Akamai Technologies' CEO Discusses Q1 2012 Results - Earnings Call Transcript
Akamai Technologies (AKAM)
Q1 2012 Earnings Call
April 25, 2012 4:30 pm ET
Natalie Temple -
Paul L. Sagan - Chief Executive Officer, President and Executive Director
James Benson - Chief Financial Officer and Executive Vice President
Mark S. Mahaney - Citigroup Inc, Research Division
David M. Hilal - FBR Capital Markets & Co., Research Division
Michael Turits - Raymond James & Associates, Inc., Research Division
Jennifer A. Swanson - Morgan Stanley, Research Division
Gray Powell - Wells Fargo Securities, LLC, Research Division
Colby Synesael - Cowen and Company, LLC, Research Division
Michael J. Olson - Piper Jaffray Companies, Research Division
Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division
Daniel Morrison - Crédit Suisse AG, Research Division
Sterling P. Auty - JP Morgan Chase & Co, Research Division
Richard Fetyko - Janney Montgomery Scott LLC, Research Division
Timothy K. Horan - Oppenheimer & Co. Inc., Research Division
Ben Z. Rose - Battle Road Research Ltd.
Aaron Schwartz - Jefferies & Company, Inc., Research Division
Jeffrey Van Rhee - Craig-Hallum Capital Group LLC, Research Division
Donna Jaegers - D.A. Davidson & Co., Research Division
Chad Bartley - Pacific Crest Securities, Inc., Research Division
Sameet Sinha - B. Riley & Co., LLC, Research Division
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Good afternoon, and thank you for joining Akamai's Investor Conference call to discuss our first quarter 2012 financial results. Speaking today will be Paul Sagan, Akamai's President and Chief Executive Officer; and Jim Benson, Akamai's Chief Financial Officer.
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 April 25, 2012. 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 News & Events portion of the Investor Relations section of our website.
Now let me turn the call over to Paul.
Paul L. Sagan
Thanks, Natalie, and thank you all for joining us today. Quite simply, Q1 was a great quarter where we exceeded our expectations in almost every area, and I couldn't be more pleased with the results. And that strong Q1 performance really built on our record revenue achievement in the fourth quarter. We posted total revenue of $319 million in Q1, up 16% from the same period last year. And organic growth on the top line accelerated year-over-year for the second straight quarter. We generated normalized EPS at $0.41, up 8% from Q1 of last year. We had another strong quarter of cash flow generation, with $93 million of cash from operations in the quarter.
And we are pleased to announce that our board has authorized another extension of our share repurchase program, this time for $150 million. I'll be back in a few minutes with some additional thoughts on our business, and I'll have some comments about the planned transition we announced today to eventually name a successor to me as President and CEO. But first, let me turn the call over to Jim for more about our very strong first quarter results. Jim?
Thank you, Paul. As I walk you through our very strong Q1 financial results in detail, I'll provide you with the consolidated numbers that include roughly one month of the Cotendo acquisition, which closed in early March. And where appropriate, I'll also provide you with Akamai's results from Q1 excluding Cotendo.
Revenue came in above our guidance range at $319 million, up 16% year-over-year, with solid growth across the business. Cotendo accounted for less than $2 million in revenue for the quarter. Excluding the impact of Cotendo, revenue was up 15% year-over-year and down just 2% sequentially.
In Media & Entertainment, we saw strong traffic growth year-over-year, building off of the acceleration we saw in Q4 and exceeding our expectations. As a result, Media & Entertainment revenue grew by 14% over Q1 of last year and was down 2% sequentially.
Commerce was our fastest growing vertical in Q1, increasing 21% over the first quarter of last year. As expected, revenue declined 7% sequentially due to normal seasonality.
Revenue from our enterprise vertical grew 17% year-over-year and 3% sequentially, as applications continue to shift to the cloud and we saw increased demand for optimization, performance and security solutions. We also saw revenue growth accelerate again in the high-tech vertical, which grew 15% year-over-year and 3% sequentially. This acceleration was due to the timing of several large software download releases and continued traction among Software-as-a-Service, or SaaS customers, who continue to migrate to our cloud infrastructure solutions.
Finally, Public Sector revenue grew 9% year-over-year and 7% sequentially.
Across all of our verticals, cloud infrastructure solutions made up 57% of our total revenue. During the first quarter, international sales represented 28% of total revenue, consistent with the prior quarter. International revenue grew 10% year-over-year and was flat sequentially in Q1. Foreign exchange had a negative impact on revenue of about $1 million on both a year-over-year and a sequential basis. Excluding the impact of currency, international revenue grew 11% year-over-year and 1% sequentially.