Akamai Technologies, Inc. Q3 FY2025 earnings call

• Akamai had a strong third quarter with revenue, margin, and earnings per share above expectations. Revenue grew 5% Y/Y reported and 4% constant currency. Non-GAAP operating margin 31%, non-GAAP EPS $1.86, up 17% Y/Y.
• CIS had accelerating momentum, with top 3 US cloud providers using CIS and an expanded multiyear renewal. Q3 CIS revenue $81M, up 39% Y/Y.
• Launched Akamai Inference Cloud leveraging NVIDIA's Blackwell AI infrastructure, with 17 global locations and initial customers like Monks and Harmonic.
• Security growth driven by segmentation and API security solutions, with wins in various industries. Recognized as Customers' Choice in Gartner reports.

Revenue for Akamai Technologies in the third quarter of 2025 was $1.055 billion, up 5% year-over-year as reported and 4% in constant currency. Non-GAAP operating margins improved to 31%, and non-GAAP earnings per share was $1.86, up 17% year-over-year. Cloud Infrastructure Services (CIS) revenue was $81 million, up 39% year-over-year as reported and in constant currency, accelerating from Q2's 30% growth. Security revenue was $568 million, up 10% year-over-year as reported and 9% in constant currency, with high-growth security products (API security, Zero Trust) up 35% year-over-year reported and 34% in constant currency. Delivery revenue was $306 million, down 4% year-over-year as reported and in constant currency. International revenue was $525 million, up 9% year-over-year or 8% in constant currency, representing 50% of total revenue.

• Q4 revenue guidance: $1.065 billion to $1.085 billion, up 4%-6% reported and 3%-5% constant currency over Q4 2024.
• Full-year 2025 revenue growth 4%-5% constant currency. Q4 non-GAAP EPS $1.65-$1.85. Full-year non-GAAP operating margin ~29%-30%, EPS $6.93-$7.13.
• CIS ARR expected to grow 40%-45% constant currency Y/E. API security product line run rate to ~$100M by end of 2025.

• Macroeconomic trends, acquisition integration, geopolitical developments, and other risks in SEC filings.
• Seasonality impacts Q4 financial performance, especially delivery revenue.
• Timing issues between CapEx and revenue recognition for AI Inference Cloud.

Q: Clarification on segment growth guidance.

A: Security ~10% full-year, compute slightly under 15%, with CIS momentum from AI Inference.

Q: Status of Akamai Inference Cloud.

A: First inning, strong customer interest, 17 locations, initial customers using it.

Q: Go-to-market strategy for sales reps.

A: Ongoing hiring, transformation to be largely done by early next year, incenting longer-term deals.

Q: Pipeline for Inference Cloud deals.

A: Large deal sizes expected, CapEx informed by demand.

Q: Delivery business trends.

A: Stabilizing, seasonality impacts, pricing moderation, and traffic growth as drivers.

Q: Gross margin and CapEx for Inference Cloud.

A: CapEx closely tied to revenue, gross margins expected similar to compute, potentially better with GPU scarcity.

Q: Security penetration and AI security.

A: Room for growth in segmentation and API security, AI firewall solutions for inference engines.

Q: Traffic mix and AI impact.

A: AI driving more personalized content, potentially increasing traffic, favorable for Akamai.

Q: NVIDIA partnership and strategic importance.

A: Deeper partnership, deploying Blackwell 6000, unique distributed platform for AI inference.

Q: International segment strength.

A: APJ strong, compute and APJ leading, international picking up again.