Stock Update (NASDAQ:AKAM): Akamai Technologies, Inc. Reports Fourth Quarter 2015 And Full-Year 2015 Financial Results


AKAM

Akamai Technologies, Inc. (NASDAQ:AKAM), the global leader in Content Delivery Network (CDN) services, today reported financial results for the fourth quarter and full-year ended December 31, 2015.

“Akamai’s solid fourth quarter performance capped off an excellent year on both the top and bottom lines,” said Dr. Tom Leighton, CEO of Akamai. “Revenue achievement in the quarter was driven by a robust online holiday shopping season, as well as continued rapid growth of our Cloud Security Solutions.  Our Security business grew 50% year-over-year in constant currency and has now achieved an annualized run rate of nearly $300 million.”

Akamai delivered the following results for the fourth quarter and full-year ended December 31, 2015:

Revenue: Revenue for the fourth quarter was $579 million, an 8% increase over fourth quarter 2014 revenue of $536 million, and an 11% increase when adjusted for foreign exchange.* Total revenue for 2015 was $2.197 billion, a 12% increase over 2014 revenue of $1.964 billion and a 16% increase when adjusted for foreign exchange.*

Revenue by Solution Category:

  • Performance and Security Solutions revenue for the fourth quarter was $286 million, up 16% year-over-year and up 19% when adjusted for foreign exchange.* Performance and Security Solutions revenue for 2015 was $1.050 billion, up 17% year-over-year and up 20% when adjusted for foreign exchange.*
  • Cloud Security Solutions revenue, a component of Performance and Security, for the fourth quarter was $73 million, up 46% year-over-year and up 50% when adjusted for foreign exchange.* Cloud Security Solutions revenue for 2015 was $254 million, up 50% year-over-year and up 54% when adjusted for foreign exchange.*
  • Media Delivery Solutions revenue for the fourth quarter was $247 million, down 2% year-over-year and up 1% when adjusted for foreign exchange.* Media Delivery Solutions revenue for 2015 was $977 million, up 7% year-over-year and up 10% when adjusted for foreign exchange.*
  • Service and Support Solutions revenue for the fourth quarter was $46 million, up 18% year-over-year and up 21% when adjusted for foreign exchange.* Service and Support Solutions revenue for 2015 was $170 million, up 16% year-over-year and up 20% when adjusted for foreign exchange.*

Revenue by Geography:

  • U.S. revenue was $416 million for the fourth quarter, a 5% increase over fourth quarter 2014 revenue. U.S. revenue for 2015 was $1.604 billion, a 12% increase over 2014 revenue.
  • International revenue was $163 million for the fourth quarter, a 17% increase over fourth quarter 2014 revenue and a 27% increase when adjusted for foreign exchange.* International revenue for 2015 was $593 million, an 11% increase over 2014 revenue and a 24% increase when adjusted for foreign exchange.*

Income from operations: GAAP income from operations for the fourth quarter was $123 million, a 10% decrease from fourth quarter 2014 GAAP income from operations of $136 million.  GAAP operating margin for the fourth quarter was 21%, down 4 percentage points from the same period last year. GAAP income from operations for 2015 was $466 million, a 5% decrease from the prior year’s GAAP income from operations of $490 million. Full-year GAAP operating margin was 21%, down 4 percentage points from the prior year.

Non-GAAP income from operations* for the fourth quarter was $168 million, a 4% decrease from fourth quarter 2014 non-GAAP income from operations of $175 million. Non-GAAP operating margin* for the fourth quarter was 29%, down 4 percentage points from the same period last year. Non-GAAP income from operations* for 2015 was $638 million, a 1% decrease from the prior year’s non-GAAP income from operations of $648 million. Full-year non-GAAP operating margin* was 29%, down 4 percentage points from the prior year.

Net Income: GAAP net income for the fourth quarter was $88 million, a 9% decrease from fourth quarter 2014 GAAP net income of $97 million.  Full-year GAAP net income was $321 million, a 4% decrease from 2014 GAAP net income of $334 million.

Non-GAAP net income* for the fourth quarter was $129 million, a 1% increase over fourth quarter 2014 non-GAAP net income of $127 million.  Full-year non-GAAP net income* was $454 million, a 1% increase over 2014 non-GAAP net income of $449 million.

GAAP and non-GAAP net income* results for the fourth quarter include a $12 million, or $0.06per diluted share, benefit from the reinstatement of the federal R&D tax credit, which was retroactive to January 1, 2015.

EPS: GAAP EPS was $0.49 per diluted share, a 9% decrease from fourth quarter 2014 GAAP EPS of $0.54 and a 5% decrease when adjusted for foreign exchange*. Full-year GAAP EPS was $1.78per diluted share, a 3% decrease from 2014 GAAP EPS of $1.84 per diluted share and a 2% increase when adjusted for foreign exchange.*

Non-GAAP EPS* was $0.72 per diluted share, a 3% increase over fourth quarter 2014 non-GAAP EPS* of $0.70 and a 5% increase when adjusted for foreign exchange*. Full-year non-GAAP EPS* was $2.52 per diluted share, a 2% increase over 2014 non-GAAP EPS* of $2.48 per diluted share and a 6% increase when adjusted for foreign exchange.*

Adjusted EBITDA: Adjusted EBITDA* for the fourth quarter was $238 million, a 3% increase over fourth quarter 2014 Adjusted EBITDA* of $232 million. Adjusted EBITDA margin* for the fourth quarter was 41%, down 2 percentage points from the same period last year.  Adjusted EBITDA* for the full-year was $897 million, a 5% increase from the prior year’s Adjusted EBITDA* of $853 million.  Full-year adjusted EBITDA margin* was 41%, down 2 percentage points from the prior year.

Cash flow from operations: Cash from operations for the fourth quarter was $218 million, or 38% of revenue, and for the full-year was $764 million, or 35% of revenue. Cash, cash equivalents and marketable securities were $1.5 billion at December 31, 2015.

Share Repurchase Program
The Company also announces today that its Board of Directors has authorized a new $1 billionshare repurchase program, effective from February 9, 2016 through December 31, 2018.  The Company’s goal for this program is to offset the dilution created by its employee equity compensation programs and provide the flexibility to increase its capital distributions to shareholders as business and market conditions warrant.

The timing and amount of any shares repurchased will be determined by the Company’s management based upon the evaluation of market conditions and other factors. Repurchases will be executed in the open market subject to Rule 10b-18, and may also be made under a Rule 10b5-1 plan, which would permit the Company to repurchase shares when the Company might otherwise be precluded from doing so under insider trading laws. Other structured repurchase programs may be considered from time to time. The Company may choose to suspend, expand or discontinue the repurchase program at any time.

The Company spent $100 million in the fourth quarter to repurchase 1.7 million shares of its common stock at an average price of $60.14 per share, under the Company’s previous share repurchase plan.  For the full-year, the Company spent $303 million to repurchase 4.5 million shares of its common stock at an average price of $67.05 per share.

The Company had approximately 177 million shares of common stock outstanding as of December 31, 2015. (Original Source)

Shares of Akamai are up nearly 15% in after-hours trading. AKAM has a 1-year high of $78.44 and a 1-year low of $39.43. The stock’s 50-day moving average is $47.51 and its 200-day moving average is $62.30.

On the ratings front, Akamai Technologies has been the subject of a number of recent research reports. In a report issued on January 12, Deutsche Bank analyst Vijay Bhagavath maintained a Buy rating on AKAM, with a price target of $80, which represents a potential upside of 102.2% from where the stock is currently trading. Separately, on January 11, Pacific Crest’s Michael Brown maintained a Buy rating on the stock and has a price target of $75.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Vijay Bhagavath and Michael Brown have a total average return of -22.7% and -8.7% respectively. Bhagavath has a success rate of 11.6% and is ranked #3469 out of 3556 analysts, while Brown has a success rate of 20.0% and is ranked #2427.

Overall, one research analyst has rated the stock with a Sell rating, 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $52.00 which is 31.4% above where the stock opened today.

Akamai Technologies Inc provides cloud services for delivering, optimizing and securing online content and business applications.