Reconciliation of GAAP to Non-GAAP Financial Measures, 3rd Quarter 2021

Akamai Technologies, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

September 30, 2021

In addition to providing financial measurements based on generally accepted accounting principles in the United States of America (GAAP), Akamai provides additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes, to measure executive compensation and to evaluate Akamai's financial performance. These non-GAAP financial measures are non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, Adjusted EBITDA, Adjusted EBITDA margin, capital expenditures and impact of foreign currency exchange rates, as discussed below

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 comparing financial results across accounting periods and to those of 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 also 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. Akamai has provided a reconciliation of each non-GAAP financial measure used in its financial reporting and investor presentations to the most directly comparable GAAP financial measure. This reconciliation captioned "Reconciliation of GAAP to Non-GAAP Financial Measures" can be found on the Investor Relations section of Akamai's website.

Akamai provides forward-looking statements in the form of guidance during its quarterly earnings conference calls. This guidance is provided on a non-GAAP basis and 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 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, like 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.

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Akamai's definitions of its non-GAAP financial measures are outlined below:

Non-GAAPincome from operations - GAAP income from operations adjusted for the following items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; amortization of capitalized interest expense; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the Akamai Foundation; and other non-recurring or unusual items that may arise from time to time.

		Three Months Ended				Nine Months Ended
	September			June 30,		September		September		September
(in thousands)		30, 2021			2021			30, 2020			30, 2021			30, 2020
Income from operations...........................................	$	205,265	$	199,434	$	181,158	$	587,063	$	523,917
Amortization of acquired intangible assets .............		11,959			12,060			10,340			35,446			31,155
Stock-basedcompensation ......................................		49,018			50,481			50,217			153,804			146,901
Amortization of capitalized stock-based		8,815			9,840			7,913			27,253			24,540
compensation and capitalized interest expense .......
Restructuring charge (benefit) .................................		565			(2,114)			21			5,567			10,439
Acquisition-relatedcosts .........................................		1,316			140			1,051			1,520			1,189
Legal settlements .....................................................		-			-			-			-			275
Non-GAAP income from operations.......................	$	276,938	$	269,841	$	250,700	$	810,653	$	738,416

Non-GAAPoperating margin - Non-GAAP income from operations stated as a percentage of revenue.

	Three Months Ended		Nine Months Ended
	September		June 30,		September		September		September
(in thousands)	30, 2021		2021		30, 2020		30, 2021		30, 2020
Revenue ...................................................................	$ 860,333	$ 852,824	$ 792,845	$2,555,865	$2,351,862
Non-GAAP income from operations.......................	276,938	269,841	250,700	810,653	738,416
Non-GAAPoperating margin..................................	32 %	32 %	32 %	32 %	31 %

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Non-GAAPnet 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; gains and losses on legal settlements; costs incurred related to endowments to the Akamai Foundation; amortization of debt discount and issuance costs; amortization of capitalized interest expense; certain gains and losses on investments; income and losses from equity method investment; and other non-recurring or unusual items that may arise from time to time.

		Three Months Ended				Nine Months Ended
	September			June 30,		September		September		September
(in thousands)		30, 2021			2021			30, 2020			30, 2021			30, 2020
Net income...............................................................	$	178,916	$	156,497	$	158,623	$	491,108	$	443,684
Amortization of acquired intangible assets .............		11,959			12,060			10,340			35,446			31,155
Stock-basedcompensation ......................................		49,018			50,481			50,217			153,804			146,901
Amortization of capitalized stock-based		8,815			9,840			7,913			27,253			24,540
compensation and capitalized interest expense .......
Restructuring charge (benefit) .................................		565			(2,114)			21			5,567			10,439
Acquisition-relatedcosts .........................................		1,316			140			1,051			1,520			1,189
Legal settlements .....................................................		-			-			-			-			275
Amortization of debt discount and issuance costs...		16,567			16,460			15,747			49,284			47,057
Gain on investments ................................................		(3,680)			-			-			(3,680)			-
Loss from equity method investment ......................		1,064			10,816			559			12,578			1,674
Income tax-effect of above non-GAAP		(25,600)			(21,428)			(28,689)			(73,374)			(68,481)
adjustments and certain discrete tax items ..............
Non-GAAPnet income ...........................................	$	238,940	$	232,752	$	215,782	$	699,506	$	638,433

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Non-GAAPnet income per diluted share - Non-GAAP net income divided by weighted average diluted common shares outstanding. Diluted weighted average 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 $1,150 million of convertible senior notes due 2027 and 2025, respectively. Under GAAP, shares delivered under hedge transactions are not considered offsetting shares in the fully-diluted share calculation until they are delivered. However, the company would receive a benefit from the note hedge transactions and would not allow the dilution to occur, so management believes that adjusting for this benefit provides a meaningful view of operating performance. With respect to the convertible senior notes due in each of 2027 and 2025, unless Akamai's weighted average stock price is greater than $116.18 and $95.10, respectively, the initial conversion price, there will be no difference between GAAP and non-GAAP diluted weighted average common shares outstanding.

		Three Months Ended				Nine Months Ended
	September			June 30,		September		September		September
(in thousands, except per share data)		30, 2021			2021			30, 2020			30, 2021			30, 2020
GAAP net income per diluted share........................	$	1.08	$	0.94	$	0.95	$	2.96	$	2.69
Adjustments to net income:
Amortization of acquired intangible assets.........		0.07			0.07			0.06			0.21			0.19
Stock-basedcompensation..................................		0.29			0.30			0.30			0.93			0.89
Amortization of capitalized stock-based		0.05			0.06			0.05			0.16			0.15
compensation and capitalized interest expense ..
Restructuring charge (benefit) ............................		-			(0.01)			-			0.03			0.06
Acquisition-relatedcosts ....................................		0.01			-			0.01			0.01			0.01
Legal settlements ................................................		-			-			-			-			-
Amortization of debt discount and issuance		0.10			0.10			0.09			0.30			0.29
costs ....................................................................
Gain on investments ...........................................		(0.02)			-			-			(0.02)			-
Loss from equity method investment .................		0.01			0.07			-			0.08			0.01
Income tax effect of above non-GAAP		(0.15)			(0.13)			(0.17)			(0.44)			(0.42)
adjustments and certain discrete tax items..........
Adjustment for shares..............................................		0.02			0.02			0.02			0.04			0.02
Non-GAAP net income per diluted share................	$	1.45	$	1.42	$	1.31	$	4.25	$	3.89
Shares used in GAAP per diluted share
	166,318			166,263			166,519			166,090			164,990
calculations ..............................................................
Impact of benefit from note hedge transactions ......		(2,028)			(1,782)			(1,732)			(1,589)			(795)
Shares used in non-GAAP per diluted share
	164,290			164,481			164,787			164,501			164,195
calculations ..............................................................

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Adjusted EBITDA - GAAP net income excluding the following items: interest income; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the Akamai Foundation; foreign exchange gains and losses; interest expense; amortization of capitalized interest expense; certain gains and losses on investments; income and losses on equity method investment; and other non-recurring or unusual items that may arise from time to time.

		Three Months Ended				Nine Months Ended
	September			June 30,		September		September		September
(in thousands)		30, 2021			2021			30, 2020			30, 2021			30, 2020
Net income...............................................................	$	178,916	$	156,497	$	158,623	$	491,108	$	443,684
Interest income ........................................................		(2,872)			(4,736)			(6,307)			(12,186)			(22,852)
Provision for income taxes ......................................		13,648			18,009			8,801			43,555			41,764
Depreciation and amortization.................................		119,055			115,860			100,644			346,399			294,992
Amortization of capitalized stock-based		8,815			9,840			7,913			27,253			24,540
compensation and capitalized interest expense .......
Amortization of acquired intangible assets .............		11,959			12,060			10,340			35,446			31,155
Stock-basedcompensation ......................................		49,018			50,481			50,217			153,804			146,901
Restructuring charge (benefit) .................................		565			(2,114)			21			5,567			10,439
Acquisition-relatedcosts .........................................		1,316			140			1,051			1,520			1,189
Legal settlements .....................................................		-			-			-			-			275
Interest expense .......................................................		18,144			18,037			17,324			54,015			51,778
Gain on investments ................................................		(3,680)			-			-			(3,680)			-
Loss from equity method investment ......................		1,064			10,816			559			12,578			1,674
Other expense, net ...................................................		45			811			2,158			1,673			7,869
Adjusted EBITDA ...................................................	$	395,993	$	385,701	$	351,344	$	1,157,052	$	1,033,408

Adjusted EBITDA margin - Adjusted EBITDA stated as a percentage of revenue.

	Three Months Ended		Nine Months Ended
	September		June 30,		September		September		September
(in thousands)	30, 2021		2021		30, 2020		30, 2021		30, 2020
Revenue ...................................................................	$ 860,333	$ 852,824	$ 792,845	$2,555,865	$2,351,862
Adjusted EBITDA ...................................................	395,993	385,701	351,344	1,157,052	1,033,408
Adjusted EBITDA margin.......................................	46 %	45 %	44 %	45 %	44 %

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