Akamai Technologies, Inc. (AKAM) Earnings & Analysis

Latest quarter

Akamai reported Q2 FY2026 revenue of $1.1 billion, up 5.38% from Q2 FY2025, and revenue was 0.71% above the consensus of $1.1 billion. The company reported adjusted EPS, as the consensus counts it, of $1.59, which was 0.63% above the $1.58 consensus estimate.

The filing said year-over-year revenue growth came from increased security and cloud infrastructure services sales, partly offset by lower delivery and other cloud applications revenue as contract-renewal pricing declined. Akamai reported diluted EPS of $0.52, down −26.8% year over year, while gross margin was 55.8% and operating margin was 7.30%, compared with 59.1% and 14.5%, respectively, a year earlier. The company reported free cash flow of $100.5 million, down −57.3% from Q2 FY2025.

Against its own Q2 guidance, Akamai reported revenue within its $1.1 billion–$1.1 billion range, while the reported 55.8% gross margin and 7.30% operating margin were below the respective 70.0%–71.0% and 25.0%–26.0% guidance ranges.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Tom Leighton said a U.S.-based technology company committed more than $600 million over four years for cloud infrastructure services supporting robotics development. He said that addition brought cloud infrastructure services commitments signed so far in 2026 to more than $2.8 billion, and the company anticipates overall revenue growth will accelerate into the low teens in 2027.

Ed McGowan said Q2 cloud infrastructure services revenue was $99 million, up 39% year over year, while security revenue was $604 million, up 10%; he said delivery and other cloud applications revenue was $396 million, down 6%. McGowan said cloud infrastructure services revenue should accelerate meaningfully in Q4 after GPU shipments that arrived after quarter-end delayed some planned Q2 spending and reduced the time for certain Q3 revenue ramps.

On capacity and investment, McGowan said all of Akamai’s GPU capacity was sold out and that the company expects to invest up to $500 million to replenish and expand GPU capacity. He said Akamai expects operating margin to remain in the mid-20s for the remainder of 2026 while it invests in cloud infrastructure services, including co-location, depreciation and headcount.

Analysts asked about the timing between signing large cloud contracts and revenue recognition. McGowan said the interval is typically six to nine months and said the company may have co-location costs ahead of revenue as data-center space and equipment are brought online. When asked about pricing, he said customers understood that inventory and data-center availability were tight, and that Akamai could pass along cost increases through contract mechanisms and follow-on pricing.

McGowan said Akamai does not provide quarterly guidance for cloud infrastructure services, while stating that Q4 should show an acceleration as equipment is installed and major contracts begin generating revenue. Leighton said Akamai continues to expand capacity in more locations and said its existing data-center relationships support its ability to obtain capacity and power.

Guidance

Akamai now expects FY2026 revenue of $4.445 to $4.53 billion, compared with its previous $4.445 billion to $4.55 billion range. Ed McGowan said the company now expects FY2026 non-GAAP EPS of $6.40 to $7.05, compared with its previous $6.40 to $7.15 range. Akamai now expects FY2026 capital expenditures to be approximately 40% of total revenue, compared with its previous expectation of approximately 40% to 42%.