AKAMAI TECHNOLOGIES INC

Akamai Technologies, Inc. develops and provides solutions for global enterprises to build, secure and accelerate their applications and digital experiences. As of December 31, 2025, its massively distributed global infrastructure was comprised of core and distributed compute sites, more than 4,300 edge points-of-presence in over 130 countries and approximately 700 cities, and its underlying global network integrated with roughly 1,200 network partners. The company operates in the intensely competitive and rapidly changing markets for internet content delivery and hosting services, security and cloud computing solutions, competing with companies ranging from start-ups to large technology or telecommunications companies, including the large so-called 'hyper-scaler' cloud computing providers.

Akamai competes primarily on the basis of performance and reliability, massive distribution and availability of its network, return on investment for customers, reduced infrastructure complexity, the ability of its products to function in hybrid cloud environments, the placement and availability of its compute infrastructure, sophistication and functionality of its offerings, long-term product roadmaps, scalability, security, ease of implementation, first-party global services and support, customer support, and price. The company believes it competes favorably through its global scale, reliability and expertise, which it views as unique. No customer accounted for 10% or more of total revenue for any of the years ended December 31, 2025, 2024 and 2023.

Akamai primarily derives revenue from the sale of services to customers pursuant to contracts having terms of one year or longer, which allows for a consistent and predictable base level of revenue. Services included in its contracts consist of security solutions, the delivery of content, applications and software over the internet, cloud computing solutions and professional services. Revenue is recognized upon transfer of control of promised services in an amount that reflects the consideration the company expects to receive in exchange for those services, with most security, delivery and cloud computing services representing stand-ready obligations satisfied over time, generally ratably over the term of the arrangement.

Akamai's security solutions, threat intelligence and global operations team work to provide defense in depth to safeguard enterprise data and applications across hybrid cloud environments, operating two security platforms — Application Protection and Zero Trust Network Security. The portfolio encompasses mature, market-leading security products including web application firewall, bot management, distributed denial-of-service protection and domain name system security, complemented by fast-growing solutions in API security and network segmentation. In 2025, Akamai launched Firewall for AI, a new solution designed to provide protection for AI applications against unauthorized queries, adversarial inputs and large-scale data-scraping attempts. The Akamai Guardicore Platform simplifies enterprise security with broad visibility and granular controls through one console, enabling Zero Trust through a fully integrated combination of microsegmentation, Zero Trust Network Access, multi-factor authentication, DNS firewall and threat hunting. Security revenue was $2,243,404 thousand ¹ for the year ended December 31, 2025, compared to $2,042,661 thousand ² in 2024 and $1,765,267 thousand ³ in 2023.

Akamai's cloud computing services provide a continuum of services for developers to build and deliver distributed, low-latency applications, comprised of Cloud Infrastructure Services as well as other cloud applications. Cloud Infrastructure Services, which represent the majority of Akamai's strategic investment and differentiation, consist of compute, storage, cloud-native and networking solutions, along with the Akamai EdgeWorkers serverless products and partner solutions running on its cloud platform. In 2025, Akamai launched Akamai Inference Cloud, a platform that expands AI inference from core data centers to the edge of the internet, and introduced new NVIDIA graphics processing units. In November 2025, Akamai acquired serverless WebAssembly company Fermyon Technologies, Inc. Cloud computing revenue was $708,050 thousand ⁴ for the year ended December 31, 2025, compared to $630,376 thousand ⁵ in 2024 and $504,219 thousand ⁶ in 2023. Delivery solutions consist primarily of web and mobile performance focused solutions and media delivery solutions, with revenue of $1,256,721 thousand ⁷ for 2025, compared to $1,318,131 thousand ⁸ in 2024 and $1,542,434 thousand ⁹ in 2023.

In 2025, Akamai continued to expand its compute platform to include additional data centers and introduced new NVIDIA GPUs. In November 2025, Akamai acquired Fermyon Technologies, Inc. for $56.6 million ¹⁰ in cash. In June 2024, Akamai acquired Noname Security Ltd. for $451.5 million ¹¹ in cash. In December 2024, Akamai acquired certain customer contracts from Edgio, Inc. for $158,341 thousand ¹² as part of a bankruptcy process. In May 2025, the company issued $1,725.0 million ¹³ in principal amount of convertible senior notes due 2033 and repaid $1,150.0 million ¹⁴ in convertible senior notes that matured. During the year ended December 31, 2025, the company repurchased 10.0 million ¹⁵ shares of its common stock for an aggregate purchase price of $800.0 million ¹⁶. In the fourth quarter of 2025, management committed to an action to restructure certain parts of the company, resulting in a restructuring charge of $58,051 thousand ¹⁷ for the year.

Total revenue for the year ended December 31, 2025 was $4,208,175 thousand ¹⁸, compared to $3,991,168 thousand ¹⁹ in 2024 and $3,811,920 thousand ²⁰ in 2023, representing a 5% ²¹ increase in 2025 and a 5% ²² increase in 2024. Net income was $452,031 thousand ²³ for 2025, compared to $504,918 thousand ²⁴ in 2024 and $547,629 thousand ²⁵ in 2023. Diluted earnings per share was $3.07 ²⁶ in 2025, compared to $3.27 ²⁷ in 2024 and $3.52 ²⁸ in 2023. Income from operations was $566,944 thousand ²⁹ in 2025, compared to $533,411 thousand ³⁰ in 2024 and $637,338 thousand ³¹ in 2023. Net cash provided by operating activities was $1,518,765 thousand ³² in 2025, compared to $1,519,171 thousand ³³ in 2024 and $1,348,439 thousand ³⁴ in 2023.

Akamai's growth strategy is centered on its security, cloud computing, and AI infrastructure services. The company plans to continue to invest in its faster growing security and cloud computing solutions, with a focus on higher growth security products and Cloud Infrastructure Services to further advance its product portfolios and sales capabilities. In 2025, Akamai launched Akamai Inference Cloud, a platform designed to provide low-latency, real-time edge AI processing on a global scale, and introduced new NVIDIA GPUs well-suited for video transcoding, live video streaming, virtual reality and augmented reality content, gaming and graphics rendering, training and inference with neural networks, data analysis and scientific computing and high-performance computing applications. The company also launched Firewall for AI, a new solution designed to provide protection for AI applications against unauthorized queries, adversarial inputs and large-scale data-scraping attempts. By acquiring Fermyon in November 2025, Akamai plans to deepen the integration between the edge functions platform and its performance and security products, aiming to make it even faster and easier for developers to build, deploy and secure applications at the edge.

Akamai's cloud computing growth vector is driven by its compute platform, which the company continues to expand to include additional data centers to provide access to powerful dedicated compute, storage and networking services in major metros that lack cloud computing options and availability. The company expects traffic growth trends to continue in 2026, with incremental traffic from contracts acquired as part of recent asset acquisitions. The company also expects revenue from its international operations to continue to grow, particularly from new customer acquisition and cross-selling of incremental solutions. The company's security solutions currently generate the largest portion of its revenue, and its ability to generate security revenue depends on its ability to increase industry recognition as a provider of security solutions, navigate a highly competitive market, and develop or acquire new solutions in a rapidly-changing environment.

During 2026, Akamai expects its cost of revenue to increase as compared to 2025, particularly co-location costs, bandwidth fees, depreciation of network equipment and amortization of internal-use software, as the company continues to invest in its compute platform. The company is experiencing price increases for co-location, server and memory costs due to market dynamics driven by hyperscalers, which will increase co-location costs and depreciation of network equipment. Network build-out and supporting services are expected to increase due to partner programs to support the growth of cloud computing solutions. The company expects research and development costs to increase in 2026, in particular payroll and related costs, including stock-based compensation, in support of its faster growing security and cloud computing solutions, and also expects stock-based compensation to increase as a result of a new stock-based retirement program effective in 2026. Sales and marketing expenses are expected to increase in 2026, primarily due to reinvestment in headcount as part of the go-to-market strategy to drive acquisition of new customers for faster growing security and cloud computing solutions. General and administrative expenses are expected to increase in 2026 to support the operations of the business, with stock-based compensation expected to increase as a result of a new stock-based retirement program effective in 2026.

Akamai expects to continue to invest in its network, particularly as part of building out its compute infrastructure, which increased capital expenditures and resulting depreciation expense. The company plans to continue investing in its faster growing Cloud Infrastructure Services, including support for a new enterprise cloud computing customer and its new Akamai Inference Cloud. With the build out of its compute platform, the company is experiencing a significant increase in server and memory costs due to market dynamics driven by hyperscalers, which will increase future capital expenditures and resulting depreciation expense. The company expects to continue to carefully manage costs in an effort to manage its operating margins.

During the year ended December 31, 2025, Akamai capitalized $114.8 million ³⁵ of stock-based compensation related to internal-use software development costs. The company capitalized $286,816 thousand ³⁶ in salaries and related costs for research and development in 2025. Purchases of property and equipment were $507,786 thousand ³⁷ in 2025, and capitalization of internal-use software development costs was $311,714 thousand ³⁸. As of December 31, 2025, the company had $1.2 billion ³⁹ available for future purchases of shares under its current share repurchase program, which is effective through June 2027. The company does not expect to pay any cash dividends in the foreseeable future.

Akamai faces structural headwinds including pricing pressure due to competition in its delivery solutions, which have experienced revenue declines in recent years, and ongoing competition and pricing pressure that has and may continue to impact revenue of certain security solutions, including during contract renewals. Global macroeconomic and geopolitical conditions continue to impact customers and the company's business and revenue growth rates, with fluctuating inflation, regulatory policies, decreased consumer confidence, pressure on prices during contract renewals, uncertain energy supplies, heightened geopolitical tensions and conflict, potential for supply chain disruptions, changes in legislation and regulations including tariffs, fluctuations in foreign exchange rates and elevated interest rates. The company also faces the risk that large customers may shift to do-it-yourself internal solutions for content and application delivery or security protection, which has negatively impacted revenue in the past and may continue to do so.

Akamai faces execution risks related to its ability to successfully continue building its compute platform, developing AI capabilities, and attracting a customer base that has traditionally partnered with more established companies in the cloud computing industry. The company's ability to generate revenue in its cloud computing solutions depends on developing effective, price competitive and attractive solutions and increasing prices without reducing customer adoption, usage or retention. The company also faces risks related to its ability to source adequate transmission capacity, co-location facilities and equipment needed to operate its network, as well as disruptions in its supply chain that could prevent it from purchasing needed equipment at attractive prices or at all, including continued volatility in certain server component costs as a result of recently imposed tariffs.

Akamai faces significant risks from slowing, flat or limited revenue growth, which has in the past and may continue to negatively impact profitability and stock price, particularly as revenue from delivery solutions has experienced declines due to pricing pressure and competition, and as security and cloud computing solutions face intense competition. The company's business is materially exposed to global macroeconomic and geopolitical conditions, including inflation, foreign exchange rates, tariffs, and geopolitical destabilization, which have impacted and could continue to impact customer spending, traffic on its network, and operating costs. Cybersecurity breaches and attacks on the company, its contractors, or third-party vendors pose a material risk, as the company regularly faces attempts to gain unauthorized access to its platforms and systems, and such threats are prevalent, continue to rise, and may be enhanced or facilitated by AI. The company's ability to compete effectively and adapt to changing market conditions is critical, as it competes with companies having substantially greater financial, technical and marketing resources, particularly in AI and cloud computing where a small number of very large competitors have established themselves as incumbents. Failure to develop or acquire new solutions that are attractive to customers, including in the rapidly evolving areas of AI and cloud computing, could materially adversely affect the company's business, results of operations, financial condition and cash flows.

Management's message emphasizes the company's strategy to help continue to power and protect business online by offering security, compute, delivery and AI infrastructure services with industry-leading reliability, scale and expertise. Key themes include the commitment to helping customers seize on the power and potential of AI, with cloud computing infrastructure for building low-latency AI-powered applications, cybersecurity solutions powered by adaptive AI and automation, and throughput on the global intelligent network to enable large volumes of data required to power AI-powered applications. Management has introduced changes to the sales organization and sales compensation structure to optimize sales performance and better align sales incentives to the fastest growing areas of the business. The company's strategic priorities for the period ahead include continuing to invest in higher growth security products and Cloud Infrastructure Services, carefully managing costs to manage operating margins, and executing on its go-to-market transformation initiative.