Akamai(AKAM) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results This section details Akamai's strong Q2 2025 financial performance, exceeding expectations and leading to raised full-year guidance Performance Summary Akamai reported strong Q2 2025 results, exceeding revenue and profitability expectations. Total revenue grew 7% year-over-year to $1.043 billion, driven by significant growth in Security (+11%) and Cloud Computing (+13%), particularly Cloud Infrastructure Services which surged 30%. This performance led the company to raise its full-year guidance for both revenue and earnings. Non-GAAP net income per diluted share increased by 9% to $1.73 Q2 2025 Key Financial Highlights (YoY) | Metric | Q2 2025 | Growth (YoY) | Growth (YoY, Constant Currency) | | :--- | :--- | :--- | :--- | | Total Revenue | $1.043 billion | 7% | 6% | | Cloud Infrastructure Services Revenue | $71 million | 30% | 29% | | GAAP Net Income per Diluted Share | $0.71 | -17% | -18% | | Non-GAAP Net Income per Diluted Share | $1.73 | 9% | 9% | - CEO Tom Leighton highlighted strong momentum, leading to increased full-year guidance. He emphasized that investments in security and cloud computing are paying off and sees AI as a strong tailwind for the business[2] Q2 2025 Revenue Breakdown (YoY, Constant Currency) | Revenue by Solution | Amount | Growth (YoY, CC) | | :--- | :--- | :--- | | Security | $552 million | 10% | | Delivery | $320 million | -4% | | Cloud Computing | $171 million | 13% | | Revenue by Geography | Amount | Growth (YoY, CC) | | U.S. | $528 million | 4% | | International | $516 million | 8% | - The company executed $300 million in share repurchases during the quarter, buying back 3.9 million shares at an average price of $77.51[6] Financial Guidance Akamai has raised its financial outlook for the remainder of the year. For the third quarter of 2025, the company projects revenue between $1.035 billion and $1.050 billion, with non-GAAP EPS of $1.62 to $1.66. For the full year 2025, revenue is now expected to be in the range of $4.135 billion to $4.205 billion, with non-GAAP EPS between $6.60 and $6.80 Q3 and Full Year 2025 Financial Guidance | Guidance Metric | Q3 2025 | Full Year 2025 | | :--- | :--- | :--- | | Revenue | $1,035M - $1,050M | $4,135M - $4,205M | | Non-GAAP Operating Margin | 28% | 29% | | Non-GAAP EPS | $1.62 - $1.66 | $6.60 - $6.80 | Financial Statements This section presents Akamai's condensed consolidated balance sheets, income statements, and cash flow statements Condensed Consolidated Balance Sheets As of June 30, 2025, Akamai's balance sheet shows total assets of $10.54 billion, a slight increase from $10.37 billion at year-end 2024. Key changes include a decrease in marketable securities and a significant increase in convertible senior notes, reflecting financing activities during the period. Total stockholders' equity decreased from $4.88 billion to $4.47 billion Balance Sheet Summary (as of June 30, 2025) | Account | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $2,033,827 | $2,578,097 | | Total Assets | $10,536,135 | $10,368,785 | | Total Current Liabilities | $880,519 | $2,091,323 | | Convertible senior notes (non-current) | $4,100,977 | $2,396,695 | | Total Liabilities | $6,068,627 | $5,490,428 | | Total Stockholders' Equity | $4,467,508 | $4,878,357 | Condensed Consolidated Statements of Income For the three months ended June 30, 2025, Akamai generated revenue of $1.043 billion, up from $980 million in the prior year period. However, due to higher operating expenses and a larger provision for income taxes, GAAP net income decreased to $104 million from $132 million year-over-year, resulting in a GAAP diluted EPS of $0.71 compared to $0.86 Income Statement Highlights (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $1,043,494 | $979,580 | | Income from Operations | $151,461 | $147,986 | | Net Income | $103,618 | $131,688 | | Diluted EPS | $0.71 | $0.86 | Condensed Consolidated Statements of Cash Flows In the second quarter of 2025, Akamai generated strong net cash from operating activities of $459 million. Investing activities resulted in a net cash outflow of $683 million, primarily due to purchases of property, equipment, and marketable securities. Financing activities showed a net cash outflow of $41 million, driven by $300 million in common stock repurchases, offset by proceeds from the issuance of new convertible senior notes and related transactions Cash Flow Summary (Three Months Ended June 30, 2025) | Activity (in thousands) | Q2 2025 | | :--- | :--- | | Net cash provided by operating activities | $459,149 | | Net cash used in investing activities | ($682,866) | | Net cash used in financing activities | ($41,205) | Supplemental Financial Data This section provides additional detailed breakdowns of revenue by solution and geography, along with other key operational metrics Revenue by Solution In Q2 2025, Security revenue grew 11% year-over-year to $552 million, and Cloud Computing revenue increased 13% to $171 million. Conversely, Delivery revenue continued its decline, falling 3% to $320 million. On a constant currency basis, Security grew 10% while Delivery declined 4% Q2 2025 Revenue by Solution (YoY Growth) | Solution | Revenue (in thousands) | YoY Growth | YoY Growth (Constant Currency) | | :--- | :--- | :--- | :--- | | Security | $551,914 | 11% | 10% | | Delivery | $320,125 | -3% | -4% | | Cloud computing | $171,455 | 13% | 13% | Revenue by Geography Geographically, International revenue growth outpaced U.S. growth in Q2 2025. International revenue grew 10% year-over-year (8% in constant currency) to $516 million, while U.S. revenue grew 4% to $528 million Q2 2025 Revenue by Geography (YoY Growth) | Geography | Revenue (in thousands) | YoY Growth | YoY Growth (Constant Currency) | | :--- | :--- | :--- | :--- | | U.S. | $527,607 | 4% | 4% | | International | $515,887 | 10% | 8% | Other Supplemental Data This section provides detailed breakdowns of key operational and financial metrics. For Q2 2025, total stock-based compensation was $112.8 million. Total capital expenditures on an accrual basis were $214.2 million, representing 21% of revenue for the quarter. The company's employee count stood at 10,944 at the end of the period - Total stock-based compensation for Q2 2025 was $112.8 million, an increase from $98.5 million in Q2 2024[17] - Total capital expenditures (accrual basis) were $214.2 million in Q2 2025, equivalent to 21% of revenue, up from 17% of revenue in the prior year quarter[17] Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP financial results to non-GAAP measures for income from operations, net income, and diluted earnings per share Reconciliation of Income from Operations and Net Income For Q2 2025, Akamai's GAAP income from operations was $151.5 million. After adjusting for items such as stock-based compensation ($112.8 million) and amortization of acquired intangible assets ($27.7 million), the non-GAAP income from operations was $308.6 million. Similarly, GAAP net income of $103.6 million was reconciled to a non-GAAP net income of $251.4 million Q2 2025 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | GAAP | Key Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Income from Operations | $151,461 | +$157,162 | $308,623 | | Operating Margin | 15% | | 30% | | Net Income | $103,618 | +$147,738 | $251,356 | Reconciliation of Net Income per Diluted Share The company's GAAP net income per diluted share of $0.71 for Q2 2025 is reconciled to a non-GAAP figure of $1.73. The primary adjustments adding back to the EPS were stock-based compensation ($0.78) and amortization of acquired intangible assets ($0.19), partially offset by tax effects - GAAP EPS of $0.71 was adjusted upwards by a net $1.02 to arrive at a Non-GAAP EPS of $1.73 for Q2 2025. The largest positive adjustment was for stock-based compensation, contributing $0.78 per share[20] Reconciliation of Net Income to Adjusted EBITDA Akamai's Adjusted EBITDA for Q2 2025 was $444.4 million, representing an Adjusted EBITDA margin of 43%. This was derived from a GAAP net income of $103.6 million by adding back items including depreciation and amortization ($135.8 million), stock-based compensation ($112.8 million), and provision for income taxes ($48.3 million) Q2 2025 Net Income to Adjusted EBITDA Reconciliation (in thousands) | Metric | Amount | | :--- | :--- | | Net Income (GAAP) | $103,618 | | Adjustments (Taxes, Interest, D&A, Stock Comp, etc.) | +$340,762 | | Adjusted EBITDA | $444,380 | | Adjusted EBITDA Margin | 43% | Non-GAAP Financial Measures and Forward-Looking Statements This section explains the company's use of non-GAAP financial measures and provides a safe harbor statement regarding forward-looking information Use and Definition of Non-GAAP Financial Measures Akamai utilizes non-GAAP financial measures to supplement its GAAP results, believing they provide a better understanding of ongoing business performance and facilitate comparisons across periods. These measures exclude items that may be infrequent or not reflective of core operations - Management uses non-GAAP measures for operational decision-making, planning, and evaluating financial performance[23] - Key adjustments to derive non-GAAP figures include excluding: - Amortization of acquired intangible assets - Stock-based compensation - Acquisition-related costs - Restructuring charges - Amortization of debt issuance costs[26][36] Safe Harbor Statement This section serves as a safe harbor statement, cautioning that the press release contains forward-looking statements, including financial guidance, which are subject to various risks and uncertainties. It warns that actual results could differ materially from expectations due to factors like economic trends, competition, geopolitical events, and other risks detailed in SEC filings - The release contains forward-looking statements regarding future financial performance and prospects, which are not guarantees of future results[41] - Key risks that could impact results include macroeconomic trends, competition, geopolitical instability, supply chain issues, and the ability to integrate acquisitions[41] - Akamai disclaims any obligation to update these forward-looking statements in the future[42]