Akamai (NASDAQ: AKAM), the intelligent edge platform for securing and delivering digital experiences, today reported financial results for the second quarter ended June 30, 2019.
“Akamai delivered another quarter of strong results, with revenue and earnings exceeding our expectations. Security product revenue grew 34%, when adjusted for the impact of foreign exchange rates, to over $200 million in the quarter, and we saw continued strong OTT traffic growth on the Akamai Edge platform," said Dr. Tom Leighton, Akamai's Chief Executive Officer. “We believe we are well positioned to achieve our 30% margin goal in 2020, while continuing to invest in innovation and new products to drive future growth.”
Akamai delivered the following financial results for the second quarter ended June 30, 2019:
Revenue: Revenue was $705 million, a 6% increase over second quarter 2018 revenue of $663 million and an 8% increase when adjusted for foreign exchange.*
Revenue by Division(1):
- Web Division revenue was $380 million, up 8% year-over-year and up 10% when adjusted for foreign exchange*
- Media and Carrier Division revenue was $325 million, up 4% year-over-year and up 6% when adjusted for foreign exchange*
Revenue from Cloud Security Solutions(2):
- Cloud Security Solutions revenue was $205 million, up 32% year-over-year and up 34% when adjusted for foreign exchange*
Revenue from Internet Platform Customers(3):
- Revenue from Internet Platform Customers was $46 million, up 5% 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 $417 million, up 1% year-over-year
- International revenue was $288 million, up 15% year-over-year and up 20% when adjusted for foreign exchange*
Second quarter 2018 and 2019 items: Second quarter year-over-year growth rates for GAAP income from operations, GAAP net income and GAAP EPS in the paragraphs below were impacted by a one-time $50 million endowment to the Akamai Foundation recognized in the second quarter of 2018, which did not recur in the second quarter of 2019.
Second quarter year-over-year growth rates for GAAP and non-GAAP income from operations, net income and EPS in the paragraphs below were benefited by $9 million, or $8 million net of tax and $0.05 per share, from a change in estimated useful lives of some network assets due to software and hardware initiatives undertaken to manage Akamai's global network more efficiently. 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 $136 million, a 138% increase from second quarter 2018. GAAP operating margin for the second quarter was 19%, up 10 percentage points from the same period last year.
Non-GAAP income from operations* was $204 million, a 20% increase from second quarter 2018. Non-GAAP operating margin* for the second quarter was 29%, up 3 percentage points from the same period last year.
Net income: GAAP net income was $114 million, a 165% increase from second quarter 2018. Non-GAAP net income* was $176 million, a 23% increase from second quarter 2018.
EPS: GAAP EPS was $0.69 per diluted share, a 176% increase from second quarter 2018 and a 185% increase when adjusted for foreign exchange.* Non-GAAP EPS was $1.07 per diluted share, a 29% increase from second quarter 2018 and a 32% increase when adjusted for foreign exchange.*
Adjusted EBITDA*: Adjusted EBITDA was $293 million, a 12% increase from second quarter 2018. Adjusted EBITDA margin* for the second quarter was 42%, up 3 percentage points from the same period last year.
Supplemental cash information: Cash from operations for the second quarter of 2019 was $318 million, or 45% of revenue. Cash, cash equivalents and marketable securities was $1.3 billion as of June 30, 2019.
Share repurchases: Akamai spent $81 million in the second quarter of 2019 to repurchase 1.1 million shares of its common stock at an average price of $77.11 per share. The Company had 163 million shares of common stock outstanding as of June 30, 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 reflects 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 8775706. 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 8775706. 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.