CAMBRIDGE, Mass., June 26, 2018 /PRNewswire/ -- In connection
with its Analyst Day being held today, Akamai Technologies, Inc.
(NASDAQ: AKAM) updated its quarterly and fiscal year 2018 revenue
and earnings outlook.
As measured in constant currency, both revenue and non-GAAP net
income per diluted share* for the second quarter in 2018 are
anticipated to be at the midpoint of the previous guidance range of
$658 million to $670 million and $0.79 to 0.83, respectively. Due to the
strengthening of the dollar since guidance was issued on
April 30, revenue and earnings for
the second quarter are expected to face a headwind of $3 million and $0.01, respectively. As a result, the Company now
anticipates its second quarter 2018 revenue range to be
$658 million to $663 million and non-GAAP net income per diluted
share* to be between $0.79 and
$0.81.
As measured in constant currency, full year revenue and non-GAAP
net income per diluted share* are anticipated to be at the high end
or above the previous guidance ranges of $2,690 million to $2,720
million and $3.15 to
$3.25, respectively. Factoring in
expected currency-related headwinds of $17
million and $0.05,
respectively, for the full year, the Company now anticipates its
full year 2018 revenue range to be $2,675
million to $2,705 million and
non-GAAP net income per diluted share* to be between $3.20 and $3.30.
The increase to the net income per share guidance is due to
expected improvement in the Company's operating margins.
Second Quarter
2018 Guidance
|
|
Metric
|
Previous
Guidance
|
Updated
Guidance
|
Revenue (in
millions)
|
$658-$670
|
$658-$663
|
Non-GAAP net income
per diluted share*
|
$0.79-$0.83
|
$0.79-
$0.81
|
Fiscal Year 2018
Guidance
|
|
Metric
|
Previous
Guidance
|
Updated
Guidance
|
Revenue (in
millions)
|
$2,690-$2,720
|
$2,675-$2,705
|
Non-GAAP net income
per diluted share*
|
$3.15-$3.25
|
$3.20-$3.30
|
As previously announced, Chief Executive Officer Tom Leighton and Chief Financial Officer
James Benson, along with other
Company executives, will present a detailed company and financial
overview, including forward-looking guidance, today at the Analyst
Day beginning at 8:30 a.m. ET. The
Company invites investors to listen to the live webcast of the
presentation at here. A replay will be available within 24 hours
after the event on the Company's website.
About Akamai
As the world's largest and most
trusted cloud delivery platform, Akamai makes it easier for its
customers to provide the best and most secure digital experiences
on any device, anytime, anywhere. Akamai's massively distributed
platform is unparalleled in scale with over 200,000 servers across
130 countries, giving customers superior performance and threat
protection. Akamai's portfolio of web and mobile performance, cloud
security, enterprise access, and video delivery solutions are
supported by exceptional customer service and 24/7 monitoring. To
learn why the top financial institutions, e-commerce leaders, media
& entertainment providers, and government organizations trust
Akamai please visit www.akamai.com, blogs.akamai.com, or
@Akamai on Twitter.
Akamai Statement Under the Private Securities Litigation
Reform Act
This release and/or our analyst day
presentation scheduled for later today contain 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 expected revenue and
profitability achievement. 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,
failure of our investments in innovation to generate solutions that
are accepted in the market; lower than expected revenue performance
in the second quarter and remainder of the year; higher than
expected expenses in the second quarter and the remainder of the
year; 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 and at such
presentation represent Akamai's expectations 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.
*Non-GAAP Financial Measures
The guidance
contained in this release is provided on a non-GAAP basis and
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 we exclude 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 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 we exclude and to estimate
certain discrete tax items, like 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.
Non-GAAP Definitions
Non-GAAP net income – GAAP net income adjusted for the
following tax-effected items: amortization of acquired intangible
assets; stock-based compensation; amortization of capitalized
stock-based compensation; acquisition-related costs; restructuring
charges; gains and other activity related to divestiture of a
business; gains and losses on legal settlements; costs from
professional service providers related to a non-routine stockholder
matter; costs incurred with respect to Akamai's internal FCPA
investigation; loss on early extinguishment of debt; amortization
of debt discount and issuance costs; amortization of capitalized
interest expense; certain gains and losses on investments; and
other non-recurring or unusual items that may arise from time to
time.
Non-GAAP net income per diluted share – Non-GAAP net
income divided by diluted common shares outstanding. Basic weighted
average shares outstanding are those used in GAAP net income per
share calculations. Diluted weighted average shares outstanding are
adjusted in non-GAAP per share calculations for the shares that
would be delivered to Akamai pursuant to the note hedge transaction
entered into in connection with the issuance of $690 million of convertible senior notes due
2019. Under GAAP, shares delivered under hedge transactions are not
considered offsetting shares in the fully-diluted share calculation
until they are delivered. However, the company would receive a
benefit from the note hedge transaction and would not allow the
dilution to occur, so management believes that adjusting for this
benefit provides a meaningful view of operating performance. Unless
and until Akamai's weighted average stock price is greater than
$89.56, the initial conversion price,
there will be no difference between GAAP and non-GAAP diluted
weighted average common shares outstanding.
Impact of Foreign Currency Exchange Rates – Revenue and
earnings from international operations have historically been an
important contributor 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 foreign 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 change at constant currency presented 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.
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 are 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 – Although stock-based compensation is
an important aspect of the compensation paid to Akamai's employees,
the grant date fair value 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. In
addition, subsequent adjustments to Akamai's initial estimated
amounts of contingent consideration and indemnification associated
with specific acquisitions are included within acquisition-related
costs. These amounts are impacted by the timing and size of the
acquisitions. Akamai excludes acquisition-related costs from its
non-GAAP financial measures to provide a useful comparison of
Akamai's operating results to prior periods and to its peer
companies because such amounts vary significantly based on the
magnitude of the acquisition transactions.
Restructuring charges – Akamai has incurred restructuring
charges that are included in its GAAP financial statements,
primarily related to workforce reductions and estimated costs of
exiting facility lease commitments. 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 discount and issuance costs and
amortization of capitalized interest expense – In February 2014, Akamai issued $690 million of convertible senior notes due 2019
with a coupon interest rate of 0%. The imputed interest rate of the
convertible senior notes was approximately 3.2%. This is a result
of the debt discount recorded for the conversion feature that is
required to be separately accounted for as equity under GAAP,
thereby reducing the carrying value of the convertible debt
instrument. The debt discount is amortized as interest expense
together with the issuance costs of the debt. All of Akamai's
interest expense is comprised of these non-cash components and is
excluded from management's assessment of the company's operating
performance because management believes the non-cash expense is not
representative of ongoing operating performance.
Gains and losses on investments – Akamai has recorded
gains and losses from the disposition and impairment of certain
investments. Akamai believes excluding these amounts from its
non-GAAP financial measures is useful to investors as the types of
events giving rise to them occur infrequently and are not
representative of Akamai's core business operations and ongoing
operating performance.
Legal and stockholder matter costs – Akamai has incurred
losses related to the settlement of legal matters, costs from
professional service providers related to a non-routine stockholder
matter and costs with respect to its internal U.S. Foreign Corrupt
Practices Act ("FCPA") investigation. 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.
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
recording or releasing of valuation allowances), 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.
Contacts:
|
Jeanne
Trogan
|
Tom
Barth
|
Media
Relations
|
Investor
Relations
|
512-705-1293
|
617-274-7130
|
jtrogan@akamai.com
|
tbarth@akamai.com
|
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SOURCE Akamai Technologies, Inc.