0001086222-26-000058
SEC filingRevenue grew 6% to $1.07B, driven by cloud infrastructure (+40%) and security (+11%), while operating margin compressed to 11%.
Revenue for Q1 2026 increased 6% YoY to $1.07B, with constant currency growth of 4%. The growth was driven by security and cloud infrastructure services, partially offset by a decline in delivery and other cloud applications. Cost of revenue rose 12% to $471.3M, outpacing revenue growth, leading to a gross margin contraction from 59% to 56%. Operating expenses grew 9% to $558.8M, with R&D up 15% and sales & marketing up 17%, reflecting headcount investments and a new retirement benefit increasing stock-based compensation. Income from operations fell 26% to $114.5M, and operating margin declined from 15% to 11%. Net income decreased 14% to $106.3M, with diluted EPS of $0.71 versus $0.82 in the prior year. The effective tax rate dropped to 13% from 29% due to excess tax benefits from stock-based compensation and lower profitability.
Security revenue grew 11% to $589.8M, driven by API security, web application, and Guardicore segmentation solutions. Delivery and other cloud applications revenue declined 7% to $389.2M, primarily due to downward pricing pressure at contract renewals and customer cost optimization amid macroeconomic headwinds. Cloud infrastructure services revenue surged 40% to $94.6M, fueled by growth in compute solutions and partner programs. International revenue grew 9% to $530.5M (49% of total), benefiting from favorable foreign exchange impacts of $18.5M.
Management expects cost of revenue to increase in the remainder of 2026, particularly co-location, bandwidth, and depreciation costs, driven by investments in cloud infrastructure and AI. R&D and sales & marketing expenses are also expected to rise due to headcount growth and stock-based compensation from a new retirement benefit. The company plans to continue investing in security and cloud infrastructure services while carefully managing costs to sustain operating margins. No quantitative guidance was provided for future periods.
As of March 31, 2026, Akamai held $622.4M in cash and cash equivalents and $1.11B in marketable securities (short- and long-term), totaling $1.73B in liquid assets. Total debt stood at $4.11B (net carrying value of convertible senior notes), with no borrowings under revolving credit facilities. Shareholders' equity was $4.91B. The company maintains a strong liquidity position despite a high debt load, supported by $5.5B in remaining performance obligations (RPO) and $223.6M in deferred revenue.
Akamai disclosed $5.5B in remaining performance obligations from customer contracts as of March 31, 2026. Approximately 50% ($2.75B) is expected to be recognized as revenue within 12 months, 40% ($2.2B) in the next two to three years, and the remaining 10% thereafter. No other purchase commitments (e.g., supply or capacity) were reported. The company has operating lease liabilities of $1.76B (current and non-current) and restructuring liabilities of $12.7M.
Akamai operates as a single segment. Revenue for Q1 2026 was $1.074B, up 5.8% YoY. Geographic split: U.S. $543.1M (50.6%), International $530.5M (49.4%). Solution category breakdown: Security $589.8M (55%), Delivery and other cloud applications $389.2M (36%), Cloud infrastructure services $94.6M (9%). Security and cloud infrastructure grew 11.1% and 39.9% YoY, respectively, while delivery declined 6.6%. No further segment-level operating income is disclosed.