Summary
- Akamai has a strong balance sheet, secure revenues, and a positive growth outlook.
- Cybersecurity has become a big issue in the past year. Through its latest acquisition, Akamai continues to establish its dominance in the space.
- While the company seems fully priced, it is a business we are happy to buy and hold for the long term.
- This idea was discussed in more depth with members of my private investing community, Macro Trading Factory. Get started today »
Thesis Summary
Akamai Technologies Inc. (AKAM) provides CDN and cloud services. It has been around for over 20 years and is a leader in cybersecurity and edge computing. While the stock is fully priced, we believe that it is still a good company to add to your portfolio. Akamai has “utility-like” characteristics that make its revenues reliable and secure. Furthermore, the company will enjoy continued growth thanks to cybersecurity and its pioneering Edge Platform.
Source: wbur.org
Company Overview
Akamai Technologies provides CDN and cloud services for delivering content around the internet. It provides the necessary infrastructure to companies around the world to deliver data in a fast and secure way. The company has been around since the days of the tech bubble and has a long track record of growth and profitability. The latest quarterly numbers are no different, and we can gain some insight into the direction the market and business is going:
Source: Investor Relations
YoY, revenues are up 11% after accounting for foreign exchange. The company operates in two main segments; Web Division, and Media and Carrier Division. The service provided is essentially the same, but the profile of the clients and specific needs are different. Web Division serves data to “traditional” HTML websites, such as Airbnb Inc. (AIRB). Meanwhile, Media and Carrier provide services to clients like the NBA and Riot Games. Revenues are split quite evenly between these two segments at $418M and $375M, respectively, in the latest quarter. However, the Media and Carrier grew at 16%, more than twice as fast as the Web.
