Akamai Technologies reported first-quarter earnings that topped Wall Street targets while revenue missed. Akamai stock tumbled as revenue guidance came in well below expectations amid weakness in its legacy content-delivery business.
The content delivery software company reported Q1 earnings after the market close on Thursday. In addition, Akamai announced a $2 billion buyback for AKAM stock.
On the stock market today, Akamai stock fell 9% to 93.11 in morning action.
"Akamai reported mixed Q1 results and lowered its 2024 guidance for revenue and adjusted EPS driven primarily by currency headwinds and traffic deceleration in delivery, while raising its 2024 revenue growth guidance for security and compute," said Michael Elias, a TD Cowen analyst in a report. "We view management's commentary around the Noname acquisition and anticipated revenue synergies as positive. W continue to be encouraged by strong growth in security."
For the quarter ending March 31, Akamai earnings rose 17% to $1.64 per adjusted share. Revenue climbed 8% to $987 million, the Cambridge, Mass.-based company said.
In addition, analysts expected Akamai earnings of $1.61 a share on revenue of $989 million, including acquisitions.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 11% to $417 million, missing estimates of $418 million.
Also, security revenue rose 21% to $491 million vs. estimates of $480 million.
Further, Akamai on May 7 announced the acquisition of Noname Security for $450 million. Analysts expect the deal will generate $20 million in 2024 revenue and dilute earnings by 10 cents per share.
Akamai Stock: Guidance Misses
For the current quarter ending in June, Akamai forecast revenue of $977 million at the midpoint of guidance. Analysts' consensus estimate is for 7% growth to $1 billion.
Meanwhile, Akamai is the biggest provider of content delivery network services. Its services also increase the speed of e-commerce transactions and business software downloads.
In addition, Akamai expanded into cybersecurity services and edge computing. Edge computing extends cloud services closer to where data is generated.
Heading into the Akamai earnings report, shares retreated 14% in 2024 and had gained 29% from a year ago.
Additionally, Akamai stock has a Relative Strength Rating of 24 out of a best-possible 99, according to IBD Stock checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
