Bankruptcy Court Approves Winning Akamai Bid for Select Assets of Edgio
Akamai Technologies (NASDAQ: AKAM) has received U.S. Bankruptcy Court approval to acquire select assets from Edgio, including customer contracts in content delivery and security, and non-exclusive patent license rights. The transaction, following Edgio's Chapter 11 bankruptcy auction, excludes personnel, technology, and network assets. The deal is expected to add $9-$11 million in revenue for Q4 2024 and $80-$100 million for 2025. Akamai will incur transition costs of $15-$17 million in Q4 2024 and $25-$30 million in 2025. The transaction is anticipated to close in early December 2024.
Akamai Technologies (NASDAQ: AKAM) ha ricevuto l'approvazione della Corte Fallimentare degli Stati Uniti per acquisire alcuni beni da Edgio, inclusi contratti con clienti nel settore della distribuzione dei contenuti e della sicurezza, e diritti di licenza sui brevetti non esclusivi. La transazione, che segue l'asta fallimentare Chapter 11 di Edgio, esclude personale, tecnologia e beni della rete. Si prevede che l'affare porterà un aumento del fatturato di $9-$11 milioni per il quarto trimestre del 2024 e $80-$100 milioni per il 2025. Akamai sosterrà costi di transizione di $15-$17 milioni nel quarto trimestre del 2024 e $25-$30 milioni nel 2025. La transazione dovrebbe concludersi all'inizio di dicembre 2024.
Akamai Technologies (NASDAQ: AKAM) ha recibido la aprobación del Tribunal de Quiebras de EE. UU. para adquirir ciertos activos de Edgio, incluidos contratos con clientes en la entrega de contenido y seguridad, así como derechos de licencia de patentes no exclusivas. La transacción, que sigue a la subasta de quiebra bajo el Capítulo 11 de Edgio, excluye personal, tecnología y activos de red. Se espera que el acuerdo genere entre $9 y $11 millones en ingresos para el cuarto trimestre de 2024 y $80-$100 millones para 2025. Akamai incurrirá en costos de transición de $15-$17 millones en el cuarto trimestre de 2024 y de $25-$30 millones en 2025. Se anticipa que la transacción se cierre a principios de diciembre de 2024.
Akamai Technologies (NASDAQ: AKAM)는 미국 파산 법원의 승인을 받아 Edgio로부터 특정 자산을 인수하기로 했습니다. 여기에는 콘텐츠 배달 및 보안의 고객 계약과 비독점적인 특허 라이선스 권리가 포함됩니다. 이 거래는 Edgio의 Chapter 11 파산 경매에 따른 것으로, 직원, 기술 및 네트워크 자산은 제외됩니다. 이번 거래로 인해 2024년 4분기에 $9-$11백만의 수익이 추가될 것으로 예상됩니다 그리고 2025년에는 $80-$100백만이 될 것으로 보입니다. Akamai는 2024년 4분기에 $15-$17백만, 2025년에 $25-$30백만의 전환 비용이 발생할 것입니다. 이 거래는 2024년 12월 초에 마무리될 것으로 예상됩니다.
Akamai Technologies (NASDAQ: AKAM) a reçu l'approbation du tribunal des faillites américain pour acquérir certains actifs d'Edgio, y compris des contrats clients dans la livraison de contenu et la sécurité, ainsi que des droits de licence de brevet non exclusifs. La transaction, qui fait suite à l'enchère de faillite selon le Chapitre 11 d'Edgio, ne comprend pas le personnel, la technologie ni les actifs du réseau. On s'attend à ce que l'accord ajoute entre 9 et 11 millions de dollars de revenus pour le quatrième trimestre de 2024 et entre 80 et 100 millions de dollars pour 2025. Akamai encourra des coûts de transition de 15 à 17 millions de dollars au quatrième trimestre 2024 et de 25 à 30 millions de dollars en 2025. La transaction devrait se conclure début décembre 2024.
Akamai Technologies (NASDAQ: AKAM) hat die Genehmigung des US-Insolvenzgerichts erhalten, bestimmte Vermögenswerte von Edgio zu erwerben, einschließlich Kundenverträge im Bereich Content Delivery und Sicherheit sowie nicht-exklusive Patentlizenzrechte. Die Transaktion folgt auf die Insolvenzauktion nach Chapter 11 von Edgio und schließt Personal, Technologie und Netzwerkvermögen aus. Es wird erwartet, dass der Deal im vierten Quartal 2024 einen Umsatz von 9 bis 11 Millionen Dollar beiträgt und 80 bis 100 Millionen Dollar für 2025 erwirtschaftet. Akamai wird im vierten Quartal 2024 Übergangkosten von 15 bis 17 Millionen Dollar und 2025 von 25 bis 30 Millionen Dollar anfallen. Der Abschluss der Transaktion wird für Anfang Dezember 2024 erwartet.
- Expected revenue addition of $80-$100 million for full year 2025
- Accretive to non-GAAP EPS by $0.15-$0.20 in 2025
- Acquisition of several hundred new customers with cross-selling opportunities
- Immediate revenue contribution of $9-$11 million in Q4 2024
- Dilutive to non-GAAP EPS by $0.03-$0.05 in Q4 2024
- Transition service costs of $15-$17 million in Q4 2024
- Additional transition costs of $25-$30 million expected in 2025
Insights
This strategic acquisition of Edgio's select assets represents a well-calculated move by Akamai. The immediate financial impact shows
The deal structure is particularly clever - acquiring customer contracts and patent licenses without taking on network infrastructure or personnel liabilities. This allows Akamai to leverage its existing infrastructure and superior cost structure while expanding its customer base. The
The opportunity for cross-selling and up-selling advanced security and cloud solutions to these new customers presents significant upside potential beyond the stated financial projections.
This acquisition strengthens Akamai's market position in content delivery and security services while eliminating a competitor through bankruptcy proceedings. The transaction's structure as an asset purchase rather than a full acquisition minimizes integration risks and potential liabilities.
The timing is opportunistic, allowing Akamai to capture several hundred enterprise customers who need immediate transition support before Edgio's network shutdown in January 2025. This urgency creates high customer retention probability and positions Akamai to deepen these relationships through its broader solution portfolio.
The court approval follows Akamai submitting the winning bid for the select assets during Edgio's 363 bankruptcy auction on November 13, 2024, as part of its filing for Chapter 11 bankruptcy relief. The court decision provides the necessary approval for the closing of the sale to proceed.
When the transaction closes, several hundred net new Akamai customers will have a clear path and the necessary support to smoothly migrate to a best-in-class and reliable provider of the services they need prior to Edgio ceasing operations of its content delivery network. The customers will also have immediate access to the full portfolio of Akamai's cybersecurity and cloud computing services.
"Akamai is offering Edgio customers a smooth, secure transition without impacting their business or that of their end users," said Adam Karon, Akamai's Chief Operating Officer and General Manager, Cloud Technology Group. "We have the capacity, capabilities, and experience to help Edgio customers easily migrate to Akamai, and we believe our track record with similar transactions gives us the expertise to help move them to Akamai as seamlessly as possible. We look forward to welcoming these new customers and giving them the opportunity to take advantage of Akamai's full range of security and cloud solutions, which run on the world's most distributed platform."
For the fourth quarter of 2024, Akamai expects this transaction to add approximately
For the full year 2025, Akamai anticipates this transaction will add approximately
"We believe this transaction will create significant value for Akamai and our shareholders," said Ed McGowan, Akamai's Chief Financial Officer. "By integrating these customers onto our platform with its advantageous cost structure, we expect to improve profitability and unlock new growth opportunities. We're excited about the potential to cross-sell and up-sell our advanced security and cloud computing solutions to this expanded customer base."
The transaction is expected to close in early December 2024, subject to customary closing conditions for a transaction of this type.
About Akamai
Akamai is the cybersecurity and cloud computing company that powers and protects business online. Our market-leading security solutions, superior threat intelligence, and global operations team provide defense-in-depth to safeguard enterprise data and applications everywhere. Akamai's full-stack cloud computing solutions deliver performance and affordability on the world's most distributed platform. Global enterprises trust Akamai to provide the industry-leading reliability, scale, and expertise they need to grow their business with confidence. Learn more at akamai.com and akamai.com/blog, or follow Akamai Technologies on X and LinkedIn.
Contacts
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AkamaiPR@akamai.com
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IR-InvestorRelations@akamai.com
Akamai Statement Under the Private Securities Litigation Reform Act
This press release contains statements that are not statements of historical fact and constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about: management's guidance regarding the expected impact of the transaction on Akamai, including its expected impact on revenue, non-GAAP net income per diluted share, capital expenditures, and new customer additions; the potential benefits of the transaction to Akamai, its customers and its shareholders; expectations regarding customer migration in connection with the transaction; expected transition services costs; the expected duration of Edgio's transition and wind-down period; and the expected closing date of the transaction. Each of the forward-looking statements is subject to change as a result of various important factors, many of which are beyond the company's control, including, but not limited to: the risk that the transaction may not be completed in a timely manner or at all; the parties' ability to satisfy closing conditions; the occurrence of any event, change or other circumstance that could give rise to the termination of the transaction agreements; Akamai being unable to achieve the anticipated benefits of the transaction; the risk that customer migration may be more difficult, time-consuming or costly than expected; the retention of key personnel during the transition period; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; effects of competition, including pricing pressure and changing business models; impact of macroeconomic trends, including economic uncertainty, turmoil in the financial services industry, the effects of inflation, rising and fluctuating interest rates, foreign currency exchange rate fluctuations, securities market volatility and monetary supply fluctuations; continuing supply chain and logistics costs, constraints, changes or disruptions; defects or disruptions in Akamai's products or IT systems, including cyber-attacks, data breaches or malware; changes to economic, political and regulatory conditions in
Use of Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in
Management believes that these non-GAAP financial measures reflect Akamai's ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparison of financial results across accounting periods and to those of our peer companies. Management also believes that these non-GAAP financial measures enable investors to evaluate Akamai's operating results and future prospects in the same manner as management. These non-GAAP financial measures may exclude expenses and gains that may be unusual in nature, infrequent or not reflective of Akamai's ongoing operating results.
The non-GAAP financial measures do not replace the presentation of Akamai's GAAP financial results and should only be used as a supplement to, not as a substitute for, Akamai's financial results presented in accordance with GAAP.
In addition, the financial guidance contained in this press release that is provided on a non-GAAP basis cannot be reconciled to the closest GAAP measures without unreasonable effort because of the unpredictability of the amounts and timing of events affecting the items we exclude from non-GAAP measures. For example, stock-based compensation is unpredictable for Akamai's performance-based awards, which can fluctuate significantly based on current expectations of the future achievement of performance-based targets. Amortization of intangible assets, acquisition-related costs and restructuring costs are all impacted by the timing and size of potential future actions, which are difficult to predict. In addition, from time to time, Akamai excludes certain items that occur infrequently, which are also inherently difficult to predict and estimate. It is also difficult to predict the tax effect of the items we exclude and to estimate certain discrete tax items, such as the resolution of tax audits or changes to tax laws. As such, the costs that are being excluded from non-GAAP guidance are difficult to predict and a reconciliation or a range of results could lead to disclosure that would be imprecise or potentially misleading. Material changes to any one of the exclusions could have a significant effect on our guidance and future GAAP results.
Akamai's definition of the non-GAAP measures used in this press release are outlined below:
Non-GAAP net income per diluted share – Non-GAAP net income divided by weighted average diluted common shares outstanding. Diluted weighted average common shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to Akamai pursuant to the note hedge transactions entered into in connection with the issuances of
Non-GAAP net income – GAAP net income adjusted for the following tax-affected items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; amortization of debt issuance costs; amortization of capitalized interest expense; certain gains and losses on investments; gains and losses from equity method investment; and other non-recurring or unusual items that may arise from time to time.
The non-GAAP adjustments, and Akamai's basis for excluding them from non-GAAP financial measures, are outlined below:
- Amortization of acquired intangible assets – Akamai has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions Akamai has made. The amount of an acquisition's purchase price allocated to intangible assets and term of its related amortization can vary significantly and is unique to each acquisition; therefore, Akamai excludes amortization of acquired intangible assets from its non-GAAP financial measures to provide investors with a consistent basis for comparing pre- and post-acquisition operating results.
- Stock-based compensation and amortization of capitalized stock-based compensation – Stock-based compensation is an important aspect of the compensation paid to Akamai's employees which includes long-term incentive plans to encourage retention, performance-based plans to encourage achievement of specified financial targets and also short-term incentive awards with a one year vest. The grant date fair value of the stock-based compensation awards varies based on the stock price at the time of grant, varying valuation methodologies, subjective assumptions and the variety of award types. This makes the comparison of Akamai's current financial results to previous and future periods difficult to interpret; therefore, Akamai believes it is useful to exclude stock-based compensation and amortization of capitalized stock-based compensation from its non-GAAP financial measures in order to highlight the performance of Akamai's core business and to be consistent with the way many investors evaluate its performance and compare its operating results to peer companies.
- Acquisition-related costs – Acquisition-related costs include transaction fees, advisory fees, due diligence costs and other direct costs associated with strategic activities, as well as certain additional compensation costs payable to employees acquired from the Linode acquisition if employed for a certain period of time. The additional compensation cost was initiated by and determined by the seller, and is in addition to normal levels of compensation, including retention programs, offered by Akamai. Acquisition-related costs are impacted by the timing and size of the acquisitions, and Akamai excludes acquisition-related costs from its non-GAAP financial measures to provide a useful comparison of operating results to prior periods and to peer companies because such amounts vary significantly based on the magnitude of the acquisition transactions and do not reflect Akamai's core operations.
- Restructuring charge – Akamai has incurred restructuring charges from programs that have significantly changed either the scope of the business undertaken by the Company or the manner in which that business is conducted. These charges include severance and related expenses for workforce reductions, impairments of long-lived assets that will no longer be used in operations (including acquired intangible assets, right-of-use assets, other facility-related property and equipment and internal-use software) and termination fees for any contracts canceled as part of these programs. Akamai excludes these items from its non-GAAP financial measures when evaluating its continuing business performance as such items vary significantly based on the magnitude of the restructuring action and do not reflect expected future operating expenses. In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of its business.
- Amortization of debt issuance costs and capitalized interest expense – Akamai has convertible senior notes outstanding that mature in 2029, 2027 and 2025. The issuance costs of the convertible senior notes are amortized to interest expense and are excluded from Akamai's non-GAAP results because management believes the non-cash amortization expense is not representative of ongoing operating performance.
- Gains and losses on investments – Akamai has recorded gains and losses from the disposition, changes to fair value and impairment of certain investments. Akamai believes excluding these amounts from its non-GAAP financial measures is useful to investors as the types of events giving rise to these gains and losses are not representative of Akamai's core business operations and ongoing operating performance.
- Gains and losses from equity method investment – Akamai records income or losses on its share of earnings and losses from its equity method investment, and any gains from returns of investments or impairments. Akamai excludes such income and losses because it does not have direct control over the operations of the investment and the related income and losses are not representative of its core business operations.
- Income tax effect of non-GAAP adjustments and certain discrete tax items – The non-GAAP adjustments described above are reported on a pre-tax basis. The income tax effect of non-GAAP adjustments is the difference between GAAP and non-GAAP income tax expense. Non-GAAP income tax expense is computed on non-GAAP pre-tax income (GAAP pre-tax income adjusted for non-GAAP adjustments) and excludes certain discrete tax items (such as the impact of intercompany sales of intellectual property related to acquisitions), if any. Akamai believes that applying the non-GAAP adjustments and their related income tax effect allows Akamai to highlight income attributable to its core operations.
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SOURCE Akamai Technologies, Inc.
FAQ
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