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Why Is Akamai Technologies (AKAM) Down 1.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Akamai Technologies (AKAM - Free Report) . Shares have lost about 1.6% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Akamai Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Akamai Misses on Q1 Earnings Despite Higher Revenues
Akamai reported relatively modest first-quarter 2022 results with year-year-year growth in revenues and adjusted earnings on per share basis. However, both the bottom line and top line missed the Zacks Consensus Estimate.
Quarter Details
GAAP net income in the reported quarter was $119.2 million or 73 cents per share compared with $155.7 million or 94 cents per share in the year-ago quarter. The decline in GAAP earnings despite top-line growth was primarily attributable to higher operating expenses. Non-GAAP net income in the quarter was $224.8 million or $1.39 per share compared with $227.8 million or $1.38 per share a year ago. The non-GAAP earnings came at the low end of the guidance and had an adverse tax impact of 3 cents per share. Non-GAAP earnings missed the Zacks Consensus Estimate by 3 cents.
Revenues of $903.6 million increased 7% year over year but missed the consensus estimate of $905 million. Growth in the security business primarily contributed to the top line. Region-wise, U.S. revenues were $481 million, up 4% year over year. International revenues were $422.6 million, up 11%.
By product groups, Security Technology Group revenues were $381.6 million, up 23% year over year, driven by growth in the application security business and solid performance from Guardicore. Revenues from Delivery aggregated $441.1 million, down 6% owing to non-renewals by some customers. Compute revenues increased 32% year over year to $77.9 million, led by incremental contribution from the Linode acquisition.
GAAP operating margin contracted 300 basis points (bps) year over year to 19%, while non-GAAP operating margin was down 100 bps to 30%. Adjusted EBITDA improved 4% to $391 million for a margin of 43%.
Cash Flow & Liquidity
In first-quarter 2022, Akamai generated $222.5 million of cash from operations compared with $249.8 million in the prior-year period. As of Mar 31, 2022, the company had $377.8 million in cash and cash equivalents.
During the reported quarter, Akamai repurchased 0.9 million shares for $103 million at $111.25 per share.
Guidance
For the second quarter of 2022, Akamai expects revenues between $890 million and $905 million with incremental contribution from Linode. Cash gross margin is estimated to be 75%. Adjusted EBITDA margin is expected to be 43%. Akamai expects a non-GAAP operating margin of 29%. Non-GAAP earnings are envisioned in the range of $1.28-$1.33 per share.
For 2022, Akamai expects revenues between $3.62 billion and $3.67 billion, up 5-6% year over year. Akamai expects a non-GAAP operating margin of 29%. Non-GAAP earnings are expected in the range of $5.32-$5.44 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -12.29% due to these changes.
VGM Scores
At this time, Akamai Technologies has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Akamai Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Akamai Technologies (AKAM) Down 1.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Akamai Technologies (AKAM - Free Report) . Shares have lost about 1.6% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Akamai Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Akamai Misses on Q1 Earnings Despite Higher Revenues
Akamai reported relatively modest first-quarter 2022 results with year-year-year growth in revenues and adjusted earnings on per share basis. However, both the bottom line and top line missed the Zacks Consensus Estimate.
Quarter Details
GAAP net income in the reported quarter was $119.2 million or 73 cents per share compared with $155.7 million or 94 cents per share in the year-ago quarter. The decline in GAAP earnings despite top-line growth was primarily attributable to higher operating expenses. Non-GAAP net income in the quarter was $224.8 million or $1.39 per share compared with $227.8 million or $1.38 per share a year ago. The non-GAAP earnings came at the low end of the guidance and had an adverse tax impact of 3 cents per share. Non-GAAP earnings missed the Zacks Consensus Estimate by 3 cents.
Revenues of $903.6 million increased 7% year over year but missed the consensus estimate of $905 million. Growth in the security business primarily contributed to the top line. Region-wise, U.S. revenues were $481 million, up 4% year over year. International revenues were $422.6 million, up 11%.
By product groups, Security Technology Group revenues were $381.6 million, up 23% year over year, driven by growth in the application security business and solid performance from Guardicore. Revenues from Delivery aggregated $441.1 million, down 6% owing to non-renewals by some customers. Compute revenues increased 32% year over year to $77.9 million, led by incremental contribution from the Linode acquisition.
GAAP operating margin contracted 300 basis points (bps) year over year to 19%, while non-GAAP operating margin was down 100 bps to 30%. Adjusted EBITDA improved 4% to $391 million for a margin of 43%.
Cash Flow & Liquidity
In first-quarter 2022, Akamai generated $222.5 million of cash from operations compared with $249.8 million in the prior-year period. As of Mar 31, 2022, the company had $377.8 million in cash and cash equivalents.
During the reported quarter, Akamai repurchased 0.9 million shares for $103 million at $111.25 per share.
Guidance
For the second quarter of 2022, Akamai expects revenues between $890 million and $905 million with incremental contribution from Linode. Cash gross margin is estimated to be 75%. Adjusted EBITDA margin is expected to be 43%. Akamai expects a non-GAAP operating margin of 29%. Non-GAAP earnings are envisioned in the range of $1.28-$1.33 per share.
For 2022, Akamai expects revenues between $3.62 billion and $3.67 billion, up 5-6% year over year. Akamai expects a non-GAAP operating margin of 29%. Non-GAAP earnings are expected in the range of $5.32-$5.44 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -12.29% due to these changes.
VGM Scores
At this time, Akamai Technologies has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Akamai Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.