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Factors to Note Ahead of Akamai's (AKAM) Q2 Earnings Release

·4 min read

Akamai Technologies AKAM is scheduled to release second-quarter 2021 results on Aug 3.

For the second quarter, Akamai expects revenues between $839 million and $853 million. The Zacks Consensus Estimate for quarterly revenues is pegged at $845.5 million, which indicates growth of 6.4% from the year-ago quarter’s levels.

Non-GAAP earnings are expected to be $1.35-$1.40 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 0.7%.

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

Akamai’s second-quarter performance is expected to have benefited from continued robust demand for its security solutions including application-layer firewall and DDoS prevention as well as healthy growth witnessed in its edge applications’ business.

Demand for security solutions is being driven by growing incidents of cyber-attacks as hackers are take advantage of the pandemic-led sudden shift to remote work and online education trends.

The Zacks Consensus Estimate for Security Technology Group (revenues from Cloud Security Solutions) second-quarter revenues is currently at $315 million, which suggests a rise of 21.6% on a year-over-year basis.

Akamai’s Bot Manager and Page Integrity Manager Solutions are anticipated to have witnessed solid uptake in the second quarter. Page Integrity protects websites and end users from malware-infected content that resides on third-party sites, while Bot Manager is devised to thwart wide-ranging automated attacks.

Akamai is likely to gain from the growing clout of its security segment, Access Control. Access Control consists of solutions like enterprise threat protector, and enterprise application access as well as new mobile and Internet of Things (“IoT”) offerings that the company purchased from Asavie. Access Control hit an annualized revenue run rate of $100 million in the first quarter, soared more than 170% year over year and over 60% organically.

Akamai MFA — the company’s new phish-proof solution — that provides enterprises with FIDO2 multi-factor authentication deployment without the need for hardware security keys is also anticipated to have witnessed healthy adoption in the second quarter.

The company’s Prolexic offering is expected to have witnessed incremental adoption given the increases in DDoS attacks.

In the edge applications’ business, momentum in edge computing solutions like EdgeWorkers and Vaccine Edge is expected to have positively contributed to the top line.

In March 2021, Akamai unveiled Akamai Vaccine Edge for salesforce.com’s CRM Vaccine Cloud to enable processes concerning to the online distribution of COVID-19 vaccines.

Akamai’s top-line performance is also likely to gain from strong traffic on the company’s platform, due to continued demand for OTT video services and increase in gaming activity during the second quarter.

Increases in COVID-19 cases across several parts of the world and subsequent re-imposition of lockdown, is expected to have driven the upside in gaming and demand for streaming services.

The Zacks Consensus Estimate for Edge Technology Group’s (media delivery and web performance CDN business and edge compute solutions) second-quarter revenues is pegged at $533 million, which indicates a drop of 0.4% on a year-over-year basis.

Increasing expenses toward product innovation along with higher bandwidth costs is 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:

Avnet AVT has an Earnings ESP of +9.82% and a Zacks Rank #1, at present. You can see the complete list of today's Zacks #1 Rank stocks here.

CyberArk Software CYBR has an Earnings ESP of +37.93% and a Zacks Rank #2, presently.

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