Content distribution giant Akamai (NASDAQ:AKAM, news, filings) issued its earnings report this afternoon, and they just blew past estimates. EBITDA of $100.3M, and normalized EPS(diluted) of $0.44 were all surprises to the upside, well above my own expectations. Gross Margins of 71.4% showed no deterioration at all. Revenue of $212.6M included $6.9M from the Acerno acquisition which I had not realized would be so large, but even discounting that they beat my guess by a bit. To summarize:
Such results just go to show you that recession or no recession, internet traffic is still growing and the content distribution sector remains hot. Akamai’s results show no signs of pricing disruptions, despite the crowded field. I don’t get the sense that they prospered at the expense of others in the sector, rather that the sector itself had a good quarter.
Going into 2009 with a continuing recession and too many CDNs trying to survive it, one still has to be conservative and expect the economic environment to drag on Akamai somehow. But as this quarter showed, the company remains a formidable foe with the lion’s share of the sector under its thumb. Since the company didn’t give such guidance, we will just have to make our own guesses for what the coming year holds.
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Categories: Content Distribution · Financials
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This really should not come as too much of a surprise as it is still cheaper to communicate, and by that I mean a broader form of communication than your phone call to grandma, via the internet and a using a CDN than it is to either travel or to use more traditional forms of communication. Therefore as the economy heads South and we all look for ways to tighten the belt, it will be better to emphasise the cheaper alternative and move away from the other. Probably bad for the airlines and hotels and to a lesser amount the RBOC’s but good for the networks and the CDN’s.