Akamai (AKAM) 8-K Akamai Reports Record Revenue and Profits for Third Quarter 2005

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Contacts:
Jeff Young		Sandy Smith
Media Relations		Investor Relations
Akamai Technologies	—or—	Akamai Technologies
617-444-3913		617-444-2804
jyoung@akamai.com		ssmith@akamai.com

AKAMAI REPORTS RECORD REVENUE AND PROFITS
FOR THIRD QUARTER 2005

wRevenue grows 42 percent year-over-year to $75.7 million, a 17 percent increase from prior quarter

wGAAP net income expands in the third quarter to $272.3 million, or $1.71 per diluted share, including a benefit from the release of a tax valuation allowance of $255.3 million

wNormalized net income* increases 80 percent year-over-year to $22.0 million, or $0.14 per diluted share, a 29 percent increase over prior quarter’s normalized net income

CAMBRIDGE, Mass.—October 25, 2005— Akamai Technologies, Inc. (NASDAQ: AKAM), the leading global service provider for accelerating content and business processes online, today reported financial results for the third quarter ended September 30, 2005. Revenue for the third quarter 2005 was $75.7 million, a 17 percent increase over second quarter 2005 revenue of $64.6 million, and a 42 percent increase over third quarter 2004 revenue of $53.3 million.

Net income in accordance with United States Generally Accepted Accounting Principles, or GAAP, for the third quarter of 2005 was $272.3 million, or $1.71 per diluted share. The Company’s GAAP net income included a benefit of $255.3 million, or approximately $1.59 per diluted share, primarily related to the recognition of the Company’s net operating loss carryforward as a result of the release of a tax valuation allowance. The Company previously had discussed its expectation that the tax valuation allowance would be released in the second half of 2005. The Company has concluded, pursuant to Statement of Financial Accounting Standards No. 109, that the valuation allowance should be released primarily as a result of achieving sustained profitability.

Normalized net income* was $22.0 million, or $0.14 per diluted share, in the third quarter of 2005, a 29 percent increase over second quarter 2005 normalized net income of $17.1 million, or $0.12 per diluted share, and an 80 percent improvement over 2004 third quarter normalized earnings of $12.2 million, or $0.09 per diluted share. (*See Use of Non-GAAP Financial Measures below for definitions.)

Adjusted EBITDA* for the third quarter of 2005 of $27.7 million represented an increase of 55 percent year-over-year, and 22 percent over the prior quarter. Adjusted EBITDA as a percentage of revenue was 37 percent, up from 34 percent a year ago, and 35 percent in the prior quarter. (*See Use of Non-GAAP Financial Measures below for definitions.)

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“We’re very pleased with our third quarter results,” said Paul Sagan, president and CEO of Akamai. “Many of our enterprise customers have continued to increase their use of the Internet, and Akamai brings improved Internet performance and reliability to their critical business processes.”

Cash from operations was $19.5 million in the third quarter, as compared to second quarter 2005 cash from operations of $16.9 million. During the quarter, the Company redeemed the remaining $56.6 million of its outstanding 5.5% convertible debt. On a year-to-date basis, cash from operations was $55.1 million, as compared to $35.7 million in the first nine months of 2004.

At September 30, 2005, the Company had approximately 139.7 million shares of common stock outstanding.

Customers

The number of customers under long-term services contracts at the end of the third quarter increased by 94 to a record 1,830, a 5 percent increase over second quarter 2005, and a 45 percent increase year-over-year.

“Strong growth in our customer base reflects increasing trust in Akamai to accelerate the on-line delivery of mission critical content and Web-based applications by businesses and government agencies,” Sagan said.

Sales through resellers and sales outside the United States accounted for 24 percent and 20 percent, respectively, of revenue for the third quarter of 2005.

Quarterly Conference Call

Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-888-689-4521 (or 1-706-645-9202 for international calls). A live Webcast of the call may be accessed atwww.akamai.com in the Investor section. In addition, a replay of the call will be available for one week following the conference through the Akamai Website or by calling 1-800-642-1687 (or 1-706-645-9291 for international calls) and using conference ID No. 9875106.

About Akamai

Akamai^® is the leading global service provider for accelerating content and business processes online. More than 1,800 organizations have formed trusted relationships with Akamai, improving their revenue and reducing costs by maximizing the performance of their online businesses. Leveraging the Akamai EdgePlatform, these organizations gain business advantage today, and have the foundation for the emerging Web solutions of tomorrow. Akamai is“The Trusted Choice for Online Business.”For more information, visitwww.akamai.com.

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Financial Statements

Condensed Consolidated Balance Sheets
(dollar amounts in thousands)
(unaudited)

	September 30,		December 31,
	2005		2004
Assets
Cash and cash equivalents	$	34,084	$	35,318
Marketable securities		32,232		34,380
Restricted marketable securities		730		932
Accounts receivable, net		43,935		30,333
Prepaid expenses and other current assets		9,148		7,706
Current assets		120,129		108,669
Marketable securities		15,735		34,065
Restricted marketable securities		3,722		3,722
Property and equipment, net		42,529		25,242
Goodwill and other intangible assets, net		139,503		5,128
Other assets		5,008		5,917
Deferred tax assets, net		320,413		—
Total assets	$	647,039	$	182,743
Liabilities and stockholders’ equity
Accounts payable and accrued expenses	$	50,982	$	42,446
Other current liabilities		6,917		4,320
Current liabilities		57,899		46,766
Other liabilities		11,548		5,294
Convertible notes		200,000		256,614
Total liabilities		269,447		308,674
Stockholders’ equity (deficit)		377,592		(125,931	)
Total liabilities and stockholders’ equity	$	647,039	$	182,743

Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)

	Three Months Ended											Nine Months Ended
	September 30,			June 30,			September 30,			June 30,		September 30,			September 30,
	2005			2005			2004			2004		2005			2004
Revenues	$	75,713		$	64,649		$	53,286		$	50,786	$	200,458		$	152,439
Costs and operating expenses:
Cost of revenues *		15,295			12,752			11,748			11,083		39,571			34,977
Research and development		4,953			4,507			3,222			2,872		13,089			8,788
Sales and marketing		19,803			18,363			12,965			13,671		54,911			40,646
General and administrative *		14,568			11,341			11,874			10,521		37,748			33,592
Amortization of other intangible assets		2,296			520			12			12		2,828			36
Total costs and operating expenses		56,915			47,483			39,821			38,159		148,147			118,039
Operating income		18,798			17,166			13,465			12,627		52,311			34,400
Interest expense, net		567			770			1,533			2,045		2,350			6,736
Loss on early extinguishment of debt		1,370			—			634			3,264		1,370			5,916
Loss on investments, net		27			—			79			—		27			68
Other expense (income), net		63			(77	)		(101	)		85		712			122
Income before (benefit) provision for income taxes		16,771			16,473			11,320			7,233		47,852			21,558
(Benefit) provision for income taxes		(255,489	)		573			71			430		(254,387	)		585
Net income	$	272,260		$	15,900		$	11,249		$	6,803	$	302,239		$	20,973
Net income per share:
Basic	$	1.96		$	0.12		$	0.09		$	0.06	$	2.29		$	0.17
Diluted	$	1.71		$	0.11		$	0.08		$	0.05	$	2.00		$	0.16
Shares used in per share calculations:
Basic		139,204			130,119			125,618			123,645		132,125			123,789
Diluted		160,362			149,986			147,294			146,408		152,336			133,557

* Includes depreciation (see supplemental tables for figures)

	Three Months Ended											Nine Months Ended
	September 30,			June 30,		September 30,			June 30,			September 30,			September 30,
	2005			2005		2004			2004			2005			2004
Supplemental financial data (in thousands):
Network-related depreciation	$	4,361		$	3,472	$	3,124		$	3,725		$	10,748		$	11,299
Other depreciation	$	881		$	860	$	1,024		$	1,106		$	2,680		$	3,724
Capital expenditures	$	8,531		$	9,805	$	5,346		$	4,575		$	28,055		$	12,963
Net (decrease) increase in cash, cash equivalents, restricted cash and marketable securities	$	(44,213	)	$	12,695	$	(2,329	)	$	(54,922	)	$	(21,914	)	$	(88,558	)
End of period statistics:
Number of customers under recurring contract		1,830			1,736		1,258			1,214
Number of employees		766			774		598			589
Number of deployed servers		18,092			17,500		15,064			14,916

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	Three Months Ended												Nine Months Ended
	September 30,			June 30,			September 30,			June 30,			September 30,			September 30,
	2005			2005			2004			2004			2005			2004
Cash flows from operating activities:
Net income	$	272,260		$	15,900		$	11,249		$	6,803		$	302,239		$	20,973
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of deferred financing costs		7,792			5,074			4,469			5,189			17,006			16,155
Equity-related compensation		1,383			657			249			274			2,267			1,056
Change in deferred tax assets, net, including release of deferred tax asset valuation allowance		(255,345	)		—			—			—			(255,187	)		30
Non-cash portion of loss on early extinguishment of debt		481			—			178			1,006			481			2,161
Loss on investments, property and equipment and foreign currency, net		161			319			(72	)		34			707			118
Provision for doubtful accounts		566			41			(186	)		(30	)		1,020			(422	)
Changes in operating assets and liabilities:
Accounts receivable, net		(4,194	)		(1,837	)		(2,076	)		(1,696	)		(10,792	)		(7,105	)
Prepaid expenses and other current assets		2,567			(1,926	)		2,057			(37	)		1,418			4,494
Accounts payable, accrued expenses and other current liabilities		(6,818	)		(1,846	)		281			1,755			(3,786	)		(168	)
Accrued restructuring		(710	)		(339	)		(354	)		(474	)		(1,401	)		(1,278	)
Deferred revenue		1,374			45			(2,016	)		(393	)		1,700			(1,236	)
Other noncurrent assets and liabilities		(18	)		836			769			47			(547	)		884
Net cash provided by operating activities:		19,499			16,924			14,548			12,478			55,125			35,662
Cash flows from investing activities:
Cash acquired through business combination		—			1,717			—			—			1,717			—
Purchases of property and equipment and capitalization of internal-use software		(8,531	)		(9,805	)		(5,346	)		(4,575	)		(28,055	)		(12,963	)
Purchase of investments		(6,534	)		(15,541	)		(12,325	)		(39,117	)		(32,619	)		(172,860	)
Proceeds from sale of property and equipment		—			—			—			—			—			9
Proceeds from sales and maturities of investments		33,733			14,231			15,588			9,400			53,167			196,713
Decrease in restricted cash held for note repurchases		—			—			—			—			—			5,000
Decrease in restricted investments held for security deposits		—			—			96			—			—			96
Net cash provided by (used in) investing activities		18,668			(9,398	)		(1,987	)		(34,292	)		(5,790	)		15,995
Cash flows from financing activities:
Payments on capital leases		(171	)		(93	)		(137	)		(134	)		(398	)		(402	)
Proceeds from the issuance of 1% convertible senior notes, net of financing cots		—			—			—			—			—			24,313
Repurchase and retirement of 5 1/2% covertible subordinated notes		(56,614	)		—			(13,115	)		(68,523	)		(56,614	)		(144,511	)
Proceeds from the issuance of common stock under stock option and employee stock purchase plans		1,933			4,145			1,095			6,617			7,721			9,890
Net cash (used in) provided by financing activities		(54,852	)		4,052			(12,157	)		(62,040	)		(49,291	)		(110,710	)
Effects of exchange rate translation on cash and cash equivalents		(259	)		(431	)		357			(167	)		(1,278	)		(378	)
Net (decrease) increase in cash and cash equivalents		(16,944	)		11,147			761			(84,021	)		(1,234	)		(59,431	)
Cash and cash equivalents, beginning of period		51,028			39,881			45,460			129,481			35,318			105,652
Cash and cash equivalents, end of period	$	34,084		$	51,028		$	46,221		$	45,460		$	34,084		$	46,221

* 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 has historically provided additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). Recent legislative and regulatory changes discourage the use of and emphasis on non-GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors.

Akamai defines “Adjusted EBITDA” as net income, before interest, taxes, depreciation and amortization of tangible and intangible assets, equity-related compensation, certain gains and losses on equity investments, foreign exchange gains and losses, release of the deferred tax asset valuation allowance and loss on early extinguishment of debt.

Adjusted EBITDA eliminates items that are either not part of the Company’s core operations, such as investment gains and losses, foreign exchange gains and losses, early debt extinguishment and net interest expense, or do not require a cash outlay, such as equity-related compensation and

impairment of intangible assets. Adjusted EBITDA also excludes depreciation and amortization expense, which is based on the Company’s estimate of the useful life of tangible and intangible assets. These estimates could vary from actual performance of the asset, are based on historic cost incurred to build out the Company’s deployed network, and may not be indicative of current or future capital expenditures. Because Adjusted EBITDA eliminates these items, Akamai considers this financial measure to be an important indicator of the Company’s operational strength and performance of its business and a good measure of the Company’s historical operating trend.

Akamai defines “Adjusted EBITDA margin” as a percentage of adjusted EBITDA over revenue. Akamai considers Adjusted EBITDA margin to be an indicator of the Company’s operating trend and performance of its business in relation to its revenue growth.

Akamai defines “capital expenditures” or “capex” as purchases of property and equipment and capitalization of internal-use software development costs. Capital expenditures or capex are disclosed in Akamai’s condensed consolidated statement of cash flows in the Company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

Akamai defines “normalized net income” as net income before amortization of intangible assets, equity-related compensation, certain gains and losses on equity investments, release of the deferred tax asset valuation allowance and loss on early extinguishment of debt. Akamai considers normalized net income to be another important indicator of the overall performance of the Company because it eliminates the effects of events that are either not part of the Company’s core operations or are non-cash.

Adjusted EBITDA and normalized net income should be considered in addition to, not as a substitute for, the Company’s operating income and net income, as well as other measures of financial performance reported in accordance with GAAP.

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial metrics to the comparable GAAP measures.

Reconciliation of GAAP net income to normalized net income
and Adjusted EBITDA
(amounts in thousands, except per share data)

	Three Months Ended											Nine Months Ended
	September 30,			June 30,			September 30,			June 30,		September 30,			September 30,
	2005			2005			2004			2004		2005			2004
Net income	$	272,260		$	15,900		$	11,249		$	6,803	$	302,239		$	20,973
Amortization of intangible assets		2,296			520			12			12		2,828			36
Equity-related compensation		1,383			657			249			274		2,267			1,056
Loss on investments, net		27			—			79			—		27			68
Release of the deferred tax asset valuation allowance		(255,345	)		—			—			—		(255,345	)		—
Loss on early extinguishment of debt		1,370			—			634			3,264		1,370			5,916
Total normalized net income:		21,991			17,077			12,223			10,353		53,386			28,049
Interest expense, net		567			770			1,533			2,045		2,350			6,736
(Benefit) provision for income taxes		(144	)		573			71			430		958			585
Depreciation and amortization		5,242			4,332			4,148			4,831		13,428			15,023
Other expense (income), net		63			(77	)		(101	)		85		712			122
Total Adjusted EBITDA:	$	27,719		$	22,675		$	17,874		$	17,744	$	70,834		$	50,515
Normalized net income per share:
Basic	$	0.16		$	0.13		$	0.10		$	0.08	$	0.40		$	0.23
Diluted	$	0.14		$	0.12		$	0.09		$	0.07	$	0.36		$	0.21
Shares used in normalized per share calculations:
Basic		139,204			130,119			125,618			123,645		132,125			123,789
Diluted		159,994			149,986			147,294			146,408		152,336			146,449

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Akamai Statement Under the Private Securities Litigation Reform Act

The release contains 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 concerning the expected growth and development of our business and expectations as to continued profitability. 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, unexpected increases in Akamai’s use of funds, loss of significant customers, failure to increase our revenue and keep our expenses consistent with revenues, failure to realize our expectations with respect to the acquisition of Speedera, the effects of any attempts to intentionally disrupt our services or network by unauthorized users or others, failure to have available sufficient transmission capacity, a failure of Akamai’s services or network infrastructure, failure to maintain the prices we charge for our services, inability to service and repay our outstanding debt 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 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.