February 12, 2019 / 9:10 PM / 3 days ago

Akamai earnings beat on cyber-security strength

(Reuters) - Akamai Technologies Inc reported better-than-expected quarterly earnings and forecast current-quarter profit above estimates, driven by strong demand for its cyber-security and media content delivery services.

Revenue from the cloud security business - which helps data centers operate and deliver content securely - rose 36 percent to $185 million in the quarter.

“The company continues to execute well on its security strategy, and that helps drive a solid quarter and fiscal 2019 outlook,” D.A. Davidson analyst Mark Kelleher said.

Akamai has been focusing on its security unit as its traditional business of speeding up delivery of video and other content on the web has come under pressure with large media customers such as Apple Inc and Amazon.com Inc building their own networks.

The unit has an annual revenue run rate of more than $750 million, Akamai Chief Executive Officer Tom Leighton told Reuters.

“We expect the security business to have an annual rate of $1 billion in a couple of years.”

The company’s media and carrier division, which includes media delivery business, posted an 8 percent rise in revenue as more people used their smartphones and computers to download games, videos and software from the internet.

The popularity of battle royale game “Fortnite” and streaming of UEFA champions league played a major role in the business’s strong performance, Leighton said on a post-earnings call.

The company also said Chief Financial Officer Jim Benson was retiring and that he would be replaced by 18-year company veteran and Senior Vice President of Finance Ed McGowan.

Akamai also announced a joint venture with Mitsubishi UFJ Financial Group of Japan to offer a new blockchain-based online payment platform called Global Open Network.

Blockchain-based online payment network could become a substantial source of revenue in the 2020s, Leighton said.

For the first quarter, the company expects earnings of $1 to $1.05 per share, above analysts’ expectations of 96 cents, according to IBES data from Refinitiv.

The company’s net income rose to $94.0 million, or 57 cents per share, in the quarter ended Dec. 31 from $27.5 million, or 16 cents per share, a year earlier.

Akamai recorded a $26 million provisional charge associated with the U.S. tax law changes in the last year.

Revenue rose to $713.4 million from $658.5 million. Analysts on average expected the company to post revenue of $703.7 million.

Excluding certain items, the company earned $1.07 per share, beating analysts estimate of $1.

Reporting by Vibhuti Sharma in Bengaluru; Editing by Anil D'Silva

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