Earnings Preview: Akamai

Feb. 8.12 | About: Akamai Technologies, (AKAM)

Akamai (NASDAQ:AKAM) is expected to report Q4 earnings after the market close on Wednesday, February 8, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is 40c for EPS and $311.26M for revenue, according to First Call. Akamai's positive earnings surprise for the past four quarters averages at a modest 3.6%. Guidance for Q4: revenues in the range of $303M-$315M, representing 6%-11% year-over-year growth. EPS is expected to be 37c-41c, including tax charges of $25M-$30M, based on a full-year GAAP tax rate of about 36%. Akamai expects gross margins "flat to slightly higher" than Q3’s 79.8%. Operating expenses are expected to increase approximately $10M year-over-year. The adjusted EBITDA margin is expected in the range of 43%-44%. Capex for Q4 is forecast at approximately $50M, and 16% of revenues for FY11.

Analyst Views

Citigroup is looking for $311M in revenue, $135M in EBITDA, and 40c in normalized EPS, which is generally in-line with consensus. Based on Citigroup's intra-quarter channel checks and its model sensitivity work, the firm views Street Q4 and Q1 estimates as reasonable. For Q4, Citigroup is expecting a modest deceleration in Akamai's reported revenue growth –- 9% year-over-year in Q4 vs. 11% year-over-year in Q3. Consensus for Q1: 39c on $304.82M in revenue. Consensus for FY12: $1.67 on $1.28B in revenue.