Akamai Technologies, Inc. AKAM reported strong fourth-quarter 2024 results, wherein both bottom and top lines beat the respective Zacks Consensus Estimates. The company recorded higher revenues 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 are key growth drivers.

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Net Income of AKAM

GAAP net income declined to $140 million or 91 cents per share from $161 million or $1.03 in the year-ago quarter. Despite top-line growth, the decline in GAAP earnings was primarily due to high operating expenses.

Non-GAAP net income was $253.9 million or $1.66 per share, down from $262.6 million or $1.69 a year ago. However, the bottom line beat Zacks Consensus Estimate by 14 cents.

In 2024, the company reported a GAAP net income of $504.9 million or $3.27 per share compared with $547.6 million or $3.52 in 2023. Non-GAAP net income was $995.6 million or $6.48 per share, up from $960 million or $6.20 in 2023.

Revenues of AKAM

Akamai generated $1 billion in revenues compared with $995 million in the year-ago quarter. Solid momentum in the Security and Compute vertical drove the top line during the quarter. Revenues beat the Zacks Consensus Estimate by $5 million.

By product groups, revenues from Security Technology Group were $534.6 million compared with $471 million in the year-ago quarter. The 14% year-over-year growth was primarily driven by solid demand for Guardicore segmentation solutions. Demand for API security solutions remained strong.
 
The Delivery segment contributed $317.8 million, down from $389 million in the year-earlier quarter. Despite boasting a leadership position in the market, the segment is facing challenges due to macro headwinds. 

The Compute segment registered $167.5 million in revenues, up from $135 million in the prior-year quarter. Healthy traction among enterprise customers and multiple deal wins in various verticals, including financial services, retail, cybersecurity and transport drove net sales in this segment.

Region-wise, net sales from the United States were $529.9 million, up 3% year over year. International revenues were $490.1 million, up from $478.7 million in the year-earlier quarter.

Other Details of AKAM

In the December quarter, total operating expenses rose to $871.9 million from $810.2 million. Non-GAAP operating income declined to $298.1 million from $302.7 million, with respective margins of 29% and 30%. Adjusted EBITDA was $429.4 million, up from $426 million in the year-ago quarter.

AKAM’s Cash Flow & Liquidity

In the fourth quarter of 2024, Akamai generated $343.8 million in cash from operating activities compared with $389.2 million in the prior-year quarter. In 2024, the company generated $1.51 billion cash from operations compared with $1.34 billion in 2023.

As of Dec. 31, 2024, the company had $517.7 million in cash and cash equivalents with $829.7 million of operating lease liabilities compared with respective tallies of $489.5 million and $774.8 million in the previous year. During the quarter, the company repurchased approximately 1.4 million shares for around $138 million.

Outlook of AKAM

For the first quarter of 2025, Akamai estimates revenues in the range of $1-$1.02 billion. Non-GAAP operating margin is expected at 28%. Non-GAAP earnings are forecasted to be in the range of $1.54-$1.59 per share. Capital expenditure, as a percentage of revenues, is anticipated to be 24%.

For 2025, management expects revenues in the range of $4-$4.2 billion. It expects a non-GAAP operating margin of 28%. Non-GAAP earnings are now expected in the range of $6-$6.4 per share. Capital expenditure is likely to be around 19% of total revenues.

AKAM’s Zacks Rank & Other Stocks to Consider

Akamai currently has a Zacks Rank #2 (Buy).

Keysight Technologies, Inc. KEYS has a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last reported quarter, it delivered an earnings surprise of 5.10%. Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications and rising adoption of driver-assistance systems globally.

InterDigital IDCC sports a Zacks Rank #1 at present. In the trailing four quarters, it delivered an earnings surprise of 158.41%.

It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions, used in digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.

Juniper Networks Inc. JNPR, carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help to build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products. JNPR has a long-term earnings growth expectation of 12.4%.

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