Akamai Reaffirms First Quarter 2013 Guidance In Conjunction With Annual Investor Summit

Mon Mar 11, 2013 11:53am EDT

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Company Announces New Cost Classifications and Non-GAAP Reporting Terminology
and Methodology
CAMBRIDGE, Mass.,  March 11, 2013  /PRNewswire/ -- Akamai Technologies, Inc.
(NASDAQ: AKAM), the leading cloud platform for helping enterprises provide
secure, high-performing user experiences on any device, anywhere, is today
reaffirming its previously-issued first quarter 2013 financial guidance.  In
conjunction with its annual  Investor Summit  being held today, the Company is
also announcing the adoption of new reporting methodologies for classifying
certain costs in the statements of operations and for calculating normalized net
income, which will be referred to as non-GAAP net income going forward.  These
new reporting methodologies will be reflected beginning in the Company's first
quarter 2013 results, and have no impact on the Company's operational
performance, financial position or cash flows.  

(Logo:  http://photos.prnewswire.com/prnh/20100225/AKAMAILOGO  )

First Quarter 2013 Guidance
The Company is announcing today that it continues to expect first quarter
revenue in the range of $352 million to $362 million, adjusted EBITDA margins in
the range of 42 to 43 percent and normalized net income per diluted share in the
range of  $0.50 to $0.52.  Under the new methodology described below, the
Company expects non-GAAP net income per diluted share in the range of  $0.45 to
$0.47.

New Reporting Methodologies
Starting in the first quarter 2013, the Company will classify both the cost of
services and support and the cost of network build-out and support as costs of
revenues in its statements of operations on a historic and prospective basis. 
The Company previously classified the cost of services and support in the sales
and marketing line of the statements of operations and the cost of network
build-out and support in the general and administrative line of the statements
of operations.  The effect of these reclassifications is to increase cost of
revenues and decrease operating expenses.  The changes do not impact adjusted
EBITDA, GAAP and non-GAAP net income or operational free cash flow.

In addition, the Company previously calculated normalized net income by adding
the following items on a non-tax-effected basis to net income calculated in
accordance with GAAP:

* Amortization of other acquired intangible assets;  
* Stock-based compensation expense, including amortization of capitalized
internal-use software;  
* Restructuring charges and benefits;  
* Acquisition-related costs and benefits;  
* Certain gains and losses on investments;  
* Loss on early extinguishment of debt;  
* Gains and losses on legal settlements; and  
* Other non-recurring or unusual items that may arise from time to time.

Starting in the first quarter 2013, the Company will tax effect the items listed
above to calculate non-GAAP net income.  The Company believes this revised
methodology will help investors more easily and consistently evaluate the
Company's performance.

"Our goal is to align our reporting methodology with the evolution of our
business," said  Tom Leighton, CEO of Akamai.  "As we look to the next phase of
Akamai's growth, it is important that we help investors better understand the
dynamics of our core and emerging businesses.  These additional disclosures will
provide increased granularity to enable measurement of Akamai's growth over the
long term."

The following table provides an overview of the Company's first quarter 2013
guidance before and after these new reporting methodologies.  Additional
materials, including historical pro forma schedules for full-year 2010, 2011 and
2012 and quarterly for 2011 and 2012 are available on the Company's Investor
Relations website.  These schedules represent comparisons of non-GAAP financial
measures with the most comparable GAAP financial measures for the related
period.

                                                                                                    
 First Quarter 2013 Guidance                                                                           
 ($ amounts in millions, expect per share data)                                                        
                                            Guidance as of                          Guidance as of  
                                            Feb. 6, 2013    Adjustments             Mar. 11, 2013   
 Revenue Range                              $352 - $362     -                       $352 - $362     
                                                                                                    
 Cash Gross Margin                          82%             (7%)                    75%             
                                                                                                    
 GAAP Gross Margin                          73%             (7%)                    66%             
                                                                                                    
 Cash Operating Expenses                    $141            ($25) or 7% of Revenue  $116            
                                                                                                    
 Adjusted EBITDA Margin                     42% - 43%       -                       42% - 43%       
                                                                                                    
 CapEx                                      $60 - $65       -                       $60 - $65       
                                                                                                    
                                                                                                    
 Normalized EPS                             $0.50 - $0.52   -                       $0.50 - $0.52   
                                                                                                    
 Income Tax-Effect of Non-GAAP Adjustments  -               ($0.05)                 ($0.05)         
                                                                                                    
 Non-GAAP EPS                               -               -                       $0.45 - $0.47   
                                                                                                    
 GAAP taxes and diluted sharecount guidance remains unchanged                                          


About Akamai  
AkamaiĀ®  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 visit  www.akamai.com  or 
blogs.akamai.com, and follow @Akamai on Twitter.

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). We believe that making available non-GAAP financial measures may be
helpful to investors as they examine our past performance and future prospects,
especially when comparing such results to previous periods. Our management uses
non-GAAP financial 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. Some of these financial 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 maymake
comparisons with other companies' financial results more challenging. These
non-GAAP financial measures should only be used as a supplement to results
presented in accordance with GAAP.  



Akamai defines the following non-GAAP financial measures as shown below:

Normalized net income -  GAAP net income adjusted for the following non-tax
effected items:  amortization of other acquired intangible assets; stock-based
compensation expense; stock-based compensation reflected as a component of
amortization of capitalized internal-use software; restructuring charges and
benefits; acquisition-related costs and benefits; certain gains and losses on
investments; loss on early extinguishment of debt; gains and losses on legal
settlements and other non-recurring or unusual items that may arise from time to
time.

Non-GAAP net income  - GAAP net income adjusted for the following tax-effected
items:  amortization of other acquired intangible assets; stock-based
compensation expense; stock-based compensation reflected as a component of
amortization of capitalized internal-use software; restructuring charges and
benefits; acquisition-related costs and benefits; certain gains and losses on
investments; loss on early extinguishment of debt; gains and losses on legal
settlements and other non-recurring or unusual items that may arise from time to
time.

Normalized net income per share  - 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.  

Non-GAAP net income per share  - Non-GAAP 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.  

Adjusted EBITDA  - GAAP 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, gains and losses on legal settlements and other
non-recurring or unusual items that may arise from time to time.  

Adjusted EBITDA margin  - Adjusted EBITDA as a percentage of revenues.

Cash gross margin  - Revenues less GAAP cost of revenues, excluding stock-based
compensation and depreciation and amortization, as a percentage of revenues.

Cash operating expenses  - GAAP operating expenses (consisting of Research and
Development, Sales and Marketing, General and Administrative expenses,
Amortization of other intangible assets and Restructuring charge (benefit)),
excluding stock-based compensation, amortization of other intangible assets,
depreciation and amortization, restructuring charges and benefits and
acquisition related costs and benefits.

Capital expenditures (CapEx)  - Purchases of property and equipment,
capitalization of internal-use software development costs and capitalization of
stock-based compensation.

Operational free cash flow, or free cash flow  - Adjusted EBITDA less capital
expenditures, or CapEx, excluding stock-based compensation.

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

Akamai is unable to provide a reconciliation on a forward-looking basis of the
foregoing non-GAAP financial measures to corresponding metrics calculated in
accordance with GAAP because the Company does not have and is currently unable
to estimate the following items that are excluded from the calculations of such
non-GAAP metrics: amortization of other intangible assets; stock-based
compensation expense; amortization of capitalized stock-based compensation;
acquisition related costs (benefits); restructuring (benefits) charges; and
capital expenditures.



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 guidance  for the first quarter of 2013.
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 potential 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 for the year ended 
December 31, 2012.

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.

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


SOURCE  Akamai Technologies, Inc.

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