Akamai (AKAM) Stock Plummets Despite Surpassing Earnings Expectations: Impact of Pricing Pressure and Weak Guidance

  • Akamai Technologies (AKAM) reported Q1 earnings that surpassed Wall Street predictions, but revenue fell short. The company’s stock took a hit as revenue guidance was significantly lower than expected due to pricing pressure in its legacy content-delivery business.
  • The content delivery software company also announced a $2 billion buyback for AKAM stock. For the quarter ending March 31, Akamai earnings rose 17% to $1.64 per adjusted share. Revenue climbed 8% to $987 million, the Cambridge, Mass.-based company said.
  • On the stock market today, Akamai stock fell 8.8% to 93.43. Akamai is the biggest provider of content delivery network services. Its services also increase the speed of e-commerce transactions and business software downloads.

Akamai Technologies reports Q1 earnings that beat expectations but revenue misses, leading to a drop in stock value. The company also announces a $2 billion buyback for AKAM stock.

Akamai Earnings and Revenue Details

Akamai reported Q1 earnings after the market close. Earnings rose 17% to $1.64 per adjusted share. Revenue climbed 8% to $987 million. Earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 11% to $417 million, missing estimates of $418 million. Also, security revenue rose 21% to $491 million vs. estimates of $480 million.

Acquisition of Noname Security

Akamai announced the acquisition of Noname Security for $450 million on May 7. Analysts expect the deal will generate $20 million in 2024 revenue and dilute earnings by 10 cents per share.

Stock Market Performance and Future Outlook

On the stock market today, Akamai stock fell 8.8% to 93.43. For the current quarter ending in June, Akamai forecast revenue of $977 million at the midpoint of guidance. Analysts’ consensus estimate is for 7% growth to $1 billion. Akamai is the biggest provider of content delivery network services. Its services also increase the speed of e-commerce transactions and business software downloads.

Conclusion

Akamai Technologies reported Q1 earnings that surpassed Wall Street predictions, but revenue fell short. The company’s stock took a hit as revenue guidance was significantly lower than expected due to pricing pressure in its legacy content-delivery business. The company also announced a $2 billion buyback for AKAM stock. For the quarter ending March 31, Akamai earnings rose 17% to $1.64 per adjusted share. Revenue climbed 8% to $987 million.

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