Exhibit 99.1
CONTACTS:
Jeff Young --or-- J.C. Raby
Media Relations Investor Relations
Akamai Technologies Akamai Technologies
617-444-3913 617-444-2555
jyoung@akamai.com jraby@akamai.com
AKAMAI REPORTS SECOND QUARTER 2003 RESULTS
- REVENUE GROWS TO $37.8 MILLION
- TOTAL EDGESUITE(R)CUSTOMERS INCREASES BY 88 TO 434
- NET LOSS OF $14.6 MILLION OR NEGATIVE $0.13 PER SHARE, DECLINES FROM
A NET LOSS OF $42.2 MILLION, OR NEGATIVE $0.38 PER SHARE, IN THE
SECOND QUARTER OF 2002
- CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES
OF $96.3 MILLION AT QUARTER END
CAMBRIDGE, MASS. - JULY 30, 2003 - Akamai Technologies, Inc. (NASDAQ: AKAM), a
provider of services that enable the world's leading enterprises and government
agencies to extend and control their e-business infrastructure, today reported
financial results for the second quarter ended June 30, 2003. Revenue for second
quarter 2003 was $37.8 million, a 3.3 percent increase over first quarter
revenue of $36.6 million, and a 4.1 percent increase over second quarter 2002
revenue of $36.3 million.
Net loss, in accordance with United States generally accepted accounting
principles (GAAP) for second quarter 2003 was $14.6 million, or negative $0.13
per share, compared to a net loss for first quarter 2003 of $8.6 million, or
negative $0.07 per share, and compared to a loss of $42.2 million, or negative
$0.38 per share in second quarter 2002.
The Company's net losses include a real estate restructuring charge of $1.3
million for the second quarter of 2003, and a real estate restructuring benefit
of $9.8 million for the first quarter of 2003.
Net loss for the six months ended June 30, 2003 was $23.3 million, or negative
$0.20 per share, compared to a net loss of $101.3 million, or negative $0.91 per
share, for the six months ended June 30, 2002.
Normalized net loss* for second quarter 2003 was $10.1 million, or negative
$0.09 per share, compared to normalized net loss for the prior quarter of $13.3
million, or negative $0.11 per share, and compared to First Call's consensus
summary normalized net loss of $0.10 per share. (* See Use of Non-GAAP Financial
Measures for definition of normalized net loss.)
Normalized net loss* for second quarter 2003 also represents a 69 percent
improvement as compared to normalized net loss of $32.8 million, or negative
$0.29 per share in second quarter 2002. Normalized net loss* for the six months
ended June 30, 2003 was $23.3 million, or negative $0.20 per share, compared to
a normalized net loss of $62.2 million, or negative $0.56 per share, for the six
months ended June 30, 2002. (* See Use of Non-GAAP Financial Measures for
definition of normalized net loss.)
Adjusted EBITDA* for second quarter 2003 was $7.7 million, up 22 percent from
$6.3 million in the prior quarter, and up 193 percent from an Adjusted EBITDA
loss of $8.3 million in second quarter 2002. (* See Use of Non-GAAP Financial
Measures for definition of Adjusted EBITDA.)
"In the second quarter, we improved our operating results year over year and
grew revenue quarter over quarter and year over year, while building valuable
relationships with a large and healthy base of enterprise and government
clients," said George Conrades, chairman and CEO of Akamai.
Net cash consumption declined for the third consecutive quarter to $13.6
million, including cash payments of $16.1 million to settle real estate
lease obligations, ending the quarter with $96.3 million in cash and cash
equivalents, restricted cash and marketable securities.
The settlement payments of $16.1 million to restructure real estate lease
obligations will result in average annual cash savings of over $8 million per
year starting in 2004, or over $50 million by the end of the original lease
period in 2010.
"We believe we are well-positioned to reach our goal of generating positive free
cash flow* for the fourth quarter," said Robert Cobuzzi, chief financial officer
of Akamai. (* See Use of Non-GAAP Financial Measures for definition of free cash
flow.)
At June 30, 2003, the Company had 118.8 million shares of common stock
outstanding. At June 30, 2003, common stock outstanding and unexercised stock
options and warrants totaled 135.2 million shares.
CUSTOMERS
At the end of the second quarter of 2003, Akamai had 434 EdgeSuite customers
under recurring contract, compared to 346 at the end of the previous quarter,
and up from 211 EdgeSuite clients at the end of second quarter of 2002.
New EdgeSuite customers in the second quarter included ATI Technologies Inc.,
BBC Technology, BearingPoint, Inc., The Dow Chemical Company, FUJI TV, Fuji
Heavy Industries, Ltd. (Subaru), The Princeton Review, Inc., Red Hat Inc.,
Reebok International, Ltd, and Warner Music Group, among others.
Resellers accounted for approximately 27 percent of second quarter revenue, as
compared to approximately 24 percent in the first quarter of 2003.
NETWORK
The size, scale and functionality of Akamai's underlying global network remain
key to the value proposition of all Akamai services. Akamai's global network at
the end of the second quarter
consisted of 14,372 servers in 1,134 networks, in 70 countries. The geographic
reach and capacity of Akamai's network is unprecedented in its ability to serve
the needs of enterprise customers, government agencies and major Web-centric
businesses.
USE OF NON-GAAP FINANCIAL MEASURES
The Company has historically provided financial metrics, some of which are based
on GAAP and others that are not prepared in accordance with GAAP (non-GAAP).
Recent legislative and regulatory changes encourage the use of 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 loss, before interest, taxes,
depreciation, amortization, equity-related compensation, restructuring charges
and benefits, and certain gains and losses on equity investments. 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 which are either not part of the Company's core
operations, such as investment gains and losses, net interest expense and
restructuring activities, or do not require a cash outlay, such as
equity-related compensation and impairment of intangible assets. Adjusted EBITDA
also eliminates 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.
Akamai defines "normalized net loss" as net loss before amortization,
equity-related compensation, restructuring charges and benefits, and certain
gains and losses on equity investments. Akamai considers normalized net loss 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 "free cash flow" as the net change in cash and cash equivalents,
restricted cash and marketable securities quarter-over-quarter. Akamai considers
free cash flow to be an important indicator of the Company's ability to generate
cash to finance operations, service its debt and make strategic investments.
Adjusted EBITDA, free cash flow and normalized net loss should be considered in
addition to, not as a substitute for, the Company's operating loss, net loss,
and various cash flow measures (e.g., cash used in operations), as well as other
measures of financial performance reported in accordance with generally accepted
accounting principles.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
In accordance with the requirements of Regulation G, 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 LOSS TO NORMALIZED NET LOSS
AND ADJUSTED EBITDA
(dollar amounts in thousands except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------------------- ---------------------------
JUNE 30, MARCH 31, JUNE 30, JUNE 30, JUNE 30,
2003 2003 2002 2003 2002
--------- --------- --------- --------- ---------
Net loss $ (14,646) $ (8,647) $ (42,242) $ (23,293) $(101,300)
Amortization of intangible assets 12 2,198 2,231 2,210 7,468
Equity-related compensation 3,268 2,971 4,646 6,239 11,017
Restructuring charges 1,299 (9,820) 602 (8,521) 13,011
Loss on investments, net -- 15 759 15 5,087
Amortization of CNN advertising -- -- 1,246 -- 2,492
--------- --------- --------- --------- ---------
Total normalized net loss: (10,067) (13,283) (32,758) $ (23,350) $ (62,225)
========= =========
Interest expense, net 4,268 4,228 3,733
Provision for income taxes 123 73 123
Depreciation 13,385 15,248 20,602
--------- --------- ---------
Total Adjusted EBITDA: $ 7,709 $ 6,266 $ (8,300)
========= ========= =========
Weighted average common
shares outstanding: 117,109 116,398 112,253 116,754 110,973
Normalized net loss per share: $ (0.09) $ (0.11) $ (0.29) $ (0.20) $ (0.56)
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
(unaudited)
June 30, 2003 December 31, 2002
------------- -----------------
ASSETS
Cash and cash equivalents $ 90,719 $ 111,262
Restricted cash and marketable securities 1,608 3,664
Accounts receivable, net 22,004 17,574
Prepaid expenses and other current assets 9,284 9,183
--------- ---------
Current assets: 123,615 141,683
Restricted cash 4,018 10,244
Property and equipment, net 38,143 63,159
Goodwill and other intangible assets, net 5,200 7,410
Other assets 6,045 7,367
--------- ---------
Total assets $ 177,021 $ 229,863
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable and accrued expenses $ 43,969 $ 53,909
Other current liabilities 8,076 27,190
--------- ---------
Current liabilities: 52,045 81,099
Other liabilities 5,724 16,854
Convertible notes 300,000 300,000
--------- ---------
Total liabilities 357,769 397,953
Stockholders' deficit (180,748) (168,090)
--------- ---------
Total liabilities and stockholders' deficit $ 177,021 $ 229,863
========= =========
Net increase (decrease) in cash and cash equivalents as reported on the
consolidated statements of cash flows, which are prepared in accordance with
GAAP, is the financial measure most directly comparable to Free Cash Flow. This
measure is not accessible on a forward-looking basis because it would include
estimates that cannot be reasonably forecasted. These estimates include future
changes in the balance of marketable securities and restricted cash, which may
be significant.
FREE CASH FLOW OR NET CASH CONSUMPTION
(dollar amounts in thousands)
<Table>
<Caption>
THREE MONTHS ENDED
------------------
JUNE 30,
2003
------------------
Change in cash and cash equivalents per the
consolidated statement of cash flows $ (7,913)
Change in restricted cash and marketable securities (5,684)
--------
Free cash flow or net cash consumption $(13,597)
========
</Table>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------------------- ------------------------
JUNE 30, MARCH 31, JUNE 30, MARCH 31, JUNE 30, JUNE 30,
2003 2003 2002 2002 2003 2002
-------- -------- -------- --------- -------- ---------
Revenue $ 37,759 $ 36,564 $ 36,322 $ 37,927 $ 74,323 $ 74,249
Cost and operating expenses:
Cost of revenue (before depreciation) 6,551 6,866 10,946 11,242 13,417 22,188
Research and development 2,048 2,445 4,624 4,869 4,493 9,493
Sales and marketing 11,382 10,109 13,837 13,610 21,491 27,447
General and administrative 10,069 10,878 15,215 13,966 20,947 29,181
Amortization of CNN advertising -- -- 1,246 1,246 -- 2,492
Amortization of other intangible assets 12 2,198 2,231 5,237 2,210 7,468
Depreciation 13,385 15,248 20,602 20,010 28,633 40,612
Equity-related compensation 3,268 2,971 4,646 6,371 6,239 11,017
Restructuring charges 1,299 (9,820) 602 12,409 (8,521) 13,011
-------- -------- -------- -------- -------- ---------
Total cost and operating expenses 48,014 40,895 73,949 88,960 88,909 162,909
-------- -------- -------- -------- -------- ---------
Operating loss (10,255) (4,331) (37,627) (51,033) (14,586) (88,660)
Interest expense, net 4,268 4,228 3,733 3,574 8,496 7,307
Loss on investments, net -- 15 759 4,328 15 5,087
-------- -------- -------- -------- -------- ---------
Loss before provision for income taxes (14,523) (8,574) (42,119) (58,935) (23,097) (101,054)
Provision for income taxes 123 73 123 123 196 246
-------- -------- -------- -------- -------- ---------
Net loss $(14,646) $ (8,647) $(42,242) $(59,058) $(23,293) $(101,300)
======== ======== ======== ======== ======== =========
Basic and diluted net loss per share $ (0.13) $ (0.07) $ (0.38) $ (0.54) $ (0.20) $ (0.91)
Weighted average shares outstanding 117,109 116,398 112,253 109,693 116,754 110,973
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------------------- ----------------------
June 30, March 31, June 30, March 31, June 30, June 30,
2003 2003 2002 2002 2003 2002
--------- --------- --------- --------- -------- --------
Supplemental financial data (in thousands):
Network-related depreciation $ 9,146 $ 10,620 $ 11,848 $ 11,914 $ 19,766 $ 23,762
Other depreciation $ 4,239 $ 4,628 $ 8,754 $ 8,096 $ 8,867 $ 16,850
Capital expenditures $ 1,857 $ 2,202 $ 3,665 $ 2,787 $ 4,069 $ 6,452
Common stock outstanding 118,820 117,843 116,397 115,723
Common stock outstanding and unexercised
options and warrants 135,225 133,503 133,377 130,607
Cash flow data (in thousands):
Net cash used in operating activities $(13,941) $(13,001) $ (8,011) $(35,969) $(26,942) $(43,980)
Net cash provided by investing
activities $ 4,373 $ 411 $ 31,481 $ 20,873 $ 4,784 $ 52,354
Net cash provided by (used in) financing
activities and effects of exchange rate
translation on cash $ 1,655 $ (40) $ 862 $ 131 $ 1,615 $ 993
-------- -------- -------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents $ (7,913) $(12,630) $ 24,332 $(14,965) $(20,543) $ 9,367
Net change in cash, cash equivalents,
restricted cash and marketable securities $(13,597) $(15,228) $(11,483) $(38,786) $(28,825) $(50,269)
End of period statistics:
EdgeSuite customers 434 346 211 187
Number of customers under recurring contract 1,001 994 1,034 1,055
Number of employees 519 532 807 822
Number of deployed servers 14,372 15,307 12,976 12,674
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 at www.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. 1565261.
ABOUT AKAMAI
Akamai(R) provides services that enable the world's leading enterprises and
government agencies to extend and control their e-business infrastructure.
Having deployed the world's largest, globally-distributed computing platform,
Akamai ensures the highest levels of availability, reliability, security, and
performance of networked information and application delivery. Headquartered in
Cambridge, Massachusetts, Akamai's industry-leading services, matched with
world-class customer care, are used by hundreds of successful enterprises,
government entities, and Web businesses around the globe. For more information,
visit www.akamai.com.
# # #
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. 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, lack of market acceptance of our services, failure to achieve incremental
revenue growth, the effects of any attempts to intentionally disrupt our
services or network by hackers or others, failure to have available sufficient
transmission capacity, a failure of Akamai's network infrastructure, 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.