Akamai Reports First Quarter Results
CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 24, 2000--
-- First quarter revenue of $7.2 million, up 167% from fourth quarter -- Customer list grows to 425 customers, representing almost 600 Web properties
-- Network grows to 2,800 servers located in more than 160 telecommunications networks in over 45 countries
Akamai Technologies, Inc. (NASDAQ: AKAM), the foremost provider of global, high performance services for the delivery of Internet content, streaming media, and applications, today reported financial results for the first quarter ended March 31, 2000. Revenues for the quarter increased 167% to $7.2 million, compared to revenues of $2.7 million for the previous quarter.
"The rapid pace at which Akamai has acquired hundreds of customers, the rate at which we continue to deploy our network, and the continued innovation of our service offerings has resulted in the extension of our category leadership," said George Conrades, chairman and CEO, Akamai. "Akamai has increased its lead in the distributed content delivery market measured by revenue, customer count, server count, number of networks connected and performance and reliability as determined by independent third party measurements. We are truly changing the way the Internet works for mission-critical Web content, streaming, and application delivery. It's a tribute to our dedicated employee team and supportive network partners as well as our loyal customers who continue to push us to innovate."
Net loss for the first quarter 2000 before equity related non-cash compensation charges was $33.2 million, or $0.44 per share, compared to fourth quarter 1999 net loss before equity related non-cash compensation charges and extraordinary loss from early extinguishment of debt of $23.5 million, or $0.40 per share. The EBITDA (earnings before interest, taxes, depreciation, amortization, and other non-cash charges) loss for the first quarter was $24.8 million compared to $23.9 million for the fourth quarter of 1999. Net loss attributable to common stockholders for the first quarter of 2000 and the fourth quarter of 1999 was $35.4 million and $29.8 million or $0.47 per share and $0.51 per share, respectively.
Customers
Akamai's ability to rapidly extend its service offerings to almost 600 Web properties is a result of unsurpassed technology and unparalleled customer service. Customer benefits include improved return on investment (ROI) from better business results and reduced infrastructure and operating costs. During the quarter, Akamai more than doubled its installed customer base with 425 signed customers.
New customers in the quarter include Abercrombie & Fitch, Adobe, All Music Guide, APB-News.com, art.com, Blockbuster.com, BBC America, Boston.com, Big Words, Classroom Connect, Community Connect, Inc.com, latimes.com, Lycos, McAfee, Money.net, Omnipod, Pro Flowers, Quicken.com, Reuters, Shockwave, Sina.com, Wired, and Zing Networks.
Indirect channels are expanding to enhance growth. Akamai's resellers, including Digex, Global Center, and NaviSite contributed 6% of revenue during the quarter. IBM, the largest hosting company in the world, also became an Akamai reseller, as did CacheFlow, a leading provider of cache appliances.
Network
Akamai today operates the largest globally distributed network for Internet content delivery and streaming media, and over the last quarter, increased its number of deployed servers to 2,800. Akamai has established its worldwide presence with servers in over 45 countries within over 160 Internet backbones, ISPs, cable head ends, DSL providers and satellite facilities. The importance of this large and rapidly growing deployment, located ever-closer to Internet users to minimize delay and congestion, is reflected in Akamai's measureable advantage in content delivery performance and reliability, and streaming quality.
During the quarter, Akamai announced strategic relationships with top-tier network providers, including America Online, Genuity, and PSINet, further expanding the global reach of Akamai's Internet content delivery network. These companies have chosen to partner with Akamai for its scaleable, value-added services platform that enables them to develop differentiated services for their customers. Placing an Akamai server within a particular network lowers that network's cost of Internet bandwidth and improves performance for content, streaming media, and applications delivery to the access customers of that network.
Technology
Akamai's world-class R&D team, which now contains over 180 people, including more than 55 Ph.D.'s, continues to simultaneously improve the industry-leading performance and features of the FreeFlowSM content delivery service and the FreeFlowSM Streaming service while also developing new applications for the Akamai EdgeAdvantageTM platform. Furthermore, the EdgeAdvantage platform itself is continuously being improved and opened to our partners.
Streaming is a fast growing Akamai service for existing customers and for new business. In addition, following the rapid integration of Network24, Akamai extended its breadth of streaming service offerings. The acquired technologies broaden the functionality of Akamai's high-performance FreeFlow Streaming service to include interactive Webcast services, which integrate audience marketing and broadcast management capabilities, as well as real-time reporting tools. This enables customers to produce, manage, and deliver interactive media content supporting a number of innovative business models including pay-per-view, e-commerce, and direct marketing.
As of April 20, 2000, Akamai also completed the acquisition of INTERVU, a pioneer in the streaming industry, and has now become the world's largest Internet streaming media and broadband content delivery services company. Combined with INTERVU, the new Akamai has more than 1,000 customers, offices in 17 locations, and over 850 employees, including the world's largest R&D team focused on designing market-leading solutions for the distributed delivery of Internet content, streaming media and applications.
Recently, Akamai formed a strategic alliance with Real Networks to deploy and integrate the RealSystem G2 Internet Media solution across Akamai's global network. Akamai's high- performance globally distributed network and FreeFlow Streaming service, along with RealSystem G2, provides end users located virtually anywhere in the world with broadband quality streaming media experiences, delivered from optimal locations at the edge of the Internet. In addition to Real Networks, Akamai supports today's other popular streaming formats including Apple QuickTime and Microsoft Windows Media Player. Akamai also announced investments in Loudeye Technologies and Virage as part of a strategic investment program to further accelerate the development of the streaming media market and to enhance Akamai's offerings to its customers.
Financials
"While it's important to recognize the benefits for our customers and network partners of utilizing Akamai's services, it is also important to understand the operating leverage in this model. Customers can buy multiple services from Akamai using a common core network and technology platform, EdgeAdvantage, which allows Akamai to target higher average revenue per user, lower churn, increasing margins, and better network utilization," said Timothy Weller, CFO at Akamai. "This is a year of investment, where the focus is on customer acquisition, new network deployment, new technology services, and the people and systems to support this growth. Our positive trends in key metrics, such as revenue and operating expenses per customer and revenue per server, highlight the significant return on investment opportunity."
During the first quarter of 2000, Akamai established subsidiaries in three countries including France, Germany and the United Kingdom to address the European market. As a result, a number of international customer contracts were signed. We continue to seek further global expansion.
During the first quarter, cash was used to fund operations, capital expenditures, and in part to purchase Network24. At March 31, 2000, the Company had $213.4 million of cash, cash equivalents, and short-term investments as compared to $269.6 million at December 31, 1999. Capital expenditures for the quarter were $22.7 million, primarily for network servers, facilities, and information systems.
At March 31, 2000, the Company had 93.8 million shares of common stock outstanding and 109.9 million shares of fully-diluted common stock, which includes outstanding common stock options and warrants. On February 10, 2000, the Company issued 599,152 shares of common stock and $12.5 million in cash to acquire Network24. The acquisition was accounted for using the purchase method and resulted in approximately $185 million of goodwill. On April 20, 2000, the Company issued approximately 10.0 million shares of common stock and options excercisable for 2.2 million shares of common stock in the acquisition of INTERVU.
About Akamai
Akamai is the foremost provider of distributed content, streaming media, and applications delivery services. Following the April 20 acquisition of INTERVU, the company serves over 1,000 customers. Akamai has deployed the broadest global network for content, streaming media, and applications delivery with more than 2,800 servers in over 45 countries directly connected to more than 160 different telecommunications networks. Akamai (pronounced AH kuh my) is Hawaiian for intelligent, clever and cool.
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, the dependence on Akamai's Internet content delivery service, a failure of its network infrastructure, market acceptance of its EdgeAdvantage service, the complexity of its service and the networks on which the service is deployed, the failure to obtain access to transmission capacity and other factors that are discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 and other documents periodically filed with the SEC.
Akamai Technologies, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2000 1999
---------- -----------
(unaudited) (unaudited)
Assets
Current assets:
Cash, cash equivalents and short-term
investments $ 213,446 $ 269,554
Accounts receivable, net 3,136 1,588
Prepaid expenses and other current assets 8,778 2,521
--------- ---------
Total current assets 225,360 273,663
Property and equipment, net 43,475 23,875
Goodwill and other intangible assets, net 186,874 434
Other assets 16,104 2,843
--------- ---------
Total assets $ 471,813 $ 300,815
========= =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 27,928 $ 14,684
Other current liabilities 4,239 3,953
--------- ---------
Total current liabilities 32,167 18,637
Long -term liabilities 682 733
--------- ---------
Total liabilities 32,849 19,370
Total stockholders' equity 438,964 281,445
--------- ---------
Total liabilities and stockholders' equity $ 471,813 $ 300,815
========= =========
Akamai Technologies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
Quarter ended
-------------
March 31, December 31, March 31,
2000 1999 1999
--------- ------------ ---------
Revenue $ 7,222 $ 2,699 $ -
Operating expenses:
Cost of service 6,636 4,469 186
Engineering and development 6,915 6,375 755
Sales, general and administrative 21,504 17,586 1,090
Amortization of intangible assets 9,000 6 11
Equity related compensation 2,189 2,387 878
--------- ------- -------
Total operating expenses 46,244 30,823 2,920
--------- ------- -------
Operating loss (39,022) (28,124) (2,920)
Interest income, net 3,625 2,280 33
Extraordinary loss from early
extinguishment of debt - (3,390) -
--------- -------- -------
Net loss (35,397) (29,234) (2,887)
Dividends and accretion to
preferred stock redemption value - 596 4
--------- -------- -------
Net loss attributable to common
stockholders $ (35,397) $(29,830) $ (2,891)
========== ========= =========
Basic and diluted net loss
per share $ (0.47) $ (0.51) $ (0.17)
Weighted average common
shares outstanding 75,029 59,033 17,045
Supplemental Financial Data
(dollars in thousands;
shares in millions):
Depreciation $ 3,063 $ 1,848 $ 168
EBITDA (1) $ (24,770) $(23,883) $ (1,863)
Capital expenditures $ 22,665 $ 12,945 $ 955
Number of signed customers 425 227 -
Number of employees 517 382 48
Number of servers 2,800 2,000 300
Common stock and preferred stock
as if converted, outstanding
at end of period 93.8 92.5 63.4
Common stock outstanding
at end of period,
including outstanding options
and warrants 109.9 109.0 69.7
(1) Earnings before interest, taxes, depreciation, amortization and
other non-cash charges
CONTACT: Akamai Technologies
Jeff Young, 617-250-3913
Marketing Manager
jyoung@akamai.com
or
Caryn Converse, 617-250-4661
Marketing Manager
converse@akamai.com