Akamai Technologies (AKAM) 10-K risk factor changes: FY2020 vs FY2019

The revenue growth rate we have enjoyed in recent years may not continue in future periods and could [removed: decline.][added: decline, which could negatively impact our profitability and stock price.]

Our revenue depends on [added: the amount of traffic we deliver,] continued growth in demand for our [added: performance and security] solutions and our ability to maintain the prices we charge for them.

[removed: Our traditional offerings, particularly] [added: We have experienced revenue declines in recent quarters from] our [removed: Media] [added: web performance solutions] and [removed: Web Performance solutions, are subject] [added: expect this trend] to [added: continue because of] increasing pricing pressure in certain verticals and geographies due to competition and business conditions affecting many of our [removed: customers.][added: customers, particularly in travel and hospitality.]

Our ability to increase our [added: overall] revenue [added: also] depends on many other factors including how well we can:

[removed: | • |] [added: -] address potential commoditization of our delivery-based solutions, which can lead to lower prices and loss of customers to competitors; [removed: |]

[removed: | • |] [added: -] adapt to changes in our customer contracting models from a committed revenue structure to a "pay-as-you-go" approach, which would make it easier for customers to stop doing business with [removed: us; |][added: us, or from traditional overage billing models to ones that do not incorporate surcharges for usage above committed levels; and]

[removed: | • |] [added: -] manage the impact of changes in general economic conditions, public health [removed: issues (for example, an outbreak of a contagious disease such as the novel coronavirus),] [added: issues,] natural disasters and public [removed: unrest. |][added: unrest on our ability to sell, market and provide our solutions.]

Maintaining or improving our profitability depends both on our ability to increase our revenue, even with [added: the] potential challenges discussed above, and limit our expenses.

Numerous [added: other] factors [removed: can] impact [added: our] traffic growth including:

[removed: | • |] [added: -] the pace of introduction of [removed: OTT] [added: over-the-top (often referred to as OTT)] video delivery initiatives by our customers; [removed: |]

[removed: | • |] [added: -] the popularity of our [removed: customers'] [added: customers’] streaming offerings as compared to those offered by companies that do not use our solutions; [removed: |]

[removed: | • |] [added: -] media and other customers utilizing their own data centers and implementing delivery approaches that limit or eliminate reliance on third party providers like us; and [removed: |]

[removed: | • |] [added: -] general [removed: economic] [added: macro-economic] conditions and industry pressures. [removed: |]

If we are unable to increase revenue [added: through traffic growth or otherwise] and limit expenses, our results of operations [removed: would] [added: will] suffer.

If we are unable to compete [removed: effectively,] [added: effectively and adapt to changing market conditions,] our business will be adversely affected.

Our current and potential competitors vary by size, product [removed: offerings,] [added: offerings] and geographic [removed: region] [added: region,] and range from start-ups that offer solutions competing with a discrete part of our business to large technology or telecommunications companies that offer, or may be planning to introduce, products and services that are broadly competitive with what we do.

The primary competitive factors in our market [removed: are:] [added: are] differentiation of technology, global presence, quality of solutions, customer service, technical expertise, security, ease-of-use, breadth of services offered, [removed: price,] [added: price] and financial strength.

[removed: | • |] [added: -] develop superior products or services; [removed: |]

[removed: | • |] [added: -] enter new markets more easily; [removed: |]

[removed: | • |] [added: -] gain greater market acceptance for their products and services; [removed: |]

[removed: | • |] [added: -] expand their offerings more efficiently and more rapidly; [removed: |]

[removed: | • |] [added: -] bundle their products that are competitive with ours with other solutions they offer in a way that makes our offerings less appealing to current and potential customers; [removed: |]

[removed: | • |] [added: -] more quickly adapt to new or emerging technologies and changes in customer requirements; [removed: |]

[removed: | • |] [added: -] take advantage of acquisition, investment and other opportunities more readily; [removed: |]

[removed: | • |] [added: -] offer lower prices than [removed: ours; |][added: ours, including at levels that may not be profitable;]

[removed: | • |] [added: -] spend more money on the promotion, [removed: marketing,] [added: marketing] and sales of their products and services; and [removed: |]

[removed: | • |] [added: -] spend more money on research and development, including offering higher salaries to talented professionals which may impact our ability to hire or retain engineering and other personnel. [removed: |]

[removed: | • |] [added: -] attract customers by offering less sophisticated versions of products and services than we provide at lower prices than those we charge; [removed: |]

[removed: | • |] [added: -] develop new business models that are disruptive to us; [removed: |]

[removed: | • |] [added: -] in some cases, use funds from recent [removed: initial] public [added: securities] offerings or private financings to strengthen their business to enable them to better compete with us; and [removed: |]

[removed: | • |] [added: -] respond more quickly than we can to new or emerging technologies, changes in customer [removed: requirements,] [added: requirements] and market and industry developments, resulting in superior offerings. [removed: |]

In the past, some of those customers have determined that it is better for them to employ a “do-it-yourself” or “DIY” strategy by putting in place equipment, [removed: software,] [added: software] and other technology solutions for content and application delivery [removed: and security protection within their internal systems instead of using Akamai solutions for some or all of their needs.]

If we do not [removed: continue to] develop new solutions that are attractive to enterprises, our [removed: revenues] [added: revenue] and operating results could be adversely affected.

The process of developing new solutions is complex, [removed: lengthy,] [added: lengthy] and uncertain; we must commit significant resources to developing new services or features without knowing whether our investments will result in solutions the market will accept, and we may choose to invest in business areas for which a viable market for our products does not ultimately develop.

We and [removed: the] other companies that compete in this industry and these markets experience continually shifting business relationships, commercial focuses and business priorities, all of which occur in reaction to industry and market forces and the emergence of new opportunities.

[added: These attempts take a variety of forms, including DDoS attacks, infrastructure attacks, botnets, malicious] file uploads, cross-site scripting, credential abuse, ransomware, bugs, viruses, worms and malicious software programs.

Malicious actors [removed: also] [added: are known to] attempt to fraudulently induce employees [removed: or] [added: and] suppliers to disclose sensitive information through illegal electronic spamming, phishing or other tactics.

[removed: In addition, unauthorized] [added: Other] parties may attempt to gain [added: unauthorized] physical access to our facilities in order to infiltrate our internal-use information systems.

[removed: Cyberthreats] [added: To date, cyber threats and other attacks have not resulted in any material adverse impact to our business or operations, but such threats] are constantly evolving, increasing the difficulty of detecting and successfully defending against them.

[removed: Moreover, the] [added: The] complexities in managing the security profile of a distributed network with vast scale and geographic reach that evolves to incorporate new capabilities expose us to both known and unknown vulnerabilities.

Financial and Operational Risks

We experienced a significant increase in revenue from our media solutions in 2020 due in significant part to greater consumption of online media and games during the COVID-19 pandemic and associated stay-at-home orders across the globe.

- variation in the popularity of online gaming;

We saw traffic levels on our network begin to stabilize in the fourth quarter of 2020.

Accordingly, we do not expect traffic growth in 2021 to continue at the same levels we saw earlier in 2020 absent other significant industry developments.

We have experienced significant growth in revenue from our security solutions in recent years.

To maintain or accelerate growth in security revenue, we must increase our industry recognition as a security solutions provider and develop new

solutions in a rapidly-changing environment where security threats are constantly evolving.

We must also ensure that our solutions operate effectively and are competitive with products offered by others.

In 2020, many of these customers faced significant disruptions to their business as a result of the international public health emergency associated with the COVID-19 pandemic.

The economic fallout from the pandemic has continued into 2021 and can be expected to have far-reaching consequences across many industries, including additional bankruptcies, continued reductions in technology spending and economic recession.

Any of these circumstances would negatively impact our revenues.

- retain existing customers, including maintaining the levels of existing services they buy;

- upsell new solutions to existing customers;

- expand our customer base;

- develop and sell innovative and appealing new solutions;

- counteract multi-vendor policies that could cause customers to reduce their reliance on Akamai;

- handle other competitive threats to our business;

If we are unable to increase revenues, our profitability and stock price could suffer.

Failure to control expenses could reduce our profitability, which would negatively impact our stock price.

Innovation is important to our future success.

In particular, as security solutions have become, and are expected to continue to, be an increasingly important part of our business, we must be particularly adept at developing new security services that meet the constantly-changing threat landscape.

Trying to innovate through acquisition can be costly and with uncertain prospects for success; we may find that attractive acquisition targets are too expensive for us to pursue which could cause us to pursue more time-consuming internal development.

Continuing restrictions on the ability of our developers and other employees to work in our facilities as a result of restrictions imposed by governments to combat the COVID-19 pandemic could reduce their effectiveness including, for example, by making it more difficult for them to collaborate as effectively in the development of new solutions.

- leverage better name recognition, particularly in the security market;

and security protection within their internal systems instead of using Akamai solutions for some or all of their needs.

We regularly face attempts to gain unauthorized access or deliver malicious software to the Akamai Intelligent Edge Platform and our internal IT systems, with the goal of stealing proprietary information related to our business, products, employees and customers; disrupting our systems and services or those of our customers or others; or demanding ransom to return control of such systems and services.

There could be attempts to infiltrate our systems through our supply chain and contractors.

Our ability to detect vulnerabilities could be particularly limited during extraordinary events, such as the COVID-19 pandemic, where more staff are working remotely and dealing with unusual distractions.

Any actual, alleged or perceived breach of network security in our systems or networks, or any other actual, alleged or perceived data security incident we or our third-party suppliers suffer, could result in damage to our reputation; negative publicity; loss of channel partners, customers and sales; loss of competitive advantages; increased costs to remedy any problems and otherwise respond to any incident; regulatory investigations and enforcement actions; costly litigation; and other liability.

In addition, we may incur significant costs and operational consequences of investigating, remediating, eliminating and putting in place additional tools and devices designed to prevent actual or perceived security breaches and other security incidents, as well as the costs to comply with any notification obligations resulting from any security incidents.

Any of these negative outcomes could adversely impact the market perception of our solutions and customer and investor confidence in our company and otherwise seriously harm our business and operating results.

revenue and market share, damage to our reputation, increased expenses and delayed payments and be exposed to legal actions by our customers.

An increasing portion of our revenue is derived from sales of security solutions.

Defects in our security solutions could lead to negative publicity, loss of business, damages payments to customers and other negative consequences.

As our solutions are adopted by an increasing number of enterprises and governments, it is possible that the individuals and organizations behind advanced malware attacks will specifically focus on finding ways to defeat our products and services.

If they are successful, we could experience a serious impact on our reputation as a provider of security solutions.

In addition, we could face strains on, or failures of, our internal IT systems if the COVID-19 pandemic persists for a longer period or governmental restrictions limit the ability of our command center personnel to work in our physical locations.

- becoming subject to regulatory oversight;

- geo-political developments that impact our customers’ ability to operate or deliver content to a country;

This has increased the difficulty of accelerating revenue growth.

| | |

| --- | --- |

| • | retain existing customers and sell new and additional products to them; |

| • | attract new customers; |

| • | develop and sell new solutions that are attractive to our current and potential customers and not easily replicable by competitors; |

| • | counteract multi-vendor policies designed to reduce reliance on any particular provider, such as us; |

| • | anticipate and react to changes in usage or adoption rates of the Internet, e-commerce and electronic devices; |

| • | handle the impact of competition across our business; |

| • | cope with any inability of our customers, particularly commerce, travel and media companies, to continue their operations and spending levels; and |

A slowing revenue growth rate could negatively impact our profitability and stock price.

If we are unable to continue to increase the amount of traffic we deliver over our network, it will be difficult to maintain or improve our current level of profitability without impacting our operations.

In anticipation of higher traffic on our network, we have increased capital expenditures recently and expect to continue doing so in the near term future.

As a result, increasing the amount of traffic we deliver is key to profitable revenue growth.

| • | the pace at which our customers' enterprise applications move from behind the firewall to the cloud; |

Our competitors include some of our current partners and customers.

Innovation is important to our revenue growth and profitability.

We must develop new solutions that customers want to purchase in a rapidly-changing technology environment where it can be difficult to anticipate the needs of potential customers and competitors are also developing new solutions.

Similarly, trying to innovate through acquisition can be costly and with uncertain prospects for success.

If we choose to cut research and development expenses to increase our profitability, investment in innovation could suffer and limit our development of new products.

The Akamai Intelligent Edge network transmits and stores both our and our customers' information, data, and encryption keys; customer information and data may, in turn, include individual data of and about their individual end-users.

Maintaining the security of the information we hold and of our solutions, network and internal IT systems, which include hundreds of thousands of servers, is a critical issue for us and our customers.

Internet-based attacks on our customers and our own network are frequent, rapidly evolving and take a variety of forms, including DDoS attacks, infrastructure attacks, botnets, malicious

Breaches of our facilities, network, or data security could disrupt the security of our systems and business applications, impair our ability to provide solutions to our customers and protect their data, result in product development delays, compromise confidential or technical business information, thereby harming our reputation or competitive position, result in theft or misuse of our intellectual property or other assets, expose us to lawsuits, fines or other penalties under privacy laws and other regulations, require us to allocate more resources to improved technologies, or otherwise adversely affect our business.

Any of these occurrences could have a material detrimental effect on our business, results of operations, financial condition and cash flows.

Compliance with GDPR and other laws may be administratively difficult and expensive.

Compliance with data regulations might limit our

Our operations in foreign countries subject us to risks (in addition to the regulatory risks discussed above) that may increase our costs, make our operations less efficient and require significant management attention.

To continue to grow our revenues generated outside the United States, we will likely need to increase our reliance on resellers, systems integrators, and other strategic partners and to leverage those relationships to expand our distribution channels.

We have not always been successful at developing these relationships due to the complexity of our solutions, our historical reliance on an internal sales force, and other factors.

Our failure to maintain and increase the number and quality of relationships with channel partners, and any inability to successfully execute on the partnerships we initiate, could significantly impede our revenue growth prospects in the short and long term.

Geo-political events such as the United Kingdom's withdrawal from the European Union, commonly referred to as Brexit, may increase the likelihood of certain of these risks materializing or heighten their impact on us in affected regions.

In particular, it is possible that the level of economic activity in the United Kingdom and the rest of Europe will be adversely impacted and that we will face increased regulatory and legal complexities, including those related to tax, trade, security and employee relations as a result of Brexit.

Such changes could be costly and potentially disruptive to our operations and business relationships in affected regions.

Trade disputes, unrest and other political activity, as well as public health issues (for example, an outbreak of a contagious disease such as the novel coronavirus), safety issues, natural disasters or general economic or political factors that disrupt our customers' businesses or our own operations could negatively impact our revenue and ability to offer services in impacted countries.

We entered into a Non-Prosecution Agreement with the U.S. Securities and Exchange Commission, or the Commission, in June 2016 in connection with resolution of an investigation relating to sales practices in a country outside the U.S. In the event we violate the terms of this Non-Prosecution Agreement, we could be subject to additional investigation or enforcement by the Commission or the Department of Justice.

offer our solutions in one or more countries.

They could also materially affect our brand or reputation, our global operations, any international expansion efforts, our ability to attract and retain employees, our business overall, and our financial results.

The appeal hearing was held in late 2019.

| • | a classified board structure that is being phased out over time, with approximately two-thirds of our Board of Directors up for re-election this year; |

The key factors that influence our financial success are our ability to build on recurring revenue commitments for our security and performance offerings, increase media traffic on our network, effectively [removed: managing] [added: manage] the prices we charge for our solutions, develop new products and carefully manage our capital spending and other expenses.

As a result, our revenue is impacted by the amount of media and software download traffic we serve on our network, the rate of adoption of gaming, social media and video platform offerings, the timing and variability of customer-specific one-time events and [removed: the] [added: geopolitical, economic and other developments that] impact [removed: of seasonal variations on] our [removed: business.][added: customers' businesses.]

[removed: The] [added: Over the longer term, our] ability to expand our product portfolio and to effectively manage the prices we charge for our solutions are [removed: also] key factors impacting our revenue growth.

[removed: | • | Increased sales of our security solutions have made a significant contribution to revenue growth.] We plan to continue to invest in this area with a focus on further enhancing our product portfolio and extending our go-to-market [removed: capabilities. |][added: capabilities, particularly in certain markets and through our channel partners.]

[removed: | • |] [added: -] We have experienced increases in the amount of traffic delivered for customers that use our solutions for video, gaming [added: downloads] and [removed: software downloads,] [added: social media,] contributing to an increase in our revenue in [removed: 2019] [added: 2020] as compared to [removed: 2018. |][added: 2019.]

[removed: | • | We] [added: - While we] have increased committed recurring revenue from our solutions by [removed: increasing sales of] [added: upselling] incremental solutions to our existing customers and adding new [removed: customers; however,] [added: customers,] we have also experienced slower revenue growth in recent quarters [removed: particularly] in our web performance solutions. [removed: We expect the trend of slower revenue growth to continue in 2020 as our commerce customers continue to experience financial pressure and we face more contract renewals with large media and other customers in 2020 as compared to 2019. |]

[removed: | • |] [added: -] The prices paid by some of our customers have declined, particularly in the context of contract renewals and large media consolidations, reflecting the impact of competition and volume discounts. [removed: Our revenue would have been higher absent these price declines. |]

[removed: | • | In recent years, revenue] [added: - Revenue] from our international operations has been growing at a faster pace than from our U.S. operations, particularly in terms of new customer acquisition and cross-selling of incremental solutions. [removed: Because we publicly report in U.S. dollars, if the dollar continues to strengthen, our reported revenue results will be negatively impacted. |]

[removed: | • | We have experienced variations in certain types of revenue from quarter to quarter.] In [removed: particular, we typically experience higher revenue in the fourth quarter of each year for some of our solutions as a result of holiday season activity. In] addition, we experience quarterly variations in revenue attributable to, among other things, the nature and timing of software and gaming releases by our customers; whether there are large live sporting or other events [added: or situations (like the COVID-19 pandemic)] that [removed: increase] [added: impact] the amount of media traffic on our network; and the frequency and timing of purchases of custom [removed: solutions. |][added: solutions or licensed software.]

[removed: | • | Network bandwidth costs represent a significant portion of our cost of revenue.] Historically, we have been able to mitigate increases in these costs by reducing our network bandwidth costs per unit and investing in internal-use software development to improve the performance and efficiency of our network. [removed: Our total bandwidth costs may increase in the future as a result of expected higher traffic levels and serving more traffic from higher cost regions. We will need to continue to effectively manage our bandwidth costs to maintain current levels of profitability. |]

[removed: | • | Co-location costs are also a significant portion of our cost of revenue.] By improving our internal-use software and managing our hardware deployments to enable us to use servers more efficiently, we have been able to manage the growth of co-location costs. [removed: We expect to continue to scale our network in the future and will need to continue to effectively manage our co-location costs to maintain current levels of profitability. |]

[removed: | • | Payroll and related costs stabilized in 2019 as compared to prior years.] [added: -] We expect to continue to manage our headcount and payroll costs in the future to focus investments on certain areas of the business while maintaining efficient operations in others. [removed: We expect to continue to hire employees in support of our strategic initiatives, but do not expect overall headcount to increase significantly in 2020. |]

[removed: | • | Depreciation and amortization] [added: These increases were partially offset by lower depreciation] expense [removed: related to our] [added: of] network equipment [removed: decreased during 2019 as compared] [added: of $31.5 million for the year ended December 31, 2019, due] to [removed: 2018. We implemented] software and hardware initiatives [added: we implemented] to manage our global network more [removed: efficiently; as a result,] [added: efficiently, resulting in an increase in] the expected average useful [removed: life] [added: lives] of our network assets, primarily servers, [removed: increased] from four [removed: years] to five [removed: years,] [added: years] effective January 1, 2019. [removed: We expect to continue to invest in our network in 2020, which will increase our capital expenditures and resulting depreciation expense. |]

[removed: Revenue] [added: We currently report our revenue] by [removed: division] [added: division, which] is a customer-focused reporting view that reflects revenue from customers that are managed by the division.

In [removed: 2019,] [added: 2020,] we reassigned some of our customers [removed: from] [added: between] the Media and Carrier Division [removed: to] [added: and] the Web Division and revised historical results in order to reflect the most recent categorization and to provide a comparable view for all periods presented.

| | [added: | | 2020 | | | | | |] 2019 | | | [removed: 2018] | | | [removed: 2017] [added: 2018] | | [added: |]

| Revenue | [added: | |] 100.0 | [added: |] % | | [added: | |] 100.0 | [added: |] % | | [added: | |] 100.0 | [added: |] % |

| Costs and operating expenses: | | | | | | | | | [added: | | | | | | | | |]

| Cost of revenue (exclusive of amortization of acquired intangible assets shown below) | [added: | | 35.4 | | | | | |] 34.1 | | | [removed: 35.1] | | | [removed: 35.2] [added: 35.1] | | [added: |]

| Research and development | [added: | | 8.4 | | | | | |] 9.0 | | | [removed: 9.1] | | | [removed: 8.9] [added: 9.1] | | [added: |]

| Sales and marketing | [added: | | 16.0 | | | | | |] 18.1 | | | [removed: 19.1] | | | [removed: 19.3] [added: 19.1] | | [added: |]

| General and administrative | [added: | | 17.1 | | | | | |] 17.8 | | | [removed: 21.1] | | | [removed: 20.5] [added: 21.1] | | [added: |]

| Amortization of acquired intangible assets | [added: | |] 1.3 | | | [removed: 1.2] | | | [added: 1.3 | | | | | |] 1.2 | | [added: |]

| Restructuring charge | [added: | | 1.2 | | | | | |] 0.6 | | | [removed: 1.0] | | | [removed: 2.2] [added: 1.0] | | [added: |]

| Total costs and operating expenses | [added: | | 79.4 | | | | | |] 80.9 | | | [removed: 86.6] | | | [removed: 87.3] [added: 86.6] | | [added: |]

| Income from operations | [added: | | 20.6 | | | | | |] 19.1 | | | [removed: 13.4] | | | [removed: 12.7] [added: 13.4] | | [added: |]

| Interest income | [added: | | 0.9 | | | | | |] 1.2 | | | [removed: 1.0] | | | [removed: 0.7] [added: 1.0] | | [added: |]

| Interest expense | [removed: (1.7] | [removed: )] | [added: (2.2)] | [removed: (1.6] | [removed: )] | | [removed: (0.8] | [removed: )] | [added: (1.7) | | | | | | (1.6) | | |]

| Other [removed: (expense) income,] [added: expense,] net | [removed: —] | | [added: (0.1)] | [removed: (0.1] | [removed: )] | | [added: | |] — | | [added: | | | | (0.1) | | |]

| Income before provision for income taxes | [added: | | 19.2 | | | | | |] 18.6 | | | [removed: 12.7] | | | [removed: 12.6] [added: 12.7] | | [added: |]

| Provision for income taxes | [removed: (1.8] | [removed: )] | [added: (1.4)] | [removed: (1.6] | [removed: )] | | [removed: (3.7] | [removed: )] | [added: (1.8) | | | | | | (1.6) | | |]

| Loss from equity method investment | [removed: —] | | [added: (0.4)] | [added: | | | | |] — | | | [added: | | |] — | | [added: |]

| Net income | [removed: 16.8] | [added: | 17.4 | |] % | | [removed: 11.1] | [added: | 16.8 | |] % | | [removed: 8.9] | [added: | 11.1 | |] % |

| | [added: | |] For the Years Ended December 31, | | | | | | | | | | | | | | [added: | | | | | | | | | |] For the Years Ended December 31, | | | | | | | | | | | | | [added: | | | | | | | |]

| | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [added: 2019 | | | | | |] % Change | | | [added: | | |] % Change at Constant Currency | | | [removed: 2018] | | | [added: 2019] | [removed: 2017] | | | | [added: | 2018 | | | | | |] % Change | | | [added: | | |] % Change at Constant Currency | | [added: |]

| Total revenue | [added: | |] $ | [removed: 2,893,617] [added: 3,198,149] | | | [added: | |] $ | [removed: 2,714,474] [added: 2,893,617] | | | [removed: 6.6] | [added: | 10.5 | |] % | | [removed: 7.8] | [added: | 10.6 | |] % | | [added: | |] $ | [removed: 2,714,474] [added: 2,893,617] | | | [added: | |] $ | [removed: 2,489,035] [added: 2,714,474] | | | [removed: 9.1] | [added: | 6.6 | |] % | | [removed: 8.6] | [added: | 7.8 | |] % |

The increase in our revenue in [removed: 2018] [added: 2020] as compared to [removed: 2017] [added: 2019] was primarily the result of higher media traffic [removed: volumes, increased sales of our new product offerings] [added: volumes due in part to behavioral changes prompted by the COVID-19 pandemic] and continued strong growth in [added: sales of] our Cloud Security Solutions.

Cloud Security Solutions revenue for the year ended December 31, [removed: 2018] [added: 2020] was [removed: $658.7] [added: $1,061.6] million, compared to [removed: $487.6] [added: $848.7] million for the year ended December 31, [removed: 2017,] [added: 2019,] which represents a [removed: 35.1%] [added: 25.1%] increase.

The increase in Web Division revenue for [added: 2020 as compared to 2019, and] 2019 as compared to [removed: 2018] [added: 2018,] was primarily the result of increased sales of both new and existing Cloud Security Solutions to this customer base.

The increase in Media and Carrier Division revenue for 2019 as compared to [removed: 2018, as well as] 2018 [removed: as compared to 2017,] was primarily the result of increased customer traffic volumes from video delivery and gaming customers and [added: higher] sales of Cloud Security [removed: Solutions to this customer base.][added: Solutions.]

Seasonal variations that impact traffic on our network, such as holiday shopping, can cause revenue fluctuations from quarter to quarter.

- Increased sales of our security solutions have made a significant contribution to revenue growth.

In addition, as a result of the COVID-19 outbreak and resultant pandemic-related shutdowns and restrictions in various locations around the world during some of 2020, the rate of growth in traffic in 2020, as compared to prior years, accelerated significantly due to increased consumption of streaming media and games online and online commerce.

We expect this year-over-year growth to moderate in 2021, assuming the restrictions experienced in 2020 do not continue.

We expect the trend of slower revenue growth in our web solutions to continue in 2021 as our customers, particularly in the commerce and travel and hospitality industries, continue to experience financial pressure, especially in light of the negative impacts of the COVID-19 pandemic on these customers' operations.

Our revenue would have been higher absent these price declines.

Because we publicly report in U.S. dollars, if the dollar strengthens, our reported revenue results will be negatively impacted.

Conversely, a continuing weaker dollar would benefit our reported results.

- We have experienced variations in certain types of revenue from quarter to quarter.

In particular, we typically experience higher revenue in the fourth quarter of each year for some of our solutions as a result of holiday season activity.

- Our profitability improved in 2020 as compared to 2019 due to higher revenue and the effects of cost savings and efficiency initiatives we have undertaken in recent years, as well as from lower travel and marketing expenses in 2020 due to pandemic-related shutdowns and restrictions.

In order to maintain our current levels of profitability, we will need to continue to undertake efforts intended to improve the efficiency of operations and ensure that our expense growth does not exceed our revenue growth.

- Network bandwidth costs represent a significant portion of our cost of revenue.

Our total bandwidth costs may increase in the future as a result of expected higher traffic levels and serving more traffic from higher cost regions.

We will need to continue to effectively manage our bandwidth costs to maintain current levels of profitability.

- Co-location costs are also a significant portion of our cost of revenue.

We expect to continue to scale our network in the future and will need to continue to effectively manage our co-location costs to maintain current levels of profitability.

We expect to continue to hire employees in support of our strategic initiatives but do not expect overall headcount to increase significantly in 2021.

- Depreciation expense related to our network equipment also contributes to our overall expense levels.

During the last three quarters of 2020, we accelerated our purchases of servers and other equipment used in our network to help meet the increased traffic demands arising during the COVID-19 pandemic and to make up for supply chain issues we experienced in the first quarter.

We expect to see higher depreciation expense in 2021 to reflect the deployment of this equipment.

We plan to continue to invest in our network in 2021, although not at the same levels we experienced in 2020, which will further increase our capital expenditures and resulting depreciation expense.

In March 2021, we will reorganize into two groups: the Edge Technology Group, or ETG, and the Security Technology Group, or STG.

The reorganization will align leaders of the two groups around our product offerings, with support from a single global sales organization, and is intended to position us to become more agile in delivering our solutions.

Beginning in 2021, we will report revenue from the STG (previously Cloud Security Solutions revenue) and the ETG (revenue from our remaining solutions), separately.

Nearly all of our employees are working remotely due to the COVID-19 pandemic, and we are not requiring employees whose roles do not require in-person presence to perform their jobs to return to offices before January 1, 2022.

We have implemented a comprehensive evaluation process to determine whether offices in different locations should be open or closed.

Our operations have not been significantly disrupted by the shift to remote working.

While we expect to incur expenses associated with enabling remote work and reconfiguring work spaces to help ensure the safety and well being of employees accessing our locations, we do not currently believe those costs will materially impact our financial condition or results of operations.

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| Web Division | | | $ | 1,666,305 | | | | | $ | 1,556,252 | | | | | 7.1 | | % | | | | 7.2 | | % | | | | $ | 1,556,252 | | | | | $ | 1,439,772 | | | | | 8.1 | | % | | | | 9.4 | | % |

| Media and Carrier Division | | | 1,531,844 | | | | | | 1,337,365 | | | | | | 14.5 | | | | | | 14.5 | | | | | | 1,337,365 | | | | | | 1,274,702 | | | | | | 4.9 | | | | | | 6.1 | | |

Customers that have been experiencing financial difficulties as a result of the COVID-19 pandemic, specifically those in the commerce, retail and travel and hospitality verticals, are primarily assigned to our Web Division.

Accordingly, Web Division revenue was negatively impacted during 2020 as a result of this pandemic.

It is difficult to predict the length of time and amount by which the Web Division will continue to be impacted by the pandemic given its uncertain nature.

The increase in Media and Carrier Division revenue for 2020 as compared to 2019 was primarily the result of increased customer traffic volumes from video delivery, gaming and social media usage, due in part to behavioral changes tied to the COVID-19 and higher sales of Cloud Security Solutions.

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| • | Our profitability improved in 2019 as compared to 2018 due to higher revenue as well as the effects of cost savings and efficiency initiatives we have undertaken. We expect to continue to undertake efforts intended to improve the efficiency of operations. If we are able to continue our efficiency efforts such that our rate of revenue growth exceeds our expense growth rate, we anticipate overall profitability improvement in 2020 as compared to 2019. |

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| Web Division | $ | 1,566,401 | | | $ | 1,448,644 | | | 8.1 | % | | 9.4 | % | | $ | 1,448,644 | | | $ | 1,307,641 | | | 10.8 | % | | 10.3 | % |

| Media and Carrier Division | 1,327,216 | | | | 1,265,830 | | | | 4.8 | | | 6.1 | | | 1,265,830 | | | | 1,181,394 | | | | 7.2 | | | 6.7 | |

The increase in Web Division revenue in 2018 as compared to 2017 was due to increased purchases of new solutions and upgrades to existing services by this customer base.

Increased sales of our Cloud Security Solutions to Web Division customers, in particular our Kona Site Defender, Prolexic and managed security solutions, as well as our new Bot Manager offering were a principal contributor to our overall revenue growth in 2018.

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| • | network build-out and supporting service costs due to investments in network expansion; |

| • | bandwidth fees to support the increase in traffic served on our network; and |

| • | payroll and related costs due to increased hiring to support revenue growth. |

These increases were partially offset by lower depreciation expense of network equipment of $31.5 million for the year ended December 31, 2019, due to software and hardware initiatives we implemented to manage our global network more efficiently, resulting in an increase in the expected average useful life of our network assets, primarily servers, from four to five years effective January 1, 2019.

The increase in total cost of revenue for 2018 as compared to 2017 was primarily due to increases in amortization of internal-use software as we continued to release internally-developed software onto our network related to new product launches and significant enhancements to our existing services throughout 2017 and 2018; payroll and related costs, as well as stock-based compensation, due to increased hiring in our services team in 2017 to support revenue growth; and amounts paid for network build-out and supporting services related to installation fees and investments in our network.

These increases were partially offset by decreases in our bandwidth and co-location fees as we have been able to more effectively manage our network and reduce our costs.

We do anticipate amortization of internal-use software development costs to increase in 2020 as we plan to continue making investments in our network with the expectation that our customer base will continue to expand and that we will continue to deliver more traffic to existing customers.

The increase in sales and marketing expenses for 2018 as compared to 2017 was primarily due to growth in payroll and related costs from headcount increases in 2017 to support our divisions' go-to-market strategies in pursuit of growth opportunities.

| • | a one-time endowment contribution to the Akamai Foundation in 2018; |

| • | a reduction in legal and stockholder matter costs related to matters in 2018 that did not recur in 2019; and |

| • | and a decrease in other expenses due to a decrease in non-income tax reserves. |

Our general and administrative expenses increased in 2018 as compared to 2017 primarily due to the one-time endowment contribution to the Akamai Foundation, legal and stockholder matter costs related to a settlement charge from our litigation with Limelight, amounts paid to professional service providers for advisory services provided in connection with a non-routine stockholder matter and higher stock-based compensation expense, primarily due to performance-based awards that experienced higher achievement in 2018 as compared to 2017.

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During 2020, we plan to continue to focus our efforts on expanding our operating margins and, in particular, assessing opportunities to reduce third-party spending and increase automation of manual tasks.

The restructuring charge in 2017 was primarily the result of management actions intended to shift focus to more critical areas of the business and away from products that have not seen expected commercial success.

The restructuring was also intended to facilitate cost efficiencies and savings.

We expect to incur additional restructuring charges of $4.0 million to $7.0 million in 2020 as a result of the action committed to in the fourth quarter of 2019.

The increase to interest income in 2018 as compared to 2017 was primarily the result of increased cash, cash equivalents and marketable securities balances as a result of our May 2018 issuance of $1,150.0 million in par value of convertible senior notes due 2025.

Other (expense) income, net also includes gains and losses from certain equity investments.

The decrease in the provision for income taxes for 2018 as compared to 2017 was mainly due to the reduction in the U.S. federal statutory tax rate from 35.0% to 21.0% as part of the U.S. Tax Cuts and Jobs Act, or TCJA, that was enacted in December 2017, an increase in the excess tax benefit related to stock-based compensation and the net impact of the TCJA recorded in 2017.

These amounts were partially offset by an intercompany sale of intellectual property and an increase in non-deductible executive compensation.

These amounts were partially offset by a provisional charge for the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings taken as part of the TCJA, the effects of stock-based compensation in accordance with authoritative guidance for share-based payments and state income taxes.

We recorded a loss of $1.1 million dollars which reflects our share of the losses incurred by GO-NET.

| • | Amortization of debt discount and issuance costs and amortization of capitalized interest expense – In August 2019, we issued $1,150 million of convertible senior notes due 2027 with a coupon interest rate of 0.375%. In May 2018, we issued $1,150 million of convertible senior notes due 2025 with a coupon interest rate of 0.125%. In February 2014, we issued $690 million of convertible senior notes due 2019 with a coupon interest rate of 0%. The imputed interest rates of these convertible senior notes were 3.10%, 4.26% and 3.20%, respectively. This is a result of the debt discounts recorded for the conversion features that are required to be separately accounted for as equity under GAAP, thereby reducing the carrying values of the convertible debt instruments. The debt discounts are amortized as interest expense together with the issuance costs of the debt. The interest expense excluded from our non-GAAP results is comprised of these non-cash components and is excluded from management's assessment of our operating performance because management believes the non-cash expense is not representative of ongoing operating performance. |

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Our portfolio of cash equivalents and short- and long-term investments is maintained in a variety of securities, including U.S. government agency obligations, high-quality corporate debt securities, commercial paper, mutual [removed: funds and] [added: funds,] money market [removed: funds.][added: funds and municipal securities.]

Changes in the fair value of these derivatives, as well as re-measurement gains and losses, are recognized in our consolidated statements of income within other [removed: (expense) income,] [added: expense,] net.

Foreign currency transaction gains and losses from these forward contracts were determined to be immaterial during the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017.][added: 2018.]

As of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] no customer had an accounts receivable balance of 10% or more of our accounts receivable.

We believe that at December 31, [removed: 2019,] [added: 2020,] the concentration of credit risk related to accounts receivable was insignificant.

Akamai provides solutions for [removed: securing, delivering] [added: securing] and [removed: optimizing] [added: delivering] content and business applications over the [removed: Internet.][added: internet.]

We deploy servers and technology at the “edge” of the [removed: Internet] [added: internet] – establishing touch points on its perimeter in more than 130 countries and nearly [removed: 1,500] [added: 1,400] networks around the world.

This approach affords us unique insight and visibility into traffic volumes, [added: congestion,] attack patterns, vulnerabilities and other activities across this complex cloud of networks and systems.

Leveraging these insights and our position at the edge, we offer our customers solutions designed to protect them from threats and attacks, while empowering them to securely deliver their business as they engage, entertain and interact with their customers; extend their internal systems beyond their corporate perimeters to control access and better leverage the cloud; and help them [added: compete and] operate with the scale, [removed: resiliency] [added: resilience] and security [removed: competitiveness] [added: that] businesses demand.

[removed: We believe that the edge] [added: Our strategy] is [added: to meet] the [removed: next frontier] [added: needs] of [removed: digital] [added: this] transformation [removed: – the intersection of users, digital technology and transactions, cloud computing and entertainment – and that our] [added: by offering] security, performance and delivery solutions [removed: can] [added: that] give our customers the competitive edge they [removed: need to capitalize on the opportunities this intersection creates.][added: need.]

[removed: Security] [added: At the same time, security] threats [removed: are growing] [added: have continued to grow] more sinister and advanced.

[added: Our platform is deployed across] approximately [removed: 3,900] [added: 4,100] locations around the world, tied together with sophisticated software and algorithms.

- help our [removed: customer] [added: customers] implement a [removed: Zero Trust] [added: zero trust] security model as described below;

- understand different types of traffic visiting websites so that customers can respond to [removed: them.][added: it.]

We believe that our scale, unique technology, [removed: high-quality intellectual property portfolio,] [added: highly-skilled workforce,] industry-leading security capabilities, strong relationships with [removed: hundreds of leading telecommunications carriers and] thousands of major brands [removed: on the web,] and relentless and personalized attention to customer and partner needs create significant value for [removed: stockholders and] [added: stockholders,] provide a meaningful [removed: edge] [added: advantage] over [removed: competitors.][added: competitors and position us well for the future.]

*Cloud [removed: Security Solutions*][added: and Enterprise Security*]

*Web and Mobile [removed: Performance Solutions*][added: Performance*]

[removed: The ultimate goal of our Web] [added: Our web] and [removed: Mobile Performance Solutions is] [added: mobile performance solutions are architected] to enable dynamic websites and applications to have [removed: instant] [added: rapid] response times, no matter where the user is, what device or browser they are [removed: using,] [added: using] or how they are connected to the [removed: Internet.][added: internet.]

*Media [removed: Delivery Solutions*][added: Delivery*]

[removed: Our Media Delivery Solutions] [added: Akamai’s media delivery solutions] are designed to enable enterprises to execute their digital media distribution [removed: strategies, not only] [added: strategies] by [removed: providing solutions to address their] [added: addressing] volume and global reach [removed: requirements but also by] [added: requirements,] improving the end-user experience, boosting reliability and reducing the cost of [removed: Internet-related] [added: internet-related] infrastructure.

[removed: *Carrier Solutions*][added: *Carrier*]

[removed: To address these needs, our] [added: Akamai’s] carrier offerings are designed to help customers operate a cost-efficient network that capitalizes on traffic growth and new subscriber services [removed: by reducing the complexity of building a content delivery network, or CDN,] [added: for security, traffic management] and [removed: interconnecting access providers.][added: content delivery.]

*Services and [removed: Support Solutions*][added: Support*]

[removed: Akamai provides] [added: We provide] an array of service and support offerings [removed: that are] designed to assist [removed: our] customers with integrating, configuring, optimizing and managing our core offerings.

Once customers are deployed on [removed: our network,] [added: the Akamai Intelligent Edge Platform,] they can rely on our professional services [added: and security] experts for customized solutions, problem resolution and 24/7 [removed: technical] [added: customer] support.

[removed: Special] [added: Additional] features [added: are] available to enterprises that purchase our premium [removed: support solution include] [added: and managed security solutions including] a dedicated technical account team, proactive service monitoring, custom technical support [removed: handling procedures] [added: handling, security traffic monitoring, technical security reviews, threat advisories] and [removed: customized training.][added: emergency support for security events.]

The Akamai Intelligent Edge Platform leverages more than [removed: 250,000] [added: 325,000] servers deployed in [removed: nearly 1,500] [added: more than 1,400] networks ranging from large, backbone network providers to medium and small [removed: Internet] [added: internet] service providers, or ISPs, to cable modem and satellite providers to universities and other networks.

Customers can control the extent of their use of [removed: Akamai 's] [added: Akamai's] technology to scale on demand, using as much or as little capacity of the global platform as they require, to support widely varying traffic and rapid growth without the need for expensive and complex internal infrastructure.

As of December 31, [removed: 2019,] [added: 2020,] our customers included many of the world's leading corporations, including Adobe, Airbnb, Alibaba, Autodesk, Capital Group, Carnival Corporation, The Coca-Cola Company, [added: Comcast,] Concur, Crate & Barrel, eBay, Electronic Arts, Epic Games, FedEx, Fidelity Investments, General Electric, Honda, IKEA, Japan Airlines, [removed: JetBlue,] Lufthansa, Maersk Transportation & Logistics, Marriott, NBCUniversal, Panasonic, Panera Bread, PayPal, Philips, Qualcomm, Rabobank, Riot Games, Sony Interactive Entertainment, Spotify, Telefonica, Toshiba, [removed: Turner Broadcasting,] Ubisoft, [removed: Viacom] [added: Viacom, WarnerMedia] and The Washington Post.

As of December 31, [removed: 2019,] [added: 2020,] our public-sector customers included the [removed: Federal Aviation Administration, the] U.S. Census Bureau, the U.S. Department of Defense, the U.S. Department of Labor, the U.S. Department of [removed: State] [added: State, the U.S. Department of Transportation] and the U.S. Department of the Treasury.

No customer accounted for 10% or more of total revenue for any of the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017.][added: 2018.]

Less than 10% of our total revenue in each of the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] was derived from contracts or subcontracts terminable at the election of the federal government, and we do not expect such contracts to account for more than 10% of our total revenue in [removed: 2020.][added: 2021.]

Our marketing strategies include an active public relations campaign, print advertisements, online advertisements, participation at trade [removed: shows,] [added: shows (virtually or in person),] strategic alliances, ongoing customer communication programs, training and sales support.

[removed: | • |] [added: -] the performance and reliability of our solutions; [removed: |]

[removed: | • |] [added: -] return on investment in terms of cost savings and new revenue opportunities for our customers; [removed: |]

[removed: | • |] [added: -] reduced infrastructure complexity; [removed: |]

[removed: | • |] [added: -] sophistication and functionality of our offerings; [removed: |]

[removed: | • |] [added: -] scalability; [removed: |]

[removed: | • |] [added: -] security; [removed: |]

[removed: | • |] [added: -] ease of implementation and use of service; [removed: |]

[removed: | • |] [added: -] customer support; and [removed: |]

As of December 31, [removed: 2019,] [added: 2020,] we owned, or had exclusive rights to, [removed: more than 416] [added: nearly 500] U.S. patents covering our technology as well as patents issued by other countries.

Our U.S.-issued patents have terms extendable to various dates between [removed: 2020] [added: 2021] and 2039.

[added: We seek to limit disclosure of our intellectual] property by requiring employees and consultants with access to our proprietary information to execute confidentiality agreements with us and by restricting access to our source code.

The COVID-19 pandemic, which has caused global disruption over the last year, has reinforced our belief in the internet’s vital role in transforming the way we exchange ideas and information and conduct business.

Across the world, there has been a shift to remote work that must be done securely and reliably.

Media consumption over the internet – movies, TV shows and games – has dramatically increased.

These trends are not new; while they may have been accelerated by the global health crisis, it is our view that the internet will play an increasingly important role in our lives going forward.

The Akamai Intelligent Edge Platform is central to our approach; positioning us at the edge of the internet for more than 20 years.

Through this uniquely pervasive presence at the edge, we bring applications, experiences and business decisions closer to users — and help keep attacks and threats away.

We believe the strategic proximity enabled by this distributed approach makes us well situated to empower our customers to cost effectively deliver superior user experiences that are interactive, rich and secure.

More specifically, key features of the platform include capabilities to:

Akamai’s cloud and enterprise security solutions are designed to keep infrastructure, websites, applications, application programming interfaces, or APIs, and users safe from a multitude of cyberattacks and online threats while improving performance.

Our solutions provide customizable protections for organizations that are seeking more control over their web and application security as well as easy-to-implement solutions for organizations without robust expertise.

We also offer frameworks and tools to enable new models for remote corporate access to replace the traditional virtual private network (VPN) approach and facilitate users and devices safely connecting to the internet; in particular, we enable a “zero trust” approach to network security that specifies, on an application by application basis, which users and devices can access applications and data.

With zero trust, enterprises can proactively identify, block and mitigate threats including malware, ransomware and phishing attacks.

Additional Akamai security capabilities include API security, credential abuse mitigation, protection against distributed denial of service, or DDoS, attacks, identity management, in-browser threat protection, web application firewall and secure web gateway.

We intend to focus much of our investment in innovation on security solutions, which we believe present revenue growth opportunities.

These services leverage intelligent performance optimization and real-time monitoring, origin offload and network reliability, and insights that enable enterprises to identify and address performance issues.

Akamai web and mobile performance capabilities also include global traffic management, site acceleration, application load balancing, automated image and video optimization, large-scale load testing and real-user monitoring.

Underlying these solutions is technology to address variable connection speeds and device types, facilitate access to disparate locations around the world, accelerate large file downloads, reliably deliver high-quality live content across various devices and platforms, enable comprehensive insights and real-time online video monitoring, and offer globally-distributed cloud storage designed for resiliency, high-availability and real-time performance optimization.

Akamai media delivery solutions include video streaming and video player services, game and software delivery, broadcast operations, authoritative domain name system, or DNS, resolution, and data and analytics.

*Edge Compute*

Our edge compute capabilities are designed to enable developers to deploy and distribute code at the edge.

This approach brings data and decision-making closer to the users and systems that act upon them so teams can rapidly iterate on existing capabilities to meet changing customer needs and build low latency solutions that provide fast, responsive and personalized experiences.

With access to the Akamai Intelligent Edge Platform, enterprises and developers gain rapid deployment and global scale without managing any additional internal infrastructure.

Our solutions help carriers sell easy-to-deploy cyberthreat protection offerings to their subscriber base; offerings include protection from phishing, viruses, malware and ransomware.

Additionally, our carrier security solutions include parental controls to tailor internet access.

We also offer DNS infrastructure and content delivery solutions for carriers through our intelligent recursive DNS offering and managed content delivery network, which has dedicated servers for the carriers’ own services with Akamai providing content provisioning, delivery and reporting.

Human Capital

Our employees – our human capital – are our most valuable assets as they are fundamental to our innovation, the operation and ongoing enhancement of the Akamai Intelligent Edge Platform, the fostering and maintenance of relationships with our customers and the management of our operations.

The importance of our workforce to our success is underscored by centering two of our 2020 corporate mission critical goals on our employees: (1) making Akamai a globally diverse, inclusive and great place to work and (2) delivering a superior end-to-end employee experience through the modernization and improvement of our technologies.

Different aspects of our human capital management are overseen by our board of directors as well as its Talent, Leadership & Compensation and Environmental, Social & Governance Committees.

As of December 31, 2020, we had 8,368 employees worldwide, located in more than 30 countries and representing over 85 nationalities, which we believe helps bring a global perspective to our operations.

Our employees are grouped across the following roles, with the approximate percentage of the overall population noted: engineering and research and development (29%), services and support (28%), sales and marketing (23%) and administrative functions (20%).

Akamai’s focus on the development of our human capital is reflected in our approach to engagement, compensation and benefits, training and development and health and safety procedures.

Across these areas, we emphasize maintaining a corporate culture rooted in meritocracy — recognizing and rewarding individuals who bring innovation, creativity, diligence, intelligence, diverse ideas and positive perspectives to their work.

It is our belief that an engaged employee base is key to having the productive, ethical and inclusive workplace needed to successfully compete in today’s marketplace.

We regularly conduct surveys of our employees to assess engagement and job satisfaction.

Results from these surveys have consistently shown a strong sense of engagement and confidence in Akamai's future; scoring us in the top 20% of top-performing companies in the comparative index used by our third-party survey provider, a nationally-recognized consulting firm specializing in corporate culture.

We have been acknowledged in respected publications across the U.S., India and Poland as a great place to work.

Our leadership believes that one of the keys to fostering employee inclusion and engagement is through communication.

This approach was amplified in 2020 because of the COVID-19 pandemic.

Our Chief Executive Officer conducted more than 70 employee town halls and all hands meetings (most of which were virtual), and our Chief Human Resources Officer provided weekly updates on pandemic-related developments and available resources to assist employees.

The technology landscape is rapidly evolving, driving businesses to enhance their digital capabilities to improve productivity, transform customer experiences, increase brand awareness and drive competitive advantage.

The network known as the Internet of Things, or IoT, is now connecting billions of devices that transmit large volumes of data from and within offices, hospitals, manufacturing plants, power grids, roads, schools and homes every second.

We believe that new technologies like blockchain are emerging that promise to surpass the ability of current methods to process transactions more quickly and deliver data and content more securely.

In addition, organizations seeking streamlined operations, digital transformation and improved cost management are increasing their reliance on servers and networks comprising the “cloud” based on the promise of agility and scale – a promise that has not always been realized.

At the same time, there are challenges and risks that have the potential to disrupt progress in every industry, compromise online experiences, and, in the most extreme cases, destroy value that took decades to build.

Enterprise applications are moving from behind the firewall to the cloud while employees increasingly demand remote access from a variety of devices – which we believe makes securing access harder to achieve with just traditional perimeter defenses.

More consumers are "cutting the cord" and consuming entertainment over the Internet rather than through traditional cable, and they are increasingly using mobile devices to view content and shop.

Web pages are also vastly more complex than ever before with advertisements, videos, graphics and other third-party content, causing speed and reliability to suffer.

We believe that Akamai is uniquely positioned to help our customers capitalize on the opportunities and mitigate the risks presented by this dynamic environment.

The Akamai Intelligent Edge Platform is architected to surround and extend a customer’s existing cloud architecture, so it can accelerate and secure cloud-based activities and workloads on a global scale, while also improving reliability and reducing cost.

Our platform comprises more than 250,000 servers deployed in

Our software also resides on millions of end-user devices, as part of our work on client-assisted delivery for large media files.

By placing integrated computing resources, data, content and security protection closer to end-users, at the edge, our technology is designed to extend our customers’ existing cloud solutions to deliver superior user experiences that are bi-directional, instantaneous, rich and secure.

The platform is also architected to enable us to:

We offer online solutions for the security, delivery and acceleration of websites and applications.

Our customers include a large percentage of the world’s most important brands, including hundreds of media companies, online retailers, major governments, financial institutions and other leading enterprises.

Across all of these customers, our mission is to make digital experiences fast, intelligent and secure.

Our Cloud Security Solutions are designed to defend websites, applications and data centers against a multitude of cyberattacks.

These solutions include:

- Kona Site Defender – Kona Site Defender is a cloud security solution that defends against network and application layer distributed denial of service, or DDoS, attacks, web application attacks and direct-to-origin attacks.

This offering provides customizable protection for enterprises that want more control over their application security.

- Web Application Protector – Web Application Protector is designed to safeguard web assets from web application and DDoS attacks, while improving performance.

This offering provides easy-to-implement application security for organizations that do not have robust security teams or expertise.

- Site Shield – Site Shield provides an additional layer of defense for critical websites and web applications.

Site Shield is designed to cloak websites from the public Internet, essentially removing them from Internet-accessible IP address space.

This helps prevent attackers from directly targeting the application origin and forces traffic to go through our network, where attacks can be better detected and mitigated.

- Bot Manager – Bot Manager provides organizations with a flexible framework to better manage the wide array of bots, both helpful and malicious, accessing their websites.

It offers the ability to identify bots, categorize different bots based on business or IT impact, and apply different management policies to mitigate that impact.

- Edge DNS – The Domain Name System, or DNS, translates human-readable domain names into numerical IP addresses to enable individuals who type in a website name to reach the desired location on the Internet.

Our Edge DNS (formerly known as Fast DNS) offering is a DNS resolution solution that is designed to quickly and dependably direct individuals to our customers' websites.

Crucially, we have architected this service to protect against DNS-based DDoS attacks.

- Identity Cloud – In January 2019, we purchased Janrain, Inc., a provider of customer identity access management solutions.

Leveraging the technology we acquired, our Identity Cloud solution enables fast-to-deploy single sign-on (SSO), registration, authentication and preference management.

It also enables centralized profile access management that is designed to facilitate our customers’ compliance with the myriad and changing privacy-related regulatory requirements around the world.

- Prolexic Routed – Prolexic Routed is a DDoS scrubbing solution that is designed to protect web- and IP-based applications, entire data centers and supporting network infrastructure from DDoS attacks.

It provides cloud-based security against high-bandwidth, sustained DDoS attacks as well as potentially those that target specific applications and services.

- Client Reputation – Client Reputation provides an additional layer of security based on Akamai’s visibility into prior malicious behavior on the Akamai network.

Our algorithms use both legitimate and attack traffic to profile the behavior of attacks, clients and applications.

Client Reputation assigns risk scores to every known malicious IP address and enables customers to take action on individual clients based on the assessed risk to their organizations.

*Enterprise Security Solutions*

[removed: FORM 10-K][added: FORM 10-K]

| ☑ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year ended December 31, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission file [removed: number: 0-27275][added: number: 0-27275]

| Delaware | | [added: | | | |] 04-3432319 | [added: | |]

| (State or other jurisdiction of incorporation or organization) | | [added: | | | |] (I.R.S. Employer Identification No.) | [added: | |]

[removed: Cambridge, Massachusetts 02142][added: Cambridge, Massachusetts 02142]

Registrant’s telephone number, including area code: [removed: (617) 444-3000][added: (617) 444-3000]

| Title of each class | [added: | |] Trading Symbol(s) | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock - par value $0.01 per share | [added: | |] AKAM | [added: | |] Nasdaq Global Select Market | [added: | |]

| Large accelerated filer | [added: | |] ☑ | [added: | |] Accelerated filer | [added: | |] ☐ | [added: | |] Non-accelerated filer | [added: | |] ☐ | [added: | |] Smaller reporting company | [added: | |] ☐ | [added: | |] Emerging growth company | [added: | |] ☐ | [added: | |]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately [removed: $12,819.9] [added: $17,181.1] million based on the last reported sale price of the Common Stock on the Nasdaq Global Select Market on June [removed: 28, 2019.][added: 30, 2020.]

The number of shares outstanding of the registrant’s Common Stock, par value $0.01 per share, as of February [removed: 25, 2020: 161,881,857] [added: 23, 2021: 163,220,270] shares.

Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission relative to the registrant’s [removed: 2020] [added: 2021] Annual Meeting of Stockholders are incorporated by reference into Items 10, 11, 12, 13 and 14 of Part III of this annual report on Form 10-K.

FOR THE FISCAL YEAR [removed: ENDED DECEMBER] [added: ENDED DECEMBER] 31, [removed: 2019][added: 2020]

| PART I | | | [added: | | | | | |]

| Item 1. | [removed: [Business](#s2FC106497C3E52B58D168310557331BC)] | [removed: [3](#s2FC106497C3E52B58D168310557331BC)] | [added: [Business](#i54c4913552c74068a75ac882a7bb8adb_13) | | | [4](#i54c4913552c74068a75ac882a7bb8adb_13) | | |]

| Item 1A. | [added: | |] [Risk [removed: Factors](#sD20532FD246155CAA9C74E44063D1912)] [added: Factors](#i54c4913552c74068a75ac882a7bb8adb_16)] | [removed: [9](#sD20532FD246155CAA9C74E44063D1912)] | [added: | [10](#i54c4913552c74068a75ac882a7bb8adb_16) | | |]

| Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#sF47A19EDBFA051E8A896253A7A9FA876)] [added: Comments](#i54c4913552c74068a75ac882a7bb8adb_19)] | [removed: [20](#sF47A19EDBFA051E8A896253A7A9FA876)] | [added: | [21](#i54c4913552c74068a75ac882a7bb8adb_19) | | |]

| Item 2. | [removed: [Properties](#s403117EC26E651DC930C9B8E924E71B2)] | [removed: [20](#s403117EC26E651DC930C9B8E924E71B2)] | [added: [Properties](#i54c4913552c74068a75ac882a7bb8adb_22) | | | [21](#i54c4913552c74068a75ac882a7bb8adb_22) | | |]

| Item 3. | [added: | |] [Legal [removed: Proceedings](#sD08ECDFB7E735C8AAA151E21313032FC)] [added: Proceedings](#i54c4913552c74068a75ac882a7bb8adb_25)] | [removed: [20](#sD08ECDFB7E735C8AAA151E21313032FC)] | [added: | [22](#i54c4913552c74068a75ac882a7bb8adb_25) | | |]

| Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#sC67F9FF9AE805F3AA9D8255662B41C3B)] [added: Disclosures](#i54c4913552c74068a75ac882a7bb8adb_28)] | [removed: [20](#sC67F9FF9AE805F3AA9D8255662B41C3B)] | [added: | [22](#i54c4913552c74068a75ac882a7bb8adb_28) | | |]

| PART II | | | [added: | | | | | |]

| Item 5. | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s96151568067051B796CFEA20C6A8E40A)] [added: Securities](#i54c4913552c74068a75ac882a7bb8adb_34)] | [removed: [20](#s96151568067051B796CFEA20C6A8E40A)] | [added: | [22](#i54c4913552c74068a75ac882a7bb8adb_34) | | |]

| Item 6. | [added: | |] [Selected Financial [removed: Data](#sE8489DCB33E45ED2AA4961AECF69E51F)] [added: Data](#i54c4913552c74068a75ac882a7bb8adb_37)] | [removed: [21](#sE8489DCB33E45ED2AA4961AECF69E51F)] | [added: | [23](#i54c4913552c74068a75ac882a7bb8adb_37) | | |]

| Item 7. | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sC8E86D0D6F425EE69AADA1403327C98D)] [added: Operations](#i54c4913552c74068a75ac882a7bb8adb_40)] | [removed: [21](#sC8E86D0D6F425EE69AADA1403327C98D)] | [added: | [23](#i54c4913552c74068a75ac882a7bb8adb_40) | | |]

| Item 7A. | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sDE83579761C955638878A0CDD1EE2568)] [added: Risk](#i54c4913552c74068a75ac882a7bb8adb_58)] | [removed: [42](#sDE83579761C955638878A0CDD1EE2568)] | [added: | [45](#i54c4913552c74068a75ac882a7bb8adb_58) | | |]

| Item 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#s349DC511C1AD5552B9934EE9B3A5FB19)] [added: Data](#i54c4913552c74068a75ac882a7bb8adb_61)] | [removed: [44](#s349DC511C1AD5552B9934EE9B3A5FB19)] | [added: | [46](#i54c4913552c74068a75ac882a7bb8adb_61) | | |]

| Item 9. | [added: | |] [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s43CC6A996FF05A3D9298F6D27E89EF64)] [added: Disclosure](#i54c4913552c74068a75ac882a7bb8adb_187)] | [removed: [87](#s43CC6A996FF05A3D9298F6D27E89EF64)] | [added: | [89](#i54c4913552c74068a75ac882a7bb8adb_187) | | |]

| Item 9A. | [added: | |] [Controls and [removed: Procedures](#sDABB2686581A5D34AE84538FE4E0AE55)] [added: Procedures](#i54c4913552c74068a75ac882a7bb8adb_190)] | [removed: [87](#sDABB2686581A5D34AE84538FE4E0AE55)] | [added: | [89](#i54c4913552c74068a75ac882a7bb8adb_190) | | |]

| Item 9B. | [added: | |] [Other [removed: Information](#sC714244968D95082AA74A24ABEFAFF94)] [added: Information](#i54c4913552c74068a75ac882a7bb8adb_193)] | [removed: [88](#sC714244968D95082AA74A24ABEFAFF94)] | [added: | [90](#i54c4913552c74068a75ac882a7bb8adb_193) | | |]

| PART III | | | [added: | | | | | |]

| Item 10. | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#sBFCC166370135FACB7CC1228DA9A2974)] [added: Governance](#i54c4913552c74068a75ac882a7bb8adb_199)] | [removed: [88](#sBFCC166370135FACB7CC1228DA9A2974)] | [added: | [90](#i54c4913552c74068a75ac882a7bb8adb_199) | | |]

| Item 11. | [added: | |] [Executive [removed: Compensation](#sD6DAAAEA7AF75719B58E6F91E84A4B7D)] [added: Compensation](#i54c4913552c74068a75ac882a7bb8adb_202)] | [removed: [88](#sD6DAAAEA7AF75719B58E6F91E84A4B7D)] | [added: | [90](#i54c4913552c74068a75ac882a7bb8adb_202) | | |]

| Item 12. | [added: | |] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s99BF0729814653E785ADE5386F934C7A)] [added: Matters](#i54c4913552c74068a75ac882a7bb8adb_205)] | [removed: [89](#s99BF0729814653E785ADE5386F934C7A)] | [added: | [91](#i54c4913552c74068a75ac882a7bb8adb_205) | | |]

| Item 13. | [added: | |] [Certain Relationships and Related Transactions, and Director [removed: Independence](#s62C5625F19F65FAD85625B0BBC890F80)] [added: Independence](#i54c4913552c74068a75ac882a7bb8adb_208)] | [removed: [89](#s62C5625F19F65FAD85625B0BBC890F80)] | [added: | [91](#i54c4913552c74068a75ac882a7bb8adb_208) | | |]

| Item 14. | [added: | |] [Principal Accounting Fees and [removed: Services](#sFE1571EA1E3650AFB0BDAC1B6CB905AC)] [added: Services](#i54c4913552c74068a75ac882a7bb8adb_211)] | [removed: [89](#sFE1571EA1E3650AFB0BDAC1B6CB905AC)] | [added: | [91](#i54c4913552c74068a75ac882a7bb8adb_211) | | |]

| PART IV | | | [added: | | | | | |]

| Item 15. | [added: | |] [Exhibits, Financial Statement [removed: Schedules](#s5808475ADF375C46950BABCB4D41257E)] [added: Schedules](#i54c4913552c74068a75ac882a7bb8adb_217)] | [removed: [89](#s5808475ADF375C46950BABCB4D41257E)] | [added: | [91](#i54c4913552c74068a75ac882a7bb8adb_217) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of

the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.

7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| [SIGNATURES](#i54c4913552c74068a75ac882a7bb8adb_223) | | | | | | [95](#i54c4913552c74068a75ac882a7bb8adb_223) | | |

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| [SIGNATURES](#s4EA1BDBA11BF5005A05C6267D1D07038) | | [93](#s4EA1BDBA11BF5005A05C6267D1D07038) |

Our headquarters is located in Cambridge, Massachusetts where we lease approximately [removed: 653,000] [added: 659,000] square feet.

As of February [removed: 25, 2020,] [added: 23, 2021,] there were [removed: 218] [added: 200] holders of record of our common stock.

The following is a summary of our repurchases of our common stock in the fourth quarter of [removed: 2019] [added: 2020] (in thousands, except share and per share data):

| Period(1) | | [added: | | | |] Total Number of Shares Purchased(2) | | | [added: | | |] Average Price Paid per Share(3) | | | | [added: | |] Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(4) | | | [added: | | |] Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs(4) | | |

[removed: | (1) | Information] [added: (1)Information] is based on settlement dates of repurchase transactions. [removed: |]

[removed: | (2) | Consists] [added: (2)Consists] of shares of our common stock, par value $0.01 per share. [removed: |]

[removed: | (3) | Includes] [added: (3)Includes] commissions paid. [removed: |]

[removed: | (4) | Effective] [added: (4)Effective] November 2018, the Board authorized a $1.1 billion repurchase program through December 2021. [removed: |]

During the year ended December 31, [removed: 2019,] [added: 2020,] we repurchased [removed: 4.0] [added: 2.0] million shares of our common stock for an aggregate of [removed: $334.5] [added: $193.6] million.

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| October 1, 2020 – October 31, 2020 | | | | | | 76,169 | | | | | | $ | 109.16 | | | | | 76,169 | | | | | | $ | 636,088 | |

| November 1, 2020 – November 30, 2020 | | | | | | 303,703 | | | | | | 100.18 | | | | | | 303,703 | | | | | | 605,664 | | |

| December 1, 2020 – December 31, 2020 | | | | | | 321,946 | | | | | | 104.90 | | | | | | 321,946 | | | | | | 571,892 | | |

| Total | | | | | | 701,818 | | | | | | $ | 103.32 | | | | | 701,818 | | | | | | $ | 571,892 | |

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| October 1, 2019 – October 31, 2019 | | 227,274 | | | $ | 90.24 | | | 227,274 | | | $ | 787,703 | |

| November 1, 2019 – November 30, 2019 | | 232,835 | | | 86.88 | | | | 232,835 | | | 767,475 | | |

| December 1, 2019 – December 31, 2019 | | 22,818 | | | 87.39 | | | | 22,818 | | | 765,481 | | |

| Total | | 482,927 | | | $ | 88.48 | | | 482,927 | | | $ | 765,481 | |

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| Year ended December 31, | | [added: | | | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| Revenue | | [added: | | | |] $ | [removed: 2,893,617] [added: 3,198,149] | | | [added: | |] $ | [removed: 2,714,474] [added: 2,893,617] | | | [added: | |] $ | [removed: 2,489,035] [added: 2,714,474] | | | [added: | |] $ | [removed: 2,347,988] [added: 2,489,035] | | | [added: | |] $ | [removed: 2,197,448] [added: 2,347,988] | |

| Total costs and operating expenses | | [added: | | | | 2,539,615 | | | | | |] 2,344,699 | | | | [added: | |] 2,351,975 | | | | [removed: 2,174,746] | | [added: 2,174,746] | | [removed: 1,881,478] | | | | [removed: 1,731,298] [added: 1,881,478] | | |

| Income from operations | | [added: | | | | 658,534 | | | | | |] 548,918 | | | | [added: | |] 362,499 | | | | [removed: 314,289] | | [added: 314,289] | | [removed: 466,510] | | | | [removed: 466,150] [added: 466,510] | | |

| Net income | | [added: | | | | 557,054 | | | | | |] 478,035 | | | | [added: | |] 298,373 | | | | [removed: 222,766] | | [added: 222,766] | | [removed: 320,727] | | | | [removed: 321,406] [added: 320,727] | | |

| Basic net income per share | | [added: | | | | 3.43 | | | | | |] 2.94 | | | | [added: | |] 1.78 | | | | [removed: 1.30] | | [added: 1.30] | | [removed: 1.83] | | | | [removed: 1.80] [added: 1.83] | | |

| Diluted net income per share | | [added: | | | | 3.37 | | | | | |] 2.90 | | | | [added: | |] 1.76 | | | | [removed: 1.29] | | [added: 1.29] | | [removed: 1.82] | | | | [removed: 1.78] [added: 1.82] | | |

| Cash, cash equivalents and marketable securities | | [added: | | | | 2,496,875 | | | | | |] 2,372,378 | | | | [added: | |] 2,101,171 | | | | [removed: 1,279,528] | | [added: 1,279,528] | | [removed: 1,616,329] | | | | [removed: 1,524,235] [added: 1,616,329] | | |

| Total assets | | [added: | | | | 7,764,130 | | | | | |] 7,006,886 | | | | [added: | |] 5,461,770 | | | | [removed: 4,648,916] | | [added: 4,648,916] | | [removed: 4,432,190] | | | | [removed: 4,181,684] [added: 4,432,190] | | |

| Convertible senior notes – [removed: Due] [added: due] 2019 | | [added: | | | |] — | | | | [added: | | — | | | | | |] 686,552 | | | | [removed: 662,913] | | [added: 662,913] | | [removed: 640,087] | | | | [removed: 624,288] [added: 640,087] | | |

| Convertible senior notes – [removed: Due] [added: due] 2025 | | [added: | | | | 953,066 | | | | | |] 912,719 | | | | [removed: 874,080] | | [added: 874,080] | | [removed: —] | | | | — | | | | [added: | |] — | | |

| Convertible senior notes – [removed: Due] [added: due] 2027 | | [removed: 927,072] | | | | [removed: —] [added: 953,641] | | | | [added: | | 927,072 | | | | | |] — | | | | [added: | |] — | | | | [added: | |] — | | |

| Long-term operating lease liabilities | | [added: | | | | 715,404 | | | | | |] 692,181 | | | | [removed: —] | | | | [removed: —] | | | | [removed: —] | | | | [removed: —] | | | [added: | |]

| Other long-term liabilities | | [added: | | | | 132,553 | | | | | |] 123,620 | | | | [added: | |] 185,121 | | | | [removed: 166,840] | | [added: 166,840] | | [removed: 156,329] | | | | [removed: 110,319] [added: 156,329] | | |

| Total stockholders’ equity | | [added: | | | | 4,251,296 | | | | | |] 3,657,958 | | | | [added: | |] 3,191,860 | | | | [removed: 3,362,469] | | [added: 3,362,469] | | [removed: 3,270,218] | | | | [removed: 3,120,848] [added: 3,270,218] | | |

Accordingly, assets arising from leases are presented above in [removed: Total] [added: total] assets in [added: 2020 and] 2019 only.

In addition, liabilities arising from leases are presented in [removed: Operating] [added: operating] lease liabilities in [added: 2020 and] 2019 only.

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See Note 2 to our consolidated financial statements included elsewhere in this annual report on Form 10-K for more details regarding new accounting pronouncements.

Prior period information as of and for the years ended December 31, 2017 and 2016 has been restated for the adoption of the new accounting standard for revenue recognition, which we adopted on January 1, 2018.

Under this standard, the way revenue is recognized changed for some of our contracts with customers and primarily impacts the timing of recognizing revenue from a small number of licensed software customers.

As a result of the new standard we also began capitalizing certain commission and incentive payments.

The financial data as of and for the year ended December 31, 2015 has not been restated for the new accounting standard.

We have audited the accompanying consolidated balance sheets of Akamai Technologies, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the related consolidated statements of income, [added: of] comprehensive income, [added: of] stockholders’ [removed: equity,] [added: equity] and [added: of] cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2019] [added: 2020] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and [removed: that:] [added: that] (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The appeal hearing was held in late [removed: 2019 and the Company awaits the judge’s determination.][added: 2019.]

However, over the next 12 months, management's current assumptions and positions could change based on [removed: audit determinations] [added: potential appeal decisions] and other events impacting [removed: management’s] [added: its] analysis.

Management has estimated that an adverse ruling related to the Massachusetts controversy could result in a gross income tax charge of approximately [removed: $35.0] [added: $41.0] million, which could be partially offset by certain state tax credits of [removed: $25.0] [added: $27.0] million which are not currently benefited as a result of the Company’s valuation allowance assessment.

The principal considerations for our determination that performing procedures related to the Massachusetts [removed: Appellate Tax Board appeal] [added: tax litigation matter] is a critical audit matter are [removed: there was] [added: (i) the] significant judgment by management when determining the Company’s uncertain tax position relative to the Massachusetts [removed: Appellate Tax Board appeal,] [added: tax litigation matter,] including a high degree of estimation uncertainty relative to numerous and complex tax laws and assessment of judicial [removed: precedent.][added: precedent; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate management’s judgments; (iii) the evaluation of audit evidence available to support the Massachusetts tax litigation matter is complex and resulted in significant auditor judgment as the nature of the evidence is often highly subjective; and (iv) the audit effort involved the use of professionals with specialized skill and knowledge.]

These procedures included testing the effectiveness of controls relating to the Company’s identification and recognition of the liability for uncertain tax positions, [removed: including] controls over the evaluation of the technical merits of the Company’s [removed: appeal] [added: assessment] and evaluation of numerous and complex tax laws and judicial precedent relevant to the [removed: appeal.][added: matter.]

These procedures also included, among others, [removed: 1)] [added: (i)] evaluating the reasonableness of management’s assessment that it is more-likely-than-not the Company will prevail in the Massachusetts [removed: Appellate Tax Board] [added: tax litigation] matter, including the potential for an unfavorable outcome of the [removed: appeal,] [added: matter,] and [removed: 2)] [added: (ii)] professionals with specialized skill and knowledge were used to assist in the evaluation of management’s assessment of the technical merits of the tax position, including evaluating the reasonableness of management’s assessment of whether the tax position is [removed: more-likely-than not] [added: more-likely-than-not] of being sustained and the application of relevant tax laws and assessment of the judicial precedent.

| *(in thousands, except share data)* | [added: | |] December 31, [removed: 2019] [added: 2020] | | | | [added: | |] December 31, [removed: 2018] [added: 2019] | | |

| ASSETS | | | | | | | | [added: | | | |]

| Current assets: | | | | | | | | [added: | | | |]

| Cash and cash equivalents | [added: | |] $ | [added: 352,917 | | | | | $ |] 393,745 | | | [added: | |] $ | 1,036,455 | |

| Marketable securities | [removed: 1,143,249] | | [added: 745,156] | | [removed: 855,650] | | | [added: | 1,143,249 | | |]

| Accounts receivable, net of reserves of [removed: $1,880] [added: $1,822] and [removed: $1,534] [added: $1,880] at December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively | [removed: 551,943] | | [added: 660,052] | | [removed: 479,889] | | | [added: | 551,943 | | |]

| Prepaid expenses and other current assets | [removed: 142,676] | | [added: 171,406] | | [removed: 163,360] | | | [added: | 142,676 | | |]

| Total current assets | [removed: 2,231,613] | | [added: 1,929,531] | | [removed: 2,535,354] | | | [added: | 2,231,613 | | |]

| Marketable securities | [removed: 835,384] | | [added: 1,398,802] | | [removed: 209,066] | | | [added: | 835,384 | | |]

| Property and equipment, net | [removed: 1,152,153] | | [added: 1,478,272] | | [removed: 910,618] | | | [added: | 1,152,153 | | |]

| Operating lease right-of-use assets | [removed: 758,450] | | [added: 793,945] | | [removed: —] | | | [added: | 758,450 | | |]

| Acquired intangible assets, net | [removed: 179,431] | | [added: 234,724] | | [removed: 168,348] | | | [added: | 179,431 | | |]

| [removed: Goodwill] [added: Beginning balance] | [added: | | $ |] 1,600,265 | | | | [removed: 1,487,404] | [added: $] | [added: 1,487,404] | [added: |]

| Deferred income tax assets | [removed: 76,528] | | [added: 106,918] | | [removed: 34,913] | | | [added: | 76,528 | | |]

| Other assets | [removed: 173,062] | | [added: 147,567] | | [removed: 116,067] | | | [added: | 173,062 | | |]

| Total assets | [added: | |] $ | [removed: 7,006,886] [added: 7,764,130] | | | [added: | |] $ | [removed: 5,461,770] [added: 7,006,886] | |

| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | [added: | | | |]

| Current liabilities: | | | | | | | | [added: | | | |]

| Accounts payable | [added: | |] $ | [removed: 138,946] [added: 118,546] | | | [added: | |] $ | [removed: 99,089] [added: 138,946] | |

| Accrued expenses | [removed: 334,861] | | [added: 380,468] | | [removed: 328,304] | | | [added: | 334,861 | | |]

| Deferred revenue | [removed: 71,223] | | [added: 76,600] | | [removed: 69,083] | | | [added: | 71,223 | | |]

| Convertible senior notes | [added: | | 873 | | | | | |] — | | | | [removed: 686,552] | | [added: —] | [added: | |]

| Operating lease liabilities | [removed: 139,463] | | [added: 154,801] | | [removed: —] | | | [added: | 139,463 | | |]

| Other current liabilities | [removed: 8,843] | | [added: 27,755] | | [removed: 27,681] | | | [added: | 8,843 | | |]

| Total current liabilities | [removed: 693,336] | | [added: 758,170] | | [removed: 1,210,709] | | | [added: | 693,336 | | |]

| Deferred revenue | [removed: 4,368] | | [added: 5,262] | | [removed: 4,557] | | | [added: | 4,368 | | |]

| Deferred income tax liabilities | [removed: 29,187] | | [added: 37,458] | | [removed: 19,624] | | | [added: | 29,187 | | |]

| Convertible senior notes | [removed: 1,839,791] | | [added: 1,906,707] | | [removed: 874,080] | | | [added: | 1,839,791 | | |]

| Operating lease liabilities | [removed: 692,181] | | [added: 715,404] | | [removed: —] | | | [added: | 692,181 | | |]

*Massachusetts Tax Litigation Matter*

In July 2020, the Massachusetts Appellate Tax Board ruled in the Company’s favor; however, the decision is eligible for appeal by the Massachusetts Department of Revenue.

February 26, 2021

| Goodwill | | | 1,674,371 | | | | | | 1,600,265 | | |

| Retained earnings | | | 605,050 | | | | | | 47,996 | | |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net income | | | $ | 557,054 | | | | | $ | 478,035 | | | | | $ | 298,373 | |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net income | | | $ | 557,054 | | | | | $ | 478,035 | | | | | $ | 298,373 | |

| Cash paid for asset acquisition | | | (36,376) | | | | | | — | | | | | | — | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| *(in thousands)* | | | For the Years Ended December 31, | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| *(in thousands, except share data)* | | | Common Stock | | | | | | | | | | | | Additional Paid-in Capital | | | | | | Treasury Stock | | | | | | Accumulated Other Comprehensive Loss | | | | | | Retained Earnings (Accumulated Deficit) | | | | | | Total Stockholders' Equity | | |

| Shares | | | | | | Amount | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance at December 31, 2018 | | | 162,904,550 | | | | | | $ | 1,629 | | | | | $ | 3,670,033 | | | | | $ | — | | | | | $ | (48,912) | | | | | $ | (430,890) | | | | | $ | 3,191,860 | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Repurchases of common stock | | | (1,964,686) | | | | | | | | | | | | | | | | | | (193,588) | | | | | | | | | | | | | | | | | | (193,588) | | |

| Treasury stock retirement | | | | | | | | | (20) | | | | | | (193,568) | | | | | | 193,588 | | | | | | | | | | | | | | | | | | — | | |

| Net income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 557,054 | | | | | | 557,054 | | |

| Balance at December 31, 2020 | | | 162,709,720 | | | | | | $ | 1,627 | | | | | $ | 3,664,820 | | | | | $ | — | | | | | $ | (20,201) | | | | | $ | 605,050 | | | | | $ | 4,251,296 | |

The allowance for current expected credit losses has been developed using historical loss rates for the previous twelve months as well as expectations about the future where the Company has been able to develop forecasts to support its estimates.

In addition, the allowance considers outstanding balances on a customer-specific, account-by-account basis.

Additionally, the Company may pay commissions and incentives based upon contract value, rather than incremental increase in contract value, to certain sales groups within the Company.

*Massachusetts Appellate Tax Board Appeal*

As disclosed by management, such events, if resolved unfavorably, could significantly impact the Company’s effective income tax rate and results of operations.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s judgments.

Also, the evaluation of audit evidence available to support the Massachusetts Appellate Tax Board appeal required significant auditor judgment as the nature of the evidence is often highly subjective and the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained.

February 28, 2020

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Retained earnings (accumulated deficit) | 47,996 | | | | (430,890 | | ) |

| | | | | | | | | | | | |

| Restructuring-related software charge | 3,784 | | | | 4,940 | | | | 31,965 | | |

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| Balance at January 1, 2017 | 173,254,797 | | | $ | 1,733 | | | $ | 4,239,588 | | | $ | — | | | $ | (57,675 | ) | | $ | (913,428 | ) | | $ | 3,270,218 | |

| Repurchases of common stock | (6,868,118 | ) | | | | | | | | | | (361,194 | | ) | | | | | | | | | | (361,194 | | ) |

| Treasury stock retirement | | | | (69 | | ) | | (361,125 | | ) | | 361,194 | | | | | | | | | | | | — | | |

| Net income | | | | | | | | | | | | | | | | | | | | 222,766 | | | | 222,766 | | |

Leases

The Company elected to use the package of practical expedients available under the transition provisions of the guidance, which allows companies to not reassess prior conclusions related to contracts containing leases, lease classification and capitalization of initial direct costs.

The Company also elected not to apply the hindsight practical expedient related to its lease transactions.

Adoption of the standard required the Company to record ROU assets and lease liabilities for its operating leases related to real estate and co-location arrangements.

The operating leases resulted in the recognition of ROU assets and lease liabilities of $362.2 million and $394.1 million, respectively, as of January 1, 2019.

The adoption of the standard also resulted in elimination of deferred rent liabilities of $31.7 million, as of January 1, 2019; such amounts are now recorded as a reduction of the ROU asset.

In February 2018, the FASB issued guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act ("TCJA") that was enacted in 2017.

The adoption of this new accounting guidance resulted in the reclassification of $0.9 million of income tax benefits resulting from the TCJA from accumulated other comprehensive loss to

retained earnings (accumulated deficit).

The adoption of this new accounting guidance did not have an impact on the Company's results of operations or cash flows.

These reserves primarily consist of allowances for doubtful accounts.

Estimates are used in determining the Company's reserves and are based upon the Company’s review of outstanding balances on a customer-specific, account-by-account basis.

The current portion

As the Company’s leases do not provide an implicit rate,

The incremental borrowing rate at January 1, 2019 (the date the new lease standard was adopted) was used to calculate the present value of the Company’s lease portfolio as of that date.

network equipment used to deliver the Company’s services; amortization of network-related internal-use software; and costs for the production of live events streamed by the Company for customers.

The Company does not consider these relationships to represent the culmination of an earnings process.

Accordingly, the Company does not recognize as revenue the value to the ISPs associated with the use of the Company’s servers, nor does the Company recognize as expense the value of the rack space and bandwidth received at discounted or no cost.

Credit Losses on Financial Instruments

Any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities.

Fair Value Disclosure

In August 2018, the FASB issued guidance that changes fair value measurement disclosure requirements.

Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

| As of December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | |

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, [removed: 2019.][added: 2020.]

Based on the evaluation of our disclosure controls and procedures as of December 31, [removed: 2019,] [added: 2020,] our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

[removed: | • |] [added: -] pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; [removed: |]

[removed: | • |] [added: -] provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and [removed: |]

[removed: | • |] [added: -] provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. [removed: |]

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2019.][added: 2020.]

Based on our assessment, management, with the participation of our Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, [removed: 2019,] [added: 2020,] our internal control over financial reporting was effective based on those criteria at the reasonable assurance level.

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2019] [added: 2020] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report, which is included in Item 8 of this annual report on Form 10-K.

No change in our internal control over financial reporting occurred during the fourth quarter ended December 31, [removed: 2019] [added: 2020] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

| | |

| --- | --- |

The complete response to this Item regarding the backgrounds of our executive officers and directors and other information required by Items 401, 405 and 407 of Regulation S-K will be contained in our definitive proxy statement for our [removed: 2020] [added: 2021] Annual Meeting of Stockholders under the sections captioned “Executive Compensation Matters,” “Delinquent Section 16(a) Reports” and “Corporate Governance Highlights” and is incorporated by reference herein.

Our executive officers and directors and their positions as of February [removed: 28, 2020,] [added: 26, 2021,] are as follows:

| Name | | [added: | | | |] Position | [added: | |]

| F. Thomson Leighton | | [added: | | | |] Chief Executive Officer and Director (Principal Executive Officer) | [added: | |]

| Edward McGowan | | [added: | | | |] Chief Financial Officer (Principal Financial and Accounting Officer) | [added: | |]

| Aaron Ahola | | [added: | | | |] Executive Vice President and General Counsel | [added: | |]

| Robert Blumofe | | [added: | | | |] Executive Vice President [removed: –] Platform and GM Enterprise Division | [added: | |]

| Adam Karon | | [added: | | | |] Executive Vice President and GM Media and Carrier Divisions | [added: | |]

| Rick McConnell | | [added: | | | |] President and GM Web Division | [added: | |]

| Anthony Williams | | [added: | | | |] Executive Vice President and Chief Human Resources Officer | [added: | |]

| Monte [removed: E.] Ford | | [added: | | | |] Director | [added: | |]

| Jill [removed: A.] Greenthal | | [added: | | | |] Director | [added: | |]

| Daniel [removed: R.] Hesse | | [added: | | | |] Director | [added: | |]

| [removed: Peter T.] [added: Tom] Killalea | | [added: | | | |] Director | [added: | |]

| Jonathan [removed: F.] Miller | | [added: | | | |] Director | [added: | |]

| Madhu Ranganathan | | [added: | | | |] Director | [added: | |]

| Frederic [removed: V.] Salerno | | [added: | | | |] Director | [added: | |]

| Bernardus Verwaayen | | [added: | | | |] Director | [added: | |]

| William [removed: R.] Wagner | | [added: | | | |] Director | [added: | |]

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Monique Bonner | | | | | | Executive Vice President and Chief Marketing Officer | | |

| Mani Sundaram | | | | | | Executive Vice President Global Services and Support and Chief Information Officer | | |

| Marianne Brown | | | | | | Director | | |

| | | |

| --- | --- | --- |

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our [removed: 2020] [added: 2021] Annual Meeting of Stockholders under the sections captioned “Executive Compensation Matters,” “Corporate Governance Highlights,” “Compensation Committee Interlocks and Insider Participation” and “Director Compensation.”

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our [removed: 2020] [added: 2021] Annual Meeting of Stockholders under the sections captioned “Executive Compensation Matters,” “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans.”

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our [removed: 2020] [added: 2021] Annual Meeting of Stockholders under the sections captioned “Certain Relationships and Related Party [removed: Transactions,”] [added: Transactions; Code of Ethics; Interest in Annual Meeting Matters,”] “Corporate Governance Highlights” and “Compensation Committee Interlocks and Insider Participation.”

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our [removed: 2020] [added: 2021] Annual Meeting of Stockholders under the section captioned “Ratification of Selection of Independent Auditors.”

[removed: | (a) | Documents] [added: (a)Documents] Filed as Part of this Annual Report on Form 10-K [removed: |]

[removed: | 1. | Financial] [added: 1.Financial] Statements (included in Item 8 of this Annual Report on Form 10-K): [removed: |]

[removed: | • |] [added: -] Report of Independent Registered Public Accounting Firm [removed: |]

[removed: | • |] [added: -] Consolidated Balance Sheets as of December 31, [removed: 2019] [added: 2020] and [removed: 2018 |][added: 2019]

[removed: | • |] [added: -] Consolidated Statements of Income for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]

[removed: | • |] [added: -] Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]

[removed: | • |] [added: -] Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]

[removed: | • |] [added: -] Consolidated Statements of Stockholders' Equity for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]

[removed: | • |] [added: -] Notes to Consolidated Financial Statements [removed: |]

[removed: | 2. | Financial] [added: 2.Financial] Statement Schedules [removed: |]

[removed: | (b) | Exhibits |][added: (b)Exhibits]

| 3.1(A) | [added: | |] [Amended and Restated Certificate of Incorporation of Akamai Technologies, Inc., as amended](http://www.sec.gov/Archives/edgar/data/1086222/000108622218000158/exhibit31amendedandrestate.htm) | [added: | |]

| [removed: 3.2] [added: 3.2(B)] | [added: | |] [Amended and Restated Bylaws of Akamai Technologies, Inc., as [removed: amended](https://www.sec.gov/Archives/edgar/data/1086222/000108622220000045/exhibit3210k2019.htm)] [added: amended](http://www.sec.gov/Archives/edgar/data/1086222/000108622220000045/exhibit3210k2019.htm)] | [added: | |]

| [removed: 4.1(B)] [added: 4.1(C)] | [added: | |] [Specimen common stock certificate](http://www.sec.gov/Archives/edgar/data/1086222/000095013599004713/0000950135-99-004713.txt) | [added: | |]

| [removed: 4.2(C)] [added: 4.2(D)] | [added: | |] [Indenture (including form of Notes) with respect to Akamai’s 0.125% Convertible Senior Notes due 2025, dated as of May 21, 2018, between Akamai and U.S. Bank National Association, as trustee](http://www.sec.gov/Archives/edgar/data/1086222/000108622218000117/exhibit41indenture2018.htm) | [added: | |]

| [removed: 4.3(D)] [added: 4.3(E)] | [added: | |] [Indenture (including form of Notes) with respect to the Registrant’s 0.375% Convertible Senior Notes due September 1, 2027, dated as of August 16, 2019, between the Registrant and U.S. Bank National Association, as trustee](http://www.sec.gov/Archives/edgar/data/1086222/000119312519223514/d794476dex41.htm) | [added: | |]

| [removed: 4.4] [added: 4.4(B)] | [added: | |] [Description of Registrant's Securities Registered Under Section 12 of the Exchange [removed: Act](https://www.sec.gov/Archives/edgar/data/1086222/000108622220000045/exhibit4410k2019.htm)] [added: Act](http://www.sec.gov/Archives/edgar/data/1086222/000108622220000045/exhibit4410k2019.htm)] | [added: | |]