factors that are discussed in the Company's 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 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: |
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Jeff Young Media Relations Akamai Technologies Inc. 617-444-3913 jyoung@akamai.com |
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Sandy Smith Investor Relations Akamai Technologies Inc. 617-444-2804 ssmith@akamai.com |
- Record fourth quarter revenue of $45.2 million, up 8% quarter-over-quarter, and up 28% year-over-year
- Annual revenue grew to $161.3 million, up 11% year-over-year
- GAAP net loss narrowed to $0.02 per share
- First ever normalized net income* of $1.5 million, or $0.01 per share
Net loss, in accordance with United States Generally Accepted Accounting Principles (GAAP), for the fourth quarter 2003 was $2.1 million, or $0.02 per share, compared to a net loss for the third quarter 2003 of $3.9 million, or $0.03 per share, and compared to a net loss of $55.6 million, or $0.48 per share, in the fourth quarter of 2002. Included in the fourth quarter 2003 net loss is $2.1 million of expenses associated with the retirement of debt.
For the first time in its history, the Company achieved positive earnings per share of $0.01 on a normalized basis*, generating $1.5 million positive net income for the fourth quarter, compared to a normalized net loss* for the prior quarter of $0.03 per share, or $3.5 million, and compared to First Call's consensus estimate for the fourth quarter of a normalized net loss of $0.01 per share. (*See Use of Non-GAAP Financial Measures below for definitions.)
Akamai ended the year with $208.4 million in cash, cash equivalents, restricted cash, marketable securities and restricted marketable securities, including $95.8 million in net debt proceeds and redemptions, an increase from $99.0 million at the end of the third quarter.
"The fourth quarter of 2003 was our best quarter to date," said George Conrades, chairman and CEO of Akamai. "We achieved the most revenue of any quarter; the most cash flow from operations in any quarter; and, marking the most important improvement in our five-year history, we generated positive earnings per share on a normalized basis. All of this capped a year of consistent revenue growth and rapidly declining losses."
Adjusted EBITDA* for the fourth quarter of 2003 was $14.2 million, a 21 percent increase from $11.7 million in the prior quarter, and over a ten fold increase over Adjusted EBITDA of $1.3 million in the fourth quarter of 2002. (*See Use of Non-GAAP Financial Measures below for definitions.)
"With revenue growth in 2003 of 11 percent year-over-year, improvement in gross margins, and a decrease in cash operating expenses of 25 percent year-over-year, we're clearly seeing the leverage in our model," continued Conrades.
Customers
The number of recurring customers grew in the fourth quarter by 70 net new accounts for a total of 1,126 customers under long-term services contracts, the highest level in more than two years. For the full year, the Company's customer count increased almost 18 percent.
New Akamai EdgeSuite® customers in the fourth quarter included Americanas (Brazil's leading e-retailer), AUDI AG, Bayer AG, Brylane, Christian Dior, Knight Ridder Digital, Learning.com, Muze Inc., OfficeMax Inc., Overstock.com, ScanAlert and Tourism New Zealand, among others.
Resellers accounted for approximately 25 percent of 2003 fourth quarter revenue, as compared to approximately 22 percent in the prior quarter and 26 percent in the fourth quarter of 2002.
Network
Akamai's global network at the end of the fourth quarter consisted of 14,733 servers in 1,072 networks, in 71 countries. The geographic reach and capacity of Akamai's network is unprecedented in its ability to serve the needs of enterprise customers, government agencies and major Web-centric businesses.
Financial Statements
*Use of Non-GAAP Financial Measures
In addition to providing GAAP-based financial measurements, Akamai has historically provided additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). Recent legislative and regulatory changes encourage use of and emphasis on GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors.
Akamai defines "Adjusted EBITDA" as net loss, before interest, taxes, depreciation, amortization, equity-related compensation, restructuring charges and benefits, certain gains and losses on equity investments, and loss on early extinguishment of debt. Akamai considers Adjusted EBITDA to be an important indicator of the company's operational strength and performance of its business and a good measure of the company's historical operating trend.
Adjusted EBITDA eliminates items which are either not part of the company's core operations, such as investment gains and losses, early debt extinguishment, net interest expense and restructuring activities, or do not require a cash outlay, such as equity-related compensation and impairment of intangible assets. Adjusted EBITDA also excludes depreciation and amortization expense, which is based on the company's estimate of the useful life of tangible and intangible assets. These estimates could vary from actual performance of the asset, are based on historic cost incurred to build out the company's deployed network, and may not be indicative of current or future capital expenditures.
Akamai defines "capital expenditures" or "capex" as purchases of property and equipment and the capitalization of internal-use software development costs. Capital expenditures or capex are disclosed in Akamai's consolidated statement of cash flows in the company's most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission.
Akamai defines "normalized net income(loss)" as net income(loss) before amortization, equity-related compensation, restructuring charges and benefits, certain gains and losses on equity investments, and loss on early extinguishment of debt. Akamai considers normalized net income(loss) to be another important indicator of the overall performance of the company because it eliminates the effects of events that are either not part of the company's core operations or are non-cash.
Adjusted EBITDA and normalized net loss should be considered in addition to, not as a substitute for, the company's operating loss and net loss, as well as other measures of financial performance reported in accordance with generally accepted accounting principles.
Reconciliation of Non-GAAP Financial Measures
In accordance with the requirements of Regulation G, the company is presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial metrics to the comparable GAAP measures.
Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-888-689-4521 (or 1-706-645-9202 for international calls). A live Webcast of the call may be accessed at www.akamai.com in the Investor section. In addition, a replay of the call will be available for one week following the conference through the Akamai Website or by calling 1-800-642-1687 (or 1-706-645-9291 for international calls) and using conference ID No. 4766875.
About Akamai
Akamai® is the global leader in distributed computing solutions and services, making the Internet predictable, scalable, and secure for conducting profitable e-business. The Akamai on demand platform enables customers to easily extend their Web operations - with full control - anywhere, anytime, without the cost of building out infrastructure. Headquartered in Cambridge, Massachusetts, Akamai serves hundreds of today's most successful enterprises and government agencies around the globe. Akamai is The Business Internet. For more information, visit www.akamai.com.
Akamai Statement Under the Private Securities Litigation Reform Act
The release contains information about future expectations, plans and prospects of Akamai's management that constitute forward-looking statements for purposes of the safe harbor 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, unexpected increases in Akamai's use of funds, unexpected loss of key large customers, failure to increase our revenue and keep our expenses consistent with revenues, the effects of any attempts to intentionally disrupt our services or network by unauthorized users or others, failure to have available sufficient transmission capacity, a failure of Akamai's network infrastructure, inability to service and repay our outstanding debt and other factors that are discussed in the Company's 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 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.
