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
-- Fourth quarter revenue of $35.4 million
-- Annual revenue of $145.0 million
-- Total EdgeSuiteSM customers increased to 270
-- Cash and marketable securities of $125.2 million at year end
CAMBRIDGE, Mass. - January 28, 2003 - Akamai Technologies, Inc. (NASDAQ: AKAM), a provider of products and 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 fourth quarter and full-year ended December 31, 2002. Revenue for the fourth quarter 2002 was $35.4 million. Total revenue for 2002 was $145.0 million.
"We are pleased with our fourth quarter results, especially the continuing improvement in the quality of our customer base and revenue, our business operations, and achievement of key financial milestones," said George Conrades, chairman and CEO of Akamai. "Sales were led by excellent growth in our EdgeSuite service which accounted for approximately 44% of revenue for the fourth quarter."
Net loss, in accordance with United States generally accepted accounting principles (U.S. GAAP), for fourth quarter 2002 was $53.8 million, or negative $0.47 per share, compared to a net loss for the third quarter 2002 of $47.5 million, or negative $0.42 per share. Net loss, in accordance with U.S. GAAP, for full-year 2002 was $202.6 million or negative $1.80 per share.
The Company recorded restructuring costs of $26.7 million during the fourth quarter related to real estate consolidations and a reduction in workforce, as compared to $6.1 million in the third quarter. Excluding the restructuring costs, net loss for the fourth quarter 2002 would have been $27.1 million, or negative $0.24 per share as compared to a loss of $41.4 million or negative $0.36 per share in the third quarter. The Company believes that the reduction in net loss, excluding restructuring costs, is the result of improvements made in the Company`s business operations.
Fourth Quarter 2002 in Review:
Customers
At the end of the fourth quarter of 2002, Akamai had 270 EdgeSuite customers under recurring contract, compared to 243 at the end of the previous quarter. New EdgeSuite customers in the fourth quarter included American Suzuki Motor Corporation, Canon Japan, L.L.Bean, Inc., Molex Incorporated, Samsung, Sony Music Entertainment Japan, Staples Inc., Verisign, and VERITAS, among others. Resellers accounted for approximately 26% of fourth quarter revenue, up from approximately 22% in the third quarter.
Akamai continues to build on the success of EdgeSuite with the additional capabilities of EdgeComputing, enabling enterprises to process applications on Akamai`s globally distributed network of servers and extend their e-business infrastructure anywhere in the world - on demand, with visibility and control. "With EdgeComputing, Akamai is breaking the application time-to-market bottleneck, while helping customers avoid costly data center build-outs and make the most of their in-place infrastructure," Conrades explained. "Just as Akamai has made the Internet predictable, scalable, and secure for content delivery, we are now doing the same for application processing and delivery. For customers, this means increased revenues, competitive advantage and better resource utilization."
The following are two examples of early customer successes:
Logitech - Requiring the assurance of 100% response to users during an online promotional contest to give away 20,000 cordless mouse and keyboard combinations, Logitech turned to Akamai`s EdgeComputing capabilities to provide a positive user experience through fast performance and guaranteed availability during this key holiday period. Uncertain as to the magnitude of traffic the online promotion would create, making the decision to purchase more servers both costly and impossible to estimate, Logitech needed a solution that could scale on-demand, and be implemented in a short timeframe to meet the marketing schedule. EdgeComputing enabled Logitech to extend its contest application out across the Akamai network. The successful, five-hour online contest drove 72 million page views, resulting in a marketing victory that delivered the desired user experience and enhanced customer goodwill.
Sony Ericsson - Seeking increased revenues while guaranteeing a strong user experience, Sony Ericsson implemented Akamai`s EdgeComputing for the delivery of its dealer locator application to drive global, on-line visitors into brick and mortar Sony Ericsson dealers. Relying on Akamai as a deployment platform for not only its dealer locator, but many of its Internet applications, Sony Ericsson offloaded nearly 100% of application server processing, reducing its server infrastructure by 65%, and increasing the performance of its global dealer locator by over 400%. Today, Sony Ericsson is using EdgeComputing to achieve significant infrastructure savings, while improving application time-to-market and competitive differentiation of their core business.
Financials
"Our fourth quarter financial results support the decision and actions we undertook during the period to reduce our overall cost structure while maintaining our high level of customer service and improving productivity. Akamai has a competitive cost structure and a strong market position," said Robert Cobuzzi, chief financial officer at Akamai. "We ended the quarter with $125.2 million in cash and marketable securities, positioning us with a strong balance sheet going into 2003."
In the fourth quarter of 2002, Akamai recorded restructuring charges of $26.7 million related to real estate consolidations and reduction in workforce. The reduction in workforce during the quarter is expected to lower operating costs between $25 and $30 million on an annual basis.
Consistent with Akamai`s low capital investment requirements, capital expenditures for the quarter, principally made in connection with the development of internal-use software, network deployment, facilities and information systems, were $0.9 million, down from $7.0 million in the third quarter. Capital expenditures were reduced by a one-time tenant improvement payment of $1.7 million from the landlord of our corporate headquarters.
At December 31, 2002, the Company had 114.9 million shares of common stock outstanding. At December 31, 2002, common stock outstanding and unexercised stock options and warrants totaled 134.1 million shares.
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