What Management Said
Read the full Q3 2025 transcript ↗Please note that today's comments include forward-looking statements, including those regarding revenue and earnings guidance. 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. 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 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. developer of analytic software, a U.S.-based supply chain planning software vendor, a European cybersecurity provider, a major U.S.
This is how Akamai can power the new generation of AI applications: conversational, personalized, and agentic, all designed to scale in real time to meet unprecedented demand. To train foundation models, AI pioneers have relied on hyperscale clouds and their centralized data centers with their enormous concentrations of compute, power, and capital. As AI systems are adopted at scale, we expect the growth of inference will drive enormous demand to this new intelligent layer of the internet. The service is available today with 17 locations around the world, and we're building out more points of presence as customer demand grows.
What went well
- Total revenue grew to $1.055 billion, up 5% year-over-year as reported and 4% in constant currency, coming in above the high end of guidance.
- Non-GAAP EPS reached $1.86, up 17% year-over-year both as reported and in constant currency, landing $0.20 above the high end of the guidance range.
- Cloud Infrastructure Services (CIS) revenue was $81 million, accelerating to 39% year-over-year growth from roughly 30% in the prior quarter, and all three of the top U.S. cloud providers are now using Akamai CIS.
- Security revenue was $568 million, up 10% year-over-year (9% in constant currency), with high-growth products API Security and Zero Trust Enterprise Security at $77 million, up 35% (34% cc).
- Non-GAAP operating margin improved to 31%, and the company generated non-GAAP net income of $269 million.
- Delivery revenue of $306 million (down 4%) came in slightly better than expected, marking another quarter of stabilization and improved trends in the delivery business.
- Akamai launched Akamai Inference Cloud with NVIDIA at GTC, live in 17 locations on NVIDIA Blackwell 6000 infrastructure, with strong early customer interest (Monks, Harmonic) for edge AI inference.
- Signed sizable cross-portfolio deals, including a $37 million two-year renewal with a Japanese gaming company, a $31 million multi-year security-and-compute commitment with a major European bank ($7M of it API Security), and a $20 million expansion with one of the world's largest airlines.
What went wrong
- Delivery revenue declined 4% year-over-year to $306 million, remaining a drag on total growth despite stabilization.
- Compute revenue growth of 8% as reported was held back by a tough compare: a $7 million one-time deferred-revenue benefit recorded in Q3 2024 that added about 5 percentage points to the prior-year compute growth rate.
- Full-year compute growth is now expected to be a touch under 15%, below prior expectations, because some larger CIS contracts ramped later in the year than anticipated.
- The Other Cloud Applications (OCA) portion of compute (~$100M) was roughly flat quarter-over-quarter, weighed down by storage and video-optimization workflow headwinds being transitioned to a partner.
- The company did not repurchase any shares in Q3, its first quarter without a buyback since around 2009.
- Q4 non-GAAP operating margin guidance of approximately 28%-30% implies sequential margin pressure, partly from a seasonal jump in sales commissions and early inefficiency from AI inference buildout.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Total revenue | Q4 2025 | $1.065B-$1.085B, up 4%-6% reported (3%-5% cc) |
| Non-GAAP operating margin | Q4 2025 | approximately 28%-30% |
| Non-GAAP EPS | Q4 2025 | $1.65-$1.85 |
| Cash gross margin | Q4 2025 | approximately 72%-73% |
| Non-GAAP operating expenses | Q4 2025 | $322M-$331M |
| EBITDA margin | Q4 2025 | approximately 42%-43% |
| CapEx | Q4 2025 | approximately $171M-$181M (~16% of revenue) |
| Non-GAAP tax rate | Q4 2025 | approximately 18%-19% ($57M-$60M) |
| Total revenue growth | FY2025 | 4%-5% in constant currency |
| Non-GAAP operating margin | FY2025 | approximately 29%-30% |
| Non-GAAP EPS | FY2025 | $6.93-$7.13 |
| CIS ARR growth (year-end) | FY2025 | 40%-45% year-over-year in constant currency |
| High-growth security combined ARR | FY2025 | up 30%-35% year-over-year in constant currency |
| API Security exit run rate | FY2025 | approximately $100 million |
| Compute revenue growth | FY2025 | a touch under 15% |
| Security revenue growth | FY2025 | approximately 10% |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +5% reported (+4% cc) | $1.055B, above guidance, driven by strength across security and compute plus continued delivery stabilization. |
| Non-GAAP EPS | +17% | $1.86, $0.20 above the high end of guidance, on higher-than-expected revenue and strong execution across the board. |
| Non-GAAP net income | n/a | $269 million for the quarter. |
| Non-GAAP operating margin | improved to 31% | Strong execution, higher capitalization of labor productivity, and better procurement/colocation/bandwidth pricing. |
| Security revenue | +10% reported (+9% cc) | $568M, driven by segmentation and rapidly growing API Security adoption. |
| High-growth security (API Security + Zero Trust) | +35% reported (+34% cc) | $77M; API Security more than doubled in its first quarter of full organic year-on-year growth after the NoName acquisition. |
| Compute revenue (CIS + OCA) | +8% reported (+7% cc) | $180M; growth held back ~5 pts by the $7M one-time deferred-revenue benefit in Q3 2024 (OCA). |
| Cloud Infrastructure Services (CIS) | +39% reported and cc | $81M, accelerating from ~30% in Q2 as all three top U.S. cloud providers now use CIS and new contracts ramped. |
| Other Cloud Applications (OCA) | n/a | ~$100M, roughly flat quarter-over-quarter amid storage and video-optimization workflow headwinds; not an investment focus. |
| Delivery revenue | -4% reported and cc | $306M, slightly better than expected; traffic growth plus moderating price declines and fewer competitors. |
| International revenue | +9% reported (+8% cc) | $525M, 50% of total revenue; strength led by APJ compute and healthier Western Europe. |
| CapEx | n/a | $224M, 21% of revenue, reflecting continued investment in the fast-growing CIS business. |
| Foreign exchange impact | +$8M YoY (+$4M sequential) | Positive FX tailwind on revenue in Q3. |
| Share repurchases | n/a | No shares bought back in Q3; $800M / ~10M shares year-to-date, the largest annual buyback in company history. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI inference at the edge | NVIDIA GPUs introduced at the edge in 2024 (Blackwell 4000-class) | Launched Akamai Inference Cloud at NVIDIA GTC on Blackwell 6000 across 17 locations; described as 'first inning' with strong demand and potential $50M-$100M-scale deals. | — |
| Business transformation (CDN to distributed cloud) | Ongoing pivot from CDN pioneer to security and distributed cloud | Validated by new IDC report 'Akamai: Navigating the Cloud Frontier, A Transformation from CDN to Distributed Cloud Provider.' | — |
| Hyperscaler relationships | Some top cloud providers using Akamai's distributed platform | All three top U.S. cloud providers now use CIS (edge worker ad logic, API orchestration, Managed Container Service for media workflow); one signed an expanded multi-year renewal in Q3. | — |
| API Security / agentic web | NoName acquisition closed June; building API Security | First quarter of full organic YoY growth, more than doubled; extending into AI Firewall and protection for AI agents, MCP/A2A, and shadow AI; exiting 2025 at ~$100M run rate. | — |
| Delivery stabilization | Structural decline moderating | Down only 4% and better than expected; fewer competitors, moderating price declines, and possible AI-driven traffic upside longer term. | — |
| Go-to-market transformation | Hiring hunters and specialists for security and compute | Transformation largely complete by early 2026 with continued rep hiring through at least 1H26; incenting longer-term, larger deals (visible in RPO). | — |
| Capital allocation | Steady quarterly buybacks to offset dilution plus opportunistic M&A | No Q3 buyback but record $800M YTD; strategy unchanged, remaining opportunistic on M&A and repurchases. | — |
| Platform reliability / distribution | Over 4,000 points of presence across 700+ cities | Targeting and achieving five-nines reliability as a differentiator versus competitors' outages, especially for regulated banking customers. | — |
Q&A Summary
Are you reiterating the segment growth communicated last quarter (compute ~15%, security ~10%)?
Security is called for about 10% for the full year and ARR guidance is reiterated. Compute will be a touch under 15% for the year because some larger contracts ramped later than expected, though CIS momentum is clearly picking up.
Any early guardrails for 2026?
Formal guidance comes on the February call, but given the CIS and new AI Inference Cloud momentum and tremendous demand, there is a very good chance CIS growth could accelerate next year.
Where are we on the AI inference adoption curve?
First inning of a very exciting game. Many customers want fast, real-user inference (personalized commerce video, AI toys, robotics, personalized media). The NVIDIA Blackwell 6000 is powerful and well-suited to the edge; the service just launched with very strong early interest.
What gives you confidence Akamai stays well-positioned versus hyperscalers building out their own capacity for edge inferencing?
Akamai's platform is unique with 4,000+ POPs in 700+ cities. Hyperscalers use Akamai for ad logic, API orchestration, and Managed Container Service because it runs their compute closer to users for better performance, not because of capacity constraints. Akamai does not need to build 4,000 new regions.
How should we think about required CapEx and compute gross margins for inferencing?
An initial NVIDIA deployment across ~17 cities is in Q4 CapEx. CapEx will closely follow demand at roughly a dollar of CapEx per dollar of revenue, possibly a bit better given GPU scarcity. Margins should be similar to compute today, inefficient at first but improving with scale and good operating leverage.
How large could inference deals be, and does the pipeline already show them?
The company is seeing some customers reach out for fairly large deal sizes, larger than typical compute deals. A $50M-$100M order would prompt buying even more CapEx to stay ahead of demand; deals will generally be larger to start.
Why is delivery pricing more stable now than in the past?
No top-customer renewal concentration this year (six customers are 1%+ of revenue) and none expected next year. Larger media deals have stabilized and price pressure, while still present, is a bit better than historically, partly because many delivery competitors have exited the business.
What percentage of customers use all three segments, and what is driving cross-sell?
The company incented longer-term deals, driving elongated average contract length and larger deals (visible in RPO). About 74%-75% of customers are both security and delivery customers; most are either a security or compute customer, and pool-of-funds/ELA deals are not the main driver.
Is there a security-attached opportunity with Akamai Inference Cloud?
Absolutely. AI applications and models have even greater vulnerabilities, requiring API Security and an AI Firewall, both areas where Akamai has market-leading solutions to wrap around inference engines and models.
What is new in the NVIDIA partnership versus last year?
It is much deeper: deploying Blackwell 6000s (a huge leap from the 4000s), much more broadly, in a stronger relationship that enables the Inference Cloud and its applications.
Your soft segment guide (security ~10%, compute just under 15%) seems to imply delivery steps back down in Q4 -- is that conservatism?
Don't read it as expecting anything negative; delivery is hard to call in Q4 and the range is wide. Seasonal effects don't manifest until around Thanksgiving. It is essentially a timing issue and delivery is the fill-in variable.
You now have all three large cloud providers on CIS -- did you just sign the third this quarter?
Yes. The third was just signed, the first signed a much larger contract, one got a lot bigger, and one is new, so now all three are on board.
Security has grown 9%-10% for a few quarters -- what are the demand puts and takes?
Significant demand for API Security (first full organic YoY quarter post-NoName, more than doubled, exiting at ~$100M run rate) and Guardicore Zero Trust. Penetration in the base is low for both fast-growing products, so there is a lot of runway; focusing only on the blended number misses the opportunity.
Is single-digit delivery growth/decline the long-term trend line?
General internet seasonality persists (Q4 strongest). No change to the trend, but AI agent applications could add video/API traffic, and gaming console refreshes and big title backlogs could help. If this year's trends hold, flat-to-down-single-digits could repeat.
Why did international outgrow the U.S., and which segments drove it?
U.S. 2025 growth was aided by NGO contracts now anniversarying. Internationally, APJ is leading the charge on large compute deals and embracing security, with healthier-than-normal Western Europe; compute in APJ is the standout strength.
Why no share buyback in Q3 -- a strategy shift toward opportunistic repurchases?
No change in thinking or strategy. The company spent more on buybacks this year ($800M) than ever before; it simply did not buy in Q3.
More on Akamai Technologies Inc
Reported 2025-11-06 · figures from the Akamai Technologies Inc Q3 2025 earnings call.
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