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Akamai Beats Earnings Estimate in 4Q17

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EPS trend

Akamai Technologies (AKAM) declared its 4Q17 financial results on January 29, 2018. In the quarter, the company posted EPS (earnings per share) of $0.69, easily outpacing the Wall Street Journal estimate of $0.63 per share. In the last four quarters, Akamai Technologies easily surpassed this estimate.

In the graph above, we can see the EPS trend of Akamai in the last five quarters. During the period, it declined at a CAGR[1. compound annual growth rate] of 1.1%.

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In 4Q17, its GAAP[2. generally accepted accounting principles] EPS came in at $0.11, down 79.0% YoY (year-over-year) mainly due to $26.0 million of provisional charges in connection with the new US tax reforms. However, on a non-GAAP basis, it fell 4.0% YoY, and its EPS declined 5.0% on a constant currency basis.

For fiscal 2017, the company’s GAAP EPS was $1.26, which declined 30.0% YoY. Its non-GAAP EPS for fiscal 2017 contracted by 3.0% to $2.62 while it fell 2.0% on a constant currency basis.

Headwinds and outlook

Rising costs, particularly associated with the product and higher selling and marketing costs, acted as headwinds for Akamai’s bottom-line growth.

Akamai expects its non-GAAP diluted EPS in 1Q18 to increase $0.67–$0.70. For fiscal 2018, it anticipates its EPS to be $2.90–$3.00. The projected fiscal 2018 and 1Q18 non-GAAP effective tax rates are expected to be 23.0% each.

According to the Wall Street Journal, Microsoft (MSFT) and IBM (IBM) outpaced their earnings estimates by 10.0% and 0.1%, respectively.

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