Akamai Technologies Q2 Earnings Call Highlights

Key Points

• Akamai’s Q2 revenue rose 5% to $1.1 billion, led by 39% growth in cloud infrastructure services to $99 million and 10% growth in security revenue to $604 million. Non-GAAP EPS fell 8% to $1.59 as the company increased investments in data-center capacity, depreciation and staffing.
• Demand for AI infrastructure is accelerating: Akamai said its GPU capacity is fully sold out and committed to invest up to $500 million to expand capacity. A new four-year robotics cloud contract worth more than $600 million lifted 2026 multi-year cloud commitments above $2.8 billion, though revenue from the deal is expected to ramp mainly in 2027.
• Akamai maintained its 2026 revenue outlook of $4.445 billion to $4.53 billion and expects cloud infrastructure growth of at least 50% in constant currency. The company is pausing share repurchases to prioritize infrastructure spending, with third-quarter capital expenditures projected at $475 million to $525 million.

Akamai Technologies NASDAQ: AKAM reported second-quarter 2026 revenue growth of 5% and highlighted expanding demand for its cloud infrastructure services and security offerings as enterprises deploy artificial intelligence workloads.

Chief Executive Officer Tom Leighton said the company signed a four-year commitment worth more than $600 million with a U.S.-based technology company to provide cloud infrastructure services for robotics development. The deal brought Akamai’s total volume of multi-year cloud infrastructure commitments signed so far in 2026 to more than $2.8 billion.

“Akamai continues to build momentum and gain wide industry recognition as a key infrastructure provider for the AI-driven economy,” Leighton said. The company expects the new robotics customer to have no material revenue effect in 2026, with revenue expected to ramp fully during 2027.

Second-Quarter Results

Chief Financial Officer Ed McGowan said second-quarter revenue was $1.1 billion, up 5% year over year on both a reported and constant-currency basis.

• Cloud infrastructure services revenue was $99 million, rising 39% year over year.
• Security revenue totaled $604 million, up 10% as reported and 9% in constant currency.
• Delivery and other cloud applications revenue was $396 million, down 6% as reported and 5% in constant currency.
• International revenue was $549 million, up 6% as reported and representing about half of total quarterly revenue.

Non-GAAP net income was $236 million, or $1.59 per diluted share, down 8% from a year earlier. Akamai’s non-GAAP operating margin was 25% for the quarter. McGowan said earnings reflected increased co-location investments, depreciation and headcount expenses intended to support growth in cloud infrastructure services.

Capital expenditures were $347 million, or 32% of revenue, below the company’s prior expectations because certain GPU shipments arrived several weeks after the quarter ended. The delayed equipment spending shifted principally into the third quarter.

Cloud Capacity, AI Demand and Investment

Akamai said all of its available GPU capacity is sold out. McGowan said the company plans to invest up to $500 million to replenish and expand GPU capacity, including roughly $60 million during 2026 and the remainder in early 2027.

The company said customers increasingly seek to reserve capacity months in advance under arrangements comparable to cloud reserved instances. Management said large cloud infrastructure contracts generally take six to nine months from signing to revenue recognition, as equipment is procured, data-center capacity is prepared and systems are deployed.

McGowan said Akamai expects cloud infrastructure services revenue to accelerate meaningfully in the fourth quarter and continue accelerating in 2027. The company expects its overall revenue growth rate to move from single digits in 2026 to the low teens in 2027, supported by signed commitments and its pipeline.

Management said the company’s distributed network, which spans more than 700 cities in 130 countries, supports AI inference workloads that require lower latency or proximity to data and users. Leighton cited robotics as an example where video processing and rapid response times can make edge-based inference useful. He said Akamai is not focused on training giant foundation models, but can support the usage of models and training of medium or smaller models.

Akamai said large-scale cloud infrastructure contracts in its signed business and active pipeline have non-GAAP cash gross margins ranging from the mid-60% range to the mid-70% range. After hardware depreciation and other operating expenses, management said such contracts typically produce non-GAAP operating margins from the low-to-mid-20% range through the low 30% range.

Security Business and LayerX Acquisition

Security growth was driven by demand for Akamai’s Web Application Firewall, API Security and Guardicore Segmentation products, according to Leighton. He said customers are seeking protection against vulnerabilities and larger attacks associated with greater adoption of AI tools and models.

The company cited a $14 million upgrade from one of the world’s largest banks to secure all of its applications, as well as a security and cloud infrastructure services renewal upgrade worth more than $20 million over two years with a large telecommunications provider.

Akamai also said CrowdStrike switched to Akamai for web security and content delivery. Leighton said CrowdStrike had been dissatisfied with inconsistent service from its prior provider.

On July 2, Akamai completed its acquisition of LayerX for approximately $205 million. The business has been rebranded as Akamai Workforce Protector and is intended to provide visibility and controls for enterprise browser activity, SaaS usage, file uploads and AI prompts. McGowan said the acquisition is not expected to have a material effect on 2026 revenue but is expected to reduce non-GAAP earnings per share by about $0.12 for the year, split evenly between the third and fourth quarters.

Akamai expects its security portfolio to generate more than $2.4 billion in revenue during 2026, Leighton said.

Guidance and Capital Allocation

For the third quarter, Akamai forecast revenue of $1.105 billion to $1.13 billion, representing reported growth of 5% to 7%. The company projected non-GAAP earnings per share of $1.60 to $1.80 and a non-GAAP operating margin of approximately 24% to 26%.

Third-quarter capital expenditures are expected to range from $475 million to $525 million, or about 43% to 46% of revenue, as the company absorbs delayed GPU shipments and builds capacity for recently announced contracts.

For full-year 2026, Akamai forecast revenue of $4.445 billion to $4.53 billion, up 6% to 8% as reported. It maintained expectations for cloud infrastructure services growth of at least 50% in constant currency, high-single-digit constant-currency security growth, and a mid-single-digit decline in delivery and other cloud applications revenue. Full-year non-GAAP earnings per share are expected to be $6.40 to $7.05.

In May, Akamai raised $3.5 billion through two tranches of zero-coupon convertible debt due in 2030 and 2032. The company ended the quarter with approximately $4.6 billion in cash equivalents and marketable securities. It repurchased roughly 3 million shares for approximately $410 million during the quarter, but said it is temporarily pausing share repurchases to direct capital toward cloud infrastructure growth.

About Akamai Technologies (NASDAQ:AKAM)

Akamai Technologies, Inc is a leading provider of content delivery network (CDN) services and cloud security solutions designed to optimize and safeguard digital experiences. Leveraging a globally distributed platform, the company accelerates web and mobile content delivery for enterprises, media companies, e-commerce platforms and government agencies. Its edge computing architecture brings processing power closer to end users, reducing latency and improving application performance across geographies.

The company's core offerings include content acceleration, web and mobile performance optimization, media delivery, and a suite of cybersecurity solutions that protect against DDoS attacks, application-layer threats and bot-driven fraud.

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