CAMBRIDGE, Mass., Feb. 15, 2022 /PRNewswire/ --
Fourth quarter highlights
Full-year highlights
Akamai Technologies, Inc. (NASDAQ: AKAM), the world's most trusted solution to power and protect digital experiences, today reported financial results for the fourth quarter and full-year ended December 31, 2021. Akamai also announced today it has entered into a definitive agreement to acquire Linode Limited Liability Company, one of the easiest-to-use and most trusted infrastructure-as-a-service (IaaS) platform providers.
"Akamai's outstanding fourth quarter performance capped off an excellent year on both the top and bottom lines," said Dr. Tom Leighton, Chief Executive Officer of Akamai. "We believe our planned acquisition of Linode in cloud computing, and our recent acquisition of Guardicore in enterprise security, combined with our robust product portfolios, enterprise-focused go-to-market capabilities and widely distributed edge platform, will uniquely position us for success in these two large and fast growing markets."
Akamai delivered the following results for the fourth quarter and full-year ended December 31, 2021:
Revenue: Revenue for the fourth quarter was $905 million, a 7% increase over fourth quarter 2020 revenue of $846 million and an 8% increase when adjusted for foreign exchange.* Total revenue for 2021 was $3.461 billion compared to $3.198 billion for 2020, up 8% year-over-year and up 7% when adjusted for foreign exchange.*
Revenue by Product Group:
Revenue by Geography:
Income from operations: GAAP income from operations for the fourth quarter was $196 million, a 46% increase from fourth quarter 2020 income from operations of $135 million. GAAP operating margin for the fourth quarter was 22%, up 6 percentage points from the same period last year. GAAP income from operations for 2021 was $783 million, a 19% increase from the prior year's GAAP income from operations of $659 million. Full-year GAAP operating margin was 23%, up 2 percentage points from the same period last year.
Non-GAAP income from operations* for the fourth quarter was $283 million, an 11% increase from fourth quarter 2020 non-GAAP income from operations of $256 million. Non-GAAP operating margin* for the fourth quarter was 31%, up 1 percentage point from the same period last year. Non-GAAP income from operations* for 2021 was $1.094 billion, a 10% increase from the prior year's non-GAAP income from operations of $994 million. Full-year non-GAAP operating margin* was 32%, up 1 percentage point from the same period last year.
Net income: GAAP net income for the fourth quarter was $161 million, a 42% increase from fourth quarter 2020 GAAP net income of $113 million. GAAP net income for 2021 was $652 million, a 17% increase from the prior year's GAAP net income of $557 million.
Non-GAAP net income* for the fourth quarter was $243 million, an 11% increase from fourth quarter 2020 non-GAAP net income of $220 million. Non-GAAP net income* for 2021 was $943 million, a 10% increase from the prior year's non-GAAP net income of $858 million.
EPS: GAAP EPS for the fourth quarter was $0.97 per diluted share, a 43% increase from fourth quarter 2020 GAAP EPS of $0.68 and a 48% increase when adjusted for foreign exchange.* GAAP EPS for 2021 was $3.93 per diluted share, a 17% increase from prior year's GAAP EPS of $3.37 per diluted share and a 14% increase when adjusted for foreign exchange.*
Non-GAAP EPS* for the fourth quarter was $1.49 per diluted share, an 12% increase from fourth quarter 2020 non-GAAP EPS of $1.33 and a 14% increase when adjusted for foreign exchange.* Non-GAAP EPS* for 2021 was $5.74 per diluted share, a 10% increase from prior year's non-GAAP EPS of $5.22 per diluted share and an 8% increase when adjusted for foreign exchange.*
Adjusted EBITDA*: Adjusted EBITDA* for the fourth quarter was $404 million, an 11% increase from fourth quarter 2020 Adjusted EBITDA of $364 million. Adjusted EBITDA* for 2021 was $1.561 billion, a 12% increase from the prior year's Adjusted EBITDA of $1.397 billion.
Supplemental cash information: Cash from operations for the quarter was $387 million, or 43% of revenue. Cash from operations for 2021 was $1.405 billion, or 41% of revenue. Cash, cash equivalents and marketable securities was $2.2 billion as of December 31, 2021.
Share repurchases: The Company spent $271 million in the fourth quarter to repurchase 2.4 million shares of its common stock at an average price of $111.05 per share. For the full-year, the Company spent $522 million to repurchase 4.7 million shares of its common stock at an average price of $109.97 per share. The Company had 161 million shares of common stock outstanding as of December 31, 2021.
* | See Use of Non-GAAP Financial Measures below for definitions |
Quarterly Conference Call and Associated Webcast with SlidesAkamai 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 7579719. A live webcast of the call and accompanying slides may be accessed in the Investor Relations section of www.akamai.com. 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 7579719. The archived webcast of this event may be accessed through the Akamai website.
About Akamai Akamai powers and protects life online. The most innovative companies worldwide choose Akamai to secure and deliver their digital experiences – helping billions of people live, work, and play every day. With the world's largest and most trusted edge platform, Akamai keeps apps, code, and experiences closer to users – and threats farther away. Learn more about Akamai's security, content delivery, and edge compute products and services at www.akamai.com, blogs.akamai.com, or follow Akamai Technologies on Twitter and LinkedIn.
AKAMAI TECHNOLOGIES, INC. | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(in thousands) | December 31,2021 | December 31,2020 | |
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 536,725 | $ 352,917 | |
Marketable securities | 541,470 | 745,156 | |
Accounts receivable, net | 675,926 | 660,052 | |
Prepaid expenses and other current assets | 166,313 | 171,406 | |
Total current assets | 1,920,434 | 1,929,531 | |
Marketable securities | 1,088,048 | 1,398,802 | |
Property and equipment, net | 1,534,329 | 1,478,272 | |
Operating lease right-of-use assets | 815,754 | 793,945 | |
Acquired intangible assets, net | 313,225 | 234,724 | |
Goodwill | 2,156,254 | 1,674,371 | |
Deferred income tax assets | 168,342 | 106,918 | |
Other assets | 142,287 | 147,567 | |
Total assets | $ 8,138,673 | $ 7,764,130 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 109,928 | $ 118,546 | |
Accrued expenses | 411,590 | 380,468 | |
Deferred revenue | 86,517 | 76,600 | |
Operating lease liabilities | 175,683 | 154,801 | |
Other current liabilities | 6,623 | 27,755 | |
Total current liabilities | 790,341 | 758,170 | |
Deferred revenue | 25,342 | 5,262 | |
Deferred income tax liabilities | 40,974 | 37,458 | |
Convertible senior notes | 1,976,167 | 1,906,707 | |
Operating lease liabilities | 707,087 | 715,404 | |
Other liabilities | 68,748 | 89,833 | |
Total liabilities | 3,608,659 | 3,512,834 | |
Total stockholders' equity | 4,530,014 | 4,251,296 | |
Total liabilities and stockholders' equity | $ 8,138,673 | $ 7,764,130 |
AKAMAI TECHNOLOGIES, INC. | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands, except per share data) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
Revenue | $ 905,358 | $ 860,333 | $ 846,287 | $ 3,461,223 | $ 3,198,149 | ||||
Costs and operating expenses: | |||||||||
Cost of revenue (1) (2) | 325,403 | 316,866 | 303,847 | 1,268,956 | 1,132,672 | ||||
Research and development (1) | 93,173 | 82,899 | 67,228 | 335,372 | 269,315 | ||||
Sales and marketing (1) | 125,205 | 108,514 | 140,401 | 461,967 | 510,405 | ||||
General and administrative (1) (2) | 147,749 | 134,265 | 162,453 | 553,024 | 547,888 | ||||
Amortization of acquired intangible assets | 12,573 | 11,959 | 10,894 | 48,019 | 42,049 | ||||
Restructuring charge | 5,170 | 565 | 26,847 | 10,737 | 37,286 | ||||
Total costs and operating expenses | 709,273 | 655,068 | 711,670 | 2,678,075 | 2,539,615 | ||||
Income from operations | 196,085 | 205,265 | 134,617 | 783,148 | 658,534 | ||||
Interest income | 3,434 | 2,872 | 6,270 | 15,620 | 29,122 | ||||
Interest expense | (18,317) | (18,144) | (17,342) | (72,332) | (69,120) | ||||
Other (expense) income, net | (222) | 3,635 | 5,415 | 1,785 | (2,454) | ||||
Income before provision for income taxes | 180,980 | 193,628 | 128,960 | 728,221 | 616,082 | ||||
Provision for income taxes | (19,016) | (13,648) | (4,158) | (62,571) | (45,922) | ||||
Loss from equity method investment | (1,430) | (1,064) | (11,432) | (14,008) | (13,106) | ||||
Net income | $ 160,534 | $ 178,916 | $ 113,370 | $ 651,642 | $ 557,054 | ||||
Net income per share: | |||||||||
Basic | $ 0.99 | $ 1.10 | $ 0.70 | $ 4.01 | $ 3.43 | ||||
Diluted | $ 0.97 | $ 1.08 | $ 0.68 | $ 3.93 | $ 3.37 | ||||
Shares used in per share calculations: | |||||||||
Basic | 161,757 | 162,767 | 162,798 | 162,665 | 162,490 | ||||
Diluted | 164,947 | 166,318 | 165,879 | 165,804 | 165,213 | ||||
(1) Includes stock-based compensation (see supplemental table for figures) | |||||||||
(2) Includes depreciation and amortization (see supplemental table for figures) |
AKAMAI TECHNOLOGIES, INC. | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
Cash flows from operating activities: | |||||||||
Net income | $ 160,534 | $ 178,916 | $ 113,370 | $ 651,642 | $ 557,054 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 141,699 | 139,747 | 127,708 | 550,632 | 478,389 | ||||
Stock-based compensation | 48,955 | 49,018 | 50,510 | 202,759 | 197,411 | ||||
Benefit for deferred income taxes | (17,459) | (37,560) | (11,273) | (47,794) | (33,821) | ||||
Amortization of debt discount and issuance costs | 16,741 | 16,567 | 15,766 | 66,025 | 62,823 | ||||
Other non-cash reconciling items, net | 9,808 | (1,639) | 6,743 | 21,823 | 23,027 | ||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||
Accounts receivable | (8,871) | (10,821) | (4,942) | (24,096) | (90,381) | ||||
Prepaid expenses and other current assets | 19,133 | (4,250) | (4,015) | 4,034 | (25,395) | ||||
Accounts payable and accrued expenses | 47,786 | 66,796 | (10,607) | 31,523 | 39,211 | ||||
Deferred revenue | (11,128) | (9,831) | (16,121) | (2,865) | (1,318) | ||||
Other current liabilities | (2,446) | (1,728) | 19,739 | (20,404) | 18,101 | ||||
Other non-current assets and liabilities | (17,852) | 4,522 | 4,215 | (28,716) | (10,101) | ||||
Net cash provided by operating activities | 386,900 | 389,737 | 291,093 | 1,404,563 | 1,215,000 | ||||
Cash flows from investing activities: | |||||||||
Cash paid for acquired businesses, net of cash acquired | (583,187) | — | (128,105) | (598,825) | (127,999) | ||||
Cash paid for asset acquisition | — | — | — | — | (36,376) | ||||
Purchases of property and equipment and capitalization of internal-use software development costs | (109,695) | (116,247) | (167,445) | (545,230) | (731,872) | ||||
Purchases of short- and long-term marketable securities | (320,872) | (229,496) | (629,323) | (932,604) | (1,782,849) | ||||
Proceeds from sales, maturities and redemptions of short- and long-term marketable securities | 172,457 | 740,179 | 296,838 | 1,434,082 | 1,628,001 | ||||
Other, net | (2,657) | (1,453) | 10,101 | (4,322) | 8,121 | ||||
Net cash (used in) provided by investing activities | (843,954) | 392,983 | (617,934) | (646,899) | (1,042,974) |
AKAMAI TECHNOLOGIES, INC. | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
Cash flows from financing activities: | |||||||||
Proceeds from the issuance of common stock under stock plans | 12,690 | 15,820 | 13,963 | 59,632 | 59,775 | ||||
Employee taxes paid related to net share settlement of stock-based awards | (10,917) | (11,935) | (12,529) | (99,112) | (89,828) | ||||
Repurchases of common stock | (270,998) | (96,841) | (72,510) | (522,255) | (193,588) | ||||
Other, net | — | (201) | — | (268) | — | ||||
Net cash used in financing activities | (269,225) | (93,157) | (71,076) | (562,003) | (223,641) | ||||
Effects of exchange rate changes on cash and cash equivalents | (2,148) | (5,080) | 7,400 | (11,376) | 10,935 | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (728,427) | 684,483 | (390,517) | 184,285 | (40,680) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 1,266,178 | 581,695 | 743,983 | 353,466 | 394,146 | ||||
Cash, cash equivalents and restricted cash at end of period | $ 537,751 | $ 1,266,178 | $ 353,466 | $ 537,751 | $ 353,466 |
AKAMAI TECHNOLOGIES, INC. | |||||||||
SUPPLEMENTAL REVENUE DATA – REVENUE BY PRODUCT GROUP (1) | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
Security Technology Group | $ 364,840 | $ 334,649 | $ 296,137 | $ 1,334,836 | $ 1,061,622 | ||||
Edge Technology Group | 540,518 | 525,684 | 550,150 | 2,126,387 | 2,136,527 | ||||
Total revenue | $ 905,358 | $ 860,333 | $ 846,287 | $ 3,461,223 | $ 3,198,149 | ||||
Revenue growth rates year-over-year: | |||||||||
Security Technology Group | 23% | 26% | 24% | 26% | 25% | ||||
Edge Technology Group | (2) | — | 3 | — | 4 | ||||
Total revenue | 7% | 9% | 10% | 8% | 11% | ||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (2): | |||||||||
Security Technology Group | 25% | 25% | 23% | 25% | 25% | ||||
Edge Technology Group | (1) | (1) | 2 | (1) | 4 | ||||
Total revenue | 8% | 8% | 8% | 7% | 11% | ||||
AKAMAI TECHNOLOGIES, INC. | |||||||||
SUPPLEMENTAL REVENUE DATA – REVENUE BY GEOGRAPHY | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
U.S. | $ 475,983 | $ 448,792 | $ 467,456 | $ 1,837,508 | $ 1,777,435 | ||||
International | 429,375 | 411,541 | 378,831 | 1,623,715 | 1,420,714 | ||||
Total revenue | $ 905,358 | $ 860,333 | $ 846,287 | $ 3,461,223 | $ 3,198,149 | ||||
Revenue growth rates year-over-year: | |||||||||
U.S. | 2% | 3% | 5% | 3% | 5% | ||||
International | 13 | 16 | 16 | 14 | 18 | ||||
Total revenue | 7% | 9% | 10% | 8% | 11% | ||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (2): | |||||||||
U.S. | 2% | 3% | 5% | 3% | 5% | ||||
International | 16 | 15 | 13 | 12 | 19 | ||||
Total revenue | 8% | 8% | 8% | 7% | 11% |
(1) | Effective March 1, 2021, Akamai reorganized into two groups: the Security Technology Group and the Edge Technology Group, which both utilize the Akamai Intelligent Edge Platform and its global sales organization. These groups are aligned with their product offerings. Revenue from the Security Technology Group was previously reported as revenue from Cloud Security Solutions, and revenue from the Edge Technology Group was previously reported as revenue from content delivery network (CDN) services and all other solutions. |
(2) | See Use of Non-GAAP Financial Measures below for a definition |
AKAMAI TECHNOLOGIES, INC. | |||||||||
SUPPLEMENTAL REVENUE DATA – REVENUE FROM INTERNET PLATFORM CUSTOMERS (1) | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
Revenue from Internet Platform Customers | $ 65,898 | $ 60,482 | $ 57,677 | $ 249,205 | $ 203,749 | ||||
Revenue excluding Internet Platform Customers | 839,460 | 799,851 | 788,610 | 3,212,018 | 2,994,400 | ||||
Total revenue | $ 905,358 | $ 860,333 | $ 846,287 | $ 3,461,223 | $ 3,198,149 | ||||
Revenue growth rates year-over-year: | |||||||||
Revenue from Internet Platform Customers | 14% | 19% | 11% | 22% | 8% | ||||
Revenue excluding Internet Platform Customers | 6 | 8 | 9 | 7 | 11 | ||||
Total revenue | 7% | 9% | 10% | 8% | 11% | ||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (2): | |||||||||
Revenue from Internet Platform Customers | 14% | 19% | 11% | 22% | 8% | ||||
Revenue excluding Internet Platform Customers | 8 | 7 | 8 | 6 | 11 | ||||
Total revenue | 8% | 8% | 8% | 7% | 11% | ||||
AKAMAI TECHNOLOGIES, INC. | |||||||||
SUPPLEMENTAL REVENUE DATA – REVENUE BY DIVISION (3) | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31,2021 | September 30,2021 | December 31, 2020 (4) | December 31,2021 | December 31, 2020 (4) | ||||
Web Division | $ 454,413 | $ 432,874 | $ 434,068 | $ 1,745,854 | $ 1,652,578 | ||||
Media and Carrier Division | 450,945 | 427,459 | 412,219 | 1,715,369 | 1,545,571 | ||||
Total revenue | $ 905,358 | $ 860,333 | $ 846,287 | $ 3,461,223 | $ 3,198,149 | ||||
Revenue growth rates year-over-year: | |||||||||
Web Division | 5% | 4% | 5% | 6% | 7% | ||||
Media and Carrier Division | 9 | 13 | 15 | 11 | 14 | ||||
Total revenue | 7% | 9% | 10% | 8% | 11% | ||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (2): | |||||||||
Web Division | 6% | 4% | 4% | 5% | 7% | ||||
Media and Carrier Division | 10 | 13 | 14 | 10 | 14 | ||||
Total revenue | 8% | 8% | 8% | 7% | 11% |
(1) | Revenue from large Internet platform companies: Amazon, Apple, Meta Platforms (Facebook), Alphabet (Google), Microsoft and Netflix |
(2) | See Use of Non-GAAP Financial Measures below for a definition |
(3) | Prior to March 1, 2021, Akamai managed its business by division, which was a customer-focused reporting view that reflected revenue from customers that were managed by the division. Although Akamai no longer manages its business by division, the prior divisional view of revenue is provided for informational purposes. |
(4) | As of January 1, 2021, Akamai reassigned some of its customers between the Media and Carrier Division and the Web Division and revised historical results in order to reflect the most recent categorization and to provide a comparable view for all periods presented. As the purchasing patterns and required account expertise of customers change over time, Akamai may reassign a customer's division from one to another. |
AKAMAI TECHNOLOGIES, INC. | |||||||||
SUPPLEMENTAL OPERATING EXPENSE DATA | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
General and administrative expenses: | |||||||||
Payroll and related costs | $ 59,015 | $ 52,799 | $ 51,759 | $ 223,238 | $ 199,992 | ||||
Stock-based compensation | 15,861 | 14,978 | 14,834 | 63,324 | 58,470 | ||||
Depreciation and amortization | 19,987 | 20,549 | 21,189 | 81,934 | 82,862 | ||||
Facilities-related costs | 25,521 | 26,056 | 25,136 | 100,769 | 98,805 | ||||
(Benefit) provision for doubtful accounts | (223) | 275 | (584) | 763 | 2,881 | ||||
Acquisition-related costs | 11,797 | 1,316 | 4,390 | 13,317 | 5,579 | ||||
Legal settlements | — | — | — | — | 275 | ||||
Endowment of Akamai Foundation | — | — | 20,000 | — | 20,000 | ||||
Other expenses | 15,791 | 18,292 | 25,729 | 69,679 | 79,024 | ||||
Total general and administrative expenses | $ 147,749 | $ 134,265 | $ 162,453 | $ 553,024 | $ 547,888 | ||||
General and administrative expenses–functional(1): | |||||||||
Global functions | $ 53,605 | $ 49,738 | $ 51,476 | $ 212,456 | $ 193,719 | ||||
As a percentage of revenue | 6% | 6% | 6% | 6% | 6% | ||||
Infrastructure | 82,565 | 82,928 | 87,172 | 326,480 | 325,434 | ||||
As a percentage of revenue | 9% | 10% | 10% | 9% | 10% | ||||
Other | 11,579 | 1,599 | 23,805 | 14,088 | 28,735 | ||||
Total general and administrative expenses | $ 147,749 | $ 134,265 | $ 162,453 | $ 553,024 | $ 547,888 | ||||
As a percentage of revenue | 16% | 16% | 19% | 16% | 17% | ||||
Stock-based compensation: | |||||||||
Cost of revenue | $ 6,435 | $ 6,738 | $ 6,455 | $ 27,143 | $ 24,829 | ||||
Research and development | 15,315 | 16,329 | 12,519 | 65,950 | 48,855 | ||||
Sales and marketing | 11,344 | 10,973 | 16,702 | 46,342 | 65,257 | ||||
General and administrative | 15,861 | 14,978 | 14,834 | 63,324 | 58,470 | ||||
Total stock-based compensation | $ 48,955 | $ 49,018 | $ 50,510 | $ 202,759 | $ 197,411 |
(1) | Global functions expense includes payroll, stock-based compensation and other employee-related costs for administrative functions, including finance, purchasing, order entry, human resources, legal, information technology and executive personnel, as well as third-party professional service fees. Infrastructure expense includes payroll, stock-based compensation and other employee-related costs for our network infrastructure functions, as well as facility rent expense, depreciation and amortization of facility and IT-related assets, software and software-related costs, business insurance and taxes. Our network infrastructure function is responsible for network planning, sourcing, architecture evaluation and platform security. Other expense includes acquisition-related costs, provision for doubtful accounts, legal settlements and the endowments of the Akamai Foundation. |
AKAMAI TECHNOLOGIES, INC. | |||||||||
OTHER SUPPLEMENTAL DATA | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands, except end of period statistics) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
Depreciation and amortization: | |||||||||
Network-related depreciation | $ 60,748 | $ 58,139 | $ 48,824 | $ 226,384 | $ 167,018 | ||||
Capitalized internal-use software development amortization | 40,502 | 40,943 | 38,682 | 161,094 | 155,187 | ||||
Other depreciation and amortization | 19,399 | 19,973 | 20,662 | 79,570 | 80,955 | ||||
Depreciation of property and equipment | 120,649 | 119,055 | 108,168 | 467,048 | 403,160 | ||||
Capitalized stock-based compensation amortization (1) | 7,645 | 7,882 | 7,737 | 32,136 | 29,631 | ||||
Capitalized interest expense amortization (1) | 832 | 851 | 909 | 3,429 | 3,549 | ||||
Amortization of acquired intangible assets | 12,573 | 11,959 | 10,894 | 48,019 | 42,049 | ||||
Total depreciation and amortization | $ 141,699 | $ 139,747 | $ 127,708 | $ 550,632 | $ 478,389 | ||||
Capital expenditures, excluding stock-based compensation and interest expense (2) (3): | |||||||||
Purchases of property and equipment | $ 61,490 | $ 75,687 | $ 138,140 | $ 313,830 | $ 509,404 | ||||
Capitalized internal-use software development costs | 55,002 | 53,061 | 56,634 | 219,702 | 217,120 | ||||
Total capital expenditures, excluding stock-based compensation and interest expense | $ 116,492 | $ 128,748 | $ 194,774 | $ 533,532 | $ 726,524 | ||||
End of period statistics: | |||||||||
Number of employees | 8,780 | 8,411 | 8,368 |
(1) | Amortization of capitalized stock-based compensation and interest expense in this table excludes amortization of capitalized stock-based compensation and interest expense capitalized as part of the implementation of cloud-computing arrangements and contract fulfillment costs. However, the amounts are included in our total amortization of capitalized stock-based compensation and interest expense that is excluded from our non-GAAP measures (see reconciliations of GAAP to non-GAAP measures). |
(2) | Capital expenditures presented in this table are reported on an accrual basis, which differs from the cash-basis presentation in the statements of cash flows. The primary difference between the two is the change in purchases of property and equipment and capitalization of internal-use software development costs accrued for, but not paid, at period end versus prior periods. |
(3) | See Use of Non-GAAP Financial Measures below for a definition. |
AKAMAI TECHNOLOGIES, INC. | |||||||||
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS AND NET INCOME | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
Income from operations | $ 196,085 | $ 205,265 | $ 134,617 | $ 783,148 | $ 658,534 | ||||
GAAP operating margin | 22% | 24% | 16% | 23% | 21% | ||||
Amortization of acquired intangible assets | 12,573 | 11,959 | 10,894 | 48,019 | 42,049 | ||||
Stock-based compensation | 48,955 | 49,018 | 50,510 | 202,759 | 197,411 | ||||
Amortization of capitalized stock-based compensation and capitalized interest expense | 8,641 | 8,815 | 8,662 | 35,894 | 33,202 | ||||
Restructuring charge | 5,170 | 565 | 26,847 | 10,737 | 37,286 | ||||
Acquisition-related costs | 11,797 | 1,316 | 4,390 | 13,317 | 5,579 | ||||
Legal settlements | — | — | — | — | 275 | ||||
Endowment of Akamai Foundation | — | — | 20,000 | — | 20,000 | ||||
Operating adjustments | 87,136 | 71,673 | 121,303 | 310,726 | 335,802 | ||||
Non-GAAP income from operations | $ 283,221 | $ 276,938 | $ 255,920 | $ 1,093,874 | $ 994,336 | ||||
Non-GAAP operating margin | 31% | 32% | 30% | 32% | 31% | ||||
Net income | $ 160,534 | $ 178,916 | $ 113,370 | $ 651,642 | $ 557,054 | ||||
Operating adjustments (from above) | 87,136 | 71,673 | 121,303 | 310,726 | 335,802 | ||||
Amortization of debt discount and issuance costs | 16,741 | 16,567 | 15,766 | 66,025 | 62,823 | ||||
Gain on investments | — | (3,680) | (7,228) | (3,680) | (7,228) | ||||
Loss from equity method investment | 1,430 | 1,064 | 11,432 | 14,008 | 13,106 | ||||
Income tax-effect of above non-GAAP adjustments and certain discrete tax items | (22,790) | (25,600) | (34,799) | (96,164) | (103,280) | ||||
Non-GAAP net income | $ 243,051 | $ 238,940 | $ 219,844 | $ 942,557 | $ 858,277 |
AKAMAI TECHNOLOGIES, INC. | |||||||||
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED SHARE | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands, except per share data) | December 31,2021 | September 30,2021 | December 31,2020 | December 31,2021 | December 31,2020 | ||||
GAAP net income per diluted share | $ 0.97 | $ 1.08 | $ 0.68 | $ 3.93 | $ 3.37 | ||||
Adjustments to net income: | |||||||||
Amortization of acquired intangible assets | 0.08 | 0.07 | 0.07 | 0.29 | 0.25 | ||||
Stock-based compensation | 0.30 | 0.29 | 0.30 | 1.22 | 1.19 | ||||
Amortization of capitalized stock-based compensation and capitalized interest expense | 0.05 | 0.05 | 0.05 | 0.22 | 0.20 | ||||
Restructuring charge | 0.03 | — | 0.16 | 0.06 | 0.23 | ||||
Acquisition-related costs | 0.07 | 0.01 | 0.03 | 0.08 | 0.03 | ||||
Legal settlements | — | — | — | — | — | ||||
Endowment of Akamai Foundation | — | — | 0.12 | — | 0.12 | ||||
Amortization of debt discount and issuance costs | 0.10 | 0.10 | 0.10 | 0.40 | 0.38 | ||||
Gain on investments | — | (0.02) | (0.04) | (0.02) | (0.04) | ||||
Loss from equity method investment | 0.01 | 0.01 | 0.07 | 0.08 | 0.08 | ||||
Income tax effect of above non-GAAP adjustments and certain discrete tax items | (0.14) | (0.15) | (0.21) | (0.58) | (0.63) | ||||
Adjustment for shares (1) | 0.02 | 0.02 | — | 0.06 | 0.04 | ||||
Non-GAAP net income per diluted share | $ 1.49 | $ 1.45 | $ 1.33 | $ 5.74 | $ 5.22 | ||||
Shares used in GAAP per diluted share calculations | 164,947 | 166,318 | 165,879 | 165,804 | 165,213 | ||||
Impact of benefit from note hedge transactions (1) | (1,636) | (2,028) | (1,105) | (1,600) | (873) | ||||
Shares used in non-GAAP per diluted share calculations (1) | 163,311 | 164,290 | 164,774 | 164,204 | 164,340 |
(1) | Shares used in non-GAAP per diluted share calculations have been adjusted for the periods presented for the benefit of Akamai's note hedge transactions. During the periods presented Akamai's average stock price was in excess of $95.10, which is the initial conversion price of Akamai's convertible senior notes due in 2025. See Use of Non-GAAP Financial Measures below for further definition. |
AKAMAI TECHNOLOGIES, INC. | |||||||||
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA | |||||||||
Three Months Ended | Year Ended | ||||||||
(in thousands) | December 31, 2021 | September 30, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||
Net income | $ 160,534 | $ 178,916 | $ 113,370 | $ 651,642 | $ 557,054 | ||||
Net income margin | 18% | 21% | 13% | 19% | 17% | ||||
Interest income | (3,434) | (2,872) | (6,270) | (15,620) | (29,122) | ||||
Provision for income taxes | 19,016 | 13,648 | 4,158 | 62,571 | 45,922 | ||||
Depreciation and amortization | 120,649 | 119,055 | 108,168 | 467,048 | 403,160 | ||||
Amortization of capitalized stock-based compensation and capitalized interest expense | 8,641 | 8,815 | 8,662 | 35,894 | 33,202 | ||||
Amortization of acquired intangible assets | 12,573 | 11,959 | 10,894 | 48,019 | 42,049 | ||||
Stock-based compensation | 48,955 | 49,018 | 50,510 | 202,759 | 197,411 | ||||
Restructuring charge | 5,170 | 565 | 26,847 | 10,737 | 37,286 | ||||
Acquisition-related costs | 11,797 | 1,316 | 4,390 | 13,317 | 5,579 | ||||
Legal settlements | — | — | — | — | 275 | ||||
Endowment of Akamai Foundation | — | — | 20,000 | — | 20,000 | ||||
Interest expense | 18,317 | 18,144 | 17,342 | 72,332 | 69,120 | ||||
Gain on investments | — | (3,680) | (7,228) | (3,680) | (7,228) | ||||
Loss from equity method investment | 1,430 | 1,064 | 11,432 | 14,008 | 13,106 | ||||
Other expense, net | 222 | 45 | 1,813 | 1,895 | 9,682 | ||||
Adjusted EBITDA | $ 403,870 | $ 395,993 | $ 364,088 | $ 1,560,922 | $ 1,397,496 | ||||
Adjusted EBITDA margin | 45% | 46% | 43% | 45% | 44% |
Use of Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the United States of America (GAAP), Akamai provides additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes, to measure executive compensation and to evaluate Akamai's financial performance. These non-GAAP financial measures are non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, capital expenditures and impact of foreign currency exchange rates, as discussed below.
Management believes that these non-GAAP financial measures reflect Akamai's ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparison of financial results across accounting periods and to those of our peer companies. Management also believes that these non-GAAP financial measures enable investors to evaluate Akamai's operating results and future prospects in the same manner as management. These non-GAAP financial measures may exclude expenses and gains that may be unusual in nature, infrequent or not reflective of Akamai's ongoing operating results.
The non-GAAP financial measures do not replace the presentation of Akamai's GAAP financial results and should only be used as a supplement to, not as a substitute for, Akamai's financial results presented in accordance with GAAP. Akamai has provided a reconciliation of each non-GAAP financial measure used in its financial reporting and investor presentations to the most directly comparable GAAP financial measure. This reconciliation captioned "Reconciliation of GAAP to Non-GAAP Financial Measures" can be found on the Investor Relations section of Akamai's website.
The non-GAAP adjustments, and Akamai's basis for excluding them from non-GAAP financial measures, are outlined below:
Akamai's definitions of its non-GAAP financial measures are outlined below:
Non-GAAP income from operations – GAAP income from operations adjusted for the following items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; amortization of capitalized interest expense; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the Akamai Foundation; and other non-recurring or unusual items that may arise from time to time.
Non-GAAP operating margin – Non-GAAP income from operations stated as a percentage of revenue.
Non-GAAP net income – GAAP net income adjusted for the following tax-affected items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the Akamai Foundation; amortization of debt discount and issuance costs; amortization of capitalized interest expense; certain gains and losses on investments; income and losses from equity method investment; and other non-recurring or unusual items that may arise from time to time.
Non-GAAP net income per diluted share – Non-GAAP net income divided by weighted average diluted common shares outstanding. Diluted weighted average shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to Akamai pursuant to the note hedge transactions entered into in connection with the issuances of $1,150 million of convertible senior notes due 2027 and 2025, respectively. Under GAAP, shares delivered under hedge transactions are not considered offsetting shares in the fully-diluted share calculation until they are delivered. However, the company would receive a benefit from the note hedge transactions and would not allow the dilution to occur, so management believes that adjusting for this benefit provides a meaningful view of operating performance. With respect to the convertible senior notes due in each of 2027 and 2025, unless Akamai's weighted average stock price is greater than $116.18 and $95.10, respectively, the initial conversion price, there will be no difference between GAAP and non-GAAP diluted weighted average common shares outstanding.
Adjusted EBITDA – GAAP net income excluding the following items: interest income; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the Akamai Foundation; foreign exchange gains and losses; interest expense; amortization of capitalized interest expense; certain gains and losses on investments; income and losses on equity method investment; and other non-recurring or unusual items that may arise from time to time.
Adjusted EBITDA margin – Adjusted EBITDA stated as a percentage of revenue.
Capital expenditures, or capex, excluding stock-based compensation and interest expense – Purchases of property and equipment and capitalization of internal-use software development costs presented on an accrual basis, which differs from the cash-basis presentation included in the statements of cash flows. The primary difference between the two is the change in purchases of property and equipment and capitalization of internal-use software development costs accrued for, but not paid, at period end versus prior periods.
Impact of foreign currency exchange rate – Revenue and earnings from international operations have historically been an important contributor to Akamai's financial results. Consequently, Akamai's financial results have been impacted, and management expects they will continue to be impacted, by fluctuations in foreign currency exchange rates. For example, when the local currencies of our foreign subsidiaries weaken, our consolidated results stated in U.S. dollars are negatively impacted.
Because exchange rates are a meaningful factor in understanding period-to-period comparisons, management believes the presentation of the impact of foreign currency exchange rates on revenue and earnings enhances the understanding of our financial results and evaluation of performance in comparison to prior periods. The dollar impact of changes in foreign currency exchange rates presented is calculated by translating current period results using monthly average foreign currency exchange rates from the comparative period and comparing them to the reported amount. The percentage change at constant currency presented is calculated by comparing the prior period amounts as reported and the current period amounts translated using the same monthly average foreign currency exchange rates from the comparative period.
Akamai Statement Under the Private Securities Litigation Reform ActThis release and/or our earnings conference call scheduled for later today contain 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, including statements about expected future financial performance and the benefits of the planned acquisition of Linode. 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, the inability to continue to generate cash at the same level as prior years; the ability to complete the Linode transaction in a timely manner or at all; uncertainties as to whether the anticipated benefits from the Linode transaction will be realized; uncertainties as to whether Linode's business will be successfully integrated with Akamai's business, including whether Linode's technology will interoperate as expected with existing Akamai technology; the effect of the announcement of the proposed transaction on Linode's ability to maintain relationships with its key customers, vendors and employees; the failure of our investments in innovation to generate solutions that are accepted in the market; the inability to increase our revenue at the same rate as in the past and keep our expenses from increasing at a greater rate than our revenues; the impact of the ongoing COVID-19 pandemic; defects or disruptions in our products or IT systems; the failure of the integration of any of our acquisitions; the delay in developing or failure to develop new service offerings or functionalities, and if developed, the lack of market acceptance of such service offerings and functionalities or failure of such solutions to operate as expected, 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, the statements in this press release and on such investor call represent Akamai's expectations and beliefs as of the date of this press release. Akamai anticipates that subsequent events and developments may cause these expectations and beliefs to change. However, while Akamai may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Akamai's expectations or beliefs as of any date subsequent to the date of this press release.
Contacts: | ||
Gina Sorice | Tom Barth | |
Media Relations | Investor Relations | |
Akamai Technologies | Akamai Technologies | |
646-320-4107 | 617-274-7130 | |
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SOURCE Akamai Technologies, Inc.