Akamai had mixed results in the December quarter, with growth in cloud computing and security software offset by continued declines in its traditional content delivery network business.
For the fourth quarter, Akamai reported a 7% increase in revenue to $995 million, falling within the range of $985 million to $1.005 billion it had given investors. However, it fell slightly short of the consensus among Wall Street analysts of $999 million.fact set
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On an adjusted basis, Akamai earned $1.69 per share in the quarter. This beats both the guidance range of $1.57 to $1.62 per share and the street consensus call of $1.59 per share. Based on generally accepted accounting principles, the company earned $1.03 per share.
Akamai posted security revenue of $471 million, up 18% in the quarter, but below the street consensus of $475 million. Revenue from his content distribution division fell 6% to $389 million, also slightly below Wall Street expectations of $392 million. Revenue from the company's growing cloud computing business, Compute, rose 20% to $135 million, beating the consensus call of $132 million.
Akamai expects March quarter revenue to be between $980 million and $1 billion, the midpoint of that range being slightly below the consensus estimate of $993 million in revenue. The company expects adjusted quarterly earnings to be between $1.59 and $1.64 per share, compared to Wall Street's consensus call of $1.59.
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Akamai's full-year outlook calls for revenue growth of 6% to 8%, with the midpoint implying revenue of $4.08 billion. This compares to a consensus call of $4.11 billion.
Management expects full-year adjusted earnings per share to increase 7% to 11%. This estimate suggests earnings of about $6.76 per share, a few pennies above the consensus estimate of $6.71.
CEO Tom Leighton said in a statement that its cloud business and security software together account for 60% of the company's overall revenue. “As we look to 2024, we will continue to drive delivery profitability, expand our market-leading security products, and extend our cloud computing platform to the edge to provide our customers with better performance at lower cost. That's the plan,” he said.
On that last point, Akamai also announced plans to add cloud computing capabilities to its edge computing network as it expands its competition with Amazon.com.
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For cloud workloads.
In fact, Akamai leverages its content delivery network to hide copies of media and e-commerce content on the web, reducing access times and providing cloud computing capabilities closer to end users. The company said it has already started rolling out new features in applications such as AI inference, multiplayer gaming, social media and content streaming.
Akamai expects additional applications to follow in data analytics, spatial computing, consumer and industrial Internet of Things, among others.
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Akamai says the new service, called Gecko after Generalized Edge Compute, has already been rolled out in Hong Kong, Kuala Lumpur, Johannesburg, Querétaro, Mexico, and other cities with “low concentrations of hyperscalers.” Bogota, Denver, Houston, Hamburg, Marseille, etc.
Akamai stock rose 5% in the year to Tuesday's close. The stock has increased 46% in the past 12 months.
Email Eric J. Savitz at eric.savitz@barrons.com.
