Akamai Technologies, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Akamai Technologies, Inc. Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Tom Barth, Head of Investor Relations. Thank you. Please go ahead, sir.

Thank you, Operator. Good afternoon, everyone, and thank you for joining Akamai's fourth quarter and fiscal year 2020 earnings conference call. Speaking today will be Tom Layton, Akamai's Chief Executive Officer, and Ed McGowan, 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. The factors including stemming from the COVID-19 pandemic and any impact from unexpected geopolitical developments. Additional information concerning these factors is contained in Optimized Violence with the SEC, including our annual report on 10-K and quarterly reports on Form 10-Q. The forward-looking statements included in this call represent the company's view on February 9th, 2021. 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.

Thanks, Tom, and thank you all for joining us today. I'm pleased to report that Akamai delivered excellent results for both the fourth quarter and the full year, in spite of extraordinary challenges that we all faced in 2020. Q4 revenue was $846 million, up 10% over Q4 in 2019, and up 8% in constant currency. This strong result was driven by the continued rapid growth of our security business and continued high traffic levels on our Intelligent Edge platform. Non-GAAP operating margin in Q4 was 30%, up one point over Q4 in 2019, And Q4 non-GAAP EPS was $1.33 per diluted share, up 8% year-over-year and up 6% in constant currency. For the full year, we surpassed our expectations on both the top and bottom lines, setting new records for our business and positioning us well for the future. Full-year 2020 revenue was $3.2 billion, up 11% over the prior year in constant currency. and topping the $3 billion mark for the first time in our history. We're especially pleased to report that we expanded non-GAAP operating margin to 31% in 2020, overachieving our target of 30%. This is up dramatically from 24% in 2017. I think it's worth noting that we achieved this expansion over the past three years while also investing for future growth. Non-GAAP EPS for 2020 was $5.22 per share, up 16% over 2019, and exceeding $5 per share for the first time. We also generated $1.2 billion in cash from operations last year, up 15% over 2019, and representing 38% of revenue. Our security portfolio continued to be the fastest growing part of our business in Q4. generating revenue of $296 million, up 23% year-over-year in constant currency. For the full year, security revenue exceeded $1 billion and grew 25% over 2019. This puts Akamai in rare company, as few firms generate more than $1 billion in annual revenue from cybersecurity solutions, and fewer still grew at 25% last year. Security represented one-third of our revenue last year, which is up from 29% in 2019 and 24% in 2018. Bookings were especially strong for our Prolexic service in Q4, as we helped dozens of major enterprises defend against the huge wave of ransom DDoS attacks that began in Q3. DDoS production has been a mainstay of our portfolio for years and has never been more relevant for customers. We also saw strong bookings for our Bot Manager solution. Bot Manager helps defend against credential abuse attacks, which were about four times greater in 2020 than the year before. 2020 was also a strong year for innovation, with the release of Page Integrity Manager and Secure Web Gateway. Bookings for both are off to an excellent start, as enterprises increasingly need to deal with malware and third-party software and applications. and the addition of Secure Web Gateway to our Enterprise Threat Protector service better positioned us to compete in the fast-growing enterprise security market. We were also pleased to close our acquisition of Ossipee in Q4, which helps advance our security capabilities for cellular devices and networks. New Ossipee customers signed after the integration include a national health agency, which adopted Ossipee to secure its COVID vaccination application, and Digital Promise, a nonprofit organization that works to close the digital learning gap for students with equitable access to technology. Our media and carrier division also delivered a strong fourth quarter as a result of continued high levels of traffic for OTT video services and downloads of e-gaming software. On November 10th, traffic on the Occamite platform reached an all-time high of 181 terabits per second, 50% greater than the peak in 2019. Nobody in the marketplace comes anywhere close to our capacity to serve customers at the edge on a global scale. In fact, we already exceeded last year's traffic peak just last week. On the application performance side of the business, Q4 was a crucial quarter for e-commerce, with major buying events such as Black Friday and Singles Day. The unmatched reliability, scale, global reach, and security of our intelligent edge platform is a major reason why 40 of the world's top 50 retailers and 23 of the top 25 in the US use Akamai to accelerate their commerce applications. Overall, we're very pleased with our performance last year on both the top and bottom lines. And I want to thank our employees for enabling Akamai to achieve such strong results as they cope with the challenges of the pandemic. As we look to the future, we see substantial opportunity for enterprises to increase their use of the Akamai Intelligent Edge platform. We believe the edge is where new applications and new business models will come to life, where intelligence will be built into how data is collected and analyzed, where the promise of 5G and IoT will be realized, and where security will provide the online world's first and most important line of defense. To better take advantage of these opportunities, and to better serve our customers. We announced today that we'll be realigning our organization around two major groups of products. Products that enable business online and products that protect business online. Both product groups will be supported with a single unified sales organization. Products that enable business online will be the focus of our new edge technology group, which will be led by Adam Caron as COO and General Manager. This group will be responsible for our media delivery, web performance, and edge computing solutions, as well as the edge platform that underpins everything we do. These products generate about two-thirds of our total revenue today, with strong margins in cash generation to fuel our innovation firepower. The group's mission is twofold. First, to ensure that our edge platform remains the unparalleled market leader for scale, performance, reliability, ease of use, agility, and cost. And second, to generate additional growth through the innovation of new products and services for emerging customer needs in areas such as IoT, 5G, and serverless computing. Products that protect business online will come together in a new security technology group to be led by Rick McConnell as President and General Manager. This new group will be responsible for all our security solutions, including our market-leading web security products, such as Kona Site Defender, Bot Manager, and Perlexic, our enterprise security products, such as Enterprise Application Access and Enterprise Threat Protector, and our carrier security products, such as our DNS-based secure business offering and our new secure mobile service from Azevin. In 2021, we'll go to market with a unified global sales organization to better serve our customers, deepen our channel relationships, and provide our customers and partners with easier access to the full breadth of our portfolio. PJ Joseph, who previously led our sales for Media and Carrier, will lead global sales reporting to me. As part of the new alignment, Bobby Blumhoff will become our Chief Technology Officer. to guide innovation and be an evangelist for our technology vision and leadership in the marketplace. Kim Salem-Jackson, who has successfully led Akamai Field Marketing and Global Communications for the last three years, will become our new Chief Marketing Officer as part of a plan of transition. Kim will succeed Monique Bonner, who has done a fabulous job at transforming our marketing organization over the last four and a half years. Mo will stay on with Akamai in a senior advisory role which will allow her to devote more time to her family while still ensuring the success of key marketing initiatives currently underway. You can read more about our organizational announcement in the press release issued today, and you'll be able to hear directly from our leadership team at our investor summit on February 25th, when we'll outline our strategy and plans to drive Akamai's next phase of growth. Akamai made amazing contributions to the world in 2020, But we believe the best is yet to come. Looking ahead, we have the potential to greatly expand our business and enterprise and carrier security as we strive to further grow our leadership position in web security. We plan to grow the capacity of our unparalleled intelligent edge platform by another order of magnitude as we continue to improve our market leading performance and reliability. We seek to bring innovative new services to market to support emerging IoT and serverless computing applications. We want to help enable the world to take advantage of the incredible potential of 5G. And we'll continue our efforts to build value for our shareholders with our world-class talent, technology leadership, strong profitability, and cash generation to fuel our future growth. Now I'll turn the call over to Ed to provide further details on our 2020 results and the outlook for 2021. Ed?