Akamai Technologies (NASDAQ:AKAM) reported fourth-quarter 2025 results that management said reflected continued progress in repositioning the company toward cybersecurity and cloud infrastructure, while also highlighting new investments tied to its AI inference strategy.
Fourth-quarter financial performance
CEO Tom Leighton said Akamai delivered “strong fourth quarter results,” with revenue of $1.095 billion, up 7% year-over-year as reported and 6% in constant currency. Non-GAAP operating margin was 29%, and non-GAAP earnings per share were $1.84, up 11% year-over-year as reported and in constant currency.
On capital returns, McGowan said Akamai did not repurchase shares in the fourth quarter, but spent $800 million in 2025 to buy back approximately 10 million shares, calling it the largest annual buyback in the company’s history.
Cloud infrastructure growth accelerates and AI inference ramps
A key focus of the call was cloud infrastructure services (CIS). Leighton said CIS revenue was $94 million in Q4, up 45% year-over-year as reported (and 44% in constant currency), accelerating from 39% growth in Q3. McGowan added that compute revenue—comprised of CIS and other cloud applications (OCA)—was $191 million, up 14% year-over-year, with CIS now representing about 50% of total compute revenue.
Leighton attributed CIS growth to multiple areas, including ISV solutions, infrastructure-as-a-service and storage customers, and customers using EdgeWorkers and WebAssembly for “improved performance and lower costs for edge-native applications.” He also said Akamai is beginning to benefit from “AI-related tailwinds” as customers increase use of AI applications and agents.
Akamai highlighted its launch of Akamai Inference Cloud, which Leighton described as aimed at scaling AI inference “on the internet” by bringing compute physically closer to end users to achieve low-latency performance. He said the platform incorporates NVIDIA Blackwell GPUs into Akamai’s distributed cloud infrastructure and security capabilities.
Management also disclosed a major new agreement: Leighton said Akamai recently signed a four-year, $200 million commitment for CIS with a “major U.S. tech company.” McGowan said the contract is Akamai’s largest compute customer deal and that the “large majority” of the commitment is for AI inference cloud, with revenue recognition expected to begin in Q4 2026. In Q&A, McGowan said the customer was an existing Akamai customer using CDN and security, though not one of the company’s largest accounts.
In addition to the large contract, Leighton cited several CIS customer wins and expansions, including cost-savings claims versus hyperscalers and deals tied to performance and reduced latency or egress costs. In Q&A, management emphasized that customers choose Akamai for a mix of performance, scale, and cost, and noted that the three large U.S. hyperscalers use Akamai’s compute for performance reasons tied to Akamai’s distributed footprint.
Security performance led by API Security and segmentation
Security remained Akamai’s largest segment in the quarter. McGowan reported security revenue of $592 million, up 11% year-over-year as reported and 9% in constant currency. Revenue from API Security and Zero Trust enterprise security combined was $90 million, up 36% year-over-year as reported (and 34% in constant currency).
McGowan said API Security grew by more than 100% year-over-year, exiting 2025 with a revenue run rate exceeding $100 million. Leighton and McGowan cited continued demand for API Security and Guardicore Segmentation, including multiple multi-year contracts and renewals, and said demand was coming from a variety of verticals and geographies.
Leighton also pointed to external recognition, including a Gartner Peer Insights “Customers’ Choice” designation for network security micro-segmentation, and cited a 99% recommendation rate in that report. He additionally highlighted Akamai’s inclusion in Forbes lists focused on trust and employer standing, and The Wall Street Journal’s “Management Top 250” ranking.
Delivery trends and segment mix
Delivery revenue in Q4 was $311 million, down 2% year-over-year as reported and down 3% in constant currency. McGowan said results reflected “continued steadying trends” in delivery throughout 2025. International revenue was $542 million, up 11% year-over-year as reported (up 8% in constant currency) and represented 50% of total revenue.
In Q&A, management described a stable traffic environment and competitive pricing dynamics, with McGowan noting some competitors selling at “very low prices,” which Akamai “won’t do.” He also said Akamai may raise prices in some cases to help offset rising costs.
Guidance, investment plans, and reporting changes
For the first quarter of 2026, Akamai guided revenue to $1.06 billion to $1.085 billion, which McGowan said implies 4% to 7% reported growth (or 2% to 5% constant currency). He said Q1 revenue is expected to be lower sequentially due to reduced one-time license revenue versus Q4, two fewer calendar days, and seasonal traffic patterns.
Q1 non-GAAP EPS guidance was $1.50 to $1.67, with a projected non-GAAP operating margin of 26% to 27%. Q1 CapEx is expected at $254 million to $264 million, or 23% to 25% of revenue.
For full-year 2026, Akamai guided revenue to $4.4 billion to $4.5 billion, up 5% to 8% as reported (or 4% to 7% in constant currency). Within that outlook:
- Security revenue is expected to grow in the high single digits on a constant currency basis.
- CIS revenue is projected to accelerate to 45% to 50% year-over-year, with momentum building in the second half driven “mainly by the scaling of AI inference cloud business.”
- Delivery and other cloud apps are expected to decline in the mid-single digits year-over-year.
McGowan said 2026 non-GAAP operating margin is expected to be approximately 26% to 28%, with margin pressure driven “mainly” by increased colocation and depreciation expenses tied to CIS expansion. Full-year 2026 CapEx is expected to be approximately 23% to 26% of revenue.
Management also detailed two drivers behind higher capital spending: Akamai intends to invest about $250 million of CapEx in 2026 to augment AI inference cloud capacity, and it has observed “significant inflationary pressure” in computer hardware—particularly memory chips—necessitating an upward adjustment to the 2026 CapEx forecast of approximately $200 million.
Separately, McGowan said Akamai completed a targeted workforce reduction to better align talent with long-term priorities and took a $55 million restructuring charge in Q4, primarily severance and intangible asset impairments. He said severance-related cash outflows are expected in Q1.
Finally, Akamai announced a reporting change: beginning in Q1 2026, the company will report cloud infrastructure services as a standalone revenue category, while consolidating delivery and other cloud apps into a single reporting category. McGowan said Akamai published eight quarters of revenue history for the new categories and will also disclose quarterly OCA revenue independently for the remainder of 2026.
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.
