Akamai(AKAM)2025-05-29 16:25Financial Data and Key Metrics Changes - The company has reset its long-term growth expectations, projecting about 10% growth for its security segment due to product maturity and market saturation [15][16] - The company anticipates a 30% to 35% growth in Annual Recurring Revenue (ARR) for new capabilities this year, particularly in API security and Gardacore segmentation [18][46] - Operating margins were close to 30% in Q1, with guidance for slightly lower margins for the year due to investments in new platforms and infrastructure [22][23] Business Line Data and Key Metrics Changes - The security segment is expected to grow at a slower rate due to maturity, while new products are projected to drive significant growth [15][16][18] - The compute business is identified as a major focus, with investments being reallocated from the delivery business to enhance growth in this area [25][26] - The delivery business is aiming for stabilization, with traffic growth expected to improve as market conditions rationalize [65][68] Market Data and Key Metrics Changes - The company has seen a shift in customer acquisition strategies, with channel partners becoming the primary source of new customers for security and compute services [8][12] - The competitive landscape has changed, with several competitors exiting the market, which may help stabilize pricing dynamics [68][71] Company Strategy and Development Direction - The company is focusing on a go-to-market transition to increase the ratio of hunters to farmers, emphasizing the need to target new customers beyond traditional CDN users [4][5] - Investments are being made in cloud infrastructure and security products to enhance the total addressable market (TAM) [23][25] - The company aims to position itself as a comprehensive cloud provider, similar to hyperscalers, by integrating compute, security, and delivery services [84][86] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by AI in the security landscape, noting that AI has increased the attack surface and sophistication of threats [53][57] - The company believes that the demand for new security solutions, particularly those tailored for AI applications, will drive future growth [55][56] - Management is optimistic about traffic growth in the delivery business, citing potential increases from video content and AI-generated media [68][70] Other Important Information - The company has been insourcing third-party compute services to improve efficiency and customer experience [44] - The compute business is seen as a significant opportunity, particularly in media, where customers are looking for cost-effective solutions [29][30] Q&A Session Summary Question: How has the go-to-market transition been going? - The company is evolving to focus more on hunting for new customers, particularly in security and cloud computing [4][5] Question: What led to the reset of growth expectations? - The company had not provided long-term guidance for over three years and felt it was important to update the community on current views [13][15] Question: What are the critical investments needed to achieve growth? - Investments are being made in technology, compute infrastructure, and sales force expansion to support growth [21][23] Question: Is compute the top priority for the company? - Both security and compute are considered equally important, with significant investments being made in both areas [25][26] Question: How is AI impacting the security landscape? - AI has increased the sophistication of attacks and the demand for specialized security solutions [53][55] Question: What is the outlook for the delivery business? - The company aims to stabilize the delivery business and improve traffic growth, with expectations for better pricing dynamics [65][68]