Akamai said that the increased demand on networks during the COVID-19 crisis lead to a first quarter web traffic peak that was more than double the peak recorded in the same quarter last year.
The company said that despite the cancelation of major events like March Madness and Champions League Soccer, its traffic increased by about 30% over a four-week period at the end of first quarter and reached a peak of 167 terabits per second.
The surge in traffic helped drive better than expected quarterly results for Akamai.
"During these unprecedented times, I am very proud of how Akamai employees continue to support our customers, our communities, and each other, and my heart goes out to those most deeply impacted by the COVID-19 crisis," said Akamai CEO Dr. Tom Leighton in a statement. "We achieved excellent results in the first quarter driven by continued strength in our security solutions and stronger than expected traffic growth. Akamai's Intelligent Edge Platform is uniquely positioned to help the Internet scale quickly and is a lifeline for organizations and people around the globe during this challenging time."
Needham analyst Alex Henderson warned that Akamai’s reliance on retail and travel verticals could pose a risk for the company. Akamai’s customers within those verticals account for 4% and 16% of revenue, respectively. However, he said continuing elevated demand on networks during the pandemic could be a positive for Akamai’s business.
“While conditions could worsen, we see potential for upside… we believe COVID could accelerate the tailwinds behind CDN growth including greater workforce mobility, OTT viewership, and e-commerce,” he wrote, according to Yahoo Finance.
Akamai’s consolidated revenue totaled $764 million, up 8%, and net income reached $123 million, up 15%. Web division and media and carrier division revenues both rose 8% while cloud security revenues jumped 26%. However, internet platform customers revenue fell 5%, which the company said was in line with its expectations.
Overall, Akamai said its first-quarter results were negatively impacted by approximately $5 million due to a combination of contract restructurings and elevated bad debt reserves.
“Although it is difficult for us to project the total impact, we do expect to incur additional charges in the coming quarters, if the economy continues to suffer,” said CFO Ed McGowan, according to a Seeking Alpha transcript.