Akamai Technologies Inc (NASDAQ: AKAM)

Sector: Technology Industry: Software - Infrastructure CIK: 0001086222
Market Cap 12.87 Bn
P/B 2.72
P/E 25.39
P/S 3.11
ROIC (Qtr) 5.10
Div Yield % 0.00
Rev 1y % (Qtr) 4.97
Total Debt (Qtr) 5.23 Bn
Debt/Equity (Qtr) 1.11

About

Price action

Investment thesis

Bull case

  • Healthy cash reserves of 927.93M provide 3.30x coverage of short-term debt 281.35M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.50B provides exceptional 50.54x coverage of interest expenses 29.60M, showing strong debt service capability.
  • Tangible assets of 7.02B provide exceptional 37.83x coverage of deferred revenue 185.43M, showing strong service capability backing.
  • Operating cash flow of 1.50B provides strong 8.07x coverage of deferred revenue 185.43M, indicating service delivery capability.
  • Free cash flow of 718.30M provides exceptional 24.27x coverage of interest expense 29.60M, showing strong debt service ability.

Bear case

  • Operating cash flow of 1.50B barely covers its investment activities of (418.54M), with a coverage ratio of -3.57, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (418.54M) provide weak support for R&D spending of 494.35M, which is -0.85x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 927.93M provide limited coverage of acquisition spending of (157.11M), which is -5.91x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 1.50B shows concerning coverage of stock compensation expenses of 439.22M, with a 3.41 ratio indicating potential earnings quality issues.
  • Operating earnings of 686.20M show weak coverage of depreciation charges of 694.05M, with a 0.99 ratio indicating high capital intensity and potential reinvestment needs.

Contract with Customer, Sales Channel Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.60 2.69
EV to Cash from Ops. EV/CFO 11.56 28.91
EV to Debt EV to Debt 3.31 19.83
EV to EBIT EV/EBIT 25.20 -9.95
EV to EBITDA EV/EBITDA 13.16 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 24.07 26.09
EV to Market Cap EV to Market Cap 1.34 0.36
EV to Revenue EV/Rev 4.18 -9.34
Price to Book Value [P/B] P/B 2.72 3.88
Price to Earnings [P/E] P/E 25.39 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.71
Dividend per Basic Share Div per Share (Qtr) 0.00 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.68
Interest Coverage Int. cover (Qtr) 23.18 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.49 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 62.87 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -3.54 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.68 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 5.18 20.13
EBT Growth (1y) % EBT 1y % (Qtr) 5.03 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 0.29 67.50
FCF Growth (1y) % FCF 1y % (Qtr) -20.92 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.27 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.38 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.98 1.22
Current Ratio Curr Ratio (Qtr) 2.28 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 1.11 -0.96
Interest Cover Ratio Int Coverage (Qtr) 23.18 -14.20
Times Interest Earned Times Interest Earned (Qtr) 23.18 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 33.40 -548.16
EBIT Margin % EBIT Margin % (Qtr) 16.60 -199.84
EBT Margin % EBT Margin % (Qtr) 15.89 -607.20
Gross Margin % Gross Margin % (Qtr) 59.10 51.88
Net Profit Margin % Net Margin % (Qtr) 12.30 -610.00