On Wednesday, Internet delivery expert Akamai Technologies (Nasdaq: AKAM) released first-quarter 2008 earnings for the period ended March 31, 2008.

Revenue growth was healthy; income growth was even healthier; and the cash flow improvements should start a hospital, or something. That's an eminently Foolish stepladder of accelerating betterments.

That's what happens to companies that can show expanding margins.

The highest CAPS ratings in Akamai's corner of the business world belong to the two companies that can turn a profit today. Coincidence? I don't think so.

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2008

Q1 2007

Change

Sales

$187.0

$139.3

34.3%

Net Profit

$36.9

$19.2

92.5%

EPS

$0.20

$0.11

81.8%

Diluted Shares

185.7

183.2

1.4%

Get back to basics with the income statement.

Margin Checkup

Q1 2008

Q1 2007

Change*

Gross Margin

72.4%

75.2%

(2.8)

Operating Margin

28.5%

19.5%

9.0

Net Margin

19.7%

13.8%

5.9

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2008

Q1 2007

Change

Cash + ST Invest.

$321.8

$341.0

(5.6%)

Accounts Rec.

$122.7

$86.9

41.2%

Liabilities

Q1 2008

Q1 2007

Change

Accounts Payable + Accrued Expenses

$74.6

$35.4

110.8%

Long-Term Debt

$199.9

$200.0

(0.1%)

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2008

Q1 2007

Change

Cash From Ops.

$88.0

$52.9

66.5%

Capital Expenditures

$29.9

$32.9

(9.2%)

Free Cash Flow

$58.1

$19.9

191.4%

       
Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating

Akamai

$5,760

61.4

****

Level 3 Communications (Nasdaq: LVLT)

$4,730

N/A

***

NeuStar (NYSE: NSR)

$2,123

24.1

*****

Limelight Networks (Nasdaq: LLNW)

$238

N/A

**

Internap Network Services (Nasdaq: INAP)

$244

N/A

***

Using the latest reported numbers from Capital IQ, a division of Standard & Poor's. Keep your partners close and the competition in your vest pocket.

Related Foolishness:

Akamai Technologies is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

"Fool by Numbers" provides raw earnings information in a timely, convenient package. But numbers never provide the whole story, so check Fool.com for more in-depth discussion of the meaning behind the earnings.

At the time of publication, Anders Bylund was an Akamai shareholder but had no other position in any company mentioned. Fool rules are here.