Akamai Technologies: security in the digital environment
Akamai Technologies is an American company that specializes in providing content delivery network (CDN), cybersecurity, and cloud services. The company is still waiting for its summer quarterly results, but the market sentiment is already moving the share price quite a bit. Where does it stand now?
Akamai operates one of the largest distributed computing platforms in the world, which includes thousands of servers spread across the globe. This infrastructure enables the fast and efficient delivery of digital content, such as websites, videos and software, to end users by optimizing the path that data travels over the Internet.
The company also focuses on cybersecurity. It offers solutions that help protect web applications and servers from various types of attacks, including distributed denial of service (DDoS), application layer attacks, and other threats. $AKAM+2.3% also provides services to protect against data loss and other security measures.
Akami is known for its ability to handle huge volumes of data and provide fast and reliable service, which is key for many businesses that rely on the Internet for their operations. Akamai's clients include a number of large corporations, including media companies, e-commerce platforms and financial institutions. Not for nothing does this place them among the leaders in their industry.
Managment
Frank Thomson Leighton - CEO
Dr. Tom Leighton co-founded Akamai Technologies in 1998 and served as the company's Chief Scientific Officer from then until he became CEO in 2013.
Frank has served on numerous government, industry and academic advisory panels. Dr. Leighton was one of 18 CEOs invited to the White House in 2017 to launch the American Technology Council to develop solutions to modernize and secure U.S. government IT systems. From 2003 to 2005, he served on the President's Information Technology Advisory Committee and chaired its Subcommittee on Cybersecurity. He is also a member of the National Academy of Sciences, the National Academy of Engineering, and the American Academy of Arts and Sciences.
As one of the world's leading authorities on algorithms for network applications and cybersecurity, Frank Leighton has discovered solutions to relieve web congestion using applied mathematics and distributed computing. Akamai used this technology to create the world's largest distributed computing platform, which today delivers and secures tens of millions of requests per second to billions of users worldwide.
He graduated summa cum laude from Princeton University in 1978 with a bachelor's degree in electrical engineering and computer science. Mr. Leighton also earned a Ph.D. in applied mathematics from MIT in 1981.
If you would like to learn more about the CEO himself, you can check out his private Linkedin profile, where not only is he regularly active and up to date on what's going on at the company, but he also has a detailed work and study history.
Field/Specialization of the company
Content Delivery: Akamai operates one of the largest and most widely used content delivery networks in the world. Its CDN infrastructure includes thousands of servers around the world that enable fast and efficient delivery of websites, videos, software updates, and other digital media to end users. As a result, businesses can improve the user experience by minimizing latency (response time) and increasing content loading speeds.
Cybersecurity: $AKAM+2.3% provides a wide range of security solutions to help protect web applications, servers and data from various types of cyber attacks. These solutions include DDoS attack protection, web application firewall (WAF), botnet protection, data loss prevention and other advanced security technologies.
Cloud services: The Company offers various cloud services that enable enterprises to improve the performance and scalability of their applications and services. These services include web application performance optimization, software update management and delivery solutions, and other cloud infrastructure.
Edge computing: Akamai is a pioneer in edge computing, where computing tasks and data processing are performed closer to end users, reducing latency and improving application performance. This technology is key for applications that require rapid response, such as IoT devices, interactive media and other demanding Internet services.
Performance Optimization:$AKAM+2.3% helps enterprises optimize the performance of their web applications and Internet services. This includes solutions to speed up web page load times, optimize network traffic, and ensure high availability and service reliability.
Company profitability and cash
The company's stock has only been declining almost since the beginning of this year. The onlyexception was the first days of 2024. $AKAM+2.3%shares have already written down 16.89%since the beginning of the year , significantly increasing their attractiveness to many investors The company's shares are now trading 32.3% below their fair value according to our Fair Price Index.
Akamai's current market value is $15.9 billion. Since its absolute peak where the stock last traded in mid-February this year, its value has declined by 24.19%. At that time, the entire company was worth $20 billion according to the market. The company now employs 10,250 people.
Akamai Technologies
AKAMAkamai Technologies was only founded in 1998. So while it hasn't been on the market as long as its competitors, for example, only 1.87% of all its shares are privately held. The remaining 149.46 million shares on the market are split between funds and traditional investors. The company's debt is now $4.57 billion. Management holds $1.67 billion in cash.
In 2019, the company's revenue was $2.89 billion. Operating margins at the time were 16.52%. The company's net income was $478.04 million. The next year, revenue rose to $3.2 billion. Margins rose to 17.42%, bringing profits to $557.05 million. In 2021, the company continued to do very well. Its operating margins hit their highest level in that year, which was 18.83%. Together with revenue of $3.46 billion, net profit in that year reached $651.64 million. The company has continued to be on a growth trend in terms of revenue over the last two years. Revenues were $3.62 billion in 2022 and $3.81 billion in 2023. However, the profit margin decreased to 14.37 and 14.48. The company's net profit was $523.67 million in 2022 which was lower than last year's $547.63 million.
The company divides its revenue into only two categories based on the states it comes from. The largest share that took care of $1.97 billion in revenue in 2023 came from the United States, which continues to earn the company the most. The remaining $1 billion and $840 million came from international sales. This is the remaining 48.35%.
The security sector accounted for the largest share of the total sales value. Last year it was $1.77 billion. Data delivery then contributed $1.54 billion. The last 13.23% of the 2023 revenue value came from computing services.
In 2016,$AKAM+2.3%'s earnings per share were $2.7. Even at that time, management was already 1.27% above analyst estimates with this figure. The company has managed to stay above the consensus EPS until today. In 2017 and 2018, EPS were $2.62 and $3.62, respectively. Growth continued in the following years and hasn't slowed down in 2020, when the economy has stalled in many places. The only decline came in 2022, when earnings per share came in at $5.37, down 37 cents from the previous year. Last year, however, the company was already able to return to growth. By 2027, it should be no different. EPS could get as high as $8.88 under current guidance.
For revenue development, it's a very similar tale. Revenue was $2.34 billion in 2016. That was 0.45% above the analyst consensus. As with earnings per share, management has been able to maintain a positive beat on analyst estimates to date. Heading into 2019 ,$AKAM'+2.3%s revenue has come in at $2.89 billion and hasn't stopped. In 2022, the company settled for revenue of $3.62 billion. But last year, even that figure was already surpassed and replaced with a new high. In 2023, the company earned $3.81 billion. By 2027, then, the current outlook is for revenues of up to $4.94 billion.
The company has only recently begun to divide its revenues into three current categories by sector. As recently as 2020, there were many more of these individual groups from which revenue was subsequently divided. Therefore, we can only compare one of the currently existing sectors over the last 3 years, which is the security sector. It generated $1.33 billion for the company in 2020. In 2022 it was already $1.54 billion and last year it was $1.77 billion. It is safe to assume that cybersecurity will continue to do so.
Operating costs
As the company grew over the years and its revenues and sales increased, it could also afford to spend more and more. However, the company's management is very experienced, led by the co-founder, and therefore knows very well what is most important for the company in a given situation. We can therefore rest assured that these people can manage the company's finances very well. Moreover, their year-on-year development confirms this. The company has never "lost a hand" and every increase has been in line with sales. In 2010 ,$AKAM+2.3% spent $212 millionin one quarter. By 2013, that figure had risen to $320 million. In 2016, it then took $456 million to run one quarter. From 2017 to 2020, there was almost no increase in spending. T could thus remain around $600 million. After the covid pandemic, when more competition emerged and there was room to increase the company's scope, costs got to $730 million by 2022. From then until the last quarter, they only increased by $90 million.
