company background image
AKAM

Akamai Technologies NasdaqGS:AKAM Stock Report

Last Price

US$96.80

Market Cap

US$15.4b

7D

3.3%

1Y

-14.4%

Updated

18 Aug, 2022

Data

Company Financials +
AKAM fundamental analysis
Snowflake Score
Valuation5/6
Future Growth2/6
Past Performance2/6
Financial Health4/6
Dividends0/6

AKAM Stock Overview

Akamai Technologies, Inc. provides cloud services for securing, delivering, and optimizing content and business applications over the internet in the United States and internationally.

Rewards

Trading at 47.9% below our estimate of its fair value

Earnings are forecast to grow 16.72% per year

Risk Analysis

No risks detected for AKAM from our risk checks.

Akamai Technologies, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Akamai Technologies
Historical stock prices
Current Share PriceUS$96.80
52 Week HighUS$123.25
52 Week LowUS$85.90
Beta0.64
1 Month Change8.22%
3 Month Change-0.73%
1 Year Change-14.35%
3 Year Change9.11%
5 Year Change114.02%
Change since IPO-33.33%

Recent News & Updates

Aug 16

Akamai: Deteriorating CDN Business And FX Headwinds, Sell

At one point in time, Akamai's legacy global content delivery network - or CDN - was the global leader and a bullish catalyst. But then - over time - many companies moved CDN functionality in-house and AKAM's revenue growth slowed. However, AKAM leveraged its legacy CDN footprint by pivoting to sell security solutions to its large customer base. Cybersecurity is now the primary investment thesis. That said, AKAM's global footprint means it faces strong foreign currency headwinds due to a strong U.S. dollar and the CDN business is deteriorating. Meantime, YTD the company has spent $268 million on share buybacks at higher prices than today, while the total shares are not being reduced due to employee stock compensation. SELL the stock. As I reported in my previous Seeking Alpha articles, Akamai (AKAM) long-ago began to leverage its legacy global CDN business in order to become a leading cybersecurity solutions provider to its existing customer base (see AKAM: Quickly Becoming A Cybersecurity Power). That being the case, I had been bullish on the company's prospects going forward. However, in May of this year I changed my rating on Akamai from a BUY to a HOLD based on weak Q1 results and reduced guidance. Now that I have seen the Q2 results and forward guidance, I'm further downgrading AKAM to a SELL. Investment Thesis Given AKAM's leading global CDN position, the company appeared to be ideally positioned to leverage those assets and its long-term relationships with content owners & content deliverers in order to become a leading cybersecurity solutions provider. And it is growing its cybersecurity business at a healthy-clip. However, the company's CDN business is still its biggest business segment and deterioration is accelerating. In addition, in my earlier last analysis on Seeking Alpha - which I correctly identified potential foreign exchange risks, I failed to anticipate the extent to which Akamai's global footprint would be exposed to FX stress as a result of a very strong U.S. dollar: MarketWatch Q2 Earnings I reduced AKAM from BUY to HOLD after Akamai's Q1 report which - despite strong cybersecurity results - was "ok" but forward guidance was reduced (see AKAM: Softening Business & Reduced Guidance). The Q2 EPS Report was released last week and - in my opinion - it was poor. Highlights were: Q2 revenue was $903 million, +6% yoy (+9% when adjusted for foreign currency headwinds). Q2 Security and Compute revenue of $487 million (+26% yoy, and +30% when adjusted for foreign exchange) was greater than CDN "delivery revenue" of $417 million, which was down 11% yoy. GAAP EPS of $0.74 was -21% yoy and -15% when adjusted for foreign exchange. Q2 GAAP net income was $120 million, -24% as compared to Q2 last year. Delivery, AKAM's largest business segment (and ~50% of revenue), is clearly taking a big hit from the global macro environment: revenue was -11%. AKAM has effectively no-moat to this business, so slowing media traffic and deflationary pricing (which has been happening for years), combined with FX headwinds to make very poor quarterly results. Meantime, it appears AKAM's momentum in cybersecurity is beginning to decelerate as well. Over the first 6-months of the year, adjusted EBITDA margin has declined by two full percentage points. Margin deterioration may be partly the result of challenges with the recent Guardicore & Lionde acquisitions. Regardless it doesn't appear as though AKAM admirable and growing positions in cybersecurity and edge-computing are material enough to overcome continued deterioration of Akamai's legacy CDN business. As a result of the poor quarter and FX headwinds, management lowered FY22 guidance to 4% revenue growth at the midpoint (vs 5% previously) and an 8% EPS decline (vs 6 previously). As a result, consensus EPS estimates for Akamai have come down significantly across the board: Yahoo Finance Shareholder Returns? Akamai spent $165 million in Q2 to repurchase 1.6 million shares at an average price of $100.80 per share. At pixel time, AKAM is currently trading at $96.27. It is noteworthy that, in Q1, Akamai spent $103 million to repurchase 0.9 million shares at an average price of $111.25 per share. And note that despite the $268 million AKAM spent on buybacks in Q1 and Q2, the fully-diluted share count has barely moved (161.7 million) due to employee stock compensation plan issuance. Clearly AKAM's stock repurchase plan has reached a point of diminishing returns for ordinary shareholders. Risks I suppose it is possible that oil prices (and thus inflation) could come down significantly and reduce the potential for future Federal Reserve interest rate increases. But I doubt the Fed is done hiking, and as a result the U.S. dollar is likely to remain strong. In addition, note that just today China cut two key interest rate benchmarks. That being the case, I don't see AKAM's FX headwinds changing for the better any time soon. Big cloud providers like Microsoft (MSFT), Google (GOOG), and Amazon (AMZN) are developing competing CDNs within their own public cloud offerings. That is why I said earlier that AKAM's CDN business has "no moat" and is ripe to lose market share.

Jul 21

Akamai quickly gains 6% on takeover speculation

Akamai Technologies (NASDAQ:AKAM) quickly jumped 6% on speculation of takeover interest. An unidentified private equity firm is said to be in talks to try to secure financing for a potential offer for Akamai (AKAM), according to a StreetInsider report, which cited a source. The report claims that recent market speculation has suggested activist Elliott Management may be interested. Developing story ...

Shareholder Returns

AKAMUS ITUS Market
7D3.3%1.0%1.4%
1Y-14.4%-25.4%-8.4%

Return vs Industry: AKAM exceeded the US IT industry which returned -25.9% over the past year.

Return vs Market: AKAM underperformed the US Market which returned -9% over the past year.

Price Volatility

Is AKAM's price volatile compared to industry and market?
AKAM volatility
AKAM Average Weekly Movement4.0%
IT Industry Average Movement8.9%
Market Average Movement7.6%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.1%

Stable Share Price: AKAM is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: AKAM's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19988,700Tom Leightonhttps://www.akamai.com

Akamai Technologies, Inc. provides cloud services for securing, delivering, and optimizing content and business applications over the internet in the United States and internationally. The company offers cloud solutions to keep infrastructure, websites, applications, application programming interfaces, and users safe from various cyberattacks and online threats while enhancing performance. It also provides web and mobile performance solutions to enable dynamic websites and applications; media delivery solutions, including video streaming and video player services, game and software delivery, broadcast operations, authoritative domain name system, resolution, and data and analytics; and edge compute solutions to enable developers to deploy and distribute code at the edge.

Akamai Technologies, Inc. Fundamentals Summary

How do Akamai Technologies's earnings and revenue compare to its market cap?
AKAM fundamental statistics
Market CapUS$15.39b
Earnings (TTM)US$578.15m
Revenue (TTM)US$3.57b

26.6x

P/E Ratio

4.3x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
AKAM income statement (TTM)
RevenueUS$3.57b
Cost of RevenueUS$1.32b
Gross ProfitUS$2.25b
Other ExpensesUS$1.67b
EarningsUS$578.15m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.64
Gross Margin63.06%
Net Profit Margin16.18%
Debt/Equity Ratio55.1%

How did AKAM perform over the long term?

See historical performance and comparison