Akamai Technologies Inc (NASDAQ:AKAM) saw its stock plunge 8.4% in the pre-market session on Friday, following the company's Q4 2024 earnings report that highlighted headwinds and growth slowdowns in certain areas amid its ongoing transition to focus more on security and cloud infrastructure services.
While the company reported strong Q4 2024 performance with revenue and earnings exceeding guidance, and milestones like surpassing $2 billion in security revenue, there were several key concerns that likely weighed on investor sentiment:
- Akamai faces a significant headwind from its largest customer pursuing a 'DIY' strategy, which is expected to impact overall revenue growth. The company anticipates a $60 million headwind from this customer in 2025. - Despite growth in cloud computing revenue, the company expects a slowdown in this segment, projecting only 15% growth in cloud computing solutions in 2025, compared to higher growth rates in previous years. - Akamai's delivery revenue declined by 18% year-over-year in Q4 2024, although there are signs of stabilization in this area. - Foreign exchange fluctuations are expected to negatively impact revenue and non-GAAP EPS expectations in 2025. - The company anticipates increased capital expenditures in 2025, partly due to infrastructure builds for a large cloud infrastructure services contract.
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