Q1 2022 Akamai Technologies Inc Earnings Call
Okay.
Good day, and thank you for standing by.
Welcome to the first quarter 2022, Akamai technologies earnings Conference call.
At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone please.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.
I would now like turn the conference over to your Speaker today, Tom Barth head of Investor Relations. Please go ahead.
Thank you operator, good afternoon, everyone and thank you for joining Akamai first quarter 2022 earnings call speaking today will be Tom Leighton Akamai, as Chief Executive Officer, and Ed Mcgowan Akamai as Chief Financial Officer.
Please note that today's comments include forward looking statements statements.
Statements regarding revenue and earnings guidance.
These forward looking statements are subject to risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied by such statements. The factors include any impact from macroeconomic trends uncertainty stemming from the COVID-19 pandemic the integration of any acquisitions.
And any impact from geopolitical developments additional information concerning these factors is contained in akamai filings with the SEC, including our annual report on Form 10-K, and quarterly reports on Form 10-Q the.
Forward looking statements included in this call represent the company's view on May 3rd 2020 to Akamai disclaims any obligation to update these statements to reflect new information future events or circumstances, except as required by law.
As a reminder, we'll be referring to some non-GAAP financial metrics during today's call. A detailed reconciliation of GAAP and non-GAAP metrics can be found under the financial portion of the Investor Relations section of Akamai Dot com and with that let me turn the call over to John .
Thanks, Tom and thank you all for joining US today, our Q1 revenue was $904 million up 7% year over year and up 9% in constant currency.
This solid result was driven by the continued rapid growth of our security and compute businesses.
Q1, non-GAAP operating margin was 30%.
Q1, non-GAAP EPS was $1.39 per diluted share up 1% year over year and up 4% in constant currency.
As Ed will discuss later EPS came in at the low end of our guidance range, primarily due to an adverse tax impact of three cents.
Since our last call with you on February 15, we have seen the development of several major global events and financial headwinds. It's remarkable how quickly the world has changed with the war in Ukraine, the significant strengthening of the U S dollar escalating inflation, increasing concerns about a recession.
And a moderation of internet traffic growth as many countries removed mask mandates.
Since these developments are all fairly recent they had a relatively small impact on our Q1 results, but it is prudent to assume that they will impact our results more meaningfully for the rest of the year.
For example at current spot rates, the strengthening dollar will adversely impact full year 2022 revenue by about $100 million.
About $55 million of that impact has come since we issued guidance on February 15th.
As we disclosed in our 8-K filing on March seven about 1% of our revenue comes from Russian companies, whereas derived from delivering traffic into Russia.
We have since terminated our business with several majority stayed on Russian companies and our traffic delivered into Russia, and Ukraine on behalf of other global customers has declined dramatically since the war began.
As a result, it's reasonable to assume that we will no longer generate most of the revenue that had been associated with Russia and Ukraine.
Lastly data from some of our large customers E. Commerce verticals suggests that they may be transitioning from an environment of above normal online consumption fueled by COVID-19 related.
Sections.
To an environment with more macroeconomic uncertainty, which could moderate their traffic growth in the near term.
Discussions with many of our large carrier partners across the world have reinforced the view that traffic growth rates may be moderating across the internet as a whole.
In particular, they've told us that they have recently seen a moderation in there year over year traffic growth and that the current levels of traffic on their networks are less than what they had expected.
This is consistent with what we've recently seen traffic is still growing at a fast pace on the akamai platform, but at a more moderate pace than we've observed over the last few years.
As a result of these largely external factors and to be conservative in our outlook. We feel it is prudent to lower our expectations for the full year.
Ed will provide more detail shortly.
That said and this is important to emphasize akamai business continues to be very strong and highly profitable.
Traffic growth on our platform remains substantial and the data we received from our customers and carrier partners indicates that our market share remains stable, whereas modestly increasing.
In addition, our customer churn levels continue to be at record lows last annual revenue from churned accounts in Q1 amounted to less than one half of 1% of total annual revenue.
And churn due to competitors with much less than half of that already small amount.
As a result, our market leading delivery business continues to generate substantial cash and to power our unique edge platform.
Our security business has reached an annual revenue run rate of over $1 $5 billion and continues to grow over 20% annually in constant currency.
And we believe that our compute business is poised to achieve about $400 million in revenue this year with a growth rate of over 60%.
And perhaps most important of all the combination of our security and compute businesses now represents the majority of our revenue.
We expect these businesses to generate about $2 billion of revenue this year with a growth rate of about 27% in constant currency.
I'll now talk about each of our three major business lines, starting with security, which we believe will soon become our largest business line.
Our security solutions generated revenue of $382 million in Q1 up 23% year over year and up 26% in constant currency.
This very strong growth was driven primarily by our flagship security products Kona site defender and Bot manager and also by our New guard, our core micro segmentation solution to stop ransomware.
In Q1, we finalized a largest deal in Garda course history valued at more than $10 million over the next three years expanding our longtime relationship with one of the largest banks in the world.
The size and scope of the deal illustrates why we're so excited about our opportunity and micro segmentation.
Financial services firms in particular are frequent targets of ransomware and malware and large banks with security risks faced financial penalties from regulators, if they fail to address them.
So from a compliance perspective, adopting micro segmentation can reduce risk and prevent large fines in the process.
By reducing spending on their legacy static firewalls. The bank, that's adopting our micro segmentation solution will free up resources to implement stronger defenses as they move to a new zero Trust security architecture and.
And by converting to our more flexible software based solution. They can achieve greater agility to compete with fast moving Fintech services.
This example demonstrates how Garda court can help akamai expand long time relationships with customers to become a more valuable strategic partner in the future.
<unk> is also helping us win new accounts and verticals such as critical infrastructure.
For example, one of the largest railroads and the railroads in the World recently became a multimillion dollar Garda core customer.
On April 20th Cyber security authorities in the U S and other major countries warn that the war in Ukraine raises the risk of cyber attacks.
They have recommended defenses align well to Akamai security solutions for micro segmentation, Ddos protection and web App firewall.
Web application attacks experienced by customers grew by nearly 200% year over year in Q1, the largest increase we've seen in several years web app attacks are a critical vulnerability for any company moving to the cloud building micro services or integrating third parties via Apis.
Which is why App and API protection is a critical priority for major enterprises.
<unk> is a leader in Gartner Magic quadrant for web App, and API protection and in Q1, Akamai Web App and API protection on Gartner peer insights customers' choice distinction for the third year in a row also in Q1 Forrester named Akamai a leader in its new wave from micro segmentation.
As we discussed during our last call with investors in February we will be reporting on our delivery and compute product lines separately going forward.
In Q1, our delivery products generated revenue of $444 million down 6% year over year and down 4% in constant currency.
Revenue for our compute product group was $78 million in Q1 up 32% year over year and up 35% in constant currency.
As I mentioned earlier traffic on our platform has been growing at a substantial rate in fact, just last week, we set another record when we delivered over 250 terabits per second of peak traffic more than 20% higher than our previous peak reached in February .
The Akamai edge platform continues to be the top choice for large media companies worldwide due to its unique scale and performance.
In a recent review of CDN vendors worldwide, IDC said Akamai is balanced and comprehensive portfolio spanning media and web delivery emerging edge applications extensive security capabilities and programmable edge addresses the needs of all enterprise segments and the developer.
<unk>.
The report also noted how akamai appetite appetite for innovation is showcased by the fact that it continues to expand its services and capabilities beyond CDN to address new areas.
Akamai as the market leader in delivery by far and the income generated by our delivery business helps to fund our investments in the fast growing areas of security and compute including our game changing acquisitions of <unk> and Lenovo.
Okay.
Our compute product group includes akamai capabilities, and compute storage cloud optimization developer tools edge applications and now the note, which joined Akamai on March 21.
We're encouraged by how customers and industry analysts have responded to our acquisition of Lenovo in fact, several of use the word transformational to sum up the potential impact of our combination of the marketplace.
The CEO and cofounder of macro meta.
<unk> partner that enables web and cloud developers to run and scale data heavy real time cloud applications has called Akamai is acquisition of law node a watershed moment for the cloud because it fundamentally reconfigured the landscape in many ways those are his words.
And he says that Akamai provides that layer of reach and distribution in a way that cloud providers are very challenged to be able to do it.
I'm excited about that he said.
Of course, we're excited to the node was an early pioneer in creating the market for alternative clouds offering developers a platform to build new applications in ways that are simple to use and affordable with high performance of competitive transparent and predictable price points and backed by strong customer support after the sale.
Bill.
Today, nearly three quarters of enterprises are pursuing multi cloud strategies, which means that new workloads will be cloud agnostic and portable free to move and choose the best place to be.
In fact, IDC just issued a report on workload deployment optimization that urges buyers to consider suppliers of infrastructure as a service beyond the hyper scaler.
Our acquisition of law node was the first alternative IDC highlighted as an example that can offer better cost and performance, while retaining the level of redundancy in coverage demanded by enterprises.
In the coming years, we expect our customers will have a growing need for a continuum of compute from the cloud to the edge to be closer where billions of end users are and where tens of billions of connected devices will be especially as five G and Iot take hold and grow building.
Building the bridge that enables developers to move from the cloud to the edge and have one place to build run and secure apps is a key reason why we're expanding expanding our offering with lenovo.
At our analyst day coming up on May 18, we will talk more about the potential for substantial future growth in this new and exciting part of Akamai portfolio as we become the cloud company that powers and protects life online.
The soundness of our overall strategy was validated in visits I had with dozens of akamai customers across EMEA and AP J last month com.
Common concerns expressed by customers and prospects included the war in Ukraine, the heightened level of cyber attacks as well as risk to trade and supply chains energy cost and currency valuations.
Customers expressed very strong interest in our security strategy and Garda core in particular as you can imagine their boards are asking them, how they can prevent a crippling ransomware attack and Garda core is the perfect solution.
They know that malware always finds a way in the key is identifying it and stopping it's spread before it can cause serious damage and thats exactly what God of course designed to do.
Most of the customers I met with were also interested in exploring our cloud compute offering as a more affordable and easier way to build run and secure their new applications.
The tight labor market employee attrition and the desire of employees to work remotely were also top of mind for customers in every location.
Several companies that I met with are reducing their real estate footprint and one of them told me they could only do this because they secure their remote work environments with Akamai enterprise application access.
Here at Akamai, we face the same macro trends as our customers, but in spite of the headwinds we feel good about the growing demand from customers for our security and compute solutions the expertise of our team and the addition of capabilities and talent from <unk> and Lenovo and how all of this gives akamai not one.
But to rapidly growing and highly synergistic businesses further diversifying our revenue.
We have also performed well on the retention of our talent employees appreciate our flexible workplace policy and culture of teamwork.
<unk> scores very high on third party rankings of the best places to work.
I am proud of the way that our employees have managed and I want to thank our extended team around the world for doing such a great job for our customers.
They are truly making life better for billions of people billions of times a day.
Now over to Ed for more on Q1, and our outlook for Q2, and the rest of the year Ed.
Ed.
Thank you Tom.
Tom mentioned Akamai delivered a solid quarter in Q1, Q1 revenue was $904 million up 7% year over year or 9% in constant currency.
Revenue was led by continued strong growth in security and compute the strength was partially offset by a significant strengthening U S dollar and a slight moderation in traffic growth rate in our delivery business during the last month of the quarter.
Security revenue grew 23% year over year and 26% in constant currency led by a reacceleration of growth in our application security business and continued very strong performance from Garda core.
Security represented 42% of total revenue in Q1, which was up five points from Q1 a year ago.
<unk> delivered revenue of $19 million in the quarter included in our garden of core results was approximately $7 million of term license deals from four customers. As a reminder, while the majority of Garlock where deals are software as a service revenue is recognized monthly under ASC 606, some customers.
Specifically in financial services and health care do from time to time require on premise deployments.
These deployments result in term license accounting treatment, where we are required to recognize a significant portion of the revenue upfront when the product is delivered for spreading the revenue over the contract term.
Worth, noting the impact of these deals resulted in a pull forward from Q2 to Q4 into Q1 of approximately one percentage point of revenue growth.
Compute revenue in Q1 was $78 million and grew 32% year over year and 35% in constant currency as Tom mentioned, we were very pleased with the initial performance of our Winnowed acquisition, which closed in late March contributed revenue of approximately three and a half million dollars in Q1.
<unk>.
Livery revenue was $444 million in Q1 and declined 6% year over year and 4% in constant currency.
As discussed last quarter several of our top customers are expected to renew in the first half of 2022.
Our first quarter revenue was impacted by the renewals of half of these customers. We expect the remaining customers to renew by July one.
So far the pricing for the renewals has been in line with our expectations.
Additionally, we started to notice the growth rate of traffic on our network moderate a bit in March specifically in gaming and OTT verticals. Some pandemic related restrictions were lifted in countries throughout the world.
Sales in our international markets represented 47% of total revenue in Q1 International revenue grew 11% year over year or 16% in constant currency.
The negative impact of foreign exchange on our Q1 results increased by approximately $2 million from our February earnings call as the U S. Dollar continued to strengthen significantly in March foreign exchange fluctuations had a negative impact on revenue of $4 million on a sequential basis and negative $18 million on it.
Year over year basis.
Finally revenue from our U S market was $481 million and grew 4% year over year.
Now moving onto costs.
Cash gross margin was 76% in line with our expectations GAAP gross margin, which includes both depreciation and stock based compensation was 63%.
non-GAAP cash operating expenses were $295 million.
Now moving on to profitability adjusted EBITDA was $391 million, our adjusted EBITA margin was 43% in line with our guidance non-GAAP operating income was $270 million and non-GAAP operating margin was 30%.
Capital expenditures in Q1, excluding equity compensation and capitalized interest expense were $116 million. This was slightly better than our guidance range as we continue to see greater efficiency on our network.
GAAP net income for the first quarter was $119 million or 73 cents of earnings per diluted share.
non-GAAP net income was $225 million or $1.39 of earnings per diluted share up 1% year over year and up 4% in constant currency.
non-GAAP or non-GAAP earnings per share was negatively impacted by approximately three cents in Q1 due to a higher than expected non-GAAP effective tax rate.
Taxes included in our non-GAAP earnings were $43 million based on a Q1 effective tax rate of approximately 16%.
This was approximately one five points higher than we had expected and due primarily to three reasons first a higher than expected mix of U S revenue with foreign exchange rate fluctuations a significant contributing factor along with the addition of the node revenue second.
An unfavorable change to foreign tax credits in Q1 based on the most recent treasury guidance and thought.
Third a refinement of our previous assumptions related to R&D tax law changes from the 2017 U S tax reform that became effective in Q1 2022.
Moving now to cash and our use of capital.
As of March our cash cash equivalents in marketable securities totaled approximately $1 $3 billion. During the first quarter, we spent approximately $103 million to repurchase shares buying back approximately 900000 shares.
Addition to share repurchases in March we spent approximately $900 million to complete our acquisition of them.
We ended Q1 with approximately $1 $7 billion remaining on our current repurchase authorization or.
Our intention is to continue to buy back shares to offset dilution from employee equity programs over time and to be opportunistic both M&A share repurchases.
Before I provide our Q2 and 2020 to guidance I want to highlight several factors.
First.
Our guidance now includes Lenovo, we expect window to contribute revenue of approximately $100 million and add approximately five to six cents to non-GAAP EPS in 2022.
This is unchanged from the assumptions, we shared on our last call.
Second.
The dollar has continued to strengthen meaningfully since we reported in mid February as a result, we currently expect a much greater foreign exchange headwind for the remainder of 2022.
At current spot rates, our guidance assumes that foreign exchange will have a negative $100 million impact on revenue on a year over year basis. This compares to our prior guidance of a negative $45 million impact to revenue.
This change in FX. Our prior guide will also negatively impact non-GAAP EPS by approximately 16 cents for the full year of 2022.
It's worth emphasizing that currency markets have been extremely unsettled.
And about as volatile as I have ever seen as a result, it is impossible to predict whether and how the impact could change going forward.
Third.
We now expect our non-GAAP effective tax rate for 2020 to be approximately 16%, which is approximately one five points higher than our prior assumption based on the items I mentioned before the.
The change in tax rate will also negatively impact our full year 2022, non-GAAP EPS by approximately <unk> 11 cents.
Fourth.
As Tom discussed regarding our business in Russia, and Ukraine is reasonable to assume that most of that revenue goes away.
Finally, as mentioned earlier, our traffic growth rate moderated a bit in March we've seen that trend continue in April .
Traffic continues to grow at a strong rate is at record levels. The growth rate is lower than we originally expected.
Therefore, we are taking a more conservative approach to forecasting our traffic and corresponding revenue for the remainder of the year.
That said, we do not believe this trend is a permanent consumer shift were due to us losing share.
The other is likely driven by some of the significant external factors, you're seeing in the marketplace and Geo politically said another way we.
We believe the traffic growth in online activity returned to more historical norms at some points.
So with all those factors in mind, turning to our Q2 guidance.
We're now projecting revenue in the range of $890 million to $905 million were up 4% to 6% as reported or 8% to 10% in constant currency over Q2 2021.
Foreign exchange fluctuations are expected to having negative $14 million impact on Q2 revenue compared to Q1 levels and a negative $30 million impact year over year.
These revenue levels, we expect cash gross margins of approximately 75%.
Q2, non-GAAP operating expenses are projected to be $282 million to $289 million, we anticipate Q2 EBITDA margins of approximately 43%.
We expect non-GAAP depreciation expense to be between $129 million to $130 million.
We expect non-GAAP operating margin to decline to approximately 29% for Q2 due largely to the change in FX and some lower integration costs.
Moving now to Capex.
We expect to spend approximately $150 million to $155 million, excluding equity compensation and capitalized interest in the second quarter. This represents approximately 17% of projected total revenue a significant portion of the increase in the spend this quarter is related to lenovo in anticipation of significant demand.
And with the overall revenue and spend configuration I just outlined we expect Q2 non-GAAP EPS in the range of $1 28 to $1 33.
This EPS guidance assumes taxes of $40 million to $41 million based on an estimated quarterly non-GAAP .
<unk> rate of approximately 16%. It also reflects a fully diluted share count of approximately 162 million shares.
Looking ahead to the full year, we now expect revenue of three six to $3 $67 billion, which was up 5% to 6% year over year as reported were up 7% to 9% in constant currency.
We expect security revenue to grow at least 20% or greater for the full year of 2022 in constant currency.
We now estimate non-GAAP operating margin to be approximately 29% based primarily on the impact of FX and some of the internet traffic dynamics I previously discussed.
We now estimate non-GAAP earnings per diluted share of $5.32 to $5.44.
This non-GAAP earnings guidance is based on a non-GAAP effective tax rate of approximately 16% and fully diluted share count of approximately 161 million shares.
Finally full year Capex is anticipated to be approximately 14% of rubbing. It is worth noting our capex assumption now includes Ono the node that.
We talked about on our last quarter, partially offset by lower network capex given the slower traffic growth rate that we now project and closing.
While the macroeconomic environment has become more challenging since our last earnings call in the U S. Dollar continues to be a major headwind for us.
We remain very optimistic about the opportunities in front of us, especially in security and compute.
Tom mentioned I look forward to seeing you at our analyst day in New York City on May 18th.
Tom and I would be happy to take your questions operator.
Thank you as a reminder, task a question you'll need to press star one on your telephone to withdraw your question press the pound key.
First question comes from Keith Weiss with Morgan Stanley . Your line is open.
Excellent. Thank you guys for a particular call and a lot of great kind of information in there for us to kind of better understand what's going on with with a lot of moving pieces in the environment.
Of course, I'm going to ask you about more on that in particular.
When do you see like the slowing network traffic in somebody's increasing pressures is there any kind of geographic specificity to it or is it more in Europe and the U S or is it more evenly spread number one and number two.
On the security side of equation is there any counter force if you will meaning.
It sounds like it's a pretty bad threat environment out there you guys have a great solution portfolio for those types of threats are you seeing any sort of increasing demand on that side of the equation that can offset some of those potential headwinds on the delivery and compute side of the equation. Thank you.
Yeah. This is Tom great great questions are the traffic I would say you know growth moderation seems to be pretty much global and you know that coincides with a pretty much global reduction in things like masked mandates and quarantines and so forth, except for China and we don't.
Do a domestic to domestic delivery in China, So we wouldn't be able to see that.
So theres no particular geographic dependence there and you're at a great point about counter balanced through security.
You know obviously were negatively impacted in terms of traffic and a few customers because of the war in Ukraine on the other hand attacks have gone way up.
The volume of attacks and that's an area, where we can really help our customers and so there you know they could have some counterbalance in terms of the security business and obviously as I mentioned customers are really worried about ransomware attacks and malware and we've got a great.
No solution for that with Garda Corp, you know and.
And as we talk about the macroeconomic challenges.
Challenges you know the fears of a recession.
You know the inflation customers probably increasingly.
Burned about saving cost going forward and that could provide some counterbalance as well you know with our law node solution. We're in a really good position to help our major enterprises decrease their cloud spend are we find that many of them have seen that span increased dramatically.
And you know now they can use the node for applications, especially you know enterprises that are already set up in a multi cloud environment.
Got their applications and containers or be honest and they can easily move those to the node and save money. So there could be some counterbalance here is as we go forward that that's a very good observation.
Got it and then if I could sneak one in for Ed on the Opex side of the equation you talked to us about how sort of capex is coming down a little bit versus kind of what we were talking about immediately after one node based off on lower network traffic are there any adjustments that you guys are making to your opex side of the equation. So the did the level of investment that you guys are gonna be may.
Throughout the year, given a more difficult environment or is it.
It's kind of.
Steady investment as she goes if you will.
We're not able to hear.
Ed.
So, yes, we're having a problem with the operator.
With that.
Maybe.
Okay could you ask the question again please.
Sure. Thanks.
And on the on the call Ed you talked about Capex.
Capex coming down a little bit.
Because of our sort of lower network traffic I was just wondering if you guys are making any adjustment to the opex for FY 'twenty two.
Given the more volatile macro any any limitation in your kind of your investments throughout the year or does the investment stay relatively stable.
Oh, that's a great question and yeah. Capex you know is much more efficient of course, we're investing heavily to grow the the node footprint.
In terms of Opex, you know, we're always working to be more efficient with our opex to deliver trap.
And we're seeing the benefits of that even now you know you look at the impact that FX. For example is is having on our operating margin and then you know having less traffic and yet still you know we were we were at 29% to 30 with op margin for this year and that now will be I think you know really closer to the low end of that range.
But it's because we've been able to be much more efficient on opex that we can hold it there and not be lower than that and of course. We are also it's important that we are going to continue to invest certainly in security and compute.
We don't want a what you know to be a very temporary solution with FX to induce us to do something that would hurt us long term with our growth in security and compute.
If you look at our business today, and I think it's pretty important to note that the majority of our revenue is now security and compute and that is growing.
Currently at over 25% as reported.
And so the last thing we want to do is somehow scale back investment there.
When it's just a fabulous you know a couple of businesses.
Just because you know their stuff going on with FX, and the macro and economic environment.
And that is trying to get back on but we can keep going and I'll I'll do my best at invitation in the meantime, yes. So Tom on back on can you guys hear me now all we can very good okay.
Okay, Great I'm, sorry about that I know what happened with technical difficulties there Keith but.
I'm not sure if Tom got to your question about some of the things we're doing on the cost okay. If there's anything else I'm happy to.
Taken additional questions Yeah, no problem did a great job you might have to worry about job security now.
[laughter].
Okay.
Thank you. Our next question comes from James Breen with William Blair. Your line is open.
Thanks.
Just a couple.
One when you look at the old guidance that you gave in the fourth quarter call relative to today, you know down kind of $5 million or $50 million, the low end and the high end.
Given some of the puts and takes you gave.
It seems like the Russia impact you know sort of a mid thirties million and then the incremental FX and sort of in the mid fifties sort of you know kind of offsets basically the upside from Lenovo and that equals that deal. So just I'm just trying to think about or quantify it. So is that sort of incremental kind of $15 million difference really what youre seeing from.
The lower traffic on the delivery side and can you just remind us.
Of the delivery revenue this quarter to 444, or however, you want to think about annually how much of that is more volume driven versus.
There's a subscription base.
Yeah, Hey, Jim It's Ed.
I think you've got the pieces right there in terms of the different components FX being about $55 million.
Russia, you could say, it's about a percent so call it about $30 million give or take.
But the rest of it is the delivery I think you know one of the things we tried to.
Clear and our.
Our prepared remarks was the compute business is going great. We don't have any.
Only owned the business for a little while so there's no change there in terms of our outlook.
Certainly could it really returns and then security is going great did better than we expected. This quarter. So it is limited to a delivery issue and it is I would say primarily almost all volume driven that we're seeing so what we did basically is just adjust the growth rate that we expected for.
For the remainder of the year and then obviously you know things can change over time, but based on what we've seen so far in the last couple of weeks of March and the beginning of April we just thought it was prudent to adjust that so youre thinking about it right in terms of the different pieces.
Great and then just maybe one for Tom just on the strategy.
Owned it now for a little over a month.
They were folks a lot into the small mid sized business space in terms of the compute and storage have you seen any traction with that product with some of your larger customers tend to get integrated.
Yeah, obviously very early days, but we're really excited about the potential for that traction I'll give you just one anecdote I was in Europe , a meeting customers last month and that was one of our major media workflow partners and our you know it was going to go to talk to them about one note because they have a big cloud spend and we feel that could be really.
Relevant for moving to Lenovo, they're very happy Akamai partners and customers and that was gonna tell them about the acquisition, but you know I get there we shake hands first thing. He says he is Wow great acquisition.
And he's the CEO of if it turns out he has passed as a developer knew about lenovo loves him and he's in the multi cloud and he said look you know what we did is we you know we already have our workflow apps in containers and so we thought about the heck, let's try it and so they moved them over to Lenovo and he said it worked great and he said we're going to save money.
<unk> and it's really easy to use and we didn't even know because it really is easy to use that we didn't know this was even taking place.
So I do think we're in excellent position to.
Not only increase their existing winnowed customer base, but you know provide the node capabilities to major enterprises and of course, lienau really appeals to developers and increasingly developers are making the decisions or heavily influence the decisions at that major enterprises as well as an example in this.
Case.
Great. Thanks, a lot.
Thank you. Our next question comes from Rishi.
Loria with RBC Your line is open.
Oh wonderful guys. Thanks for taking my questions and I appreciate all the details around the moving pieces.
First I wanted to start with maybe better understanding some of the macro factors I think look the FX, while understood, Russia as well, but the moderating traffic with reopening.
I thought at the beginning you you had you had mentioned kind of the inflation side as well as.
Fears of a.
Recession deed in western Europe or or or globally.
Can you talk a little bit more about how those macro factors are impacting your business is this resulting in longer sales cycles smaller initial deal land just more hesitation around new deals any color. There that you can give would be helpful. And then I have a follow up.
Yeah, I don't really see this is Ed I'll take that and Tom can add some color.
If I Miss something here so in terms of inflation.
The impact on our business today, we were not seeing a significant impact from inflation, whether that's with labor costs or with our cost of our network and that sort of thing we are seeing a little bit of higher energy prices in Europe , and that sort of thing, but our team does a pretty good job of trying to bake that into there.
They're they're deals when they when they signed colo deals and that sort of thing.
That could obviously change you know obviously the labor market is pretty tight and that sort of thing, but I think the biggest macro impact from our business in terms of our change in outlook is really around the change in behavior, where we're seeing you know mass mandates are lifted and people going out more shopping more in stores and that sort of stuff and the impact on the traffic growth rate is probably the biggest impact.
Obviously if.
We got a major recession that could potentially have a greater impact, but we're not seeing that certainly in the security business without saying customers pulling back we're not seeing deal sizes. The deal deals getting elongated or anything along those lines, it's really more of that impact on the traffic business.
Yeah and to Ed's point that it's not direct on US you know.
There is some concern among our media customers in terms of subscriptions and how their business is doing.
So we're just keeping an eye on that in terms of you know the end user's reacting and in cutting cost and consuming less.
Less online so I don't think that's a major factor yet, but it's something we're keeping an eye on.
Got it that's really helpful. Thanks.
And then just going back back to la node.
I guess number one if we if we do the math back of the envelope. It's about a $4 million contribution in Q1 is is that Directionally a correct number one and I think number two you know when when you made the acquisition you were talking about incremental investment opportunities to accelerate the growth rate can you maybe remind us about where you find those opportunities.
It is especially where there's low hanging fruit and what would be.
You know a an ideal growth rate for the Lenovo asset. Thanks.
Yes, I'll start off with the question first just a housekeeping item, we've got about three and a half a million of revenue.
You see in the quarter from Lenovo.
And then as far as the growth rate is concerned we know we'll get into a lot more details when we see you in New York in a couple of weeks, but obviously this is a very very fast growing business and Lenovo growth rate before we acquired them was at 15%. We think we can.
Accelerated pretty significantly as we introduce more features more locations more capabilities and when we start to tap into our enterprise customer base. So we think that growth rate can accelerate pretty significantly.
Yeah, just to add to that in terms of investment and opportunities. Obviously scale is something we're really good at and distribution, which were you know putting a lot of effort into.
And you know our customer banks, which lienau really haven't tapped into and you know being a smaller company.
A little harder for them to go after major enterprises in terms of the credibility and so forth, but that's really easy for us to do and you know just as I talked about with examples before you take leno's ease of use and you know our customer base and those customers that are multi cloud and <unk>.
Have their apps and containers they can they can move them over.
And you know I save money when they do it and bring it closer to their delivery and security, which is has been akamai and we're the market leaders at so I think there's a really great opportunity to jumpstart our significant growth among major enterprises for Lenovo.
Got it that's really helpful. Thank you so much guys.
Thank you. Our next question comes from Tim Horan with Oppenheimer. Your line is open.
Thank you Tom on that point with absent containers is.
Is it how have you seen many apps kind of port over to other clouds at this point and if they ever tying into other value added products and other software products with the cloud guys have does it make it harder to do or where can they still do it relatively easily.
Yeah. That's that's another great point, you know the hyperscale or have a lot of managed services and added functionality on their platform, which Linn now doesn't know if you're the kind of company that likes to do those things yourself.
Well, that's easy to do on Lenovo Ah if you're the kind of company that wants that done by your cloud provider well no doesn't do that today now over time, we will be adding more and more capabilities there.
So it really so today I wouldn't say that the.
Every customer would be in a position to move everything over at all or no that is certainly not the case, but I think there is a pretty significant.
<unk> segment, where it can be done and does make sense to do and over time, we want to grow the kinds of the number and the types of applications that will make sense to move on to the node and it is helpful. That you know certainly our customer base is already using us for market leading delivery.
The market, leading app acceleration of market, leading security so there's a lot of synergy there.
Combination of that synergy ease of use and cost savings, it's a pretty exciting combination.
And just on the traffic volumes could you give us a sense the last two years and Covid, where when we like 25% above trend, 50% above trend and you know.
Do you think it kind of reverses however, much it was above trend, but you don't not looking for exact numbers, but just some color yeah.
Yeah. It was way above certainly the first year and very strong the second year and I would say in comparison of small.
No decrease in growth rates still growing very strong.
But less than I think had been expected and we're seeing that the same for the internet as a whole.
You know now and we're also seeing our growth be stronger than the internet as a whole which is good that's what we want to keep seeing because it means we're taking more of the internet traffic when that happens. So I would say the step down we've seen so far is less than the step ups that we're seeing and I think that's because.
A lot of the increase use of the Internet for everything you know for video for gaming for Commerce, you know remote work I think a lot of that is here to stay but right now with all the the restrictions coming off except for China I think that's a big part of why we're seeing a little bit of a decrease.
<unk> in traffic growth rates right now.
<unk>.
<unk>.
Thank you. Our next question comes from James Fish with Piper Sandler Your line is open.
Hey, guys. Thanks for the questions wanted to first start on the delivery side, where frankly, we're not we're not surprised to see slowing traffic driven or tracking of what's going on in the space, but it seems like it was a little bit worse for you guys can you just help break down where the main weakness was between web delivery versus media delivery best quarters. It sounds like.
Media was a bit more of a surprise for you guys as a form of growth driver slowing and you guys had a bunch of renewals now while we didn't have the recovery in web despite travel and hospitality traffic coming back can you just help us kind of triangulate, where where we are between some of the underlying verticals.
Hey, Jim This is Ed I'll take that one.
So yes, the bigger impact was definitely on the on the media side. So you know I called out that we had renewals and when you have renewals big renewals concentrated in a short period of time and you have a slowdown in your traffic rate. It does accentuate the impact of revenue you know typically we see in a normal year you'd start to get back to flat line. After several quarters in that sort of thing. We just think it might take a.
A little bit longer based on the.
Type of drive traffic growth rates, we're seeing in terms of the hospitality and retail two things to think about there we are seeing a bit of a traffic increase specifically in travel a small vertical for us 4% give or take.
But remember both travel and the media is probably the commerce vertical tend to buy a zero overage. So it's a little bit profit doesn't have as much of an impact on revenue, but in terms of the biggest impact it's really on the media side in terms of the change in traffic and also in terms of a percentage of overall traffic media representatives.
A significant portion of greater than 90% of our total traffic.
Got it and sticking on the security side, how are you guys thinking about the current balance of term subscription versus SaaS for Gardy cord now that you've had it for about one and a half quarters.
How do you think that settles down given certain verticals like financial services work those term subscriptions and lastly, any sense to what other large deals for <unk> could be in the pipeline over the next six quarters that can swing I think it was 50 or 55 million expect for expectations for goudy quarters here.
Yes, good question.
Called out on the call that where there was about.
For customers that had term licenses and what I'll do going forward to the extent that there's anything material, we'll call. It out I'd say the majority of customers have the more traditional subscription based.
Our model, but there are customers, especially financial services go to like to have the management control or on premise and that's what really drives the the term license aspect of it and what requires us to take the revenue upfront.
But again I think the majority will be in that category now keep in mind with a term license you do have to renew that the subscription when the term goes up the typical perm is one to three years.
Tom mentioned that we did sign up a fairly large.
A three year term deal so there'll be some of that maintenance and whatnot that could spread out but you are required to pick up a fair chunk of that upfront.
But in general I would say that the majority would be a SaaS type deals and as far as the pipeline goes it's it's always hard to call when the deals can hit in any particular quarter.
I don't see anything significant here in Q2, I'm still expecting more of a normal quarter, but to the extent there's anything we'll certainly let you know.
Thanks, a lot.
Okay.
Thank you. Our next question comes from Amit sorry.
Sorry, Yamani with Evercore ISI your line is open.
Oh.
Thanks, Steve My question I guess I have two as well maybe just.
To ask a little bit more on the core delivery business the CDN business.
Do you think this business just sort of declined four 5% a year for the rest of counting 22 or do you think the Q1 reset.
Bottom and the decline rate should improve as you go through the year.
Yeah. So you know I think for the rest of the year, you'll see the business in decline because of the.
The renewals that we have we had half of them hit so far in the first quarter to the other half one in the second quarter. So you probably see a little bit of a step down in Q3, and then in Q4 tends to be your seasonally strong quarter.
But you do have a tough compare so I would expect it to be a negative for the rest of this year and obviously it'll fluctuate depending on the specific traffic levels, but Q4, we do typically see a strong season, both with commerce and media Commerce is less muted impact. These days with a lot of customers I think was about 65% or greater.
Zero overage contract. So Congress doesn't have as big of an impact, but the media, we've typically seen a pretty strong.
Traffic in Q4, we expect to see a pickup in traffic probably a little less so this year, that's what we'd modeled.
Oh got it and then.
Hopefully I have all these numbers correctly.
Mark please collect them, but you know as I think about the revisions to the calendar 'twenty two guide that you provided.
It looks like sales versus where the street was you know with all of them.
<unk> is coming down by about 100 million give or take.
253% of our initial expectations, but the EPS numbers I think that's coming down much more severe and it goes with the eight 9% below the prior expectations were.
Maybe just walk me through there's a much more outsized EPS adjustment to the full year number versus revenue.
Is that just the tax rate what are the moving pieces that are magnifying the correction on the bottom line on the EPS line, where some of the topline.
Yeah sure. So let me try to walk you through that recently, so first of all the tax impact of about 11.
And that obviously has no ones.
Outsize of anytime there's sort of a change in the revenue and then you've got the FX impact of about 16.
And then the Russia impact as you know call. It another nine ish give or take so you've got about 60% of it is related to some of those external factors in the remainder of it is related to just the revisions.
The revisions that we see in delivery.
Got it thank you.
Thank you. Our next question comes from Frank Louthan with Raymond James Your line is open.
Alright, great great. Thank you. So so on the the traffic thing just to be clear. This is an end user slowing down with the pie is shrinking. It's just more of the pie is growing more slowly and or is it some of this traffic going elsewhere and if that's the case, where you're losing share to.
No you're right. It's the it's just the pie is not growing as fast the pie is not shrinking. The pie is just not growing as fast and we believe based on talking to our customers and our carrier partners and what we see that our share of the pie is stable or growing and that we are not on.
Balance losing share of the pie.
Okay, great. Thank you and then what sales investments do you need to make for the through for the rest of the year to sell more of it through sell through with Lenovo and sell more Garda courts et cetera, where are you on that.
Yeah. So the nice thing with the Lenovo acquisition is we're not required to make any additional investments in sales per se. We're gonna be obviously, bringing this to our channel partners and our sales reps can sell it as a matter of fact, a lot of our customers. If you look at their CDN spend to cloud spend it's orders of magnitude larger on the cloud side. So we're talking.
And the same people that are spending money there.
<unk> will.
It will be trained up and ready to go for being able to sell a note on the security side, you do tend to hire more specialists and if I look at sort of where P. J is investing in sales we are investing a lot in Garda core not only just with sales reps, but also with technical specialists to help the sales team and professional services folks as well so you're seeing the investment more leaning.
And towards the sales side, and you're getting a lot of leverage from a from Illinois standpoint.
Alright, great. Thank you.
Thank you we have a question from Rudy Kessinger with D. A Davidson your line is open.
Great guys. Thanks for taking my questions on the OTT media, just how are your OTT customers attributing that slower traffic growth maybe between end users.
Eliminating or reducing the number of OTT services they subscribe to.
A shortage of new content or just people getting out more with COVID-19 mandates are lifted.
Well you know as best we're hearing of sort of the first and third there's fewer subscriptions in some cases, some cases subscriptions reversing.
Some cases when the subscriptions are okay, there's traffic growth, but slower traffic growth and they had anticipated.
And that they had seen before and so I think you know part of that.
Is that people are just out more right now also on the Commerce side, you know when there's been public reports about this that the more you know brick and mortar sales than there have been in a little bit less on the online side, which you know is.
It's understandable I think.
You know given that people are apparently out and about more with less restrictions.
You know so I think there's sort of a variety of factors and it's early days here and probably we'll learn a lot more over the next couple of months.
Got it and then just on delivery you know you said the pricing in those large con large customers that renewed this quarter was about as expected.
But just as you look more broadly in delivery how is pricing pressure ferring.
Aaron versus years past I guess, just as that piece it together.
You know understanding traffic growth growing more slowly, but still growing in your guys' position that you're still gaining a share of that growing pie.
But delivery you know revenue being down several points.
Just how is pricing pressure bearing in the broader market.
Yeah. Good question, So I would say a couple of things to respond to that so you know that.
Renewables like I said are coming in largely as expected. The big change is the rate of growth. So that also impacts your conversations going forward. So we've talked for years about how the pricing in the market is fairly efficient in terms of especially with the high volume media.
<unk> environment.
And it's really driven by volume so to the extent that the customers have less volume.
Discounts rates will start to come down going forward. So I would expect to see over time, if customers aren't growing at the same type of rate, they're not going to get the same kind of discount so.
We may see that take hold over the next several quarters as we go through you know more more renewals and that sort of thing.
Got it that's helpful. Thanks, guys.
Okay.
Thank you we have a question from Fatima <unk> with Citi. Your line is open.
Hey, good afternoon, and thank you for squeezing me in and.
Just a really quick one for you and the security business I think that.
You spent a lot of times are flushing out the guard of core performance in the quarter, which was pretty substantial I think he also a tip your hat on the recovery or Reacceleration on the application security side of the security portfolio, but I'm curious if you have any comments or observations around what the network.
Security outside of defense within.
The segment is doing just any color there with respect to your sort of competitive dynamics. It sounds dynamics that would be really helpful. Thank you.
Yeah. This is Tom on the network side that would be Prolexic, which was our Ddos mitigation service are doing very well.
You know and we've seen a lot of attacks over the last year, especially around ran some or extortion ddos attacks and we've been in a great position to you know I had a lot of customers major enterprises that you know we're gonna be potential victims of those attacks also we have a DNS capabilities, which are widely used.
As part of the network security product lines, and I would say are doing doing very well.
The one other thing I would add Tom just that Oh, sorry, if I look at the product portfolio Bot manager continues to do extremely well and growing at a very very healthy clip and we introduced our account protector this quarter and saw very very high uptake with that and early returns on that look great. Obviously, it's a newer.
Products It will take time for that to become a material contributor to revenue but.
So far the early returns on that had been very good.
Yeah, and those were all part of our App and API Protection group, which is where we're seeing the reacceleration Ed talked about.
Got it and just a quick one for you in terms of the housekeeping around free cash flow. So appreciate some of the puts and takes on the margin side of things, mostly stable, but curious about how we should think about.
How about free cash flow kind of given the near term step up in Capex, which is expected to moderate based on your guidance over the course of the year, but anything you can help us from the free cash flow margin side, given the FX movements as well and that's it for sure.
Yeah sure. So the on the free cash flow side, you'll notice that Q1 tends to be a little bit lighter on the on the free cash flow side and a lot of it has to do with when the timing of when bonuses get paid and you can look if you look at kind of year over year, it's sort of in line Q1 to Q1, it will expand as we go out throughout the year, but I think one big key takeaway.
If we go to the Capex section, which obviously impacts free cash flow quite a bit.
We had originally talked about the sort of color akamai, excluding lenovo being 13% to 14%.
From a capex perspective, another node would add about two points one of the things that we're able to do is take advantage of.
The slowdown in the growth rate of traffic to be able to pull in some of the capex associated with Lenovo and build out a little bit faster, but in addition to that we've taken down our total capex. So I gave guidance for about 14% of total revenue for the year, which is about 2% better than what we had expected so think of it as sort of folding in.
The other one node capex under the original umbrella so that'll obviously help help our free cash flow.
Yeah.
Okay.
Thank you.
Thank you. Our next question comes from Michael Elias with Cowen and company. Your line is open.
Great. Thanks for taking the questions two if I may so you're you're expecting to hold an analyst day later this month.
Any color on what we should expect to hear on.
As part of that should we expect similar long term guidance to what you gave at your last analyst day, just including the.
New compute segment. That's my first question and the second question is you highlighted at the beginning of the call. The inflation and you said that you arent you aren't seeing the impacts of that I'm. Just wondering as you think of the business and to the extent that did become a bigger issue what are the levers that you could poll visa.
Vis vis pricing in order to combat inflation to the extent that it manifests itself. Thank you yeah.
Yeah on the first question I think analyst day structurally a look a lot like it did last year. So we will look it up you know long term you know.
The CAGR is what we're trying to achieve we will talk a lot about the compute business and our overall strategy. So high level similar to what you saw last year in terms of the structure, obviously with a lot of cool new things to talk about with our new products the acquisitions Garda core.
The node in the compute product line, where we're pretty excited about.
Yeah on the inflation front a.
Couple of things there, obviously, you could I guess you could argue that inflation as you know.
Causing rates to go higher which is impacting the U S. Dollar so theres the FX impact of that you know so that's one thing to keep in mind I guess, but.
One of the advantages of sort of a hybrid work environment as it enables you to look at.
Acquiring talent from all over the place instead of just on the coach you can look in the middle of the country and look at other lower cost areas. So that that's one tool in our tool kit the team's done a great job on the network side with our supply chain in terms of.
You know our negotiating leverage power a lot of our traffic on our network today is free in terms of bandwidth.
So we're somewhat insulated from that obviously, we'll keep a close eye on.
The labor markets, but as Tom mentioned, you know there could be some some impact to some of our customers and the decisions that they make in terms of their spending are there going to be spending on subscriptions for video or buying the next title for gaming or the gaming console and that sort of thing so that could have an impact on on traffic. So what we're doing there is obviously pulling back a little bit on our capex for the corn.
Network are actually able to redeploy some of those resources that we have that know how to build out and scale. The network and just go faster in the node which is great.
So we're sort of taking advantage of some of the opportunities that this gives us in trying to insulate ourselves from.
Any significant impact that inflation may have on the business.
Yeah, that's one of the really nice things about our business now is we really are diversified.
The majority of our revenue is now security and compute not delivery, which is a you know a pretty big milestone for a company that not too long ago was known as a C D N or a delivery company and so when you do have these external factors that can hurt you know one side of the business they might help other sides of the <unk>.
Is this you know for example security.
Being tied to you know the war in Ukraine, or inflation, driving a need to cut cost and now we have a really good answer for our customers with Lenovo.
So it puts our business in a much stronger position and we're much more diversified than we've ever been.
Great. Thank you.
Yeah.
Thank you and we have a question from Jeff Van <unk> with Craig Hallum. Your line is open.
Great. Thanks, just a couple of cleanups for me and I'm on the on guard a corner in terms of the the the term licenses were there any terms in Q4.
Yes.
Nothing material that may have been about $1 million or so, but nothing really material there.
Okay.
And then as it relates to lienau like how should we think about sales cycles. There as you know obviously going to try to blow up the sales effort and take that into the enterprise base. Just how do we think about two things there one the sales cycles and then to to date for Lenovo what was a large customer I mean, if you take a look at kind of there.
Maybe their top 10 customers what would it take for somebody to correct that that large customer criteria sort of into the into the top 10. Obviously, thank you to you know being able to measure your success in bringing that product to your enterprise space.
Yeah. Good question. So the sales cycles will vary as Tom mentioned, there are certain workloads that are built in a container it's easier to move so those can move relatively quickly.
<unk> started our training rolled out our compensation plans for our sales team is starting to build a funnel we're having good conversations with customers. We're starting to build out additional functionality put out a press release about a man's database capabilities. The other day, we're building out more locations, you'll hear a lot more from Adam when we get to the analyst day about specifically, what we're doing and where we're heading.
I would say you start you know in terms of how I'm looking at success, which we should start to see some of that materialize towards the back half of the year and really looking at what is our exit run rate going into next year and then what is that funnel look like but we should start to see a lot of this materialize towards the back half of the year, it's probably a normal sales cycle you get some early wins you got <unk>.
Helpers from customers that could start.
Playing around adding new applications and that sort of stuff, but I think in terms of the more meaningful impactful.
Deal sizes, though should happen towards the back half of the year and into next year.
Okay. That's helpful last one for me I think on the on the traffic side, you mentioned OTT as well as gaming and in particular.
In general be most visible in the most recent quarter I mean anything notable difference in the trends of those two traffic types or is it just generally behavior you would expect from people getting outside and unlocking any any differences there.
Yeah. Good question, I'd say sort of the latter what you just said there that it is probably more about people getting out that as you can see that more on the.
The video side in terms of less hours streamed if you know.
If you were watching 10 hours a day, you may be doing eight or six or whatever.
Gaming is more of a seasonal issue I'd say, we saw more of an impact on gaming not as many of the leases.
That had probably a bit weaker than we would have expected I think in terms of the trends it depends on what the.
The cycle looks like going into the back half of the year in terms of major gaming releases, but you know the video side I think there's a lot more behavioral.
Yeah, Okay, alright, thank you.
Operator, we probably have time for one more question.
Thank you. Our last question comes from will power with Baird. Your line is open.
Okay, great. Thanks for sneaking me in.
Maybe Tom I'd.
I'd love to get a little more color on the strength of then compute anything else you can provide with respect to key drivers in the quarter would be great.
Yeah, you know we've been working on the edge computing doing edge computing services for close to 20 years.
We have the edge edge worker solution that has function as a service and you know thousands of pops around the world educate me and you know a database capability.
And.
More and more applications, having our customers, having an interest in having them work at the edge to get tremendous scalability instant scalability you can.
Spin up your edge worker App, a few milliseconds and be really close to the end user and I think we you know get more you.
Business there as you go forward more and more of our customers are using it as you know they moved to the an API model and as you get five G and as you get I O T and do you have more demand for lower latency and scalability at the edge and of course, Lenovo just really exciting because now you're getting.
Our core cloud compute capability. So you can just take you know your container your app in the container and move it over to Akamai and have the whole thing and as you know from the core of the cloud to the edge you could build your app on Akamai you can run it on Akamai you can deliver it on Akamai you can do the commute compute you need at the real ACH.
Of places and of course, we'll wrap it all in security for you.
So I think you know compute is strong on its own from what we had now you get more strength with Lenovo and then you wrap it altogether in the Akamai platform, which is really unique in terms of having 4000 Pops Ah.
There is nothing like it in terms of having a true edge network. The scalability you get.
And the performance you get from that.
Okay, great. Thanks, and then maybe just a quick question on <unk>.
That's around potential M&A from here given valuation compressions in the market how does that change the landscape for you. How do you look at things and maybe appetite here, particularly coming off the heels of the well no deal.
Yeah, we're continuing to look at possible acquisitions, obviously, we've done two large ones in a short period of time I don't expect that to be the norm you know.
We're generating a lot of cash and we're going to use that to reinvest in the business, particularly in security and compute.
So it's not impossible over time, you'll see other acquisitions like that and probably you know several smaller acquisitions like we've always done tech tuck ins adjacent products.
So I think what you've seen is what you'll get but not you know two big ones you know right away that that's not the norm, but we saw real chance to have a game changer and enterprise security with Garda core you know really the.
The right product to stop ransomware, and a game changer in lienau, leading alternative cloud that gives us really completes the akamai picture I would say in terms of powering and protecting life online being able to build run deliver accelerated secure your app all in one platform.
It's really exciting for us.
Great. Thank you.
Thank you well. Thank you everyone for joining US Tonight I know, we ran a little long. So we appreciate your patience and in closing we'll be presenting at several investor conferences and roadshows throughout the rest of the second quarter, including our analyst day in New York City on May 18 details of all of these events can be found in the Investor Relations section at Akamai Dot com.
Thanks for joining us and all of US here at Akamai wish you and yours continued good health and have a great evening.
This concludes today's conference call. Thank you for participating you may now disconnect.
[music].
Yeah.
[music].
Okay.