Cybersecurity and cloud computing company Akamai (AKAM +1.84%) saw an 11.7% gain through noon ET Friday after beating on sales and crushing on earnings last night.
Heading into the report, analysts forecast earnings of $1.64 per share (adjusted for one-time items) on sales of $1.04 billion. Akamai actually reported a $1.86-per-share profit on sales of $1.06 billion -- then raised guidance for the year.
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Akamai Q3 earnings
Akamai grew total sales a modest 5% in Q3, but revenue from cloud infrastructure services in particular surged a much stronger 39%, driving the quarter's results.
Earnings for the quarter, when calculated according to generally accepted accounting principles (GAAP), were less than the adjusted number -- only $0.97 per share. Still, this represented stellar 155% growth year over year. CEO Dr. Tom Leighton called the revenue number "solid" and the earnings "excellent."
NASDAQ: AKAM
Key Data Points
Is Akamai stock a buy?
And those excellent results could get even more excellent as the year wraps up. Akamai forecasts that full-year sales could approach $4.2 billion, potentially beating Wall Street forecasts again. Non-GAAP full-year profits will probably center on $7.03 per share, significantly better than the $6.70 per share Akamai previously expected to earn.
Admittedly, this is an adjusted number. GAAP profits will probably be significantly weaker than $7. Indeed, analysts polled by S&P Global Market Intelligence think Akamai may be lucky to earn a GAAP profit of just $3.30 per share in 2025.
Even so, $3.30 would work out to no worse than a P/E ratio of 25 for Akamai, and if you value the stock on free cash flow, Akamai's arguably trading for as little as 14x. At this valuation, even just mid-teens growth should suffice to make Akamai stock a solid buy.
