Copyright 2000 by Robert Wood and Akamai DO NOT DISTRIBUTE 1 10110 Korklan DO NOT DISTRIBUTE Sharpening the Edge Robert Wood Director of Business Development University of Virginia October 31, 2000 DARDEN DARDEN Akamai is on a Mission …To Deliver a Better Internet Networks (Partners) Content Providers (Customers) Technology (Proprietary Platform with APIs) Superior Financial Returns
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Copyright 2000 by Robert Wood and Akamai
DO NOT DISTRIBUTE1
10110 KorklanDO NOT DISTRIBUTE
Sharpening the Edge
Robert WoodDirector of Business Development
University of Virginia
October 31, 2000
DARDENDARDEN
Akamai is on a Mission…To Deliver a Better Internet
Networks(Partners)
Content Providers (Customers)
Technology (Proprietary Platform with APIs)
SuperiorFinancialReturns
Copyright 2000 by Robert Wood and Akamai
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The Market We Are In
Great Early Success…Room To Grow
Huge Market Opportunity
Explosive Top Line Growth
On The Path To Profitability
Agenda
What Is Akamai?We Deliver - From the EDGE…
…the market share leader
…providing managed edge services to Content Providers
Top Line GrowthStrong Acceleration in Short History
Akamai Quarterly Revenues(US$ in Millions)
Top Line Growth:Customer Revenue Drivers
Committed monthly revenue from snapshot
customer set as of Jan. 1st 2000
increased over 30%by September 2000
•• More HitsMore Hits•• Richer ContentRicher Content•• Broadband Broadband
IncreasedUsage
New Services
•• 4 New Services 4 New Services launched Q2launched Q2
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NewCustomers
Top Line Growth:Customer Revenue Drivers
•• More HitsMore Hits•• Richer ContentRicher Content•• Broadband Broadband
IncreasedUsage
New Services
•• 4 New Services 4 New Services launched Q2launched Q2
•• Direct SalesDirect Sales•• ResellersResellers•• Channel PartnersChannel Partners
Recurring revenuecustomer base
grew 400%227 to 1,115in 9 Months (Jan-Sept)
Top Line Growth:Network & Technology Revenue Drivers
• Enabling Content Delivery Service Providers to sell Akamai service offerings – Content delivery– Streaming– Load balancing
• Enabling third party application developers to integrate via open APIs with EdgeAdvantage – Access to EdgeAdvantage platform – Access to Content Providers – Access to Network Providers
Copyright 2000 by Robert Wood and Akamai
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Agenda
The Market We Are In
Great Early Success…Room To Grow
Huge Market Opportunity
Explosive Top Line Growth
On The Path To Profitability
Path to Profitability:Attractive Financial Model
• Recurring revenue– Long-term revenue after one-time
customer acquisition cost
• High operating leverage– High margins from new services to existing
customers
• Low capital expenditures– Free cash flow quickly follows net income
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Path to Profitability:Customer Profit Drivers
Increased Increased ROI for ROI for
Content ProvidersContent Providers
Increased Increased Revenues Revenues for Akamai for Akamai
Leads to
• Historically, Content Providers have bought the raw materials to improve website performance– Bandwidth, servers and personnel
• Akamai has taken the raw materials and created value-added services– Content delivery, streaming, load balancing, etc.
• Akamai service offerings create real ROI for Content Providers leading to customer “stickiness”
Path to Profitability:Network Profit Drivers
• Large volume purchasing power
• Bandwidth costs declining with new fiber and technology
• Network partnerships improve connectivity and lower cost
• Increasing amount of bandwidth for free
• Higher utilization driving margin expansion
• New, non-bandwidth services are high margin Bandwidth
Costs
Network Utilization
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Path to Profitability:Network Profit Drivers
• Gross margin positive today– Reached in less than
1 year of selling services
• Server payback is fast and improving– server payback =
Less than 9 month payback
• Network utilization remains low as we build out network– Fixed cost build-out is
focus of 2000 and 2001 Q4 99 Q1 00 Q2 00 Q3 00
Cash
Non-Cash
Akamai Gross Margin
52.4%
30.4%
-22.8%
-65.6%
30.3%
8.1%
56.0%
33.0%
Path to Profitability:Technology Profit Drivers
• Monetizing the EdgeAdvantage platform
• An increasing number of partners pay Akamai:– For access to the EdgeAdvantage platform – For access to our Content Providers– For access to our Network Providers