Profitability analysis
Akamai ‘s revenues were $3.8 billion, $3.6 billion and $3.5 billion in 2023, 2022 and 2021, respectively.
Akamai ‘s revenue in 2023 was up about 5.6% year-on-year.
Akamai ‘s revenue in 2022 was up about 2.9% year-on –year.
It ‘s growth rate in revenues was very slow.
The company ‘s net income was $548 million, $524 million and $652 million for 2023, 2022 and 2021, respectively.
The net profit margin was 14.4%, 14.6% and 18.6% in 2023, 2022 and 2021, respectively.
Akamai ‘s total stockholders’ equity was $4.6 billion and 4.37 billion in 2023 and 2022, respectively.
The company’s return on equity was 12% and 12% for 2023 and 2022, respectively.
Cash flow analysis
Net cash provided by operating activities was $1.35 billion, $1.27 and $1.4 billion in 2023, 2022 and 2021, respectively.
We could see that Akamai ‘s cash flow has been strong in the past two years.
But we think Akamai has many disadvantages for cash flow.
Stock-based compensation was $328 million, $217 million and $202 million in 2023,2022 and 2021, respectively.
Stock-based compensation do not trigger cash outflow, but stock-based compensation may be eventually bought back.
The amount of purchases of property and equipment was $458 million, $241 million and $329 million in 2023, 2022 and 2021, respectively.
Capitalization of internal-use software development costs was $272 million, $217 million and $216 million in 2023, 2022 and 2021, respectively.
Akamai ‘s free cash flow was $0.63 billion, $0.78 billion and $0.85 billion in 2023, 2022 and 2021, respectively.
We think the other account leading to cash outflow is cash paid for business acquisitions, net of cash acquired.
Cash paid for business acquisitions was $106 million , $827 million and $599 million in 2023, 2022 and 2021, respectively.
Free cash flow subtracting the amount of cash paid for business acquisitions was $520 million, -$47 million and $250 million in 2023, 2022 and 2021, respectively.
Repurchase of common stock were $654 million, $608 million and $522 million in 2023, 2022 and 2021, respectively.
We reckon that we cloud see the amount of repurchases of common stock as stockholders’ real return.
Asset structure analysis
Akamai ‘s total assets were $9.9 billion and $8.3 billion in 2023 and 2022, respectively.
Total current assets were $1.8 billion in 2023, accounting for 18% of total assets.
Current assets ‘s proportion was small.
Cash and cash equivalents were $490 million in 2023, making up 5% of total assets.
Marketable securities were $375 million in 2023, consisting of 3.8% of total assets.
Property and equipment, net were $1.8 billion in 2023, accounting for 18% of total assets.
Akamai ‘s goodwill was $2.85 billion in 2023, consisting of 28.8% of total assets.
Liquidity and solvency
Akamai ‘s current liabilities were $836 million in 2023.
We get a current ratio: 2.15, which mean Akamai’ s current assets covered current liabilities 2.15 times.
Total liabilities were $5.3 billion in 2023, but in which convertible senior notes were $3.5 billion in 2023, which may not need to be repaid.
We reckon that the debt pressure is very high, and the debt can only be maintained by cash flow.
Conclusion
We don’t like this stock .
The growth rate in revenues was rather slow.
The debt ratio was actually high.
Acquiring other company has been a way to expand.
Now, Akamai ‘s stock price is $108.76 per share , which is equivalent to $16.66 billion in market price.
We reckon that Akamai is worth under $6 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
Akamai’s mission is to power and protect life online.
Since 1998, Akamai has developed and provided solutions for global enterprises to build, deliver and secure their digital experiences on our massively distributed worldwide network. This platform, which we refer to as Akamai Connected Cloud, is comprised of an edge and cloud architecture and underlying network for cloud computing, security and content delivery services. Akamai Connected Cloud spans more than 4,100 edge points-of-presence in approximately 130 countries and nearly 750 cities, with roughly 1,200 network partners. With this scale and distribution, Akamai Connected Cloud provides us with visibility and insight into traffic volumes, congestion, attack patterns, vulnerabilities and other activities across the internet’s complex intersections of networks and systems. Leveraging these insights, Akamai Connected Cloud offers solutions designed to protect our customers from threats and attacks, while empowering them to securely deliver digital experiences to engage, entertain and interact with their customers. Akamai Connected Cloud also offers a continuum of computing designed to efficiently build, deploy and secure performant applications and workloads that require single-digit millisecond latency and global reach.
