Akamai Technologies Q2 2026 Earnings Call: Complete Transcript

Akamai Technologies (NASDAQ: AKAM ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

The full earnings call is available at Summary Akamai Technologies Inc. -based tech company for robotics development. The company anticipates accelerating overall revenue growth to the low teens in 2027, driven by AI-driven demand for its cloud and security solutions. 1 billion, up 5% year over year, with cloud infrastructure services revenue growing by 39% and security revenue by 10%.

Akamai's strategic focus includes expanding its distributed platform for AI inference, leveraging its global reach to optimize performance and reduce latency. The company is investing heavily in its cloud services, with significant capex planned to expand GPU capacity, and has temporarily paused share repurchases to fund growth. Akamai acquired LayerX to enhance its security portfolio, now rebranded as Akamai Workforce Protector, to address AI usage control and workforce security. Management is confident in the company's ability to manage costs and maintain profitability despite significant investments, with projected non-GAAP operating margins in the mid-20s for 2026.

Full Transcript OPERATOR Good day everyone and welcome to the Q2 2026 Akamai Technologies Inc. earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please reach a conference specialist by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. Using a touchtone telephone, to withdraw your questions you may press star and two. Please also note today's event is being recorded.

At this time, I'd like to turn the floor over to Mark Stoutenburg, Head of IR. Sir, please go ahead. Mark Stoutenburg, Head of IR Good afternoon everyone and thank you for joining Akamai's second quarter 2026 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 that include 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 with our filings with the SEC.

The statements included on today's call represent the company's views on August 6, 2026, and we assume no obligation to update any forward-looking statements. As a reminder, we will be referring to certain non-GAAP financial metrics during today's call. com under Financials. With that, I'll now hand the call off to our CEO, Dr.

Tom Leighton. Tom Leighton, Chief Executive Officer Thanks, Mark. I'm very pleased to report that Akamai continues to build momentum and gain wide industry recognition as a key infrastructure provider for the AI-driven economy. Akamai has long been known for operating the world's most distributed platform for content delivery and cybersecurity at global scale and with a reputation for reliability, quality, and trust.

And now we're leveraging our global footprint and years of experience serving the world's largest enterprises to do for the AI-driven economy what we've done for cybersecurity and content delivery. The response from industry leaders and major enterprises has been very strong. -based technology company has committed more than $600 million over four years for our cloud infrastructure services to power their robotics development. 8 billion.

As a result of these commitments and the exceptionally strong pipeline we're seeing, we now anticipate that Akamai's overall revenue growth will accelerate into the low teens in 2027. For investors who want to understand how the AI market is evolving and why Akamai is such a unique and vital player in this new ecosystem, we encourage you to read the July 23 article in Fast Company by Victor Day.

In the article, Day explains the role played by Akamai's distributed platform in transforming the content delivery and cybersecurity marketplaces, and how a similar approach can benefit the AI ecosystem with many agentic workloads being processed at the edge, close to users, instead of in massive centralized data centers. In a related blog, IDC analyst Dave McCarthy considers a world transformed by AI agents and the practical challenges of automated execution of queries against a trained model.

Whereas training frontier models requires massive data centers and energy consumption, the next challenge for AI is what it will take to run those models everywhere at low latency and with affordable cost. It's also helpful to read a recent blog by Akamai CTO Bobby Blumofe on how AI inference is reshaping the cloud. Bobby's post explains why the infrastructure needed for AI agents will ultimately be a flexible continuum stretching from the core to the edge as the market for AI moves beyond centralized AI factories. Akamai's strategy is to provide a unified distributed grid for AI inference.

By pushing AI inference to the edge and combining it with our massive deployment of CPUs for delivery, security, and functions as a service, our platform will enable customers to run agents and models within milliseconds of their end users, with the responsiveness of local compute and the scale of the global web, optimizing performance while reducing latency and cost. Customers are already leveraging our cloud infrastructure services for a wide variety of repeatable use cases. For example, an AI patent intelligence platform in Singapore shifted its inference workloads from a hyperscaler to Akamai, boosting performance by 30% and cutting infrastructure costs by 20%.

An AI-powered decision intelligence platform in Poland chose us to run low-latency game theory simulations globally and with predictable costs. S. chose us to run their high-throughput storage, observability, and analytics platform. A global AI software company in India chose us to run their GenAI image creation in a $12 million win over a hyperscaler.

An AI-powered communications provider in India chose us to eliminate unpredictable hyperscaler billing and accelerate their customer engagement. S. chose us for high-throughput live media encoding. Looking across our business as a whole, AI is not only driving adoption and revenue growth for Akamai Cloud, AI has also been a tailwind for our security solutions.

In Q2, Akamai security revenue grew 10% year over year as reported and 9% in constant currency. Security growth was led once again by strong demand for our market-leading web app firewall, API security, and Guardicore segmentation solutions. 5. Customers that added or significantly expanded their WAF usage in Q2 included one of the world's leading commerce sites, one of the world's leading automakers, and one of the world's largest banks in a $14 million upgrade to have Akamai secure all of their applications.

We also signed renewal upgrades for security and CIS products with one of the world's largest telcos in a contract worth more than $20 million over two years. And today we're also very pleased to announce that CrowdStrike, a leading AI-native cybersecurity platform, has switched to Akamai for its web security and content delivery needs. CrowdStrike told us they were dissatisfied with the inconsistent service they received from one of our SMB-focused competitors. We see this validation from another security leader as a strong endorsement of Akamai's enterprise security capabilities and our hard-won reputation for trust, reliability, and dedicated customer support.

On the go-to-market front, we recently announced that Akamai has been selected as a strategic partner for WWT's AI Readiness Model for Operational Resilience, or ARMOR for short. This is the industry's first holistic, vendor-agnostic AI security framework, and our inclusion positions Akamai as a foundational security architecture for the AI factories being built by WWT and accelerated by Nvidia. Without this collaborative security framework for AI, organizations are often forced to piece together fragmented security strategies.

By aligning the Akamai security portfolio with ARMOR, we provide a methodology to protect large-scale AI clusters proactively by preventing the lateral movement of threats. As WWT's Chris Conrad said, no single vendor can secure the AI frontier alone. Through our close partnership with Akamai, we're turning the hype of secure enterprise AI into a tangible, scalable reality for customers. Akamai is also proud to be one of the industry's must-have security providers, partnering with Anthropic and OpenAI to help ensure the safe and rapid deployment of AI-enhanced defenses.

With our access to programs like Last Wing and Daybreak and our participation in programs like the Open Secure AI Alliance, we're applying our expertise to help keep major enterprises and critical infrastructure secure. As employees across all industries use AI tools more frequently, enterprises need more help to secure their workforce and prevent sensitive data from being leaked. That's why we acquired LayerX, a leading provider of secure enterprise browser and AI usage control.

With LayerX, now rebranded as Akamai Workforce Protector, we're able to give security teams the deep visibility they need to see exactly how users are interacting with web content, SaaS applications, file uploads, and even raw AI prompts. By adding this browser security platform to our portfolio, Akamai is now uniquely positioned to protect enterprises from unauthorized AI agents, whether they're operating on a user's laptop or living inside internal applications that talk to external LLMs.

What makes the combination particularly exciting is how nicely Workforce Protector aligns with Akamai's existing Zero Trust portfolio, including our Guardicore microsegmentation, Zero Trust Network Access, and DNS security solutions that thousands of enterprises rely on today. Ultimately, we believe these combined capabilities will deliver a powerful, unified workforce security solution that directly addresses one of the industry's most urgent challenges: securing and governing how employees, partners, and supply-chain ecosystems interact with AI.

LayerX is the latest in a series of acquisitions we made to build out our security portfolio and make it easier for enterprises to obtain more comprehensive solutions from Akamai as their strategic security partner. 4 billion in revenue this year, making Akamai one of the largest security providers in the market. In summary, we're excited to see AI driving demand for our cloud and security portfolios, and we're grateful for our talented team here at Akamai who continue to perform extraordinary work to deliver flawless digital experiences for our customers.

Our employees' dedication to our customers' success is one of the reasons why so many of the world's top brands and most demanding businesses rely on Akamai as their trusted, dependable, and reliable partner. Now I'll turn the call over to Ed for more on our results and our outlook for the remainder of the year. Ed. Ed McGowan, Chief Financial Officer Thanks, Tom.

Before I begin the standard review of our quarterly financials and updated 2026 outlook, I want to build on Tom's remarks. From a strategic and financial perspective, we couldn't be more excited about the trajectory of our business. 8 billion this year, a huge validation of our platform. Beyond providing great multiyear revenue visibility, it also underscores the scale of our cloud infrastructure services business for this new customer.

We don't expect any material revenue impact for 2026, but we do expect revenue to fully ramp throughout 2027. And finally, as Tom mentioned earlier, and backed by these multiyear commitments along with an expanding pipeline, we have a clear line of sight to accelerating our top-line revenue growth from single digits this year to the low teens in 2027. With that, let's dive into the Q2 results. 1 billion, up 5% year over year as reported and in constant currency.

Cloud Infrastructure Services, or CIS, revenue was $99 million, up 39% year over year as reported and in constant currency. This was in line with our expectations, and we continue to expect CIS revenue to meaningfully accelerate in Q4 and then further accelerate in 2027. Security revenue maintained strong momentum with revenue of $604 million, up 10% year over year as reported and 9% in constant currency. The strength in the second quarter continued to be driven by our fast-growing API Security and Guardicore segmentation solutions.

Moving to Delivery and Other Cloud Applications, revenue was $396 million, down 6% year over year as reported and down 5% in constant currency. International revenue was $549 million, up 6% year over year or up 7% in constant currency, representing approximately 50% of total revenue in Q2. Foreign exchange fluctuations had a negative impact on revenue of $2 million on a sequential basis and a negative $1 million impact on a year over year basis. 59 of earnings per diluted share, down 8% year over year as reported and down 6% in constant currency.

These results include our expanded colocation investments, higher depreciation, and increased headcount costs, all to help fuel faster growth in our Cloud Infrastructure Services. Our non-GAAP operating margin for Q2 was 25%, in line with our expectations. We expect operating margin to remain in the mid-20s for the remainder of this year as we continue to invest to capture the exciting growth opportunities in CIS. Our Q2 capex was $347 million, or 32% of revenue.

Second-quarter capex was below our guidance, primarily driven by the timing of receipt of some GPUs. These shipments arrived a few weeks later than expected following the quarter end, pushing the bulk of the planned spend into Q3. 5 billion via two equal tranches of zero-coupon convertible debt maturing in 2030 and 2032 to fund our growing CIS pipeline and for general corporate purposes. In Q2 we spent approximately $410 million to buy back approximately 3 million shares.

Year to date, we have repurchased roughly 5 million shares for a total of approximately $616 million. We ended the second quarter with approximately $565 million remaining on our current repurchase authorization. However, given the strong market demand for CIS, we are temporarily pausing share repurchases to reallocate capital to support our high-growth CIS pipeline. 6 billion of cash, cash equivalents, and marketable securities.

Now, before I provide Q3 and full-year 2026 guidance, I want to touch on a few housekeeping items. First, on July 2nd we completed the acquisition of security company LayerX for approximately $205 million. From a financial perspective, we expect the acquisition to have no material impact on full-year 2026 revenue. 12 for 2026, split evenly across Q3 and Q4.

Second, I'd like to turn to foreign exchange and its expected impact on our second-half 2026 performance. Based on currency movements since our last earnings call, we now expect second-half revenue headwinds of approximately $9 million. Finally, I'd like to provide additional color on our capital expenditures for the remainder of the year. For Q3, capex is projected to step up significantly, partly due to the shipments that slipped into July that I referenced earlier and as we ramp up buildouts to support the major contracts announced earlier this year.

As mentioned on our last call, GPU demand remains exceptionally strong. As a result, all of our GPU capacity is completely sold out. Therefore, driven by the $600 million new customer win we announced today and a very robust pipeline, we expect to invest up to $500 million in capex to replenish and expand our GPU capacity. We expect to spend approximately $60 million of that this year, with the remainder hitting in early 2027.

13 billion, up 5% to 7% as reported and up 5% to 8% in constant currency over Q3 2025.