April 30, 2018 / 9:00 PM / a year ago

Akamai results powered by cloud security growth

(Reuters) - Akamai Technologies Inc topped analysts’ estimates for first-quarter revenue and profit on Monday as it reaped the benefits of an aggressive push to cloud security and its business of speeding up media content delivery stabilized.

The company also forecast current-quarter revenue and profit above Wall Street’s expectations, pushing its shares up 3.3 percent to $74 in extended trading.

Akamai’s traditional media content delivery business has remained under pressure as many of its large customers such as Apple Inc and Amazon.com Inc develop in-house capabilities to handle their web traffic.

Revenue from the big six internet platform customers fell 14 percent to $44 million in the first quarter, but overall media and carrier division revenue rose 6 percent to $316 million.

“The big six are now less than 7 percent of our revenue overall and they are no longer having the impact on our revenue growth that they did before,” Chief Executive Officer Tom Leighton told Reuters on a post earnings call.

Revenue from Akamai’s cloud security business surged 36 percent to $149 million. Sales growth in the unit has averaged about 33 percent in the last five quarters.

The results come after the company in March settled with activist hedge fund Elliott Management Corp and agreed to add two directors, including former Amazon.com chief information security officer Tom Killalea.

The company also set up a financial operation committee to lift its operating margin to 30 percent by 2020.

“With the recent involvement of Elliott Management, margins now look poised to reverse the downward trend seen over recent years,” Morgan Stanley analysts wrote in a pre-earnings note.

The company, which has already cut 5 percent of its global workforce, could announce reduction in facilities at its Analyst Day on June 26, Leighton said on a call with analysts.

Akamai forecast second-quarter revenue of $658 million to $670 million and adjusted profit of 79 cents to 83 cents per share.

Analysts on average had estimated revenue of $656.8 million and profit of 70 cents per share.

Revenue rose 11.4 percent to $668.7 million in the first quarter, beating estimate of $654 million

But net income fell 28 percent to $53.7 million on a $15 million restructuring charge and $23 million settlement related to a legal dispute.

Excluding items, earnings were 79 cents per share, topping estimate of 70 cents, according to Thomson Reuters I/B/E/S.

Reporting by Sonam Rai in Bengaluru: Editing by Arun Koyyur and Sriraj Kalluvila

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