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Akamai (AKAM) Beats Q2 Earnings Estimates on Higher Revenues

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Akamai Technologies, Inc. (AKAM - Free Report) reported relatively healthy second-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. However, shares trended down post earnings release as the company trimmed its earlier guidance for the year.

Quarter Details

GAAP net income in the reported quarter was $119.5 million or 74 cents per share compared with $156.5 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 $216.4 million or $1.35 per share compared with $232.8 million or $1.42 per share a year ago. The non-GAAP earnings exceeded the guidance despite an adverse tax impact of 7 cents per share. Non-GAAP earnings surpassed the Zacks Consensus Estimate by 4 cents.

Akamai Technologies, Inc. Price, Consensus and EPS Surprise

Akamai Technologies, Inc. Price, Consensus and EPS Surprise

Akamai Technologies, Inc. price-consensus-eps-surprise-chart | Akamai Technologies, Inc. Quote

Revenues of $903.3 million increased 5.9% year over year and beat the consensus estimate of $897 million. Growth in the Security and Compute businesses primarily contributed to the top line. Region-wise, U.S. revenues were $477.2 million, up 6% year over year. International revenues were $426.2 million, up 6%.

By product groups, Security Technology Group revenues were $380.7 million, up 17% year over year, driven by growth in the application security business and solid performance from Guardicore. Revenues from Delivery aggregated $416.7 million, down 11% owing to non-renewals by some customers. Compute revenues increased 74% year over year to $106 million, led by incremental contribution from the Linode acquisition.

Non-GAAP operating margin contracted to 29% from 32% in the prior year. Adjusted EBITDA improved to $388.3 million from $385.7 million a year ago for a margin of 43%, down from 45%.

Cash Flow & Liquidity

For the first six months of 2022, Akamai generated $563.9 million of cash from operations compared with $627.9 million in the prior-year period. As of Jun 30, 2022, the company had $426.7 million in cash and cash equivalents with $186.9 million of operating liabilities. During the reported quarter, Akamai repurchased 1.6 million shares for $165 million at an average price of $100.8 per share.

Guidance

For the third quarter of 2022, Akamai expects revenues between $868 million and $883 million with incremental contribution from Linode. Adjusted EBITDA margin is expected to be 41%. Akamai expects a non-GAAP operating margin of 27%. Non-GAAP earnings are envisioned in the range of $1.21-$1.26 per share.

For 2022, Akamai currently expects revenues between $3.57 billion and $3.61 billion, down from $3.62 billion and $3.67 billion expected earlier due to uncertain market conditions and challenging macroeconomic conditions. Akamai expects a non-GAAP operating margin of 28-29%. Non-GAAP earnings are expected in the range of $5.19-$5.37 per share, down from earlier expectations of $5.32-$5.44.

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.

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TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.

Ooma Inc. (OOMA - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 34.7%, on average, in the trailing four quarters. Earnings estimates for Ooma for the current year have moved up 5.4% since March 2022.

Ooma offers communications services and related technologies for businesses and consumers in the United States and Canada. It helps to create powerful connected experiences for businesses and consumers through its smart cloud-based SaaS platform.

Harmonic Inc. (HLIT - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 79.8%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 17.1% since February 2022.

Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.