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Akamai shares tumble on weak outlook despite revenue milestone

Published 2024/11/07, 23:10
AKAM
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NEW YORK - Akamai Technologies Inc . (NASDAQ:AKAM) reported third-quarter earnings that missed analyst expectations and provided a disappointing outlook, sending its shares down 7.6% in after-hours trading despite reaching a significant revenue milestone.

The cloud services and cybersecurity company posted adjusted earnings per share of $1.49 for the quarter ended September 30, falling short of the $1.59 analyst consensus. Revenue, however, surpassed $1 billion for the first time, coming in at $1.005 billion, slightly above the $999.31 million estimate and up 4% YoY.

Akamai's security and compute segments, which now account for 68% of total revenue, grew 17% YoY when adjusted for foreign exchange. Security revenue increased 14% to $519 million, while compute revenue jumped 28% to $167 million. However, delivery revenue declined 16% to $319 million.

"Akamai delivered another solid quarter, highlighted by continued momentum in security and cloud computing," said CEO Dr. Tom Leighton. "This quarter also marks a significant milestone as we surpassed the billion-dollar quarterly revenue threshold for the first time."

Despite the revenue growth, investors focused on Akamai's weak fourth-quarter guidance. The company expects Q4 EPS of $1.49-$1.56, below the $1.62 analyst consensus, and revenue of $1-1.02 billion, short of the $1.03 billion estimate.

The company also recognized an $82 million restructuring charge in Q3, primarily related to severance costs from a workforce reduction aimed at supporting strategic investments.

Akamai repurchased 1.7 million shares for $166 million during the quarter at an average price of $97.29 per share.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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