Akamai Technologies, Inc.

Good day and welcome to the second quarter 2025 Akamai Technologies Incorporated Earnings Conference Call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mark Suttenberg, Head of Investor Relations. Please go ahead.

Thanks, and good afternoon, everyone, and thank you for joining Akamai's second quarter 2025 earnings call. Speaking today will be Tom Layton, Akamai's Chief Executive Officer, and Ed McGowan, Akamai's Chief Financial Officer. Please note that today's comments include forward-looking statements, including those regarding revenue and earnings guidance. These forward-looking statements are based on current expectations and assumptions that are subject to certain risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied. 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. The statements included on today's call represent the company's views on August 7, 2025, and we assume no obligation to update any forward-looking statements. As a reminder, we will be referring to certain non-GAAP financial metrics during today's call. A detailed reconciliation of GAAP to non-GAAP metrics can be found under the financial portion of the investor relations section of Akamai.com. With that, I'll now hand the call off to our CEO, Dr. Tom Leighton.

Thanks, Mark. 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 15 cents above the high end of our guidance range. Our strong performance was enabled by the stabilization of revenue from our delivery product line combined with the solid growth of our security and compute product lines as we continue to reposition Akamai to take advantage of the tailwinds in these markets and the substantial opportunities associated with AI. 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. As a reminder, our cloud infrastructure services portfolio consists of the compute and storage solutions that we've developed based on Linode, along with our Edge workers product and the ISV solutions running on our cloud platform. It's the high growth portion of our cloud computing product line, and it's where we're focusing our investments. Our rapid growth in cloud infrastructure services is driven in part by our customers' desire to get their compute instances closer to end users for improved scalability and performance, and by their need to reduce cost. This is particularly true for new GenAI applications, which are increasingly being used to drive real-time decisions, shape user experiences, and power operations. To attract and retain customers, businesses are developing a variety of AI-based apps and agents for personalization, support, search, inference, and other tasks. Akamai's globally distributed platform, spanning more than 4,300 points of presence across 130 countries, offers unique advantages for deploying such AI applications, bringing business logic and data to within milliseconds of end users globally. and operating at a scale that provides a petabyte per second of throughput capacity. 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. Last month, we introduced our new AI Gateway solution to customers at an event in London. This new solution is designed to address three of the biggest challenges that businesses encounter when they deploy large language models. AI that's too slow, too vulnerable to attack, and too expensive to run at scale. AI Gateway acts as a smart traffic controller that sits between users and the AI services deployed by our customers. So now, instead of every AI request having to travel all the way to a centralized server, Akamai makes it possible to handle many of these requests closer to the user at the edge. Moving AI closer to the action makes each interaction faster, makes our customer systems more energy and cost efficient, and ultimately allows our customers to deliver a vastly better experience for their users. The edge is also where Akamai deploys our security solutions, including our new firewall for AI that fights prompt abuse, and model compromise, as well as our bot and abuse solutions that help our publishing customers monetize their content by monitoring and controlling access by AI scraper bots. AI Gateway and Firewall for AI are prime examples of how we're bringing our expertise at the edge to the cloud to make AI faster, more secure, and significantly more affordable. There are also good examples of the synergy between our new cloud computing capabilities and our security and delivery product lines, as customers buy cloud computing from Akamai alongside security and delivery. Examples of the many contracts we signed in Q2 that included a large commit for our cloud infrastructure services are a three-year, $16 million renewal and expansion agreement with one of the largest companies at the forefront of the AI revolution. a two-year $28 million agreement with one of the world's leading travel companies, a three-year $18 million deal with a leading Internet platform in South Korea, a $19 million deal with an Internet company in Japan, and a three-year $10 million agreement with one of the world's leading media companies. Turning now to security. Security growth was driven in part by the continued strong demand for our market-leading Garticor segmentation solutions. as more enterprises relied on Akamai to meet compliance requirements and to defend against ransomware and data exfiltration malware. Ransomware remains a top financial and reputational risk for enterprises, as illustrated by the highly publicized attacks that took down several major retailers in Q2. 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. And a retailer in the U.S. reported $20 million in lost sales when a cyber attack took down its e-commerce platform during their Memorial Day weekend sale. In a world where attacks are finding new ways to penetrate traditional perimeter defenses, segmentation is the last and most important line of defense for major enterprises. And our market-leading segmentation solution is making a big difference for our customers. With our sophisticated threat intelligence, we've detected a wide variety of malicious ransomware attacks on commerce companies. And customers who use our segmentation solution were able to identify these attacks and protect themselves from operational harm and financial loss. In fact, Akamai is the only vendor to be named customer favorite in the new Forrester Wave Zero Trust Platforms report, receiving perfect scores in three categories, segmentation and control, pricing flexibility, and supporting services. Our segmentation wins in Q2 included a $9 million contract for GardaCore with one of the world's leading consumer and commercial insurance providers. After Akamai demonstrated the fastest time to policy, across their on-prem, AWS, and Azure environments. A $5 million contract with one of the world's largest financial services companies that selected GuardaCore after struggling to modernize their environment for zero trust to protect aging networks for which they had no visibility. And a $3 million contract, two-thirds of which is for GuardaCore, with one of Japan's leading financial institutions. Wins and other industries included deals with a leading manufacturer in the U.S., a major steel producer in Asia, and a large holding company in Latin America. In Q2, we also continued to see strong interest in our market-leading API security solution, which earned Akamai recognition as a leader in Coppinger Cole's Leadership Compass API Security and Management Report released last month. Our API security solution combines very well with our market-leading WAF and bot management solutions to provide a compelling platform for app and API protection for major enterprises. Major API security wins last quarter included a $15 million agreement with one of North America's largest real estate fintech companies, which included $2 million for API security. A $4 million expansion contract with one of the largest managed care organizations in North America, which included $2 million for API security. A $2.3 million agreement with one of the largest life insurance providers in India, which included $1.4 million for the protection of their API ecosystem as they migrated away from their previous provider. and a $20 million five-year contract renewal with one of the leading fashion and home retailers in Europe that included seven Akamai security solutions in addition to compute and delivery. We're very pleased to see customers increasingly utilize the full breadth of our security platform across applications, APIs, infrastructure, and enterprise zero trust security. We believe this illustrates the strength of Akamai security defenses the depth of our threat intelligence, and our close relationships with enterprise customers who rely on us as a strategic partner in security, helping them consolidate their security spending with a major vendor they trust most to protect their businesses and reputations. Before I turn the call over to Ed, I'd like to say a few words of welcome to the two new directors on Akamai's board, Janaki Akela and Bas Berger. Janaki has held several executive roles at Google, including as lead for digital transformation for Google Cloud and chief of business operations. Prior to that, she was a partner at McKinsey & Company. She brings deep expertise in cloud computing, cybersecurity, and AI, as well as general management and strategy consulting experience. Bas Berger is the CEO of BT International, the division of the UK telco company that delivers global data, voice, security, and cloud connectivity solutions to multinational organizations. Bas brings expertise in leading complex global organizations, executing go-to-market initiatives focused on driving customer acquisition, retention, and expansion, and building strategic partnerships, with major technology, infrastructure, and cybersecurity providers. Their insights and counsel will be invaluable to us as we continue to innovate and expand our cloud computing and cybersecurity offerings and advance our go-to-market transformation to best capture future growth opportunities. Now I'll turn the call over to Ed to say more in our Q2 results and our outlook for the rest of the year. Ed?