Akamai
posted better-than-expected results for the June quarter, driven by strong performance in security software. The company also provided full-year guidance above previous Wall Street estimates.
In late trading Tuesday, Akamai shares were 4.7% higher at $99.45. Before the report, Akamai shares were up about 13% so far this year.
Akamai (ticker: AKAM) had revenue in the quarter of $936 million, up 4% from a year ago, and above the Wall Street consensus forecast of $930 million. Adjusted profit was $1.49 a share, up 10% from a year earlier, and nine cents above Wall Street estimates. Under generally accepted accounting principles, Akamai earned 84 cents a share.
Akamai is best known as a content delivery network, which helps steer traffic around the internet for online content and commerce companies, but security software is now the company’s largest business.
For the quarter, the delivery segment had revenue of $380 million, down 9% from a year ago and below the Wall Street consensus of $386 million. Security software revenue, by contrast, rose 14% from a year earlier to $433 million, ahead of consensus at $420 million. Compute, which includes Akamai’s cloud computing business, had revenue of $123 million, up 16% from a year earlier, but a hair below consensus of $124 million.
For the September quarter, Akamai sees revenue of $937 million to $952 million, with adjusted profit of $1.48 to $1.52 a share; that’s ahead of the old Street consensus of $931 million in revenue and $1.41 a share in earnings. For the full year, Akamai sees revenue ranging from $3.765 billion to $3.795 billion, with adjusted profit of $5.87 to $5.95 a share; consensus had been $3.759 billion in revenue and profit of $5.73 a share.
Akamai said it bought back $137 million of stock in the quarter.
In an interview with Barron’s, CEO Tom Leighton said the company sees strength in its edge security software quarter, with several consecutive quarters of strong bookings. He also says he sees considerable new opportunity with a recent entry into the market for API security—protecting the point where software programs can connect to share information. He sees API-related attacks as a growing vulnerability for large companies.
“The bad guys are figuring it out,” he said.
Meanwhile, Leighton remains upbeat about the company’s push to build a cloud-computing business to compete with big players like
Amazon.com
(AMZN),
Microsoft
(MSFT), and
Alphabet
‘s (GOOG) Google. He thinks the company will begin to see “meaningful” bookings in that business in next year’s second half.
The company will initially target video, gaming and e-commerce companies, many of whom have long used the company’s content delivery network services, the CEO said. Akamai will offer better performance, at a lower price point, than the hyperscalers that dominate the market, Leighton said.
Write to Eric J. Savitz at [email protected]
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