Akamai Technologies reported first-quarter earnings that missed Wall Street targets amid its acquisition spree. The earnings report sent AKAM stock plunging as the company lowered 2022 guidance.
Cambridge, Mass.-based Akamai reported earnings after the market close on Tuesday. Q1 earnings rose 1% to $1.39 an adjusted share, the company said. Akamai revenue climbed 7% to $904 million.
Analysts expected Akamai earnings of $1.42 a share on revenue of $904 million for the period ended March 31. A year earlier, Akamai earned $1.38 a share on sales of $843 million. The company lowered 2022 guidance.
"There is roughly a $45 million impact from additional currency headwinds, $36 million from the elimination of Russian related traffic in various directions and $65 million impact from expected slower traffic growth," said Raymond James analyst Frank Louthan in a report. "This totals to $146 million decline, offset by approximately $100 million contribution by low margin (currently) Linode revenue, for a net effect of $46 million."
Akamai stock fell 9.7% to close at 102.77 on the stock market today. AKAM stock rallied in March but dropped out of a buy zone in late April.
AKAM Stock: Security Revenue Up 23%
Meanwhile, the company said earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 4% to $391 million, in line with views.
Further, the company said security product revenue, including acquisitions, jumped 23% to $382 million.
"Q1 results were led by the very strong performance of our security and compute product groups, which now make up the majority of our revenue," said Chief Executive Tom Leighton, in a news release.
Heading into the Akamai earnings report, the stock had a Relative Strength Rating of 76 out of a possible 99, according to IBD Stock Checkup. AKAM stock has dipped 4% in 2022.
Biggest Provider Of CDN Services
Akamai is the biggest provider of CDN (content delivery network) services that also increase the speed of e-commerce transactions and business software downloads.
In addition, Akamai has expanded into cybersecurity services.
Continuing an acquisition spree, Akamai in February acquired Linode for $900 million. Linode is a cloud computing infrastructure provider for businesses. The deal better positions Akamai versus Cloudflare, AKAM stock analysts said.
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