Summary
Akamai reported fourth quarter revenue of $905 million, up 7% from the prior-year quarter, and full-year 2021 revenue of $3.461 billion, up 8%. Profit grew much faster than the top line. GAAP income from operations was $196 million for the quarter, up 46% from a year earlier, and net income was $161 million, up 42%. GAAP operating margin for the quarter was 21.7%, up 5.8 percentage points from the same period last year. Diluted EPS was $0.97 for the quarter, up 43%, and $3.93 for the full year, up 17%. Full-year GAAP operating margin was 22.6%, up 2 percentage points, and full-year net income was $652 million, up 17%.
The mix told a clearer story than the headline number. Security Technology Group revenue grew 23% in the quarter and 26% for the year. Edge Technology Group revenue fell 2% in the quarter and was flat for the year. The MD&A ties the Edge decline to lower sales of application performance solutions, partly offset by growth in edge application solutions. U.S. revenue growth was 2% in the quarter, while international revenue grew 13%. On a non-GAAP basis, income from operations was $283 million, up 11%, and the non-GAAP operating margin was 31%. Adjusted EBITDA was $404 million for the quarter, up 11%. Non-GAAP EPS was $1.49, up 12%.
Cash generation stayed strong. Operating cash flow was $387 million for the quarter, up 33%, and $1.405 billion for the year, up 16%. Capital expenditures moved the other way. Cash capex was $63.8 million in the quarter, down 46%, and $329 million for the year, down 36%. The company ended 2021 with $2.2 billion in cash, cash equivalents and marketable securities. It spent $271 million in the quarter to buy back 2.4 million shares at an average price of $111.05, and $522 million for the year to repurchase 4.7 million shares at an average price of $109.97. Deferred revenue, current portion, was $86.5 million, up 12.9%, and remaining performance obligations were $3.10 billion, up 6.9%.
The biggest strategic item was the agreement to acquire Linode, an infrastructure-as-a-service provider, for approximately $900 million. Akamai expects the deal to close in the first quarter of 2022. For fiscal year 2022, the company said Linode should add roughly $100 million in revenue and be slightly accretive to non-GAAP EPS by about $0.05 to $0.06. Structuring the purchase as an asset deal is expected to generate cash income tax savings with an estimated net present value of about $120 million over 15 years. Linode joins Guardicore, the micro-segmentation vendor Akamai bought in October 2021 for $610.4 million, which management expects to be dilutive to earnings per share at least through 2022.
The pressures are worth naming. Edge Technology Group is the bigger revenue pool and it contracted. Competition and contract renewals have pushed prices lower, and Akamai expects revenue challenges in website and application performance solutions to continue in 2022, particularly in the U.S. commerce vertical. Traffic growth moderated in 2021 as pandemic restrictions eased, and management does not expect the 2020 growth rates to repeat. Costs should rise. Management expects higher cost of revenue, research and development, and sales and marketing expenses in 2022 on network investment, headcount growth, and the recent and planned acquisitions. Interest income is expected to fall as cash is used for Linode. Akamai also expects more losses from GO-NET, its equity method venture with MUFG, as that business winds down, though not more than its remaining investment of $7.5 million.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $905.4M | $860.3M | +5.2% | $846.3M | +7.0% |
| Gross profit | $580.0M | $543.5M | +6.7% | $542.4M | +6.9% |
| Gross margin | 64.1% | 63.2% | +0.9 pp | 64.1% | -0.0 pp |
| Research & development | $93.2M | $82.9M | +12.4% | $67.2M | +38.6% |
| Sales & marketing | $125.2M | $108.5M | +15.4% | $140.4M | -10.8% |
| General & administrative | $147.7M | $134.3M | +10.0% | $162.5M | -9.1% |
| Total operating expenses | $709.3M | $655.1M | +8.3% | $711.7M | -0.3% |
| Operating income (loss) | $196.1M | $205.3M | -4.5% | $134.6M | +45.7% |
| Operating margin | 21.7% | 23.9% | -2.2 pp | 15.9% | +5.8 pp |
| Net income (loss) | $160.5M | $178.9M | -10.3% | $113.4M | +41.6% |
| Net margin | 17.7% | 20.8% | -3.1 pp | 13.4% | +4.3 pp |
| Diluted EPS | $0.97 | $1.08 | -$0.11 | $0.69 | +$0.28 |
Risks
Akamai says its media solutions revenue growth declined in 2021 as stay-at-home orders were lifted, and it expects revenue challenges from website and application performance solutions to continue in 2022. Edge Technology Group revenue decreased 0.5% in 2021 compared with 2020, while total revenue rose 8.2% over the same period.
Akamai faces larger technology and telecommunications competitors, nimble startups and customers pursuing DIY or multi-vendor strategies. It notes increasing pricing pressure and says competition can lead to price and revenue reductions, loss of customers and loss of market share.
Akamai experienced service incidents in the summer of 2021 that interrupted the availability of some customers' websites. The filing says it could lose customers as they seek alternative or supplemental providers and may owe service credits or refunds under service level commitments.
The Risk Factors highlight the late 2021 Apache Log4j 2 vulnerability known as Log4Shell, which impacted a large portion of the internet ecosystem, and warn of undiscovered vulnerabilities. Mitigation and security engineering are described as frequently costly with a negative impact on near-term profitability and potentially lower operating margin.
Akamai acquired Guardicore for $610.4 million in October 2021 and announced the roughly $900.0 million Linode acquisition in February 2022, both carrying integration, dilution and management distraction risks. Guardicore is expected to be dilutive to earnings per share at least through 2022, while Linode is expected to close in March 2022 and be accretive to 2022 earnings per share.
The filing warns that inflation, increasing energy prices, recessionary cycles, protracted slowdowns, COVID-19 variants and geopolitical developments such as the Russian invasion of Ukraine could disrupt customers and reduce demand. Akamai also cites potential deterioration in the overall economy as a revenue risk.
Global supply chain constraints in the wake of COVID-19 continue to increase lead times for equipment components, adding risk to Akamai's ability to flex for future business needs. Failure to obtain adequate server equipment could harm service quality and cause customer and revenue loss.
The company says failure to control expenses could reduce profitability, and many expenses are fixed in the short term. MD&A expects cost of revenue, research and development and sales and marketing costs to increase in 2022 due to network investments and recent and anticipated acquisitions.
Akamai cites significant competition for talented individuals in its primary office regions and increased cash and stock-based compensation costs. It also plans to roll out FlexBase in May 2022 for more than 90% of its workforce, which the filing says may create remote-work security, morale, productivity and training risks.
Evolving privacy and data localization laws such as GDPR and CCPA could increase compliance costs and limit use of network data. Akamai also notes that restrictions adopted in India in 2020 prohibiting access to identified Chinese applications caused a reduction in revenue to it.
An October 2021 international tax reform framework may increase Akamai's tax liabilities and reduce profitability. The company is also contesting a Massachusetts tax audit finding, and an adverse outcome could require a financial charge if reserves are inadequate.
As of December 31, 2021, Akamai had $2.3 billion of convertible senior notes outstanding and negative net cash of $133.8 million after factoring in those notes. It plans to fund the roughly $900.0 million Linode acquisition with cash and marketable securities, which could pressure liquidity and limit financing flexibility.
SaaS KPIs
All quarters →Adjusted EBITDA margin
Non-GAAP operating margin
Adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from AKAMAI TECHNOLOGIES INC's SEC filings for Q4 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.