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Akamai CEO: ‘Rapid Growth’ of Company’s Cloud Security Business Gave it Q1 Boost

The “continued rapid growth” of Akamai’s Cloud Security Solutions business provided the company with a major lift in its first quarter (ended March 31), according to CEO Tom Leighton.

That strong demand for its cybersecurity services, combined with “very strong traffic growth” from Akamai’s media customers, helped the company report revenue, profit and margins that all topped expectations, he said April 30 on earnings call with analysts.

Total Akamai Q1 revenue grew 6% from a year ago to $706.5 million, while profit jumped to $107.1 million (65 cents a share) from $53.7 million (31 cents a share).

“Our security portfolio continued to be the fastest growing part of our business” in Q1, with revenue jumping 29% from a year ago in constant currency to $190 million, Leighton told analysts. Akamai’s Bot Manager “continued to be our fastest selling new product in recent memory, with nearly 400 customers now under contract,” he said, noting Bot Manager “uses sophisticated” artificial intelligence (AI) and machine learning “to distinguish between human neuromuscular signatures and machine-generated requests.”

That technology is “especially effective in thwarting bots that try to take over end-user accounts and commit fraud across a range of consumer-facing applications, such as apparel sales, event ticket sales, travel reservations and gaming and streaming services,” he noted.

Akamai does “not intend to slow down or rest on our laurels” in the cybersecurity space, he noted. In January, the company closed on its purchase of Janrain and, using that customer identity access management company’s technology, it’s created the Akamai Identity Cloud, a new service that he said was “designed to help customers stop credential abuse and account fraud, manage and protect consumer data and comply with regional data regulations.”

In announcing that purchase in January, Rick McConnell, president of Akamai Technologies and general manager of its web division, said Janrain’s Identity Cloud, “working together with Akamai’s Intelligent Edge Platform, will provide an added layer of security to allow our customers to know more about their end users and potentially drive additional revenues from that deepened relationship.”

Akamai, meanwhile, expects that services that are part of its recently-announced Global Open Network (GO-NET) joint venture with Mitsubishi UFJ Financial Group of Japan will become available in Japan next year, Leighton said on the April 30 call. GO-NET will offer a new blockchain-based online payment platform that’s “designed to enable next-generation digital financial transactions to be scalable, fast, efficient and secure,” he said.

In early April, Akamai also announced an expanded partnership with Microsoft Azure, Leighton pointed out on the call, explaining: “By combining the power of Azure with the vast reach of the Akamai Edge, we plan to help content providers maximize performance and scale, mitigate costs and realize the benefits of the cloud to deliver the best possible online experiences. We believe that this partnership demonstrates the essential role that our Edge platform plays in the evolving hybrid cloud ecosystem.”

Akamai’s media business, meanwhile, “continued to grow traffic faster than the Internet as a whole in Q1, which means that we continued to gain share,” he told analysts.

Q1 revenue in Akamai’s Web Division grew 7% from a year ago to $376 million, driven by “another very strong quarter of security growth as we continued to see strong adoption of our entire security portfolio,” Ed McGowan said during the call, his first as the company’s CFO after being promoted from SVP of finance. Revenue from the Janrain acquisition contributed nearly $4 million in the quarter alone and was factored into its total security revenue, he said.

“We believe security remains a tremendous growth opportunity and we plan to continue to invest to further enhance and extend our product portfolio as well as expand our go-to-market capabilities,” McGowan said.

Revenue from the company’s Media and Carrier Division grew 5% from a year ago in Q1 to $330 million, “led by higher than expected traffic growth in gaming, video and software downloads,” the CFO said. Revenue from Akamai’s Internet Platform customers, meanwhile, increased 6% to $47 million, representing the first time since Q3 of 2015 that the company saw growth year-over-year from that group of customers, he pointed out. The “strength really came from video gaming and software,” he noted.