Akamai (NASDAQ: AKAM), the intelligent edge platform for securing and delivering digital experiences, today reported financial results for the first quarter ended March 31, 2019.
“We are pleased with our excellent start for the year, with revenue, margins and earnings all exceeding expectations,” said Dr. Tom Leighton, Chief Executive Officer. “The outperformance was driven by the continued very strong growth of our security business, very strong traffic growth from our media business and our ability to improve efficiency while continuing to invest in innovation and new products to drive future growth.”
Akamai delivered the following financial results for the first quarter ended March 31, 2019:
Revenue: Revenue was $707 million, a 6% increase over first quarter 2018 revenue of $669 million and an 8% increase when adjusted for foreign exchange.*
Revenue by Division(1):
- Web Division revenue was $376 million, up 7% year-over-year and up 9% when adjusted for foreign exchange*
- Media and Carrier Division revenue was $330 million, up 5% year-over-year and up 7% when adjusted for foreign exchange*
Revenue from Cloud Security Solutions(2):
- Cloud Security Solutions revenue was $190 million, up 27% year-over-year and up 29% when adjusted for foreign exchange*
Revenue from Internet Platform Customers(3):
- Revenue from Internet Platform Customers was $47 million, up 6% year-over-year and when adjusted for foreign exchange*
- Revenue excluding Internet Platform Customers was $659 million, up 6% year-over-year and up 8% when adjusted for foreign exchange*
Revenue by Geography:
- U.S. revenue was $418 million, down 1% year-over-year
- International revenue was $288 million, up 17% year-over-year and up 24% when adjusted for foreign exchange*
First quarter 2018 and 2019 items: First quarter year-over-year growth rates for GAAP income from operations, GAAP net income and GAAP EPS in the paragraphs below were impacted by charges recognized in the first quarter of 2018, which did not recur in the first quarter of 2019 or were not of the same magnitude: a $15 million restructuring charge and $23 million for legal settlements and non-recurring professional advisory fees associated with a non-routine stockholder matter.
First quarter year-over-year growth rates for GAAP and non-GAAP income from operations, net income and EPS in the paragraphs below were also benefited by $8 million, or $6 million net of tax and $0.04 per share, from a change in the estimated useful lives of some our network assets due to software and hardware initiatives undertaken to manage Akamai's global network more efficiency. These network assets, primarily comprised of servers, are now amortized over 5 years, from 4 years, beginning on January 1, 2019.
Income from operations: GAAP income from operations was $135 million, a 96% increase from first quarter 2018. GAAP operating margin for the first quarter was 19%, up 9 percentage points from the same period last year.
Non-GAAP income from operations* was $210 million, a 26% increase from first quarter 2018. Non-GAAP operating margin* for the first quarter was 30%, up 5 percentage points from the same period last year.
Net income: GAAP net income was $107 million, a 99% increase from first quarter 2018. Non-GAAP net income* was $181 million, a 33% increase from first quarter 2018.
EPS: GAAP EPS was $0.65 per diluted share, a 110% increase from first quarter 2018 and a 116% increase when adjusted for foreign exchange.* Non-GAAP EPS was $1.10 per diluted share, a 39% increase from first quarter 2018 and a 42% increase when adjusted for foreign exchange.*
Adjusted EBITDA*: Adjusted EBITDA was $299 million, a 17% increase from first quarter 2018. Adjusted EBITDA margin* for the first quarter was 42%, up 4 percentage points from the same period last year.
Supplemental cash information: Cash from operations for the first quarter of 2019 was $161 million, or 23% of revenue. Cash, cash equivalents and marketable securities was $1.2 billion as of March 31, 2019.
Share repurchases: Akamai spent $35 million in the first quarter of 2019 to repurchase 0.5 million shares of its common stock at an average price of $70.89 per share. The Company had 164 million shares of common stock outstanding as of March 31, 2019.
(1) Revenue by Division – A customer-focused reporting view that reflects revenue from customers that are managed by the division
(2) Revenue from Cloud Security Solutions – A product-focused reporting view that illustrates revenue from Cloud Security Solutions separately from all other solution categories
(3) Revenue from Internet Platform Customers – Revenue from six customers that are large Internet platform companies: Amazon, Apple, Facebook, Google, Microsoft and Netflix
Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-844-578-9671 (or 1-508-637-5655 for international calls) and using passcode 1989658. 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 two weeks following the conference by calling 1-855-859-2056 (or 1-404-537-3406 for international calls) and using passcode 1989658. The archived webcast of this event may be accessed through the Akamai website.
Akamai secures and delivers digital experiences for the world’s largest companies. Akamai’s intelligent edge platform surrounds everything, from the enterprise to the cloud, so customers and their businesses can be fast, smart, and secure. Top brands globally rely on Akamai to help them realize competitive advantage through agile solutions that extend the power of their multi-cloud architectures. Akamai keeps decisions, apps and experiences closer to users than anyone — and attacks and threats far away. Akamai’s portfolio of edge security, web and mobile performance, enterprise access and video delivery solutions is supported by unmatched customer service, analytics and 24/7/365 monitoring. To learn why the world’s top brands trust Akamai, visit www.akamai.com, blogs.akamai.com, or @Akamai on Twitter. You can find our global contact information at www.akamai.com/locations.