AKAMAI TECHNOLOGIES INC (AKAM) Q1 2026 Earnings Call Transcript
Bullish Software - Services 16.11B USA
Next Earnings
2026-05-07
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Akamai delivered strong Q4 results with 7% revenue growth, accelerating CIS, and AI-focused Inference Cloud investments, guiding to multi-year CIS-driven growth and higher capex in 2026.
⭐ Key Highlights
Q4 Revenue and Margin
Q4 revenue reached $1.095B (up 7% YoY) with non-GAAP operating margin at 29% and non-GAAP EPS of $1.84, up 11% YoY.
Cloud Infrastructure Services (CIS) Acceleration
CIS revenue of $94M in Q4 grew 45% YoY (44% CC), marking a notable acceleration from Q3 and representing ~50% of total compute revenue.
Akamai Inference Cloud Launch and AI Tailwinds
Launched Akamai Inference Cloud with NVIDIA Blackwell GPUs; signed a 4-year, $200M commitment with a major US tech customer and expect strong pipeline and capacity expansion via a $250M CapEx program.
Security Growth and New Wins
Security revenue rose 11% YoY to $592M, led by API Security and Guardicore Segmentation, with API Security exiting the year at a run rate >$100M.
Capital Allocation and 2025 Buybacks
Full-year 2025 buybacks of ~$800M (~10M shares); cash and equivalents ~$1.9B at year-end; continued opportunistic M&A and buybacks intact.
Guidance Highlights
2026 guidance callouts include CIS revenue growth of 45–50% YoY, Security in high-single digits, Delivery and OCA down mid-single digits, with 2026 non-GAAP EPS of $6.20–$7.20 and revenue of $4.4–$4.55B.
✔Positive Signals
- CIS acceleration to 45% YoY growth and ~50% of total compute revenue
- Akamai Inference Cloud momentum with 20-city GPU deployment sold out and a major 4-year $200M contract
- API Security growth >100% YoY exiting the year, with run rate >$100M
- Large cash position and history of substantial buybacks, improving shareholder value
- Broad, multi-vertical CIS pipeline including new verticals (life sciences, manufacturing, health care)
✖Negative Signals
- 2026 capex increase driven by memory chip costs and GPU investments; potential margin pressure
- FX volatility remains a risk given ~ $1.3B revenue denominated in foreign currencies
- Q1 2026 guidance implies seasonality and onetime license revenue softness
- Delivery and OCA expected to decline mid-single digits in 2026, weighing on overall mix
- Execution execution risk around ramping large CIS deals and ensuring timely capacity deployment
📊Financial Results
- Q4 total revenue $1.095B, up 7% YoY; non-GAAP EPS $1.84, up 11% YoY
- Compute revenue (CIS + OCA) $191M, up 14% YoY; CIS alone $94M, +45% YoY
- Security revenue $592M, +11% YoY; API Security and Zero Trust combined $90M, +36% YoY
- Q4 CapEx $154M (14% of revenue); cash and equivalents ~ $1.9B; full-year 2025 buybacks ~$800M (~10M shares)
🔮Future Guidance
- Q1 2026 revenue guidance at $1.06B–$1.085B, +4% to +7% YoY (2%–5% CC) with cash gross margin ~71%–72%
- Q1 2026 non-GAAP OPEX guidance $339M–$348M; EBITDA margin ~39%–41%; non-GAAP op margin ~26%–27%; EPS $1.50–$1.67
- Capex for Q1 2026 expected 254–264M (~23%–25% of revenue)
- Full-year 2026 guidance: revenue $4.4B–$4.55B (+5% to +8% reported; 4%–7% CC); CIS growth 45%–50%; Security high-single digits CC; Delivery and OCA mid-single digits decline
- Non-GAAP EPS for 2026: $6.20–$7.20; capex ~23%–26% of revenue; FX scenarios assume modest positive $36M revenue impact; 147–148M share count
💡Interesting Insights
- Inference Cloud capacity is being scaled with a new cluster-based model in addition to per-hour pricing, expanding addressable workloads and customer types
- Large CIS deal with an existing CDN/security customer signals strong cross-sell potential rather than pure churn from hyperscalers
- Event-driven revenue from live events is acknowledged as meaningful but not a material quarterly driver
Detailed Analysis
AI-generated summary of AKAMAI TECHNOLOGIES INC earnings call transcript.
Akamai reported solid Q4 performance with revenue of $1.095B (+7% YoY) and non-GAAP EPS of $1.84 (+11% YoY). CIS grew 45% YoY to $94M, signaling a broad and rapid AI-driven expansion in edge compute. Security remained a key driver, with total security revenue up 11% and API Security exiting the year with a run rate above $100M. The company highlighted momentum for Akamai Inference Cloud, including a 4-year, $200M commitment from a major tech customer and a plan to invest about $250M in 2026 CapEx to scale AI inference capacity. Akamai also noted stabilizing delivery trends, ongoing margin discipline, and a strategic shift to a CIS-centric growth model. For 2026, the company guided to revenue of $4.4–$4.55B, CIS revenue growth of 45–50%, Security growth in the high single digits, and delivery/OCA declines in the mid-single digits, with non-GAAP EPS of $6.20–$7.20 and capex of roughly 23–26% of revenue.
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