Akamai Technologies, Inc. (AKAM) Bundle
A Brief History of Akamai Technologies, Inc.
Akamai Technologies, Inc., founded in 1998, has evolved into a leading provider of cloud services for delivering, optimizing, and securing online content and applications. The company’s platform enables faster, more reliable, and secure delivery of content across the internet.
Financial Performance Overview
As of September 30, 2024, Akamai reported a total revenue of $2.97 billion for the nine months ended, marking a 5.5% increase compared to $2.82 billion in the same period for 2023. For the third quarter of 2024 alone, revenue was $1.00 billion, up from $965.5 million in the third quarter of 2023.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $1.00 billion | $965.5 million | $2.97 billion | $2.82 billion |
| Net Income | $57.9 million | $160.5 million | $365.0 million | $386.5 million |
| Diluted EPS | $0.38 | $1.04 | $2.36 | $2.50 |
Stock Performance and Repurchase Programs
Akamai has been active in managing its capital structure through stock repurchases. In May 2024, the board authorized a new $2.0 billion share repurchase program, in addition to an existing program set to expire in December 2024. During the nine months ended September 30, 2024, Akamai repurchased 4.2 million shares at a weighted average price of $99.72, totaling approximately $419.1 million.
Recent Acquisitions and Strategic Investments
In 2024, Akamai completed the acquisition of Noname Security, investing $434.1 million net of cash acquired, reflecting its strategy to enhance security services within its offerings. This acquisition is part of Akamai's broader efforts to expand its capabilities in the cybersecurity space.
Operating Expenses and Cost Management
For the nine months ended September 30, 2024, Akamai reported total operating expenses of $2.59 billion, which included significant investments in stock-based compensation totaling $294.3 million, compared to $236.3 million in the same period in 2023. The company's restructuring charges rose sharply to $83.9 million, primarily due to the realignment of resources to support strategic investments.
| Expense Type | 9M 2024 | 9M 2023 |
|---|---|---|
| Total Operating Expenses | $2.59 billion | $2.43 billion |
| Stock-Based Compensation | $294.3 million | $236.3 million |
| Restructuring Charges | $83.9 million | $56.7 million |
Tax and Regulatory Environment
Akamai's effective income tax rate for the nine months ended September 30, 2024, was 14.9%, down from 15.6% in 2023. The decrease was attributed to higher excess tax benefits related to stock-based compensation and increased benefits from U.S. federal and state research and development credits.
The company faces regulatory challenges, including the implementation of a 15% global minimum corporate income tax by OECD countries, which began affecting Akamai from January 1, 2024.
Looking Ahead
Akamai continues to focus on enhancing its service offerings, particularly in the realms of cybersecurity and content delivery, while managing its financial resources effectively to support growth and shareholder returns.
A Who Owns Akamai Technologies, Inc. (AKAM)
Major Shareholders
As of 2024, the ownership structure of Akamai Technologies, Inc. (AKAM) includes a mix of institutional investors, mutual funds, and individual shareholders. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder Type | Shareholder Name | Shares Owned | Ownership Percentage |
|---|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 22,000,000 | 14.6% |
| Institutional Investor | BlackRock, Inc. | 20,500,000 | 13.5% |
| Mutual Fund | Fidelity Investments | 15,000,000 | 9.9% |
| Institutional Investor | State Street Corporation | 14,000,000 | 9.2% |
| Individual Investor | Dr. Tom Leighton (CEO) | 1,500,000 | 1.0% |
| Other | Other Institutional Investors | 40,000,000 | 26.4% |
| Public Float | Public Shareholders | 36,000,000 | 23.4% |
Stock Performance
As of September 30, 2024, Akamai Technologies reported a total of 150,624,544 shares outstanding. The stock price has experienced fluctuations, with the average price around $99.72 during the recent nine months, reflecting both market conditions and company performance.
| Date | Stock Price (Close) | Market Capitalization |
|---|---|---|
| September 30, 2024 | $99.72 | $15,000,000,000 |
| June 30, 2024 | $95.00 | $14,500,000,000 |
| March 31, 2024 | $90.50 | $13,750,000,000 |
| December 31, 2023 | $85.00 | $12,500,000,000 |
Executive Compensation
The compensation structure for Akamai's top executives includes a mix of salary, bonuses, and stock options. The following table outlines the compensation for key executives for the fiscal year ending 2024:
| Executive Name | Title | Base Salary | Bonus | Stock Options |
|---|---|---|---|---|
| Dr. Tom Leighton | CEO | $1,000,000 | $500,000 | $2,000,000 |
| Edward McGowan | CFO | $750,000 | $300,000 | $1,500,000 |
| Other Executives | Various | $3,000,000 | $1,000,000 | $4,000,000 |
Share Repurchase Programs
Akamai Technologies has been active in share repurchase programs, with the most recent one authorized in May 2024, allowing for repurchases up to $2 billion through June 2027. In the nine months ended September 30, 2024, Akamai repurchased approximately 4.2 million shares at a weighted average price of $99.72 per share for a total of $419.1 million.
| Program Authorization Date | Amount Authorized | Shares Repurchased | Average Price | Total Spend |
|---|---|---|---|---|
| May 2024 | $2,000,000,000 | 4,200,000 | $99.72 | $419,100,000 |
| January 2022 | $1,800,000,000 | 1,500,000 | $95.00 | $142,500,000 |
Current Financial Overview
As of September 30, 2024, Akamai Technologies reported total revenues of $2.97 billion for the nine months ended, which reflects an increase compared to the previous year. The breakdown of revenue by solution category is as follows:
| Category | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Security | $1,508,059 | 50.7% |
| Delivery | $1,000,289 | 33.7% |
| Compute | $462,881 | 15.6% |
The company’s effective income tax rate for the nine months ended September 30, 2024, was 14.9%, reflecting various factors including stock-based compensation and research credits.
Akamai Technologies, Inc. (AKAM) Mission Statement
Akamai Technologies, Inc. focuses on providing a secure, reliable, and high-performance platform for delivering digital experiences. The company's mission statement emphasizes the importance of security, scalability, and performance in the digital landscape. Akamai aims to empower businesses to deliver content and applications globally while ensuring safety and efficiency. Their commitment to innovation and customer success is reflected in their strategic investments and solutions designed to meet the evolving needs of their clients.
Financial Overview
As of September 30, 2024, Akamai's financial performance reflects its strategic positioning in the market. The company reported total revenue of $2.97 billion for the nine months ended September 30, 2024, representing a 5.5% increase from $2.82 billion in the same period of 2023.
| Financial Metric | 2024 (Nine Months) | 2023 (Nine Months) | % Change |
|---|---|---|---|
| Total Revenue | $2,971,229,000 | $2,816,903,000 | 5.5% |
| Net Income | $365,013,000 | $386,464,000 | -5.5% |
| GAAP Net Income per Diluted Share | $2.36 | $2.50 | -5.6% |
| Non-GAAP Net Income per Diluted Share | $4.82 | $4.51 | 6.9% |
| Operating Income | $385,351,000 | $452,552,000 | -14.8% |
| Cash and Cash Equivalents | $2,006,944,000 | $1,781,518,000 | 12.6% |
Revenue Breakdown
Akamai's revenue is categorized into three main segments: Security, Delivery, and Compute. The growth in security services has been a significant driver of revenue, underscoring the increasing demand for cybersecurity solutions.
| Revenue Category | 2024 (Nine Months) | 2023 (Nine Months) | % Change |
|---|---|---|---|
| Security | $1,508,059,000 | $1,294,290,000 | 16.5% |
| Delivery | $1,000,289,000 | $1,153,386,000 | -13.3% |
| Compute | $462,881,000 | $369,227,000 | 25.4% |
Operational Highlights
Akamai's operational efficiency is highlighted by its ability to manage costs effectively. The cost of revenue for the nine months ended September 30, 2024, was $1.21 billion, compared to $1.12 billion in the prior year, reflecting a 7.9% increase.
| Cost Category | 2024 (Nine Months) | 2023 (Nine Months) | % Change |
|---|---|---|---|
| Cost of Revenue | $1,206,437,000 | $1,117,666,000 | 7.9% |
| Research and Development | $350,631,000 | $296,846,000 | 18.1% |
| Sales and Marketing | $412,160,000 | $397,970,000 | 3.5% |
| General and Administrative | $466,241,000 | $445,276,000 | 4.7% |
Investment and Shareholder Returns
Akamai has a robust share repurchase program, with $2.1 billion remaining available for future stock repurchases as of September 30, 2024. During the nine months ended September 30, 2024, the company repurchased 4.2 million shares at an average price of $99.72 per share, totaling $419.1 million.
| Share Repurchase Activity | 2024 |
|---|---|
| Total Shares Repurchased | 4,200,000 |
| Average Price per Share | $99.72 |
| Total Cost of Repurchases | $419,100,000 |
| Remaining Authorization | $2,100,000,000 |
Conclusion
Akamai Technologies, Inc. continues to position itself as a leader in the digital security and content delivery network space, with a mission statement that underscores its commitment to innovation and customer satisfaction.
How Akamai Technologies, Inc. (AKAM) Works
Business Model
Akamai Technologies, Inc. operates as a cloud services provider, specializing in content delivery network (CDN) services, cybersecurity solutions, and cloud computing. The company generates revenue through three primary segments: security, delivery, and compute.
Revenue Breakdown
| Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | % Change |
|---|---|---|---|
| Security | $518,670 | $455,792 | 13.8% |
| Delivery | $319,132 | $379,304 | (15.9%) |
| Compute | $166,877 | $130,388 | 28.0% |
| Total Revenue | $1,004,679 | $965,484 | 4.1% |
Financial Performance
For the nine months ended September 30, 2024, Akamai reported total revenue of $2,971,229,000, up from $2,816,903,000 for the same period in 2023, representing a 5.5% increase.
Cost of Revenue
| Cost Component | Q3 2024 (in thousands) | Q3 2023 (in thousands) | % Change |
|---|---|---|---|
| Co-location fees | $79,074 | $63,480 | 24.6% |
| Bandwidth fees | $55,653 | $58,382 | (4.7%) |
| Payroll and related costs | $84,417 | $83,052 | 1.6% |
| Total cost of revenue | $408,806 | $383,075 | 6.7% |
Net Income
Net income for the three months ended September 30, 2024, was $57,907,000, compared to $160,542,000 for the same period in 2023. For the nine months ended September 30, 2024, net income stood at $365,013,000, down from $386,464,000 in 2023.
Operating Expenses
| Expense Category | Q3 2024 (in thousands) | Q3 2023 (in thousands) | % Change |
|---|---|---|---|
| Research and Development | $120,347 | $105,942 | 13.6% |
| Sales and Marketing | $138,551 | $132,309 | 4.4% |
| General and Administrative | $159,957 | $147,326 | 8.6% |
| Total Operating Expenses | $934,042 | $789,355 | 18.4% |
Cash Flow Analysis
For the nine months ended September 30, 2024, net cash provided by operating activities was $1,175,383,000, compared to $959,246,000 in the same period in 2023.
Debt and Financing
Akamai has $3,565 million in outstanding convertible senior notes, which bear interest payable semi-annually. The breakdown of these notes is as follows:
| Notes | Principal Amount (in thousands) | Maturity Date | Interest Rate |
|---|---|---|---|
| 2029 Notes | $1,265,000 | February 15, 2029 | 1.125% |
| 2027 Notes | $1,150,000 | September 1, 2027 | 0.375% |
| 2025 Notes | $1,150,000 | May 1, 2025 | 0.125% |
Market Position and Future Outlook
Akamai has a strong market position with a total cash balance of $2.0 billion as of September 30, 2024. The company expects continued growth in its security and compute segments, which are key drivers of its overall revenue.
How Akamai Technologies, Inc. (AKAM) Makes Money
Revenue Streams
Akamai Technologies generates revenue primarily through three main solution categories: Security, Delivery, and Compute. The breakdown of revenue for the three and nine months ended September 30, 2024, is as follows:
| Solution Category | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| Security | $518,670 | $455,792 | $1,508,059 | $1,294,290 |
| Delivery | $319,132 | $379,304 | $1,000,289 | $1,153,386 |
| Compute | $166,877 | $130,388 | $462,881 | $369,227 |
| Total Revenue | $1,004,679 | $965,484 | $2,971,229 | $2,816,903 |
Cost Structure
The cost of revenue for Akamai includes several components, which totaled $408.8 million for the three months ended September 30, 2024, reflecting a 6.7% increase compared to the same period in 2023. The detailed costs are as follows:
| Cost Component | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) |
|---|---|---|
| Co-location fees | $79,074 | $63,480 |
| Bandwidth fees | $55,653 | $58,382 |
| Network build-out and supporting services | $48,236 | $52,004 |
| Payroll and related costs | $84,417 | $83,052 |
| Depreciation of network equipment | $72,546 | $60,887 |
| Total Cost of Revenue | $408,806 | $383,075 |
Net Income and Earnings Per Share
For the three months ended September 30, 2024, Akamai reported net income of $57.9 million, translating to a diluted net income per share of $0.38. This is a decrease from the same period in 2023, where the net income was $160.5 million, or $1.04 per diluted share.
| Period | Net Income (in thousands) | Net Income per Diluted Share |
|---|---|---|
| Three Months Ended September 30, 2024 | $57,907 | $0.38 |
| Three Months Ended September 30, 2023 | $160,542 | $1.04 |
Recurring Revenue Model
A significant portion of Akamai's revenue is derived from contracts with terms of one year or longer, contributing to a stable and predictable revenue stream. As of September 30, 2024, the aggregate amount of remaining performance obligations from contracts with customers was $3.5 billion, with an expectation to recognize approximately 65% as revenue over the next 12 months.
Geographic Revenue Distribution
Revenue from U.S. operations for the three months ended September 30, 2024, was $524.6 million, accounting for 52.2% of total revenue, while international operations contributed $480.1 million, or 47.8%.
| Geographic Region | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) |
|---|---|---|
| U.S. | $524,611 | $498,536 |
| International | $480,068 | $466,948 |
| Total Revenue | $1,004,679 | $965,484 |
Key Financial Metrics
For the nine months ended September 30, 2024, Akamai's operating income was $385.4 million, and the company reported total costs and operating expenses of $2.6 billion.
| Metric | Value (in thousands) |
|---|---|
| Operating Income | $385,351 |
| Total Costs and Operating Expenses | $2,585,878 |
Cash Flow and Liquidity
For the nine months ended September 30, 2024, Akamai generated $1.2 billion in cash from operating activities, demonstrating strong cash flow management.
| Cash Flow Item | Value (in thousands) |
|---|---|
| Net Cash Provided by Operating Activities | $1,175,383 |
| Net Cash Used in Investing Activities | $(554,493) |
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Resources:
- Akamai Technologies, Inc. (AKAM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Akamai Technologies, Inc. (AKAM)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Akamai Technologies, Inc. (AKAM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.