Akamai recorded double-digit revenue growth in the third quarter and the company said its traffic volumes are remaining elevated.
The company’s third-quarter revenue totaled $793 million, up 12% year over year. Web division revenue totaled $418 million, up 8%; media and carrier division revenue totaled $375 million, up 16%; and cloud security solutions revenue totaled $266 million, up 23%.
GAAP income from operations was $181 million, up 26% year over year, and GAAP net income was $159 million, up 15% year over year.
Cowen analyst Colby Synesael praised Akamai’s strong third-quarter results and predicted the fourth quarter could be better than currently forecast.
“We view 4Q20 guidance as conservative once again and would be buyers on weakness as we believe fundamentals remain strong. LT, we continue to believe there is a meaningful valuation disconnect with its security/CDN peers that should close as its Security business becomes a greater % of the company,” he wrote in a research note.
Akamai said that traffic levels on its CDN and edge platform remained at elevated levels during the previous quarter, which the company said helped offset the approximately $15 million negative impact from India's ban of 59 Chinese apps. Looking ahead, CEO Tom Leighton expects 5G and smart cities to impact continued growth for the company.
“As we look to the future, we believe that the deployment of 5G and IoT applications can provide significant opportunities for Akamai. 5G technology improves the performance of the last mile, providing higher throughput and lower latency, and the potential to connect a lot more people and things. And that could spawn the creation of new applications, such as ultra-low latency video, augmented reality, IoT applications and analytics at a massive scale, deep threat intelligence for attack mitigation, and much more that we can't even imagine yet,” said Leighton, according to a Seeking Alpha transcript. “The impact of 5G on innovation to be similar to the way broadband enabled new social networking apps that few could have imagined before.”