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Akamai (AKAM) Beats Q4 Earnings Estimates on Top-Line Growth
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Akamai Technologies, Inc. (AKAM - Free Report) reported relatively healthy fourth-quarter 2022 results with year-year-year growth in revenues despite a challenging macroeconomic environment and adverse currency translation effects. Both the bottom line and top line beat the Zacks Consensus Estimate on solid demand trends.
Quarter Details
GAAP net income in the reported quarter was $128.8 million or 82 cents per share compared with $160.5 million or 97 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 $216.4 million or $1.37 per share compared with $243.1 million or $1.49 per share a year ago. Non-GAAP earnings surpassed the Zacks Consensus Estimate by 10 cents.
Akamai Technologies, Inc. Price, Consensus and EPS Surprise
In 2022, GAAP net income declined to $523.7 million or $3.26 per share from $651.6 million or $3.93 per share in 2021. Non-GAAP net income in 2022 was $857.7 million or $5.37 per share compared with $942.6 million or $5.74 per share a year ago.
Quarterly revenues of $927.8 million increased 2.5% year over year and beat the consensus estimate of $903 million. Growth in the Security Technology Group and Compute businesses primarily contributed to the top line. Region-wise, U.S. revenues were $482.8 million, up 1% year over year. International revenues were $445 million, up 4%.
In 2022, total revenues jumped to $3,616.6 million from $3,461.2 million in 2021.
By product groups, Security Technology Group revenues were $400.2 million, up 10% year over year, driven by growth in the application security business and solid performance from Guardicore. Revenues from Delivery aggregated $415.2 million, down 12% owing to non-renewals by some customers. Compute revenues increased 61% year over year to $112.4 million, led by incremental contributions from the Linode acquisition and the addition of improved enterprise capabilities to the compute platform.
Non-GAAP operating margin contracted to 28% from 31% in the prior year. Adjusted EBITDA declined to $381.7 million from $403.9 million a year ago for a margin of 41%, down from 45%.
Cash Flow & Liquidity
In 2022, Akamai generated $1,274.7 million in cash from operating activities compared with $1,404.6 million in 2021. As of Dec 31, 2022, the company had $542.3 million in cash and cash equivalents with $693.3 million of operating lease liabilities. During the reported quarter, Akamai repurchased 2.1 million shares for $178 million at an average price of $86.50 per share.
Guidance
For the first quarter of 2023, Akamai expects revenues between $900 million and $915 million with incremental contributions from Linode. It expects a non-GAAP operating margin of 27-28%. Non-GAAP earnings are envisioned in the range of $1.30-$1.34 per share.
For 2023, Akamai expects revenues between $3,700 million and $3,775 million. It expects a non-GAAP operating margin of 27-28%. Non-GAAP earnings are expected in the band of $5.40-$5.60 per share.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy), is likely to benefit from the strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 12.7%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Viavi Solutions Inc. (VIAV - Free Report) , carrying a Zacks Rank #2, is a key pick. Headquartered in Scottsdale, AZ, Viavi is a leading provider of network test, monitoring and service enablement solutions to diverse sectors across the globe. The product portfolio of the company offers end-to-end network visibility and analytics that help build, test, certify, maintain, and optimize complex physical and virtual networks.
Viavi also offers high-performance thin film optical coatings for light-management solutions used in anti-counterfeiting, 3D sensing, electronics, automotive, defense and instrumentation markets. It delivered an earnings surprise of 9.1%, on average, in the trailing four quarters.
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2, is another key pick. Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company offers its services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
It delivered a trailing four-quarter earnings surprise of 212.7%, on average. T-Mobile has a long-term earnings growth expectation of 67.6%.
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Akamai (AKAM) Beats Q4 Earnings Estimates on Top-Line Growth
Akamai Technologies, Inc. (AKAM - Free Report) reported relatively healthy fourth-quarter 2022 results with year-year-year growth in revenues despite a challenging macroeconomic environment and adverse currency translation effects. Both the bottom line and top line beat the Zacks Consensus Estimate on solid demand trends.
Quarter Details
GAAP net income in the reported quarter was $128.8 million or 82 cents per share compared with $160.5 million or 97 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 $216.4 million or $1.37 per share compared with $243.1 million or $1.49 per share a year ago. Non-GAAP earnings surpassed the Zacks Consensus Estimate by 10 cents.
Akamai Technologies, Inc. Price, Consensus and EPS Surprise
Akamai Technologies, Inc. price-consensus-eps-surprise-chart | Akamai Technologies, Inc. Quote
In 2022, GAAP net income declined to $523.7 million or $3.26 per share from $651.6 million or $3.93 per share in 2021. Non-GAAP net income in 2022 was $857.7 million or $5.37 per share compared with $942.6 million or $5.74 per share a year ago.
Quarterly revenues of $927.8 million increased 2.5% year over year and beat the consensus estimate of $903 million. Growth in the Security Technology Group and Compute businesses primarily contributed to the top line. Region-wise, U.S. revenues were $482.8 million, up 1% year over year. International revenues were $445 million, up 4%.
In 2022, total revenues jumped to $3,616.6 million from $3,461.2 million in 2021.
By product groups, Security Technology Group revenues were $400.2 million, up 10% year over year, driven by growth in the application security business and solid performance from Guardicore. Revenues from Delivery aggregated $415.2 million, down 12% owing to non-renewals by some customers. Compute revenues increased 61% year over year to $112.4 million, led by incremental contributions from the Linode acquisition and the addition of improved enterprise capabilities to the compute platform.
Non-GAAP operating margin contracted to 28% from 31% in the prior year. Adjusted EBITDA declined to $381.7 million from $403.9 million a year ago for a margin of 41%, down from 45%.
Cash Flow & Liquidity
In 2022, Akamai generated $1,274.7 million in cash from operating activities compared with $1,404.6 million in 2021. As of Dec 31, 2022, the company had $542.3 million in cash and cash equivalents with $693.3 million of operating lease liabilities. During the reported quarter, Akamai repurchased 2.1 million shares for $178 million at an average price of $86.50 per share.
Guidance
For the first quarter of 2023, Akamai expects revenues between $900 million and $915 million with incremental contributions from Linode. It expects a non-GAAP operating margin of 27-28%. Non-GAAP earnings are envisioned in the range of $1.30-$1.34 per share.
For 2023, Akamai expects revenues between $3,700 million and $3,775 million. It expects a non-GAAP operating margin of 27-28%. Non-GAAP earnings are expected in the band of $5.40-$5.60 per share.
Zacks Rank & Stocks to Consider
Akamai currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy), is likely to benefit from the strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 12.7%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Viavi Solutions Inc. (VIAV - Free Report) , carrying a Zacks Rank #2, is a key pick. Headquartered in Scottsdale, AZ, Viavi is a leading provider of network test, monitoring and service enablement solutions to diverse sectors across the globe. The product portfolio of the company offers end-to-end network visibility and analytics that help build, test, certify, maintain, and optimize complex physical and virtual networks.
Viavi also offers high-performance thin film optical coatings for light-management solutions used in anti-counterfeiting, 3D sensing, electronics, automotive, defense and instrumentation markets. It delivered an earnings surprise of 9.1%, on average, in the trailing four quarters.
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2, is another key pick. Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company offers its services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
It delivered a trailing four-quarter earnings surprise of 212.7%, on average. T-Mobile has a long-term earnings growth expectation of 67.6%.