Why Akamai Technologies, Inc. (NASDAQ: AKAM) stock is falling

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Akamai Technologies, Inc. (NASDAQ: AKAM) stock fell over 7.7% on 29th April, 2020 (As of 11:51 am GMT-4; Source: Google finance) on lower than expected results for the first quarter of FY 20.

The company has reported first-quarter net income of $123.2 million, compared to $107.1 million in the year-ago period. Further, the traffic on the platform increased dramatically in March as enterprises turn to Akamai to move more of their operations online. Despite the cancellation or postponement of major sporting events like March Madness and Champions League Soccer, the traffic had risen about 30% over a 4-week period at the end of Q1. Traffic had reached a peak of 167 terabits per second, which was more than double the peak in the first quarter of 2019.

In Q1, the cloud-based security portfolio was up 28% to $240 million in revenue year-over-year in constant currency. Sales continued to be led by the flagship services for DDoS prevention, application layer firewall and bot management. The company experienced a strong surge in bookings for the next-gen zero trust enterprise security solutions. The strong demand the company saw in Q1 for the security and media services more than offset the reduced revenue the company received from companies that have been hit hardest by the pandemic, especially in the travel and hospitality vertical.

Revenue from our Media and Carrier Division was up 8% to $358 million, year-over-year and 9% in constant currency. The outperformance in media was mainly due to the increase in traffic from OTT video, gaming, social media and news and information sites as more and more people around the world began to shelter in place.

AKAM in the first quarter of FY 20 has reported 9 percent increase in the adjusted earnings per share of $1.20, while reported the adjusted revenue growth of 8 percent to $764.30 million in the first quarter of FY 20. Non-GAAP operating margin in Q1 was 30%, up one point over Q4 and consistent with Q1 of last year. The company delivered an Adjusted EBITDA of $327 million, up $8 million from Q4 and up 9% from the same period in 2019.

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