Please note that today's comments include forward-looking statements, including those regarding revenue and earnings guidance. The factors include, but are not limited to, any impact from macroeconomic trends, the integration of any acquisition, geopolitical developments, and other risk factors identified in our filings with the SEC. I'm pleased to report that Akamai had an excellent second quarter, with results coming in above our guidance for revenue, margin, and earnings per share. Revenue grew to $1.043 billion, up 7% year-over-year as reported, and up 6% in constant currency.
Non-GAAP operating margin was 30%, and non-GAAP earnings per share came in at $1.73, up 9% year-over-year as reported and in constant currency, and $0.15 above the high end of our guidance range. I'm especially excited about the growth and opportunity we're seeing for our Cloud Infrastructure Services portfolio. CIS revenue in Q2 was $71 million and grew at 30% year-over-year as reported, and 29% in constant currency. We're projecting even faster growth throughout the remainder of the year as we start recognizing revenue from some large deals signed earlier this year.
It's the high-growth portion of our cloud computing product line, and it's where we're focusing our investments. Already, customers have deployed AI-powered applications on Akamai Cloud for tasks such as image classification, image optimization, speech-to-text and speech-to-image, chatbots, inference engines, virtual fitting rooms, to name a few. AI Gateway acts as a smart traffic controller that sits between users and the AI services deployed by our customers. According to news reports, one attack in April on a British retailer impacted operations for at least three months, costing the company an estimated $400 million in lost revenue.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q3 2025 | $1.035B-$1.050B (up 3%-4% reported, 2%-4% cc) |
| Cash gross margin | Q3 2025 | ~72%-73% |
| Non-GAAP operating expenses | Q3 2025 | $327M-$332M |
| EBITDA margin | Q3 2025 | ~41% |
| Non-GAAP operating margin | Q3 2025 | ~28% |
| Non-GAAP EPS | Q3 2025 | $1.62-$1.66 |
| Non-GAAP tax rate | Q3 2025 | ~19% ($54M-$55M taxes) |
| Fully diluted share count | Q3 2025 | ~145 million shares |
| CapEx | Q3 2025 | $227M-$237M (~22% of revenue) |
| Non-GAAP depreciation | Q3 2025 | $139M-$141M |
| Revenue | FY2025 | $4.135B-$4.205B (up 4%-5% reported, 3%-5% cc) |
| CIS ARR growth (cc, at year-end) | FY2025 | 40%-45% |
| Security revenue growth (cc) | FY2025 | ~10% |
| Zero Trust + API Security combined ARR growth (cc) | FY2025 | 30%-35% |
| Compute revenue growth (cc) | FY2025 | could be a little less than ~15% |
| QCP partner-resale impact on gross margin | FY2025 | ~70 bps drag |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +7% reported (+6% cc) | Delivery stabilization plus security and compute growth; $1.043B, above guidance. |
| Security revenue | +11% reported (+10% cc) | $552M; led by Guardicore Segmentation and API Security demand. |
| API Security + Zero Trust (combined) | +48% reported (+49% cc; ~32% organic) | $67M; ~$8M inorganic from Noname Security acquisition. |
| Compute revenue | +13% reported and cc | $171M; driven by Cloud Infrastructure Services strength. |
| Cloud Infrastructure Services (CIS) | +30% reported (+29% cc) | $71M; Linode-based compute/storage, EdgeWorkers and ISV offerings; near ~$300M ARR. |
| Other cloud applications (OCA) | +4% reported (+3% cc) | $100M; mature products (Image & Video Manager, Cloudlets, LegacyNet Storage) roughly flat. |
| Delivery revenue | -3% reported (-4% cc) | $320M; well above expectations on better pricing and traffic (video, software download). |
| International revenue | +10% (+8% cc) | $516M; 49% of total revenue; FX +$8M YoY. |
| Non-GAAP operating margin | 30% | Above guidance; aided by lower bandwidth costs and a ~$5M one-time credit benefit. |
| Non-GAAP EPS | +9% reported and cc | $1.73; higher revenue, lower bandwidth costs, higher interest income and lower share count. |
| Non-GAAP net income | n/a | $251 million for the quarter. |
| CapEx | n/a | $214M, 21% of revenue. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Cloud Infrastructure Services (CIS) acceleration | Early-stage Linode-based cloud build-out | $71M at +30%; several large multi-year committed deals signed, driving projected 40%-45% year-end ARR growth and acceleration into 2026. | — |
| AI at the edge / inference | Emerging opportunity | New AI Gateway and Firewall for AI launched; 4,300+ PoPs positioned for low-latency GenAI inference, personalization and agents; dozens of PoCs underway. | — |
| Microsegmentation / Zero Trust security | Guardicore establishing leadership | Named customer favorite in Forrester Wave Zero Trust Platforms; strong demand off ransomware risk; ~30%-35% ARR growth. | — |
| API Security | Growing add-on | Recognized leader by KuppingerCole; extremely strong pipeline as natural WAF upsell; large greenfield opportunity across enterprises' thousands of exposed APIs. | — |
| Delivery stabilization | Persistent structural decline | Two sequential growth quarters; four major pre-pandemic CDN competitors gone, healthier pricing and traffic; targeting mid-single-digit declines trending toward stable. | — |
| Go-to-market transformation | Standard sales motion | Adding hunter reps, product specialists and channel partners; near-term margin drag but core to capturing security/compute growth. | — |
| Capital return and balance sheet | Ongoing buybacks | $300M / 3.9M shares repurchased in Q2 ($800M YTD); refinanced $1.15B converts with $1.725B 0.25% notes due 2033; ~$1.2B authorization remaining; ~$1.6B cash. | — |
| Edgeo acquisition integration | Newly acquired CDN assets | Traffic migrated by mid-January; tracking to (or above) the $85M-$105M range with new-logo upsell playing out as planned. | — |