Akamai Technologies ( AKAM Quick Quote AKAM - Free Report) is set to report fourth-quarter 2020 results on Feb 9.
For the fourth quarter, Akamai expects revenues between $812 million and $837 million. The Zacks Consensus Estimate for quarterly revenues is pegged at $830.5 million, which indicates a rise of 7.6% from the year-ago quarter’s reported figure.
In third-quarter conference, management cautioned that revenues might be negatively impacted due to the assumption of ban on 59 China-based apps in India (Akamai delivers traffic for nearly 30 of those) to continue throughout 2020.
The acquisition of Asavie is expected to have contributed $4 million to the fourth-quarter top line.
Non-GAAP earnings are expected in the range of $1.28-$1.32 per share. The consensus mark for earnings is pegged at $1.32, which reflects year-over-year growth of 7.3%.
Notably, the company has a trailing four-quarter earnings surprise of 8.2%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors Likely to Have Influenced Q4
Akamai’s Media and Carrier division revenues are anticipated to have positively impacted by strong traffic on the company’s platform, courtesy of continued demand for OTT video services and increase in gaming activity during the fourth quarter.
The re-imposition of shelter-in-place guidelines across several countries is expected to have driven the upside in gaming and demand for streaming services.
The Zacks Consensus Estimate for Media and Carrier Division’s fourth-quarter revenues is currently at $382 million, which indicates growth of 8.2% on a year-over-year basis.
Akamai’s fourth-quarter 2020 performance is also expected to have benefited from continued robust demand for its security solutions including application-layer firewall and DDoS prevention.
Demand for security solutions is being driven by higher instances of cyber-attacks as hackers are taking advantage of the ongoing pandemic to accelerate attacks on enterprises across all industries.
The company’s Prolexic offering is expected to have witnessed incremental adoption given the increases in DDoS attacks. Also, rising instances of credentials’ theft is likely to have driven demand for Akamai’s bot management offering.
Page Integrity Manager Solution is also anticipated to have witnessed robust uptake in the fourth quarter. The solution protects websites and end users from malware-infected content that resides on third-party sites.
Further, ongoing momentum for the company’s new Zero Trust enterprise security solutions is likely to have added to revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for Cloud Security Solutions’ fourth-quarter revenues is currently at $284 million, which suggests a rise of 19.3% on a year-over-year basis.
Further, the Zacks Consensus Estimate for Web Division revenues for the fourth quarter is currently pegged at $446 million that indicates growth of 6.2% on a year-over-year basis.
The Zacks Consensus Estimate for Internet Platform Customers revenues for the fourth quarter is currently at $52 million, unchanged on a year-over-year basis.
Nonetheless, rising expenses on account of product innovation along with increasing bandwidth costs is likely to have put pressure on margins in the quarter under review.
Key Developments in Q4
In December 2020, Akamai revealed that Telenor Myanmar is utilizing Akamai's SPS Shield to safeguard its subscribers from cybersecurity threats. SPS Shield leverages Akamai’s Intelligent Edge Platform and is based on the company’s DNSi resolver and security infrastructure.
In October 2020, Akamai announced the buyout of Asavie in an all-cash deal. Asavie’s offerings will be integrated with Akamai’s Security and Personalization Services ("SPS") product portfolio. A privately funded company, Asavie specializes in Internet of Things (IoT), mobile and security solutions. What the Zacks Model Unveils
Our proven model predicts an earnings beat for Akamai this time around. The combination of a positive
Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Akamai has a Zacks Rank #3 and an Earnings ESP of +2.35%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Stocks to Consider
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