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What to Expect Ahead of Akamai's (AKAM) Q3 Earnings Release?

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Akamai Technologies AKAM is scheduled to release third-quarter 2021 results on Nov 2.

For the third quarter, Akamai expects revenues between $845 million and $860 million. The projection indicates 6-8% year-over-year growth at constant currency (cc). Revenues are expected to benefit from favorable forex ($5-million impact) year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $852.5 million, which indicates growth of 7.5% from the year-ago quarter’s levels.

Non-GAAP earnings are expected to be $1.37-$1.41 per share. The consensus mark for earnings has been steady in the past 30 days at $1.39, which reflects year-over-year growth of 6.1%.

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 to Note

Rising incidents of cyber-attacks necessitate the implementation of robust security solutions as hackers are taking advantage of the pandemic-led sudden shift to remote work and online education trends.

Akamai’s third-quarter performance is expected to have benefited from strong demand for its security portfolio which includes application-layer firewall, Access Control and DDoS prevention solutions. Steady traction witnessed in its edge applications’ business is likely to have acted as a tailwind.

Gains from solid uptake of Akamai’s Bot Manager and Page Integrity Manager solutions are likely to have favored the top line in the to-be-reported quarter. Page Integrity protects websites and end users from malware-infected content that resides in third-party sites. Bot Manager is devised to thwart wide-ranging automated attacks.

In the last reported quarter, Akamai noted that Bot Manager had nearly 800 clients with an annualized revenue run rate of $200 million.

Amid increases in DDoS attacks, the company’s Prolexic offering is expected to have witnessed healthy adoption.

Akamai is likely to gain from the growing clout of its security segment, Access Control. The unit provides solutions like enterprise threat protector, enterprise application access and a new mobile and Internet of Things (“IoT”) offerings that the company purchased from Asavie. Revenues from Access Control suite soared more than 161% year over year and over 57% organically in the last reported quarter.

The Zacks Consensus Estimate for Security Technology Group’s (revenues from Cloud Security Solutions) third-quarter revenues is currently at $329 million, suggesting a rise of 23.7% on a year-over-year basis.

In the edge applications’ business, momentum in edge computing solutions like EdgeWorkers and Vaccine Edge might have favored the top line performance.

Akamai’s top-line performance is also likely to have benefited from strong traffic on the company’s platform, owing to continued demand for OTT streaming services and a spurt in gaming activity worldwide during the third quarter.

The Zacks Consensus Estimate for Edge Technology Group’s (media delivery and web performance CDN business and edge compute solutions) third-quarter revenues is pegged at $526 million, indicating a drop of 0.2% on a year-over-year basis.

Higher expenses toward product innovation and increasing bandwidth costs are likely to have exerted pressure on margin expansion in the quarter under review.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for 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.

Akamai has an Earnings ESP of 0.00% and a Zacks Rank #3, at present, making earnings beat prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks, which you may consider, as our proven model shows that these have the right mix of elements to beat estimates this time around:

HP Inc HPQ has an Earnings ESP of +1.89% and a Zacks Rank #1, presently. You can see the complete list of today's Zacks #1 Rank stocks here.

Apple AAPL has an Earnings ESP of +3.96% and a Zacks Rank #2, at present.

Synaptics Incorporated SYNA has an Earnings ESP of +0.38% and a Zacks Rank #2.


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