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Akamai (AKAM) Gears Up for Q4 Earnings: What's in the Cards?

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Akamai Technologies (AKAM - Free Report) is slated to release fourth-quarter 2019 results on Feb 11.

For fourth-quarter 2019, Akamai envisions revenues between $735 million and $755 million. The corresponding Zacks Consensus Estimate is pegged at $749.76 million, which indicates a rise of 5.1% from the year-ago quarter’s reported figure.

Non-GAAP earnings are expected in the range of $1.10-$1.15 per share. The consensus mark for earnings stayed at $1.13 in the past 30 days, which reflects year-over-year growth of 5.6%.

Notably, the company has trailing four-quarter positive earnings surprise of 7.42%, on average.

Factors Likely to Have Influenced Q4 Results

Solid demand for Enterprise Application Access and Enterprise Threat Protector offerings, particularly among carrier and enterprise customers are anticipated to have driven Cloud Security Solutions revenues in the to-be-reported quarter.

The Zacks Consensus Estimate for Cloud Security Solutions revenues for the fourth quarter is currently pegged at $231 million, compared with third-quarter reported figure of $216 million.

Further, growing influence of its new security solutions, including Akamai Enterprise Defender and Akamai Identity Cloud (formerly Janrain Identitiy Cloud), among media customers, is expected to get reflected in fourth-quarter results.

Moreover, ongoing momentum in Kona Site Defender, Nominum services, Bot Manager and Prolexic solutions is likely to have been a tailwind.

Akamai Technologies, Inc. Price and EPS Surprise

Akamai Technologies, Inc. Price and EPS Surprise

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

Notably, the Zacks Consensus Estimate for Media and Carrier Division revenues for the fourth quarter are currently pegged at $332 million, which indicates an improvement from the reported figure of $320 million in the third quarter.

Additionally, robust adoption of its Intelligent Edge Platform and Edge Cloud offerings, is likely to have benefited fourth-quarter performance.

Strong growth in demand for High Definition video over the Internet is driving bandwidth requirements, which is expected to have accelerated demand for the company’s solutions and consequently driving revenues.

Notably, the Zacks Consensus Estimate for CDN and other solutions revenues for the fourth quarter is currently pegged at $520 million, compared with $494 million reported in the third quarter.

Nevertheless, stiff competition in the CDN market and associated pricing pressure is likely to have exerted pressure on margin.

Key Developments in Q4

During the quarter under review, Akamai also rolled out product enhancements to Security and Personalization Services (SPS) Secure Business offering. The aim is to aid Internet service providers (ISPs) deliver robust cybersecurity solutions to small and mid-sized business (SMB) clients. This is expected to have generated incremental revenues in the fourth quarter.

Moreover, Akamai closed the buyout of Exceda, aimed at addressing the rise in demand for security and cloud infrastructure solutions as well as expand presence in Latin America.

However, higher investments related to product enhancements and acquisitions are likely to have affected profitability in the to-be-reported quarter

What Our Model Says

Our proven model does not conclusively predict an earnings beat or 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. But that’s not the case here.

Akamai has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few stocks that you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Alteryx, Inc. (AYX - Free Report) has an Earnings ESP of +6.49% and a Zacks Rank #1. You can see  the complete list of today’s Zacks #1 Rank stocks here.

Applied Materials, Inc. (AMAT - Free Report) has an Earnings ESP of +2.89% and a Zacks Rank of 1.

Bruker Corporation (BRKR - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #2.

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