Akamai Technologies, Inc. (NASDAQ:AKAM) Q4 2018 Earnings Conference Call Transcript

Feb 12, 2019 • 04:30 pm ET


Akamai Technologies, Inc. (NASDAQ:AKAM) Q4 2018 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Akamai Technologies Q4 and Fiscal 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the management's prepared remarks, we will host a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded for replay purposes.

It is now my pleasure to hand the conference over to Tom Barth, Head of Investor Relations. Sir, you may begin.

Tom Barth

Thank you, Brian, and good afternoon, everyone. And we appreciate you joining Akamai's fourth quarter and fiscal year-end 2018 earnings conference call. Speaking today will be Tom Leighton, Akamai's Chief Executive Officer; Jim Benson, Akamai's Chief Financial Officer; and Ed McGowan, Akamai's Senior Vice President of Finance.

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 12, 2019. 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 akamai.com.

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

Tom Leighton

Thanks, Tom, and thank you all for joining us today. Akamai delivered excellent results in the fourth quarter. Revenue was $713 million, up 8% over Q4 of 2017 and up 10% in constant currency. Q4 non-GAAP EPS was $1.07 per diluted share, up 51% year-over-year and up 52% in constant currency. These very strong results were driven by the continued rapid growth of our security business that continued improvement in our media and carrier division and a robust holiday commerce season in our web division.

Our bottom line also benefited from a lower tax rate and from our continued focus on operational excellence. EBITDA margins in Q4 expanded to 42% and non-GAAP operating margins expanded to 28%. Q4 marked our fifth consecutive quarter of increasing margins and we anticipate further margin expansion in 2019.

We also have clear line of sight to achieving non-GAAP operating margins of 30% in 2020, while continuing to invest in innovation and new products to drive our future growth. For the full year, revenue was $2.7 billion, up 9% over the prior year. Non-GAAP EPS for 2018 was $3.62, up a full dollar or 38% over 2017.

We're especially pleased to report that we generated over $1 billion in cash from operations last year. This was up 26% over