Please note that today's comments include forward-looking statements that include 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. In just a few months, we've achieved major milestones for our cloud computing strategy, marking a definitive turning point in the growth and evolution of our business. We have a large and rapidly expanding pipeline of prospects who are looking to Akamai for cloud solutions, including some with very large needs.
To satisfy this strong and growing demand for our Cloud Infrastructure Services, we expect to continue to build out both our physical infrastructure and our cloud sales and support teams. As Ed will talk about in a few minutes, we now anticipate significant acceleration of our overall revenue growth heading into 2027 and beyond. Turning to security, I'm pleased to report that Q1 was also strong for our security portfolio, where revenue grew 11% year-over-year as reported and 9% in constant currency. Our security growth was led by strong demand for our market-leading Web Application Firewall, API Security, and Guardicore Segmentation solutions.
Our WAF in particular is seeing growing interest from customers eager to deploy the latest defenses for vulnerabilities that could be exposed by the ever-strengthening frontier models and AI-powered attacks. For example, there are many legacy systems and billions of deployed devices that can't be patched. The WAFs need to be deployed across a vast distributed platform, and this need provides a unique advantage for Akamai when compared to the competition. In closing, we're thrilled by the way our growth strategy has taken hold and is generating transformative opportunities for our business.
| Metric | Period | Current guidance |
|---|---|---|
| Total revenue | Q2 2026 | $1.075B-$1.1B, up 3%-5% YoY (as reported and constant currency) |
| Cash gross margin | Q2 2026 | approximately 70%-71% |
| Non-GAAP operating expenses | Q2 2026 | $346M-$357M |
| EBITDA margin | Q2 2026 | approximately 38%-39% |
| Non-GAAP depreciation expense | Q2 2026 | $144M-$146M |
| Non-GAAP operating margin | Q2 2026 | approximately 25%-26% |
| Non-GAAP EPS | Q2 2026 | $1.45-$1.65 (assumes ~18.5% tax rate, ~146M diluted shares) |
| CapEx | Q2 2026 | $433M-$453M, approximately 40%-41% of revenue |
| Total revenue | FY 2026 | $4.445B-$4.55B, up 6%-8% as reported (5%-8% constant currency) |
| CIS revenue growth | FY 2026 | raised to at least 50% YoY growth in constant currency |
| Security revenue growth | FY 2026 | high single digits YoY in constant currency |
| Delivery revenue growth | FY 2026 | decline in the mid single digits YoY in constant currency |
| Non-GAAP operating margin | FY 2026 | approximately 26% at today's FX rates |
| CapEx | FY 2026 | approximately 40%-42% of total revenue (includes $700M for the $1.8B contract) |
| Non-GAAP EPS | FY 2026 | $6.40-$7.15 (assumes ~18.5% tax rate, ~147M diluted shares) |
| Revenue from $1.8B win | Q4 2026 | expected to ramp starting Q4, approximately $20M-$25M in Q4 |
| Total-company top-line revenue growth | FY 2027 | expected to reach double digits |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +6% as reported (+4% constant currency) | $1.074 billion; strong CIS and security growth partly offset by delivery decline; FX added $19M YoY. |
| Cloud Infrastructure Services (CIS) revenue | +40% as reported (+39% constant currency) | $95 million; robust start driven by CIS wins across industries, geographies, and use cases with a rapidly building AI-specific pipeline. |
| Security revenue | +11% as reported (+9% constant currency) | $590 million; led by API Security, Guardicore Segmentation, and largest product Web Application Firewall amid AI-driven threat urgency. |
| Delivery and other cloud applications revenue | -7% as reported (-8% constant currency) | $389 million; in line with expectations, driven by the wraparound impact of the 2025 Edgio transaction; rate of decline expected to moderate. |
| International revenue | +9% as reported (+5% constant currency) | $530 million, 49% of total revenue; FX contributed a positive $19M year-over-year. |
| Non-GAAP net income | -5% (as reported and constant currency) | $239 million; reduced by expanded colocation investments, higher depreciation, and increased headcount tied to CIS strategic investment. |
| Non-GAAP EPS (diluted) | -5% (as reported and constant currency) | $1.61 per diluted share; same CIS investment cost drivers as net income. |
| Non-GAAP operating margin | 26% (in line with expectations) | Held steady as investment ramps to capture growth; expected to remain in this range for the rest of 2026. |
| Capital expenditures | $206M, 19% of revenue | Slightly below guidance due to timing (some spend shifted to Q2) and favorable, lower-than-expected component pricing. |
| Share repurchases | ~$206M, ~2M shares | Bought back roughly 2 million shares; ~$975M remaining on repurchase authorization; strategy to offset equity dilution and be opportunistic. |
| Cash, equivalents and marketable securities | ~$1.7 billion | As of March 31; plus a $1 billion line of credit available, funding build-outs from internal capital so far. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI as the growth turning point for the cloud strategy | Building a distributed compute/inference platform desired by large enterprises | Definitive turning point: landmark $1.8B win plus $200M CIS deal validate the strategy; double-digit total-company growth expected in 2027 and beyond. | — |
| NVIDIA partnership and distributed AI inference at the edge | Traditional distributed platform for delivery and security | First global-scale NVIDIA AI Grid implementation; thousands of RTX PRO 6000 GPUs rolling out to push AI inference to the edge within milliseconds of end users. | — |
| Security demand amplified by AI threats | Steady security growth from WAF, API Security, Guardicore | Unprecedented urgency as AI enables larger attacks (millions of requests/sec from millions of IPs); WAF in surging demand; CISOs scrambling to protect apps, agents, and APIs. | — |
| Delivery business role | Legacy CDN, harvested for cash | Still a cash generator plowed into cloud growth; declining on Edgio wraparound but synergistic; potential future upside from agent-generated video traffic. | — |
| Dedicated-capacity vs. on-demand GPU model | General cloud/compute offering | Supports both; customers increasingly prefer dedicated committed capacity for better pricing and to lock in scarce GPU supply; $1.8B deal is committed capacity billed ratably like a subscription. | — |
| Investing ahead of revenue / CapEx surge | Disciplined CapEx around 19%-20% of revenue | CapEx jumping to ~40%-42% of FY2026 revenue including $700M for the $1.8B win; ~$800M-$825M total over 12 months; possible additional GPU orders not yet in guidance. | — |
| Power and colocation capacity | Concern about scaling infrastructure | Not concerned about access to power or colo; strong data-center relationships, excellent credit, takes large colo chunks and helps partners build out; CDN/security use little power vs. GPUs. | — |
| Capital allocation and funding | Buybacks to offset dilution, opportunistic M&A | Funding build-outs from internal cash ($1.7B on hand, $1B credit line); open to capital markets if large deals require, but nothing announced yet. | — |