Akamai Technologies, Inc. Q2 FY26 Earnings Analysis

- **Cloud Infrastructure Services (CIS):** Expected to grow at least 50% year-over-year in constant currency for 2026, with strong pipeline and rapid build in AI-specific use cases. - **Security Revenue:** Projected to grow in the high single digits in constant currency for 2026, driven by strong demand for API security, Guardicore segmentation, and Web Application Firewall. - **Delivery and Other Cloud Apps:** Expected to decline mid-single digits year-over-year in 2026 but this decline is expected to moderate over the year. - **Overall Company Revenue Growth:** Anticipated to reach double digits in 2027, fueled by major customer wins including the $1.8 billion and $200 million deals. - **CapEx and Investment:** Increased investments in GPUs and capacity to support growing demand, particularly in second half of 2026 and into 2027, indicating preparation for significant volume growth.

- Full year 2026 non-GAAP EPS guidance is $6.40 to $7.15 per diluted share, including impact from the $1.8 billion win. - Q2 2026 non-GAAP EPS projected at $1.45 to $1.65, with revenue growth of 3%-5% year-over-year. - Total company annual top line revenue growth is expected to reach double digits in 2027, driven by cloud infrastructure services (CIS) and security segments. - Non-GAAP operating margin for 2026 is estimated at approximately 26%, stable amid ramped investments. - Increased investments in cloud infrastructure and AI-related CapEx expected, but support strong future growth and profitability. - Q2 operating expenses expected to rise due to go-to-market investments and annual merit cycles. - Continuous strong demand in CIS and security solutions underpins growth acceleration beyond 2026.

- Q1 CapEx was $206 million, slightly below guidance due to timing and favorable pricing. - Q2 CapEx expected to jump significantly (~$433M-$453M) due to NVIDIA GPU deliveries and catching up on Q1 deferred spending. - Full-year 2026 CapEx expected around 40%-42% of revenue, including ~$700 million tied to the $1.8 billion customer win. - ~$800M-$825M CapEx expected over the next 12 months to support this customer, with ~$700M deployed in H2 2026 and the balance in H1 2027. - Potential additional GPU orders in H2 2026 to meet strong pipeline demand, which could increase CapEx beyond current guidance. - Investments focused on cloud infrastructure services, especially scaling AI opportunities and large strategic deals. - Currently financing CapEx from internal cash, with $1.7B cash and $1B credit line available; no external capital raising announced yet.

- Currently, there are **no announced plans for new fundraising** through debt or equity. - The company is **financing build-outs using its own capital**, supported by strong profitability and cash generation. - It holds **$1.7 billion in cash, cash equivalents, and marketable securities** as of the latest quarter. - Additionally, there is a **$1 billion available line of credit** if needed. - The company has **excellent credit and no issue raising capital** in the markets if future large deals require it. - So far, it has not tapped additional capital markets but **may consider this if the pipeline and deal flow justify it**.

- The current pipeline for GPUs significantly exceeds existing and projected inventory. - There is a very large pipeline of opportunities, with customers wanting anywhere from a couple of hundred to over a thousand GPUs. - The pipeline is growing every day and includes some very large opportunities. - Additional GPU purchases may be necessary in the second half of the year to meet demand, not yet included in the current CapEx guidance. - CapEx guidance may increase if additional GPU orders are placed before year-end. - The company is actively converting pipeline opportunities into contracts. - Demand for dedicated capacity is driven by customers wanting to lock in GPU availability amid market scarcity. - The company expects continued strong demand and a robust pipeline moving forward.