Natalie Temple - Paul L. Sagan - Chief Executive Officer, President and Executive Director J. D. Sherman - Chief Financial Officer, Principal Accounting Officer and Senior Vice President Jim Benson -

Scott H. Kessler - S&P Equity Research Mark Kelleher - Dougherty & Company LLC, Research Division David M. Hilal - FBR Capital Markets & Co., Research Division Gray Powell - Wells Fargo Securities, LLC, Research Division Jennifer A. Swanson - Morgan Stanley, Research Division Mark S. Mahaney - Citigroup Inc, Research Division Sterling P. Auty - JP Morgan Chase & Co, Research Division Colby Synesael - Cowen and Company, LLC, Research Division Michael Turits - Raymond James & Associates, Inc., Research Division Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division Aaron Schwartz - Jefferies & Company, Inc., Research Division Rob Sanderson Tim Klasell - Stifel, Nicolaus & Co., Inc., Research Division Philip Winslow - Crédit Suisse AG, Research Division Ben Z. Rose - Battle Road Research Ltd. Richard Fetyko - Janney Montgomery Scott LLC, Research Division

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Akamai Technology Earnings Conference Call. My name is Derek, and I'll be your operator for today. [Operator Instructions] At this time I would now like to turn the call over to Ms. Natalie Temple, Investor Relations. Please proceed.

Good afternoon, and thank you for joining Akamai's Investor Conference call to discuss our fourth quarter and full year 2011 financial results. Speaking today will be Paul Sagan, Akamai's President and Chief Executive Officer; J.D. Sherman, Akamai's Chief Financial Officer; and Jim Benson, Senior Vice President of Finance. 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 8, 2012. 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 News & Events portion of the Investor Relations section of our website. Now let me turn the call over to Paul. Paul L. Sagan: Thanks, Natalie, and thank you all for joining us today. Akamai posted record revenue in Q4 with our largest quarter-over-quarter revenue growth ever. Financial highlights for the fourth quarter include: Revenue of $324 million, a 14% year-over-year increase and a 15% increase over the third quarter of 2011; and normalized EPS of $0.45, up 13% from Q4 of last year and up 32% sequentially. For the full year, we grew revenue to $1.16 billion, up 13%. We generated normalized EPS of $1.52, an increase of 6% over 2010, and we continued to generate strong cash flow, with full year cash from operations of more than $450 million. I'll be back with some additional comments on what we're seeing in the market. I'll also have a few comments about our new product rollouts in 2012 and the planned transition we announced today in the role of CFO with Jim Benson taking over from J.D. Sherman after we close the books on 2011. But first J.D. and Jim are going to review our 2011 results in detail and look ahead to the start of 2012. J.D.? J. D. Sherman: Thanks, Paul. With Q4 revenue of $324 million, up 14% year-over-year and up $42 million or 15% sequentially, we exceeded the high end of our guidance with solid growth across the board. Our commerce vertical increased 20% compared to last year and 25% sequentially, driven by a significant increase in online shopping activity. We typically experience strong online retail and advertising seasons in Q4, but this was the best holiday season in company history. Enterprise, our fastest growing vertical, once again grew 23% year-over-year against a very strong Q4 of 2010, and grew 6% sequentially. We also saw revenue growth accelerate in the high-tech vertical, which grew 9% compared to Q4 of 2010 and 10% sequentially. This was driven by adoption of our cloud infrastructure solutions, and these solutions now make up 55% of our sales in the high-tech vertical. Revenue from our media and entertainment vertical grew 11% year-over-year and 17% sequentially as we saw traffic growth accelerate in the quarter. And public sector revenue grew 3% year-over-year and declined 2 points sequentially due to the timing of some of our custom projects. Across all our verticals, cloud infrastructure solutions grew 20% over Q4 of 2010 and now make up 58% of our total revenue, up from 55% last year. International revenue growth accelerated from Q3 levels on a constant currency basis. Foreign exchange was a slight benefit compared to Q4 of 2010, but a $3 million negative impact on revenues on a sequential basis. Revenue from outside of North America grew 11% sequentially and 15% on a year-over-year basis. And we saw accelerated growth in Europe and all major economies outside the U.S. except Japan, where we continue to face macroeconomic headwinds. Revenue from North America grew 13% on a year-over-year basis and 17% sequentially. During the fourth quarter, sales outside North America were 28% of total revenue, that's down 1 point from the prior quarter, primarily due to the strong U.S. commerce season. And resellers represented 19% of total revenue and that's consistent with the prior quarter. Our cash gross margin for the quarter was 79%, consistent with last quarter and down 2 points from the same period last year. GAAP gross margin, which includes both depreciation and stock-based compensation, was 68% for the quarter, up 1 point sequentially and down 2 points from last year. Our GAAP operating expenses were $142 million in the fourth quarter. These GAAP numbers include depreciation, amortization of intangible assets and stock-based compensation. Excluding these non-cash charges, our operating expenses for the quarter were $109 million, up $9 million from Q3 and up 8% on a year-over-year basis. Adjusted EBITDA for the fourth quarter was $148 million, and that's up 14% from the same period last year and up about 21% from Q3 levels. Our adjusted EBITDA margin came in at 46%, up 1 point from the same period last year and up 3 points from the prior quarter. For the fourth quarter, total depreciation and amortization was $44 million. And this includes $35 million of network-related depreciation, $4 million of G&A depreciation and $4 million of amortization of intangible assets. And net interest income for the fourth quarter was $2 million. Moving on to earnings. GAAP net income for the quarter was $60 million, or $0.33 of earnings per diluted share. As a reminder, our GAAP net income includes several primarily noncash items, including: $21 million of stock-based compensation, including amortization of capitalized equity-based compensation; and $4 million from amortization of acquired intangible assets. We're including GAAP taxes in our normalized earnings, and that tax charge was $28 million based on a full year GAAP tax rate of 35%. Our normalized net income for the fourth quarter was $83 million. That translates to $0.45 per diluted share on a normalized basis, up 13% from Q4 of last year, and up 32% from Q3. Our weighted average diluted share count for the fourth quarter was 183 million shares. With our solid fourth quarter results, we finished the year with $1.16 billion in revenue, an increase of 13% over 2010. Full year GAAP gross margin came in at 68%, down 2 points from 2010 and cash gross margin was 79%, also down 2 points from the prior year. Full year GAAP operating expenses were $493 million. These GAAP numbers include depreciation, amortization of intangible assets and stock-based compensation, and excluding these noncash charges, operating expenses for the full year were $395 million. Our full year adjusted EBITDA was $525 million, up 11% from 2010 and full year adjusted EBITDA margin was 45%, down 1 point from the prior year. GAAP net income for the year was $201 million, or $1.07 of earnings per diluted share. This GAAP net income included $69 million of stock-based compensation expense, including amortization of capitalized equity-based compensation, and $17 million of amortization of intangible assets. Excluding these items, our normalized net income for the year was $285 million, or $1.52 of earnings per diluted share. That's up 6% from 2010. This number includes a full year GAAP tax charge of $106 million based on a full year GAAP tax rate of 35%. Cash generation was very strong. Cash from operations from the fourth quarter were $136 million and for the full year, we generated $453 million in cash from operations. We spent $76 million in share repurchases during Q4, buying back just under 3 million shares at an average price of $26.38. For the full year, we spent $325 million buying back 12 million shares at an average price of $26.45. Coming into 2012, we had $130 million remaining in our share buyback authorization. Capital expenditures in Q4, excluding equity compensation, were $47 million and for the full year, capital expenditures were $183 million, or 16% of revenues, in line with our model. At the end of Q4, we had over $1.2 billion in cash, cash equivalents and marketable securities on the balance sheet. Finally, days sales outstanding for the quarter were 56 days. Overall, the company performed very well in Q4 and this is an exciting time for Akamai. This is a great team, and I'm proud of what we've accomplished over the last 6 years as we grew to over $1 billion in revenues. At the same time I'm looking forward to a new challenge in a very different role than I've played here at Akamai. I'm also very pleased to be turning the reins over to Jim Benson, who I've worked with for the past 2 years now as my Senior VP of Finance. I'm confident that this will be a seamless transition. And with that, let me turn the call over to Jim to talk about our Q1 guidance. Jim?

Thanks, J.D. It's been a pleasure working closely with you, and I look forward to following your example of professionalism and business leadership in the years ahead. As J.D. said, our business performed very well in Q4, with accelerated growth for both our cloud infrastructure solutions and our content delivery solutions. With $42 million in sequential revenue growth, we recorded our largest quarterly revenue increase ever. And while it's too early to call it a trend, we did see very promising traffic growth in Q4 for our media solutions. For Q1, we do expect to see a normal sequential revenue decline due to seasonality. Perhaps a bit more pronounced than in the past due to the exceptionally strong Q4 we experienced in 2011. We also expect foreign exchange will be a headwind, with an expected negative sequential impact of about $1 million based on current spot rates. Coming off of our record Q4, we are expecting Q1 revenues of $305 million to $313 million or 11% to 13% growth. As a reminder, this guidance excludes the impact of the pending Cotendo acquisition. We expect cash gross margins to be roughly flat with the prior quarter, and GAAP gross margins to be down 1 to 2 points sequentially, given the normal seasonal revenue trends. We expect Q1 operating expenses to remain roughly flat with the prior quarter as normal Q1 items, such as the annual payroll tax reset and sales training expenses roughly offset the Q4 expenses driven by year-end commission and bonus accruals. As a result, we expect adjusted EBITDA margins to be about 43%. We also expect to record a higher tax charge based on a GAAP tax rate of 38% to 39%, or taxes of $25 million to $29 million in Q1, due primarily to the expiration of the federal R&D tax credit. This rate change will have roughly a $0.02 impact on normalized EPS for the quarter. As a result, we expect normalized EPS of $0.36 to $0.39 for Q1, assuming a fully diluted share count of roughly 183 million shares. On CapEx, we expect to spend about $50 million in the quarter, excluding equity compensation. Overall, we are extremely pleased with the momentum we have coming into Q1. We remain optimistic about the growth potential and markets for our solutions. That said, we are maintaining our practice of providing guidance only 1 quarter ahead. We are also looking forward to closing the Cotendo transaction, potentially as soon as this quarter. We'll talk more about the financials associated with Cotendo when the deal closes, but we expect the transaction to be roughly neutral to 2012 normalized EPS. Finally, today we announced the acquisition of Blaze, a provider of front-end optimization technology with a small team in Ottawa, Canada. From a financial perspective, we don't expect the acquisition to have a material impact on revenue or profit in 2012. We look forward to updating you again on our next earnings call. Now let me turn the call back over to Paul. Paul? Paul L. Sagan: Thank you, both. Before I provide some commentary on the year ahead, I would like to thank J.D. for 6 years of dedication to Akamai. When he joined us from IBM, his goal was to help us scale the business to capture the growth opportunities we saw in front of us. And he met that goal, and helped Akamai to grow to well over $1 billion in annual revenue. Now he wants an opportunity to help run an early-stage technology business. He'll be leaving us after he signs the 10-K for 2011 to join HubSpot. We wish J.D. well, and we'll miss him. But we're confident that he'll be leaving us in good hands. Which brings me to Jim Benson, who many of you already know from IR meetings over the past year. Jim joined us from an accomplished career in high-tech finance at HP, Compaq and DEC. He's been helping J.D. to run our finance organization for 2 years, and I'm confident he's going to pick up the CFO mantle without missing a beat. With such a strong Q4 and end of the year, we believe we're well positioned to take full advantage of the market opportunities for growth ahead of us. Over the past year, you've heard me talk about the hyper connected world and what that means for both Akamai and our customers. There's tremendous opportunity for organizations of all kinds to build and expand their online businesses to provide instant access to applications and content anywhere and on any device. Our clients are providing an unprecedented user experience, one that's personalized, impactful, relevant, high performing and secure to employees, customers, partners and other stakeholders around the globe. As recent headlines make very clear, doing business online faces increasing security risks. Our customers are reporting an increasing number of attacks directed at their web properties. From 2009 to 2011, the number of distributed denial of service attacks that we investigated on behalf of our customers more than tripled. Perhaps most alarming, hackers are employing new method to combine network and application era attacks to bring sites down and it's harder than ever to defend against these new forms of attacks. Akamai's cloud-based web security solutions leverage our massively distributed platform, providing new ways to protect an organization's online presence. Our approach to web security is designed to not only absorb high-volume attacks for our customers, but also to keep attack traffic as far away as possible from a customer's data center. This solution is designed to enable client sites to stay up and their web applications to keep performing. This year, we're rolling out enhancements across nearly all of our product lines. This week, we brought together our entire worldwide sales organization for a preview and training. One of the new services we highlighted is a next-generation web security product that provides a sophisticated layer of defense against malicious online activities. It will be released to the market next quarter. We built momentum in the web security market last year that we believe will continue into 2012. We increased sales of web security solutions by 149% in 2011. While security is generally the #1 concern of CIOs doing business online, site performance is also still critical to them. And so you'll see us continuing to invest resources to build even better performance optimizing cloud services throughout 2012 in addition to security enhancements. We believe that one of the most promising new areas is a technology called front-end optimization. Earlier today we announced the acquisition of Blaze. We're excited about the prospects of integrating Blaze's unique cloud-based technology with ours and incorporating it into our next-generation Dynamic Site Accelerator solution. During Q4, we announced that we entered into an agreement to acquire Cotendo. Together, we'll continue addressing the acceleration complexities of the cloud and mobile environments. The Cotendo deal could close as early as this quarter, pending standard regulatory approvals and we're looking forward to having another extremely talented team join Akamai. Partnerships are also helping us to expand the reach of our capabilities and bring Akamai to new markets. This quarter, for example, we're looking forward to announcing general availability of the Akamai-Riverbed solution. Through this partnership, we believe we will be able to offer clients a better way to ensure that SaaS applications are accelerated and optimized wherever they are accessed, in the public cloud, or private network, to provide a consistent user experience anywhere. We've been testing the solution with 10 global data customers since late last year, and these tests have been showing exceptional performance improvements. We demonstrated some of these test results at our Investor Summit in December. For those of you weren't able to join us, I encourage you to watch the replay, which you can find on the Investor Page of our website. In particular, the demonstration showed a reduction in the download time of a local file using Office 365 from 14 seconds to 1 second. We reduced the upload time from 45 seconds to less than 2 seconds. We think our customers will find the results very compelling. Another area of investment for us is in the mobile arena, where we are rolling out a new product this year called Mobile Accelerator. This embraces the shift in consumer behavior toward mobile computing over smartphones and tablets. This solution includes device detection and protocol optimization capabilities that reduce page load times and packet loss. We believe we're helping customers unlock new revenue sources through innovation that removes the complexities of connecting increasingly mobile world, while improving online performance. That's our strategy across Akamai's entire lineup of cloud infrastructure solutions. To enable our clients to offer secure and higher performing sites and applications, reaching any user, on any device, anywhere around the world. It's also key to our strategy for our content delivery media solutions. It wasn't long ago that video on the Internet was more like an interesting science project, dominated by user-generated content. Many said the Internet would never really compete with TV and while we're not quite there yet, the industry is rapidly moving in that direction. A perfect example was last weekend. Television's largest event migrated for the first time to the Internet, with the Super Bowl being streamed live on the website of our partner at NBC Sports, and delivered exclusively over the Akamai HD Network. It was interesting to see the complementary nature of a compelling online video experience paired with a live TV broadcast. We saw more than 2.1 million unique users, a record for a live event for a single broadcaster. These were end users participating in an interactive, personalized experience unlike anything they've ever had before, and we believe this is a great indication of where media is heading rapidly. Broadcasters and content owners are exploring new ways to engage their audiences through initiatives such as UltraViolet, TV Everywhere. We're rolling out of the second-generation of the Akamai HD Network this year with enhanced security capabilities to help our media clients succeed in these initiatives and others, and at the same time to protect their assets, while reaching the widest possible online audiences. All of these trends in cloud computing, online web security, mobile and media require a full suite of solutions that address the challenges of moving mission-critical businesses on to the Internet. So with all the opportunities in front of us, we are very positive about the investments we've been making in new product capabilities and about Akamai's prospects for growth in 2012 and beyond. Now J.D., Jim, and I will take your questions. Operator, the first question please?

First question will be coming from the line of Scott Kessler from S&P Capital IQ. Scott H. Kessler - S&P Equity Research: A couple of questions. You talked about acceleration in some of the verticals, particularly high-tech. Can you speak to what might have driven that? Obviously, I would imagine that it didn't necessarily have to do exclusively with a strong holiday shopping season, and I have a follow-up. Paul L. Sagan: So one of the nice things about the quarter and the really positive surprise was that we saw strength across the board. We thought it would be a good holiday season. It was an exceptional holiday season, and so commerce was very strong. But as we mentioned, we saw some acceleration in media volumes. We saw acceleration in the software and SaaS delivery market. And so there was just a very strong Internet ecosystem economy, which we hope will set us up well for 2012 as well. Scott H. Kessler - S&P Equity Research: And the follow-up I had, it seems pretty obvious that maybe you're looking a little bit differently in terms of your balance sheet and your financial flexibility in that you've announced 2 strategic acquisitions over the last couple of months, and I guess I'm wondering how you think about both the balance sheet and use of cash, particularly as M&A plays perhaps a greater role in your priorities going forward? Paul L. Sagan: Sure. Well our goal is to return strong growth and shareholder value to our investors. And we want to use our balance sheet whenever possible to strengthen the company and we said for a long time that we would continue to be opportunistic about acquisitions to fill holes faster in our product portfolio and to try to grow the company more quickly. You've seen us some years do a number of acquisitions, some years not and so I think we're a disciplined buyer. We have a roadmap across our divisions of things that we want to add to our portfolio, and we're always making that make-or-buy evaluation and in this case, we found 2 terrific companies that we thought would help us grow the business, and that's why we went the M&A route and in the future we'll continue to look. We do have a great balance sheet and it allows us to be opportunistic and to move when we need to. J. D. Sherman: I would just add to that, that we used our balance sheet really, flexibility, in 2 ways last year. One is with the share buyback. We started the year at $1.2 billion in cash. We basically used our free cash flow to buy back shares last year when it made sense, it was opportunistic. And of course with that strong balance sheet, we were also able to make a cash acquisition of Cotendo and then a smaller one with Blaze. So it does give us a lot of flexibility and we'll be opportunistic both in terms of returning it to shareholders via buybacks as well as acquisitions.

Your next question will be coming from the line of Mark Kelleher from Dougherty & Company. Mark Kelleher - Dougherty & Company LLC, Research Division: I wanted to ask, focus on the value-added services, the cloud services. Was there anything that particularly drove the strength in the quarter? You mentioned networking was up 149% year-over-year. Has that become a meaningful part of that? Wonder if you could just talk about the different elements within that part of the business. Paul L. Sagan: Oh, secure -- it was really demand for security products, so we talked a lot about providing a different layer in a security in-depth philosophy of web-based security from the Akamai cloud. And that was the strong growth we saw and interest in security products last year. I'll let Jim make some additional comments, if you'd like.

Yes, and we had very good signings in our cloud infrastructure solutions, and we had very good momentum in our cloud infrastructure solutions, in particular in our DSA product line, which tends to seasonally do very well in Q4 because of the online commerce season. So we had growth as Paul mentioned across the board, but we continued to see momentum in the cloud infrastructure solutions in particular. Mark Kelleher - Dougherty & Company LLC, Research Division: Okay. And just one quick follow-up. The legal settlement, what was that about? Paul L. Sagan: Legal settlement. Oh, I'm sorry, yes, that had to do with a dispute that we had brought against somebody. I can't comment on the details at all. We obviously excluded that from our normalized earnings. It went down in major. J. D. Sherman: And that was not -- that was not connected to our patent litigation. No, it was not.

Your next question is coming from the line of David Hilal from FBR. David M. Hilal - FBR Capital Markets & Co., Research Division: I guess I wanted to ask Paul or J.D. on the go-to-market with both Blaze and Cotendo, and so specifically for Blaze, is that going to be embedded in DSA, or is it a separate product or separate pricing? And then similar for Cotendo, maybe you can just talk about what the product looks like, whether it's separate, bundled into other things? And the opportunity to sell those into your install base. Paul L. Sagan: Sure. Let me take them in reverse order because we're not going to make any specific comments on Cotendo until that deal is closed. We like a lot of their capabilities. We like their team. We think it brings a lot to Akamai, but I won't comment specifically there until we close that. Now in terms of Blaze, which is already closed, we'll be embedding those, that capability across our dynamic site capabilities. We'll be announcing new product availability in dynamic site acceleration and mobile acceleration, and we'll be using front-end optimization capabilities where it makes sense. Just to help folks understand, this is the idea that the sites are now effectively created in the browser and that's very different on different kinds of devices, so there's this ability to create optimization in this front end where the user is across devices, and Blaze has very interesting cloud-based capabilities. There are a lot of people who say they're in the front end optimization space or web content optimization space, but often they are a single point of failure solution or a data center solution or a box solution, and we don't believe are scalable. What we really like about not just the team at Blaze and their expertise was their design, and our belief was we could embed it in our massively distributed platform and bring it to bear a number of products. I won't to jump the gun and announce pricing or how the bundling is done. That will be done by product marketing and rollouts. But you can assume that over the next couple of years we believe front-end optimization will be important and taking what Blaze has done and building on it should be important to those -- that product suite.

Your next question will be coming from the line of Gary Powell from Wells Fargo. Gray Powell - Wells Fargo Securities, LLC, Research Division: Just had a couple of quick ones. So there's a very nice acceleration in revenue growth, particularly in the media and entertainment vertical. Can you just give a little bit more color as to the driver there? And then broadly speaking, how do you think pricing in the competitive environment in the CDN space will look in 2012, relative to 2011? Paul L. Sagan: Well that's the age-old question that the answer doesn't really change much. The pricing environment has been quite consistent. I'd remind everyone that our goal is to drive the cost and the price down on the delivery of volume content, because that's how our customers can afford to bring more long form media online. The pricing environment in the second half of last year and Q4 was very consistent with what we've seen for years, so I expect it will be similar this year. Our goal is to drive even more cost out of the business so we can help our customers do more online, so no fundamental change there. Last year, don't expect it. This year -- and the acceleration really came from I think our customers feeling better about their ability to bring more media online and profit by doing so, probably a little bit of recovery in the economy, a little bit of recovery in the ad market, which is how a lot of this content is effectively monetized online by our customers. And so they brought, I think, more content online, and we saw the volumes always increase, but we saw that rate of increase tick up a little bit. Again, we don't want to say that it's a giant trend, but it is something that we expected would happen. We saw it happening in Q4 and I think that helped the growth on the content delivery solution side, and I think that's a good data point. Gray Powell - Wells Fargo Securities, LLC, Research Division: Got it. That's very helpful. And then just as a quick follow-up, you touched on it here. Can you just provide details as to what you're doing to control co-location costs, and how we should think about that item or component of your gross margin going forward? Paul L. Sagan: It's true. Jim?

Yes, I can cover that. I mean, there's a couple of things that we're doing in particular for co-location costs, but the driver of co-location costs obviously is the server print -- footprint that sits in the data centers, and so there's a lot of work that we're doing around improving software enablement to get more throughput out of the servers. There's also work to be done on the hardware side as well, that hardware becomes more efficient as we introduce new servers into the data centers as well. So both of those areas are what's helping us focus on co-location costs and make sure that we manage it appropriately. Paul L. Sagan: I think we have the ability to continue to drive the cost of delivery down significantly going forward. It's sort of invisible out there, because a lot of it is the -- effectively take advantage of Moore's Law, and a machine is not a machine year-over-year, and the incredible efficiency that we can drive out of our own software development or changes, physical changes, in those boxes. And so our goal is to never have a larger footprint than necessary, but to make that footprint more efficient every year, and that's a big focus on our network and platform side.

Your next question is coming from the line of Jennifer Swanson from Morgan Stanley. Jennifer A. Swanson - Morgan Stanley, Research Division: I just want to drill on a little bit. Paul, you made the comment, I think you touched on this, but in terms of the reacceleration in traffic growth, I know that is something that you talked about a couple of years -- a couple of quarters back as something you had expected. Should we think about the acceleration through Q4 as basically the -- what you were talking about a couple of quarters ago, but with some conservatism playing out kind of in-line with what you hoped it would be? Or were there other drivers that caused that to happen either faster or more dramatically than maybe you'd anticipated a couple of quarters back as sort of the hope -- how should we think about that reacceleration, relative to your expectations a couple of quarters ago? Paul L. Sagan: Jen, I think we -- if you step all the way back, it's clear to us and to most people that we're going to see content move online and quality improve, and I think we are starting to see that. Q4, there's a lot of seasonality in there. So we're always nervous to put 1 point and call it a trend, and there's got to be some seasonality built into that and we had -- we'll have some of that naturally, so it'll be interesting to see how it plays out in the -- in quarter by quarter. The only thing I know really for sure is that I would expect that to happen over the next several years, but it's hard to call quarter-by-quarter at this point.

Yes, and I think the Super Bowl is a great example of what can be done, and what we've seen with these inflection points over time is, it's a combination of the economics, the cost of delivery married to the monetization capability. And the other is just what's possible from an experience, and we now believe that you can deliver reliably an HD quality movie that shouldn't rebuffer during the time people watch it. Or a sporting event that frankly, people said well -- and I used to hear this all the time, well the Internet's great, but the Super Bowl will never go on the Internet. Well it just did, and it was a great experience, and a complimentary experience to television, and so I think that distributors, content providers, broadcasters are all going to look at that and say, "It actually enhanced the audience and created new opportunities to make money." It didn't cannibalize, and I think that, that will also drive more media online and that'll be good for our Content Delivery business. Jennifer A. Swanson - Morgan Stanley, Research Division: And then just turning a little bit, it sounds like pretty much every business did see some strong acceleration in the quarter. The one that looked maybe like it decelerated little bit was the Enterprise business, and that's been such a strong performer over the last few quarters, so it's still a good result, but maybe a little bit of a deceleration there. Was there anything that changed in that business or that we should be thinking about there? Paul L. Sagan: No, we saw very strong growth in Enterprise as you mentioned. I think last year we had a very, very strong performance in the Enterprise segment, so the comp is a little bit tougher for that area, but it still is our fastest growing vertical, and so we're very pleased with the growth in the Enterprise vertical, and in particular with our EPS solutions.

Your next question is coming from the line of Mark Mahaney. Mark S. Mahaney - Citigroup Inc, Research Division: In terms of the international sales, you disclosed that yet acceleration in all the regions except for Japan. Can you just remind us how material Japan is do you as an end market, and then just talk probably about the international growth. It seems awfully lumpy. It's nice to have that acceleration, but it seems like it's a lot more uneven in terms of its year-over-year growth in international. Is that just the way those markets work for you? Or is there something you can do to kind of not necessarily perfectly manage the growth, but get it more consistently in that upper teens level? J. D. Sherman: Yes, I think this is sort of work -- weave my way back to those thanks a lot, by the way, first of all. I think it's a bit small -- the markets are smaller, so just small numbers move around a little bit more, so you have a little bit of that phenomenon and of course currency moves around. So that probably describes some of the choppiness that you see with our overall international revenue. Roughly speaking, international is 28% of our revenue, about 2/3 of that is Europe, and about 1/3 is Asia-Pac and Asia-Pac is dominated by Japan, so it's a pretty large market for us. And it's one that we haven't seen a lot of growth this year and has been somewhat of a constraint on our growth outside of Europe. I was really, really pleased to see the growth in Europe accelerate in the quarter, and we've also got emerging markets which are still a relatively small part of our overall European -- our international revenue portfolio, but they're growing 40 -- in the 40% range. So I think if we get a little bit of stability in the big markets, the product announcements that we have coming out, the investments that we've put in there, we're pretty optimistic about the ability to grow outside of the U.S. faster than we're going to grow inside the U.S.

Your next question is coming from the line of Sterling Auty from JPMorgan. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Two questions. First, when you look at the sequential decline for the first quarter, you mentioned the seasonality in the fourth quarter. What is it that you want to see, if there is anything in particular, before you're ready to call the improvement in volumes and business and VAS a trend? Paul L. Sagan: Well, the volumes have increased. It's the rate of increase and we'll just have to watch that over a few more quarters and decide if we think it's really an inflection point in video, and in our cloud infrastructure services, we have seen very strong growth last year, Q4 was great results. I'll be looking at how we're doing in our Dynamic site, in security and in mobile solutions this year, as we go forward and try to forecast how we're going to do. J. D. Sherman: I think that when we talk about it for -- a Vice President has to have 3 points to call it a trend, the CFO has 2 points and the CEO has to have 1 point, so I'm not quite ready to call a trend yet. So maybe Paul is, but... Paul L. Sagan: No. J. D. Sherman: No. And I need 3 quarters. They want 3 quarters. So I guess that's as scientific as we can get. No seriously, there's a very strong back half of the year, very strong bookings, great communication with our customers. We're going to be rolling out either enhancements or entirely new offerings in every major category of our product sets this year from site acceleration, mobile, web security and media delivery, and I think that our customers are focusing on more and more how they're going to grow their businesses online, and we're talking to them about the kinds of suite of solutions and a platform that they need. Sterling P. Auty - JP Morgan Chase & Co, Research Division: With that, with the new offerings and how you're interacting with your customers, what changes have you finalized to the sales structure to optimize that go to market for 2012? J. D. Sherman: We're not changing the structure at all. We're continuing to make investments in growing sales offices in regions where we see opportunity, opening new offices opportunistically where we see additional opportunity but the Enterprise, vertically our industry aligned structure that we've had for a number of years under the direction of the global sales services and marketing leadership I think is really working for us, and our goal is not to upend that or, if you will, fix it. I think it's working well.

Your next question is coming from the line of Colby Synesael from Cowen & Company. Colby Synesael - Cowen and Company, LLC, Research Division: Just a few questions. First off, I wanted to get an update on the products you didn't mention. Number one, the Ericsson product as well as the license of CDN. Wondering if you could comment on where those are. And then also, you keep on talking about product enhancements. I'm just curious, when we think of mobile, when we think of security even, I guess, the new Blaze acquisition, are these going to be new products with new revenue opportunities? Are these essentially improvements to current solutions to help further differentiate your versus your competitors, but don't necessarily lead to potentially new revenue? Paul L. Sagan: Well, our goal with whatever we bring out is I believe, is to drive new revenue for the company. In some cases they will be next generation products, in other cases they will be wholly new products and in both cases I think they give us opportunity to go to our customers and do more and get paid more. That's at least what we try to earn every day with them. In terms of those other 2 areas, I'm very pleased with the partnership with Ericsson, which we said was going to do joint development across a number of products. We're not ready to announce those today, but I'm very pleased with the collaboration and the work and the -- some of the actual field-testing results that we're seeing, but we are not ready to make product announcements yet. And in the area of working with our network partners, also very encouraged by some of the work that we have going there. As we said on the last call, we now have more formal network relationships than in the history -- any time in the past history of the company. They are more interested in how to drive more traffic efficiently across their network and work with us. We think that, that has opened up new opportunity to create a new kind of relationship, and even potentially a new revenue stream for us. We're not ready to make those announcements formally as new products yet, but we continue to work in that category and I'm very optimistic about that as well. But you'll just have to watch this space across those 2 categories for formal product announcements this year. Colby Synesael - Cowen and Company, LLC, Research Division: Paul have you -- am I right to think, though, that you guys have talked about launching those in the back half of 2012 but just were not exactly sure when? Paul L. Sagan: No, I haven't made a formal statement about that.

Your next question will be coming from the line of Michael Turits from Raymond James. Michael Turits - Raymond James & Associates, Inc., Research Division: First on the -- on high-tech services. This is the best quarter you guys have had in a long time there. Can you give us any more granularity on -- you gave us the breakout of what percentage of it was, I think, you said SaaS-based, as opposed to probably software delivery, I forgot exactly how you characterized it, but maybe just to tell us a little bit more about exactly what that business is that is the SaaS-based portion, and what the growth rate is there and then I have a couple of follow-ups. Paul L. Sagan: Yes, I think I'll take that. That so -- the -- the SaaS base of the cloud infrastructure solutions, I think, are about 55% of that vertical and we had very, very good momentum in that area. And as we talked about in the past, that you mentioned the software download business being the other business. That business is not the business that we're expecting to grow. That business was actually okay in the quarter. That business tends to be lumpy based on customers that do software downloads. So we had a reasonably good quarter there, but the real big driver in that was our SaaS solutions. Michael Turits - Raymond James & Associates, Inc., Research Division: Any sense of the comparative growth rate, what the SaaS is growing? Paul L. Sagan: I don't have that off the top of my head, no. J. D. Sherman: Overall, Michael -- overall our cloud infrastructure solutions grew 20% and I'm pretty -- I'm confident that the cloud infrastructure solutions within the high-tech group grew faster than that. Just another point of reference, I think last year in Q4, the percentages were -- it was less than 1/2 of the revenue of the high-tech group was on cloud infrastructure solutions, so we've really seen that turn this year. We've talked about that being an important sort of milestone for that vertical and I think we are turning the corner there. Michael Turits - Raymond James & Associates, Inc., Research Division: All right. And then back to the income statement, we did 46% EBITDA margins, which is the long-term target this quarter, but your guidance is 43%. Any sense of what you need to do in order to get it to 46% in the near-term versus the long-term and then similar question, similar thing just on tax rate, is that 38%, 39% good for the year?

Yes, I'll cover that. So I we talked about kind of a long-term model of having kind of EBITDA in the 45% to 47% range. So certainly, 43% in Q1 reflects a continued investment in the business, and I think Paul talked about some of those areas that we're going to continue to invest in those areas that we think are going to fuel product innovation and go to market for the company to continue to grow at the rates that we know the market opportunity is there for us. So I think what you're seeing is here. In the short-term it might bump around, around 43%, but we believe that we're going to be well within the long-term model of 45% to 47%. Now as far as the tax rate, I'm glad you brought that up, because I covered it briefly in my remarks and I want to make sure I clarify for folks that -- so not to get into a tax course, but the -- there is a federal R&D tax credit that was -- has basically expired in 2011 and from an accounting perspective, you cannot record the benefit for the R&D tax credit in the future years until it's reinstated. We don't know whether it's going to be reinstated, so what we've done, from an accounting perspective, is we've assumed that it will not be reinstated. And as I mentioned, that has roughly a $0.02 impact on our gross, so that takes us from roughly a 35% to 36% tax rate, to a 38% to 39%. Does that help? Michael Turits - Raymond James & Associates, Inc., Research Division: Yes, it sure does. So we could say it to just assume that for the year and forget the benefit at the annual taken. J. D. Sherman: Exactly, exactly. Paul L. Sagan: And not to get on a political soapbox, that's clearly a problem that we've seen year after year, and it would be nice for everybody if we just knew, but that's unfortunately not one of the things that Washington seems to be able to figure out.

Next question is coming from the line of Ed Maguire. Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division: I had a question about -- more broadly about volumes in the media and entertainment group. Last year, it was at -- it had been less predictable at points for you, and I would like to know if you feel that, that the, I guess, the pace or the variability of volumes is more predictable? And a follow-up to that is I knew you had renewed a number of very large M&A contracts at the end of 2010 and some of those are coming up and should be coming up sometime in the middle of this year for renewal. Have you had any discussions with customers there, and do you anticipate any changes there? Paul L. Sagan: Okay. And Ed, well, as they say on the radio, we'll take your calls off-line because it sounds like you're on a cell phone and you were warbling in and out. On the M&A volumes, it was a strong quarter. We continue to be optimistic that more and more video is going to move online. The drivers there continue to be finding the audience with the right quality and the right content and the right monetization. And I think the producers and distributors are more optimistic about that than ever. I'll let Jim comment on renewals, but we continue to work well with our customers.

Yes, I mean I think I've -- I think we've said it before, that it's true last Q1 was kind of an anomaly where we had 8 of our top 10 renewals occur, and renewals recur every quarter. And the expectation is that that's going to happen every quarter, we're going to see renewals. Paul L. Sagan: It will be pretty well spaced out, last year was an exception. Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division: Okay, and one final question on the security business, I know the -- and the denial of service has been getting a bit of attention, but could you provide a little more granularity in terms of which services you're seeing the most traction? Paul L. Sagan: Sure. So DDoS is one clearly that's been higher interest because of the headlines in the last 6 months, but also our WAF or Web Application Firewall product that allows filtering rules to be put out at the edge of the Internet embedded in our cloud as opposed to in your datacenter is another. And then as I said, we'll be making another announcement about web security in the first half of this year, which I think will be of interest to a lot of our customers as well.

Your next question is coming from the line of Aaron Schwartz. Aaron Schwartz - Jefferies & Company, Inc., Research Division: Maybe I'll try that -- the volume question at slightly a different angle, I mean, it seems you're certainly optimistic in some of the things you're seeing here in Q4. I know you don't want to get too much into the guidance around 2012 but directionally, if you look at the rate of change from 11, I mean do you expect that to sort of increase or sort of stay level in terms of the rate of the volume growth? Paul L. Sagan: We're very pleased with what we saw in the second half of last year. We've said those were good data points, particularly in Q4. I'm not going to characterize it anymore going forward, except to say that we think our customers are optimistic about what they can do online and are really looking at the monetization opportunities, but I'm not going to try to guide on volumes beyond that. Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division: Okay. And then related to the strong M&A performance here in the quarter, was there anything abnormal in terms of burst or overage fees? And if there was, I think you've billed that in the January period, if I'm correct there. I was just wondering if you could comment on that. Paul L. Sagan: There was nothing out of the ordinary besides bursting our overage fees. J. D. Sherman: Yes, the one thing, when you get to the M&E contracts, that's not the old-style contact where you have a monthly commit and then bursting. They tend to be based on usage. So we recognize revenue as the customers use, deliver the gigabits or hit the megabits per second. So it's not the traditional bursting approach. It's as the customer's traffic grows, our revenue will grow. And what we saw in Q4 was a nice acceleration in the rate of volume growth off of Q3, back to Paul's point. One point does not a trend make, and we're not going to call much beyond Q1 except to say that long-term, we all believe that there's a huge opportunity to see a tremendous amount of volume growth on the Internet.

Your next question is coming from Rob Sanderson.

A question on the product pipeline, a lot of interesting cloud infrastructure products you talked about at your investor summit. And can you just sort of give us some sense of how that sort of looks over the next few quarters? And which offerings are sort of more -- you're more optimistic or more maybe material? And qualitatively, how many for those might be in terms of installed base or upgrade opportunity or whatever you can do to help was think about the great pipeline you have here? Paul L. Sagan: Sure. Well I think first of all, in this recurring revenue model, we're not making the quarter on the last hour by shipping boxes or licenses as we need to get people signed up and on the platform then recognize the revenue ratably on a monthly basis across the year or more, hopefully years of their relationship with us. I think one of the significant things around the effort in our products and development group is that they're rolling out either enhancements or new products in every division, which gives us the ability to go back to our customers and ask for our fair share of their spend on IT and Internet and cloud. And I think we have the ability to go back and do better in all of those categories because the enhancements that we're going to be able to rollout, or the new products across the board. So we're very optimistic, and we'll be able to actually talk to them about these and sell most of them in the first half of this year.

Your next question is coming from the line of Tim Klasell. Tim Klasell - Stifel, Nicolaus & Co., Inc., Research Division: Just a question following up on the media and entertainment segment. Seems like the gross margin overall held in well despite the growth in that segment. Is there anything specific within that segment that's doing well in terms of the cloud services? Paul L. Sagan: As far as the M&E segment? How we are doing in the cloud services? Tim Klasell - Stifel, Nicolaus & Co., Inc., Research Division: Yes, I mean, if there are any cloud services specifically within M&E that are growing and kind of helping the gross margin overall. Paul L. Sagan: I mean, there certainly are. I mean, in particular that we -- our DSA and RMA products tend to be sold as the M&E segments pretty well. They continue to make good traction in that area, but -- you were talking about gross margins, and our gross margins kind of -- just want to make sure I understand your question. Tim Klasell - Stifel, Nicolaus & Co., Inc., Research Division: Yes, just the overall gross margin despite the kind of growth in the M&E segment kind of returning to a higher rate, I think, gross margins. Paul L. Sagan: Yes, I think that the -- I think we talked about that, our mix of business between kind of values -- our cloud infrastructure solutions and the volume solutions was fairly consistent from Q3 to Q4, and so you're seeing similar gross margins as a result of that. The mix didn't shift dramatically. We actually saw a little bit of a lift in our volume solutions Q3 to Q4 from, I think, 3% growth in Q3 to 6% in Q4. So -- but the mix didn't really change.

The next question will be from Philip Winslow. Philip Winslow - Crédit Suisse AG, Research Division: Just wanted to focus back on pricing a little bit. I know you all didn't want to comment about the sort of -- what you're kind of expecting for pricing for the rest of 2012 but when you look at Q4, and I guess at least the first sort of 5 weeks here of 2012, do you see sort of significant changes from sort of normal declines year-over-year versus what you saw kind of Q4 and the first part of last year? And also just in terms of CapEx, I know you guys gave CapEx guidance for Q1, but what's the range that you're kind of thinking about for this year as a percentage of revenue? Paul L. Sagan: I'll take the pricing part, because I tried to be very clear and declarative. Before, we saw a very consistent pattern. Last year, we expected. This year, our goal is to continue to drive cost out and to be able to pass some of that along to our customers so they can drive more volume, and I don't expect a change in that pattern, and I'll let Jim talk to you about --

On CapEx, we expect to sit stay within our long-term auto range of 13% to 16%.

A question coming from the line of Ben Rose. Ben Z. Rose - Battle Road Research Ltd.: I apologize if the question has been asked, but is there an update on the joint development effort that you're making with Ericsson? Paul L. Sagan: That question was asked, and what I said was no product announcements today, but very pleased with the collaboration with them and I'm very optimistic that we can do some interesting things together over the next couple of years.

Last question will be from Richard Fetyko. Richard Fetyko - Janney Montgomery Scott LLC, Research Division: Just curious on the headcount growth in the 2011 period, and what do you expect in 2012. That's it. Paul L. Sagan: So I think we had headcount growth of roughly a couple hundred people in 2011 and as I mentioned before, our expectation is we're going to continue to grow and invest in the business, so you can continue to see us grow in headcount. I don't have a specific number that I'm going to share, though. But we continue to hire, and we continue to look primarily for engineers and great salespeople. And we expect to end the year with more people that we started with. All right, thank you all for calling. J.D., good luck. Please stay in touch. Jim, welcome aboard to this role. And Jim and I look forward to updating all of you again in another quarter. Thanks for dialing in. Bye.

Ladies and gentlemen that concludes today's conference. We thank you for your participation. You may now disconnect. Have a great day.