Akamai Technologies, Inc. Earnings Call Nuggets: International Markets, Riverbed Market Strategy

On Wednesday, Akamai Technologies, Inc. (NASDAQ:AKAM) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

International Markets

Mark Mahaney – Citigroup: Hey Paul, congratulations on the success to-date and with the transition going forward. Two quick questions. One, on the Media segment, you had two quarters in a row of acceleration, I’ll just ask the hard question, which is I would almost have thought there had been greater acceleration given the comp and given that you renegotiated or negotiated those media deals last year, so any color on that and then in international markets, where I think you singled out Japan this week, were there anything interesting to note in terms of the other geographies and you do have any read into how long it might take for Japan to get back to normalized growth?

Paul Sagan – President and CEO: Well, I will do them in reverse order on international since I did go around the world and talked not everywhere, but a quite a few places and I would we are seeing good trend throughout, but that doesn’t mean that the economies are fixed and we all know the headlines from certainly from Europe and places like Japan. I think we benefit, because IT budgets are large and even if they don’t grow as faster, even shrink them and people are shifting their investments to the cloud and to the Internet and so they come to us for help for better, faster, cheaper way to get their businesses moving online and we benefit. Certainly saw great opportunity across Asia when I was there and some pockets of strength in Europe, as well besides some of the strong economic winds in the other direction. As for Japan, I am not an economist, so I can’t tell you what even not – I think your word was regular growth is going forward. I can say that on the IT side those companies are, many companies I met with there that be multinational are curious about mining opportunities outside of Japan to look for growth because of just the characteristics of the economy there. Online media there is pretty strong and we think there’s a lot of opportunity there still, it just hasn’t turned around as well as other economies did, coming out of ’08, ’09 and obviously the double whammy that hit there environmentally is the main reason behind that. As for media volumes, I feel it’s not relevant to the issues of a year ago, it’s really a question of how much is going online and then we try to get our share of that, and I think what we are seeing is more content, more usage moving online and that’s an extremely strong trend, and it was strong in the fall, and it continued over the winter and accelerated some more, which is great. I think that there is more coming long term. But we will take what we are seeing now as a real positive.

Riverbed Market Strategy

David Hilal – FBR: Paul, could you please – I wanted to talk about Riverbed and the Steelhead partnership. Can you help quantify what you think the revenue opportunity is for Akamai this year, and could you also remind us of what the go-to-market strategy is with Riverbed?

Paul Sagan – President and CEO: So the go-to-market strategy is primarily their selling motion, which is the channel based model, because it is really to augment to someone who is using their solutions behind the firewall and now wants to access private – going from private to public cloud capabilities, so say something like Office 360 or Google Docs or something across the public internet. So we are using that selling motion, and the customers are adding this service on top of the capability they have and there is a revenue shared between the two of us, so we are really supporting their channel, and we had a very strong set of beta tests in the winter, and now general availability just in the last quarter, so its’ too soon to quantify and we are certainly not going to put any public sales targets out there. But again, remember, we have a recurring revenue service’s model, so it ramps up, it’s not a one quarter phenomenon and so I would not describe it as a material opportunity this year and we never did.

David Hilal – FBR: Then maybe one follow-up, high-tech was strong; it sounds like there are some specific software product downloads which begs the question with Windows 8 later this year. Is that another opportunity or maybe you have some strength in that sector?

Paul Sagan – President and CEO: I think that’s been a strong sector because we’ve seen the increase in some of the downloads, but also the overall shift to SaaS model that’s driving a lot of business in that category. I don’t want to speculate on a single release for one company that would be there to speculate on in terms of volumes and we’re happy to serve, but we’re not going to get ahead of anything they would want.

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