Akamai Q1 Earnings Surpass Estimates, Revenues Increase Y/Y

Akamai Technologies, Inc. AKAM reported strong first-quarter 2025 results, with both the adjusted earnings and revenues surpassing the Zacks Consensus Estimate. 

The company reported a top-line expansion year over year, driven by healthy demand trends in multiple end markets. Strong demand for the Guardicore platform, API security solutions and cloud infrastructure services is a key growth driver. 

Net Income

GAAP net income declined to $123.2 million or 82 cents per share from $175.4 million or $1.11 per share in the year-ago quarter. High operating expenses affected the net income.

Non-GAAP net income was $256.1 million or $1.70 per share compared with $255.5 million or $1.64 per share a year ago. The bottom line beat the Zacks Consensus Estimate by 12 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar)  

Revenues

Quarterly net sales were $1.02 billion compared with $987 million reported in the year-ago quarter. The 3% year-over-year uptick was driven by strong momentum in the Security and Compute verticals. Revenues surpassed the Zacks Consensus Estimate of $1 billion.

By product groups, revenues from Security Technology Group were $530.7 million compared with $490.7 million in the year-ago quarter. The 8% year-over-year growth was primarily backed by growing demand for Guardicore Segmentation Solution. The company is experiencing healthy traction for its API security solutions in various end markets, including financial services, retail, electric vehicles, and more. Net sales exceeded our estimate of $522.8 million.

The Delivery segment contributed $319 million, down from $351.8 million in the year-ago quarter. However, the segment’s revenues surpassed our estimate of $318.6 million.

The Compute segment registered $165.5 million in revenues, up from $144.5 million in the prior-year quarter. Solid traction among enterprise customers and multiple deal wins in various verticals, including financial services, retail, cybersecurity and transport, drove net sales in this segment. The segment’s revenues beat our estimate of $162.9 million.

Region-wise, net sales from the United States came in at $528.7 million, up 3% year over year. International revenues totaled $486.4 million, up from $474.6 million in the year-earlier quarter.

Other Details

In the March quarter, total operating expenses rose to $860.6 million from $820.2 million reported in the prior-year period. Non-GAAP income from operations improved to $307 million from $291.9 million, with respective margins of 30%. Adjusted EBITDA was $441.3 million, up from $417.2 million in the year-ago quarter.

Cash Flow & Liquidity

In the first quarter of 2025, Akamai generated $251.2 million in cash from operating activities compared with $351.9 million in the prior-year quarter. As of March 31, 2025, the company had $1.09 billion in cash and cash equivalents, with $263.4 million of operating lease liabilities. During the quarter, it repurchased approximately 6.2 million shares for around $500 million.

Outlook

For the second quarter of 2025, Akamai expects revenues in the range of $1.012 billion to $1.032 billion. Non-GAAP operating margin is projected to be 28%. Non-GAAP operating expense is projected to be in the range of $315-$320 million. EBITDA margin is forecasted to be in the band of 41%-42%. 

Non-GAAP earnings are forecasted to be in the range of $1.52-$1.58 per share. Management anticipates capital expenditure to be in the band of $226-$236 million, which is approximately 22% to 23% of the projected total revenues. Non-GAAP tax rate is expected to be between 19% and 20%. 

For 2025, Akamai expects revenues in the range of $4.050 billion to $4.2 billion. It expects a non-GAAP operating margin of 28%. Non-GAAP earnings are now projected to be in the range of $6.10-$6.40 per share. Capital expenditure is likely to be around 19-20% of total revenues.  Non-GAAP effective tax rate is expected to be between 19% and 20%.

Zacks Rank

Akamai currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Upcoming Releases

AST SpaceMobile ASTS is scheduled to release first-quarter 2025 earnings on May 12. The Zacks Consensus Estimate for earnings is pegged at a loss of 17 cents per share, indicating a decline of 6.25% from the year-ago figure. 

Keysight Technologies, Inc.  KEYS is scheduled to release second-quarter fiscal 2025 earnings on May 20. The Zacks Consensus Estimate for earnings is pegged at $1.17 per share, indicating growth of 25.81% from the year-ago figure. 

Workday, Inc. WDAY is scheduled to release first-quarter fiscal 2026 earnings on May 22. The Zacks Consensus Estimate for earnings is pegged at $1.99 per share, indicating growth of 14.37% from the year-ago figure. 

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This article originally published on Zacks Investment Research (zacks.com).

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