0001086222-26-000022
SEC filingRevenue grew 5% driven by security and cloud computing solutions, while GAAP operating margin held at 13%.
Akamai Technologies, Inc. describes its mission as 'to power and protect life online.' The company provides security, cloud computing, and delivery solutions for global enterprises, leveraging a massively distributed infrastructure comprising over 4,300 edge points-of-presence in more than 130 countries and approximately 700 cities, integrated with roughly 1,200 network partners.
Akamai organizes its solutions into three core offerings: Security, Cloud Computing, and Delivery. No revenue share per segment is disclosed in this section.
Named products and platforms include Firewall for AI, Akamai Guardicore Platform, Akamai App Platform, Akamai EdgeWorkers, Akamai Inference Cloud (AIC), API Security (powered by Neosec/Noname), WAF, Bot Management, DDoS Protection, and DNS Security.
Akamai markets globally through a direct field sales and services organization and extensive channel partnerships (e.g., AHEAD, Carahsoft, Deloitte, Microsoft Azure, Deutsche Telekom). Marketing includes PR, digital advertising, content marketing, events, and trade shows. Key customers include many Fortune 500 companies (e.g., Adobe, Airbnb, eBay, Sony Interactive Entertainment, Spotify). No single customer exceeded 10% of revenue in 2025, 2024, or 2023. Less than 10% of revenue came from federal government contracts.
Akamai faces intense competition from content delivery and hosting providers, security hardware/software vendors, and cloud computing providers, including hyper-scalers. Competitive factors include performance, reliability, network distribution, scalability, security sophistication, price, and customer support. Akamai believes its global scale, reliability, and expertise differentiate it.
Akamai's strategy is to 'power and protect business online' by offering integrated security, compute, delivery, and AI infrastructure services. Key strategic pillars include: expanding cloud computing at the edge (e.g., Akamai App Platform, AIC), developing AI-native security solutions (Firewall for AI), leveraging network insights for real-time protection, and investing in distributed infrastructure to enable low-latency applications.
As of December 31, 2025, Akamai employed over 11,000 people across more than 30 countries, with approximately 65% outside the U.S. Workforce composition: 37% engineering/R&D, 26% services and support, 17% sales and marketing, 20% administrative. Employee engagement surveys show strong engagement. Voluntary attrition was slightly up in 2025. Akamai offers flexible work arrangements (FlexBase), competitive benefits, stock incentives, and development programs (Akamai University, succession planning).
In 2025, Akamai's total revenue increased 5% to $4.21B, driven by growth in security (10%) and cloud computing (12%) solutions, partially offset by a 5% decline in delivery. Gross margin remained steady at 59% as cost of revenue grew 7% to $1.73B, primarily from co-location costs (+13%) and depreciation (+16%) due to compute platform investments. GAAP operating income rose 6.3% to $567M, but operating margin held at 13% as operating expenses increased 6% overall. Net income decreased 10.5% to $452M, with diluted EPS falling from $3.27 to $3.07, impacted by higher restructuring charges and income tax provisions.
Security revenue reached $2.24B, benefiting from continued demand for API security, web application firewall, and microsegmentation. Cloud computing revenue grew to $708M, fueled by Cloud Infrastructure Services and compute platform adoption. Delivery revenue declined to $1.26B due to competitive pricing pressure and customer cost optimization, though the Edgio contract acquisition provided partial offset. International revenue grew 8% to $2.07B, now representing 49% of total revenue, while U.S. revenue grew 3% to $2.14B.
Management expects cost of revenue to increase in 2026, driven by co-location costs, bandwidth fees, depreciation, and amortization as they continue expanding the compute platform. Research and development, sales and marketing, and general and administrative expenses are all expected to rise, with stock-based compensation increasing due to a new stock-based retirement program. The company plans to maintain disciplined cost management to support operating margins while investing in higher-growth security and cloud computing areas. No specific numerical guidance was provided.
As of December 31, 2025, Akamai held $930.2M in cash and cash equivalents plus $989.5M in marketable securities (short- and long-term), totaling $1.92B in liquidity. Total debt (carrying value) stood at $4.11B, primarily from convertible senior notes. Shareholders' equity was $4.98B, reflecting retained earnings of $3.42B and accumulated other comprehensive loss of $(94.8)M.
Akamai reports $5.2B in remaining performance obligations (RPO) as of December 31, 2025, of which ~55% is expected to be recognized within 12 months and ~40% over the next two to three years. Operating lease liabilities total $1.57B (undiscounted $1.87B), with co-location and real estate leases expiring through 2046. Specific purchase commitments for bandwidth or other goods/services are disclosed only qualitatively; no dollar amount is provided in the Notes.
During 2025, Akamai repurchased $800M of common stock (10.0M shares), with $1.2B remaining under the May 2024 $2.0B authorization. The company issued $1.725B of 0.250% convertible senior notes due 2033 and used $1.15B to repay the 2025 notes at maturity, resulting in a net debt increase of $575M. Capital expenditures totaled $819.5M (19.5% of revenue), split between purchases of property and equipment ($507.8M) and capitalized internal-use software ($311.7M). No dividends were paid.
The Notes confirm a single operating and reportable segment. Revenue is disaggregated by solution category: Security $2.243B (53.3%), Delivery $1.257B (29.9%), and Cloud Computing $708M (16.8%). Cloud Infrastructure Services alone contributed $313.9M. Geographically, U.S. revenue was $2.139B (50.8%) and international $2.069B (49.2%). No single international country exceeded 10% of total revenue.
Akamai's revenue growth is challenged by declining delivery solutions revenue, driven by competition and DIY shifts. A large social media customer's optimization reduced traffic in 2024, with potential for further declines. Security solutions face pricing pressure, while cloud computing requires heavy investment with uncertain returns. Fixed costs and inability to control expenses could compress margins. Restructuring activities (2023, 2024, 2025) aim to reprioritize investments but may disrupt operations.
Intense competition from hyperscalers (especially in cloud and AI) and smaller nimble players creates pricing and innovation pressure. The company must continuously develop new security and cloud solutions. Defects or outages in products or systems could lead to customer loss and liability. Cybersecurity threats are escalating, with heightened risk during geopolitical conflicts. The reliance on third-party hardware and co-location exposes Akamai to supply chain constraints, exacerbated by tariffs.
Geopolitical instability is a key concern: 6% of employees in Israel are affected by the Israel-Hamas war and Iran tensions, risking operational disruption. U.S. tariffs on imports increase component costs and supply chain volatility. Evolving regulations like PAFACA (Chinese app divestiture), EU AI Act, and data localization laws impose compliance costs and may limit addressable markets. Privacy regulations proliferate globally, increasing legal exposure.
The stock price is volatile, partly due to forecast difficulties from pay-as-you-go billing models. The company holds $4.14B in convertible notes maturing 2027-2033, creating refinancing risk. Failure to retain key talent, especially in security and cloud, could hinder growth. AI initiatives face competitive and regulatory hurdles. Overall, the risk factor disclosure is comprehensive, with notable emphasis on geopolitical disruptions and tariff impacts.