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Akamai (AKAM) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research
·4 min read

Akamai Technologies AKAM is slated to release first-quarter 2020 results on Apr 28.

For first-quarter 2020, Akamai expects revenues between $741 million and $755 million. The Zacks Consensus Estimate for quarterly revenues is pegged at $747.95 million, which indicates a rise of 5.9% from the year-ago quarter’s reported figure.

Non-GAAP earnings are expected in the range of $1.13-$1.18 per share. The consensus mark for earnings stayed at $1.15 in the past seven days, which reflects year-over-year growth of 4.6%.

Notably, the company has a trailing four-quarter positive earnings surprise of 7.89%, on average.

Let’s see how things have shaped up prior to this announcement.

Akamai Technologies, Inc. Price and EPS Surprise

 

Akamai Technologies, Inc. Price and EPS Surprise
Akamai Technologies, Inc. Price and EPS Surprise

Akamai Technologies, Inc. price-eps-surprise | Akamai Technologies, Inc. Quote

 

Factors Likely to Have Influenced Q1 Results

Growing influence of Akamai’s new security solutions, including Enterprise Defender, Identity Cloud (formerly Janrain Identitiy Cloud), Multi-Factor Authentication and Page Integrity Manager is expected to get reflected in first-quarter results.

Moreover, ongoing momentum in Kona Site Defender and Bot Manager Solutions is likely to have been a tailwind.

Further, the addition of enhancements like Secure Web Gateway to Akamai’s Enterprise Application Access and Enterprise Threat Protector offerings are likely to have led to robust adoption, which in turn are anticipated to have driven Cloud Security Solutions revenues in the to-be-reported quarter.

The Zacks Consensus Estimate for Cloud Security Solutions revenues in the first-quarter is currently pegged at $237 million, which suggests a rise of 24.7% on a year-over-year basis.

Strong demand for OTT video services as well as software and gaming downloads is likely to have driven traffic for Akamai’s platform, which in turn is expected to have boosted Media and Carrier division revenues.

The Zacks Consensus Estimate for Media and Carrier Division revenues for the first quarter are currently pegged at $344 million, which indicates a growth of 4.2% on a year-over-year basis.

Notably, the Zacks Consensus Estimate for CDN and other solutions revenues for the first quarter is currently pegged at $513 million, compared with $516.4 million reported in the year-ago quarter.

Lockdown measures due to the global coronavirus pandemic are likely to have driven Internet traffic during the quarter under review. Moreover, as people are staying at home, there is strong growth in demand for High Definition video over the internet. This is driving bandwidth requirements, which is expected to have accelerated demand for the company’s solutions and driven revenues.

Additionally, robust adoption of its Intelligent Edge Platform and Edge Cloud offerings is likely to have benefited first-quarter performance.

However, the company’s investments in re-structuring efforts are likely to have put pressure on margins in the to-be-reported quarter.

Key Developments in Q1

Akamai’s solutions, which include the cloud-based remote access management solution and Enterprise Threat Protector among others, were selected by Au Kabucom Securities to strengthen its defense against cyber-attacks while reducing costs.    

Moreover, Akamai closed a deal to acquire customers and intellectual property (IP) from Instart. The acquired customers will be transitioned to the Akamai’s platform, while IP will be used to enhance its page integrity solution.

What Our Model Says

Our proven model does not predict an earnings beat or Akamai this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Akamai has an Earnings ESP of -0.75% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few stocks that you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Pixelworks, Inc. PXLW has an Earnings ESP of +5.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shopify Inc. SHOP has an Earnings ESP of +11.84% and a Zacks Rank #2.

CoStar Group, Inc. CSGP has an Earnings ESP of +2.01% and a Zacks Rank of 3.

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Akamai Technologies, Inc. (AKAM) : Free Stock Analysis Report
 
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Pixelworks, Inc. (PXLW) : Free Stock Analysis Report
 
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