Akamai Technologies celebrates the 10th anniversary of is IPO today, on the heels of a third quarter that surprised analysts and investors alike. Though third quarter profits at the Cambridge, Mass.-bassed content delivery platform provider slipped 1.8% from the same period a year they were better than the company and analysts had forecast, pushing shares up 9.8 percent in overnight trading.
Akamai earned $32.7 million, or 18 cents per share, compared with $33.4 million, or 18 cents per share, in the year-ago quarter. Excluding one-time items, Akamai earned 38 cents per share, higher by 3 cents than analysts expected.
"Akamai performed very well in the third quarter with solid revenue growth and operating results," Paul Sagan, President and Chief Executive Officer, said. "We think these strong results show the early renewed traction in driving profitable volume growth ... in the media industry. At the same time, we saw continued penetration of our value-added solutions into our existing customer base and with new customers to Akamai."
Revenue was $206.5 million, a five percent increase over last year's $197.3 million, and again, ahead of analyst expectations. Akamai said its number of customers with recurring contracts rose 8 percent to 3,031 by the end of the quarter.
Sagan said the results were "encouraging signs" for the business but said Akamai wasn't "anticipating a rapid return to business as usual for most of our customers." Still, he said "we are cautiously optimistic about the economic climate in many of our markets. In the media and entertainment world, we've seen some early traction with our strategy to support and encourage profitable volume growth with key customers."
Other highlights from Akamai's conference call with analysts:
- Sagan said last quarter's aggressive price reduction strategy had paid off, allowing the company to drive costs down while at the same time improving margins. He said the push would continue to add customers and drop pricing.
- Sagan said volume had risen in the quarter, and attributed only a portion of the growth to Akamai's HD push. "What we are really seeing is just more video at all levels coming, both to computers, standard PC model but also now even to mobile devices and that's all driving volumes on the network," he said.
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