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    AKAM
    Earnings call· Mar 2026(Q1 FY26)

    AKAMAI TECHNOLOGIES Q1 FY26 earnings call AKAM

    May 7, 2026 Source

    Executive summary

    Akamai Q1 FY26 — Landmark $1.8B AI Infrastructure Deal Fuels Future Growth

    Akamai reported a strong Q1 FY26, highlighted by a record $1.8 billion cloud infrastructure services commitment, signaling a definitive shift towards becoming a key infrastructure provider for the AI-driven economy. The company is making bold investments in its CIS portfolio, including GPU deployments, to capitalize on rapidly expanding AI-specific demand, which is expected to drive double-digit revenue growth by 2027. While these investments are impacting near-term profitability and CapEx, management views them as critical for long-term growth, leveraging Akamai's distributed platform for low-latency, scalable AI inference and enhanced security solutions against AI-fueled attacks.

    Highlights

    5

    • Secured a landmark 7-year $1.8 billion commitment for cloud infrastructure services, the largest customer deal in company history.

    • Cloud Infrastructure Services (CIS) revenue grew 40% year-over-year as reported and 39% in constant currency to $95 million.

    • Security revenue grew 11% year-over-year as reported and 9% in constant currency to $590 million, driven by strong WAF, API security, and Guardicore Segmentation demand.

    • Anticipates total company annual top-line revenue growth to reach double digits in 2027, driven by AI opportunities.

    • Ended Q1 with $1.7 billion in cash, cash equivalents, and marketable securities, providing strong liquidity.

    Concerns

    5

    • Non-GAAP net income decreased 5% year-over-year to $239 million, and EPS decreased 5% to $1.61, due to expanded colocation investments, higher depreciation, and increased headcount costs.

    • Operating margin is expected to remain around 25-26% for the remainder of the year due to strategic investments in CIS.

    • CapEx is projected to jump significantly in Q2 to $433 million to $453 million (40-41% of revenue) to take delivery of NVIDIA GPUs and catch up on Q1 expenditures.

    • Delivery and other cloud applications revenue declined 7% year-over-year as reported and 8% in constant currency to $389 million.

    • Potential for additional GPU orders in H2 2026, not factored into current CapEx guidance, could further increase investment.

    Guidance & targets

    24
    CategoryTargetConfidence
    Total company annual top-line revenue growth
    double digits
    high materiality
    High
    Revenue from $1.8 billion customer win
    $20 million to $25 million
    medium materiality
    High
    CapEx for $1.8 billion customer win
    $800 million to $825 million
    high materiality
    High
    Q2 FY26 Revenue
    $1.075 billion to $1.1 billion
    high materiality
    High
    Q2 FY26 FX impact on revenue
    positive $2 million
    low materiality
    High
    Q2 FY26 Cash gross margin
    approximately 70% to 71%
    medium materiality
    High
    Q2 FY26 Non-GAAP operating expenses
    $346 million to $357 million
    medium materiality
    High
    Q2 FY26 EBITDA margin
    approximately 38% to 39%
    medium materiality
    High
    Q2 FY26 Non-GAAP depreciation expense
    $144 million to $146 million
    medium materiality
    High
    Q2 FY26 Non-GAAP operating margin
    approximately 25% to 26%
    high materiality
    High
    Q2 FY26 Non-GAAP EPS
    $1.45 to $1.65
    high materiality
    High
    Q2 FY26 Taxes
    $47 million to $54 million
    low materiality
    High
    Q2 FY26 Fully diluted share count
    approximately 146 million shares
    low materiality
    High
    Q2 FY26 CapEx
    $433 million to $453 million
    high materiality
    High
    Full-year 2026 Revenue
    $4.445 billion to $4.55 billion
    high materiality
    High
    Full-year 2026 Cloud Infrastructure Services (CIS) growth
    at least 50% year-over-year growth
    high materiality
    High
    Full-year 2026 Security revenue growth
    high single digits
    medium materiality
    High
    Full-year 2026 Delivery and other cloud apps decline
    mid-single digits year-over-year
    medium materiality
    High
    Full-year 2026 FX impact on revenue
    positive $20 million
    low materiality
    High
    Full-year 2026 Non-GAAP operating margin
    approximately 26%
    high materiality
    High
    Full-year 2026 CapEx
    approximately 40% to 42% of total revenue
    high materiality
    High
    Full-year 2026 Non-GAAP EPS
    $6.40 to $7.15
    high materiality
    High
    Full-year 2026 Non-GAAP effective tax rate
    approximately 18.5%
    low materiality
    High
    Full-year 2026 Fully diluted share count
    approximately 147 million shares
    low materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Cloud Infrastructure Services (CIS)
    Robust start to the year, with growth of 39% in constant currency. Seeing wins across a wide spectrum of industries, geographies, and use cases, with a rapidly building pipeline for AI-specific use cases.
    		$95 million40%——
    Security
    Strong momentum driven by fast-growing API security and Guardicore Segmentation solutions, along with strong growth from Web Application Firewall. Growth was 9% in constant currency.
    		$590 million11%——
    Delivery and other cloud applications
    Results were in line with expectations, driven by the wraparound impact of the Edgio transaction in 2025. Expected rate of decline to moderate throughout the remainder of the year. Decline was 8% in constant currency.
    		$389 million-7%——
    International revenue
    Represented 49% of total revenue in Q1. Growth was 5% in constant currency.
    		$530 million9%——

    Operational metrics

    9
    Non-GAAP net income
    $239 milliondown 5% year-over-year
    Q1 FY26

    Impacted by expanded colocation investments, higher depreciation, and increased headcount costs related to CIS.

    Non-GAAP EPS
    $1.61down 5% year-over-year
    Q1 FY26

    Diluted earnings per share, impacted by investments in CIS.

    Non-GAAP operating margin
    26%
    Q1 FY26

    In line with expectations, expected to remain in this range for the remainder of the year due to investment ramp-up.

    CapEx
    $206 million
    Q1 FY26

    Slightly below guidance due to timing shifts to Q2 and favorable component costs.

    Share buyback amount
    $206 million
    Q1 FY26

    Used to buy back approximately 2 million shares.

    Remaining share repurchase authorization
    $975 million
    Q1 FY26

    Remaining on current repurchase authorization.

    Cash and investments balance
    $1.7 billion
    Q1 FY26

    As of March 31, 2026, includes cash, cash equivalents, and marketable securities.

    Foreign exchange impact on revenue
    $2 millionpositive year-over-year
    Q1 FY26

    Positive impact on revenue on a sequential basis and year-over-year basis.

    Line of credit
    $1 billion
    current

    Available if needed to tap for funding.

    Industry KPIs

    8
    MetricValueDetails
    Headcount dso—
    Infra economics—
    Rpo current rpo—
    Large customer cohorts—
    Genai ai book of business$1.8 billionUSD
    Consumption revenue growth$95 millionUSD
    Sales capacity productivity—
    Ai agentic channel product adoption—

    Orderbook & backlog

    2
    Cloud Infrastructure Services commitment$1.8 billionQ1 FY26

    7-year commitment from a leading frontier model company. Largest customer deal in Akamai history. Revenue to ramp in Q4 FY26 ($20M-$25M expected).

    Cloud Infrastructure Services deal$200 millionQ4 FY25

    4-year deal announced last quarter with a major U.S. tech company.

    Product announcements

    1
    ProductTypeDetails
    NVIDIA AI gridlaunch

    Deals & partnerships

    3
    Leading frontier model companyLandmark 7-year commitment for cloud infrastructure services$1.8 billion7 years

    Customer chose Akamai for scale, performance, and reliability for AI workloads. This is a committed deal for dedicated capacity, with revenue recognized ratably over the contract term.

    Major U.S. tech companyCloud Infrastructure Services (CIS) deal$200 million4 years

    Customer is at the forefront of the AI revolution and chose Akamai for its cloud platform.

    NVIDIAIntegration of NVIDIA AI infrastructure into Akamai's distributed platform

    Involves the rollout of thousands of NVIDIA RTX Pro 6000 GPUs. NVIDIA referenced Akamai as a vital player in the industry's ecosystem for AI infrastructure.

    Capital programs

    1
    CapEx for $1.8 billion customer dealunderway$800 million to $825 million
    Funding: own capital
    Start: Q2 FY26

    Benefit: Support for the landmark 7-year $1.8 billion cloud infrastructure services commitment

    Expected to be spent over the next 12 months, with roughly $700 million in H2 2026 and the remaining balance in H1 2027. This CapEx is included in the full-year 2026 guidance.

    Risks & headwinds

    6
    Investment ahead of revenueFY26

    Non-GAAP net income down 5% YoY; non-GAAP operating margin at 26% (expected to remain in this range for FY26)

    Mitigation: Strategic investment to capture significant growth opportunities in CIS; expected to drive double-digit revenue growth by 2027.

    Increased operating expensesQ2 FY26

    Q2 non-GAAP operating expenses projected to be $346 million to $357 million

    Mitigation: Primarily due to continued investments in go-to-market and the annual employee merit cycle.

    Significant CapEx increaseQ2 FY26 and FY26

    Q2 CapEx projected to be $433 million to $453 million (40-41% of revenue); full-year CapEx 40-42% of revenue

    Mitigation: Driven by NVIDIA GPU delivery and Q1 CapEx timing shifts. Essential for building out CIS capacity to meet strong demand.

    Potential for additional GPU orders and CapExH2 FY26

    Current pipeline for GPUs significantly exceeds existing and projected inventory, potentially leading to additional GPU orders not factored into current annual CapEx guide.

    Mitigation: Management will update CapEx guidance if additional orders are placed before year-end. This indicates strong demand and growth opportunity.

    AI-fueled attacks and increased vulnerabilityOngoing

    Attacks with millions of malicious requests per second from millions of widely distributed IPs observed; increased frequency of zero-day attacks expected.

    Mitigation: Akamai's distributed WAF platform (4,300 locations), unparalleled access to real-time attack data, early warning ecosystem integration, experienced human security operations team with AI tools, and innovative AI-enabled product suite.

    Decline in Delivery and other cloud applications revenueFY26

    Down 7% YoY reported, 8% YoY constant currency to $389 million in Q1 FY26.

    Mitigation: Expected to moderate throughout the remainder of the year; primarily due to wraparound impact of Edgio transaction in 2025.

    What to watch in Q2 FY26

    5

    CapEx for additional GPU orders

    next quarter
    CurrentNot factored into current annual CapEx guide
    TargetUpdate on potential additional GPU orders and associated CapEx

    Why it matters

    Indicates the pace of demand for AI infrastructure and potential for further investment beyond current guidance, impacting future growth and profitability.

    Our current pipeline for GPUs significantly exceeds our existing and projected inventory, meaning we may place additional GPU orders in the second half of the year to meet this demand. This is not factored into our current annual CapEx guide. We will update CapEx guidance on a subsequent earnings call if we place another GPU order before year-end.

    Q&A highlights

    6

    Who are the primary competitors for such large AI infrastructure deals, and is the use case inference or agentic workloads? How is the customer leveraging Akamai's distributed network?

    Akamai competes with hyperscalers and neo clouds, winning deals due to its proven ability to manage and scale complex distributed systems, access to data center space globally, and leading security solutions. The specific use case for the $1.8B deal cannot be disclosed, but generally, customers value Akamai's low latency and scalability for agents and applications close to users and data.

    “Yes, we do compete with the hyperscalers and the neo clouds with our cloud infrastructure services. That's the primary competition. They select Akamai because of our proven ability to manage and scale complex distributed systems, our ability to get the necessary data center space and locations around the globe to interconnect that with the world's largest and best-performing delivery network and leading security solutions.”

    asked by Roger Boyd · answered by F. Leighton

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Driven Cloud Computing Strategy and NVIDIA Partnership

    Akamai is leveraging its global distributed platform to become an indispensable infrastructure provider for the AI-driven economy. The company unveiled the industry's first global-scale implementation of NVIDIA's AI grid at GTC in March, rolling out thousands of NVIDIA RTX Pro 6000 GPUs. This strategy aims to move the market for AI beyond isolated AI factories towards a unified distributed grid for AI inference, enabling customers to run complex models with low latency at the edge.

    02

    Landmark Customer Wins and Accelerating Pipeline

    Akamai announced a landmark 7-year $1.8 billion commitment for cloud infrastructure services from a leading frontier model company, the largest deal in its history. This follows a $200 million CIS deal in February with a major U.S. tech company. These wins, along with a rapidly expanding pipeline of AI-specific prospects, are expected to accelerate total company annual top-line revenue growth to double digits in 2027 and beyond, validating Akamai's cloud platform for AI workloads.

    03

    Strength in Security Portfolio Amidst AI-Fueled Threats

    The security portfolio delivered strong Q1 revenue growth of 11% reported and 9% constant currency. Demand was led by Web Application Firewall (WAF), API security, and Guardicore Segmentation solutions. Management highlighted a heightened sense of urgency among CISOs due to AI-powered attacks, which are increasing the frequency of zero-day vulnerabilities and attack volumes. Akamai's distributed WAF platform, operating in 4,300 locations, is uniquely positioned to defend against these advanced threats.

    04

    Strategic Investments in CIS and CapEx Outlook

    To capitalize on the strong demand for cloud infrastructure services, Akamai is investing significantly ahead of revenue. This includes substantial capital expenditures for GPU deployments and colocation, with Q2 CapEx projected to jump to $433 million to $453 million. While these investments are impacting near-term operating margins and non-GAAP net income, they are deemed critical for building the foundation to meet future growth opportunities. The company also noted a potential for additional GPU orders in the second half of the year, not yet factored into current CapEx guidance, due to strong pipeline demand.

    05

    Delivery and Other Cloud Applications Performance

    Revenue from delivery and other cloud applications was $389 million, down 7% year-over-year reported and 8% constant currency. This performance was in line with expectations, primarily due to the wraparound impact of the Edgio transaction in 2025. Management expects the rate of decline to moderate throughout the remainder of the year. While AI's biggest impact is on compute and security, potential for increased video generation by agents could eventually drive more delivery traffic.

    06

    Capital Allocation and Funding Strategy

    Akamai remains committed to its capital allocation strategy, including share buybacks to offset dilution and opportunistic M&A. The company spent $206 million to repurchase 2 million shares in Q1, with $975 million remaining on its authorization. With $1.7 billion in cash and a $1 billion line of credit, Akamai currently funds its significant CapEx for CIS build-outs intrinsically, though it remains open to capital markets if needed for future large deals.

    AI-generated summary of the company’s earnings call. Not investment advice.