Akamai 3Q15 Earnings Call Notes

Akamai Technologies (AKAM) Frank Thomson Leighton on Q3 2015 Results

Slowing traffic growth in some of our largest accounts but rest of media business very healthy

“we are projecting some moderation in the growth of our U.S. media business, primarily due to slower traffic growth in a few of our largest accounts…To be clear, the rest of our global media business is very healthy. Our overall media traffic is still projected to grow at a substantial pace, and I am very optimistic about the future growth of our media business.”

We believe the slowing in traffic is overall slowing at these accounts, not do it yourself

“we are seeing a slowdown in those accounts off of very strong Q4 of last year, and it is magnified by the fact they do serve some of their own traffic. But we believe kind of the bigger slowdown in traffic here is that traffic overall is slowing, not so much an acceleration and kind of do-it-yourself.”

Bots have become a significant issue for customers

“Bot manager is our newest security service and is now in beta with 18 customers. Bots are automated software agents, and they have become a significant issue for our customers. On a typical day, Akamai sees over 10 billion requests from over 60 million bots. Some bots, such as search engine bots, are helpful, but many are harmful. Malicious bots can steal intellectual property and personal information, scrape prices, and consume significant bandwidth and server resources. Some of our customers have been surprised to learn that over half of their traffic is from bots.”

DIY doesn’t make sense for anyone except the giant media companies

“It’s not something that I think even makes any sense at all for somebody who is not a giant media company, just – it’s not going to be any kind of quality you’d want to have and it doesn’t even make sense financially, I think.”

It’s tough to say why traffic is slowing for our customers

“I mean, that’s tough to tell. I mean, this is the nature of our business that we can’t control how many people are doing a download, how many people are doing various things. So that’s really an end user thing. So why it’s slowing for our customers is difficult for us to assess.”

These are big, big customers

“these top three accounts in our media business represent a reasonably large percentage because these are big, big, big media companies. So the biggest share of the revenue deceleration and actually these three accounts are declining year-on-year.”

Growth outside these customers is strong

“it’s fair to say that growth outside of these three customers in the media is doing very well. Our international growth is strong in the media business, and is strong in other segments of our U.S. market as well.”