Akamai Technologies, Inc. Q4 FY2025 earnings call

• Akamai delivered strong Q4 results with revenue growth, strong non-GAAP margins and EPS. • CIS revenue grew 45% YoY, driven by ISV solutions, IaaS and storage customers, and EdgeWorkers/WebAssembly. Launched Akamai Inference Cloud to support AI inference. Signed large contracts, including a 4-year $200 million CIS deal with a major U.S. tech company. • Security solutions performed well, led by API security and Guardicore Segmentation, with strong demand and new contracts. • Recognized for trust, being named to lists like Forbes' America's Most Trusted Companies. • Intends to invest in AI Inference Cloud, with $250 million CapEx planned, but facing hardware cost inflation. • Workforce reduction with restructuring charge, reinvesting savings. • Compute to be reported as stand-alone category from Q1 2026, with CIS as growth engine.

Revenue was $1.095 billion, up 7% year-over-year as reported and 6% in constant currency. Compute revenue (CIS and OCA) was $191 million, up 14% year-over-year. CIS revenue was $94 million, up 45% year-over-year, representing ~50% of compute revenue. Security revenue was $592 million, up 11% year-over-year. API Security and Zero Trust Enterprise Security combined revenue was $90 million, up 36% year-over-year. Delivery revenue was $311 million, down 2% year-over-year. International revenue was $542 million, up 11% year-over-year, representing 50% of total revenue. Non-GAAP operating margin was 29% and non-GAAP earnings per share was $1.84, up 11% year-over-year.

• Q1 2026 revenue projected $1.06B - $1.085B, up 4%-7% YoY (2%-5% constant currency). Q1 non-GAAP EPS $1.50 - $1.67. • Full-year 2026 revenue $4.4B - $4.55B, up 5%-8% YoY (4%-7% constant currency). CIS revenue growth projected 45%-50% YoY. Security revenue to grow high single digits constant currency. Delivery and other cloud apps to decline mid-single digits. • Non-GAAP operating margin 26%-28% in 2026. Full-year CapEx ~23%-26% of revenue. • Full-year 2026 non-GAAP EPS $6.20 - $7.20.

• Macroeconomic trends impact. • Integration of acquisitions. • Geopolitical developments. • Hardware cost inflation affecting CapEx. • Foreign currency market volatility impacting revenue. • Competitive landscape in delivery business with pricing pressures.

Q: Congrats on strong Q4 results, ask about CapEx and Akamai Inference Cloud pipeline.

A: Ed McGowan says $1 CapEx to $1 revenue not fully holding due to hardware inflation, but CIS growth justifies investment. Tom Leighton says pipeline for Inference Cloud is strong, with broad interest in various AI applications.

Q: Ask about CIS success with existing customers, if ACV is additive.

A: Ed McGowan says it's additive, not trading delivery for compute, with good success with existing and new customers.

Q: Ask about delivery business traffic and pricing.

A: Tom Leighton says traffic trends comparable to latter half of 2025, pricing competitive with some costs rising and prices possibly raised.

Q: Ask about Inference Cloud rental service, structure and utilization.

A: Tom Leighton says there are traditional and cluster models, with early pipeline showing interest in guaranteed capacity.

Q: Ask about security growth and AI risk.

A: Ed McGowan says API and Guardicore driving security growth with new and existing customers. Tom Leighton says AI doesn't pose risk to Akamai's security services as their distributed platform is needed for scale.

Q: Ask about compute customer reasons for choosing Akamai.

A: Tom Leighton says performance, scale, and cost are key, with customers valuing Akamai's distributed platform.

Q: Ask about Inference Cloud customer profile and software updates.

A: Tom Leighton says it's a broader customer pool, existing customers are targets, and software updates are part of normal platform upgrades.

Q: Ask about unique aspects of Akamai for compute workloads.

A: Tom Leighton says performance, scale, trust, and cost are unique, with customers valuing Akamai's distributed nature.

Q: Ask about Inference Cloud GPU locations.

A: Tom Leighton says currently in ~20 locations, with larger locations enabling cluster sales.

Q: Ask about verticals for CIS and competitive dynamics vs hyperscalers.

A: Ed McGowan says verticals include life sciences, manufacturing, etc., from direct and channel. Tom Leighton says compete successfully with hyperscalers, with new workloads and performance advantages.

Q: Ask about AI impact on security and delivery.

A: Tom Leighton says AI makes attack environment harder but increases need for security services, and delivery sees rise in scraper bots but bot management helps handle them.