Earnings Preview: Akamai

Jul.25.12 | About: Akamai Technologies, (AKAM)

Akamai (NASDAQ:AKAM) is expected to report Q2 earnings after the market close on Wednesday, July 25, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is 37c for EPS and $325.74M for revenue, according to First Call. The company is looking to beat analyst estimates for a 3rd quarter in a row. Expectations call for roughly 17.2% top-line revenue growth, a 41.4% EBITDA margin. Akamai is at a crossroad -- with the CEO having announced he will be departing once a successor is found -- and while the rate of growth in its cloud or Value Added Services business has slowed significantly. Jefferies says the core-CDN environment remains healthy. Eyes will be on Cloud Infrastructure.

Analyst Views

Jefferies is modeling Q2 Cloud Infrastructure revenue of $194M, which implies an acceleration in organic growth to 16% from 14% seen in Q1. The firm believes Kona security and Aqua mobile are areas gaining greater traction and should aid Cloud Infrastructure growth through the year in addition to the acquired Cotendo contribution. Jefferies is modeling Q2 EPS/revenue of 37c/$326M, respectively, and expect a relatively in-line quarter with potential for modest upside, while recent buyback activity could be 1c accretive. The firm says currency could negatively impact Q3 by about $6M-$7M, which they do not believe is fully captured in consensus and could bring modest downward revisions.