Akamai Technologies, Inc. (NASDAQ:AKAM) Q4 2015 Earnings Conference Call - Final Transcript

Feb 09, 2016 • 04:30 pm ET

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Akamai Technologies, Inc. (NASDAQ:AKAM) Q4 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Akamai Technologies Fourth Quarter and Fiscal Year 2015 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded.

I would now like to introduce your host for today's conference, Mr. Tom Barth, Head of Investor Relations. Sir, please go ahead.

Executive
Tom Barth

Thank you, Liz, and good afternoon and thank you for joining Akamai's fourth quarter and fiscal year 2015 earnings call. Speaking today will be Tom Leighton, Akamai's Chief Executive Officer; and Jim Benson, Akamai's Chief Financial Officer.

Before we get started, please note that today's comments include forward-looking statements, including statements regarding revenue and earnings guidance. These forward-looking statements are subject to risk and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied by such statements. Additional information concerning these factors is contained in Akamai's filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q. The forward-looking statements included in this call represent the Company's view on February 9, 2016. Akamai disclaims any obligation to update these statements to reflect future events or circumstances. As a reminder, we will be referring to some non-GAAP financial metrics during today's call. A detailed reconciliation of GAAP and non-GAAP metrics can be found under the financial portion of the Investor Relations section of our website.

And with that, let me turn the call over to Tom.

Executive
Frank Thomson Leighton

Thanks, Tom, and thank you all for joining us. Q4 was another strong quarter for Akamai on both the top and bottom line. Revenue in the fourth quarter was $579 million, up 8% year-over-year and up 11% when adjusted for foreign exchange headwinds. Our revenue overachievement compared to guidance was driven by the continued rapid growth of our security services as well as a strong holiday commerce season. Non-GAAP EPS for the fourth quarter was $0.72 per diluted share, up 3% year-over-year and up 5% when adjusted for currency headwinds. Our better than expected earnings were fueled by higher revenues, improved efficiency and a $0.06 benefit from the reinstatement of the federal R&D tax credit. We also had very strong cash generation in the fourth quarter with free cash flow of $139 million.

Our fourth quarter results capped off another excellent year for Akamai. In 2015, we generated $2.2 billion in revenue, up 16% in constant currency over an outstanding 2014. As a result, Akamai is now one of only 11 US public Internet software and services companies that has generated over $2 billion in annual revenue. Our performance in Security Solutions topped $1 billion in revenue in 2015, making this our largest solution category. Contributing to that result were our Cloud Security Solutions, which grew 54% for the year and now have an annual revenue run rate of nearly $300 million. We continued