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Akamai (AKAM) Beats on Q1 Earnings & Revenues, Shares Up
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Akamai Technologies Inc. (AKAM - Free Report) delivered adjusted first-quarter 2018 earnings of 79 cents per share that beat the Zacks Consensus Estimate by 9 cents and surged 21.3% from the year-ago quarter.
Revenues of $668.7 million outpaced the Zacks Consensus Estimate of $654 million and increased 11.4% from the year-ago quarter (up 8% adjusted for foreign exchange). The revenues were towards the top end of management’s guided range of $596-$610 million.
Excluding Internet Platform Customers, revenues increased 13.7% year over year (up 11% adjusted for foreign exchange) to $624.3 million. Revenues from Internet Platform Customers were $44.4 million, down 13.6% year over year.
Shares increased 4.1% in after hours trading following the results. Akamai has returned 10.2% year to date, significantly outperforming industry that has lost 9.2%.
Robust Cloud Security Solutions Growth
Cloud Security Solutions (22.3% of revenues) revenues were $149 million, up 36% year over year (up 32% adjusted for foreign exchange). Solid growth was driven by strong demand for Kona Site Defender and Prolexic Solutions, as well as new Bot Manager Premier and Nominum Services.
Management stated that out of 500 financial institutions which the company serves, over 400 enterprises uses its security solutions, including all top 25 U.S. banks and 22 of the top 25 in Europe.
Akamai Technologies, Inc. Price, Consensus and EPS Surprise
Akamai stated that with the addition of Nominum, it now processes 1.7 trillion domain name system (DNS) queries per day for over 100 million domains. Management stated that cloud security business revenue run-rate is now $600 million per year.
Segment Details
Web Division (52.8% of total revenues) revenues increased 16.3% year over year (up 13% adjusted for foreign exchange) to $352.8 million. Solid cloud security solutions growth as well as strong performance from Buyon solution, new Image manager and Digital Performance Management solutions drove growth.
Akamai now have 1000 customers using the new solutions. Revenues from these new solutions have tripled on a year-over-year basis and revenue run-rate is well over $100 million per year.
Media and Carrier Division (47.2% of total revenues) revenues of $315.9 million increased 6.4% (up 4% adjusted for foreign exchange) from the year-ago quarter.
Traffic growth was especially strong in OTT and gaming sectors.
U.S. revenues were $423 million, up 6% year over year. International revenues were $245 million, up 22% year over year (up 14% adjusted for foreign exchange) primarily driven by strong growth in Asia Pacific region.
Operating Details
Adjusted EBITDA margin remained flat on a year-over-year basis at 38.4%, better than management’s guidance range, primarily due to higher revenues and improving operational efficiency.
Non-GAAP research & development (R&D) and general & administrative (G&A) expenses as percentage of revenues increased 100 basis points (bps) and 20 bps on a year-over-year basis, respectively. This was partially offset by 60 bps decline in selling & marketing expenses.
As a result, Non-GAAP operating margin declined 90 bps from the year-ago quarter to 25%.
However, operating margin was better than management’s guidance range due to improving operating efficiency.
Balance Sheet & Cash Flow
As of Mar 31, 2018, Akamai’s cash and cash equivalents (and marketable securities) were $1.32 billion as compared with $1.28 billion as of Dec 31, 2017.
The company generated cash flow from operations of $192 million as compared with $197.4 million in the previous quarter.
In the quarter, Akamai repurchased 0.3 million shares for $20 million.
Guidance
For second-quarter 2018, Akamai envisions revenues between $658 million and $670 million. Management stated that unfavorable foreign exchange is likely to impact revenues by roughly $2 million.
Non-GAAP operating expenses are projected between $249 million and $254 million,
Adjusted EBITDA margin is anticipated to be approximately 39%. Adjusted operating margin is anticipated to be in the range of 25-26% for the quarter.
Non-GAAP earnings are projected in the range of 79-83 cents per share.
For full-year 2018, Akamai expects revenues between $2.69 billion and $2.72 billion.
Adjusted EBITDA margin is anticipated to be approximately 39%. Adjusted operating margin is anticipated to be 25%.
Akamai expects further improvement in margins by the end of 2018 due to the additional cost reduction initiatives the company undertook in the first quarter.
Non-GAAP earnings are projected in the range of $3.15-$3.25 per share.
Management plans to achieve non-GAAP operating margin of 30% in 2020.
Both Autohome and Etsy are set to report their first-quarter 2018 results on May 8. Match Group slated to report first-quarter 2018 results on May 9.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Akamai (AKAM) Beats on Q1 Earnings & Revenues, Shares Up
Akamai Technologies Inc. (AKAM - Free Report) delivered adjusted first-quarter 2018 earnings of 79 cents per share that beat the Zacks Consensus Estimate by 9 cents and surged 21.3% from the year-ago quarter.
Revenues of $668.7 million outpaced the Zacks Consensus Estimate of $654 million and increased 11.4% from the year-ago quarter (up 8% adjusted for foreign exchange). The revenues were towards the top end of management’s guided range of $596-$610 million.
Excluding Internet Platform Customers, revenues increased 13.7% year over year (up 11% adjusted for foreign exchange) to $624.3 million. Revenues from Internet Platform Customers were $44.4 million, down 13.6% year over year.
Shares increased 4.1% in after hours trading following the results. Akamai has returned 10.2% year to date, significantly outperforming industry that has lost 9.2%.
Robust Cloud Security Solutions Growth
Cloud Security Solutions (22.3% of revenues) revenues were $149 million, up 36% year over year (up 32% adjusted for foreign exchange). Solid growth was driven by strong demand for Kona Site Defender and Prolexic Solutions, as well as new Bot Manager Premier and Nominum Services.
Management stated that out of 500 financial institutions which the company serves, over 400 enterprises uses its security solutions, including all top 25 U.S. banks and 22 of the top 25 in Europe.
Akamai Technologies, Inc. Price, Consensus and EPS Surprise
Akamai Technologies, Inc. Price, Consensus and EPS Surprise | Akamai Technologies, Inc. Quote
Akamai stated that with the addition of Nominum, it now processes 1.7 trillion domain name system (DNS) queries per day for over 100 million domains. Management stated that cloud security business revenue run-rate is now $600 million per year.
Segment Details
Web Division (52.8% of total revenues) revenues increased 16.3% year over year (up 13% adjusted for foreign exchange) to $352.8 million. Solid cloud security solutions growth as well as strong performance from Buyon solution, new Image manager and Digital Performance Management solutions drove growth.
Akamai now have 1000 customers using the new solutions. Revenues from these new solutions have tripled on a year-over-year basis and revenue run-rate is well over $100 million per year.
Media and Carrier Division (47.2% of total revenues) revenues of $315.9 million increased 6.4% (up 4% adjusted for foreign exchange) from the year-ago quarter.
Traffic growth was especially strong in OTT and gaming sectors.
U.S. revenues were $423 million, up 6% year over year. International revenues were $245 million, up 22% year over year (up 14% adjusted for foreign exchange) primarily driven by strong growth in Asia Pacific region.
Operating Details
Adjusted EBITDA margin remained flat on a year-over-year basis at 38.4%, better than management’s guidance range, primarily due to higher revenues and improving operational efficiency.
Non-GAAP research & development (R&D) and general & administrative (G&A) expenses as percentage of revenues increased 100 basis points (bps) and 20 bps on a year-over-year basis, respectively. This was partially offset by 60 bps decline in selling & marketing expenses.
As a result, Non-GAAP operating margin declined 90 bps from the year-ago quarter to 25%.
However, operating margin was better than management’s guidance range due to improving operating efficiency.
Balance Sheet & Cash Flow
As of Mar 31, 2018, Akamai’s cash and cash equivalents (and marketable securities) were $1.32 billion as compared with $1.28 billion as of Dec 31, 2017.
The company generated cash flow from operations of $192 million as compared with $197.4 million in the previous quarter.
In the quarter, Akamai repurchased 0.3 million shares for $20 million.
Guidance
For second-quarter 2018, Akamai envisions revenues between $658 million and $670 million. Management stated that unfavorable foreign exchange is likely to impact revenues by roughly $2 million.
Non-GAAP operating expenses are projected between $249 million and $254 million,
Adjusted EBITDA margin is anticipated to be approximately 39%. Adjusted operating margin is anticipated to be in the range of 25-26% for the quarter.
Non-GAAP earnings are projected in the range of 79-83 cents per share.
For full-year 2018, Akamai expects revenues between $2.69 billion and $2.72 billion.
Adjusted EBITDA margin is anticipated to be approximately 39%. Adjusted operating margin is anticipated to be 25%.
Akamai expects further improvement in margins by the end of 2018 due to the additional cost reduction initiatives the company undertook in the first quarter.
Non-GAAP earnings are projected in the range of $3.15-$3.25 per share.
Management plans to achieve non-GAAP operating margin of 30% in 2020.
Zacks Rank & Stocks to Consider
Currently, Akamai carries a Zacks Rank #3 (Hold).
Autohome (ATHM - Free Report) , Match Group (MTCH - Free Report) and Etsy (ETSY - Free Report) are stocks worth considering in the same sector. While Etsy carries a Zacks Rank #2 (Buy), both Autohome and Match Group sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both Autohome and Etsy are set to report their first-quarter 2018 results on May 8. Match Group slated to report first-quarter 2018 results on May 9.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>