Popular Stories

Akamai Stock Is Sliding Despite an Earnings Beat

Content-delivery network and security-software firm Akamai is seeing shares slip.

Funtap P/Dreamstime

Akamai Technologies stock is losing ground in late trading Tuesday despite reporting fourth-quarter results that were modestly ahead of Street estimates. The company’s guidance was in line with Street expectations—and investors may have been hoping for more.

For the quarter, the content-delivery network and security-software company posted revenue of $846 million, up 10% from a year ago, and ahead of the Street consensus estimate at $829.5 million. Non-GAAP profits were $1.33 a share, two cents better than consensus.

Akamai (ticker: AKAM) projects March quarter revenue of $822 million to $836 million, with non-GAAP profits of $1.28 to $1.31 a share; Street consensus estimates had been $819 million and $1.29, respectively. For the full year, Akamai is projecting revenue of $3.37 billion to $3.42 billion, with non-GAAP profits of $5.33 to $5.46 a share, which compares with the previous consensus estimates at $3.39 billion and $5.46, respectively.

“Akamai’s strong fourth-quarter performance capped off an excellent year in which we surpassed $3 billion in revenue and achieved record earnings per share,” Akamai CEO Tom Leighton said in a statement. He also noted that the company’s security revenue topped $1 billion for the first time in 2020, and he noted that non-GAAP operating margin was 31%, ahead of the company’s long-term target of 30%.

Akamai also announced a corporate reorganization, creating two product groups—security technology and edge technology—and a unified global sales organization.

In an interview with Barron’s Leighton said it made sense for the company to create a separate business unit for the growing security business, in part to highlight the segment’s financial success. But he also said that the groups are tightly coupled, with no plans to separate security as an independent business. 

Leighton said he was “very pleased” with the quarter, and that Akamai sees strong tailwinds for the business. The shift to remote work and the acceleration in e-commerce are here to stay and growing, he says. And Leighton notes that the number of security incidents has “exploded” in both number and sophistication, driving demand for security software.

Nonetheless, Akamai shares in late trading are down 7.1% to $109.61.

Write to Eric J. Savitz at [email protected]

View Article Origin Here

Related Articles

Back to top button