Web content delivery and security company Akamai (NASDAQ:AKAM) reported results in line with analysts' expectations in Q4 FY2023, with revenue up 7.2% year on year to $995 million. On the other hand, the company expects next quarter's revenue to be around $990 million, slightly below analysts' estimates. It made a non-GAAP profit of $1.69 per share, improving from its profit of $1.37 per share in the same quarter last year.
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Akamai (AKAM) Q4 FY2023 Highlights:
- Revenue: $995 million vs analyst estimates of $999.7 million (small miss)
- EPS (non-GAAP): $1.69 vs analyst estimates of $1.61 (4.7% beat)
- Revenue Guidance for Q1 2024 is $990 million at the midpoint, below analyst estimates of $995.4 million
- Free Cash Flow of $255.3 million, up 57.8% from the previous quarter
- Gross Margin (GAAP): 60.5%, down from 61.6% in the same quarter last year
- Market Capitalization: $19.33 billion
Founded in 1999 by two engineers from MIT, Akamai (NASDAQ:AKAM) provides software for organizations to efficiently deliver web content to their customers.
Content DeliveryThe amount of content on the internet is exploding, whether it is music, movies and or e-commerce stores. Consumer demand for this content creates network congestion, much like a digital traffic jam which drives demand for specialized content delivery networks (CDN) services that alleviate potential network bottlenecks.
Sales GrowthAs you can see below, Akamai's revenue growth has been unimpressive over the last two years, growing from $905.4 million in Q4 FY2021 to $995 million this quarter.
Akamai's quarterly revenue was only up 7.2% year on year, which might disappoint some shareholders. We can see that revenue increased by $29.53 million in Q4, which was roughly the same as in Q3 2023.
Next quarter's guidance suggests that Akamai is expecting revenue to grow 8.1% year on year to $990 million, improving on the 1.3% year-on-year increase it recorded in the same quarter last year.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Akamai's free cash flow came in at $255.3 million in Q4, up 10.7% year on year.
Akamai has generated $618.4 million in free cash flow over the last 12 months, a solid 16% of revenue. This strong FCF margin stems from its asset-lite business model, giving it optionality and plenty of cash to reinvest in its business.
Key Takeaways from Akamai's Q4 Results We struggled to find many strong positives in these results. Akamai missed Wall Street's revenue estimates and guidance for next quarter also came in weaker than expected. The company is down 5.6% on the results and currently trades at $118.2 per share.