Executive Summary

Q2 delivered a clean top- and bottom-line beat: revenue $1.043B (+7% y/y) and non-GAAP EPS $1.73 (+9% y/y), with non-GAAP operating margin at 30%; management raised FY25 revenue and EPS guidance on the back of stronger Security and accelerating Cloud Infrastructure Services (CIS) growth .
Revenue outperformed S&P Global consensus by ~$22M* and non-GAAP EPS beat by ~$0.20*, aided by higher revenue, lower-than-expected bandwidth costs, a one-time ~$5M gross margin credit, and lower share count from buybacks .
Segment mix remained favorable: Security $552M (+11% y/y), Cloud computing $171M (+13% y/y), Delivery $320M (-3% y/y) with CIS at $71M (+30% y/y) and projected to accelerate on large, committed deals ramping in 2H25/2026 .
FY25 guidance raised: revenue to $4.135–$4.205B (from $4.050–$4.200B), non-GAAP EPS to $6.60–$6.80 (from $6.10–$6.40), non-GAAP op margin ~29%; Q3 guide embeds higher colo costs and mix pressure from partner resales (≈+100 bps to cost of revenue combined), partly offset by ongoing demand across Security/CIS .
Stock reaction catalysts: raised FY guide; clear CIS acceleration narrative; improving Delivery pricing/traffic; near-term gross margin headwinds (colo/QCP mix) acknowledged, but framed as investment to support CIS growth .

What Went Well and What Went Wrong

What Went Well

Beat-and-raise quarter: Revenue $1.043B (+7% y/y), non-GAAP EPS $1.73 (+9% y/y), non-GAAP op margin 30%; CEO: “outperformance in both revenue and profitability… increasing our guidance for revenue and earnings for the remainder of the year” .
CIS momentum: CIS revenue $71M (+30% y/y); management expects faster growth through the year as large signed deals begin to recognize revenue; CIS ARR targeted +40–45% y/y by year-end .
Delivery stabilization: Delivery revenue fell only 3% y/y (better than feared) amid improved traffic growth and a rationalized pricing backdrop; CFO cites healthier video/software download traffic and moderating pricing declines; CEO notes four major pre-pandemic CDN competitors have exited .

What Went Wrong

GAAP earnings down: GAAP net income $104M (-21% y/y) and GAAP EPS $0.71 (-17% y/y) given higher tax expense and non-cash items; GAAP operating margin stayed at 15% .
Gross margin headwinds ahead: Q3 cost of revenue expected to increase ~1 pt from higher colocation as new compute capacity comes online; QCP partner resale mix expected to compress gross margin by ~70 bps for the year .
Compute OCA noise: Other Cloud Applications (OCA) expected flat q/q in 2H and faces a one-time y/y dip in Q3 due to a prior-year $7M deferred revenue release; full-year compute growth could be “a little less” than ~15% CC given deal timing .

Financial Results

Headline Metrics vs Prior Periods and Consensus

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025 Actual	Q2 2025 Consensus*
Revenue ($USD Billions)	$0.980	$1.020	$1.015	$1.043	$1.021*
GAAP EPS ($)	$0.86	$0.91	$0.82	$0.71	—
Non-GAAP EPS ($)	$1.58	$1.66	$1.70	$1.73	$1.53*
GAAP Operating Margin (%)	15%	15%	15%	15%	—
Non-GAAP Operating Margin (%)	29%	29%	30%	30%	—
Adjusted EBITDA ($USD Billions)	$0.409	$0.429	$0.441	$0.444	—
Adjusted EBITDA Margin (%)	42%	42%	43%	43%	—

*Values retrieved from S&P Global.

Segment Revenue Breakdown

Segment ($USD Millions)	Q2 2024	Q1 2025	Q2 2025	YoY % (Q2)
Security	$498.7	$530.7	$551.9	11%
Delivery	$329.4	$319.0	$320.1	(3%)
Cloud Computing (total)	$151.5	$165.5	$171.5	13%
Cloud Infrastructure Services (CIS)	—	—	$71.0	30%

Geography Breakdown

Revenue ($USD Millions)	Q2 2024	Q1 2025	Q2 2025	YoY % (Q2)
U.S.	$508.7	$528.7	$527.6	4%
International	$470.9	$486.4	$515.9	10%
Total	$979.6	$1,015.1	$1,043.5	7%

Cash Flow, Capex, and Capital Returns

KPI	Q1 2025	Q2 2025
Cash from Operations ($USD Millions)	$251.2	$459.1
Capex (accrual basis, $USD Millions)	$225.9	$214.2
Capex as % of Revenue	22%	21%
Adjusted EBITDA ($USD Millions)	$441.3	$444.4
Share Repurchases ($, Shares)	$500M; 6.2M shares	$300M; 3.9M shares
Cash, Cash Equivalents & Marketable Securities ($B)	$1.344	$1.558

Guidance Changes

Metric	Period	Previous Guidance (Q1’25)	Current Guidance (Q2’25)	Change
Revenue ($B)	FY 2025	$4.050–$4.200	$4.135–$4.205	Raised
Non-GAAP EPS ($)	FY 2025	$6.10–$6.40	$6.60–$6.80	Raised
Non-GAAP Operating Margin (%)	FY 2025	28%	~29%	Raised
Non-GAAP Tax Rate (%)	FY 2025	19–20%	19%	Slightly Lower
Shares for Non-GAAP EPS (M)	FY 2025	150	147	Lower (buybacks)
Capex as % of Revenue	FY 2025	19–20%	20%	Maintained at ~20%
Revenue ($B)	Q3 2025	N/A	$1.035–$1.050	New
Non-GAAP EPS ($)	Q3 2025	N/A	$1.62–$1.66	New
Non-GAAP OpEx ($M)	Q3 2025	N/A	$327–$332	New
Non-GAAP Op Margin (%)	Q3 2025	N/A	~28%	New
EBITDA Margin (%)	Q3 2025	N/A	~41%	New
Cash Gross Margin (%)	Q3 2025	N/A	~72–73%	New
Non-GAAP D&A ($M)	Q3 2025	N/A	$139–$141	New

Color on guidance and cadence:

Q3 cost of revenue expected +~1 pt from new compute capacity; Qualified Compute Partner (QCP) resales to reduce FY gross margin by ~70 bps; Q3 includes U.S. TikTok revenue (~half of the $40–50M annual run-rate) now assumed in H2 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
AI/Technology initiatives	Focus on transforming into cybersecurity & cloud leader; strong innovation cadence	Launch of “AI gateway” and “Firewall for AI” to secure AI apps; edge inference narrative; dozens of PoCs underway	Accelerating productization of AI security/edge compute
CIS (cloud infra) growth	Compute +24% y/y in Q4’24; +14% y/y in Q1’25; strategic CIS positioning	CIS $71M (+30% y/y); ARR +40–45% y/y target; large multi-year committed contracts ramping 2H25+	Positive inflection, increasing visibility
Delivery stabilization	Delivery declines persisted in 2024; -9% y/y in Q1’25	Delivery -3% y/y, aided by better traffic (video/software download) and more rational pricing; competitor exits noted	Improving trajectory
Security momentum	Security +14% y/y in Q4’24; +8% y/y in Q1’25	Security +11% y/y; API security + Zero Trust combined ARR +30–35% in 2025; API Security enhancements and industry recognition	Healthy, diversified growth
Macro/regulatory	—	U.S. “One Big Beautiful Bill Act” reviewed; no material 2025 tax rate impact expected	Neutral near term
Margin drivers	Non-GAAP op margin ~29–30% exiting 2024/Q1’25	One-time ~$5M credit boosted Q2 gross margin; Q3 colo/QCP mix headwinds flagged; 2H op margin lower as GTM investments ramp	Near-term pressure, strategic investments

Management Commentary

CEO (Tom Leighton): “Akamai reported excellent results… we are increasing our guidance for revenue and earnings… investments are paying off — our Cloud Infrastructure Services grew 30% year-over-year — and we expect that rate to accelerate… AI is driving decisions… providing a strong tailwind for Akamai as we help businesses maximize their AI investments by ensuring every AI interaction is intuitive, instant and secure.”
CIS strategy: “CIS revenue in Q2 was $71M… We’re projecting even faster growth… as we start recognizing revenue from some large deals signed earlier this year.”
AI security: “AI gateway acts as a smart traffic controller… our new firewall for AI fights prompt abuse and model compromise… bringing our expertise at the edge to the cloud to make AI faster, more secure, and significantly more affordable.”
Security leadership: “Akamai is the only vendor to be named customer favorite in the new Forrester Wave Zero Trust Platforms… perfect scores in segmentation and control, pricing flexibility, and supporting services.”
CFO (Ed McGowan): “Non‑GAAP EPS outperformed our guidance range by $0.15… driven by higher than expected revenue, lower bandwidth costs, higher interest income… and lower share count… [and] a one‑time positive benefit of approximately $5M to gross margin.”

Q&A Highlights

CIS ramp and visibility: Large CIS deals signed include minimum commitments and have staged ramps; ARR growth target of 40–45% is based on Q4 run-rate proxy; revenue timing depends on customer application migrations and capacity build-outs .
Delivery dynamics: Healthier traffic growth (video/software download) and a less irrational pricing environment; legacy competitor exits aided pricing discipline; aim for mid-single-digit declines near term, with longer-term stability .
TikTok inclusion: H2 U.S. TikTok revenue now included in guidance (~$40–50M annualized; roughly half in H2 guide); FY raise reflects broad-based strength beyond TikTok .
Margin outlook: Q3 cost of revenue up ~1 pt from incremental colo for compute capacity; QCP partner resale mix reduces FY gross margin by ~70 bps but helps drive higher-margin CIS revenue; 2H operating margin lower due to increased GTM investments .
Security momentum: API Security and Zero Trust demand remains strong; combined ARR expected +30–35% in 2025; API Security is a natural upsell into WAF installed base .

Estimates Context

Metric	Q2 2024 Actual vs Cons.*	Q1 2025 Actual vs Cons.*	Q2 2025 Actual vs Cons.*
Revenue ($USD Millions)	$979.6 vs $977.6 (+$2.0)	$1,015.1 vs $1,011.1 (+$4.0)	$1,043.5 vs $1,020.7 (+$22.8)
Non-GAAP EPS ($)	$1.58 vs $1.53 (+$0.05)	$1.70 vs $1.57 (+$0.13)	$1.73 vs $1.53 (+$0.20)

*Consensus values retrieved from S&P Global.

Implications: The magnitude of beats (especially Q2 revenue and EPS) should prompt upward estimate revisions for CIS-related growth and Security momentum; near-term gross margin expectations likely temper modestly given Q3 colo/QCP commentary .

Key Takeaways for Investors

Beat-and-raise confirms pivot toward higher-growth Security and CIS; sustained 30%+ CIS growth with multi-year commitments underpins medium-term mix and margin resilience even as near-term gross margins face colo/QCP headwinds .
Delivery is improving faster than expected on better traffic and more rational pricing; stabilizing declines reduce a key bear thesis on the legacy CDN segment .
AI strategy is tangible: AI gateway and Firewall for AI bolster security cross-sell and edge compute use cases, creating a differentiated “secure edge AI” narrative .
Capital allocation remains supportive: $800M YTD buybacks and lower guided diluted shares (147M for FY EPS) enhance per-share metrics while the $1.725B 2033 converts add low-cost liquidity for growth .
Near-term trading setup: Strong Q2 beat and raised FY guide are positives; watch Q3 gross margin cadence (colo/QCP) and timing of CIS revenue ramps—execution on large deals is the swing factor for H2 .
Medium-term thesis: Security/API/Zero Trust ARR growth of 30–35% and CIS ARR 40–45% suggest durable double-digit growth engines as Delivery stabilizes, supporting sustained ~29–30% non-GAAP operating margins over cycle .

Supporting Citations

Q2’25 results and financials:
Q1’25 and Q4’24 context:
Guidance and qualitative drivers:
Product/AI announcements:

AKAMAI TECHNOLOGIES INC (AKAM)·Q2 2025 Earnings Summary