Akamai(US:AKAM)2024-11-07 21:04Revenue Performance - Third quarter revenue reached $1.005 billion, a 4% increase year-over-year from $965 million[3] - Security and compute revenue accounted for 68% of total revenue, growing 17% year-over-year[2] - Security revenue was $519 million, up 14% year-over-year, while compute revenue increased by 28% to $167 million[3] - Revenue for Q3 2024 reached $1,004,679, a 4.1% increase from $965,484 in Q3 2023[14] - Total revenue for the three months ended September 30, 2024, was $1,004,679, representing a 4% year-over-year growth[19] - International revenue for the three months ended September 30, 2024, was $480,068, showing a 3% year-over-year growth[20] Income and Earnings - GAAP net income decreased by 64% to $58 million, with GAAP EPS at $0.38, a 63% decline from the previous year[5][6] - Non-GAAP net income was $244 million, a 3% decrease year-over-year, with non-GAAP EPS at $1.59, down 2%[5][6] - Net income for Q3 2024 was $57,907, down 56.0% from $131,688 in Q2 2024 and down 64.0% from $160,542 in Q3 2023[14] - For the three months ended September 30, 2024, Akamai reported a GAAP net income of $57,907 thousand, a decrease from $160,542 thousand for the same period in 2023[26] - Non-GAAP net income for the three months ended September 30, 2024, was $243,514 thousand, compared to $251,071 thousand for the same period in 2023, reflecting a slight decline[26] - The non-GAAP operating margin for the three months ended September 30, 2024, was 29%, consistent with the previous quarter but down from 31% in the same quarter last year[26] Expenses and Costs - Total costs and operating expenses increased to $934,042 in Q3 2024, up 12.4% from $831,594 in Q2 2024 and up 18.3% from $789,355 in Q3 2023[14] - Research and development expenses rose to $120,347 in Q3 2024, a 6.5% increase from $113,352 in Q2 2024 and a 13.6% increase from $105,942 in Q3 2023[14] - Research and development expenses for the three months ended September 30, 2024, totaled $39,275, an increase from $33,366 in the same period last year[23] - The company reported a restructuring charge of $82,013 in Q3 2024, compared to $1,385 in Q2 2024 and $2,595 in Q3 2023[14] - The company incurred a restructuring charge of $82,013 thousand for the three months ended September 30, 2024, compared to $2,595 thousand for the same period in 2023[26] - Total amortization of acquired intangible assets increased to $24,368 in Q3 2024, compared to $21,076 in Q2 2024 and $18,108 in Q3 2023[14] Cash Flow and Capital Expenditures - Cash from operations for Q3 2024 was $393 million, representing 39% of total revenue[7] - Cash provided by operating activities for Q3 2024 was $392,542, a decrease from $430,963 in Q2 2024 but an increase from $359,436 in Q3 2023[16] - Net cash used in investing activities was $116,228 in Q3 2024, a decrease from $286,682 in Q2 2024 and a significant decrease from $1,164,163 in Q3 2023[16] - Capital expenditures for the three months ended September 30, 2024, were $163,991, representing 16% of total revenue[24] Shareholder Actions - The company plans to repurchase $166 million worth of shares, totaling 1.7 million shares at an average price of $97.29[7] Financial Guidance - Financial guidance for Q4 2024 projects revenue between $995 million and $1.020 billion[8] - Non-GAAP operating margin is expected to be between 27% and 28% for Q4 2024[8] Assets and Liabilities - Total assets increased to $10.190 billion as of September 30, 2024, up from $9.900 billion at the end of 2023[13] - Cash, cash equivalents, and restricted cash at the end of the period were $572,753, up from $462,290 at the end of the same period last year[17] Stock-Based Compensation - Total stock-based compensation for the three months ended September 30, 2024, was $102,607, compared to $87,017 in the same period last year[23] - Stock-based compensation for the three months ended September 30, 2024, amounted to $102,607 thousand, up from $87,017 thousand in the same quarter last year[31] Taxation - The GAAP tax rate for the three months ended September 30, 2024, was 22%, compared to 11% for the same period in 2023[26] - Akamai's total income tax effect of non-GAAP adjustments for the three months ended September 30, 2024, was $(41,097) thousand[26] Non-GAAP Measures - Akamai excludes amortization of acquired intangible assets from non-GAAP financial measures to provide a consistent basis for comparing pre- and post-acquisition operating results[36] - Stock-based compensation is excluded from non-GAAP measures to highlight the performance of Akamai's core business and facilitate comparisons with peer companies[37] - Acquisition-related costs, including transaction fees and advisory fees, are excluded from non-GAAP measures to provide a useful comparison of operating results to prior periods[38] - Restructuring charges are excluded from non-GAAP measures as they do not reflect expected future operating expenses and vary significantly based on the magnitude of the restructuring action[39] - Non-GAAP income from operations is adjusted for items such as stock-based compensation and acquisition-related costs, providing a clearer view of operational performance[45] - Non-GAAP net income per diluted share is adjusted for the impact of convertible senior notes, with specific conversion prices set at $126.31, $116.18, and $95.10 for notes maturing in 2029, 2027, and 2025 respectively[49] - Adjusted EBITDA excludes items like interest, taxes, and depreciation, providing a clearer picture of operational performance[51] - Capital expenditures (capex) are presented on an accrual basis, excluding stock-based compensation and interest expense, to reflect true investment in property and equipment[53] Risks and Forward-Looking Statements - The impact of foreign currency exchange rates on revenue and earnings is significant, with management emphasizing the importance of understanding these fluctuations for financial results[55] - Akamai's forward-looking statements indicate potential risks including competition, macroeconomic trends, and geopolitical uncertainties that may affect future performance[57]