Akamai Technologies (AKAM) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 revenue of $1.005 billion, up 4.1% year-over-year, surpassing the billion-dollar mark for the first time, driven by security and compute growth while delivery declined due to industry headwinds and customer cost optimization.

• Security and compute now represent nearly two-thirds of total revenue, reflecting a strategic shift from content delivery to cybersecurity and cloud computing.

• Net income for Q3 2024 was $57.9 million, down from $160.5 million in Q3 2023, due to higher restructuring charges and increased operating expenses.

• Major restructuring and investments are underway to accelerate cloud and security expansion, including a 2.5% workforce reduction and redeployment of resources.

• Completed the $452.3 million acquisition of Noname Security, expanding API security offerings and integrating ~200 employees.

Financial highlights

• Q3 2024 total revenue: $1.005B, up 4.1% year-over-year; security revenue: $519M, up 14%; compute revenue: $167M, up 28%; delivery revenue: $319M, down 16%.

• Q3 2024 net income: $57.9M (GAAP EPS $0.38), down 64% year-over-year; non-GAAP net income: $244M (non-GAAP EPS $1.59), down 2%.

• Adjusted EBITDA for Q3 2024 was $426M (42% margin); non-GAAP operating margin: 29%.

• Cash, cash equivalents, and marketable securities: ~$2B as of September 30, 2024.

• U.S. revenue: $525M, up 5%; international revenue: $480M, up 3%, representing 48% of total revenue.

Outlook and guidance

• Q4 2024 revenue projected at $995M–$1.02B; full-year 2024 revenue expected at $3.966B–$3.991B, up 4%–5% year-over-year.

• Q4 non-GAAP operating margin expected at 27%–28%; full-year at 29%.

• Full-year non-GAAP EPS guidance: $6.31–$6.38; CapEx to be ~17% of total revenue.

• Noname Security acquisition expected to add ~$20M revenue in 2024 but be dilutive to EPS through year-end.

• Macroeconomic and geopolitical headwinds, including customer cost optimization and global tax changes, expected to continue impacting results.