Akamai unveiled a platform for cloud computing, security, and content delivery on Tuesday.
Dreamstime
The content-delivery and securitiy software company
Akamai
posted better-than-expected financial results as it continues to gear up to take on
Amazon.com,
Microsoft
and
Alphabet
in the cloud computing business.
For the fourth quarter, Akamai (ticker: AKAM) reported revenue of $928 million, up 2% from a year ago, and ahead of both the company’s forecast range of $890 million to $915 million and the Wal Street consensus call of $903 million. On an adjusted basis, Akamai earned $1.37 a share, likewise above both the forecast range of $1.23 to $1.30 a share, and the Street consensus of $1.27.
CEO Tom Leighton said in an interview with Barron’s that the company saw “strong seasonal traffic” in the quarter from its core internet delivery business, although that segment still showed the effects of a slower economy. Revenue was off 12% from a year earlier, or 8% adjusted for moves in foreign-exchange rates.
Security software revenue was up 10%, or 14% adjusted for currency moves. The company’s compute segment, which includes its emerging cloud computing business, saw revenue growth of 61%, or 65% adjusted for currency.
Earlier on Tuesday, Akamai unveiled the “Akamai Connected Cloud,” which the company describes as “a massively distributed edge and cloud platform for cloud computing, security, and content delivery.”
As Leighton noted, Akamai is leveraging its work on traffic delivery and security services to push into cloud computing.
“We’ve competed for over 10 years with the hyperscalers on delivery and security, and now we’ll do the same on compute, which is the largest of those markets,” he said. Leighton contends that the company is well positioned to target cloud computing business from “big media, big gaming and big commerce,” segments that are already heavy users of Akamai’s content delivery arm.
“We know these accounts, and they have been asking us to add compute,” he said.
Leighton contends that over time, cloud computing can become the majority of Akamai’s business, given the sheer size of the market.
“Getting 1% to 2% of that would be huge for us,” he said.
This year, Leighton said, the company will move its own applications off of other cloud vendors and onto its own cloud. While some of the early adopters of Akamai’s new service have involved new use cases, Akamai has also had wins against the largest cloud vendors based on a combination of both performance and cost, he said..
In late trading, Akamai stock was 2.5% higher at $90.
Write to Eric J. Savitz at eric.savitz@barrons.com
Credit: marketwatch.com