What To Expect From Akamai For The Full Year After A Strong Start
Akamai (NASDAQ:AKAM) recently announced its Q1 earnings, reporting an 11% growth in net revenues to $669 million. The company’s international revenues were up 22% on a y-o-y basis to $245 million while revenues in the U.S. were up 6% to $423 million. Akamai’s web division reported sustained demand through the March quarter with total revenues increasing 16% to $353 million. This trend is consistent in recent quarters with growth in teen percentages over the period. Going forward, we expect web division to continue to drive top line growth, while media and carrier segment revenues are expected to increase at modes rates through the year.
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Akamai’s media division revenues have witnessed revenue declines (1-2%) over the last couple of years. The key reason for the decline in Media Content Delivery Solutions has been the fact that some of the company’s largest customers such as Amazon, Apple, Facebook, Google, Microsoft, and Netflix deployed content delivery networks (CDNs) of their own. Against the trend, combined media and carrier division revenues picked up with a 6% revenue growth to $316 million in the most recent quarter. This was attributable to the company gaining traction in the over-the-top (OTT) delivery and gaming sectors. Going forward we expect a modest increase in media segment revenues to just under $1.3 billion.
On the other hand, the company’s web segment has performed well in recent quarters. Akamai has witnessed solid demand for some of its key product lines in this segment including Image Manager, Digital Performance Management, Bot Manager and Prolexic Cloud Security Solutions. This trend is expected to continue through 2018, with the web segment expected to drive top line growth for the company. As a result, we forecast web segment revenues to be up 10% to over $1.4 billion.
Despite revenue growth, we forecast the adjusted EBITDA margin to be around 1 percentage point lower than 2017 at 33% for the current year. The resulting net income and earnings per share are expected to increase 20% to $506 million and $2.99, respectively. This is in line with the consensus estimates for the company. We have summarized our expectations for Akamai’s full year results on our interactive dashboard platform. If you think differently or disagree with our forecasts, you can modify expected segment revenues and margins for the quarter to see how the EPS will be affected in for the year.
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