Acquisition will enable Akamai to extend
protection across all API traffic locations, no matter the
business, integration, or deployment requirements
CAMBRIDGE, Mass., May 7, 2024
/PRNewswire/ -- Akamai Technologies, Inc. (NASDAQ: AKAM), the
cloud company that powers and protects life online, announces that
it has entered into a definitive agreement to acquire application
programming interface (API) security company, Noname Security.
Noname, one of the top API security vendors in the market, will
enhance Akamai's existing API Security solution and accelerate its
ability to meet growing customer demand and market requirements as
the use of APIs continues to expand. Akamai also expects to gain
greater scale with Noname's additional sales and marketing
resources, and established channel and alliance relationships.
"Applications run our world, but as applications and users
proliferate, so do security risks," said Mani Sundaram, executive vice president and
general manager, Security Technology Group, Akamai Technologies.
"Akamai has seen a growing need for API protection with our own
data showing 109% year over year growth in API attacks. With the
addition of Noname, Akamai believes it will have the breadth of
integrations and deployment choices needed to deliver comprehensive
API protection for customers across all environments."
As a result of the acquisition, Akamai expects to offer a
complete API security suite enabling customers to better discover
"shadow" APIs and detect vulnerabilities and attacks. Akamai's
enhanced offering expects to have greater deployment choices for
customers and access to a portfolio of technology integrations that
is unrivaled in the market. Akamai also plans to integrate Noname
for use by customers of Akamai's Application and API platform
shortly after the acquisition is closed.
"API development continues to proliferate as customers
prioritize their investments in application modernization and
digital transformation initiatives," said Oz Golan, chief executive
officer and co-founder, Noname. "Combining Noname with
Akamai's API Security offering will provide a solution for any type
of customer. No matter where the customer's applications reside –
be it in the cloud, natively on the edge, on-premise, or on other
vendor platforms – they will be protected."
Under terms of the agreement, Akamai has agreed to acquire all
of the outstanding equity of Noname for approximately $450 million, after customary purchase price
adjustments. The closing of the transaction, which is subject to
customary closing conditions, is expected to occur in the second
quarter of 2024.
For the fiscal year 2024, the acquisition is anticipated to
deliver approximately $20 million of
revenue, be dilutive to non-GAAP operating margin by approximately
0.50%, and be dilutive to non-GAAP net income per diluted share by
approximately $0.10. On its upcoming
quarterly earnings call scheduled for May 9,
2024, Akamai plans to provide first quarter financial
results and second quarter and full year 2024 financial guidance,
including any expected impact from Noname.
Noname, headquartered in San Jose,
California, is a privately funded company. Noname's over 200
employees, including CEO and Co-founder, Oz Golan, are expected to
join Akamai's Security Technology Group.
For more information, visit the Akamai application and API
security page.
About Akamai
Akamai powers and protects life online. Leading companies
worldwide choose Akamai to build, deliver, and secure their digital
experiences — helping billions of people live, work, and play every
day. Akamai Connected Cloud, a massively distributed edge and cloud
platform, puts apps and experiences closer to users and keeps
threats farther away. Learn more about Akamai's cloud computing,
security, and content delivery solutions at akamai.com and
akamai.com/blog, or follow Akamai Technologies on X, formerly known
as Twitter, and LinkedIn.
Akamai Statement Under the Private Securities Litigation
Reform Act
This release contains statements that are not statements of
historical fact and constitute forward-looking statements for
purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995, including, but not limited to,
statements about expected future financial performance,
expectations, plans and prospects of Akamai. 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, inability to continue to generate cash at the same
level as prior years; failure of our investments in innovation to
generate solutions that are accepted in the market; 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;
effects of competition, including pricing pressure and changing
business models; impact of macroeconomic trends, including economic
uncertainty, turmoil in the financial services industry, the
effects of inflation, rising and fluctuating interest rates,
foreign currency exchange rate fluctuations, securities market
volatility and monetary supply fluctuations; conditions and
uncertainties in the geopolitical environment, including sanctions
and disruptions resulting from the ongoing war in Ukraine; continuing supply chain and logistics
costs, constraints, changes or disruptions; defects or disruptions
in our products or IT systems, including cyber-attacks, data
breaches or malware; failure to realize the expected benefits of
any of our acquisitions or reorganizations; changes to economic,
political and regulatory conditions in the United States and internationally; our
ability to attract and retain key personnel; impact of the COVID-19
pandemic; 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 our Annual Report on Form 10-K, quarterly reports
on Form 10-Q, and other documents filed with the SEC.
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 financial measures). Management uses
non-GAAP financial measures, in addition to GAAP financial
measures, to understand and compare operating results across
accounting periods, for financial and operational decision making,
for planning and forecasting purposes, to measure executive
compensation and to evaluate Akamai's financial performance. The
non-GAAP financial measures used in this release are non-GAAP
operating margin and non-GAAP net income per diluted share.
Management believes that these non-GAAP financial measures
reflect Akamai's ongoing business in a manner that allows for
meaningful comparisons and analysis of trends in the business, as
they facilitate comparison of financial results across accounting
periods and to those of our peer companies. Management also
believes that these non-GAAP financial measures enable investors to
evaluate Akamai's operating results and future prospects in the
same manner as management. These non-GAAP financial measures may
exclude expenses and gains that may be unusual in nature,
infrequent or not reflective of Akamai's ongoing operating
results.
The non-GAAP financial measures do not replace the presentation
of Akamai's GAAP financial results and should only be used as a
supplement to, not as a substitute for, Akamai's financial results
presented in accordance with GAAP. Akamai has provided a
reconciliation of each non-GAAP financial measure used in its
financial reporting and investor presentations to the most directly
comparable GAAP financial measure. This reconciliation captioned
"Reconciliation of GAAP to Non-GAAP Financial Measures" can be
found on the Investor Relations section of Akamai's website.
Akamai provides forward-looking statements in the form of
guidance during its quarterly earnings conference calls. This
guidance 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 the 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, such as 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.
Akamai's definition of the non-GAAP measures used in this press
release are outlined below:
Non-GAAP operating margin – Non-GAAP income from operations
stated as a percentage of revenue. Non-GAAP income from operations
is GAAP income from operations adjusted for the following items:
amortization of acquired intangible assets; stock-based
compensation; amortization of capitalized stock-based compensation;
amortization of capitalized interest expense; acquisition-related
costs; restructuring charges; 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 weighted average diluted common shares outstanding.
Diluted weighted average common shares outstanding are adjusted in
non-GAAP per share calculations for the shares that would be
delivered to Akamai pursuant to the note hedge transactions entered
into in connection with the issuances of $1,265 million of convertible senior notes due
2029 and the issuances of $1,150
million of convertible senior notes due 2027 and 2025,
respectively. Under GAAP, shares delivered under hedge transactions
are not considered offsetting shares in the fully-diluted share
calculation until they are delivered. However, Akamai would receive
a benefit from the note hedge transactions and would not allow the
dilution to occur, so management believes that adjusting for this
benefit provides a meaningful view of operating performance. With
respect to the convertible senior notes due in each of 2029, 2027
and 2025, unless Akamai's weighted average stock price is greater
than $126.31, $116.18 and $95.10,
respectively, the initial conversion prices, there will be no
difference between GAAP and non-GAAP diluted weighted average
common shares outstanding.
Non-GAAP net income – GAAP net income adjusted for the following
tax-affected items: amortization of acquired intangible assets;
stock-based compensation; amortization of capitalized stock-based
compensation; acquisition-related costs; restructuring charges;
amortization of debt issuance costs; amortization of capitalized
interest expense; certain gains and losses on investments; gains
and losses from equity method investment; and other non-recurring
or unusual items that may arise from time to time.
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 is 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, as well as
certain additional compensation costs payable to employees acquired
from the Linode acquisition if employed for a certain period of
time. The additional compensation cost was initiated by and
determined by the seller, and is in addition to normal levels of
compensation, including retention programs, offered by Akamai.
Acquisition-related costs are impacted by the timing and size of
the acquisitions, and Akamai excludes acquisition-related costs
from its non-GAAP financial measures to provide a useful comparison
of operating results to prior periods and to peer companies because
such amounts vary significantly based on the magnitude of the
acquisition transactions and do not reflect Akamai's core
operations.
- Restructuring charge – Akamai has incurred restructuring
charges from programs that have significantly changed either the
scope of the business undertaken by the Company or the manner in
which that business is conducted. These charges include severance
and related expenses for workforce reductions, impairments of
long-lived assets that will no longer be used in operations
(including right-of-use assets, other facility-related property and
equipment and internal-use software) and termination fees for any
contracts canceled as part of these programs. 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 issuance costs and capitalized interest
expense – Akamai has convertible senior notes outstanding that
mature in 2029, 2027 and 2025. The issuance costs of the
convertible senior notes are amortized to interest expense and are
excluded from Akamai's non-GAAP results because management believes
the non-cash amortization expense is not representative of ongoing
operating performance.
- Gains and losses on investments – Akamai has recorded gains and
losses from the disposition, changes to fair value 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 these gains and losses are not
representative of Akamai's core business operations and ongoing
operating performance.
- Gains and losses from equity method investment – Akamai records
income or losses on its share of earnings and losses from its
equity method investment, and any gains from returns of investments
or impairments. Akamai excludes such income and losses because it
does not have direct control over the operations of the investment
and the related income and losses are not representative of its
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 the impact of
intercompany sales of intellectual property related to
acquisitions), 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:
Gina Sorice
Media Relations
646-320-4107
gsorice@akamai.com
Mark Stoutenberg
Investor Relations
857-227-4491
mstouten@akamai.com
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SOURCE Akamai Technologies, Inc.