- Sep-Q topline results and Dec-Q guide look totally fine to us
- CDN volume facing very easy 3Q16 comparison, top 6 exit seems largely behind AKAM in the short run, and total volume trendline (CDN + Performance) underlying the revenue is fairly steady
- Incremental 2H opportunity with recently acquired Shoasta, Cyberfend, and Soha should net good enough revenue
- However, the stock is expensive at 21x EV/FCF or ~5% FCF yield for a company that is struggling to grow
- And if the exit of the Big6 in revenue terms is already mostly behind AKAM, we'd argue the loss of volume on the platform from the fastest growing drivers of Internet traffic will not be recovered and cannot be mimicked with the remaining enterprise customers
- AKAM thus has a long term problem now in which it’s core business will struggle to grow
- The M&A flywheel remains needed to continue pushing cloud security revenue
- While the setup into the current Q seems inopportune for the Short, we think there will be a time later in the calendar year or early 2018 when easier comps roll off, and a recovery in real terms will be too puny to match the still extended valuation
Remains on the Short Bench, aiming to come back to it later in the calendar year
