Akamai (AKAM) Q3 FY2025 Earnings Call Transcript

Date: November 6, 2025 | Source: Investing.com (full verbatim transcript)

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Conference Operator: Good day and welcome to the third quarter 2025 Akamai Technologies earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Mark Stoutenberg, Head of Investor Relations. Please go ahead, sir.

Mark Stoutenberg (Head of Investor Relations, Akamai): Good afternoon, everyone, and thank you for joining Akamai's third quarter 2025 earnings call. Speaking today will be Tom Leighton, Akamai's Chief Executive Officer, and Ed McGowan, Akamai's Chief Financial Officer. Please note that today's comments include forward-looking statements, including those regarding revenue and earnings guidance. These forward-looking statements are based on current expectations and assumptions that are subject to certain risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied. The factors include, but are not limited to, any impact from macroeconomic trends, the integration of any acquisition, geopolitical developments, and other risk factors identified in our filings with the SEC. The statements included on today's call represent the company's views on November 6, 2025, and we assume no obligation to update any of these forward-looking statements.

As a reminder, we'll be referring to certain non-GAAP financial metrics during today's call. A detailed reconciliation of GAAP to non-GAAP metrics can be found under the financial portion of the investor relations section of akamai.com. With that, I'll now hand the call off to our CEO, Dr. Tom Leighton.

Tom Leighton (Chief Executive Officer, Akamai): Thanks, Mark. I'm pleased to report that Akamai had a strong third quarter with results coming in above expectations for revenue, margin, and earnings per share. Revenue grew to $1.055 billion, up 5% year over year as reported, and up 4% in constant currency. Non-GAAP operating margins improved to 31%, and non-GAAP earnings per share was $1.86, up 17% year over year as reported and in constant currency. Our business performed well across the spectrum of our portfolio, with accelerating momentum for our cloud infrastructure services, or CIS, continued strong demand for our high-growth security products, and continued stabilization of our delivery revenue. We're especially pleased with the greater recognition of the strength of our distributed platform and differentiated strategy among customers and industry analysts.

For investors who may be less familiar with how we have transformed Akamai's business model from the CDN pioneer to a leader in cloud security and distributed cloud computing, I encourage you to read the new report on Akamai from IDC titled, "Akamai: Navigating the Cloud Frontier — A Transformation from CDN to Distributed Cloud Provider." It offers an objective third-party perspective of how Akamai has evolved, our strategy, and our key differentiators in security and distributed cloud computing for AI inferencing at the edge. As a great proof point for the advantages offered by Akamai's uniquely distributed compute capabilities, the top three cloud providers in the US are all now using Akamai Cloud Infrastructure Services. In Q3, one of them signed an expanded multi-year renewal that solidifies Akamai's position to be their premier distributed cloud computing provider.

This customer has a dominant position at the core of the internet and uses our widely distributed Managed Container Service to get their business logic closer to end users for superior performance. Our revenue for Cloud Infrastructure Services in Q3 was $81 million, up 39% year over year as reported and in constant currency. That is an acceleration from the 30% growth rate we had in Q2. We signed many new and expanded contracts for our Cloud Infrastructure Services in Q3, including with a major global appliance and consumer electronics manufacturer in South Korea, a multinational financial services company in Singapore, a leading US developer of analytic software, a US-based supply chain planning software vendor, a European cybersecurity provider, a major US airline, a leading American video game company, a leading media and entertainment company in India, and one of the largest media companies in the world.

Also, a multinational gaming company in Japan contracted for our Cloud Infrastructure Services as part of a larger $37 million two-year renewal for an array of Akamai products and services. Last week, I was with our team at the AI Industry Conference at NVIDIA GTC, where Akamai took a major step toward the future with the launch of Akamai Inference Cloud, our platform to support the growing demand to scale AI inference on the internet. With the rise of AI, the internet is undergoing a fundamental shift in architecture. The internet we're building today is driven by AI, where human intelligence is supported and augmented by intelligence systems powered by AI inference. Akamai is positioned to power inference the way we power the web, by bringing inference physically close to users. This will enable faster performance and global scale to support intelligent applications worldwide.

Akamai Inference Cloud will bring NVIDIA Blackwell GPUs into Akamai's globally distributed cloud, deployed across approximately 20 cities worldwide, enabling AI workloads to run near the edge with the lowest latency and the highest performance, backed by the security and reliability of the Akamai platform. Jensen Huang, CEO of NVIDIA, highlighted the importance of AI inference, noting, "Inference has become the most compute-intensive phase of AI, demanding real-time reasoning at planetary scale." The launch generated significant interest from customers, and we are already seeing strong demand and a robust pipeline for the Akamai Inference Cloud, with a number of large opportunities in various stages of evaluation. We believe the AI market is entering a critical transition point — the first inning of a long game to come — where inference or the execution of queries against a trained model is the new frontier, and Akamai is uniquely positioned to capitalize on this opportunity.

[Q&A and remainder of call — Security/delivery segment detail per management commentary: Security revenue $568M (+10% YoY), API Security and Zero Trust combined growth ~35% cc; delivery stabilized with EdgeIo integration tracking at the higher end of the $85-105M range; CIS 40-45% ARR growth on track for year-end; FY25 revenue guide $4.135-4.205B, non-GAAP EPS $6.60-6.80, OM ~29%, CapEx ~20% of revenue.]

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.