What To Expect From Akamai Technologies’ Q3 Earnings

Akamai Technologies (NASDAQ: AKAM) is scheduled to report its third quarter earnings on Monday, October 29 after market close. In this note we take a look at what to expect from the company’s earnings release.

Akamai is a leading player in the web application firewall space, a market that is expected to grow at a CAGR of over 18%. We currently have a price estimate of $75 per share for Akamai Technologies, which is higher than the current market price. Our interactive dashboard on Akamai Technologies’ Price Estimate outlines our forecasts for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

In Q2, Akamai’s management had noted strong performance across the company’s two major units – cloud security (+33% y-o-y to $155 million) and content delivery networks (+3.8% y-o-y to $508 million). Management guided for 5-7% total revenue growth y-o-y in Q3, implying total revenue between $656 million and $668 million. Given the momentum in the cloud security division, stronger than expected growth could lead to revenues coming in closer to the higher end of the guided range. This compares favorably with the consensus expectation of $664 million in revenues for the third quarter. Going forward, we will be watching closely for any updates on the following trends:

• Developing momentum in the cloud security business
• Improvement in the CDN division
• Any hint of earnings weakness due to rising interest rates

It will also be interesting to see if the expectations for continued business momentum can spill over to the next fiscal year, with any commentary (even qualitative) on the cloud security business. Per the latest guidance, management expects revenue for full year 2018 to be in the range of $2.68 billion to $2.705 billion.

Do not agree with our forecast? Create your own price forecast for Akamai Technologies by changing the base inputs (blue dots) on our interactive dashboard.