Akamai (AKAM) 8-K Akamai Reports Third Quarter 2012

Exhibit 99.1

Contacts:
Jeff Young		Natalie Temple
Media Relations		Investor Relations
Akamai Technologies	—or—	Akamai Technologies
617-444-3913		617-444-3635
jyoung@akamai.com		ntemple@akamai.com

AKAMAI REPORTS THIRD QUARTER 2012

FINANCIAL RESULTS

• Third quarter revenue of $345 million, up 23 percent year over year

• GAAP net income of $48 million, up 14 percent year over year; or $0.27 per diluted share, up 17 percent year over year

• Normalized net income* of $79 million, up 24 percent year over year; or $0.43 per diluted share, up 26 percent year over year

CAMBRIDGE, Mass.–October 24, 2012– Akamai Technologies, Inc. (NASDAQ: AKAM), the leading cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere, today reported financial results for the third quarter ended September 30, 2012. Revenue for the third quarter of 2012 was $345 million, a 23 percent increase over third quarter 2011 revenue of $282 million, and a 4 percent increase over second quarter 2012 revenue of $331 million.

Net income in accordance with United States Generally Accepted Accounting Principles, or GAAP, for the third quarter of 2012 was $48 million, or $0.27 per diluted share, a 14 percent increase from third quarter 2011 GAAP net income of $42 million, or $0.23 per diluted share, and a 9 percent increase from second quarter 2012 GAAP net income of $44 million, or $0.24 per diluted share.

The Company generated normalized net income* of $79 million, or $0.43 per diluted share, in the third quarter of 2012, a 24 percent increase over third quarter 2011 normalized net income of $63 million, or $0.34 per diluted share, and a 1 percent increase from the prior quarter normalized net income of $78 million, or $0.43 per diluted share. (*See Use of Non-GAAP Financial Measures below for definitions.)

“Akamai experienced its fourth consecutive quarter of accelerating revenue growth and delivered higher margins,” said Paul Sagan, President and CEO of Akamai. “We continued to capitalize on our investments in cloud computing, web security, mobile services, and online video by expanding our product portfolio, while effectively managing the cost and efficiency of our network. These efforts paid off in both the Company’s top and bottom line performance.”

Adjusted EBITDA* for the third quarter of 2012 was $157 million, up 28 percent from $122 million in the third quarter of 2011, and up 9 percent from $143 million in the prior quarter. Adjusted EBITDA margin* for the third quarter was 45 percent, up two points from the prior quarter and from the same period last year. (*See Use of Non-GAAP Financial Measures below for definitions.)

Cash from operations was $141 million in the third quarter of 2012, or 41 percent of revenue. At the end of the third quarter of 2012, the Company had over $1 billion in cash, cash equivalents and marketable securities.

Sales through resellers and sales outside the United States accounted for 22 percent and 29 percent, respectively, of revenue for the third quarter of 2012.

Share Repurchase Program

During the third quarter of 2012, under a share repurchase program that was approved by the Board of Directors in May 2012, the Company repurchased approximately 1 million shares of its common stock for $37 million, at an average price of $31.53 per share. During the three quarters ended September 30, 2012, the Company repurchased approximately 4 million shares of its common stock for $112 million, at an average price of $31.31 per share. The Company has $68 million remaining on its current authorization, which runs through April 30, 2013.

The Company had approximately 177 million shares of common stock outstanding as of September 30, 2012.

Quarterly Conference Call

Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-800-706-7745(or 1-617-614-3472 for international calls) and using passcode No. 82472044. 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 1-888-286-8010 (or 1-617-801-6888 for international calls) and using passcode No. 96448745.

About Akamai

Akamai^® is the leading cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere. At the core of the Company’s solutions is the Akamai Intelligent Platform™ providing extensive reach, coupled with unmatched reliability, security, visibility and expertise. Akamai removes the complexities of connecting the increasingly mobile world, supporting 24/7 consumer demand, and enabling enterprises to securely leverage the cloud. To learn more about how Akamai is accelerating the pace of innovation in a hyperconnected world, please visitwww.akamai.com orblogs.akamai.com, and follow @Akamai on Twitter.

Condensed Consolidated Balance Sheets

(dollar amounts in thousands)

(unaudited)

	Sep. 30, 2012		Dec. 31, 2011
Assets
Cash and cash equivalents	$	182,650	$	559,197
Marketable securities		282,579		290,029
Accounts receivable, net		236,232		210,936
Deferred income tax assets, current portion		6,444		6,444
Prepaid expenses and other current assets		45,784		55,414
Current assets		753,689		1,122,020
Marketable securities		593,105		380,729
Property and equipment, net		331,218		293,043
Goodwill and other intangible assets, net		803,976		498,300
Other assets		15,365		7,924
Deferred income tax assets, net		42,101		43,485
Total assets	$	2,539,454	$	2,345,501
Liabilities and stockholders’ equity
Accounts payable and accrued expenses	$	184,365	$	123,618
Other current liabilities		28,555		24,774
Current liabilities		212,920		148,392
Other liabilities		66,596		40,859
Total liabilities		279,516		189,251
Stockholders’ equity		2,259,938		2,156,250
Total liabilities and stockholders’ equity	$	2,539,454	$	2,345,501

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share data)

(unaudited)

	Three Months Ended									Nine Months Ended
	Sep. 30, 2012			Jun. 30, 2012			Sep. 30, 2011			Sep. 30, 2012		Sep. 30, 2011
Revenues	$	345,321		$	331,306		$	281,856		$	996,075	$	834,798
Costs and operating expenses:
Cost of revenues * †		109,995			107,457			93,284			320,018		271,999
Research and development *		19,351			17,542			13,542			54,373		37,142
Sales and marketing *		75,924			75,882			54,520			219,096		160,722
General and administrative * †		54,511			57,997			50,834			168,214		140,710
Amortization of other intangible assets		5,381			5,463			4,185			15,611		12,754
Restructuring (benefit) charge		—			(46	)		158			14		158
Total costs and operating expenses		265,162			264,295			216,523			777,326		623,485
Operating income		80,159			67,011			65,333			218,749		211,313
Interest income, net		1,593			1,626			3,002			4,865		9,058
Other (expense) income, net		(241	)		1,131			(188	)		449		(1,330	)
Income before provision for income taxes		81,511			69,768			68,147			224,063		219,041
Provision for income taxes		33,280			25,529			25,862			88,366		78,218
Net income	$	48,231		$	44,239		$	42,285		$	135,697	$	140,823
Net income per share:
Basic	$	0.27		$	0.25		$	0.23		$	0.76	$	0.76
Diluted	$	0.27		$	0.24		$	0.23		$	0.75	$	0.74
Shares used in per share calculations:
Basic		177,455			178,547			183,085			178,040		185,515
Diluted		181,053			181,817			185,704			181,738		189,089

* Includes stock-based compensation (see supplemental table for figures)

† Includes depreciation and amortization (see supplemental table for figures)

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	Three Months Ended									Nine Months Ended
	Sep. 30, 2012			Jun. 30, 2012			Sep. 30, 2011			Sep. 30, 2012			Sep. 30, 2011
Cash flows from operating activities:
Net income	$	48,231		$	44,239		$	42,285		$	135,697		$	140,823
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		53,457			50,112			41,761			149,204			124,228
Stock-based compensation		22,635			25,621			15,141			69,180			42,465
Provision for deferred income taxes, net		826			—			20,906			826			20,906
Excess tax benefits from stock-based compensation		(2,540	)		(1,635	)		(610	)		(17,589	)		(11,460	)
Loss (gain) on investments and disposal of property and equipment, net		142			(107	)		(176	)		(62	)		(172	)
Provision for doubtful accounts		(345	)		(86	)		782			(61	)		1,236
Changes in operating assets and liabilities:
Accounts receivable		(27,974	)		7,803			(8,277	)		(21,587	)		(7,821	)
Prepaid expenses and other current assets		2,131			4,663			(919	)		11,103			(78	)
Accounts payable, accrued expenses and other current liabilities		44,591			15,939			445			54,732			(5,268	)
Accrued restructuring		(28	)		(725	)		(148	)		(2,897	)		(180	)
Deferred revenue		1,401			2,667			796			5,542			(1,386	)
Other noncurrent assets and liabilities		(1,031	)		1,061			4,303			(536	)		13,355
Net cash provided by operating activities		141,496			149,552			116,289			383,551			316,648
Cash flows from investing activities:
Cash paid for acquired businesses, net of cash received		(14,392	)		—			—			(306,030	)		(550	)
Purchases of property and equipment and capitalization of internal-use software costs		(60,294	)		(55,539	)		(47,317	)		(159,177	)		(136,292	)
Proceeds from sales and maturities of short- and long-term marketable securities		98,567			134,171			388,983			350,152			900,120
Purchases of short- and long-term marketable securities		(137,809	)		(135,845	)		(149,318	)		(554,303	)		(727,453	)
Proceeds from the sale of property and equipment		—			2			47			12			135
Decrease in restricted investments held for security deposits		—			—			—			—			221
Net cash (used in) provided by investing activities		(113,928	)		(57,211	)		192,395			(669,346	)		36,181
Cash flows from financing activities:
Proceeds from the issuance of common stock under stock option and employee stock purchase plans		6,066			15,491			1,183			28,635			13,305
Excess tax benefits from stock-based compensation		2,540			1,635			610			17,589			11,460
Taxes paid related to net share settlement of equity awards		(2,370	)		(2,541	)		(2,173	)		(26,566	)		(5,680	)
Repurchase of common stock		(36,523	)		(67,213	)		(155,125	)		(111,649	)		(247,738	)
Net cash used in financing activities		(30,287	)		(52,628	)		(155,505	)		(91,991	)		(228,653	)
Effects of exchange rate changes on cash and cash equivalents		2,373			(1,441	)		(3,209	)		1,239			(443	)
Net (decrease) increase in cash and cash equivalents		(346	)		38,272			149,970			(376,547	)		123,733
Cash and cash equivalents, beginning of period		182,996			144,724			205,629			559,197			231,866
Cash and cash equivalents, end of period	$	182,650		$	182,996		$	355,599		$	182,650		$	355,599

	Three Months Ended							Nine Months Ended
	Sep. 30, 2012		Jun. 30, 2012		Sep. 30, 2011			Sep. 30, 2012			Sep. 30, 2011
Supplemental financial data (in thousands):
Stock-based compensation:
Cost of revenues	$	684	$	884	$	634		$	2,251		$	1,779
Research and development		4,427		4,901		2,629			13,258			7,515
Sales and marketing		10,896		10,994		6,951			32,024			19,112
General and administrative		6,628		8,842		4,927			21,647			14,059
Total stock-based compensation	$	22,635	$	25,621	$	15,141		$	69,180		$	42,465
Depreciation and amortization:
Network-related depreciation	$	41,022	$	37,989	$	31,662		$	113,616		$	93,594
Capitalized stock-based compensation amortization		2,025		1,939		1,592			5,719			5,595
Other depreciation and amortization		5,029		4,721		4,322			14,257			12,285
Amortization of other intangible assets		5,381		5,463		4,185			15,611			12,754
Total depreciation and amortization	$	53,457	$	50,112	$	41,761		$	149,203		$	124,228
Capital expenditures:
Purchases of property and equipment	$	46,635	$	42,188	$	37,244		$	119,256		$	105,769
Capitalized internal-use software		13,659		13,351		10,073			39,921			30,523
Capitalized stock-based compensation		2,561		1,835		1,941			6,694			5,406
Total capital expenditures	$	62,855	$	57,374	$	49,258		$	165,871		$	141,698
Net increase (decrease) in cash, cash equivalents, marketable securities and restricted marketable securities	$	39,889	$	39,725	$	(94,478	)	$	(171,621	)	$	(52,407	)
End of period statistics:
Number of employees		2,884		2,654		2,356
Number of deployed servers		119,370		115,008		100,770

*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). Legislative and regulatory pronouncements 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. We believe that the inclusion of these non-GAAP financial measures in this press release and our earnings call helps investors to gain a meaningful understanding of our past performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts. Our management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. These measures are also used by management in its financial and operational decision-making. There are limitations associated with reliance on these non-GAAP financial metrics because they are specific to our operations and financial performance, which may make comparisons with other companies’ financial results more challenging. By providing both GAAP and non-GAAP financial measures, we believe that investors are able to compare our GAAP results to those of other companies while also gaining a better understanding of our operating performance as evaluated by management.

Akamai defines “Adjusted EBITDA” as net income, before interest, income taxes, depreciation and amortization of tangible and intangible assets, stock-based compensation expense, amortization of capitalized stock-based compensation, restructuring charges and benefits, acquisition related costs and benefits, certain gains and losses on investments, foreign exchange gains and losses, loss on early extinguishment of debt and gains and losses on legal settlements. Akamai considers Adjusted EBITDA 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.

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 income, or that do not require a cash outlay, such as stock-based compensation. 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 the historical cost incurred to build out the Company’s deployed network, and may not be indicative of current or future capital expenditures.

Akamai defines “Adjusted EBITDA margin” as a percentage of Adjusted EBITDA as a percentage of revenues. 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, capitalization of internal-use software development costs and capitalization of stock-based compensation. Capital expenditures or capex are disclosed in Akamai’s 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 other intangible assets, stock-based compensation expense, amortization of capitalized stock-based compensation, restructuring charges and benefits, acquisition related costs and benefits, certain gains and losses on investments, loss on early extinguishment of debt and gains and losses on legal settlements. 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.

Akamai defines “normalized net income per share” as normalized net income, plus interest add-back for diluted share calculation, divided by the basic weighted average or diluted common shares outstanding used in GAAP net income per share calculations. Akamai considers normalized net income per share to be another important indicator of overall performance of the Company because it eliminates the effect of non-cash items. 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 measures 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
	Sep. 30, 2012			Jun. 30, 2012			Sep. 30, 2011			Sep. 30, 2012			Sep. 30, 2011
Net income	$	48,231		$	44,239		$	42,285		$	135,697		$	140,823
Amortization of other intangible assets		5,381			5,463			4,185			15,611			12,754
Stock-based compensation		22,635			25,621			15,141			69,180			42,465
Amortization of capitalized stock-based compensation		2,025			1,939			1,592			5,719			5,595
Acquisition related costs (benefits)		279			376			—			5,107			(440	)
Restructuring (benefit) charge		—			(46	)		158			14			158
Total normalized net income:		78,551			77,592			63,361			231,328			201,355
Interest income, net		(1,593	)		(1,626	)		(3,002	)		(4,865	)		(9,058	)
Provision for income taxes		33,280			25,529			25,862			88,366			78,218
Depreciation and amortization		46,051			42,710			35,984			127,873			105,879
Other expense (income), net		241			(1,131	)		188			(449	)		1,330
Total Adjusted EBITDA:	$	156,530		$	143,074		$	122,393		$	442,253		$	377,724
Normalized net income per share:
Basic	$	0.44		$	0.43		$	0.35		$	1.30		$	1.09
Diluted	$	0.43		$	0.43		$	0.34		$	1.27		$	1.06
Shares used in normalized per share calculations:
Basic		177,455			178,547			183,085			178,040			185,515
Diluted		181,053			181,817			185,704			181,738			189,089

Akamai Statement Under the Private Securities Litigation Reform Act

This 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 about future revenue growth. 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, effects of increased competition including potentially failure to maintain the prices we charge for our services and loss of significant customers; failure of the markets we address or plan to address to develop as we expect or at all; 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; a failure of Akamai’s services or network infrastructure; 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 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.