akamai ir summit 2013

©2013 Akamai

Safe Harbor Statement

• failure to maintain the prices we currently charge for our services;

• inability to effectively compete with existing companies and new entrants in the markets in which we operate;

• unexpected network and service interruptions that cause loss of revenues, increased expenses or diversion of resources;

• failure to increase our revenue at the same rate as in the past and keep our expenses from increasing at a greater rate than our revenues;

• changes in relationships with our network providers that increase our operating expenses;

• failure of new services we offer to operate as expected or to gain widespread market acceptance;

• delay in developing or failure to develop new service offerings or functionalities, and if developed, lack of market acceptance of such service offerings and functionalities; and

• other factors that are discussed in our annual report, on Form 10-K, our quarterly reports on Form 10-Q, and other documents periodically filed with the SEC.

In addition, any forward-looking statements, represent our estimates only as of March 11, 2013 and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

Finally, during this presentation we will be referring to non-GAAP financial measures such as Adjusted EBITDA. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation between non-GAAP and the most directly comparable GAAP financial measures appears in the News and Publications portion of the Investor Relations section of our website.

This presentation and webcast include information about Akamai’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995, including estimates about future revenues. Actual results may differ materially from those indicated by these forward-looking statements… as a result of various important factors including, but not limited to…

Business Strategy and Technology VisionTom Leighton | Chief Executive Officer & Co-Founder

©2013 Akamai

Today’s Agenda

8:30 – 10:00AM

10:00 – 10:30AM

10:30 – 10:40AM

10:40 – 11:05AM

11:05 – 11:35AM

11:35 – 11:50AM

11:50AM – 12:30PM

12:30 – 1:00PM

Tom Leighton

Rick McConnell

Bob Hughes

Jim Benson

Strategy & Technology Vision

Q&A

Break

Product Strategy

Go-to-Market Strategy

Break

Financial Update

Q&A

©2013 Akamai

The Hyperconnected World is Changing Everything

©2013 Akamai

Media over IPOver 90% of IP traffic will be video by 20151

Cloud AdoptionNearly 2/3 of application

workloads will be cloud-based by 20161

Megatrends Driving the Market

The Challenge:Quality at Scale

Sources: 1-Cisco, 2-Infonetics

The Challenge:Performance & Cost

Mobile50 Billion connected

devices by 20202

The Challenge:Performance & Capacity

Cyber AttacksCyber attacks

have increased >50X since 2009

The Challenge:Availability & Data Integrity

©2013 Akamai

Akamai Product Strategy

Core

Emerging

Web PerformanceMedia Delivery

Carrier Products

Hybrid Cloud OptimizationWeb Security

Media Delivery

©2013 Akamai

Delivery

Video

Software

Site Content

Advanced Functionality

Transcoding

Ad Insertion

Analytics

©2013 Akamai

The State of the Media Business Today

• Revenue ≈ traffic x price• Traffic growing rapidly• Price dropping steadily (within historic norms)• Expect continued variability in revenue growth

(due to DIY, competition, seasonality, renewals, pricing)

• Margins driven by price vs. cost• Margins improved in 2012• Successful COGS savings projects continuing

• Competition includes: DIY, CDNs, Carriers• Competitive advantages: scale, quality and end-to-end workflow

©2013 Akamai

Future Drivers of Growth

• Cost Reduction• Scaling Capacity• Quality Enhancements• Easier Workflows

• The Next-Generation Media Delivery Platform• Very low cost at very high scale and quality

©2013 Akamai

Avoid data theft and downtime by extending the security perimeter outside the data-center and protect from increasing frequency, scale and sophistication of web attacks.

30Tbps

20Tbps

40Tbps

50Tbps

0

3Tbps

9Tbps

1Tbps

2Tbps

8Tbps

4Tbps

5Tbps

6Tbps

7Tbps

0

2006 2009 2012

1Tbps

2.6Tbps

>10Tbps

>10Tbps

1Tbps 2.6Tbps

2015

10Tbps~50Tbps

Demand for Premium & Broadcast Content Online: Quality & Scale Challenge

Med

ia T

raff

ic (

in T

bp

s)

©2013 Akamai


1.5B Primetime Viewersx 7 Mbps

~10,000 Tbps

LET’S DO THE MATH:


©2013 Akamai


1000Tbps

300Tbps

900Tbps

200Tbps

800Tbps

400Tbps

500Tbps

600Tbps

700Tbps

0

100Tbps

2020

1Tbps 2.6Tbps~50Tbps

2006 2009 2012 2015

>10Tbps


©2013 Akamai

The Scalability ChallengeCloud Data Centers

©2013 Akamai

The Last Mile Has Enormous CapacityCloud Data Centers

©2013 Akamai

The Last Mile Has Enormous Capacity

400M Linesx 25 Mbps

10,000 Tbps


Cloud Data Centers

©2013 Akamai

The Problem is at the Core

100 Major NetworksX 5 Tbps

500 Tbps


Cloud Data Centers

©2013 Akamai

The Problem is at the Core

500 Tbps

10,000 Tbps

5% of what

we need!


Cloud Data Centers

=

©2013 Akamai

Akamai’s Unique Edge StrategyAkamai Servers

©2013 Akamai

Deepening Akamai’s Edge Strategy with Aura

©2013 Akamai

Akamai’s Future Vision: Extending our Platformto Home, Office, Retail, and User Devices

©2013 Akamai

Akamai’s Next-Gen Media Delivery Platform: Extending the Edge to the Device

©2013 Akamai

30 million Akamai clients now active

©2013 Akamai

Customer Case Study:

Results:• 10x improvement in cost• 20% improvement in download rates• Doubled the user base

©2013 Akamai


Core

Emerging


Carrier Products

Hybrid Cloud OptimizationWeb Security

Web Performance

©2013 Akamai

Site Acceleration

Dynamic Site Accelerator Aqua Ion

Special Focus on Mobile

Aqua Ion Mobile

©2013 Akamai

Application Acceleration

Web Application Accelerator Terra Alta

IP Application Accelerator

©2013 Akamai

The State of the Web Performance Business Today

• Revenue ≈ # of apps or sites x price• # of sites/apps grows through rep-driven transactions• Pricing is stable with uplift from next-gen services,

mobile adoption and value-add modules

• Competition includes: data center devices, CDNs• Competitive advantages: superior performance,

mobile capabilities, enhanced functionality, and real end-user reporting

©2013 Akamai


• Expanding sales capacity• Hiring more direct sales reps in 2013 than past 4 years combined

(80% increase from mid-2012 to end-2013)• Enabling a more robust channel ecosystem• Entering new geographies

• Continuing innovation to achieve near-instant performance …even for mobile devices (and as measured by real-user metrics)

©2013 Akamai

$$$

$The Performance Challenge

Tim

e to

Dow

nloa

d

UserExpectations

Heavier Content

3rd Party Content

Inefficient Web Code

Chatty Protocols

Mobile Congestion

Myriad Devices

©2013 Akamai

Challenge: Mobile Internet Access is SLOW because…

…the mobile network architecture was not designed for the Web

©2013 Akamai

1 in 4 visits to a

U.S. retail site today is from a smartphone

Source: IBM Digital Analytics Benchmark, November 2012

©2013 Akamai

Massive Growth Predicted

Source: Mobile Traffic to the Top 500 North American E-Retailers, Branding Brand, 2012

Smartphones will account for over 50% of North American visits to a commerce site within 2 years

2010 2011 2012 2013 2015

13.4%

53.2%

39%

24.6%

3.8%

60.6%

2014

60%

50%

40%

30%

20%

10%

0%

©2013 Akamai

Keynote Commerce Index: Desktop vs. Mobile

Seconds to load

Seconds to load

Top 30 Desktop Commerce Sites Top 30 Mobile Commerce Sites

2 9We haven't seen 9 seconds since 2001!

©2013 Akamai

slower pages = higher abandonment• Damages brand • Increases costs• Reduces revenue

Speed Matters: Abandonment Rates

Source: Gomez Real User Monitoring

0

5

10

15

20

25

30

Page Load Time (Seconds)

Ab

an

do

nm

en

t R

ate

(%

)A

band

onm

ent R

ate

(%)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

©2013 Akamai

Speed Matters: Conversion Rates

CONVERSION RATE VERSUS LOAD TIME

POPULATION PERCENTAGE CONVERSION PERCENTAGE

LOAD TIME (SECONDS)

Page Performance & Site Conversion – Feb 2012

0−1 1−2 2−3 3−4 4−5 5−6 6−7 7−8 8−9 9−10 10−11 11−12 12−13 13−14 14−15 >15

faster pages = higher revenue

©2013 Akamai

Redefining Web Performance

©2013 Akamai


Akamai has a Solution: Aqua Ion

Customer Infrastructure Akamai Intelligent Platform™ Local ISP / Mobile Network Operator

Akamai Optimizations

First Mile Middle Mile Last Mile

©2013 Akamai

Challenges with Cloud Adoption

Cloud servers reside in big data centers, farther away from the end user…

...resulting in decreased performance and security

End User

Cloud Datacenter

©2013 Akamai

End User

Problem 1

Route to datacentermay perform poorly

Cloud Datacenter

XX

Cloud Optimization: Route Selection

©2013 Akamai

End User

Solution

Akamai SureRoute to optimize route

Cloud Optimization: Route Selection

Problem 1

Route to datacentermay perform poorly

Akamai Edge Servers

X

Cloud Datacenter

©2013 Akamai

End User

Solution

Akamai Communication Protocol

Cloud Optimization: Communication Protocol

Problem 2

Many round trips for initial large download

Cloud Datacenter

Akamai Edge Servers

©2013 Akamai

Akamai Communication Protocols Make a Big Difference

First Mile

Middle MileLast Mile

(0.2 sec)

(8.0 sec)(0.2 sec)

Typical number of round trips for an application = 31

Total response time = 8.4 sec1.0 sec5

1.5 sec

End User

Cloud Datacenter

Akamai Edge Servers

©2013 Akamai

Cloud Optimization: Prefetching

Problem 3

Many round trips for personalized or cold objects

End User

Cloud Datacenter

©2013 Akamai

Problem 3

Many round trips for personalized or cold objects

Solution

Akamai Intelligent Prefetching

End User

Cloud Datacenter

Akamai Edge Servers

Cloud Optimization: Prefetching

©2013 Akamai

Akamai vs. Large Cloud Provider

APS – AKAMAI (ApP) – Total Time (seconds)

APS – LARGE CLOUD PROVIDER (ApP) – Total Time (seconds) 8x

©2013 Akamai

Akamai vs. CDN Vendor

APS – AKAMAI (ApP) – Total Time (seconds)

APS – CDN VENDOR (ApP) – Total Time (seconds) 2.3x

©2013 Akamai

Keynote Page Load Time for a Major Retailer

Homepage

2.6

Brands

2.8

Cabinet Knobs

2.6

Drawer Slide

3.0

Knobs

2.1

0.61.00.80.9

0.7

DSA Aqua Ion

Load

Tim

e (S

econ

ds)

Product Images

©2013 Akamai


Real User Performance for a Major Retailer

DSA

19%< 2 seconds

ION

48%< 2 seconds

Seconds

0

10

20

30

40

50

% o

f Use

rs

Ion could increase conversion rates by

34%

0-1 1-2 2-3 3-4 4-5 5-6 6+

DSA Aqua Ion IR10 Conversion Rate

©2013 Akamai

Deliver Better Experiences To Mobile Users

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Seconds

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15+

DSA

% o

f use

rs

©2013 Akamai

Seconds

Deliver Better Experiences To Mobile Users

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15+

DSA Aqua Ion

% o

f use

rs

©2013 Akamai

Let’s See it Live

Similar gains for enterprise apps with Terra Alta

©2013 Akamai

Record Revenue Credited to Akamai

“The combination of Aqua Ion, Aqua Ion Mobile and expert advice from Akamai Professional Services means that we can deliver an experience that meets user expectations even under extremely high demand. The amazing influx of new customers is a testament to the effectiveness and value of Akamai’s solutions.” ─ Gavin Cliffe, CTO, OZSALE

Results After Just 24 Hours:

30% of transactions made via mobile

10,000+ new members

50,000 items sold at a rate of one item per 1.7 seconds

Record revenues

Improved performance by over 130%

©2013 Akamai


Core

Emerging


Carrier Products

Hybrid Cloud OptimizationWeb SecurityWeb Security

©2013 Akamai

Kona Site Defender

Denial of Service Prevention

Web Application Firewall

Enhanced DNS

©2013 Akamai

The State of the Security Business Today

• Revenue ≈ # of apps or sites x price• # of sites/apps grows through rep-driven transactions• Pricing is stable and ARPUs are rising

• Competition includes: data center devices, carrier filtering and cloud-washing solutions

• Competitive advantages: massive scale, always-on filtering, packet inspection, massive data set, speed, and unique ability to defend against leading attackers

©2013 Akamai


• Adoption• Field-training and expanding sales capacity• Extension to defend all IP applications (not just Web)• Creation of Managed Security Service Provider (MSSP)

capabilities and partnerships

©2013 Akamai


Security is a Serious Problem

• 31% of these attacks resulted in service disruption

• Each breach costs $8M on average, and can be up to $1B

• 74% of companies experienced one or more cyber attacks in the past year

©2013 Akamai

Typical Attack Size

10 Gbps

2009 2010 2011 20120

100

200

300

400

500

600

700

800

900

Nu

mb

er

of

Att

ac

ks

768

Attacks on Akamai Customers

Attacks are originating from all geographies and are

moving between geographies during the attack

Large Attack Size

100+ Gbps

14

220

510

©2013 Akamai

Attacks are Varied and Sophisticated

• SQL Injection is the most common attack type followed by DoS attacks

• Attack tools such as LOIC, HOIC and SlowLoris evolve rapidly and are easily available

Predictable Resource Location 2%

Cross-Site Forgery 2%

Source: Trustwave, Web Hacking Incident DB – 2012 report

SQL Injection

27%

Denial of Service

23%

Unreported

37%

Top WHID Attacks

Clickjacking 1%

Stolen Credentials 2%

Banking Trojan 3%

Brute Force 3%

©2013 Akamai

Traditional Solutions Are Insufficient

Sufficient Capacity

Packet Inspection

Proactive vs. Reactive

Maintain Performance

Datacenter Devices

Cloud Washing

Carrier Filtering

©2013 Akamai

Avoid data theft and downtime by extending the security perimeter outside the data-center and protect from increasing frequency, scale and sophistication of web attacks.X

(Cloud) Datacenters

End User

1

10

100

10000

Origin Traffic

1000

Web Application Without Akamai

©2013 Akamai


Web Application with Kona Site Defender

(Cloud) Datacenters

End User

1

10

100

10000

Origin Traffic

1000

Akamai Traffic

1

10

100

10000

1000

✔

✔

✔

✔

✔

✔

✔

COVERED

©2013 Akamai

Summer 2012: Akamai Defends Olympic Web Sites

Firewall Rules Triggered

25 MillionTypes of Requests Denied

Including: Bad Robots, SQL Injections, Cross-Site Scripts, LDAP Injections

23 40x

ATTACKDenied Rules

Warned Rules

Normal Traffic

©2013 Akamai

DNS Traffic Handled by Akamai

1.8 M

1.6 M

1.4 M

1.2 M

1.0 M

0.8 M

0.6 M

0.4 M

0.2 M

0.0

Total EDNS

Tues 12:00 Wed 00:00 Wed12:00

Akamai Kona Defends Major Bank

Attack Traffic:

23 Gbps(10,000X normal)

Duration:

4.5 Hours

©2013 Akamai

The State of the Hybrid Cloud Business Today

• Product under development• Market entry in 2H13 (beta) beginning with retail customers

• Optimizes the performance and cost for IP applications in branch offices, retail stores, hotels, etc.

• Behind the firewall applications• SaaS applications• Internet Web sites

• Competition includes: WAN optimization devices• Competitive advantages: existing deployed platform for SaaS

and Internet acceleration, market-leading acceleration and offload technology, Network-as-a-Service know-how

©2013 Akamai

In-Store Users of Mobile Devices

Omnichannel shoppers spend 71% more than single channel consumers*

Navigation Promos Information Checkout

Navigation

Find products easily

Promos

Help your customers find your products and take advantage of special promotions

Information

QR codes for immediate information

Checkout

Simple, fast, one-click checkout

Mobile Alert

Head on over to

aisle 18 to take

advantage of

a $100 instant

savings coupon!

X

X

Source: Guardian.co.uk; Deloitte

©2013 Akamai

Engaging Omnichannel Consumers is Key

“Shoppers who shop on our website as well as in our stores spend four times as much; throw smartphones into the mix and they spend eight times as much”

— Laura Wade-Gery, Executive Director, Multi-channel

E-commerce, Marks & Spencer1 Channel 2 Channels 3 Channels

8X

4X

1X

Source: Guardian.co.uk; Deloitte

©2013 Akamai

Akamai is Developing a Solution

Akamai software in the store optimizes performance and

offloads last mile pipes

©2013 Akamai

• 2 revenue streams:

Selling a CDN platform

The State of the Carrier Business Today

• Competition includes: DIY, device vendors, CDNs• Competitive advantages: proven technology for performance and

scale (the Akamai Intelligent Platform), ability to federate, enormous customer base

Distribution channel

©2013 Akamai

Business Strategy

Reduce Cost• Offload capex and colo• Leverage carrier salesforce

Reduce Cost

Reduce Cost• Embed deeper in carrier network

Improve Quality

Reduce Cost• Selling the platform• Broader sales capacity through channel

Increase Revenue

©2013 Akamai

Summary

2 strong core businesses today

Megatrends are moving in Akamai’s direction

Driving towards $5B goal by the end of the decade

3 highly-synergistic emerging businesses

akamai ir summit 2013

Technology

akamaiavoid data theft

high scale

increasing frequency

infoneticsthe challenge

marketthe challenge

availability data integrity

premium broadcast content

thesecurity perimeter