Akamai Reports First Quarter 2002 Results
Jeff Young
Media Relations
Akamai Technologies, Inc.
(617) 444 - 3913
jyoung@akamai.com
J.C. Raby
Investor Relations
Akamai Technologies, Inc.
(617) 444 - 2555
jraby@akamai.com
§ First quarter revenue of $37.9 million
§ Total EdgeSuiteSM customers increased to 185
§ First quarter EBITDA 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
CAMBRIDGE, Mass. - April 18, 2002 - Akamai Technologies, Inc. (NASDAQ: AKAM), a leading provider of secure, outsourced e-business 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 Conrades, chairman and CEO of Akamai. "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 and non-cash charges (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 with 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 contract, compared to 152 at the end of the previous quarter. New EdgeSuite customers in the first quarter included DaimlerChrysler, Edmunds.com, Foot Locker, Toyota Motor Sales, and TrendMicro, among others. Resellers and channel partners accounted for approximately 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 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 increase quarter over quarter."
The combination of Akamai`s wholly owned European 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 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 with the addition of new functionality to EdgeSuite, including:
EdgeSuite Edge Processing - extends and accelerates an enterprise`s e-business applications by performing processing including authorization, assembly, and transformations at optimal locations within the global Akamai platform;
Akamai SureRouteSM - advanced technology that determines the optimal route between the customer`s origin servers and the edge of the Internet to optimize delivery for all types of content, including dynamic, uncacheable content;
EdgeSuite Site ShieldSM - an industry-leading solution for protecting a Web site from the wide range of threats on the public Internet; and,
Last Mile Compression - 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, and the real estate settlement with our Cambridge landlord, all strengthened our cash outlook," said Timothy Weller, chief financial officer at Akamai. "Not only did we end the first quarter with over $170 million of cash and marketable securities, 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 the Company`s leases with MIT at 500 and 600 Technology Square in Cambridge for an upfront payment of $15 million, thus reducing Akamai`s long-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 and long-term marketable securities as compared to $210.5 million at December 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.
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 and manageability. 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, and application delivery comprises more than 12,600 servers within over 1,000 networks in 66 countries. With headquarters in Cambridge, Massachusetts, 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 InternetSM, 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, 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 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 privacy or other aspects of the Internet 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, 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 any obligation to do so, even if our estimates change.
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