Akamai Technologies reported third-quarter earnings and revenue that topped Wall Street targets amid a shift to higher margin products. AKAM stock rose on Wednesday as company raised 2023 guidance for security product growth.
The company reported Q3 earnings after the market close on Tuesday. For the quarter ending Sept. 30, Akamai earnings rose 29% to $1.63 an adjusted share. Revenue climbed 9% to $965 million, said the Cambridge, Mass.-based company.
Analysts expected Akamai earnings of $1.50 a share on revenue of $944 million. A year earlier, Akamai earned $1.26 a share on sales of $882 million.
On the stock market today, AKAM stock rose 1.6% to close at 110.56. Akamai stock has gained 32% in 2023.
AKAM Stock Technical Ratings
For the current quarter ending in December, Akamai forecast EPS of $1.60 at the midpoint of guidance. Analysts had projected adjusted profit of $1.54 per share.
Akamai predicted revenue in a range of $985 million to $1.005 billion. That topped estimates for Q4 revenue of $987 million.
"The last few quarters have seen marked improvement in execution, which we believe comes from a variety of factors," said Raymond James analyst Frank Louthan in a report. "First there are some leadership changes over the last year that we believe have helped the company get traction, particularly in the security space. Secondly, the company has some new bundled products allowing them to sell across various security products to smaller customers."
Akamai is the biggest provider of content delivery network services that also increase the speed of e-commerce transactions and business software downloads.
In addition, Akamai has expanded into cybersecurity services and edge computing – extending cloud services closer to where data is generated.
There, it competes with Cloudflare.
Meanwhile, the company said Q3 earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 13% to $418 million, topping estimates of $394 million.
Also in Q3, security revenue rose 20% to $456 million. Security revenue growth accelerated from 14% in Q2 and 9% in Q1. Akamai raised its full-year 2023 security growth forecast to 15% from 12% to 14%.
Heading into the Akamai earnings report, Akamai owned an entry point of 109.24. AKAM stock traded in a buy zone.
And, Akamai stock had a Relative Strength Rating of 94 out of a best-possible 99, according to IBD Stock Checkup.
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