Akamai (ticker: AKAM), a leading content delivery network, reported better-than-expected results for the June quarter, driven by impressive growth in its security software division. The company also provided full-year guidance that surpassed previous Wall Street estimates.
Strong Financial Performance
In the second quarter, Akamai achieved revenue of $936 million, representing a 4% year-over-year increase, exceeding the Wall Street consensus forecast of $930 million. The company's adjusted profit stood at $1.49 per share, marking a 10% growth from the previous year and surpassing Wall Street estimates by nine cents. Under generally accepted accounting principles, Akamai earned 84 cents per share.
Evolving Business Focus
While Akamai is widely recognized for its content delivery network services that enhance internet traffic for online content and commerce companies, its security software segment has emerged as the company's top-performing business.
During the quarter, the delivery segment generated $380 million in revenue, which was a 9% decline from the previous year and slightly below the Wall Street consensus of $386 million. Conversely, security software revenue experienced a significant 14% growth, reaching $433 million, surpassing consensus expectations of $420 million. The compute segment, encompassing Akamai's cloud computing business, achieved revenue of $123 million, a 16% increase from the previous year but slightly below the consensus of $124 million.
Positive Outlook for the Future
For the upcoming September quarter, Akamai projects revenue between $937 million and $952 million, with an adjusted profit ranging from $1.48 to $1.52 per share. These figures outperform the previously predicted Street consensus of $931 million in revenue and earnings of $1.41 per share.
Looking at the bigger picture, Akamai expects revenue for the full year to range from $3.765 billion to $3.795 billion, with an adjusted profit between $5.87 and $5.95 per share. The market consensus had previously anticipated revenue of $3.759 billion and profit of $5.73 per share.
To demonstrate confidence in its growth, Akamai repurchased $137 million worth of stock during the quarter.
Market Performance
Akamai's shares have witnessed a significant 13% increase year-to-date, reflecting the market's positive response to its strong financial performance and expanding security software business.
