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AKAMAI TECHNOLOGIES INC (AKAM)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue and EPS beat: Q3 revenue $1.055B vs ~$1.044B consensus; non-GAAP EPS $1.86 vs ~$1.64 consensus; Adjusted EBITDA outperformed consensus as well. Strength came from high-growth Security and accelerating Cloud Infrastructure Services (CIS), with Delivery trends stabilizing . Estimates from S&P Global marked with asterisks: Revenue ~$1.044B*, EPS ~$1.64*, EBITDA ~$431M*.
  • Margin outperformance and mix: Non-GAAP operating margin rose to 31% (up 2ppt YoY) on disciplined execution; GAAP operating margin was 16% (up 9ppt YoY, aided by non-recurring 3Q24 restructuring charge) .
  • Guidance raised: FY25 revenue to $4.178–$4.198B (from $4.135–$4.205B), FY25 non-GAAP EPS to $6.93–$7.13 (from $6.60–$6.80). Q4 guide: revenue $1.065–$1.085B; non-GAAP EPS $1.65–$1.85; non-GAAP op margin 28–30% .
  • Strategic catalyst: Launch of Akamai Inference Cloud (NVIDIA-powered) with early traction and hyperscaler wins; management framed inference at the edge as a secular growth driver for CIS and attach opportunities for API Security/AI Firewall .

What Went Well and What Went Wrong

What Went Well

  • Broad beat vs Street and guidance: “Results came in above expectations for revenue, margin, and EPS” (non-GAAP EPS $1.86, +17% YoY; $0.20 above high-end guidance) .
  • CIS acceleration and strategic wins: CIS revenue $81M (+39% YoY), with multi-year hyperscaler renewals and new logos; management expects CIS ARR growth 40–45% in CC by year-end .
  • Security momentum: Security revenue $568M (+10% YoY), with high-growth API Security and Zero Trust solutions growing ~35% YoY; Gartner Customer’s Choice recognition bolsters positioning .

Quotes:

  • CEO: “We were particularly pleased by…momentum in Cloud Infrastructure Services, where revenue growth accelerated to 39% year-over-year” .
  • CEO on Inference Cloud: “By moving AI inference from the core to the edge, we are unlocking a new generation of applications that can sense, reason and act in real-time” .

What Went Wrong

  • Delivery remains a headwind: Delivery revenue $306M (-4% YoY), though trends “slightly better than expected” and stabilizing .
  • Elevated capital intensity: Capex was $224M (21% of revenue) as the company invests to scale CIS/Inference Cloud; CFO expects Q4 capex at ~16% of revenue .
  • Upcoming opex seasonality and FX: Q4 opex guided higher due to seasonal commissions; FX to be -$5M sequential headwind in Q4 (but +$11M YoY benefit) .

Financial Results

Headline P&L vs Prior Year and Prior Quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$1,004.7 $1,043.5 $1,054.6
GAAP Diluted EPS ($)$0.38 $0.71 $0.97
Non-GAAP Diluted EPS ($)$1.59 $1.73 $1.86
GAAP Operating Margin (%)7% 15% 16%
Non-GAAP Operating Margin (%)29% 30% 31%

Segment Revenue Breakdown

Segment ($USD Millions)Q1 2025Q2 2025Q3 2025
Security$530.7 $551.9 $568.4
Delivery$319.0 $320.1 $306.5
Cloud Computing$165.5 $171.5 $179.7
Total$1,015.1 $1,043.5 $1,054.6

Geographic Revenue Breakdown

Geography ($USD Millions)Q1 2025Q2 2025Q3 2025
U.S.$528.7 $527.6 $530.0
International$486.4 $515.9 $524.7
Total$1,015.1 $1,043.5 $1,054.6

KPIs and Cash Metrics

KPIQ1 2025Q2 2025Q3 2025
Adjusted EBITDA ($USD Millions)$441.3 $444.4 $458.4
Adjusted EBITDA Margin (%)43% 43% 43%
Cash from Operations ($USD Millions)$251.2 $459.1 $441.8
Capex (Accrual) ($USD Millions)$225.9 $214.2 $224.2
Capex as % of Revenue (%)22% 21% 21%
Cash + Marketable Securities ($USD Billions)$1.344 $1.558 $1.813
Shares Outstanding (End of Period, Millions)146 143 144

Q3 2025 Actual vs Street Consensus

MetricConsensusActual
Revenue ($USD Millions)$1,043.9*$1,054.6
Primary EPS ($)$1.64*$1.86
EBITDA ($USD Millions)$430.7*$458.4

Values with asterisks retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$4,135–$4,205 $4,178–$4,198 Raised mid-point
Non-GAAP EPS ($)FY 2025$6.60–$6.80 $6.93–$7.13 Raised
Non-GAAP Operating Margin (%)FY 2025~29% 29%–30% Raised range
Non-GAAP Tax Rate (%)FY 2025~19% 19% Maintained
Shares for Diluted EPS (Millions)FY 2025~147 147 Maintained
Capex as % of Revenue (%)FY 2025~20% 20% Maintained
Revenue ($USD Millions)Q4 2025n/a$1,065–$1,085 New
Non-GAAP EPS ($)Q4 2025n/a$1.65–$1.85 New
Non-GAAP Operating Margin (%)Q4 2025n/a28%–30% New
Non-GAAP Tax Rate (%)Q4 2025n/a18%–19% New
Capex as % of Revenue (%)Q4 2025n/a~16% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Inference CloudQ1: Launched Firewall for AI; edge AI gateway to address latency/security/cost . Q2: CIS growth driven by AI use cases; pipeline strengthening .Formal launch of Akamai Inference Cloud with NVIDIA Blackwell; 17 sites; hyperscaler adoption; “first inning” of edge inference demand .Accelerating
Cloud Infrastructure Services (CIS)Q2 CIS $71M, +30% YoY; ARR growth expected 40–45% CC; large multi-year commits .CIS $81M, +39% YoY; signed third hyperscaler; management reiterates ARR growth 40–45% CC .Accelerating
Security (API & Zero Trust)Q2: Combined API Security + Zero Trust up 48% YoY (incl. inorganic), ~32% organic; strong pipeline .High-growth security products up 35% YoY; API Security run-rate targeted ~$100M by YE25 .Strong momentum
DeliveryQ2: -3% YoY; pricing declines moderating; two sequential growth quarters; less competition .Q3: -4% YoY; “slightly better than expected”; seasonal Q4 uplift expected but uncertain .Stabilizing
Go-to-MarketQ2: Adding hunters, specialists, channel expansion; near-term margin impact .Continued hiring through early next year; longer-term deals incentivized; RPO improvement expected .Ongoing transformation
Capex/MarginsQ2: Capex ~21–22% of revenue; gross margin headwinds from QCP resales and colo timing .Q3 capex 21%; Q4 capex ~16%; compute margins expected low-70s% over time; potential uplift from GPU scarcity .Investment phase, leverage later
FX/Macro/TaxQ2: New tax law not material in 2025; FX +$13M YoY to revenue .Q4 FX: -$5M sequential, +$11M YoY; law impact still not material in 2025 .Minor FX headwind sequentially

Management Commentary

  • CEO strategic message: “By moving AI inference from the core to the edge, we are unlocking a new generation of applications that can sense, reason and act in real-time” .
  • CEO on differentiation: “The top three cloud providers in the US are all now using Akamai Cloud Infrastructure Services… one signed an expanded multi-year renewal” .
  • CFO on performance: “Non-GAAP EPS…$0.20 above the high end of our guidance range” driven by higher-than-expected revenue and execution .
  • CFO on Q4 setup: “Q4 opex…higher than in Q3…the main driver is the seasonal jump in sales commissions…”; FX -$5M sequential .

Q&A Highlights

  • Hyperscaler adoption and deal sizes: All three major US cloud providers now using CIS; initial inference deals may be $50–$100M with capex pacing to demand; potential for margin uplift at scale .
  • Delivery outlook: Seasonality supports Q4; pricing pressure moderating; fewer competitors; trends could remain flat to down low single-digits, with potential upside as gaming returns and device refreshes .
  • Security attach to AI: API Security and AI Firewall expected to secure inference workloads; strong interest, early customers and POCs underway .
  • Geographic strength: International, especially APJ, leading compute and security momentum; US growth impacted by anniversaries of NGO contracts .
  • Guidance clarity: Security around ~10% growth for the year; compute slightly under ~15% for 2025 due to timing, but momentum improving; Q4 non-GAAP EPS $1.65–$1.85 .

Estimates Context

  • Q3 2025 beats vs consensus: Revenue $1,054.6M vs ~$1,043.9M*; non-GAAP EPS $1.86 vs ~$1.64*; Adjusted EBITDA $458.4M vs ~$430.7M* .
  • Forward estimates: Q4 revenue consensus ~$1,076.1M* and EPS ~$1.75*; Q1 2026 revenue ~$1,063.9M* and EPS ~$1.73*, which may drift upward on the back of raised FY EPS and stronger CIS/AI narrative.

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Strong quarter across revenue, margins, and EPS; clear beat vs consensus and guidance, driven by Security and accelerating CIS. Expect estimate revisions upward, especially on FY EPS and Q4 .
  • Inference Cloud launch with NVIDIA establishes an emerging growth leg; hyperscaler adoption and large initial deal sizes underscore edge inference differentiation and potential operating leverage .
  • Delivery stabilizing with moderated pricing pressure and healthier traffic; Q4 seasonality should help, but management appropriately cautious on visibility .
  • Near term watch items: Q4 opex seasonal step-up; FX -$5M sequential headwind; capex intensity remains elevated as CIS scales, though capex/revenue set to ease to ~16% in Q4 .
  • Security flywheel: API Security run-rate targeted ~ $100M by YE25; strong attach to AI agentic workloads and AI Firewall positioning create multi-year expansion opportunity .
  • Balance sheet/capital allocation: $1.813B cash+securities; no buybacks in Q3 after $800M repurchases YTD; remain opportunistic in M&A/repurchases .
  • Medium-term thesis: Mix shift to Security and CIS, margin discipline, and edge inference leadership support durable earnings growth and multiple resiliency amid CDN industry consolidation .