Akamai Technologies, Inc. (NASDAQ:AKAM) Q3 2017 Earnings Conference Call - Final Transcript

Oct 24, 2017 • 04:30 pm ET

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Akamai Technologies, Inc. (NASDAQ:AKAM) Q3 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Q3 2017 Akamai Technologies Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will host a question-answer session, and our instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

It is now my pleasure to hand the conference over to Mr. Tom Barth, Head of Investor Relations. Sir, you may begin.

Executive
Tom Barth

Great. Good afternoon, and thank you, everyone, for joining Akamai's third quarter 2017 earnings conference call. Speaking today will be Tom Leighton, Akamai's Chief Executive Officer; and Jim Benson, Akamai's Chief Financial Officer.

Before we get started, please note that today's comments include forward-looking statements, including statements regarding revenue and earnings guidance. These forward-looking statements are subject to risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied by such statements. Additional information concerning these factors is contained in Akamai's filings with the SEC, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q. The forward-looking statements included in this call represent the company's view on October 24, 2017. Akamai disclaims any obligation to update these statements to reflect future events or circumstances.

As a reminder, we'll be referring to some non-GAAP financial metrics during today's call. A detailed reconciliation of GAAP and non-GAAP metrics can be found under the financial portion of the Investor Relations section of our website. Also, please note that all growth rates referenced today will be in constant currency, unless otherwise noted.

With that, let me turn the call over to Tom.

Executive
Frank Thomson Leighton

Thanks, Tom, and thank you all for joining us today. Akamai delivered strong results in the third quarter, driven by the continued rapid growth of our security offerings and strong traffic acceleration in our Media business. Revenue in Q3 was $621 million, above the high-end of our guidance range and up 6% over Q3 of last year. Non-GAAP EPS in Q3 was $0.62 per diluted share, also coming in above the high-end of our guidance range. The fastest-growing part of our business last quarter was our Cloud Security portfolio, which grew 27% year-over-year to $121 million in revenue or about 20% of Akamai's total revenue. Our leading Kona Site Defender solution continue to be a primary driver of this growth, and I think recent events can help you understand why.

By now, almost everyone has seen the headlines about the breach at a major credit reporting agency that exposed the personal financial data of more than 140 million people. According to published reports, the attackers exploited an Apache Struts vulnerability in a public-facing website to gain access to the confidential data. The company's leaders believe they patched all their sites and apps after the vulnerability was identified. But when there are a lot of sites and apps to update, it's really hard to be