Akamai Technologies Beats EPS Estimates, Falls Short on Revenue for Q4 2023
Akamai Technologies reported its fourth-quarter earnings for 2023, with earnings per share (EPS) surpassing consensus estimates but falling slightly short on revenue. Despite the revenue miss, the company’s compute services revenue showed strong growth, while security services and delivery services had mixed performances.
The cloud computing company posted an EPS of $1.69, beating the consensus estimates of $1.60. However, its quarterly revenue of $995 million slightly missed the anticipated $999.09 million.
On a positive note, compute services revenue grew by 20% YoY to $135.0 million, surpassing the estimate of $132.7 million. This growth signals the company’s success in this particular segment.
To reward its shareholders, Akamai allocated $55 million for repurchasing 0.5 million shares of its common stock, averaging $110.75 per share. This move reflects the company’s confidence in its future prospects.
Looking ahead to the first quarter of 2024, Akamai projects its EPS to be in the range of $1.59 to $1.64, aligning with analyst estimates of $1.59. This indicates the company’s optimism in maintaining its financial performance.
However, Akamai Technologies shares slumped 5% in after-hours trading Tuesday after the company missed expectations for FQ4 revenue and issued soft FQ1 2024 guidance. Despite positive EPS results, the revenue shortfall and weak guidance have raised concerns among investors.
Breaking down the revenue streams, Akamai’s security services generated $471.0 million, marking an 18% year-over-year increase, albeit slightly below the forecasted $473.3 million. On the other hand, delivery services experienced a decline, bringing in $389.0 million, a 6.3% decrease from the previous year and short of the expected $392.8 million.
Throughout 2023, the company invested $654 million in buybacks, acquiring 7.8 million shares at an average price of $83.83 each. These buybacks demonstrate Akamai’s commitment to returning value to its shareholders.
Looking ahead, revenue for 2024 is anticipated to be between $980 million and $1 billion, compared to $993.4 million projected by analysts. The company aims to continue driving profitability in delivery, expanding its market-leading security offerings, and extending its cloud computing platform to the edge to provide customers with better performance at a lower cost.
In addition to its financial results, Akamai announced plans to embed cloud computing capabilities into its massive edge network, Gecko. This move showcases the company’s commitment to innovation and staying at the forefront of technology.
Overall, despite falling short on revenue for Q4 2023, Akamai Technologies’ strong EPS performance and growth in compute services revenue demonstrate its ability to adapt to changing market dynamics. With a focus on profitability, expanding security offerings, and innovative cloud computing capabilities, the company remains poised for success in the year ahead.
Keywords: Akamai Technologies, Q4 2023 earnings, earnings per share, revenue, compute services revenue, analyst estimates, share repurchase, security services, delivery services, buybacks, financial performance, cloud computing capabilities, edge network
Analyst comment
Positive news. The market is expected to react negatively in the short term due to the revenue shortfall and weak guidance, resulting in a 5% slump in after-hours trading. However, the strong EPS performance and growth in compute services revenue demonstrate Akamai’s ability to adapt and succeed. The company’s focus on profitability, expanding security offerings, and innovative cloud computing capabilities positions it for success in the year ahead.
