0001086222-25-000256
SEC filingRevenue grew 5% driven by security and cloud computing, offset by delivery decline; operating margin expanded to 16% from 7% due to absence of large restructuring charge.
In Q3 2025, Akamai reported total revenue of $1.055B, a 5% increase year-over-year, driven by continued strength in security and cloud computing solutions, partially offset by a decline in delivery revenue. Gross margin remained stable at 59.3%, as cost of revenue growth matched revenue growth. Operating income surged to $166M from $71M in Q3 2024, largely due to the absence of the $82M restructuring charge incurred in the prior-year period. Operating margin expanded to 15.7% from 7.0%. Net income more than doubled to $140M, and diluted EPS rose to $0.97 from $0.38.
Security revenue grew 10% to $568M, with strong contributions from API security, web application security, and Guardicore segmentation. Cloud computing revenue increased 8% to $180M, fueled by cloud infrastructure services and EdgeWorkers. Delivery revenue fell 4% to $307M, reflecting persistent downward pricing pressure at renewals and customer cost optimization, though the decline was partially offset by incremental traffic from the Edgio asset acquisition. The mix shift toward higher-growth security and compute solutions is a key driver of overall growth.
Management expects cost of revenue to increase in the remainder of 2025 due to investments in co-location and network equipment for cloud computing expansion. R&D costs are also expected to rise in support of security and cloud initiatives. Sales and marketing and G&A costs are not expected to increase significantly. No specific numerical guidance was provided, but the company plans to continue investing in security and cloud computing while managing operational efficiencies.
Akamai's operating cash flow (CFO) of $1.152B comfortably covers net income of $0.367B, with a coverage ratio of 3.1x, indicating high earnings quality. Non-cash charges (depreciation & amortization $526M, stock-based compensation $340M) are the primary drivers.
Capital expenditures (PP&E and software capitalization) totaled $615M, representing 53% of CFO. This elevated capex intensity reflects continued investment in infrastructure and product development.
Share repurchases of $800M exceeded CFO after capex ($1.152B - $0.615B = $537M), implying reliance on debt or other sources (the company issued convertible notes and warrants, netting ~$1.3B in financing proceeds). No dividends were paid.
Working capital consumed $107M of cash (accounts receivable increase, deferred revenue slight rise, accounts payable decline). Large investing activities in marketable securities (net purchases of $475M) reflect balance sheet management.