Weak outlook overshadows tech firm Akamai's profit beat
(Reuters) – Akamai Technologies Inc’s (AKAM.O) forecast for third quarter revenue largely missed Wall Street expectations on Tuesday, even as its second quarter profit topped estimates on strength in its cloud security business.
Shares of the company, which were initially up after results, fell 3.5 percent to $ 72.60 in after-hours trading.
It forecast current-quarter revenue of $ 656 million to $ 668 million, while analysts on average were expecting $ 668 million, according to Thomson Reuters I/B/E/S.
Akamai provides services to companies to speed up their web pages, but has been under pressure as larger customers such as Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O) develop their own in-house know-how to handle web traffic.
The company has been responding by shifting its focus to cloud security.
Revenue from Akamai’s web business rose nearly 11 percent to $ 351 million in the second quarter. However, this growth was the slowest in at least six quarters.
“(Revenue) is a little lower than what we’d like to see from the web division,” Chief Executive Officer Tom Leighton said on an earnings call with analysts.
On the same call, Chief Financial Officer James Benson said the company was nonetheless “optimistic” about web division growth.
Revenue from the company’s cloud security business – which provides data centers with safe ways to operate and deliver content – rose 33 percent to $ 155 million in the quarter.
The company’s overall revenue rose 9 percent to $ 663 million, narrowly beating the average analyst estimate of $ 662 million.
Net income fell to $ 43 million, or 25 cents per share, in the quarter ended June 30, from $ 57 million, or 33 cents per share, a year earlier, as expenses rose 16 percent.
Excluding items, the company earned 83 cents per share, beating the average analyst estimate of 80 cents.
Akamai said in quarter three it expects to report adjusted earnings of 80 cents to 86 cents per share. Analysts were expecting earnings of 80 cents.
Reporting by Pushkala Aripaka in Bengaluru; Editing by Arun Koyyur and Rosalba O’Brien