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Akamai (AKAM) Q2 Earnings Beat Estimates, Revenues Up Y/Y
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Akamai Technologies Inc. (AKAM - Free Report) reported strong second-quarter 2024 results, with both the bottom and top lines surpassing the respective Zacks Consensus Estimate. The company recorded a top-line expansion year over year, driven by solid momentum in security and compute verticals in multiple end markets.
Net Income
GAAP net income improved to $131.7 million or 86 cents per share from $128.8 million or 84 cents per share in the year-ago quarter. The improvement was primarily attributed to year-over-year net sales growth during the quarter.
Non-GAAP net income was $242.6 million or $1.58 per share, up from $228 million or $1.49 per share a year ago. The bottom line beat the Zacks Consensus Estimate by 4 cents.
Akamai Technologies, Inc. Price, Consensus and EPS Surprise
Quarterly net sales were $979.58 million compared with $935.72 million reported in the year-ago quarter. The 5% year-over-year uptick was driven by rising customer engagement in the Security and Compute businesses. Revenues beat the Zacks Consensus Estimate by $3 million.
By product groups, revenues from Security Technology Group were $498.7 million compared with $432.9 million in the year-ago quarter. The 15% year-over-year growth was primarily driven by growing demand for Guardicore Segmentation Solution. Demand for Zero Trust Network Access Solution also remains strong. Net sales exceeded our estimate of $497.8 million.
The Delivery segment contributed $329.4 million, down from $379.7 million in the year-ago quarter. Despite boasting a leadership position in the market, the segment is facing challenges due to macro headwinds and geopolitical instability around the world. However, the segment’s revenues beat our estimate of $328 million.
The Compute segment registered $151.5 million in revenues, up from $123.1 million in the year-ago quarter. Healthy traction among enterprise customers and multiple deal wins in various verticals drove the net sales in this segment. The segment’s revenues beat our estimate of $149 million.
Region-wise, net sales from the United States came in at $508.7 million, up 6% year over year. International revenues stood at $470.9 million, up from $455.7 million in the year-earlier quarter.
Other Details
In the June quarter, total operation expenses rose to $831.6 million from $785.9 million. Non-GAAP income from operations was $281.5 million, up from $273 million, with margins of 29% each quarter. Adjusted EBITDA was $408.9 million, up from 388.2 million in the year-ago quarter, with respective margins of 42% and 41%.
Cash Flow & Liquidity
In the second quarter of 2024, Akamai generated $431 million in cash from operating activities compared with $366.3 million in the prior-year quarter. As of Jun 30, 2024, the company had $448 million in cash and cash equivalents with $2.4 billion of convertible senior notes. During the quarter, it repurchased approximately 1.4 million shares for around $128 million.
Outlook
For the third quarter of 2024, Akamai expects revenues in the range of $988-$1,008 million. Non-GAAP operating margin is projected at 29%. Non-GAAP earnings are forecasted in the range of $1.56-$1.62 per share. Capital expenditure is anticipated to be 17% of revenues.
Backed by solid momentum in several segments, Akamai has raised its guidance for 2024. Revenues are currently estimated at $3.97-$4.01 billion, up from $3.95-$4 billion projected earlier. Non-GAAP earnings are now projected in the range of $6.34-$6.47 per share, up from $6.20-$6.40 expected earlier. It expects a non-GAAP operating margin of 29%. Capital expenditure is likely to be around 16% of total revenues.
It is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
PayPal Holdings, Inc. (PYPL - Free Report) sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 23.96%.
It has emerged as one of the largest online payment solutions providers on the back of its strong product portfolio and two-sided platform that enables it to offer smooth and secure transaction facility to both customers and merchants.
CommScope Holding Company, Inc. (COMM - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 65.22% in the last reported quarter.
It is a premier provider of infrastructure solutions, including wireless and fiber optic solutions, for the core, access and edge layers of communication networks. The company has created a niche market for itself, helping customers scale network capacity, delivering better network response time and performance, and simplifying technology migration.
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Akamai (AKAM) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Akamai Technologies Inc. (AKAM - Free Report) reported strong second-quarter 2024 results, with both the bottom and top lines surpassing the respective Zacks Consensus Estimate. The company recorded a top-line expansion year over year, driven by solid momentum in security and compute verticals in multiple end markets.
Net Income
GAAP net income improved to $131.7 million or 86 cents per share from $128.8 million or 84 cents per share in the year-ago quarter. The improvement was primarily attributed to year-over-year net sales growth during the quarter.
Non-GAAP net income was $242.6 million or $1.58 per share, up from $228 million or $1.49 per share a year ago. The bottom line beat the Zacks Consensus Estimate by 4 cents.
Akamai Technologies, Inc. Price, Consensus and EPS Surprise
Akamai Technologies, Inc. price-consensus-eps-surprise-chart | Akamai Technologies, Inc. Quote
Revenues
Quarterly net sales were $979.58 million compared with $935.72 million reported in the year-ago quarter. The 5% year-over-year uptick was driven by rising customer engagement in the Security and Compute businesses. Revenues beat the Zacks Consensus Estimate by $3 million.
By product groups, revenues from Security Technology Group were $498.7 million compared with $432.9 million in the year-ago quarter. The 15% year-over-year growth was primarily driven by growing demand for Guardicore Segmentation Solution. Demand for Zero Trust Network Access Solution also remains strong. Net sales exceeded our estimate of $497.8 million.
The Delivery segment contributed $329.4 million, down from $379.7 million in the year-ago quarter. Despite boasting a leadership position in the market, the segment is facing challenges due to macro headwinds and geopolitical instability around the world. However, the segment’s revenues beat our estimate of $328 million.
The Compute segment registered $151.5 million in revenues, up from $123.1 million in the year-ago quarter. Healthy traction among enterprise customers and multiple deal wins in various verticals drove the net sales in this segment. The segment’s revenues beat our estimate of $149 million.
Region-wise, net sales from the United States came in at $508.7 million, up 6% year over year. International revenues stood at $470.9 million, up from $455.7 million in the year-earlier quarter.
Other Details
In the June quarter, total operation expenses rose to $831.6 million from $785.9 million. Non-GAAP income from operations was $281.5 million, up from $273 million, with margins of 29% each quarter. Adjusted EBITDA was $408.9 million, up from 388.2 million in the year-ago quarter, with respective margins of 42% and 41%.
Cash Flow & Liquidity
In the second quarter of 2024, Akamai generated $431 million in cash from operating activities compared with $366.3 million in the prior-year quarter. As of Jun 30, 2024, the company had $448 million in cash and cash equivalents with $2.4 billion of convertible senior notes. During the quarter, it repurchased approximately 1.4 million shares for around $128 million.
Outlook
For the third quarter of 2024, Akamai expects revenues in the range of $988-$1,008 million. Non-GAAP operating margin is projected at 29%. Non-GAAP earnings are forecasted in the range of $1.56-$1.62 per share. Capital expenditure is anticipated to be 17% of revenues.
Backed by solid momentum in several segments, Akamai has raised its guidance for 2024. Revenues are currently estimated at $3.97-$4.01 billion, up from $3.95-$4 billion projected earlier. Non-GAAP earnings are now projected in the range of $6.34-$6.47 per share, up from $6.20-$6.40 expected earlier. It expects a non-GAAP operating margin of 29%. Capital expenditure is likely to be around 16% of total revenues.
Zacks Rank & Stocks to Consider
Akamai currently has a Zacks Rank #4 (Sell).
Arista Networks, Inc. (ANET - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. In the last reported quarter, it delivered an earnings surprise of 8.25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
PayPal Holdings, Inc. (PYPL - Free Report) sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 23.96%.
It has emerged as one of the largest online payment solutions providers on the back of its strong product portfolio and two-sided platform that enables it to offer smooth and secure transaction facility to both customers and merchants.
CommScope Holding Company, Inc. (COMM - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 65.22% in the last reported quarter.
It is a premier provider of infrastructure solutions, including wireless and fiber optic solutions, for the core, access and edge layers of communication networks. The company has created a niche market for itself, helping customers scale network capacity, delivering better network response time and performance, and simplifying technology migration.