Akamai Earnings: Performance And Cloud Security Solutions Boosts Revenues In Q4

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Akamai (NASDAQ:AKAM) reported its earnings for the fourth quarter of 2017 on January 6. The company reported yet another quarter of growth as revenues grew 7.7% to $663.5 million. The revenue growth was driven largely by Performance and Security Solutions, as revenues grew by 13.3% to $416 million due to growth in Cloud Security revenues. We have created an interactive dashboard that illustrates Q4 results and our Q1 expectation for Akamai. You can modify the revenues from each business segment and net income margin expectations to see how the EPS will be affected in Q1 2018.

 

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Cloud Security Solutions Boosts Performance And Security Solutions

Performance & Security Solutions reported 13.3% growth in revenues as its cloud security solution revenue grew by over 32% to $135 million. These solutions now account for over 20% of Akamai’s overall revenue in Q4 and have an annualized revenue run rate of close to $550 million.

Decline In Media Delivery Solutions Continues

Revenue from Akamai’s six big technology clients (Amazon, Apple, Google, Facebook, Microsoft, and Netflix) has been declining at a rapid pace as these companies have been investing in and delivering content through their own content delivery networks. As a result, the company reported that its media delivery solutions division experienced 3% decline in revenue. However, in the previous quarter, the company took some steps to increase web traffic and revenues on its platform. Due to these initiatives, traffic across Akamai’s platform rose, while the revenues (excluding the large internet platforms) grew by 10%.

Guidance for Q1 and 2018

The company projects that it revenues will be $647-659 million range in Q1’18, while Non-GAAP net income per diluted share will be in $0.67-$0.70 range. For 2018, the company expects its revenues to be in $2.67-2.71 billion range and non-GAAP EPS to be in $2.90-$3 range.

At present, our $53 price estimate for Akamai is below the current market price.

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