Will Healthy Revenue Growth Aid Akamai's (AKAM) Q3 Earnings?
Akamai Technologies, Inc. AKAM is scheduled to release third-quarter 2023 results on Nov 7, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 5.7%. It pulled off a trailing four-quarter earnings surprise of 5.5%, on average.
The company is expected to report higher revenues year over year, backed by healthy demand for security and cloud computing services. The strong emphasis on portfolio expansion through a combined approach of innovation and acquisition is a tailwind.
Factors at Play
In the third quarter, Akamai launched API Security to deter application programming interface (API) attacks and detect business logic abuse inside APIs. It provides complete visibility into API activity, uses behavioral analytics to detect complex threats and improves detections by analyzing historical data uniquely stored in a data lake. This is likely to have improved the company’s third-quarter revenues.
In the quarter, Akamai inked a strategic partnership with World Wide Technology, a global technology solutions provider, to offer customers greater access to industry-leading security products and services. The combined technology platform of the two firms will enable customers to gain access to an ecosystem of innovation, research and thought leadership. This initiative is expected to have supported the top line.
During the third quarter, Akamai forged a global partnership with Corero Network Security, a leading provider of distributed denial-of-service (DDoS) protection solutions, to augment Akamai Prolexic – a comprehensive portfolio of DDoS security solutions. Prolexic is a cloud-based DDoS protection platform designed to stop attacks before they reach applications, data centers, and Internet-facing infrastructure. These initiatives are likely to have improved its top-line performance.
Our estimate for revenues from the security segment is pegged at $442.3 million, suggesting 16.5% year-over-year growth. Our revenue estimate for the compute vertical is pegged at $129.3 million, indicating growth from $109.1 million reported in the prior-year quarter. Revenues from the delivery segment are projected at $370.4 million.
For the third quarter of 2023, the Zacks Consensus Estimate for revenues is pegged at $945 million, indicating year-over-year growth from $882 million. The consensus estimate for adjusted earnings per share stands at $1.51, suggesting growth from $1.26 reported a year ago.
Earnings Whispers
Our proven model does not predict an earnings beat for Akamai in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.33%, with the former pegged at $1.50 and the latter at $1.51. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Akamai Technologies, Inc. Price and EPS Surprise
Akamai Technologies, Inc. price-eps-surprise | Akamai Technologies, Inc. Quote
Zacks Rank: Akamai carries a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for TTEC Holdings, Inc. TTEC is +5.14% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov 8. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Keysight Technologies, Inc. KEYS is +0.18% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov 20.
The Earnings ESP for Applied Materials, Inc. AMAT is +0.86% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov 16.
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