Akamai Beats Guidance As Value-Added Services Drive $36 ValueFont size: A | A | A11:30 AM ET 7/30/12 | TREFIS Akamai (NASDAQ:AKAM) announced a strong set of Q2 2012 results, beating its guidance on both the revenue and margins front. Revenues for the quarter came in at $331 million, a 20% jump over the prior-year quarter and beating its guidance at the high-end. The revenue beat happened across all verticals and geographies, implying any impact to Akamai due to the prevailing macro-economic concerns may be limited as businesses increasingly take to the Internet to reduce costs. Gross and EBITDA margins were also better than expected. Gross margins improved sequentially for the third consecutive quarter as the company drove efficiency in its delivery of Internet content and value-added services grew in strength, while EBITDA margins, adjusted for one-time non cash items, came in at 43%, a full percentage point better than the high end of its guidance.
Cash generation from operations increased to a record $150 million, almost 45% of its total revenues for the quarter. Year-to-date, the company has been able to convert almost 37% of its revenues to cash despite completing two big acquisitions of Cotendo and Blaze earlier this year.With the long-term growth trends of cloud computing, mobility and online video intact, we have revised our price estimate for Akamai’s stock to $36, in line with the current market price.