Akamai Technologies, a leading content delivery network (CDN) provider, announced impressive financial results for the third quarter of this year. The company’s robust performance was primarily driven by its successful foray into security software and cloud computing.
In the latest quarter, Akamai reported revenue of $965 million, surpassing both its projected range of $937 million to $952 million and the Wall Street consensus of $944 million. FactSet tracked this achievement. Adjusted earnings per share (EPS) stood at $1.63, outperforming the Wall Street estimate of $1.50.
Notably, 61% of Akamai’s revenue in this quarter was attributed to its security software and cloud computing segments. This substantial contribution highlights the success of the company’s diversified portfolio beyond its traditional content delivery network.
According to Tom Leighton, CEO of Akamai Technologies, the company had an exceptional quarter in terms of both top-line and bottom-line growth. The security software business delivered outstanding performance, while the compute segment also exhibited notable strength.
Despite the content delivery business experiencing stagnant growth, Akamai acquired several new clients in this quarter as other content delivery networks exited the market. This expansion strategy has helped mitigate any potential challenges posed by the lackluster growth of the core CDN business.
Furthermore, the company has efficiently saved millions of dollars annually by transitioning its computing functions to its own cloud infrastructure instead of relying on larger cloud computing platforms.
With their strong Q3 results, Akamai Technologies has revised their full-year outlook and is now anticipating even greater success going forward.
Akamai’s Strong Performance in Q3
Akamai, a leading provider of content delivery network (CDN) services and cloud computing solutions, announced its financial results for the third quarter. The company’s security business reported impressive revenue of $456 million, representing a 20% increase from the previous year and surpassing Wall Street estimates by $14 million.
While delivery revenue slightly underperformed expectations at $379 million, experiencing a 4% decrease, the compute segment performed well with revenue of $130 million, exceeding expectations.
Positive Outlook for Q4
Looking ahead to the December quarter, Akamai projects revenue between $985 million and $1.005 billion. At the midpoint of this range, the company’s forecast outpaces the Wall Street consensus of $987 million. Akamai also expects adjusted profits in the range of $1.57 to $1.62 per share, surpassing the Street estimate of $1.54 per share.
Revised Full-Year Outlook
Akamai has revised its full-year revenue outlook to a range of $3.802 billion to $3.822 billion, showcasing strong growth. Moreover, the company anticipates profits of $6.08 to $6.13 per share, compared to the previous forecast of $5.87 to $5.95 per share.
Expanding Cloud Computing Business
Akamai is particularly excited about the early success of its cloud computing business, which has witnessed significant growth. The company added seven new data centers in the quarter, increasing the total count to 24. Akamai aims to tap into opportunities in handling “mission critical apps for major enterprises,” competing directly with formidable cloud vendors. The company foresees promising prospects in the media, gaming, and commerce sectors, where Akamai has historically excelled in content delivery.
During the quarter, Akamai repurchased $113 million of common stock, highlighting its commitment to returning value to shareholders.
Following the positive financial results, Akamai’s shares rose by 3.3% in late trading. Year to date, the stock has surged by an impressive 29% in 2023.