0001086222false00010862222024-11-072024-11-07

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report: November 7, 2024
(Date of earliest event reported)

AKAMAI TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware000-2727504-3432319
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)

145 Broadway
Cambridge, Massachusetts 02142
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (617) 444-3000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueAKAMNasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02 Results of Operations and Financial Condition

On November 7, 2024, Akamai Technologies, Inc. announced its financial results for the fiscal quarter ended September 30, 2024. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information provided under this Form 8-K (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

Exhibit No.Description
99.1
104Cover page interactive data file (the cover page XBRL tags are embedded within the inline XBRL document)




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:November 7, 2024AKAMAI TECHNOLOGIES, INC.
/s/ Edward McGowan
Edward McGowan
Executive Vice President, Chief Financial Officer and Treasurer



Exhibit 99.1
FOR IMMEDIATE RELEASE

Contacts:
Christine Simeone
Mark Stoutenberg
Media RelationsInvestor Relations
Akamai TechnologiesAkamai Technologies
AkamaiPR@akamai.com
mstouten@akamai.com


AKAMAI REPORTS THIRD QUARTER 2024 FINANCIAL RESULTS

Third quarter revenue of $1.005 billion, up 4% year-over-year and when adjusted for foreign exchange*

Security and compute revenue represented 68% of total revenue in the third quarter and combined grew 17% year-over-year and when adjusted for foreign exchange*


CAMBRIDGE, Mass. – November 7, 2024 – Akamai Technologies, Inc. (NASDAQ: AKAM), the cybersecurity and cloud computing company that powers and protects business online, today reported financial results for the third quarter ended September 30, 2024.

“Akamai delivered another solid quarter, highlighted by continued momentum in security and cloud computing. Together, these solutions grew 17% on a year-over-year basis and now account for nearly 70% of our total revenue," said Dr. Tom Leighton, Akamai’s Chief Executive Officer. “This quarter also marks a significant milestone as we surpassed the billion-dollar quarterly revenue threshold for the first time. Looking forward, we remain confident in the traction we see from our new products and our continued commitment to strong bottom-line performance.”

Akamai delivered the following results for the third quarter ended September 30, 2024:

Revenue: Revenue was $1.005 billion, a 4% increase over third quarter 2023 revenue of $965 million and a 4% increase when adjusted for foreign exchange.*

Revenue by solution:

•Security revenue was $519 million, up 14% year-over-year and when adjusted for foreign exchange*
•Delivery revenue was $319 million, down 16% year-over-year and when adjusted for foreign exchange*
•Compute revenue was $167 million, up 28% year-over-year and when adjusted for foreign exchange*

Revenue by geography:

•U.S. revenue was $525 million, up 5% year-over-year
•International revenue was $480 million, up 3% year-over-year and when adjusted for foreign exchange*

Restructuring charge: Third quarter 2024 GAAP income from operations, GAAP net income and GAAP EPS in the paragraphs below were impacted by the $82 million restructuring charge recognized in the third quarter of 2024. This charge primarily related to severance costs in connection with a workforce reduction with the primary intent of redeploying resources to support the Company's strategic investments and impairments of certain assets as a result of recent acquisitions.

Income from operations: GAAP income from operations was $71 million, a 60% decrease from third quarter 2023. GAAP operating margin for the third quarter was 7%, down 11 percentage points from the same period last year.

Non-GAAP income from operations* was $296 million, flat from third quarter 2023. Non-GAAP operating margin* for the third quarter was 29%, down 2 percentage points from the same period last year.

Net income: GAAP net income was $58 million, a 64% decrease from third quarter 2023. Non-GAAP net income* was $244 million, a 3% decrease from third quarter 2023.

1

EPS: GAAP net income per diluted share was $0.38, a 63% decrease from third quarter 2023 and a 62% decrease when adjusted for foreign exchange.* Non-GAAP net income per diluted share* was $1.59, a 2% decrease from third quarter 2023 and a 1% decrease when adjusted for foreign exchange.*

Adjusted EBITDA*: Adjusted EBITDA* was $426 million, a 2% increase from third quarter 2023.

Supplemental cash information: Cash from operations for the third quarter of 2024 was $393 million, or 39% of revenue. Cash, cash equivalents and marketable securities was $1.979 billion as of September 30, 2024.

Share repurchases: The Company spent $166 million in the third quarter of 2024 to repurchase 1.7 million shares of its common stock at an average price of $97.29 per share. The Company had 151 million shares of common stock outstanding as of September 30, 2024.

Financial guidance:

The Company reports the following financial guidance for the fourth quarter and full year 2024:

Three Months Ending
December 31, 2024		Year Ending
December 31, 2024
Low EndHigh EndLow EndHigh End
Revenue (in millions)$995 $1,020 $3,966 $3,991 
Non-GAAP operating margin *
27 %28 %29 %29 %
Non-GAAP net income per diluted share *
$1.49 $1.56 $6.31 $6.38 
Non-GAAP tax rate*19 %19 %19 %19 %
Shares used in non-GAAP per diluted share calculations * (in millions)
153 153 154 154 
Capex as a percentage of revenue *
18 %19 %17 %17 %

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 Akamai excludes 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 Akamai excludes 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.

* See Use of Non-GAAP Financial Measures below for definitions
2

Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-833-634-5020 (or 1-412-902-4238 for international calls) and using passcode Akamai Technologies Call. A live webcast of the call may be accessed at www.akamai.com in the Investor Relations section. In addition, a replay of the call will be available for two weeks following the conference by calling 1-877-344-7529 (or 1-412-317-0088 for international calls) and using passcode 1443103. The archived webcast of this event may be accessed through the Akamai website.

About Akamai
Akamai is the cybersecurity and cloud computing company that powers and protects business online. Our market-leading security solutions, superior threat intelligence and global operations team provide defense-in-depth to safeguard enterprise data and applications everywhere. Akamai’s full-stack cloud computing solutions deliver performance and affordability on the world’s most distributed platform. Global enterprises trust Akamai to provide the industry-leading reliability, scale and expertise they need to grow their business with confidence. 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.
3

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)September 30,
2024		December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$569,749 $489,468 
Marketable securities1,129,456 374,971 
Accounts receivable, net696,493 724,302 
Prepaid expenses and other current assets238,732 216,114 
Total current assets2,634,430 1,804,855 
Marketable securities279,411 1,431,354 
Property and equipment, net1,948,799 1,825,944 
Operating lease right-of-use assets1,006,132 908,634 
Acquired intangible assets, net586,247 536,143 
Goodwill3,154,351 2,850,470 
Deferred income tax assets431,318 418,297 
Other assets149,769 124,340 
Total assets$10,190,457 $9,900,037 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$106,629 $146,927 
Accrued expenses288,619 352,181 
Deferred revenue138,929 107,544 
Convertible senior notes1,148,471 — 
Operating lease liabilities251,596 222,944 
Other current liabilities
48,779 6,442 
Total current liabilities1,983,023 836,038 
Deferred revenue 24,316 23,006 
Deferred income tax liabilities27,387 24,622 
Convertible senior notes2,395,439 3,538,229 
Operating lease liabilities854,740 774,806 
Other liabilities111,414 106,181 
Total liabilities5,396,319 5,302,882 
Total stockholders' equity4,794,138 4,597,155 
Total liabilities and stockholders' equity
$10,190,457 $9,900,037 











4

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months EndedNine Months Ended
(in thousands, except per share data)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Revenue$1,004,679 $979,580 $965,484 $2,971,229 $2,816,903 
Costs and operating expenses:
Cost of revenue (1) (2)
408,806 402,888 383,075 1,206,437 1,117,666 
Research and development (1)
120,347 113,352 105,942 350,631 296,846 
Sales and marketing (1)
138,551 139,039 132,309 412,160 397,970 
General and administrative (1) (2)
159,957 153,854 147,326 466,241 445,276 
Amortization of acquired intangible assets24,368 21,076 18,108 66,467 49,918 
Restructuring charge82,013 1,385 2,595 83,942 56,675 
Total costs and operating expenses934,042 831,594 789,355 2,585,878 2,364,351 
Income from operations70,637 147,986 176,129 385,351 452,552 
Interest and marketable securities income, net23,065 26,628 11,412 77,534 21,213 
Interest expense(6,735)(6,829)(4,987)(20,382)(10,825)
Other expense, net(13,161)(949)(3,161)(13,599)(6,654)
Income before provision for income taxes73,806 166,836 179,393 428,904 456,286 
Provision for income taxes(15,899)(35,148)(20,326)(63,891)(71,297)
Gain from equity method investment— — 1,475 — 1,475 
Net income$57,907 $131,688 $160,542 $365,013 $386,464 
Net income per share:
Basic$0.38 $0.86 $1.06 $2.40 $2.53 
Diluted$0.38 $0.86 $1.04 $2.36 $2.50 
Shares used in per share calculations:
Basic151,435 152,265 151,359 151,776 153,020 
Diluted153,240 153,588 154,976 154,765 154,855 

(1)    Includes stock-based compensation (see supplemental table for figures)
(2)     Includes depreciation and amortization (see supplemental table for figures)

5

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months EndedNine Months Ended
(in thousands)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Cash flows from operating activities:
Net income$57,907 $131,688 $160,542 $365,013 $386,464 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization165,729 158,549 148,560 480,461 423,142 
Stock-based compensation102,607 98,466 87,017 294,333 236,344 
(Benefit) provision for deferred income taxes
(2,541)13,946 (10,172)938 (9,763)
Amortization of debt issuance costs1,591 1,660 1,404 4,933 3,600 
Other non-cash reconciling items, net41,733 1,962 6,438 45,757 44,891 
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable11,290 17,538 (23,484)28,092 (46,262)
Prepaid expenses and other current assets(717)1,253 1,994 (25,480)(16,103)
Accounts payable and accrued expenses(31,765)19,523 23,615 (79,191)(60,170)
Deferred revenue(8,719)(11,619)(12,905)13,978 24,146 
Other current liabilities41,370 624 (13,855)42,350 2,290 
Other non-current assets and liabilities14,057 (2,627)(9,718)4,199 (29,333)
Net cash provided by operating activities392,542 430,963 359,436 1,175,383 959,246 
Cash flows from investing activities:
Cash (paid) received for business acquisitions, net of cash acquired
— (434,066)155 (434,066)(106,171)
Cash paid for asset acquisition(66)(4,796)(36,348)(4,862)(36,348)
Purchases of property and equipment and capitalization of internal-use software development costs(185,117)(163,537)(197,619)(522,408)(596,153)
Purchases of short- and long-term marketable securities(15,519)(16,103)(1,050,016)(201,641)(1,184,837)
Proceeds from sales, maturities and redemptions of short- and long-term marketable securities84,849 337,220 106,330 604,324 398,535 
Other, net(375)(5,400)13,335 4,160 (7,431)
Net cash used in investing activities(116,228)(286,682)(1,164,163)(554,493)(1,532,405)


6

AKAMAI TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

Three Months EndedNine Months Ended
(in thousands)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility— — — — 90,000 
Repayment from borrowings under revolving credit facility— — (20,000)— (90,000)
Proceeds from the issuance of convertible senior notes, net of issuance costs— — 1,247,388 — 1,247,388 
Proceeds from the issuance of warrants related to convertible senior notes— — 90,195 — 90,195 
Purchases of note hedges related to convertible senior notes— — (236,555)— (236,555)
Proceeds from the issuance of common stock under stock plans19,442 7,956 18,222 47,708 49,553 
Employee taxes paid related to net share settlement of stock-based awards(15,868)(31,914)(11,304)(157,115)(50,910)
Repurchases of common stock(165,839)(127,809)(113,197)(419,097)(599,155)
Other, net(104)(8,678)(104)(10,291)(360)
Net cash (used in) provided by financing activities(162,369)(160,445)974,645 (538,795)500,156 
Effects of exchange rate changes on cash, cash equivalents and restricted cash9,494 (5,293)(7,019)188 (7,729)
Net increase (decrease) in cash, cash equivalents and restricted cash
123,439 (21,457)162,899 82,283 (80,732)
Cash, cash equivalents and restricted cash at beginning of period449,314 470,771 299,391 490,470 543,022 
Cash, cash equivalents and restricted cash at end of period$572,753 $449,314 $462,290 $572,753 $462,290 






7

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL REVENUE DATA – REVENUE BY SOLUTION

Three Months EndedNine Months Ended
(in thousands)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Security$518,670 $498,708 $455,792 $1,508,059 $1,294,290 
Delivery319,132 329,399 379,304 1,000,289 1,153,386 
Compute166,877 151,473 130,388 462,881 369,227 
Total revenue$1,004,679 $979,580 $965,484 $2,971,229 $2,816,903 
Revenue growth rates year-over-year:
Security14 %15 %20 %17 %13 %
Delivery(16)(13)(4)(13)(8)
Compute28 23 19 25 26 
Total revenue4 %5 %9 %5 %5 %
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (1):
Security14 %16 %19 %17 %14 %
Delivery(16)(12)(4)(13)(7)
Compute28 24 19 26 27 
Total revenue4 %6 %9 %6 %6 %

AKAMAI TECHNOLOGIES, INC.
SUPPLEMENTAL REVENUE DATA – REVENUE BY GEOGRAPHY

Three Months EndedNine Months Ended
(in thousands)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
U.S.$524,611 $508,696 $498,536 $1,545,654 $1,452,431 
International480,068 470,884 466,948 1,425,575 1,364,472 
Total revenue$1,004,679 $979,580 $965,484 $2,971,229 $2,816,903 
Revenue growth rates year-over-year:
U.S.5 %6 %8 %6 %2 %
International3 3 11 4 7 
Total revenue4 %5 %9 %5 %5 %
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates (1):
U.S.5 %6 %8 %6 %2 %
International3 5 9 6 9 
Total revenue4 %6 %9 %6 %6 %

(1) See Use of Non-GAAP Financial Measures below for a definition
8

AKAMAI TECHNOLOGIES, INC.
OTHER SUPPLEMENTAL DATA

Three Months EndedNine Months Ended
(in thousands, except end of period statistics)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Stock-based compensation:
Cost of revenue$16,566 $15,864 $11,236 $45,048 $31,904 
Research and development39,275 36,951 33,366 114,271 87,468 
Sales and marketing21,076 18,976 17,290 58,863 48,558 
General and administrative25,690 26,675 25,125 76,151 68,414 
Total stock-based compensation$102,607 $98,466 $87,017 $294,333 $236,344 
Depreciation and amortization:
Network-related depreciation$72,546 $68,936 $60,887 $207,157 $168,275 
Capitalized internal-use software development amortization41,973 42,407 45,030 128,012 132,756 
Other depreciation and amortization15,998 15,983 15,709 48,011 47,690 
Depreciation of property and equipment130,517 127,326 121,626 383,180 348,721 
Capitalized stock-based compensation amortization (1)
10,740 10,048 8,710 30,500 24,169 
Capitalized interest expense amortization (1)
104 99 116 314 334 
Amortization of acquired intangible assets24,368 21,076 18,108 66,467 49,918 
Total depreciation and amortization$165,729 $158,549 $148,560 $480,461 $423,142 
Capital expenditures, excluding stock-based compensation and interest expense (2) (3):
Purchases of property and equipment$91,600 $94,463 $86,382 $260,698 $378,759 
Capitalized internal-use software development costs72,391 72,653 65,895 222,535 196,271 
Total capital expenditures, excluding stock-based compensation and interest expense$163,991 $167,116 $152,277 $483,233 $575,030 
Capex as a percentage of revenue (3)
16 %17 %16 %16 %20 %
End of period statistics:
Number of employees
10,947 10,920 10,111 

(1) Amortization of capitalized stock-based compensation and interest expense in this table excludes amortization of capitalized stock-based compensation and interest expense capitalized related to cloud-computing arrangements and contract fulfillment costs. However, the amounts are included in our total amortization of capitalized stock-based compensation and interest expense that is excluded from our non-GAAP measures (see reconciliations of GAAP to non-GAAP measures).
(2) Capital expenditures presented in this table are reported on an accrual basis, which differs from the cash-basis presentation in the statements of cash flows. The primary difference between the two is the change in purchases of property and equipment and capitalization of internal-use software development costs accrued for, but not paid, at period end versus prior periods.
(3) See Use of Non-GAAP Financial Measures below for a definition
9

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS, NET INCOME AND TAX RATE

Three Months EndedNine Months Ended
(in thousands)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Income from operations$70,637 $147,986 $176,129 $385,351 $452,552 
GAAP operating margin7 %15 %18 %13 %16 %
Amortization of acquired intangible assets24,368 21,076 18,108 66,467 49,918 
Stock-based compensation102,607 98,466 87,017 294,333 236,344 
Amortization of capitalized stock-based compensation and capitalized interest expense11,089 10,434 9,077 31,646 25,207 
Restructuring charge82,013 1,385 2,595 83,942 56,675 
Acquisition-related costs 5,036 2,179 3,048 7,387 12,156 
Operating adjustments225,113 133,540 119,845 483,775 380,300 
Non-GAAP income from operations$295,750 $281,526 $295,974 $869,126 $832,852 
Non-GAAP operating margin29 %29 %31 %29 %30 %
Net income$57,907 $131,688 $160,542 $365,013 $386,464 
Operating adjustments (from above)225,113 133,540 119,845 483,775 380,300 
Amortization of debt issuance costs1,591 1,660 1,404 4,933 3,600 
Loss (gain) on investments— 66 (110)66 (311)
Gain from equity method investment— — (1,475)— (1,475)
Income tax effect of above non-GAAP adjustments and certain discrete tax items
(41,097)(24,306)(29,135)(112,130)(71,202)
Non-GAAP net income$243,514 $242,648 $251,071 $741,657 $697,376 
GAAP tax rate22 %21 %11 %15 %16 %
Income tax effect of non-GAAP adjustments and certain discrete tax items
(3)(1)5 4 1 
Non-GAAP tax rate19 %20 %16 %19 %17 %

10

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED SHARE

Three Months EndedNine Months Ended
(in thousands, except per share data)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
GAAP net income per diluted share$0.38 $0.86 $1.04 $2.36 $2.50 
Adjustments to net income:
Amortization of acquired intangible assets0.16 0.14 0.12 0.43 0.32 
Stock-based compensation0.67 0.64 0.56 1.90 1.53 
Amortization of capitalized stock-based compensation and capitalized interest expense0.07 0.07 0.06 0.20 0.16 
Restructuring charge0.54 0.01 0.02 0.54 0.37 
Acquisition-related costs0.03 0.01 0.02 0.05 0.08 
Amortization of debt issuance costs0.01 0.01 0.01 0.03 0.02 
Loss (gain) on investments— — — — — 
Gain from equity method investment— — (0.01)— (0.01)
Income tax effect of above non-GAAP adjustments and certain discrete tax items
(0.27)(0.16)(0.19)(0.72)(0.46)
Adjustment for shares (1)
— — 0.01 0.03 0.01 
Non-GAAP net income per diluted share$1.59 $1.58 $1.63 $4.82 $4.51 
Shares used in GAAP per diluted share calculations153,240 153,588 154,976 154,765 154,855 
Impact of benefit from note hedge transactions (1)
(294)(199)(544)(869)(181)
Shares used in non-GAAP per diluted share calculations (1)
152,946 153,389 154,432 153,896 154,674 

(1) Shares used in non-GAAP per diluted share calculations have been adjusted for the periods presented for the benefit of Akamai's note hedge transactions. During these periods, Akamai's average stock price was in excess of $95.10, which is the initial conversion price of Akamai's convertible senior notes due in 2025. See Use of Non-GAAP Financial Measures below for further definition.
11

AKAMAI TECHNOLOGIES, INC.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

Three Months EndedNine Months Ended
(in thousands)September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Net income$57,907 $131,688 $160,542 $365,013 $386,464 
Net income margin6 %13 %17 %12 %14 %
Interest and marketable securities income, net
(23,065)(26,628)(11,412)(77,534)(21,213)
Provision for income taxes15,899 35,148 20,326 63,891 71,297 
Depreciation and amortization130,517 127,326 121,626 383,180 348,721 
Amortization of capitalized stock-based compensation and capitalized interest expense11,089 10,434 9,077 31,646 25,207 
Amortization of acquired intangible assets24,368 21,076 18,108 66,467 49,918 
Stock-based compensation102,607 98,466 87,017 294,333 236,344 
Restructuring charge82,013 1,385 2,595 83,942 56,675 
Acquisition-related costs5,036 2,179 3,048 7,387 12,156 
Interest expense6,735 6,829 4,987 20,382 10,825 
Loss (gain) on investments— 66 (110)66 (311)
Gain from equity method investment— — (1,475)— (1,475)
Other expense, net13,161 883 3,271 13,533 6,965 
Adjusted EBITDA$426,267 $408,852 $417,600 $1,252,306 $1,181,573 
Adjusted EBITDA margin42 %42 %43 %42 %42 %


12

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. These non-GAAP financial measures are non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP tax rate, capital expenditures and impact of foreign currency exchange rates, as discussed below.

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 measures 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.

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 – Stock-based compensation is an important aspect of the compensation paid to Akamai's employees which includes long-term incentive plans to encourage retention, performance-based plans to encourage achievement of specified financial targets and also short-term incentive awards with a one year vest. The grant date fair value of the stock-based compensation awards 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 acquired intangible assets, right-of-use assets, other facility-related property and equipment and internal-use software) and termination fees for any contracts cancelled 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
13

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.

Akamai's definitions of its non-GAAP financial measures are outlined below:

Non-GAAP income from operations – 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 operating margin – Non-GAAP income from operations stated as a percentage of revenue.

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.

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

Non-GAAP net income per diluted share, or EPS – 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.

14

Adjusted EBITDA – GAAP net income excluding the following items: interest and marketable securities income and losses; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; foreign exchange gains and losses; interest expense; 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.

Adjusted EBITDA margin – Adjusted EBITDA stated as a percentage of revenue.

Capital expenditures, or capex, excluding stock-based compensation and interest expense – Purchases of property and equipment and capitalization of internal-use software development costs presented on an accrual basis, which differs from the cash-basis presentation included in the statements of cash flows. The primary difference between the two is the change in purchases of property and equipment and capitalization of internal-use software development costs accrued for, but not paid, at period end versus prior periods.

Capex as a percentage of revenue – Capital expenditures, or capex, excluding stock-based compensation and interest expense, stated as a percentage of revenue.

Impact of foreign currency exchange rate – Revenue and earnings from international operations have historically been important contributors 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 international 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 growth rate impacted by foreign currency exchange rates, sometimes referred to as constant currency, 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.


Akamai Statement Under the Private Securities Litigation Reform Act
This release and/or our quarterly earnings conference call scheduled for later today contain 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 and the Israel-Hamas war; 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; 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.

In addition, the statements in this press release and on our quarterly earnings conference call 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.
15
v3.24.3
Document and Entity Information
Nov. 07, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 07, 2024
Entity Registrant Name AKAMAI TECHNOLOGIES, INC.
Entity Central Index Key 0001086222
Amendment Flag false
Entity Incorporation, State or Country Code DE
Entity File Number 000-27275
Entity Tax Identification Number 04-3432319
Entity Address, Address Line One 145 Broadway
Entity Address, City or Town Cambridge
Entity Address, State or Province MA
Entity Address, Postal Zip Code 02142
City Area Code 617
Local Phone Number 444-3000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $.01 par value
Trading Symbol AKAM
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Akamai Technologies (NASDAQ:AKAM)
Historical Stock Chart
From Nov 2024 to Dec 2024 Click Here for more Akamai Technologies Charts.
Akamai Technologies (NASDAQ:AKAM)
Historical Stock Chart
From Dec 2023 to Dec 2024 Click Here for more Akamai Technologies Charts.