PRESS RELEASE
CAMBRIDGE, Mass., Nov. 7, 2024 /PRNewswire/ — Akamai Applied sciences, Inc. (NASDAQ: AKAM), the cybersecurity and cloud computing firm that powers and protects enterprise on-line, as we speak reported monetary outcomes for the third quarter ended September 30, 2024.
“Akamai delivered one other stable quarter, highlighted by continued momentum in safety and cloud computing. Collectively, these options grew 17% on a year-over-year foundation and now account for almost 70% of our whole income,” mentioned Dr. Tom Leighton, Akamai’s Chief Govt Officer. “This quarter additionally marks a major milestone as we surpassed the billion-dollar quarterly income threshold for the primary time. Trying ahead, we stay assured within the traction we see from our new merchandise and our continued dedication to robust bottom-line efficiency.”
Akamai delivered the next outcomes for the third quarter ended September 30, 2024:
Income: Income was $1.005 billion, a 4% improve over third quarter 2023 income of $965 million and a 4% improve when adjusted for international alternate.*
Income by answer:
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Safety income was $519 million, up 14% year-over-year and when adjusted for international alternate*
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Supply income was $319 million, down 16% year-over-year and when adjusted for international alternate*
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Compute income was $167 million, up 28% year-over-year and when adjusted for international alternate*
Income by geography:
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U.S. income was $525 million, up 5% year-over-year
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Worldwide income was $480 million, up 3% year-over-year and when adjusted for international alternate*
Restructuring cost: Third quarter 2024 GAAP earnings from operations, GAAP internet earnings and GAAP EPS within the paragraphs beneath have been impacted by the $82 million restructuring cost acknowledged within the third quarter of 2024. This cost primarily associated to severance prices in reference to a workforce discount with the first intent of redeploying sources to assist the Firm’s strategic investments and impairments of sure belongings because of current acquisitions.
Earnings from operations: GAAP earnings from operations was $71 million, a 60% lower from third quarter 2023. GAAP working margin for the third quarter was 7%, down 11 proportion factors from the identical interval final 12 months.
Non-GAAP earnings from operations* was $296 million, flat from third quarter 2023. Non-GAAP working margin* for the third quarter was 29%, down 2 proportion factors from the identical interval final 12 months.
Internet earnings: GAAP internet earnings was $58 million, a 64% lower from third quarter 2023. Non-GAAP internet earnings* was $244 million, a 3% lower from third quarter 2023.
EPS: GAAP internet earnings per diluted share was $0.38, a 63% lower from third quarter 2023 and a 62% lower when adjusted for international alternate.* Non-GAAP internet earnings per diluted share* was $1.59, a 2% lower from third quarter 2023 and a 1% lower when adjusted for international alternate.*
Adjusted EBITDA*: Adjusted EBITDA* was $426 million, a 2% improve from third quarter 2023.
Supplemental money info: Money from operations for the third quarter of 2024 was $393 million, or 39% of income. Money, money equivalents and marketable securities was $1.979 billion as of September 30, 2024.
Share repurchases: The Firm spent $166 million within the third quarter of 2024 to repurchase 1.7 million shares of its frequent inventory at a median value of $97.29 per share. The Firm had 151 million shares of frequent inventory excellent as of September 30, 2024.
Monetary steering:
This steering is supplied on a non-GAAP foundation and can’t be reconciled to the closest GAAP measures with out unreasonable effort due to the unpredictability of the quantities and timing of occasions affecting the gadgets Akamai excludes from non-GAAP measures. For instance, stock-based compensation is unpredictable for Akamai’s performance-based awards, which may fluctuate considerably based mostly on present expectations of the long run achievement of performance-based targets. Amortization of intangible belongings, acquisition-related prices and restructuring prices are all impacted by the timing and measurement of potential future actions, that are tough to foretell. As well as, every now and then, Akamai excludes sure gadgets that happen occasionally, that are additionally inherently tough to foretell and estimate. It is usually tough to foretell the tax impact of the gadgets Akamai excludes and to estimate sure discrete tax gadgets, such because the decision of tax audits or modifications to tax legal guidelines. As such, the prices which might be being excluded from non-GAAP steering are tough to foretell and a reconciliation or a spread of outcomes may result in disclosure that may be imprecise or doubtlessly deceptive. Materials modifications to any one of many exclusions may have a major impact on our steering and future GAAP outcomes.
Quarterly Convention Name
Akamai will host a convention name as we speak at 4:30 p.m. ET that may be accessed by means of 1-833-634-5020 (or 1-412-902-4238 for worldwide calls) and utilizing passcode Akamai Applied sciences Name. A stay webcast of the decision could also be accessed at www.akamai.com within the Investor Relations part. As well as, a replay of the decision might be accessible for 2 weeks following the convention by calling 1-877-344-7529 (or 1-412-317-0088 for worldwide calls) and utilizing passcode 1443103. The archived webcast of this occasion could also be accessed by means of the Akamai web site.
About Akamai
Akamai is the cybersecurity and cloud computing firm that powers and protects enterprise on-line. Our market-leading safety options, superior menace intelligence and international operations workforce present defense-in-depth to safeguard enterprise information and functions all over the place. Akamai’s full-stack cloud computing options ship efficiency and affordability on the world’s most distributed platform. World enterprises belief Akamai to supply the industry-leading reliability, scale and experience they should develop their enterprise with confidence. Study extra about Akamai’s cloud computing, safety and content material supply options at akamai.com and akamai.com/weblog, or observe Akamai Applied sciences on X, previously referred to as Twitter, and LinkedIn.
Use of Non-GAAP Monetary Measures
Along with offering monetary measurements based mostly on usually accepted accounting rules in the USA of America(GAAP), Akamai supplies further monetary metrics that aren’t ready in accordance with GAAP (non-GAAP monetary measures). Administration makes use of non-GAAP monetary measures, along with GAAP monetary measures, to grasp and evaluate working outcomes throughout accounting durations, for monetary and operational resolution making, for planning and forecasting functions, to measure govt compensation and to guage Akamai’s monetary efficiency. These non-GAAP monetary measures are non-GAAP earnings from operations, non-GAAP working margin, non-GAAP internet earnings, non-GAAP internet earnings per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP tax charge, capital expenditures and affect of international forex alternate charges, as mentioned beneath.
Administration believes that these non-GAAP monetary measures replicate Akamai’s ongoing enterprise in a fashion that permits for significant comparisons and evaluation of developments within the enterprise, as they facilitate comparability of economic outcomes throughout accounting durations and to these of our peer corporations. Administration additionally believes that these non-GAAP monetary measures allow buyers to guage Akamai’s working outcomes and future prospects in the identical method as administration. These non-GAAP monetary measures might exclude bills and beneficial properties which may be uncommon in nature, rare or not reflective of Akamai’s ongoing working outcomes.
The non-GAAP monetary measures don’t exchange the presentation of Akamai’s GAAP monetary measures and will solely be used as a complement to, not as an alternative choice to, Akamai’s monetary outcomes introduced in accordance with GAAP. Akamai has supplied a reconciliation of every non-GAAP monetary measure utilized in its monetary reporting and investor shows to essentially the most immediately comparable GAAP monetary measure. This reconciliation captioned “Reconciliation of GAAP to Non-GAAP Monetary Measures” might be discovered on the Investor Relations part of Akamai’s web site.
The non-GAAP changes, and Akamai’s foundation for excluding them from non-GAAP monetary measures, are outlined beneath:
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Amortization of acquired intangible belongings – Akamai has incurred amortization of intangible belongings, included in its GAAP monetary statements, associated to varied acquisitions Akamai has made. The quantity of an acquisition’s buy value allotted to intangible belongings and time period of its associated amortization can differ considerably and is exclusive to every acquisition; subsequently, Akamai excludes amortization of acquired intangible belongings from its non-GAAP monetary measures to supply buyers with a constant foundation for evaluating pre- and post-acquisition working outcomes.
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Inventory-based compensation and amortization of capitalized stock-based compensation – Inventory-based compensation is a crucial side of the compensation paid to Akamai’s workers which incorporates long-term incentive plans to encourage retention, performance-based plans to encourage achievement of specified monetary targets and in addition short-term incentive awards with a one 12 months vest. The grant date truthful worth of the stock-based compensation awards varies based mostly on the inventory value on the time of grant, various valuation methodologies, subjective assumptions and the number of award sorts. This makes the comparability of Akamai’s present monetary outcomes to earlier and future durations tough to interpret; subsequently, Akamai believes it’s helpful to exclude stock-based compensation and amortization of capitalized stock-based compensation from its non-GAAP monetary measures in an effort to spotlight the efficiency of Akamai’s core enterprise and to be in step with the best way many buyers consider its efficiency and evaluate its working outcomes to look corporations.
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Acquisition-related prices – Acquisition-related prices embrace transaction charges, advisory charges, due diligence prices and different direct prices related to strategic actions, in addition to sure further compensation prices payable to workers acquired from the Linode acquisition if employed for a sure time period. The extra compensation price was initiated by and decided by the vendor, and is along with regular ranges of compensation, together with retention packages, supplied by Akamai. Acquisition-related prices are impacted by the timing and measurement of the acquisitions, and Akamai excludes acquisition-related prices from its non-GAAP monetary measures to supply a helpful comparability of working outcomes to prior durations and to look corporations as a result of such quantities differ considerably based mostly on the magnitude of the acquisition transactions and don’t replicate Akamai’s core operations.
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Restructuring cost – Akamai has incurred restructuring prices from packages which have considerably modified both the scope of the enterprise undertaken by the Firm or the way wherein that enterprise is performed. These prices embrace severance and associated bills for workforce reductions, impairments of long-lived belongings that can now not be utilized in operations (together with acquired intangible belongings, right-of-use belongings, different facility-related property and gear and internal-use software program) and termination charges for any contracts cancelled as a part of these packages. Akamai excludes this stuff from its non-GAAP monetary measures when evaluating its persevering with enterprise efficiency as such gadgets differ considerably based mostly on the magnitude of the restructuring motion and don’t replicate anticipated future working bills. As well as, these prices don’t essentially present significant perception into the basics of present or previous operations of its enterprise.
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Amortization of debt issuance prices and capitalized curiosity expense – Akamai has convertible senior notes excellent that mature in 2029, 2027 and 2025. The issuance prices of the convertible senior notes are amortized to curiosity expense and are excluded from Akamai’s non-GAAP outcomes as a result of administration believes the non-cash amortization expense shouldn’t be consultant of ongoing working efficiency.
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Beneficial properties and losses on investments – Akamai has recorded beneficial properties and losses from the disposition, modifications to truthful worth and impairment of sure investments. Akamai believes excluding these quantities from its non-GAAP monetary measures is beneficial to buyers because the varieties of occasions giving rise to those beneficial properties and losses aren’t consultant of Akamai’s core enterprise operations and ongoing working efficiency.
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Beneficial properties and losses from fairness technique funding – Akamai data earnings or losses on its share of earnings and losses from its fairness technique funding, and any beneficial properties from returns of investments or impairments. Akamai excludes such earnings and losses as a result of it doesn’t have direct management over the operations of the funding and the associated earnings and losses aren’t consultant of its core enterprise operations.
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Earnings tax impact of non-GAAP changes and sure discrete tax gadgets – The non-GAAP changes described above are reported on a pre-tax foundation. The earnings tax impact of non-GAAP changes is the distinction between GAAP and non-GAAP earnings tax expense. Non-GAAP earnings tax expense is computed on non-GAAP pre-tax earnings (GAAP pre-tax earnings adjusted for non-GAAP changes) and excludes sure discrete tax gadgets (such because the affect of intercompany gross sales of mental property associated to acquisitions), if any. Akamai believes that making use of the non-GAAP changes and their associated earnings tax impact permits Akamai to spotlight earnings attributable to its core operations.
Akamai’s definitions of its non-GAAP monetary measures are outlined beneath:
Non-GAAP earnings from operations – GAAP earnings from operations adjusted for the next gadgets: amortization of acquired intangible belongings; stock-based compensation; amortization of capitalized stock-based compensation; amortization of capitalized curiosity expense; acquisition-related prices; restructuring prices; and different non-recurring or uncommon gadgets that will come up every now and then.
Non-GAAP working margin – Non-GAAP earnings from operations acknowledged as a proportion of income.
Non-GAAP internet earnings – GAAP internet earnings adjusted for the next tax-affected gadgets: amortization of acquired intangible belongings; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related prices; restructuring prices; amortization of debt issuance prices; amortization of capitalized curiosity expense; sure beneficial properties and losses on investments; beneficial properties and losses from fairness technique funding; and different non-recurring or uncommon gadgets that will come up every now and then.
Non-GAAP tax charge – GAAP tax charge excluding the tax impact of non-GAAP changes and sure discrete tax gadgets.
Non-GAAP internet earnings per diluted share, or EPS – Non-GAAP internet earnings divided by weighted common diluted frequent shares excellent. Diluted weighted common frequent shares excellent are adjusted in non-GAAP per share calculations for the shares that may be delivered to Akamai pursuant to the notice hedge transactions entered into in reference to the issuances of $1,265 million of convertible senior notes due 2029 and the issuances of $1,150 million of convertible senior notes due 2027 and 2025, respectively. Beneath GAAP, shares delivered underneath hedge transactions aren’t thought-about offsetting shares within the fully-diluted share calculation till they’re delivered. Nevertheless, Akamai would obtain a profit from the notice hedge transactions and wouldn’t enable the dilution to happen, so administration believes that adjusting for this profit supplies a significant view of working efficiency. With respect to the convertible senior notes due in every of 2029, 2027 and 2025, except Akamai’s weighted common inventory value is larger than $126.31, $116.18 and $95.10, respectively, the preliminary conversion costs, there might be no distinction between GAAP and non-GAAP diluted weighted common frequent shares excellent.
Adjusted EBITDA – GAAP internet earnings excluding the next gadgets: curiosity and marketable securities earnings and losses; earnings taxes; depreciation and amortization of tangible and intangible belongings; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related prices; restructuring prices; international alternate beneficial properties and losses; curiosity expense; amortization of capitalized curiosity expense; sure beneficial properties and losses on investments; beneficial properties and losses from fairness technique funding; and different non-recurring or uncommon gadgets that will come up every now and then.
Adjusted EBITDA margin – Adjusted EBITDA acknowledged as a proportion of income.
Capital expenditures, or capex, excluding stock-based compensation and curiosity expense – Purchases of property and gear and capitalization of internal-use software program improvement prices introduced on an accrual foundation, which differs from the cash-basis presentation included within the statements of money flows. The first distinction between the 2 is the change in purchases of property and gear and capitalization of internal-use software program improvement prices accrued for, however not paid, at interval finish versus prior durations.
Capex as a proportion of income – Capital expenditures, or capex, excluding stock-based compensation and curiosity expense, acknowledged as a proportion of income.
Influence of international forex alternate charge – Income and earnings from worldwide operations have traditionally been essential contributors to Akamai’s monetary outcomes. Consequently, Akamai’s monetary outcomes have been impacted, and administration expects they’ll proceed to be impacted, by fluctuations in international forex alternate charges. For instance, when the native currencies of our worldwide subsidiaries weaken, our consolidated outcomes acknowledged in U.S. {dollars} are negatively impacted.
As a result of alternate charges are a significant consider understanding period-to-period comparisons, administration believes the presentation of the affect of international forex alternate charges on income and earnings enhances the understanding of our monetary outcomes and analysis of efficiency compared to prior durations. The greenback affect of modifications in international forex alternate charges introduced is calculated by translating present interval outcomes utilizing month-to-month common international forex alternate charges from the comparative interval and evaluating them to the reported quantity. The share development charge impacted by international forex alternate charges, generally known as fixed forex, is calculated by evaluating the prior interval quantities as reported and the present interval quantities translated utilizing the identical month-to-month common international forex alternate charges from the comparative interval.
Akamai Assertion Beneath the Personal Securities Litigation Reform Act
This launch and/or our quarterly earnings convention name scheduled for later as we speak comprise statements that aren’t statements of historic reality and represent forward-looking statements for functions of the secure harbor provisions underneath The Personal Securities Litigation Reform Act of 1995, together with, however not restricted to, statements about anticipated future monetary efficiency, expectations, plans and prospects of Akamai. Precise outcomes might differ materially from these indicated by these forward-looking statements because of numerous essential elements together with, however not restricted to, incapacity to proceed to generate money on the identical stage as prior years; failure of our investments in innovation to generate options which might be accepted available in the market; incapacity to extend our income on the identical charge as prior to now and preserve our bills from rising at a larger charge than our revenues; results of competitors, together with pricing stress and altering enterprise fashions; affect of macroeconomic developments, together with financial uncertainty, turmoil within the monetary providers {industry}, the results of inflation, rising and fluctuating rates of interest, international forex alternate charge fluctuations, securities market volatility and financial provide fluctuations; circumstances and uncertainties within the geopolitical atmosphere, together with sanctions and disruptions ensuing from the continuing conflict in Ukraine and the Israel-Hamas conflict; persevering with provide chain and logistics prices, constraints, modifications or disruptions; defects or disruptions in our merchandise or IT techniques, together with cyber-attacks, information breaches or malware; failure to understand the anticipated advantages of any of our acquisitions or reorganizations; modifications to financial, political and regulatory circumstances in the USA and internationally; our means to draw and retain key personnel; delay in creating or failure to develop new service choices or functionalities, and if developed, lack of market acceptance of such service choices and functionalities or failure of such options to function as anticipated, and different elements which might be mentioned in our Annual Report on Kind 10-Ok, quarterly reviews on Kind 10-Q, and different paperwork filed with the SEC.
As well as, the statements on this press launch and on our quarterly earnings convention name characterize Akamai’s expectations and beliefs as of the date of this press launch. Akamai anticipates that subsequent occasions and developments might trigger these expectations and beliefs to alter. Nevertheless, whereas Akamai might elect to replace these forward-looking statements sooner or later sooner or later, it particularly disclaims any obligation to take action. These forward-looking statements shouldn’t be relied upon as representing Akamai’s expectations or beliefs as of any date subsequent to the date of this press launch.