Akamai Still Accelerating: Fool by Numbers

On Wednesday, Rule Breakers selection Akamai Technologies (Nasdaq: AKAM  ) released earnings for the first quarter ended March 31.

  • Our table below reports revenue and income in accordance with Generally Accepted Accounting Principles, or GAAP. But that's not necessarily a true picture of this business. On what management calls a "normalized" basis -- which excludes the cost of stock-based compensation, amortization of intangibles, restructuring, and other similar charges -- Akamai earned $50.7 million in net income, or $0.28 a share. That was in line with Street estimates, and normalized net income was up 73% versus last year's Q1.
  • Though gross margin continues to lose ground, management insists that competitors such as soon-to-be public Limelight Networks, Level 3 (Nasdaq: LVLT  ) , and Internap (Nasdaq: INAP  ) aren't to blame. Instead, CFO J.D. Sherman told analysts that Akamai is agreeing to volume discounts for "huge deals" that will, over time, greatly boost the bottom line.
  • But that wasn't enough for investors. The stock fell more than 10% in regular trading and was down another 3% this morning. CAPS investors, meanwhile, give the stock just three out of the maximum five stars.

(Figures in thousands, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$139,274

$90,825

53.3%

Net Profit

$19,179

$11,495

66.8%

EPS

$0.11

$0.07

57.1%

Diluted Shares

183,157

173,811

5.4%

Get back to basics with a look at the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

75.24%

78.73%

(3.49)

Operating Margin

19.49%

19.43%

0.06

Net Margin

13.77%

12.66%

1.11

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$340,957

$284,945

19.7%

Accounts Rec.

$86,873

$55,798

55.7%

Liabilities

Q1 2007

Q1 2006

Change

Accts. Payable + Accrued Expenses

$85,450

$61,302

39.4%

Convertible Notes

$199,960

$200,000

(0.0%)

Learn the ways of the balance sheet.

Cash Flow Checkup

Q1 2007

Q1 2006

Change

Cash From Ops.

$56,278

$33,161

69.7%

Capital Expenditures

$31,543

$16,174

95.0%

Free Cash Flow

$24,735

$16,987

45.6%

Find out why Fools always follow the money.

Related Foolishness:

Akamai is a Motley Fool Rule Breakers pick. David Gardner and his team of analysts have unearthed four stocks that have more than doubled in the first two years of this market-beating service. Akamai is one; want to find out the names of the other three? Click here to test-drive Rule Breakers for 30 days. There's no obligation to subscribe.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Fool contributor Tim Beyers, ranked 3,251 out of more than 27,800 in CAPS, is a sucker for growth stocks and a regular contributor to Rule Breakers. Tim owns shares of Akamai. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on growth stocks, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy always adds up.


Read/Post Comments (0) | Recommend This Article (33)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 526571, ~/Articles/ArticleHandler.aspx, 8/30/2014 4:26:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement