-- First quarter revenue grows to $36.6 million; net loss narrows to $0.07 per share
-- Total EdgeSuite® customers increased by 77 to 346
-- EdgeSuite sales account for over 50 percent of total revenue
-- Cash and cash equivalents, restricted cash and marketable securities of $109.9 million at quarter end
CAMBRIDGE, Mass. - April 30, 2003 - Akamai Technologies, Inc. (NASDAQ: AKAM), a provider of services that enable the world`s leading enterprises and government agencies to extend and control their e-business infrastructure, today reported financial results for the first quarter ended March 31, 2003. Revenue for first quarter 2003 was $36.6 million, a 3.4 percent growth quarter-to-quarter - the first sequential quarterly revenue growth in a year.
Net loss, in accordance with United States generally accepted accounting principles (GAAP) for first quarter 2003 was $8.6 million, or negative $0.07 per share, compared to a net loss for the fourth quarter 2002 of $55.6 million, or negative $0.48 per share.
Normalized net loss* for first quarter 2003 was $13.3 million, or negative $0.11 per share, compared to normalized net loss for the prior quarter of $20.1 million, or negative $0.17 per share, and First Call`s consensus summary net loss of $0.15 per share. (* See Use of Non-GAAP Financial Measures for definitions.)
EBITDA* for the first quarter was $6.3 million, up from $1.3 million in the prior quarter.
(* See Use of Non-GAAP Financial Measures for definitions.)
"We believe our first quarter results clearly demonstrate the steady improvement in our underlying business fundamentals, including the benefit of our company-wide effort to grow and improve the quality of our customer base, and to operate the business on a more cost effective structure," said George Conrades, chairman and CEO of Akamai.
Included in the quarterly results is the impact of agreements and anticipated agreements to restructure all of Akamai`s domestic impaired lease obligations, resulting in average annual cash savings of approximately $8 million from 2004 through 2010. In restructuring the agreements, Akamai expects to eliminate approximately $50 million in net long-term lease obligations by agreeing to make one time cash payments totaling $15 million, which includes $7 million of restricted cash and long-term deposits. As a result of the expected settlements, net loss for the first quarter includes a one-time benefit of $9.8 million.
"We are taking the necessary steps to align our cost structure with today`s reality and to position the company to take full advantage of the expanding market opportunity for our services," said Robert Cobuzzi, chief financial officer, Akamai. "For the second consecutive quarter, we reduced the rate at which we consumed cash, ending the quarter with $109.9 million in cash and cash equivalents, restricted cash and marketable securities. As a result, including the payments we expect to make in the second quarter to restructure real estate, we believe we are well-positioned to reach our goal of generating positive free cash flow* by year end." (* See Use of Non-GAAP Financial Measures for definitions.)
At March 31, 2003, the Company had 117.8 million shares of common stock outstanding. At March 31, 2003, common stock outstanding and unexercised stock options and warrants totaled 133.5 million shares.
Customers
At the end of the first quarter of 2003, Akamai had 346 EdgeSuite customers under recurring contract, compared to 269 at the end of the previous quarter, and up from 187 EdgeSuite clients at the end of first quarter of 2002. New EdgeSuite customers in the first quarter included Accenture plc, Australian Broadcasting Corporation, BMW Japan, Canadian Broadcasting Corporation, Chicago Sun-Times, Cirque Du Soleil, Inc., E.W. Scripps Company, Home Office Communication Directorate (United Kingdom), John Wiley & Sons, L`Oréal, Lycos Asia, Norman Data Defense, Thomson Financial, among others. Resellers accounted for approximately 24 percent of first quarter revenue, as compared to approximately 26 percent in the fourth quarter of 2002.
"The market for our services is expanding, as evidenced by the dramatic increase in EdgeSuite accounts, as well as by our growing penetration of key verticals. EdgeSuite customers grew by 77 this quarter for an increase of almost 30 percent over the prior quarter. In addition, our total recurring customer count grew four percent to 994," said Conrades.
Network
The size, scale and functionality of Akamai`s underlying global network remains key to the value proposition of all Akamai services. Akamai`s global network at the end of the first quarter consisted of 15,307 servers in 1,134 networks, within 68 countries. This deployment has increased from 13,622 servers in 1,135 networks within 65 countries at the end of 2002. 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.
Use of Non-GAAP Financial Measures
The Company has historically provided financial metrics, some of which are based on GAAP and others that are not prepared in accordance with GAAP (non-GAAP). Recent legislative and regulatory changes encourage the use of GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors.
Akamai defines "EBITDA" as net loss, before interest, taxes, depreciation, amortization, equity-related compensation, restructuring charges and benefits, and certain gains and losses on equity investments. Akamai considers EBITDA to be an important indicator of the Company`s operational strength and performance of its business and provides a good measure of the Company`s historical operating trend. EBITDA eliminates items which are either not part of the Company`s core operations, such as investment gains and losses and net interest expense, do not require a cash outlay, such as equity-related compensation and impairment of intangible assets, or vary widely from quarter to quarter, such as restructuring activities. EBITDA also eliminates depreciation expense, which is based on the Company`s estimate of a capital asset`s useful life. These estimates could vary from actual performance of the asset and 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 "normalized net loss" as net loss before amortization, equity-related compensation, restructuring charges and benefits, and certain gains and losses on equity investments. Akamai considers normalized net 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 non-cash.
Akamai defines "Free Cash Flow" as the net change in cash and cash equivalents, restricted cash and marketable securities quarter-over-quarter. Akamai considers Free Cash Flow to be an important indicator of the Company`s ability to generate cash to maintain operations, service its debt and make strategic investments.
EBITDA, Free Cash Flow and normalized net loss should be considered in addition to, not as a substitute for, the Company`s operating loss, net loss, and various cash flow measures (e.g., cash used in operations), as well as other measures of financial performance reported in accordance with generally accepted accounting principles
Contacts:
Jeff Young
Media Relations
Akamai Technologies
617-444-3913
jyoung@akamai.com
J.C. Raby
Investor Relations
Akamai Technologies
617-444-2555
jraby@akamai.com
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