Akamai Technologies (NASDAQ:AKAM) shares slumped 5% in after-hours trading Tuesday after the company missed expectations for FQ4 revenue and issued soft FQ1 2024 guidance.
The cloud computing company posted an earnings per share (EPS) of $1.69, topping the consensus estimates of $1.60. However, its quarterly revenue of $995 million slightly missed the anticipated $999.09 million.
Breaking down the revenue streams, Akamai’s security services generated $471.0 million, marking an 18% year-over-year increase, albeit slightly below the forecasted $473.3 million.
Delivery services experienced a decline, bringing in $389.0 million, a 6.3% decrease from the previous year and short of the expected $392.8 million.
Meanwhile, compute services revenue grew by 20% YoY to $135.0 million, surpassing the estimate of $132.7 million.
Akamai allocated $55 million for repurchasing 0.5 million shares of its common stock, averaging $110.75 per share. Throughout 2023, the company invested $654 million in buybacks, acquiring 7.8 million shares at an average price of $83.83 each.
Looking ahead to the first quarter of 2024, the company projects its EPS to be in the range of $1.59 to $1.64, aligning with analyst estimates of $1.59. Revenue is anticipated to be between $980 million and $1 billion, compared to $993.4 million projected by analysts.
"Akamai's fourth quarter financial performance capped off an excellent year for the company highlighted by very strong profitability," said Dr. Tom Leighton, Akamai's Chief Executive Officer.
"Looking to 2024, we plan to continue driving profitability in delivery, expanding our market-leading security offerings, and extending our cloud computing platform to the edge to provide customers with better performance at a lower cost."
Apart from financial results, Akamai also announced plans to embed cloud computing capabilities into its massive edge network Gecko.