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Akamai Technologies Inc AKAM

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PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Security Propels Akamai to Q1 Revenue Beat and Guidance Raise, but Comps Are About To Get Tougher

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Akamai once again produced very strong sales growth during the first quarter, exceeding consensus FactSet revenue and EPS estimates. Results were driven by the security business, which saw its growth rate pick up again after decelerating recently. Overall comps will soon be tougher, though, as the firm has now lapped the beginning of the pandemic, which caused a massive spike in web traffic and led to growth in the previously stagnant content delivery network, or CDN, business (now renamed Edge Technology). Nonetheless, the company raised full-year guidance, and we’re raising our $72 fair value estimate to $76. Our fair value estimate is held back by our assessment that the core CDN business lacks sustainable competitive advantages. However, we acknowledge that the fate of Akamai is increasingly more dependent on its security business, which now exceeds one third of total revenue. Strength in that area is likely to continue.

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Company Profile

Business Description

Akamai operates a content delivery network, or CDN, which entails locating servers at the edges of networks so its customers, which store content on Akamai servers, can reach their own customers faster, more securely, and with better quality. Akamai has over 325,000 servers distributed over 4,000 points of presence in more than 1,000 cities worldwide. Its customers generally include media companies, which stream video content or make video games available for download, and other enterprises that run interactive or high-traffic websites, such as e-commerce firms and financial institutions. Akamai also has a significant security business, which is integrated with its core web and media businesses to protect its customers from cyber threats.

Contact
145 Broadway
Cambridge, MA, 02142
T +1 617 444-3000
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 8,368

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