AKAMAI REPORTS FOURTH QUARTER 2024 AND FULL-YEAR 2024 FINANCIAL RESULTS

Fourth quarter highlights

    --  Revenue of $1.020 billion, up 3% year-over-year and when adjusted for
        foreign exchange*
    --  Security and compute revenue represented 69% of total revenue in the
        fourth quarter and grew 16% year-over-year and 17% when adjusted for
        foreign exchange*
    --  GAAP net income per diluted share of $0.91, down 12% year-over-year and
        down 9% when adjusted for foreign exchange*, and non-GAAP net income per
        diluted shared* of $1.66, down 2% year-over-year and flat when adjusted
        for foreign exchange*

Full-year highlights

    --  Revenue of $3.991 billion, up 5% year-over-year and when adjusted for
        foreign exchange*
    --  Security and compute revenue represented 67% of total revenue in 2024
        and grew 18% year-over-year and when adjusted for foreign exchange*
    --  GAAP net income per diluted share of $3.27, down 7% year-over-year and
        down 4% when adjusted for foreign exchange*, and non-GAAP net income per
        diluted share* of $6.48, up 5% year-over-year and up 6% when adjusted
        for foreign exchange*

CAMBRIDGE, Mass., Feb. 20, 2025 /PRNewswire/ -- Akamai Technologies, Inc. (NASDAQ: AKAM), the cybersecurity and cloud computing company that powers and protects business online, today reported financial results for the fourth quarter and full-year ended December 31, 2024.

"Akamai delivered a solid fourth quarter, demonstrating robust profitability and sustained momentum across our security and cloud computing solutions," said Dr. Tom Leighton, Akamai's Chief Executive Officer. "We are encouraged by our latest results and the market adoption of our newest product innovations. As we head into 2025, our focus on delivering sustainable profitability across all areas of our business, coupled with our ongoing transformation into a leading cybersecurity and cloud solutions provider, positions us for long-term success."

Akamai delivered the following results for the fourth quarter and full-year ended December 31, 2024:

Revenue: Revenue for the fourth quarter was $1.020 billion, a 3% increase over fourth quarter 2023 revenue of $995 million and a 3% increase when adjusted for foreign exchange.* Total revenue for 2024 was $3.991 billion compared to $3.812 billion for 2023, up 5% year-over-year and when adjusted for foreign exchange.*

Revenue by solution:

    --  Security revenue for the fourth quarter was $535 million, up 14%
        year-over-year and when adjusted for foreign exchange.* Security revenue
        for 2024 was $2.043 billion, up 16% year-over-year and when adjusted for
        foreign exchange.*
    --  Delivery revenue for the fourth quarter was $318 million, down 18%
        year-over-year and when adjusted for foreign exchange.* Delivery revenue
        for 2024 was $1.318 billion, down 15% year-over-year and down 14% when
        adjusted for foreign exchange.*
    --  Compute revenue for the fourth quarter was $167 million, up 24%
        year-over-year and up 25% when adjusted for foreign exchange.* Compute
        revenue for 2024 was $630 million, up 25% year-over-year and when
        adjusted for foreign exchange.*

Revenue by geography:

    --  U.S. revenue for the fourth quarter was $530 million, up 3%
        year-over-year. U.S. revenue for 2024 was $2.076 billion, up 5%
        year-over-year.
    --  International revenue for the fourth quarter was $490 million, up 2%
        year-over-year and up 4% when adjusted for foreign exchange.*
        International revenue for 2024 was $1.916 billion, up 4% year-over-year
        and up 5% when adjusted for foreign exchange.*

Income from operations: GAAP income from operations for the fourth quarter was $148 million, a 20% decrease from fourth quarter 2023 income from operations of $185 million. GAAP operating margin for the fourth quarter was 15%, down 4 percentage points from the same period last year. GAAP income from operations for 2024 was $533 million, a 16% decrease from the prior year's GAAP income from operations of $637 million. Full-year GAAP operating margin was 13%, down 4 percentage points from the same period last year.

Non-GAAP income from operations* for the fourth quarter was $298 million, a 2% decrease from fourth quarter 2023 non-GAAP income from operations* of $303 million. Non-GAAP operating margin* for the fourth quarter was 29%, down 1 percentage point from the same period last year. Non-GAAP income from operations* for 2024 was $1.167 billion, a 3% increase from the prior year's non-GAAP income from operations* of $1.136 billion. Full-year non-GAAP operating margin* was 29%, down 1 percentage point from the same period last year.

Net income: GAAP net income for the fourth quarter was $140 million, a 13% decrease from fourth quarter 2023 GAAP net income of $161 million. GAAP net income for 2024 was $505 million, an 8% decrease from the prior year's GAAP net income of $548 million.

Non-GAAP net income* for the fourth quarter was $254 million, a 3% decrease from fourth quarter 2023 non-GAAP net income* of $263 million. Non-GAAP net income* for 2024 was $996 million, a 4% increase from the prior year's non-GAAP net income* of $960 million.

EPS: GAAP net income per diluted share for the fourth quarter was $0.91, a 12% decrease from fourth quarter 2023 GAAP net income per diluted share of $1.03 and a 9% decrease when adjusted for foreign exchange.* GAAP net income per diluted share for 2024 was $3.27, a 7% decrease from the prior year's GAAP net income per diluted share of $3.52 and a 4% decrease when adjusted for foreign exchange.*

Non-GAAP net income per diluted share* for the fourth quarter was $1.66, a 2% decrease from fourth quarter 2023 non-GAAP net income per diluted share* of $1.69 and flat when adjusted for foreign exchange.* Non-GAAP net income per diluted share* for 2024 was $6.48, a 5% increase from the prior year's non-GAAP net income per diluted share* of $6.20 and a 6% increase when adjusted for foreign exchange.*

Adjusted EBITDA*: Adjusted EBITDA* for the fourth quarter was $429 million, a 1% increase from fourth quarter 2023 Adjusted EBITDA* of $426 million. Adjusted EBITDA* for 2024 was $1.682 billion, a 5% increase from the prior year's Adjusted EBITDA* of $1.608 billion.

Supplemental cash information: Cash from operations for the fourth quarter was $344 million, or 34% of revenue. Cash from operations for 2024 was $1.519 billion, or 38% of revenue. Cash, cash equivalents and marketable securities was $1.872 billion as of December 31, 2024.

Share repurchases: The Company spent $138 million in the fourth quarter of 2024 to repurchase 1.4 million shares of its common stock at an average price of $97.43 per share. For the full-year 2024, the Company spent $557 million to repurchase 5.6 million shares of its common stock at an average price of $99.14 per share. The Company had 150 million shares of common stock outstanding as of December 31, 2024.

Financial guidance: The Company reports the following financial guidance for the first quarter and full year 2025:


                                                                                   Three Months Ending           
           Year Ending

                                                                             
            March 31, 2025                  December 31, 2025


                                                                              Low End                  High End    Low End              High End



     Revenue (in millions)                                                    $1,000                     $1,020      $4,000                 $4,200



     Non-GAAP operating margin *                                                28 %                      28 %       28 %                  28 %



     Non-GAAP net income per diluted share *                                   $1.54                      $1.59       $6.00                  $6.40



     Non-GAAP tax rate*                                                       19.5 %                    19.5 %     19.5 %                19.5 %



     Shares used in non-GAAP per diluted share calculations * (in millions)      152                        152         152                    152



     Capex as a percentage of revenue *                                         24 %                      24 %       19 %                  19 %

The guidance that is provided on a non-GAAP basis cannot be reconciled to the closest GAAP measures without unreasonable effort because of the unpredictability of the amounts and timing of events affecting the items Akamai excludes from non-GAAP measures. For example, stock-based compensation is unpredictable for Akamai's performance-based awards, which can fluctuate significantly based on current expectations of the future achievement of performance-based targets. Amortization of intangible assets, acquisition-related costs and restructuring costs are all impacted by the timing and size of potential future actions, which are difficult to predict. In addition, from time to time, Akamai excludes certain items that occur infrequently, which are also inherently difficult to predict and estimate. It is also difficult to predict the tax effect of the items Akamai excludes and to estimate certain discrete tax items, such as the resolution of tax audits or changes to tax laws. As such, the costs that are being excluded from non-GAAP guidance are difficult to predict and a reconciliation or a range of results could lead to disclosure that would be imprecise or potentially misleading. Material changes to any one of the exclusions could have a significant effect on our guidance and future GAAP results.

(* See Use of Non-GAAP Financial Measures below for definitions)

Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-833-634-5020 (or 1-412-902-4238 for international calls) and using passcode Akamai Technologies Call. A live webcast of the call may be accessed at www.akamai.com in the Investor Relations section. In addition, a replay of the call will be available for two weeks following the conference by calling 1-877-344-7529 (or 1-412-317-0088 for international calls) and using passcode 3157633. The archived webcast of this event may be accessed through the Akamai website.

About Akamai
Akamai is the cybersecurity and cloud computing company that powers and protects business online. Our market-leading security solutions, superior threat intelligence and global operations team provide defense-in-depth to safeguard enterprise data and applications everywhere. Akamai's full-stack cloud computing solutions deliver performance and affordability on the world's most distributed platform. Global enterprises trust Akamai to provide the industry-leading reliability, scale and expertise they need to grow their business with confidence. Learn more about Akamai's cloud computing, security and content delivery solutions at akamai.com and akamai.com/blog, or follow Akamai Technologies on X, formerly known as Twitter, and LinkedIn.



     
                AKAMAI
                 TECHNOLOGIES, INC.


     
                CONDENSED CONSOLIDATED BALANCE SHEETS





     
                (in thousands)                         December 31, December 31,
                                                                  2024          2023



     
                ASSETS



     Current assets:



     Cash and cash equivalents                               $517,707      $489,468



     Marketable securities                                  1,078,876       374,971



     Accounts receivable, net                                 727,687       724,302



     Prepaid expenses and other current assets                253,827       216,114



     Total current assets                                   2,578,097     1,804,855



     Marketable securities                                    275,592     1,431,354



     Property and equipment, net                            1,995,071     1,825,944



     Operating lease right-of-use assets                    1,006,738       908,634



     Acquired intangible assets, net                          727,585       536,143



     Goodwill                                               3,151,077     2,850,470



     Deferred income tax assets                               483,249       418,297



     Other assets                                             151,376       124,340



     Total assets                                         $10,368,785    $9,900,037



     
                LIABILITIES AND STOCKHOLDERS' EQUITY



     Current liabilities:



     Accounts payable                                        $130,447      $146,927



     Accrued expenses                                         370,888       352,181



     Deferred revenue                                         149,222       107,544



     Convertible senior notes                               1,149,116



     Operating lease liabilities                              259,134       222,944



     Other current liabilities                                 32,516         6,442



     Total current liabilities                              2,091,323       836,038



     Deferred revenue                                          26,314        23,006



     Deferred income tax liabilities                           16,066        24,622



     Convertible senior notes                               2,396,695     3,538,229



     Operating lease liabilities                              829,660       774,806



     Other liabilities                                        130,370       106,181



     Total liabilities                                      5,490,428     5,302,882



     Total stockholders' equity                             4,878,357     4,597,155



     Total liabilities and stockholders' equity           $10,368,785    $9,900,037



     
                AKAMAI TECHNOLOGIES, INC.


     
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME




                                                                                                   
     Three Months Ended                  
            Year Ended



     
                (in thousands, except per share data)                              December 31,         September 30,  December 31,     December 31,      December 31,
                                                                                              2024                   2024           2023              2024               2023



     Revenue                                                                           $1,019,939             $1,004,679       $995,017        $3,991,168         $3,811,920



     Costs and operating expenses:



     Cost of revenue (1) (2)                                                              414,356                408,806        393,397         1,620,793          1,511,063



     Research and development (1)                                                         120,245                120,347        109,202           470,876            406,048



     Sales and marketing (1)                                                              144,621                138,551        135,256           556,781            533,226



     General and administrative (1) (2)                                                   155,544                159,957        155,575           621,785            600,851



     Amortization of acquired intangible assets                                            25,614                 24,368         16,833            92,081             66,751



     Restructuring charge (benefit)                                                        11,499                 82,013           (32)           95,441             56,643



     Total costs and operating expenses                                                   871,879                934,042        810,231         3,457,757          3,174,582



     Income from operations                                                               148,060                 70,637        184,786           533,411            637,338



     Interest and marketable securities income, net                                        22,746                 23,065         23,981           100,280             45,194



     Interest expense                                                                     (6,735)               (6,735)       (6,884)         (27,117)          (17,709)



     Other expense, net                                                                   (5,962)              (13,161)       (5,642)         (19,561)          (12,296)



     Income before provision for income taxes                                             158,109                 73,806        196,241           587,013            652,527



     Provision for income taxes                                                          (18,204)              (15,899)      (35,076)         (82,095)         (106,373)



     Gain from equity method investment                                                         -                                                                  1,475



     Net income                                                                          $139,905                $57,907       $161,165          $504,918           $547,629





     Net income per share:



     Basic                                                                                  $0.93                  $0.38          $1.07             $3.34              $3.59



     Diluted                                                                                $0.91                  $0.38          $1.03             $3.27              $3.52





     Shares used in per share calculations:



     Basic                                                                                150,240                151,435        150,979           151,392            152,510



     Diluted                                                                              153,091                153,240        157,024           154,346            155,397





     (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,         September 30,  December 31,     December 31,      December 31,
                                                                                    2024                   2024           2023              2024               2023



              Cash flows from operating activities:



              Net income                                                       $139,905                $57,907       $161,165          $504,918           $547,629



              Adjustments to reconcile net income to
    net cash provided by operating
    activities:



              Depreciation and amortization                                     167,949                165,729        147,634           648,410            570,776



              Stock-based compensation                                           99,045                102,607         92,123           393,378            328,467



              Benefit for deferred income taxes                                (71,206)               (2,541)      (13,224)         (70,268)          (22,987)



              Amortization of debt issuance costs                                 1,588                  1,591          1,741             6,521              5,341



              Loss (gain) on investments                                          5,000                                                 5,066              (311)



              Other non-cash reconciling items, net                              19,797                 41,733          5,019            65,488             50,221



              Changes in operating assets and liabilities,
    net of effects of acquisitions:



              Accounts receivable                                              (50,392)                11,290        (2,941)         (22,300)          (49,203)



              Prepaid expenses and other current assets                        (20,614)                 (717)       (2,623)         (46,094)          (18,726)



              Accounts payable and accrued expenses                              79,535               (31,765)        20,345               344           (39,825)



              Deferred revenue                                                    6,709                (8,719)      (24,098)           20,687                 48



              Other current liabilities                                        (15,490)                41,370          (774)           26,860              1,516



              Other non-current assets and liabilities                         (18,038)                14,057          4,826          (13,839)          (24,507)



              Net cash provided by operating activities                         343,788                392,542        389,193         1,519,171          1,348,439



              Cash flows from investing activities:



              Cash paid for business acquisitions, net of cash acquired               -                                            (434,066)         (106,171)



              Cash paid for asset acquisitions                                (127,973)                  (66)      (84,637)        (132,835)         (120,985)



              Purchases of property and equipment and capitalization of       (162,859)             (185,117)     (133,887)        (685,267)         (730,040)
    internal-use software development costs



              Purchases of short- and long-term marketable securities          (34,535)              (15,519)     (277,053)        (236,176)       (1,461,890)



              Proceeds from sales, maturities and redemptions of short-          81,368                 84,849        178,382           685,692            576,917
    and long-term marketable securities



              Other, net                                                          (187)                 (375)         1,362             3,973            (6,069)



              Net cash used in investing activities                           (244,186)             (116,228)     (315,833)        (798,679)       (1,848,238)



     
                AKAMAI TECHNOLOGIES, INC.


     
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued




                                                                                                  
     Three Months Ended                  
            Year Ended



     
                (in thousands)                                                    December 31,         September 30,  December 31,     December 31,      December 31,
                                                                                             2024                   2024           2023              2024               2023



     Cash flows from financing activities:



     Proceeds from borrowings under revolving credit facility                                  -                                                                 90,000



     Repayment from borrowings under revolving credit facility                                 -                                                               (90,000)



     Proceeds from the issuance of convertible senior notes, net of issuance costs             -                                                              1,247,388



     Proceeds from the issuance of warrants related to convertible senior notes                -                                                                 90,195



     Purchases of note hedges related to convertible senior notes                              -                                                              (236,555)



     Proceeds from the issuance of common stock under stock plans                         13,805                 19,442         13,426            61,513             62,979



     Employee taxes paid related to net share settlement of stock-based awards          (16,061)              (15,868)      (15,312)        (173,176)          (66,222)



     Repurchases of common stock                                                       (138,371)             (165,839)      (54,891)        (557,468)         (654,046)



     Other, net                                                                            (213)                 (104)                       (10,504)             (360)



     Net cash (used in) provided by financing activities                               (140,840)             (162,369)      (56,777)        (679,635)           443,379



     Effects of exchange rate changes on cash, cash equivalents and restricted cash     (12,431)                 9,494         11,597          (12,243)             3,868



     Net (decrease) increase in cash, cash equivalents and restricted cash              (53,669)               123,439         28,180            28,614           (52,552)



     Cash, cash equivalents and restricted cash at beginning of period                   572,753                449,314        462,290           490,470            543,022



     Cash, cash equivalents and restricted cash at end of period                        $519,084               $572,753       $490,470          $519,084           $490,470



     
                AKAMAI TECHNOLOGIES, INC.


     
                SUPPLEMENTAL REVENUE DATA - REVENUE BY SOLUTION




                                                                                                                            
     Three Months Ended                  
            Year Ended



     
                (in thousands)                                                                              December 31,         September 30,  December 31,     December 31,      December 31,
                                                                                                                       2024                   2024           2023              2024               2023



     Security                                                                                                     $534,602               $518,670       $470,977        $2,042,661         $1,765,267



     Delivery                                                                                                      317,842                319,132        389,048         1,318,131          1,542,434



     Compute                                                                                                       167,495                166,877        134,992           630,376            504,219



     Total revenue                                                                                              $1,019,939             $1,004,679       $995,017        $3,991,168         $3,811,920



     
                Revenue growth rates year-over-year:



     Security                                                                                                         14 %                  14 %          18 %             16 %              14 %



     Delivery                                                                                                         (18)                  (16)           (6)             (15)               (8)



     Compute                                                                                                            24                     28             20                25                 24



     Total revenue                                                                                                     3 %                   4 %           7 %              5 %               5 %



     
                Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (1):



     Security                                                                                                         14 %                  14 %          17 %             16 %              15 %



     Delivery                                                                                                         (18)                  (16)           (7)             (14)               (7)



     Compute                                                                                                            25                     28             20                25                 25



     Total revenue                                                                                                     3 %                   4 %           7 %              5 %               6 %



     
                AKAMAI TECHNOLOGIES, INC.


     
                SUPPLEMENTAL REVENUE DATA - REVENUE BY GEOGRAPHY




                                                                                                                            
     Three Months Ended                  
            Year Ended



     
                (in thousands)                                                                              December 31,         September 30,  December 31,     December 31,      December 31,
                                                                                                                       2024                   2024           2023              2024               2023



     U.S.                                                                                                         $529,879               $524,611       $516,348        $2,075,533         $1,968,779



     International                                                                                                 490,060                480,068        478,669         1,915,635          1,843,141



     Total revenue                                                                                              $1,019,939             $1,004,679       $995,017        $3,991,168         $3,811,920



     
                Revenue growth rates year-over-year:



     U.S.                                                                                                              3 %                   5 %           7 %              5 %               4 %



     International                                                                                                       2                      3              8                 4                  7



     Total revenue                                                                                                     3 %                   4 %           7 %              5 %               5 %



     
                Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (1):



     U.S.                                                                                                              3 %                   5 %           7 %              5 %               4 %



     International                                                                                                       4                      3              6                 5                  8



     Total revenue                                                                                                     3 %                   4 %           7 %              5 %               6 %





     (1)  See Use of Non-GAAP Financial Measures below for a definition



     
                AKAMAI TECHNOLOGIES, INC.


     
                OTHER SUPPLEMENTAL DATA




                                                                                
     Three Months Ended                  
            Year Ended



     
                (in thousands, except end of period statistics) December 31,         September 30,  December 31,     December 31,      December 31,
                                                                           2024                   2024           2023              2024               2023



     
                Stock-based compensation:



     Cost of revenue                                                   $16,129                $16,566        $11,898           $61,177            $43,802



     Research and development                                           37,843                 39,275         36,428           152,114            123,896



     Sales and marketing                                                18,730                 21,076         17,895            77,593             66,453



     General and administrative                                         26,343                 25,690         25,902           102,494             94,316



     Total stock-based compensation                                    $99,045               $102,607        $92,123          $393,378           $328,467





     
                Depreciation and amortization:



     Network-related depreciation                                      $74,949                $72,546        $63,225          $282,106           $231,500



     Capitalized internal-use software development amortization         40,343                 41,973         43,919           168,355            176,675



     Other depreciation and amortization                                15,983                 15,998         16,170            63,994             63,860



     Depreciation of property and equipment                            131,275                130,517        123,314           514,455            472,035



     Capitalized stock-based compensation amortization (1)              10,952                 10,740          7,379            41,452             31,548



     Capitalized interest expense                                          108                    104            108               422                442


     amortization (1)



     Amortization of acquired intangible assets                         25,614                 24,368         16,833            92,081             66,751



     Total depreciation and amortization                              $167,949               $165,729       $147,634          $648,410           $570,776





     
                Capital expenditures (2) (3):



     Purchases of property and equipment                              $122,694                $91,600        $80,408          $383,392           $459,167



     Capitalized internal-use software development costs                69,974                 72,391         62,355           292,509            258,626



     Total capital expenditures                                       $192,668               $163,991       $142,763          $675,901           $717,793



     
                Capex as a percentage of revenue (3)                    19 %                  16 %          14 %             17 %              19 %





     
                End of period statistics:



     Number of employees                                                10,748                 10,947         10,281




     (1)   Amortization of capitalized stock-based compensation and interest expense in this table excludes amortization of capitalized stock-based compensation and interest expense capitalized
              related to 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, NET INCOME AND TAX RATE




                                                                                                                   
     Three Months Ended                  
            Year Ended



     
                (in thousands)                                                                     December 31,         September 30,  December 31,     December 31,      December 31,
                                                                                                              2024                   2024           2023              2024               2023



     Income from operations                                                                              $148,060                $70,637       $184,786          $533,411           $637,338



     
                GAAP operating margin                                                                      15 %                   7 %          19 %             13 %              17 %



     Amortization of acquired intangible assets                                                            25,614                 24,368         16,833            92,081             66,751



     Stock-based compensation                                                                              99,045                102,607         92,123           393,378            328,467



     Amortization of capitalized stock-based compensation and capitalized interest expense                 11,264                 11,089          7,774            42,910             32,981



     Restructuring charge (benefit)                                                                        11,499                 82,013           (32)           95,441             56,643



     Acquisition-related costs                                                                                115                  5,036          1,189             7,502             13,345



     Legal settlements                                                                                      2,500                                                 2,500



     Operating adjustments                                                                                150,037                225,113        117,887           633,812            498,187



     Non-GAAP income from operations                                                                     $298,097               $295,750       $302,673        $1,167,223         $1,135,525



     
                Non-GAAP operating margin                                                                  29 %                  29 %          30 %             29 %              30 %





     Net income                                                                                          $139,905                $57,907       $161,165          $504,918           $547,629



     Operating adjustments (from above)                                                                   150,037                225,113        117,887           633,812            498,187



     Amortization of debt issuance costs                                                                    1,588                  1,591          1,741             6,521              5,341



     Loss (gain) on cost method investments                                                                 5,000                                                 5,066              (311)



     Gain from equity method investment                                                                         -                                                                (1,475)



     Income tax effect of above non-GAAP adjustments and certain discrete tax items                      (42,605)              (41,097)      (18,162)        (154,735)          (89,364)



     Non-GAAP net income                                                                                 $253,925               $243,514       $262,631          $995,582           $960,007





     GAAP tax rate                                                                                           12 %                  22 %          18 %             14 %              16 %



     Income tax effect of non-GAAP adjustments and certain discrete tax items                                   7                    (3)           (1)                5                  1



     Non-GAAP tax rate                                                                                       19 %                  19 %          17 %             19 %              17 %



     
                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,         September 30,  December 31,     December 31,      December 31,
                                                                                                    2024                   2024           2023              2024               2023



     GAAP net income per diluted share                                                            $0.91                  $0.38          $1.03             $3.27              $3.52



     Adjustments to net income:



     Amortization of acquired intangible assets                                                    0.17                   0.16           0.11              0.60               0.43



     Stock-based compensation                                                                      0.65                   0.67           0.59              2.55               2.11



     Amortization of capitalized stock-based compensation and capitalized interest expense         0.07                   0.07           0.05              0.28               0.21



     Restructuring charge (benefit)                                                                0.08                   0.54                            0.62               0.36



     Acquisition-related costs                                                                        -                  0.03           0.01              0.05               0.09



     Legal settlements                                                                             0.02                                                  0.02



     Amortization of debt issuance costs                                                           0.01                   0.01           0.01              0.04               0.03



     Loss (gain) on cost method investments                                                        0.03                                                  0.03



     Gain from equity method investment                                                               -                                                                 (0.01)



     Income tax effect of above non-GAAP adjustments and certain discrete tax items              (0.28)                (0.27)        (0.12)           (1.00)            (0.58)



     Adjustment for shares (1)                                                                        -                                0.02              0.03               0.02



     Non-GAAP net income per diluted share                                                        $1.66                  $1.59          $1.69             $6.48              $6.20





     Shares used in GAAP per diluted share calculations                                         153,091                153,240        157,024           154,346            155,397



     Impact of benefit from note hedge transactions (1)                                           (368)                 (294)       (1,755)            (744)             (574)



     Shares used in non-GAAP per diluted share calculations (1)                                 152,723                152,946        155,269           153,602            154,823




     (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 these periods, 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,         September 30,  December 31,     December 31,      December 31,
                                                                                                    2024                   2024           2023              2024               2023



     Net income                                                                                $139,905                $57,907       $161,165          $504,918           $547,629



     
                Net income margin                                                                14 %                   6 %          16 %             13 %              14 %



     Interest and marketable securities income, net                                            (22,746)              (23,065)      (23,981)        (100,280)          (45,194)



     Provision for income taxes                                                                  18,204                 15,899         35,076            82,095            106,373



     Depreciation and amortization                                                              131,275                130,517        123,314           514,455            472,035



     Amortization of capitalized stock-based compensation and capitalized interest expense       11,264                 11,089          7,774            42,910             32,981



     Amortization of acquired intangible assets                                                  25,614                 24,368         16,833            92,081             66,751



     Stock-based compensation                                                                    99,045                102,607         92,123           393,378            328,467



     Restructuring charge (benefit)                                                              11,499                 82,013           (32)           95,441             56,643



     Acquisition-related costs                                                                      115                  5,036          1,189             7,502             13,345



     Legal settlements                                                                            2,500                                                 2,500



     Interest expense                                                                             6,735                  6,735          6,884            27,117             17,709



     Loss (gain) on cost method investments                                                       5,000                                                 5,066              (311)



     Gain from equity method investment                                                               -                                                                (1,475)



     Other expense, net                                                                             962                 13,161          5,642            14,495             12,607



     Adjusted EBITDA                                                                           $429,372               $426,267       $425,987        $1,681,678         $1,607,560



     
                Adjusted EBITDA margin                                                           42 %                  42 %          43 %             42 %              42 %

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 financial measures). 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, non-GAAP tax rate, 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 measures 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:

    --  Amortization of acquired intangible assets - Akamai has incurred
        amortization of intangible assets, included in its GAAP financial
        statements, related to various acquisitions Akamai has made. The amount
        of an acquisition's purchase price allocated to intangible assets and
        term of its related amortization can vary significantly and is unique to
        each acquisition; therefore, Akamai excludes amortization of acquired
        intangible assets from its non-GAAP financial measures to provide
        investors with a consistent basis for comparing pre- and
        post-acquisition operating results.
    --  Stock-based compensation and amortization of capitalized stock-based
        compensation - Stock-based compensation is an important aspect of the
        compensation paid to Akamai's employees, which includes long-term
        incentive plans to encourage retention, performance-based plans to
        encourage achievement of specified financial targets and also short-term
        incentive awards with a one year vest. The grant date fair value of the
        stock-based compensation awards varies based on the stock price at the
        time of grant, varying valuation methodologies, subjective assumptions
        and the variety of award types. This makes the comparison of Akamai's
        current financial results to previous and future periods difficult to
        interpret; therefore, Akamai believes it is useful to exclude
        stock-based compensation and amortization of capitalized stock-based
        compensation from its non-GAAP financial measures in order to highlight
        the performance of Akamai's core business and to be consistent with the
        way many investors evaluate its performance and compare its operating
        results to peer companies.
    --  Acquisition-related costs - Acquisition-related costs include
        transaction fees, advisory fees, due diligence costs and other direct
        costs associated with strategic activities, as well as certain
        additional compensation costs payable to employees acquired from the
        Linode acquisition if employed for a certain period of time. The
        additional compensation cost was initiated by and determined by the
        seller, and is in addition to normal levels of compensation, including
        retention programs, offered by Akamai. Acquisition-related costs are
        impacted by the timing and size of the acquisitions, and Akamai excludes
        acquisition-related costs from its non-GAAP financial measures to
        provide a useful comparison of operating results to prior periods and to
        peer companies because such amounts vary significantly based on the
        magnitude of the acquisition transactions and do not reflect Akamai's
        core operations.
    --  Restructuring charge - Akamai has incurred restructuring charges from
        programs that have significantly changed either the scope of the
        business undertaken by the Company or the manner in which that business
        is conducted. These charges include severance and related expenses for
        workforce reductions, impairments of long-lived assets that will no
        longer be used in operations (including acquired intangible assets,
        right-of-use assets, other facility-related property and equipment and
        internal-use software) and termination fees for any contracts cancelled
        as part of these programs. Akamai excludes these items from its non-GAAP
        financial measures when evaluating its continuing business performance
        as such items vary significantly based on the magnitude of the
        restructuring action and do not reflect expected future operating
        expenses. In addition, these charges do not necessarily provide
        meaningful insight into the fundamentals of current or past operations
        of its business.
    --  Amortization of debt issuance costs and capitalized interest expense -
        Akamai has convertible senior notes outstanding that mature in 2029,
        2027 and 2025. The issuance costs of the convertible senior notes are
        amortized to interest expense and are excluded from Akamai's non-GAAP
        results because management believes the non-cash amortization expense is
        not representative of ongoing operating performance.
    --  Gains and losses on cost method investments - Akamai has recorded gains
        and losses from the disposition, changes to fair value and impairment of
        cost method investments. Akamai believes excluding these amounts from
        its non-GAAP financial measures is useful to investors as the types of
        events giving rise to these gains and losses are not representative of
        Akamai's core business operations and ongoing operating performance.
    --  Legal settlements - Akamai has incurred losses related to the settlement
        of legal matters. Akamai believes excluding these amounts from its
        non-GAAP financial measures is useful to investors as the types of
        events giving rise to them are not representative of Akamai's core
        business operations.
    --  Gains and losses from equity method investment - Akamai records income
        or losses on its share of earnings and losses from its equity method
        investment, and any gains from returns of investments or impairments.
        Akamai excludes such income and losses because it does not have direct
        control over the operations of the investment and the related income and
        losses are not representative of its core business operations.
    --  Income tax effect of non-GAAP adjustments and certain discrete tax items
        - The non-GAAP adjustments described above are reported on a pre-tax
        basis. The income tax effect of non-GAAP adjustments is the difference
        between GAAP and non-GAAP income tax expense. Non-GAAP income tax
        expense is computed on non-GAAP pre-tax income (GAAP pre-tax income
        adjusted for non-GAAP adjustments) and excludes certain discrete tax
        items (such as the impact of intercompany sales of intellectual property
        related to acquisitions), if any. Akamai believes that applying the
        non-GAAP adjustments and their related income tax effect allows Akamai
        to highlight income attributable to its core operations.

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; legal settlements; 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; legal settlements; amortization of debt issuance costs; amortization of capitalized interest expense; gains and losses on cost method investments; gains and losses from equity method investment; and other non-recurring or unusual items that may arise from time to time.

Non-GAAP tax rate - GAAP tax rate excluding the tax effect of non-GAAP adjustments and certain discrete tax items.

Non-GAAP net income per diluted share, or EPS - Non-GAAP net income divided by weighted average diluted common shares outstanding. Diluted weighted average common 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 $1,265 million of convertible senior notes due 2029 and 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, Akamai 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 2029, 2027 and 2025, unless Akamai's weighted average stock price is greater than $126.31, $116.18 and $95.10, respectively, the initial conversion prices, 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 and marketable securities income and losses; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; legal settlements; foreign exchange gains and losses; interest expense; amortization of capitalized interest expense; gains and losses on cost method investments; gains and losses from 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 - 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.

Capex as a percentage of revenue - Capital expenditures, or capex, stated as a percentage of revenue.

Impact of foreign currency exchange rate - Revenue and earnings from international operations have historically been important contributors 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 international 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 growth rate impacted by foreign currency exchange rates, sometimes referred to as constant currency, 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 Act

This release and related management commentary on our quarterly earnings conference call scheduled for later today contain statements that are not statements of historical fact and constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about expected future financial performance, expectations, plans and prospects of Akamai, including our outlook, guidance and growth objectives. In some cases, you can identify forward-looking statements by the following words: "may," "will," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "ongoing," or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. 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, inability to continue to generate cash at the same level as prior years; failure of our investments in innovation to generate solutions that are accepted in the market; 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; effects of competition, including pricing pressure and changing business models; impact of macroeconomic trends, including economic uncertainty, turmoil in the financial services industry, the effects of inflation, rising and fluctuating interest rates, foreign currency exchange rate fluctuations, securities market volatility and monetary supply fluctuations; conditions and uncertainties in the geopolitical environment, including sanctions and disruptions resulting from the ongoing war in Ukraine and the Israel-Hamas war; continuing supply chain and logistics costs, constraints, changes or disruptions; defects or disruptions in our products or IT systems, including cyber-attacks, data breaches or malware; difficulties in integrating our acquisitions and investments; failure to realize the expected benefits of any of our acquisitions, reorganizations or investments; changes to economic, political and regulatory conditions in the United States and internationally; our ability to attract and retain key personnel; delay in developing or failure to develop new service offerings or functionalities, and if developed, 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 our Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other documents filed with the SEC.

In addition, the statements in this press release and on our quarterly earnings conference 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:

Christine Simeone
Media Relations
Akamai Technologies
AkamaiPR@akamai.com

Mark Stoutenberg
Investor Relations
Akamai Technologies
mstouten@akamai.com

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SOURCE Akamai Technologies, Inc.