阿卡邁科技 (AKAM) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 Fiscal Year 2017 Year End Results Conference Call.

(Operator Instructions)

I would now like to turn the call over to Tom Barth, Head of Investor Relations.

Please go ahead.

Thank you, and good afternoon, everyone, and thank you for joining Akamai's Fourth Quarter 2017 Earnings Conference Call.

Speaking today will be Tom Leighton, Akamai's Chief Executive Officer; and Jim Benson, Akamai's Chief Financial Officer.

Before we get started, please note that today's comments include forward-looking statements, including statements regarding revenue and earnings guidance.

These forward-looking statements are subject to risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied by such statements.

Additional information concerning these factors is contained in Akamai's filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

The forward-looking statements included in this call represent the company's view on February 6, 2018.

Akamai disclaims any obligation to update these statements to reflect future events or circumstances.

As a reminder, we will be referring to some non-GAAP financial metrics during today's call.

A detailed reconciliation of GAAP and non-GAAP metrics can be found under the financial portion of the Investor Relations section of our website.

And with that, let me turn the call over to Tom.

Thanks, Tom, and thank you all for joining us today.

Akamai delivered strong results in the fourth quarter, driven by the continued rapid growth of our security offerings and the strong seasonal performance of our Web Division customers.

Overall, revenue in Q4 was $663 million, $7 million above the high end of our guidance range and up 8% year-over-year as reported.

Non-GAAP EPS for the fourth quarter was $0.69 per diluted share, $0.04 above the high end of our guidance range, down 4% year-over-year as reported, and up 1% when adjusted for foreign exchange and a dilution associated with the acquisitions of SOASTA and Nominum.

For the full year, revenue was $2.5 billion, up 7% over 2016.

Non-GAAP EPS for 2017 was $2.62 per diluted share, down 3% year-over-year as reported and up 1% over 2016 when adjusted for foreign exchange and the dilution associated with the acquisitions of SOASTA and Nominum.

We were particularly pleased to see the year-over-year revenue growth rate from our Web Division accelerate to 17% in the fourth quarter.

The improvement was primarily driven by strong demand for our new products, including digital performance management, which came from our SOASTA acquisition; Image Manager and Bot Manager Premier.

Hundreds of customers are now using these products with the strongest adoption coming from the verticals such as travel, hospitality, retail and finance.

And it's not hard to see why.

With our new digital performance management products, our customers can discover how to optimize their websites and applications for maximum performance, make sure their site infrastructure has adequate capacity and track in real-time the business gains that are provided by Akamai's acceleration services.

With Image Manager, our customer's images are automatically modified in the Akamai cloud to help optimize performance, cost, and the end user viewing experience.

And with Bot Manager Premier, our customers' content is protected against the wide array of bots that are causing unnecessary and expensive load on their infrastructure, or even worse, attempting to steal sensitive data and/or break into end user accounts.

The combined revenue from these new products grew eightfold over the prior year and is now approaching a run rate of $100 million per year.

As you might imagine, we're very pleased to now be realizing the payoff of investments that we've made over the last few years in the acquisition and development of these new products.

Our new enterprise security products, Enterprise Application Access and Enterprise Threat Protector, also performed well in Q4, with the number of units sold nearly doubling over Q3 levels and more than tripling over Q1.

It's still early days for these products, but we believe they're well positioned to benefit from the changes that are taking place in the area of enterprise network security.

Many security experts believe that it's no longer safe for enterprises to rely on a corporate firewall to protect their sensitive applications and data.

We now live in a world of zero trust, where enterprises need to protect against the enormous damage that can be caused by a trusted insider when they click on the wrong link.

As Forrester recently wrote, "The idea of a corporate perimeter becomes quaint and even dangerous in today's world.

It's now just too easy to circumvent traditional enterprise defenses, which is a key reason why there are so many disastrous data breaches."

To be safe today, you need novel products like Akamai's Enterprise Application Access and Enterprise Threat Protector.

By deploying these products in combination with our industry-leading Web security products, like Kona Site Defender and Bot Manager, we believe that Akamai can now provide the same level of protection for internal enterprise applications that we do for consumer-facing applications, and at a lower cost than using traditional and less effective data center-based security solutions.

We're also making good progress in our media business.

Although media revenue was down slightly in Q4 due to price reductions during renewals for several of our largest customers, our traffic share continues to expand based on the actions that we began taking under new leadership last year.

Overall, our year-over-year traffic growth rates exceeded industry averages in Q4, with our OTT traffic growing by about 50% over Q4 of 2016.

As we look forward to 2018, we believe that we've turned the corner in the Media Division, and that media revenue will begin growing again and improve throughout the year.

Looking farther forward, we remain very optimistic about the potential for substantial revenue growth from our OTT customers.

We believe the traffic from the delivery of long-form premium video content could increase by a factor of 10 to 100 or more in the future, and that Akamai is very well positioned as the provider of choice to deliver a significant portion of this traffic.

Jim will talk more about our guidance in a few minutes.

But because of the work that we've done to improve the operational effectiveness of the Media Division, and because of the success that we've been having with our new Performance and Security products, we believe that we'll be able to modestly accelerate our revenue growth in 2018.

And because of the actions that we've taken to improve our operational efficiency, we believe that we'll also be able to expand our EBITDA margins in 2018, from about 36% in Q1 to about 39% in Q4.

Overall, we expect EBITDA margins in 2018 to be about 37%, which matches what we achieved in 2017 and puts us on an upward trajectory that we will continue working to improve in 2019 and beyond.

And as Jim will explain in a minute, we expect to achieve similar levels of improvement in our operating margins going forward.

As part of our effort to improve operational efficiency, we've reduced headcount in targeted areas of business, most notably in areas tied to our media business.

Overall, we have removed about 400 positions or 5% of our global workforce in a series of actions that began last quarter and that continued this week.

Jim will discuss the charges that we have taken in Q4 and that we plan to take in Q1 associated with these reductions.

It's important to note that while we've made reductions in some areas of the business, we are also investing in areas that can return greater value going forward.

In particular, we are planning to grow our lead generation and go-to-market functions in the Web Division, with a focus on new customer acquisition, increased investment in high-value services and support for customers, especially in the area of security; complete the integration of Nominum and strengthen our partnerships with major carriers; continue to invest in new products, especially in the area of security; and develop novel technology to help our customers realize the potential of the Internet of Things.

As always, you can expect us to be disciplined with our investments as we continue to develop the technology that enterprises will need to flourish in the rapidly evolving digital marketplace.

And as we've successfully done over the last 5 years, we intend to continue to diversify the business, both in terms of the customer base and the product set.

Akamai has accomplished a lot over the past 5 years.

Despite the challenges encountered by our Media Division, we've nearly doubled our revenue, growing from less than $1.4 billion in 2012 to just over $2.5 billion in 2017.

We've also expanded non-GAAP EPS by over $1 during this period, growing from $1.60 per share in 2012 to $2.62 in 2017.

The investments we made have diversified our business from a media-dominated CDN into a leading supplier of Web and security services for a broad range of customers, including many of the world's major commerce companies, financial institutions, airlines and auto manufacturers.

Our Web business has grown to represent the majority of our total revenue, and we've grown our security business from a few million dollars of revenue in 2012 into the premier supplier of DDoS and Web security services, generating well over $0.5 billion in annualized revenue and still growing at over 30% per year.

One of the great features of our business model is the way that each of our products is built on a single global platform, 20 years in the making and massively distributed across thousands of locations inside 1,700 partner networks, close to where all the end users are.

This multi-tenant, multi-product platform is unparalleled in the industry and near impossible to replicate.

And when combined with our unique software and algorithms, we believe that it provides a fundamental competitive advantage in the marketplace.

While our business and financial improvement are always top of mind, I'm also pleased about the way that we have grown and operated the business.

Akamai has received many recognitions over the past several years for being a Best Place to Work and a highly innovative company.

But perhaps the most gratifying recognition was made in December, when after evaluating nearly 1,000 of the largest publicly-traded companies, Forbes and JUST Capital ranked Akamai in the Top 40 and second among all Internet companies for ethical leadership, product quality, and for treating our customers, communities and employees well.

In summary, while I'm very pleased with the progress that we've made, I'm even more excited about what lies ahead.

Akamai has tremendous potential for profitable revenue growth in the future as more video moves online, more business moves into the cloud, billions of devices get connected, cyber attacks increase in scale and sophistication, enterprises enter a world of zero trust, and the need for our services to make the Internet fast, reliable and secure becomes more important than ever.

Thanks very much.

And I'll now turn the call over to Jim to review our financial results and to provide the outlook for 2018.

Jim?

Thank you, Tom, and good afternoon, everyone.

Before I get into the details, I'd like to provide a framework for today's financial discussion because it will be slightly different than past calls.

Namely, I'll be focusing on key financial highlights from the fourth quarter, a few housekeeping items, and end with guidance for Q1 and an outlook for the full year.

I will be leaving some of the finance and accounting details, including 2017 full year results, to the press release and financial statements, all of which can be found on the Investor Relations website.

As Tom outlined, Akamai had a strong fourth quarter, exceeding the high end of our guidance on both the top and bottom lines.

Q4 revenue came in well above the high end of our guidance range at $663 million, up 8% year-over-year or 6% in constant currency or up a healthy 9%, if you exclude the 6 large Internet platform customers, representing a slight acceleration from Q3 levels.

Revenue growth was solid across most of the business, with the overachievement compared to guidance, driven by the continued rapid growth of our security services and a robust holiday commerce season in our Web Division customer base notably.

Revenue from our Web Division customers was $355 million, up 17% year-over-year or 15% in constant currency, an acceleration from Q3's growth rate driven by a higher-than-expected uptake or uptick in holiday commerce traffic, strong uptick for our new products and continued strong adoption for our security solutions.

We continue to see solid growth and diversification in this division, and our Web Division customers now represent roughly 54% of Akamai's overall revenue.

Revenue from our Media Division customers was $284 million in the quarter, down 3% or 4% in constant currency, and down 1% excluding the large Internet platform customers.

Traffic growth was solid across both our Internet platform customers and our core installed base, with continuing strong growth coming from our video delivery customers.

Our Media Division management team has been focused on capturing more traffic share with the top 250 media customers that account for most of our traffic and revenue.

Because of these efforts, which we initiated in the middle of 2017, traffic growth accelerated and exceeded market growth rates in both Q3 and Q4, and we are confident that we will see continued traffic acceleration as well as the beginning of revenue acceleration in our Media Division customer base heading into 2018.

As I've mentioned in the past, when we restructure customer contract as we did in the second half of 2017, there is typically a 6 to 9-month lag from the improved traffic growth to acceleration of revenue.

Turning now to our Q4 results for our solution categories.

Revenue from our Performance and Security Solutions was solid, coming in at $416 million, growing 13% year-over-year or 12% in constant currency and contributing 63% of total revenues in Q4.

We continue to see very strong growth from these products within our Web Division customer base notably.

Within our Performance and Security Solutions category, we saw particularly strong uptake in our new product areas, namely Image Manager, digital performance management from our SOASTA acquisition; and Bot Manager, as well as continued strong growth in our core Cloud Security Solutions.

Fourth quarter revenue for our Cloud Security Solutions was $135 million, up 32% year-over-year or 31% in constant currency.

That's up 32% for full year 2017, capping off another tremendous year of revenue growth and customer adoption of our security solutions globally.

Entering 2018, our rapidly growing security business now has an annualized revenue run rate of well over $0.5 billion.

As Tom mentioned, we believe security presents a tremendous growth opportunity for us, and we will continue to invest in this area to further enhance and extend our product portfolio and go-to-market capabilities.

Revenue from our Media Delivery Solutions was $190 million in the fourth quarter, down 3% year-over-year or 4% in constant currency, and roughly flat year-over-year if you exclude our large Internet platform customers.

It is worth noting that Q4 is a bit of a tough compare because it had several large gaming and software update releases.

And as I said earlier, we are confident that our traffic share capture initiatives will lead to an acceleration of revenue growth in 2018.

Moving on to our geographies.

Sales in our international markets represented 35% of total revenue in Q4, up 1 point from the prior quarter.

International revenue was $234 million in the fourth quarter, up 21% year-over-year or 17% in constant currency, driven by continued strong growth in our Asia-Pacific region.

Revenue from our U.S. market was $430 million, up 1% year-over-year and up 4% excluding our large Internet platform customers.

Moving on to costs.

Cash gross margin was 77%, up 1 point from Q3 levels and in line with our guidance.

GAAP gross margin, which includes both depreciation and stock-based compensation, was 65%, up 1 point from Q3 levels and in line with our guidance.

Non-GAAP cash operating expenses were $269 million, up $24 million from Q3 levels and in line with our guidance.

There has been increasing interest from some investors to understand the components of our general and administrative operating expenses, or G&A, relative to our peers.

While our financial disclosures have always been robust in this area, we've included an additional G&A spend table in today's earnings press release to provide further clarity.

This table breaks out costs associated with our administrative functions of finance, purchasing, order entry, HR, legal, IT and executive personnel, expenses that are typically reported as G&A by most companies.

The table also identifies costs related to our network infrastructure function, which is responsible for network planning, sourcing, architecture evaluation and platform security activities as well as our global facilities infrastructure and depreciation spend.

These costs are not reported as G&A by many of our peers.

We hope this additional disclosure is helpful.

Of course, practice varies in how companies classify certain operating expenses, but adjusted EBITDA and operating income metrics provide consistent comparisons across all companies.

Moving now to profitability.

Adjusted EBITDA for the fourth quarter was $241 million, up $15 million from Q3 levels.

Our adjusted EBITDA margin came in at 36%, consistent with Q3 levels and at the high end of our guidance range.

As a reminder, our Q4 EBITDA margins are compressed by roughly 2 points, due to the absorption of the SOASTA and Nominum acquisitions in 2017.

Once we fully integrate and scale these acquisitions into Akamai in the first half of 2018, we expect to see EBITDA margins begin to expand.

Non-GAAP operating income for the fourth quarter was $155 million, up $13 million from Q3 levels.

Non-GAAP operating margin came in at 23%, consistent with Q3 levels and at the high end of our guidance range.

Again, once we integrate our recent acquisitions and execute the next phase of our operational efficiency actions, we expect operating margins to begin to expand through 2018.

Capital expenditures in Q4, excluding equity compensation and capitalized interest expense, were $94 million or 14% of revenue, in line with our guidance for the quarter.

Moving on to earnings.

Non-GAAP net income was $118 million or $0.69 of earnings per diluted share, $0.04 above the high end of our guidance range, driven primarily from the revenue overachievement.

Taxes included in our non-GAAP earnings were $42 million, based on a Q4 effective tax rate of just over 26%.

This tax rate is lower than our guidance, due to a higher mix of foreign earnings.

For the full year, the 2017 non-GAAP effective tax rate was 28%.

Moving on to our GAAP earnings.

There are 3 noteworthy items impacting our Q4 GAAP results that I'd like to provide some color on.

First, we recorded a $52 million restructuring charge in Q4, and we expect to record an additional restructuring charge of approximately $15 million in Q1.

These charges include workforce reductions of approximately 400 employees or 5% of our total headcount as well as several facility closures.

Also included, are capitalized software impairments, from decisions to deprioritize certain investment areas that have not achieved the commercial success and return on investment we expected, notably, in our Media Division.

We already implemented some of these actions in the middle of the fourth quarter and plan to complete most of the remaining actions in the first quarter of 2018.

Second, Q4 GAAP operating expenses were impacted by a $16 million charge due to the release of a foreign tax-related indemnification asset related to a 2012 acquisition.

This charge is offset by a $16 million benefit to GAAP taxes, so there was 0 net effect on our Q4 GAAP net income and earnings per share.

Lastly, included in our GAAP taxes this quarter is a one-time provisional $26 million net charge associated with U.S. tax reform, which represents $0.15 of GAAP EPS.

This charge, which is excluded from our non-GAAP results, is comprised of a $43 million charge for the deemed repatriation tax on foreign earnings, often referred to as the toll charge, which is partially offset by a noncash net benefit of $17 million related to the remeasurement of our U.S. net deferred tax liabilities because of the lower corporate tax rate.

Factoring in these various GAAP-only items, GAAP net income for the fourth quarter was $19 million or $0.11 of earnings per diluted share.

Now I'll review our use of capital.

We continue to focus on the importance of returning value to our shareholders.

During the quarter, we spent $55 million on share repurchases, buying back roughly 1 million shares.

For the year, we spent $361 million, more than 90% of our free cash flow, buying back approximately 7 million shares.

And over the last 5 years, we have spent over $1.4 billion, approximately 77% of our free cash flow, and reduced our share count by 11 million shares.

We will continue to evaluate our capital allocation strategy going forward, including with respect to returning capital to shareholders.

In summary, we are pleased with how the business performed in Q4 and our momentum as we exited 2017.

Before I move on to guidance, there are a few housekeeping items that I wanted to highlight.

The first relates to some revenue reporting changes that we'll be making for 2018.

As you know, 2 years ago, we aligned and consolidated our development, product management, marketing and sales teams into 3 customer-centric divisions: Web Division, Media Division, and Enterprise and Carrier Division.

We have streamlined further, and moving forward, we will be operating and reporting the business under a 2-division structure: Web Division, and Media and Carrier Division.

Also, we will stop providing a solution category revenue view in 2018 because we no longer manage the business through this lens, and therefore, do not believe it as a useful measure in understanding our business performance, especially with the growing overlap between some of our Media Delivery and Web performance product portfolios.

Instead, we will provide a view for cloud security, like what we do today, and consolidate the remaining solution revenue streams into a CDN other category.

These new reporting views will be effective when we report our Q1 2018 results, and we will continue to provide U.S. versus international revenue as well as revenues for our large Internet platform customers.

The second housekeeping item relates to the new revenue accounting standard, ASC 606, which we are adopting effective Q1 2018.

The new standard primarily impacts the revenue timing of a few license software customer contracts, a very small component of our revenue.

And while immaterial on a full year basis, may result in modest quarter-to-quarter revenue fluctuations.

The new revenue standard also requires that we defer and amortize certain sales commission costs.

It is important to note that the new accounting standard does not materially impact Akamai's historical or projected revenue and income statement.

We plan to adopt ASC 606 on a full retrospective basis.

So when we report our Q1 2018 financial results in April, all prior periods will be adjusted to comply with the new rules, which should be helpful to investors for comparative trending analysis.

The revenue and income statement guidance I provide today is based on these new revenue accounting standard rules.

Moving now to guidance.

We have discussed several out-of-the-ordinary items on today's call, including tax reform, restructuring, a new revenue standard, and 2017 acquisitions that are dilutive in the near term and that will impact our 2018 financial results.

To help investors navigate the anticipated impact of these items, we are providing both Q1 guidance and some thoughts about the full year on this call.

Looking ahead to the first quarter, we are projecting another solid quarter on both the top and bottom lines.

We expect to see the normal sequential revenue decline due to seasonality, perhaps a bit more pronounced due to the particularly strong holiday e-commerce season this past quarter.

We are projecting Q1 revenue in the range of $647 million to $659 million, and at the midpoint, represents a slight acceleration in year-over-year growth and constant currency.

At these revenue levels, we expect cash gross margins of 77% and GAAP gross margins of 65%, consistent with Q4 levels.

Q1 non-GAAP operating expenses are projected to be $265 million to $270 million, roughly consistent with fourth quarter spend as we absorb a full quarter of Nominum costs and implement our planned restructuring actions.

Factoring in the cash gross margin and operating expense expectations, we anticipate Q1 EBITDA margins of 36%, consistent with Q4 levels.

Moving now to depreciation.

We expect non-GAAP depreciation expense to be between $84 million to $86 million.

Factoring in this depreciation guidance, we expect non-GAAP operating margin of 23% for Q1, also consistent with the prior quarter.

And with the overall revenue and spend configuration I just outlined, we expect Q1 non-GAAP EPS in the range of $0.67 to $0.70.

This EPS guidance assumes taxes of $34 million to $36 million based on an estimated quarterly non-GAAP tax rate of 23%, which is down 5 points from 2017 levels, due to the impact of U.S. tax reform.

This guidance also reflects a fully diluted share count of approximately 172 million shares.

On CapEx, we expect to spend approximately $65 million to $75 million, excluding equity compensation in the quarter.

This range is lower than recent spend levels due to the timing and alignment of network CapEx purchases and planned network deployments that are expected to begin in Q2.

Lastly, and as I had mentioned earlier, we plan to take an additional restructuring charge of roughly $15 million, bringing our total Q4 and Q1 restructuring charges to just under $70 million.

The next phase of workforce reductions will take effect in late Q1, resulting in a lower operating expense run rate heading into Q2.

It is important to note these restructuring actions are being taken to enable some rebalancing of our investments, divesting in some areas, investing in others, and to position the company to meet our long-term goals of continued growth and scale.

And beyond Q1, we have other efforts underway to drive additional operational efficiency, so that we can redeploy spend and invest in more areas to fuel growth.

These ongoing efforts should lead to growing spend more slowly than revenue growth and generating margin expansion.

Looking to the full year, we are anticipating revenue of roughly $2.67 billion to $2.71 billion, with modest acceleration from the first half to the second half of the year.

We anticipate EBITDA and non-GAAP operating margins to expand modestly every quarter, from first quarter levels as we implement both of our restructuring actions, fully absorb our recent acquisitions and reprioritize investments in line with our expected revenue growth.

For the full year, we expect adjusted EBITDA and operating margins of 37% and 24%, respectively, consistent with 2017 full year levels and on a trajectory of further expansion going into 2019.

And at these revenue and margin levels and an unexpected non-GAAP effective tax rate of 23%, we anticipate non-GAAP earnings per diluted share of $2.90 to $3 for full year 2018.

This would be up about 13% year-over-year to the midpoint of the range.

As a helpful reference, we will post our Q1 and full year 2018 guidance ranges on the Investor Relations section of our website after this call.

In closing, we are bullish about the opportunities ahead for Akamai.

We are confident in our ability to deliver revenue, margin and earnings expansion in 2018, while at the same time, continue our successful product and customer diversification strategies, which we believe will add significant shareholder value over both the near term and long term.

Thank you.

And Tom and I would like to take your questions.

Operator?

(Operator Instructions) Our first question is from Michael Turits with Raymond James.

Can you just talk about 2 things?

One is, what are the things that have changed that have enabled you to significantly increase your EBITDA margin outlook so you went -- it looks like going down, and now flat?

And what are the areas that you are deprioritizing that are [enabler of] behind the charge?

I'll take that, Michael.

Thank you.

That's a good question.

I think you know, we talked about it throughout 2017, that one of the big areas of pressure on EBITDA margins for the company and operating margins for that matter, has been the absorption of our acquisitions.

And so that's been about a 2 point impact on our operating margins and EBITDA margins for the last couple of quarters.

And so we're beginning to absorb SOASTA more so, Nominum, less so.

We've been very much focused on driving operational efficiency across the business.

And we've been clear with investors that we intend to operate the company in the high 30s EBITDA margins, and then, expanding back to the low 40s going forward.

And so this is very much an alignment with what we've been talking about.

Now as we talked about, we took a restructuring charge in the fourth quarter.

We implemented some of those restructuring actions in the middle of the quarter.

We're going to finish the remainder of those actions pretty much in the first quarter.

And so very much in alignment with what we've been saying we're going to do.

And I would say the areas that we talked about that I included in my comments, and I think Tom talked about them a little bit as well, is that, primarily, in the media area or media-related area that -- this is a highly innovative company.

And we've been investing in R&D in a bunch of different areas.

And when you do that, not all areas end up being as commercially successful as you expect them to be.

And so there was some areas in the Media Division that we decided to scale back on.

It's resulted in some capitalized software impairments that we're going to write off.

And it's also resulted in some R&D engineers that were working in those areas to leave the business as a result of that.

So I think it's a nature of a highly innovative company.

Sometimes you have products that are highly successful and sometimes, you don't.

And I think this is just -- we're scaling back in areas that has not been commercially successful to date.

No.

That's all right.

And as Jim noted, I think, going forward, you'll see in our Media Division, a really intense focus on quality, scale and the cost of video.

We have a lot -- had a lot of projects ongoing in media, and we've scaled several of those back so that we can focus on what we think is really important for the future of the media business.

Also, in the enterprise area, as you know, there were several projects there.

Going forward, the enterprise division or team will be focused on enterprise security, capabilities like Enterprise Application Access, Enterprise Threat Protector, enabling enterprises to survive in a world of zero trust.

There's other actions that we've taken.

For example, we're closing some of our very small offices around the world, and we've got several efficiency-related projects underway.

Our next question is from Rob Sanderson with MKM Partners.

Since it will be the last time we're talking about the Solutions category, I'd like to pick apart some of the areas of strength, if we could.

You mentioned SOASTA, Image Manager, Bot Manager as areas of new product improvements.

But I guess, how do they line up across the segments?

I imagine Bot Manager's in cloud security.

I'm really trying dig into more the Web performance, ex security, a surprise there.

And is it new products-related?

Are you seeing momentum on old products, older generations of products?

Are -- was there some impact from the custom government work that you've done in the past?

Just trying to get to sort of the source of the strength, if we could.

And then, second question is, Jim, you said something about, in the Media segment, typically being a 6 to 9-month lag to improve revenue growth from when you see the traffic improvement.

Could you sort of walk through the mechanics of that?

I'm not sure I fully understand why there would be such a lag when you see the traffic recovery.

Sure.

So on your first question, we had tremendous growth in security, not just in new product areas, but also in our core security solutions.

So security grew 31% for the quarter, which is an acceleration from what we did in the third quarter.

Relative to the performance side, as we've talked about, on the performance side, that our Web Division customers tend to buy our high-end Web performance products and our Media Division customers tend to buy our lower-end Web Division or Web performance products, which are more traffic-related.

These products are -- become somewhat interchangeable, which is more of the reasons why we're going to stop reporting it that way.

The best way for you to look at kind of the performance is that the new product areas of Security, Image Manager, Bot Manager, all of them, those tend to be very heavily sold into our Web Division customer base.

So when you look at our Web Division customer base growing in the mid-teens, you should think of it as buying kind of those parts of the portfolio, our performance and security parts of the portfolio, not so much our media products.

Our Media Division customers, while they do buy those products, the predominant product that they buy are our traffic products.

And those traffic products could be a Media Delivery product or those traffic products could be a Web performance product.

So we're not providing it going forward because it's just -- we don't look at the business that way internally, and we just don't think it provides a helpful view for investors.

Obviously, during kind of Annual Investor Day, we'll give you some color on new product areas and how the new product areas are doing, so you can get an understanding of kind of some of the new areas of innovation in the company and the traction that we're making.

I think your second question was related to media, and...

Yes.

The 6 to 9 month-lag on traffic revenue.

The way you need to think about that is, when you do a reprice with a customer, you see a reduction in the pricing of the customer right away.

And it takes a while for the traffic to grow to a rate that you eclipse that pricing reduction.

And so, it's just -- it's a bit of math on it, that you take -- you go to a reprice, the price drops immediately, traffic does grow, but it takes a while for that traffic growth to lapse the pricing reduction.

And usually, it depends upon the customer.

Some customers, it could be a quarter.

But on average, it's about 6 to 9 months from the time you do a contract restructure.

And as we've been talking about for the last couple of quarters, we began a pretty vigorous campaign around going and capturing more traffic share in our Top 250 customers, and we made tremendous progress in that.

And it's resulted in traffic share increases and traffic growth acceleration both in Q3 and Q4.

It hasn't manifested itself yet in revenue growth, but we are quite confident going into 2018.

You're going to see the Media Division turn from -- which has been down very slightly to begin to grow modestly in the low single digits.

And hopefully, improve throughout the year.

So hopefully, that gives you a little bit of color.

Our next question is from James Breen with William Blair.

Just a couple of questions on the revenue side.

In the Media business, you talked about renewing some contracts with some of your customers.

Can you just talk about how that gives you some visibility into that portion of business which traditionally has been pretty volatile?

And then secondly, in the security website, as you're offering these new products, are you seeing it's your existing customers that are driving growth?

Are you able to enter new markets and increase the customer count from that?

So on the visibility side, I mean, we, obviously, renew customers all the time.

Some, of course, you might renew more than others.

I think it's fair to say in the back half of 2017, we did more contract restructures like we said we were going to.

In some cases, we opened up contracts earlier as a result of trying to grab more traffic share with those customers.

And so I think our visibility is pretty good.

I think some of the changes that we've made and that Tom talked about and that we've talked about in the last couple of calls, this very, very specific focus on the top 250 customers and reorienting our sales organization to be very much oriented around the top 250 and less focus on the customers below that has given us, I think, some very good customer visibility into the business.

And so I think we feel pretty good about the visibility.

We feel very good about the relationships we have with these customers.

We feel very good about our ability to kind of maintain that momentum.

And Tom, you want to talk about the product areas?

Yes, so the security products are great for our existing customers.

A lot of them have upgraded by adding Bot Manager, for example.

They're also good for attracting new customers, particularly in the financial vertical where I would say that the strong new customer adoption there is driven by security.

And then as we look to the future with the enterprise security products, that opens up whole new verticals for us.

So we'll be selling those products in the existing base, but I think that gives us a really good chance to increase our customer base.

And of course, one of the areas that we talked about we're investing this year is with new customer generation and the go-to-market efforts there.

Our next question is from Tim Horan with Oppenheimer.

I guess, 2 questions, maybe for Jim a little bit more.

Do you think you can keep your headcount growing slower than your revenue?

At this point, I guess how much operating leverage can you kind of see over the next couple of years so that maybe you see consistent margin improvement?

And secondly, any more thoughts on maybe the balance sheet.

I think of all my companies you're about the most underlevered I have at this point, and it seems fairly suboptimal.

I just don't know if you have any updates given a little bit more visibility in the business model.

Sure.

So on the headcount growth, so I think you can tell from the comments that I have mentioned that I think you will see headcount growth grow slower than revenue growth based on some of the actions that we're talking about taking.

So I think what we outlined today is that you're going to see scale in the business.

And outside of our network cost that -- and most of our cost in the company are headcount related.

And so you can expect that the margin expansion that we talked about that we're expecting to have happened through 2018 and hopefully exiting at a better rate outside of '18 going into '19 is going to be from better scale and better scale in areas on G&A.

We're going to continue to make sure we make the right investments in R&D and new product areas and make sure we continue to invest in areas on the sales and marketing side to capture the revenue growth opportunities.

So I'm pretty confident that we'll be able to continue to scale.

And on the balance sheet, I would say that I think we've done a pretty darn good job at the company that I talked about the buyback that we've done and how much of our -- we spend of our free cash flow in buying back shares for the company.

Also, the cash that we have available we put to strategic use.

We bought 2 companies last year.

We bought SOASTA, we bought Nominum.

We think that's a very good use of capital for the company to invest in area that are going to fuel future growth for the company.

So I feel pretty good about what we've done.

It's certainly an area that we always look at.

It's certainly an area that we talk to the board about on an ongoing basis.

So certainly, we're open to feedback in that area as always.

But I think that, pretty much, we've put the capital that we have to use in buybacks and in areas of M&A that strategically help the company going forward.

Great.

And then just on the guidance.

The -- any assumptions on the FX on the guidance for this year?

Yes, I mean, they'll be -- actually, with the recent weakening of the dollar, that there will be an improvement in FX of probably several million dollars versus Q4 levels.

And is that in your current guidance, I guess?

Yes, it is.

Our next question is from Siti Panigrahi with Wells Fargo.

Just switching to security.

That was a pretty strong quarter, 31% growth.

Just wondering if you could give some color in terms of if you see any particular strength on any particular product.

And as a follow-up, as we look into 2018, how sustainable is this growth?

And are you expecting any new products that, besides Kona and Prolexic, are you expecting any other product to get more traction or contribute significantly in 2018?

Yes.

I mentioned, Bot Manager Premier, which features the machine learning technology that we got in part from Cyberfend, that is really doing very well.

That is right now the one way to distinguish between humans and bots logging into an account.

And of course, the bots are being used to see if a stolen password and login is valid across thousands of websites.

And a lot of folks use the same login credentials across multiple sites.

In fact, most logins today for a lot of our customers are done by bots trying to crack into accounts.

And the Bot Manager Premier catches that and stops it.

So that's been a very exciting new product for us with a lot of runway for future growth.

Also, our enterprise products, as I mentioned, are focused around enterprise security.

And it's very early days for those products, but there is a rich road map to further improve them.

And we're excited about combining, for example, Enterprise Application Access with Kona Site Defender to protect internal enterprise applications.

Kona Site Defender, of course, is the industry-leading product for application layer and DDoS defenses for consumer applications.

But you need the same capabilities now inside the firewall, and that is possible by combining EAA with Kona Site Defender.

Also we're investing in the go-to-market side.

So that we'll be in a better position to sell these products, not only internally to the existing customer base, but to generate a much larger customer base.

Today, our traditional products really are focused on about 1/3 of the verticals out there in the Fortune 1000.

But with the enterprise security product line, that -- we can increase that substantially.

Our next question is from Sterling Auty with JPMorgan.

I wanted to drill in on the comments around the large contract renewals and your confidence in the Media Acceleration.

It sounds like you've got good visibility into that acceleration.

And I'm wondering, were you able to get, as part of the new agreements, a guarantee of a larger percentage of traffic and that's why you have this new increased visibility?

I mean, I think it's a combination of things.

One, obviously, when you do a contract restructure, most of these contracts are at least a year long, some longer than that.

So you certainly get some good visibility from customers when you contract with them around their expectations.

And almost all these contracts, as you can imagine, these customers commit to you for that period of time, and they give you some color around what they expect to do.

They don't always commit to that level that they expect to deliver because they don't want to be in a position where they're not delivering up to their commitment.

But I'd say this is -- what's maybe a little bit different here is that I think that our media team has been very operationally focused on these top 250 customers.

So I think the intelligence that we have with these customers at the time of renewal, and not just the intelligence itself but the contract structures that we put in place, in many cases, incent the customer to push more traffic with Akamai because the way the contract vehicles work is the more traffic they push with us, the better pricing that they do get.

And so I think we've been smart about some contract structures to be able to secure the share and grow share with the way we price this with customers.

So we feel very good, and we're quite confident about being able to return the Media Division customer base back to revenue growth in 2018.

Okay, great.

And then one follow-up.

You've touched on, last quarter you guys benefited in the Media in terms of the focus with the sales for selling more media products to Media customers.

And looking at the performance upside, would you say that we just saw a normalization of those sales behaviors this quarter and that's why we got a little bit more lift in the performance side or was it something else?

Well, I think the performance lift that you got in the fourth quarter is not from the Media Division customers.

The lift you got in the fourth quarter was holiday commerce traffic for our large commerce customers.

There was a very, very strong holiday commerce season, and the Web Performance business benefits the most from that.

Our next question is from Jeff Kvaal with Nomura.

There's been a little bit of public discussion about Elliott taking some position in the shares.

And I'm just wondering if you wouldn't mind sharing with us a little bit about your thought on that, what you are in discussions with, with Elliott, what you can, of course, but a little bit of the nature of that back-and-forth would be very helpful.

Yes, as a matter of policy, we don't comment on discussions with specific shareholders.

That said, we welcome the views of all our shareholders at how we can better create value for the shareholder base as a whole.

And we've got an active dialogue with many of our shareholders to make sure that their perspectives are heard in the boardroom.

Okay, excellent.

I guess, maybe I will follow up in a different direction then and say, could you help us understand a little bit about what kind of pricing assumptions you've built into the media business revenue picture for 2018?

I think the pricing assumptions are consistent with what we always do, which obviously, we want to make sure that we have the competitive price points that the way the media business works is you've got to give customers a competitive price, and then the best performance, reliability and scale wins.

And so I think we've worked hard to make sure that the right pricing structure exists for our customers.

And I think we're well poised to continue to grab the traffic that's there.

So the Media business is all about -- which is the reason why we're focusing on the top 250 customers -- is focused on the customers that push a lot of traffic, put the right contract vehicles in place and then watch the volume grow.

And as the volume grows, the revenue growth -- should grow with that.

That's just the nature of that business.

Okay.

So essentially the pricing environment remains about the same.

You're just grabbing a greater share of the traffic is the message?

Yes, I mean, it's fair to say it's a very competitive pricing environment.

So nothing's changed in that regard.

It's still a very competitive pricing environment.

So nothing has changed in that regard.

But the nature of that business is about providing the right price points.

And then with the right price point and the right performance, you'll get the traffic volumes.

Our next question is from Sameet Sinha with B. Riley.

I have questions about the visibility in Media.

And I just want to dig a little bit deeper there.

So you spoke about the top 250 customers.

Can you talk to us about how many of these customers you have contacted?

How many have -- the contracts have been changed?

Just wanted to kind of get a sense for the continued flow from -- or the benefits from these sort of renewals.

Secondly, if you can also touch on what are your expectations for your platform customers in 2018?

Clearly, that number seems to have stabilized around 50 million a quarter.

Just wanted to get your assumptions for next year.

Yes, I mean, certainly, from a visibility perspective in Media that we don't disclose the number of contracts that we actually reprice.

But I think it's fair to say that based on what we talked to you about at the end of Q2 and in Q3 that we were pretty aggressive about going into the customer base where we thought that we could grab more traffic share.

And you can expect that we did most of that in the second half.

So I'd just say most of that is behind us, to be frank.

We've done a lot of that work now.

And so we think we're going to be able to reap the benefits from that work in 2018.

And relative to the platform, the Internet platform customers, as we've talked about in the past, you're right that they've been roughly $50 million a quarter throughout 2017.

The dynamics that are going on with those customers are different.

So not all of those customers are kind of the same.

That -- I think we can expect for those customers that they'll probably come down modestly in 2018, to be frank.

They usually do, Q4 to Q1, seasonally, you see a drop in those customers.

And I would expect we'll see that seasonal drop for them this quarter.

And then probably stay, call it, 7% of the Akamai's revenues for pretty much the remainder of 2018.

Our next question is from Michael Hart with Guggenheim Securities.

There's a lot of additional color, which we really appreciate, especially the comment about Image Manager, Bot Manager and SOASTA reaching $100 million run rate.

I wanted to dive in a little bit around CapEx.

I know you guided to only spending about 10% to 12% of revenue in 1Q, but there's more coming in the second quarter around the network refresh cycle.

I was wondering if you could maybe give a little color kind of where we should think about the CapEx spending over the full year 2018 and maybe longer term.

And has your thinking around the level of capital intensity been changed at all by the lower tax rate?

Yes.

No, I mean, it's probably important to remind folks that our CapEx really are 2 big areas and then a smaller area.

One is network CapEx and the other is capitalized software.

So we spend, call it, between 15% and 17% of our revenue in network CapEx and capitalized software with a little bit of facilities.

And so, call it, half of it is in network CapEx and roughly half of it is in capitalized software.

And so capitalized software, all the new product areas that Tom talked about, Image Manager, Bot Manager, et cetera, that's all of the new product innovation that's going on.

So it's not typical CapEx like many people think of it.

It's not physical CapEx in that regard.

And relative to network CapEx, I think we've done a nice job of scaling our network CapEx.

And you can expect that we'll continue to scale our network CapEx in 2018.

There's always a lot of initiatives underway in the company around driving cost of goods sold efficiencies and CapEx efficiencies in the company.

And so for the full year, we'll probably spend on CapEx again between 15% and 17% of revenue.

Our next question is from Mike Olson with Piper Jaffray.

I just had a question related to getting a sense for where the bulk of security growth can come from going forward.

So as it stands today, is the growth of security coming from higher revenue per customer for existing security customers?

Or is it through adding new customers?

And I'm sure the answer is some of both.

But which would you say is driving more of the growth right now?

And then also related to that, what percent of security customers today are outside of your customer base for other Akamai solutions?

Yes, I would say most of the dollars today is upsell into the existing customer base, but we are also attracting new customers and I mentioned, especially in the financial vertical, where the first product they buy will be security.

Today, you take the typical Web rep out there selling and most of the new deals are led by security.

So it's really good as an upsell when we have these new products and really good to attract new customers and especially, as we start getting traction with our enterprise security products because those appeal to every enterprise where our traditional product lines, as I mentioned, were more combined to about 1/3 of the verticals in the Fortune 1000.

Quick housekeeping.

Are you expecting the fiscal '18 tax rate to be similar to the 23% non-GAAP rate in Q1?

Yes, I think I provided that in the full year guidance.

We expect a 23% full year non-GAAP tax rate.

Our next question is from Heather Bellini with Goldman Sachs.

Most of mine have been answered.

But one that I just wanted to touch on.

You've talked about pricing in the Media business.

And I believe you said you expect the pricing trends that you've been seeing to continue.

I was wondering if you could talk a little bit about what you've been seeing over the last kind of 6 to 12 months in the Performance business and how are you thinking about pricing trends as you look ahead over the next 12 months?

Sure, I'd say the Performance business, as you can expect, Heather, that is also -- it's not competitive like Media, but it's also a competitive business that Akamai has, we believe, the best-performing set of products in that area.

And so it depends upon the customer that you're selling to for the Web performance, but not all customers and not all products are the same.

And so when you're selling a Web performance product maybe to a Media customer that's using it for traffic solution, pricing might be much more aggressive.

Whereas if you're maybe selling a Web Performance Solution to a large commerce customer that really needs to have the highest level of performance and reliability.

And so the pricing trends kind of differ by those customers.

But as you can imagine, every customer when they come up for renewal, they expect the price of technology to come down.

The Web performance product category is no different than that.

But I'd say, it's a competitive area.

It's not as competitive as Media, but it's certainly a competitive area and it depends upon the customer profile.

And then just a follow-up, if I may.

The multi sourcing that has happened in the Media business over the last couple of years, have you seen that start to happen in the Performance business that -- in some of the customer segments?

Yes, I think only in the low end.

As Jim mentioned, where it's just basic delivery.

You can see some there.

But for a commerce company or a bank or anything like that, it doesn't technically make some really sense to do multi sourcing.

If you're just sending out dumb objects, you could do multi sourcing there.

But when you're protecting or accelerating an app or a whole site, you don't tend to see that.

Our next question is from Colby Synesael with Cowen and Company.

Two questions, if I may.

The first one is part of the review process to the company seems to have initiated sometime in the fourth quarter.

Are you considering or evaluating on outright sale of the entire company?

And then, secondly, as it relates to M&A, you've historically focused on technology bolt-ons or tuck-ins.

Is there an increasing focus to focus -- or excuse me, to look at companies that are -- have more of a go-to-market?

Then for Akamai, it seems like you have really great products, but part of what you're lacking is the go-to-market to get into some of these institutions, and I'm wondering if that's something we could potentially see more of in 2018.

Yes, of course, we don't comment on rumors.

And so I'm not going to say anything there.

Of course, our board always operates in the best interest of shareholders.

We have a very professional and experienced board.

In terms of your second question, yes, as I talked about, we are investing in growing our go-to-market efforts, particularly around new customers and especially for the new security products that we've talked about.

So there is investment in -- increased investment there.

With M&A, I don't see that there's a fundamental change in our strategy in terms of the companies that we might buy going forward.

I think it's fair to say, though, Tom on the M&A front, Colby, that you're right.

We have largely acquired companies with technology capabilities.

But there were companies, Prolexic being one, that did have go-to-market capabilities.

So we've done both before.

And you can expect in our M&A aspirations that we also look at companies in the M&A realm that can help us on the go-to-market side.

But it has to be the right fit for the company and it has to be the right kind of price point.

But you can expect that we're looking at all of those things.

Our next question is from Vijay Bhagavath with Deutsche Bank.

My question is around the U.S. and the overseas operations, Tom and Jim, please chime in as well, which is you're seeing strength in your international business versus U.S. Is the overseas strength sustainable?

What's driving that?

And anything you can do in terms of taking the overseas sales playbook and apply it back into the U.S.?

No, it's a good question.

As you could imagine, these large Internet platform customers reside in the U.S. And so they obviously weigh heavily on the U.S. growth rates.

And so one of the reasons why you see lower growth rates in the U.S. than outside the U.S. is largely because of them.

Having said that, I think you're absolutely right that we've had very good success in our international markets and in our Asia-Pacific market in particular.

And there's always things that our sales leaders are sharing with one another around plays that they run that have been successful in their particular geography that potentially could work in the U.S. And there's U.S. plays that work -- have worked well in Asia.

So yes, we're doing that.

But you have to be a little bit careful that it's not necessarily because international is growing faster than the U.S. that it's a matter of the U.S. sales force.

It's really a matter of that's where the big platform customers reside.

And if you pull them out, actually, the growth rates in the Americas are pretty good.

Our next question is from Dylan Haber with RBC Capital Markets.

Following up on the last question on international.

In terms of the strength you saw in APAC, which markets drove that outperformance?

Yes, we've had strong growth in actually many of the markets that we've had drawn -- strong growth in Australia.

We've had strong growth in Japan.

We've had strong growth in kind of Singapore.

So it's been pretty pervasive that we've had very good adoption of our technology in the Asia-Pacific market, both in the Media customer base and the Web customer base.

So we're quite pleased with the execution in the Asia-Pacific market.

I mean, I think the other markets are doing well.

I think the -- EMEA is also a market that's done pretty well.

I think we called out Asia-Pacific because, notably, their growth rate is a little bit more.

But we've had a -- we actually had a very good year in 2017 in our European markets as well.

Our next question is from Will Power with Baird.

This is actually Charlie on for Will.

I just wanted to ask about the OTT impacts in the quarter and maybe specifically DirecTV Now, which has been growing subscribers at a healthy clip.

How impactful was DirecTV Now specifically in the quarter?

And maybe more generally, how should we think about OTT growth going forward in 2018?

I mean, I can start and maybe, Tom, can offer any other color.

As Tom commented on in the -- his prepared remarks that we had very strong growth in OTT with roughly 50% traffic growth with our video delivery customers.

And so that's by far the fastest-growing kind of traffic area for our Media business.

And we expect to continue to grow a strong clip.

We don't comment specifically on customers, AT&T or DirecTV Now other than to say that, obviously, they are customers and we have a good business relationship with them.

But we really can't comment on specifically anything more noteworthy.

And relative to the broader trends, I think as Tom talked about that we think OTT will continue to have a continued, steady strong traffic growth rates in the near term.

I think we believe as a company that longer term, there's a huge amount of traffic that's poised to move online.

I don't think that's going to be the case in the 2018 fiscal year.

I think you'll see steady growth in OTT, but it's a very large, long-term growth opportunity.

Our next question is from Brad Zelnick with Crédit Suisse.

My question for you, Jim, I appreciate that you mentioned in your remarks that the impact from ASC 606 wouldn't be material.

But can you bridge us from 606 guidance back to 605 for comparison with Street models?

Yes, I mean, it -- literally, Brad, it's handfuls of millions of dollars that -- one of the reasons we have not provided -- what I wanted to be able to provide to you guys is an ability to give you a historical restatement of 2017.

We have to get our auditors through that before we publish that.

But it's very immaterial, Brad.

Let's call it -- it's less than 0.5% of revenue for the company.

And it doesn't always go in one direction or the other.

And so it's handfuls of millions of dollars in the first quarter and not really a notable impact, which is -- I wanted to bring it up because I wanted you guys to know that it's coming.

I also wanted to make sure you realize that it's not a material impact on the company's revenue or P&L results for either the quarter or the year.

So the commission expense by deferring it, doesn't end up being a benefit?

And do you factor that in or have an assumption baked into your guidance for it?

No, we do.

But again, it's not material.

Because all that -- not all of our commission spend is subject to the amortization.

It's only our -- the portion of our commission spend that is related to bookings.

So our sales teams have revenue plans, and they have bookings plans.

And a heavy weighting of their commission plans is on revenue and sales reps that are on a revenue plan.

The ASC 606 does not affect revenue plans.

It only affects bookings-oriented plans.

So it's a smaller percentage of our commissions spend that's impacted by it.

Our next question is from Jeff Van Rhee with Craig-Hallum.

I'll try to be brief with these 2 quick ones.

Just you talked about the bit growth, referenced the fact that you've outperformed the market.

Can you just be specific what did you see as the bit growth for the market, Q3, Q4?

And any quantification you can give on share gains?

So that's question one.

And then question 2 with respect to enterprise in particular, the go-to-market.

You talked about the broader applicability of the products.

That was referenced to a lot of vertical markets that you might not have addressed previously.

Does that suggest more material changes to go-to-market and sales structure going into the year?

Okay.

So the published estimates of traffic growth on the Internet are around the mid-20s overall and they get into the 30s for video.

So we compare quite favorably to that.

In terms of the go-to-market, we do operate an overlay specialist team for the new Enterprise Products.

And that's an area that we'll be growing and looking at carefully as we head further into 2018.

Our last question is from Brandon Nispel with KeyBanc Capital Markets.

I was hoping that you guys could comment on what look to be competitive products to some of your core services.

The first is Google project AMP and the second is AWS plan to add Edge.

And I'm just wondering do you view these products as competing solutions to any of your core services?

Well, we have lots of competitors, including the major cloud service providers.

So there's just a ton of competition out there.

And we distinguish ourselves with the -- our performance, our scale, our reliability and our security.

But there's -- I think we track about 90 competitors across our various product lines.

And I guess, if I could just follow-up.

On the enterprise launch, I guess, what gives you guys some of the confidence that you have in launching the enterprise type securities?

It looks like Enterprise Application Access seems to be at least copied by at least one other competitor.

It looks like Cloudflare put out a competing product in the quarter.

So I was wondering if you just could comment on that, too.

Yes, sure.

Enterprise security is going to have a lot of players.

You have all the existing companies that sell data center based security devices that will be looking to move into the cloud.

You have some of the CDNs with some capabilities, they're trying to, I would say, try to have some offers there.

I think Akamai is really unique.

And you look at our capabilities with Kona Site Defender, the massive scale we offer, the massive amount of data we have to be able to understand what's an attack, what's a human, what's a bot, what are the bad entities?

We see a large fraction of all the transactions on the Internet.

So we have a very good view as to which devices and which entities are doing bad things and which is -- which are normal users.

And that's stuff that -- capabilities that Akamai uniquely has because other companies don't have access to that traffic.

So we're in a very good position to know what's good and what's not.

And with Enterprise Application Access, the ability to marry that with Kona Site Defender gives incredible security for internal applications, does it very efficiently, at scale, very reliably and doesn't impact your performance.

So I think it's a very compelling and unique offer in the marketplace.

Now that said, there are going to be -- it's a huge market, and there'll be a lot of players out there trying to grab a share of it.

Okay, so I'll just pick it up, operator.

Thank you.

I want to thank everyone for joining us today.

In closing, we'll be presenting at several investor conferences in February and March.

Details of these can be found on our Investor Relations section of akamai.com.

Additionally, we are currently planning for our annual Investor Summit.

As you know, we face some disruption to travel and attendance due to weather issues in March over the past few years.

And we're looking to hold it a little bit later in the year.

And when we set a specific date, we will let you know.

So thank you all for joining us and have a wonderful evening.

Ladies and gentlemen, thank you for participating in today's conference.

You may all disconnect.

Everyone, have a great day.