In addition to Apple -- coverage of its earnings report can be found here -- several other notable tech names, such as top content delivery network (CDN) owner Akamai (AKAM) , white-label cloud communications services leader Twilio (TWLO) , security tech firm FireEye (FEYE) , optical component vendor Oclaro (OCLR) and local deals provider Groupon (GRPN) , have also reported since Tuesday afternoon. Here are some thoughts on their numbers.
Akamai reported Q1 revenue of $609.2 million (up 7% annually) and adjusted EPS of $0.69, topping consensus analyst estimates of $604.7 million and $0.67. But it also guided on its earnings call for Q2 revenue of $597 million to $609 million (up 5% at the midpoint) and adjusted EPS of $0.59 to $0.61, below consensus estimates of $621.7 million and $0.65. Shares declined 15% on Wednesday and are down $5 above a 52-week low of $47.80.
As it has done with prior disappointing outlooks, Akamai blamed its guidance on weak sales within its Media segment, which handles the delivery of bandwidth-intensive content such as video, music and software downloads, as clients such as Netflix, Apple and Facebook rely more and more on their CDNs to move content around. Media revenue fell 9% in Q1 to $187 million, with sales to top "Internet platform companies" dropping 29% to $51 million. And Akamai now expects its 2017 Media revenue growth rates to remain below historical rates.
Higher-margin businesses are faring better. Cloud security services revenue rose 36% to $110 million, and performance solutions revenue, which involves delivering content for which low latency and high reliability are paramount (ads, e-commerce traffic, etc.), rose 10% to $259 million. But with Akamai having gone into earnings trading at about 20 times its 2018 EPS consensus, the Media headwinds were too large to ignore.
Twilio's story looks a lot like Akamai's. The company reported Q1 revenue of $87.4 million (up 47%) and adjusted EPS of negative $0.04, topping consensus estimates of $83.6 million and negative $0.06. But it guided for Q2 revenue of $85.5 million to $87.5 million and full-year revenue of $356 million to $362 million, below consensus estimates of $87.8 million and $370 million. Shares sank 26% on Wednesday, and are less than $3 above a post-IPO low of $23.66 (hit last June).
On its call, Twilio blamed the efforts of Uber -- 17% of the company's Q4 revenue, and 12% of its Q1 revenue -- to rely on third parties for some of its cloud-based communications work, and to take other work in-house. The company still expects Uber to "remain an important customer." But in addition to dinging sales, Uber's actions raise questions about whether other big Twilio clients, such as Facebook's WhatsApp unit (5% of Q1 revenue), Airbnb, Netflix, and Lyft, might eventually make similar moves.
The company does note that outside of Uber and WhatsApp, no client accounts for more than 2% of revenue. And its total client growth remains strong, with active customer accounts rising 42% annually in Q1 to 40,696. In addition, adjusted gross margin managed to grow 370 basis points to a healthy 58.6%. And at a valuation of 6.5 times the midpoint of Twilio's 2017 sales guidance range, shares are much cheaper than they used to be, though they're still pricing in in healthy sales growth in the coming years.
As shares plummeted from their 2014 highs and remained at depressed levels, FireEye's defenders have argued its differentiated offerings in areas such as malware-detection, endpoint protection and threat intelligence will allow it to succeed, and perhaps draw the attention of a suitor. But that bull case proved a tough sell as FireEye's sales and billings sputtered amid sales execution issues, management shakeups and stiff competition from Cisco Systems (CSCO) and Palo Alto Networks (PANW) , each of which have the luxury of bundling rival offerings with other security products.
FireEye's latest numbers make the bull case look a little stronger, even if a lot of challenges still remain. Q1 revenue of $173.7 million (up 3%) and adjusted EPS of negative $0.09 easily topped consensus estimates of $163.5 million and negative $0.26. Likewise, Q2 revenue guidance of $173 million to $179 million and full-year guidance of $724 million to $736 million were above consensus estimates of $172.7 million and $722.8 million. Shares rose 12% on Wednesday to $13.78.
But as FireEye's billings -- now fueled by subscriptions and services rather than hardware and software licenses -- show, the competition is still taking a toll. Though above guidance, Q1 billings of $152.4 million were below revenue and down 18% annually. And full-year billings guidance of $745 million to $775 million implies a 7% decline at the midpoint.
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