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Akamai (AKAM) Q4 Earnings Beat Estimates on Higher Revenues
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Akamai Technologies, Inc. (AKAM - Free Report) reported modest fourth-quarter 2023 results, with the bottom surpassing the Zacks Consensus Estimate but the top line missing the same. The company recorded higher revenues year over year, driven by solid momentum in security and compute verticals. Growing adoption of API security solutions in various industries and healthy demand for Akamai Connected Cloud drove the top line.
Net Income
GAAP net income improved to $161.2 million or $1.03 per share from $128.8 million or 82 cents per share in the year-ago quarter. The growth is primarily attributed to year-over-year top-line expansion during the quarter.
Non-GAAP net income was $262.6 million or $1.69 per share, up from $216.4 million or $1.37 per share a year ago. The bottom line beat the Zacks Consensus Estimate by 10 cents.
In 2023, GAAP net income was $547.6 million or $3.52 per share compared with $523.7 million or $3.26 per share in 2022. In 2023, non-GAAP net income rose to $960 million or $6.20 per share from $857.7 million or $5.37 million in the prior year.
Akamai Technologies, Inc. Price, Consensus and EPS Surprise
Quarterly net sales were $995 million compared with $927.8 million reported in the year-ago quarter. The 7% year-over-year uptick is driven by rising customer engagement in the Security and Compute businesses. However, revenues missed the Zacks Consensus Estimate by $3 million.
In 2023, Akamai generated $3.81 billion in revenues, up from $3.61 billion in 2022.
By product groups, revenues from Security Technology Group were $471 million compared with $400.2 million in the year-ago quarter. The 18% year-over-year growth was primarily driven by strong demand for Guardicore Segmentation Solution. Several major financial institutions and retail brands in Europe and North America deployed Akamai’s API security solution during the quarter. However, net sales fell short of our estimate of $478.6 million.
The Delivery segment contributed $389 million, down from $415.2 million in the year-ago quarter. Despite the year-over-year decrease, contracts acquired from StackPath and Lumen partially supported the top line in this vertical. The segment’s revenues surpassed our estimate of $380.6 million.
The Compute segment registered $135 million in revenues, up from $112.4 million in the prior-year quarter, backed by healthy demand for its cloud computing solution. The newly launched Generalized Edge Compute is also gaining significant market traction. The top line beat our estimate of $130.5 million.
Region-wise, net sales from the United States came in at $516.3 million, up 7% year over year. International revenues stood at $478.7 million, up from $445 million in the year-earlier quarter.
Other Details
In the December quarter, total operation expenses rose to $810.2 million from $760.3 million. Non-GAAP income from operations improved to $302.7 million from $257.6 million, with respective margins of 30% and 28%. Adjusted EBITDA was $426 million, up from $381.7 million in the year-ago quarter.
Cash Flow & Liquidity
In the fourth quarter of 2023, Akamai generated $389.2 million in cash from operating activities compared with $341.5 million in the prior-year quarter. In 2023, the company generated $1.34 billion in cash from operations compared with $1.27 billion in 2022.
As of Dec 31, 2023, the company had $489.5 million in cash and cash equivalents with $774.8 million of operating lease liabilities compared with respective tallies of $542.3 million or $693.3 million in 2022. During the quarter, it repurchased approximately 0.5 million shares for around $55 million.
Outlook
For the first quarter of 2024, Akamai expects revenues in the range of $980-$1,000 million. Non-GAAP operating margin is projected to be in the range of 29-30%. Non-GAAP earnings are forecasted to be in the range of $1.59-$1.64 per share. Capital expenditure is anticipated to be 15% of revenues.
For 2024, Akamai expects revenue growth rates in the range of 6-8% year over year. It expects a non-GAAP operating margin of 30%. Non-GAAP earnings are now projected to grow in the range of 7-11% year over year. Capital expenditure is likely to be around 15% of total revenues.
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Akamai (AKAM) Q4 Earnings Beat Estimates on Higher Revenues
Akamai Technologies, Inc. (AKAM - Free Report) reported modest fourth-quarter 2023 results, with the bottom surpassing the Zacks Consensus Estimate but the top line missing the same. The company recorded higher revenues year over year, driven by solid momentum in security and compute verticals. Growing adoption of API security solutions in various industries and healthy demand for Akamai Connected Cloud drove the top line.
Net Income
GAAP net income improved to $161.2 million or $1.03 per share from $128.8 million or 82 cents per share in the year-ago quarter. The growth is primarily attributed to year-over-year top-line expansion during the quarter.
Non-GAAP net income was $262.6 million or $1.69 per share, up from $216.4 million or $1.37 per share a year ago. The bottom line beat the Zacks Consensus Estimate by 10 cents.
In 2023, GAAP net income was $547.6 million or $3.52 per share compared with $523.7 million or $3.26 per share in 2022. In 2023, non-GAAP net income rose to $960 million or $6.20 per share from $857.7 million or $5.37 million in the prior year.
Akamai Technologies, Inc. Price, Consensus and EPS Surprise
Akamai Technologies, Inc. price-consensus-eps-surprise-chart | Akamai Technologies, Inc. Quote
Revenues
Quarterly net sales were $995 million compared with $927.8 million reported in the year-ago quarter. The 7% year-over-year uptick is driven by rising customer engagement in the Security and Compute businesses. However, revenues missed the Zacks Consensus Estimate by $3 million.
In 2023, Akamai generated $3.81 billion in revenues, up from $3.61 billion in 2022.
By product groups, revenues from Security Technology Group were $471 million compared with $400.2 million in the year-ago quarter. The 18% year-over-year growth was primarily driven by strong demand for Guardicore Segmentation Solution. Several major financial institutions and retail brands in Europe and North America deployed Akamai’s API security solution during the quarter. However, net sales fell short of our estimate of $478.6 million.
The Delivery segment contributed $389 million, down from $415.2 million in the year-ago quarter. Despite the year-over-year decrease, contracts acquired from StackPath and Lumen partially supported the top line in this vertical. The segment’s revenues surpassed our estimate of $380.6 million.
The Compute segment registered $135 million in revenues, up from $112.4 million in the prior-year quarter, backed by healthy demand for its cloud computing solution. The newly launched Generalized Edge Compute is also gaining significant market traction. The top line beat our estimate of $130.5 million.
Region-wise, net sales from the United States came in at $516.3 million, up 7% year over year. International revenues stood at $478.7 million, up from $445 million in the year-earlier quarter.
Other Details
In the December quarter, total operation expenses rose to $810.2 million from $760.3 million. Non-GAAP income from operations improved to $302.7 million from $257.6 million, with respective margins of 30% and 28%. Adjusted EBITDA was $426 million, up from $381.7 million in the year-ago quarter.
Cash Flow & Liquidity
In the fourth quarter of 2023, Akamai generated $389.2 million in cash from operating activities compared with $341.5 million in the prior-year quarter. In 2023, the company generated $1.34 billion in cash from operations compared with $1.27 billion in 2022.
As of Dec 31, 2023, the company had $489.5 million in cash and cash equivalents with $774.8 million of operating lease liabilities compared with respective tallies of $542.3 million or $693.3 million in 2022. During the quarter, it repurchased approximately 0.5 million shares for around $55 million.
Outlook
For the first quarter of 2024, Akamai expects revenues in the range of $980-$1,000 million. Non-GAAP operating margin is projected to be in the range of 29-30%. Non-GAAP earnings are forecasted to be in the range of $1.59-$1.64 per share. Capital expenditure is anticipated to be 15% of revenues.
For 2024, Akamai expects revenue growth rates in the range of 6-8% year over year. It expects a non-GAAP operating margin of 30%. Non-GAAP earnings are now projected to grow in the range of 7-11% year over year. Capital expenditure is likely to be around 15% of total revenues.
Zacks Rank & Stocks to Consider
Akamai currently has a Zacks Rank #3 (Hold).
NVIDIA Corporation (NVDA - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 18.99%. In the last reported quarter, it delivered an earnings surprise of 19.64%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 170.71%. In the last reported quarter, it delivered an earnings surprise of 78.99%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 at present, is likely to benefit from 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 delivered an earnings surprise of 13.28%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.