Akamai(US:AKAM)2025-11-07 21:11Revenue Performance - Total revenue for the three months ended September 30, 2025, was $1,004,679,000, a decrease of 5% compared to $1,054,630,000 in the same period of 2024[95] - Security solutions revenue increased by 10% to $568,437,000 for the three months ended September 30, 2025, compared to $518,670,000 in 2024[95] - Cloud computing revenue grew by 8% to $179,698,000 for the three months ended September 30, 2025, compared to $166,877,000 in 2024[95] - Delivery solutions revenue decreased by 4% to $306,495,000 for the three months ended September 30, 2025, compared to $319,132,000 in 2024[95] - Total revenue for the three months ended September 30, 2025, was $1,054,630, a 5% increase from $1,004,679 in 2024; for the nine months, revenue was $3,113,263, a 5% increase from $2,971,229 in 2024[100] - International revenue for the three months ended September 30, 2025, was $524,652, a 9% increase from $480,068 in 2024; for the nine months, it was $1,526,939, a 7% increase from $1,425,575 in 2024[100] Profitability and Expenses - Net income for the three months ended September 30, 2025, was 13% of revenue, up from 6% in the same period of 2024[94] - Total costs and operating expenses as a percentage of revenue decreased to 84% for the three months ended September 30, 2025, from 93% in 2024[94] - Cost of revenue for the three months ended September 30, 2025, was $429,532, a 5% increase from $408,806 in 2024; for the nine months, it was $1,275,012, a 6% increase from $1,206,437 in 2024[101] - Research and development expenses for the three months ended September 30, 2025, were $124,720, a 4% increase from $120,347 in 2024; for the nine months, they were $374,107, a 7% increase from $350,631 in 2024[105] - Sales and marketing expenses for the three months ended September 30, 2025, were $144,867, a 5% increase from $138,551 in 2024; for the nine months, they were $425,237, a 3% increase from $412,160 in 2024[109] - General and administrative expenses for the three months ended September 30, 2025, were $161,719, a 1% increase from $159,957 in 2024; for the nine months, they were $480,249, a 3% increase from $466,241 in 2024[111] Strategic Investments and Future Outlook - The company plans to continue investing in higher growth security products and cloud infrastructure services to advance its product portfolios[90] - The company expects an increase in cost of revenue, particularly in co-location fees and depreciation of network equipment, due to investments in network growth[103] - Research and development costs are expected to increase in 2025, particularly payroll and related costs, to support faster-growing security and cloud computing solutions[108] - The company plans to reinvest in headcount and resources to support faster-growing security and cloud computing solutions as part of its go-to-market transformation initiative[110] - The company expects to continue evaluating strategic investments to strengthen its business and maintain financial stability[137] Non-Operating Income and Taxation - Non-operating income from interest and marketable securities for Q3 2025 was $18.9 million, an 18% decrease from $23.1 million in Q3 2024, and for the nine months ended September 30, 2025, it was $52.6 million, down 32% from $77.5 million in the same period of 2024[116] - The provision for income taxes for Q3 2025 was $(33.0) million, a 108% increase from $(15.9) million in Q3 2024, and for the nine months ended September 30, 2025, it was $(131.5) million, up 106% from $(63.9) million in the same period of 2024[119] - The effective income tax rate for Q3 2025 was (19)%, compared to (22)% in Q3 2024, while for the nine months ended September 30, 2025, it was (26)%, up from (15)% in the same period of 2024[120] Cash Flow and Financing Activities - Cash, cash equivalents, and marketable securities totaled $1.8 billion as of September 30, 2025, providing significant liquidity for operations[135] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $1,152,181 thousand, a decrease from $1,175,383 thousand in 2024 due to timing of customer collections and higher tax payments[139] - Cash used in investing activities decreased to $174,351 thousand for the nine months ended September 30, 2025, compared to $554,493 thousand in 2024, primarily due to reduced cash paid for business acquisitions[140] - The company held $416.4 million in cash and cash equivalents outside the U.S. as of September 30, 2025, with minimal expected impact on liquidity from these holdings[138] - The company expects its current cash, cash equivalents, and marketable securities to meet foreseeable cash needs for at least the next 12 months, including capital expenditures and potential strategic acquisitions[151] - The company entered into a $150.0 million uncommitted revolving credit agreement in January 2025, with no outstanding borrowings as of September 30, 2025[146] - The 2022 Credit Agreement was amended in May 2025 to increase revolving commitments from $500.0 million to $1.0 billion, with no outstanding borrowings as of September 30, 2025[147] Share Repurchase and Debt Management - In the nine months ended September 30, 2025, the company repurchased 10.0 million shares of common stock at a weighted average price of $79.77 per share, totaling $800.0 million, with $1.2 billion remaining for future repurchases[143] - The company issued $1,725.0 million in convertible senior notes in May 2025 and repaid $1,150.0 million in convertible senior notes due in May 2025[144] - As of September 30, 2025, the company had $4,140.0 million in convertible senior notes outstanding, maturing between September 2027 and May 2033[145] - The increase in cash used in financing activities for the nine months ended September 30, 2025, was primarily due to an increase in stock repurchases, totaling $586.3 million compared to $538.8 million in the same period of 2024[142] Risk and Credit Exposure - A hypothetical 100 basis points increase in interest rates could lead to a decline of approximately $12.9 million in the fair value of the company's available-for-sale portfolio[155] - The company has no significant changes in operating lease obligations as of September 30, 2025, as it continues to execute its expansion plans[149] - The company has limited credit risk exposure, with no customer accounting for 10% or more of accounts receivable as of September 30, 2025[163]