Akamai forecasts fourth-quarter sales above estimates on AI-driven demand

Reuters
11/07
Akamai forecasts fourth-quarter sales above estimates on AI-driven demand

Nov 6 (Reuters) - Akamai Technologies AKAM.O forecasts fourth-quarter revenue above Wall Street estimates on Thursday, buoyed by strong demand for its content delivery network offerings and AI-cloud infrastructure services.

Shares of the company were up nearly 6% in extended trade.

Companies are investing heavily to secure applications and web infrastructure amid accelerating adoption of cloud technologies, benefiting Akamai's security and compute units.

The cybersecurity company expects fourth-quarter revenue between $1.07 billion and $1.09 billion with the midpoint above analysts' average estimate of $1.07 billion, according to LSEG data.

"AI is a tailwind for us, pretty much across the board," CEO Tom Leighton told Reuters.

Its cloud-computing revenue grew 8% to $180 million in the third quarter.

While the company raised the midpoint of its annual revenue forecast, it lowered its upper limit. It now expects 2025 sales between $4.18 billion and $ 4.20 billion, compared with its earlier outlook of $4.14 billion to $4.21 billion.

"As we have better visibility into the full year, and we have another quarter now, we narrowed the range," CEO Leighton said.

Akamai's customers include Adobe ADBE.O, eBay EBAY.O and Electronic Arts EA.O, as well as the U.S. Defense and Labor departments.

The company provides content delivery network services to optimize web performance and reduce bandwidth congestion.

However, it is facing mounting pressure as tech giants such as Netflix NFLX.O and Apple AAPL.O continue to build out their own content delivery networks, posing a threat to Akamai's traditional CDN business.

Delivery revenue was down 4% to $306 million in the third quarter.

It posted third-quarter revenue of $1.06 billion, beating analysts' consensus estimate of $1.04 billion.

Adjusted earnings of $1.86 per share also beat estimates.

(Reporting by Arsheeya Bajwa; Editing by Tasim Zahid)

((ArsheeyaSingh.Bajwa@thomsonreuters.com; +91 8510015800;))

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