Akamai Technologies Inc

Analysis

Business Description

Akamai Technologies Inc (Akamai) is a provider of cloud services for delivering, optimizing and securing online content and business applications. It provides security, mobile and web performance, carrier, and media delivery solutions. The company generates revenue from two reportable divisions: Web Division and Media and Carrier Division. The company markets its solutions through direct sales force, service organizations, resellers, systems integrators and channel partners.

As of December 2020, its channel partners include Deutsche Telecom, AT&T, IBM, Telefonica Group and Orange Business Services. Akamai conducts sales through offices in the Americas, the Middle-East, Europe and Asia. Its Akamai Intelligent Edge Platform had over 325,000 servers deployed in more than 1,400 in over 130 countries.

R&D Overview

Akamai's R&D arm focuses on enhancing existing services, strengthening its network and developing of new services to meet the changing customers’ needs and market trends. In FY2020, the company incurred an expenditure of US$269.3 million on R&D, which as a percentage of revenue, stood at 8.4%. As of December 2020, it had over 500 US patents.

Business Segments
Overview

Provides media delivery and carrier solutions, including adaptive media delivery, media services live, netstorage, media analytics, download media delivery, Domain Name System (DNS) infrastructure, aura managed content delivery network (CDN), and security and personalization services.

Performance

Reported revenue of US$1,532.8 million for FY2020, which grew 14.6% YoY, and recorded a CAGR of 6.1% during 2016-20. The segment accounted for 47.9% of the company's revenue in FY2020.

Growth in revenue was mainly due to increase in customer traffic volumes from video delivery, gaming and social media usage, because of behavioral changes tied to the COVID-19. Increase in revenue was also due to higher sales of Cloud Security Solutions.

Inventore veritatis
Overview

Offers cloud and enterprise security solutions such as prolexic, kona site defender, and bot manager

Performance

Reported revenue of US$1,666.3 million for FY2020, which grew 7.1% YoY, and recorded a CAGR of 10.0% during 2016-20. The segment accounted for 52.1% of the company's revenue in FY2020.

Growth in revenue was mainly due to increase in sales of both new and existing Cloud Security Solutions to this customer base.

Geographical Segments
Performance

Reported revenue of US$1,420.7 million for FY2020, which grew 18.5% YoY, and recorded a CAGR of 18.6% during 2016-20. The segment accounted for 44.4% of the company's revenue in FY2020.

Inventore veritatis
Performance

Reported revenue of US$1,777.4 million for FY2020, which grew 4.9% YoY, and recorded a CAGR of 2.2% during 2016-20.The segment accounted for 55.6% of the company's revenue in FY2020.