WEBVTT - Akamai CEO Talks 2024 Forecast

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<v Speaker 1>Ak am I currently falling. Now. This is after forecasts

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<v Speaker 1>for revenue and unjusted earnings per Cheer came in well

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<v Speaker 1>less than the market it wanted to see it here

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<v Speaker 1>to walk us through some of the numbers and the

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<v Speaker 1>content distribution part in particular, that seems to be the weakness.

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<v Speaker 1>As a CEO, Tom Layton, and security revenue was good,

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<v Speaker 1>up twenty one percent, Compute revenue good up twenty five percent.

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<v Speaker 1>But it's a delivery revenue that isn't under pressure. Is

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<v Speaker 1>that what's really hitting the revenue forecasts?

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<v Speaker 2>Yes, exactly right. You know, Internet traffic always increases, but

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<v Speaker 2>it's not in a straight line, and we have the

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<v Speaker 2>world's largest content delivery network and so when there are dips,

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<v Speaker 2>we feel it. The good news is that we really

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<v Speaker 2>diversified our business beyond delivery to the point where now

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<v Speaker 2>two thirds of our revenue is security and compute, and

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<v Speaker 2>as you noted, both of those businesses are very strong,

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<v Speaker 2>great growth and great potential. And I think over time,

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<v Speaker 2>as we have more and more of our rebels from

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<v Speaker 2>security and compute, you know the dips you get from

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<v Speaker 2>time to time and Internet traffic we won't see as

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<v Speaker 2>noticeably on our overall performance.

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<v Speaker 1>Interesting diversification key what's took me my interest was a

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<v Speaker 1>large social media customer optimizing its costs. As what was

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<v Speaker 1>put forward as to why you've downgraded some of the outlooks.

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<v Speaker 1>Who is the social media player? Are we seeing that

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<v Speaker 1>more broadly.

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<v Speaker 2>Or is it just one Well, we do have a

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<v Speaker 2>very large social media company and they are cutting back

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<v Speaker 2>as best they can on costs, you know, facing some

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<v Speaker 2>geopolitical pressures, I would say more broadly. You know, we've

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<v Speaker 2>seen sort of a week past couple of months in

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<v Speaker 2>the gaming vertical and in video, and there's been a

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<v Speaker 2>lot of reports out there talking about you know, subscriber numbers,

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<v Speaker 2>you know, and traffic as a whole. And so we

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<v Speaker 2>feel that because you know, we carried most of all

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<v Speaker 2>the video out there and a very big for the

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<v Speaker 2>gaming companies, and so that creates a little bit of

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<v Speaker 2>a dip in our outlook for the year. That said,

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<v Speaker 2>we raised our outlook on security and compute, both of

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<v Speaker 2>those business is very strong.

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<v Speaker 1>Tom, You're the perfect person to therefore ask, because I'm

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<v Speaker 1>reading between the lines here, a geopolitically affected social media

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<v Speaker 1>company has got to be TikTok, and I know that

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<v Speaker 1>you have expertise when it comes to security, and we're

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<v Speaker 1>broadly an exposure at the moment that we're seeing of

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<v Speaker 1>US companies to China. How much you seeing geo politics

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<v Speaker 1>weighing on your business and the business of your clients.

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<v Speaker 2>Well, there is some concern there, and you know we

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<v Speaker 2>made a disclosure that in particular, if the law does

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<v Speaker 2>take effect banning TikTok, that could impact about a percent

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<v Speaker 2>and a half of our revenue next year. You know,

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<v Speaker 2>it shouldn't have a direct impact this year, and it

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<v Speaker 2>remains to be seen if the law will go into effect.

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<v Speaker 1>Are you trying to diversify out of exposure to China

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<v Speaker 1>more more time?

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<v Speaker 2>Well, we want to diversify our company as a whole.

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<v Speaker 2>Today we have seven customers at one percent of revenue,

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<v Speaker 2>and you know the goal is to have a broader

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<v Speaker 2>and broader base, and I think we've done a really

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<v Speaker 2>good job of that, both within the customer base and

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<v Speaker 2>also across product lines and geographies, so that you know,

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<v Speaker 2>you won't see much of an impact. You know, as

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<v Speaker 2>we go forward, when you know particular things happen on

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<v Speaker 2>the political stage, or you get a dip in traffic.

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<v Speaker 1>And I mean with the wealth of patterns that you

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<v Speaker 1>have and the focus on security. Where are we in

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<v Speaker 1>the cybersecurity landscape? How much are you seeing in particularly

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<v Speaker 1>the age of artificial intelligence, it becomes harder and harder

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<v Speaker 1>to ensure that we are protected in some way from

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<v Speaker 1>our data.

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<v Speaker 2>Yeah, things are in a very challenged state with cybersecurity,

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<v Speaker 2>particularly with the advances in gen ai, which as of

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<v Speaker 2>now are very helpful to the attacker. It's much easier

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<v Speaker 2>for them to generate very malicious male where we're seeing

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<v Speaker 2>a lot more breaches and I think the key now

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<v Speaker 2>really is to develop the internal layer of defense for

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<v Speaker 2>an enterprise because probably you're going to get breached, and

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<v Speaker 2>the key is to identify it quickly and to proactively

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<v Speaker 2>block it spread. And there we have the market leading

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<v Speaker 2>solution with guardacor to stop the spread of ransomware and

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<v Speaker 2>data exfiltration malware. And that's a very rapidly growing segment

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<v Speaker 1>For US and a key acquisition made Tom Lighton, thank

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<v Speaker 1>you so much spending time with us, Yakama and CEO