Akamai Technologies, Inc. CAPEX jumped on 30.2% and Revenue jumped on 10.5%
02/09/2021 • About Akamai Technologies, Inc. (
$AKAM) • By InTwits
Akamai Technologies, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 41.0% in 2020 vs. 39.5% in 2019 vs. 33.9% in 2016
- Akamai Technologies, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.5%. At the same time it's a lot of higher than industry average of 6.0%.
- CAPEX is quite volatile: $57m in FY2020, $69m in FY2019, $68m in FY2018, $44m in FY2017, $26m in FY2016
- The company has business model with average profitability: ROIC is 10.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.8x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 10.5%. Revenue growth showed small slowdown in 20Q4 - it was 9.6% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.5 pp from 39.5% to 41.0% in 2020. During the last 5 years EBITDA Margin bottomed in 2017 at 27.6% and was growing since that time.
Gross Margin decreased slightly on 1.3 pp from 65.9% to 64.6% in 2020. SG&A as a % of Revenue decreased on 2.7 pp from 33.2% to 30.4% in 2020. During 2016-2020 SG&A as a % of Revenue topped in 2018 at 37.2% and was declining since that time.
Net Income margin increased slightly on 0.90 pp from 16.5% to 17.4% in 2020. During the last 5 years Net Income margin bottomed in 2017 at 8.9% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In 2020 Akamai Technologies, Inc. had CAPEX/Revenue of 22.9%. Akamai Technologies, Inc. showed CAPEX/Revenue growth of 6.2 pp from 16.7% in 2017 to 22.9% in 2020. It's average level of CAPEX/Revenue for the last three years was 19.1%. Akamai Technologies, Inc. invested a big chunk of EBITDA (55.8%) to CAPEX to fuel its growth. CAPEX as a % of Revenue grew at 2.1 pp per annum in the last 5 years.
Return on investment
The company operates at good ROE (14.1%) while ROIC is low (10.9%). ROIC showed almost no change in 2020. ROE showed almost no change in 2020. During 2016-2020 ROIC bottomed in 2017 at 7.9% and was growing since that time. During the last 5 years ROE bottomed in 2017 at 6.8% and was growing since that time.
Leverage (Debt)
Debt level is 1.8x Net Debt / EBITDA and 2.1x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 2.0x to 1.8x in 2020. Debt increased on 3.9% while cash dropped on 10.4%. Net Debt/EBITDA grew at 0.4x per annum in 2016-2020.
Akamai Technologies, Inc. has no short term refinancing risk: cash is higher than short term debt (228.0%).
Valuation and dividends
Akamai Technologies, Inc.'s trades at EV/EBITDA 14.1x and P/E 28.8x.
Management team
Akamai Technologies, Inc.'s CEO is F Thomson Leighton "Tom". F Thomson Leighton "Tom" has 8 years tenure with the company. The company's CFO Edward Mcgowan "Ed" has spent 2 years with the company.
Financial and operational results
FY ended 12/31/2020
Akamai Technologies, Inc. ($AKAM) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,340 | 2,489 | 2,714 | 2,894 | 3,198 | 10.5% |
| Gross Profit | 1,531 | 1,613 | 1,761 | 1,906 | 2,065 | 8.4% |
| SG&A | 800 | 911 | 1,009 | 959 | 973 | 1.4% |
| EBITDA | 794 | 687 | 797 | 1,144 | 1,312 | 14.6% |
| EBIT | 460 | 314 | 362 | | | |
| Interest expence | 19 | 19 | 43 | | | |
| Tax | 143 | 91 | 45 | | | |
| Net Income | 316 | 223 | 298 | 478 | 557 | 16.5% |
| Stock Based Compensation | 145 | 164 | 184 | | | |
Balance Sheet
|
|---|
| Cash | 324 | 313 | 1,036 | 394 | 353 | -10.4% |
| Accounts Receivable | 369 | 461 | 480 | | | |
| Accounts Payable | 76 | 80 | 99 | | | |
| Short Term Debt | 0 | 0 | 687 | 139 | 155 | 11.0% |
| Long Term Debt | 640 | 663 | 874 | 2,532 | 2,622 | 3.6% |
Cash flow
|
|---|
| Capex | 316 | 415 | 406 | 562 | 732 | 30.2% |
| Acquisitions | 95 | 369 | 0 | | | |
Ratios
|
|---|
| Revenue growth | 6.5% | 6.4% | 9.1% | 6.6% | 10.5% | |
| EBITDA growth | 3.7% | -13.5% | 16.1% | 43.6% | 14.6% | |
|
|---|
| Gross Margin | 65.4% | 64.8% | 64.9% | 65.9% | 64.6% | -1.3% |
| EBITDA Margin | 33.9% | 27.6% | 29.4% | 39.5% | 41.0% | 1.5% |
| EBIT Margin | 19.6% | 12.6% | 13.4% | | |
| SG&A, % of revenue | 34.2% | 36.6% | 37.2% | 33.2% | 30.4% | -2.7% |
| SBC, % of revenue | 6.2% | 6.6% | 6.8% | | |
| Net Income Margin | 13.5% | 8.9% | 11.0% | 16.5% | 17.4% | 0.9% |
| CAPEX, % of revenue | 13.5% | 16.7% | 14.9% | 19.4% | 22.9% | 3.5% |
|
|---|
| ROIC | 11.9% | 7.9% | 8.2% | 10.8% | 10.9% | 0.1% |
| ROE | 10.0% | 6.8% | 9.1% | 14.0% | 14.1% | 0.1% |
| Net Debt/EBITDA | 0.4x | 0.5x | 0.7x | 2.0x | 1.8x | -0.1x |
| Interest expence / Average debt | 2.9% | 2.9% | 3.9% | | | |
People
|
|---|
| Insider ownership | 2.3% | 2.3% | 2.3% | | | |
| Employees | 6,490 | 7,650 | 7,519 | | | |
| Revenue/Employee, th. $ | 361 | 325 | 361 | | | |
Akamai Technologies, Inc. ($AKAM) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 764 | 795 | 793 | 846 | | 8.2% | 12.7% | 11.7% | 9.6% |
| EBITDA | 269 | 306 | 300 | 262 | | -3.9% | 26.5% | 18.2% | -11.1% |
| Net Income | 123 | 162 | 159 | 113 | | 15.0% | 42.1% | 15.0% | -4.8% |
Balance Sheet
|
|---|
| Cash | 384 | 572 | 743 | 353 | | -44.2% | 10.9% | 88.6% | -10.4% |
| Short Term Debt | 142 | 138 | 136 | 155 | | 39.7% | 44.0% | -2.3% | 11.0% |
| Long Term Debt | 2,529 | 2,547 | 2,572 | 2,622 | | 114.9% | 113.6% | 1.6% | 3.6% |
Ratios
|
|---|
| Gross Margin | 64.9% | 65.2% | 64.3% | 64.1% | | -1.1% | -0.5% | -1.0% | -2.5% |
| EBITDA Margin | 35.1% | 38.5% | 37.8% | 31.0% | | -4.4% | 4.2% | 2.1% | -7.2% |
| Net Income Margin | 16.1% | 20.4% | 20.0% | 13.4% | | 0.9% | 4.2% | 0.6% | -2.0% |
Peers in Internet Services & Infrastructure
Below you can find Akamai Technologies, Inc. benchmarking vs. other companies in Internet Services & Infrastructure industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MongoDB, Inc. ($MDB) | - | 55.3% | 63.8% | 60.8% | 57.9% |
| Twilio Inc. ($TWLO) | - | 43.9% | 62.9% | 74.5% | 55.3% |
| Okta, Inc. ($OKTA) | - | 86.6% | 60.0% | 55.6% | 46.8% |
| Wix.com Ltd. ($WIX) | - | 46.7% | 41.8% | 26.1% | 29.9% |
| Limelight Networks, Inc. ($LLNW) | - | 9.6% | 6.1% | 2.5% | 14.7% |
| |
|---|
| Median (9 companies) | 20.7% | 13.7% | 19.2% | 21.2% | 14.7% |
|---|
| Akamai Technologies, Inc. ($AKAM) | - | 6.4% | 9.1% | 6.6% | 10.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 82.6% | 83.4% | 84.2% | 85.3% | 85.8% |
| Okta, Inc. ($OKTA) | 58.1% | 65.1% | 68.5% | 71.6% | 72.8% |
| MongoDB, Inc. ($MDB) | 68.0% | 70.5% | 74.2% | 72.4% | 70.3% |
| Crexendo Inc ($CXDO) | 60.2% | 67.9% | 67.9% | 69.9% | 69.8% |
| Wix.com Ltd. ($WIX) | 84.4% | 83.7% | 79.0% | 74.1% | 68.1% |
| |
|---|
| Median (9 companies) | 59.2% | 61.8% | 66.4% | 69.9% | 68.1% |
|---|
| Akamai Technologies, Inc. ($AKAM) | 65.4% | 64.8% | 64.9% | 65.9% | 64.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 65.2% | 65.0% | 67.1% | 69.2% | 68.8% |
| GoDaddy Inc. ($GDDY) | 11.4% | 12.2% | 14.4% | 15.6% | 15.8% |
| Crexendo Inc ($CXDO) | -28.7% | -6.2% | -1.0% | 10.6% | 7.8% |
| Brightcove Inc. ($BCOV) | -0.8% | -8.0% | -3.8% | -2.6% | 5.5% |
| Limelight Networks, Inc. ($LLNW) | -30.9% | 6.7% | 7.0% | 3.8% | 5.2% |
| |
|---|
| Median (9 companies) | -5.1% | -7.1% | 14.4% | -2.6% | 5.2% |
|---|
| Akamai Technologies, Inc. ($AKAM) | 33.9% | 27.6% | 29.4% | 39.5% | 41.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Limelight Networks, Inc. ($LLNW) | 5.7% | 11.2% | 8.2% | 17.3% | 10.9% |
| Crexendo Inc ($CXDO) | 0.0% | 0.0% | 0.1% | 0.5% | 4.5% |
| VeriSign, Inc. ($VRSN) | 2.3% | 4.2% | 3.0% | 3.3% | 3.4% |
| Okta, Inc. ($OKTA) | 4.8% | 3.9% | 2.6% | 5.0% | 2.6% |
| GoDaddy Inc. ($GDDY) | 2.9% | 3.7% | 3.3% | 2.9% | 2.0% |
| |
|---|
| Median (9 companies) | 3.3% | 3.8% | 3.0% | 2.9% | 2.0% |
|---|
| Akamai Technologies, Inc. ($AKAM) | 13.5% | 16.7% | 14.9% | 19.4% | 22.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 65.2% | 54.3% | 81.9% | 228.3% | 221.3% |
| GoDaddy Inc. ($GDDY) | 2.9% | 2.7% | 4.6% | 6.0% | 8.1% |
| Crexendo Inc ($CXDO) | -114.0% | -44.3% | -10.5% | 35.4% | 7.3% |
| Brightcove Inc. ($BCOV) | -11.3% | -26.9% | -19.0% | -24.8% | -5.2% |
| Limelight Networks, Inc. ($LLNW) | -42.9% | -5.7% | -3.1% | -8.6% | -5.8% |
| |
|---|
| Median (9 companies) | -18.5% | -14.6% | 1.0% | -12.4% | -5.8% |
|---|
| Akamai Technologies, Inc. ($AKAM) | 11.9% | 7.9% | 8.2% | 10.8% | 10.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Limelight Networks, Inc. ($LLNW) | - | -1.7x | -1.8x | -0.4x | 5.7x |
| GoDaddy Inc. ($GDDY) | 2.3x | 6.8x | 3.9x | 3.4x | 4.9x |
| VeriSign, Inc. ($VRSN) | 2.2x | 2.6x | 1.8x | 1.5x | 1.6x |
| Brightcove Inc. ($BCOV) | - | - | - | - | -2.6x |
| Crexendo Inc ($CXDO) | - | - | - | -2.6x | -12.2x |
| |
|---|
| Median (5 companies) | 2.2x | 6.5x | 1.8x | 0.6x | 1.6x |
|---|
| Akamai Technologies, Inc. ($AKAM) | 0.4x | 0.5x | 0.7x | 2.0x | 1.8x |
