Akamai Technologies (AKAM) Stock Gains Big On Earnings

Akamai Technologies, Inc. (NASDAQ: AKAM)

Akamai Technologies is having an incredible day in the market today, and for good reason. Yesterday, after the closing bell, AKAM reported its earnings for the fourth quarter, blowing away expectations with regard to both earnings and revenue. However, strong earnings and revenue aren’t the only reasons for the gains we’re seeing. In fact, AKAM made a crucial announcement that really excited investors. Today, we’ll take a look at earnings, discuss the announcement made, take a look at what we saw in the market as a result, and talk about what we can expect to see from Akamai moving forward.

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AKAM Produces Solid Earnings

As mentioned above, AKAM released its earnings report for the fourth quarter of 2015 after the closing bell yesterday as expected. However, the results with regard to earnings and revenue were anything but what was expected. Here’s what we saw from the report:

  • Earnings Per Share – In terms of earnings per share, AKAM was expected to generate $0.62 per share for the quarter. However, the company actually reported earnings in the amount of $0.72 per share, absolutely blowing away expectations.
  • Revenue – In terms of revenue, Akamai also did incredibly well. In the quarter, analysts expected the company to produce revenue in the amount of $568.7 million. On the earnings report, we saw that the company actually produced revenue in the amount of $579 million. Not only did this figure blow away analyst expectations, it shows an 8% year-over-year gain in revenue at AKAM.

Earnings Weren’t The Only Positive News

As if strong earnings and revenue weren’t enough to get investors excited, AKAM made yet another big announcement. The company announced that it will be launching several segment divisions. These divisions are aimed at boosting Akamai’s focus on Web and Media customers. The new segments will include sales, products, and marketing teams. The marketing teams will be separated into two separate divisions. All in all, this new focus should drive further sales and retention among Web and Media customers. In a statement, Top Leighton, the CEO at AKAM had the following to say:

Our Media and Web businesses are now at the scale where a transition to this type of customer and solutions-centric organization makes sense…”

How The Market Reacted To The News

As investors, we’ve learned that any time there is positive news released with regard to a publicly-traded company, we can expect to see positive movement in that company’s stock. In the case of AKAM, there are two big pieces of positive news. Not only did the company beat on earnings and revenue for the fourth quarter, they announced new organizational methods that are likely to send the company’s revenue up further. As a result, we’re seeing incredibly strong movement around AKAM in the market today. Currently (11:17), AKAM is trading at $48.76 per share after a gain of $9.19 per share or 23.23% so far today.

What We Can Expect To See Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from AKAM. The reality is that investors invest their money for growth. With the strong earnings report, Akamai Technologies has proven its ability to generate growth. On top of earnings, the focus on better organization is likely to lead to even stronger gains in the future. However, it is important to remember that market movement tends to happen through a series of overreactions. So, it would not be a surprise if we saw a slight correction before the upward movement continued. Nonetheless, all in all, things look bullish for the outlook on AKAM.

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What Do You Think?

Where do you think AKAM is headed moving forward and why? Let us know your opinion in the comments below!

[Image Courtesy of Flickr]

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