Akamai Falls On Missed Earnings & Bleak Future
Akamai’s stock crashed 10% after it reported its Q2 fiscal 2016 results, as its revenues missed estimates and EPS came in line. Although the company’s results themselves may not reflect much weakness, shrinking revenues from its main clients such as Apple and Facebook are a big concern. These technology companies have been increasingly investing in their own network infrastructures, and are subsequently reducing their reliance on Akamai services. Revenue from Akamai’s six biggest technology company’s accounted for just 11% of its net sales in Q2 2016, down from 18% in the year ago period.
Even though the company’s big customers are planning to utilize their own systems for data flow instead of outsourcing it, Akamai’s CEO believes that the worst may be behind them. While decline in prices from some customers can impair the company’s margins in the near term, it expects to see some improvement next year. In fact, Akamai’s EBITDA margins, excluding non-cash and special items, actually improved year over year in the second quarter. Looking ahead, Akamai is banking on a significant improvement in traditional media companies’ video business, in tandem with the recently concluded Euro Cup and upcoming Olympic Games, to provide a push to its business. Also, rapid growth of its nascent security business also holds some potential for long term growth.
- Akamai Stock Has Seen Little Change Since 2021. Will A Q3 Earnings Beat Drive The Stock Higher?
- What To Expect From Akamai’s Q2 Earnings?
- Cloud Business In Focus As Akamai Reports Q1 Results
- Will Akamai’s Cloud Computing Push Pay Off?
- Up Almost 6% Last Month, Can Akamai Continue Its Run?
- Here’s Why Akamai Stock Has Failed To Outperform The S&P Since 2017
Have more questions about Akamai? See the links below:
- What’s Akamai’s Revenue & Earnings Breakdown Based On Expected 2016 Results?
- What’s Akamai’s Fundamental Value Based On Expected 2016 Results?
- How Has Akamai’s Revenue Composition Changed In The Last Five Years?
- What Has Led To A ~100% Increase In Akamai’s Revenues & EBITDA In The Last Five Years?
- By What Percentage Can Akamai’s Revenues Grow Over the Next Five Years?
- How Are Akamai’s Revenue & EBITDA Composition Expected To Change By 2020?
Notes:
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap |More Trefis Research