Akamai Technologies (AKAM) Q3 2026 Earnings Call: Q&A Summary

Q: John DiFucci with Guggenheim asked for more details on near-term bottlenecks that lowered 2026 revenue and how confident management is in the 2027 CIS revenue ramp.

A: Tom Leighton, CEO, stated that supply chain and third-party data center delays were minor and pushed revenue to next year, expressing high confidence in 2027. Ed McGowan, CFO, added that revenue will ramp with 25% to 30% in the first half and 70% to 75% in the back half of the year.

Q: John DiFucci with Guggenheim asked about risks outside management control such as power, real estate, and permitting compared to companies doing training.

A: Tom Leighton, CEO, explained that Akamai's distributed architecture uses smaller locations, secure power, and existing permits, lowering execution risk and avoiding training models.

Q: Samik Chatterjee with JPMorgan asked about the CIS demand pipeline and how to think about future capital raises relative to pipeline conversion.

A: Tom Leighton, CEO, stated that Akamai has a strong pipeline of hundreds of customers, secured power, and space, with the ability to raise modest capital if needed while protecting shareholder interests.

Q: Samik Chatterjee with JPMorgan asked about the magnitude of premium pricing seen in recent deals and how it affects returns.

A: Ed McGowan, CFO, noted that large multiyear commitments represent the lowest floor pricing and that component cost increases allow Akamai to raise pricing on future deals while protecting margins.

Q: Jackson Ader with KeyBanc asked if margins will lag in the first half of next year before revenue steps up.

A: Ed McGowan, CFO, answered that colocation price escalators and build-out costs will create 1 to 2 points of noncash pressure, with margins bottoming in the first half of next year in the mid-20s before expanding through 2028.

Q: Jackson Ader with KeyBanc asked why higher CapEx per megawatt compared to neo clouds is positive.

A: Tom Leighton, CEO, explained that CapEx per megawatt is higher because Akamai uses less power for its infrastructure, meaning higher efficiency and better revenue per megawatt.

Q: Vijay Homan with Craig Hallum asked about delivery pricing stability and expectations over the next 6 to 12 months.

A: Ed McGowan, CFO, stated that pricing is holding better than in the past, with delivery and cloud apps remaining stable and management being selective in the media business.

Q: Vijay Homan with Craig Hallum asked about the integration and revenue potential of the Layer x acquisition.

A: Tom Leighton, CEO, reported great integration, strong enterprise sales including a major U.S. streaming TV company, and high customer satisfaction scores protecting corporate data.

Q: Abhishek Murley with Morgan Stanley asked if management is still willing to drop below investment grade given financing scrutiny.

A: Ed McGowan, CFO, stated that the goal is to maintain investment grade to remain attractive to colocation providers, and growing EBITDA will substantially increase leverage capabilities.

Q: James Fish with Piper Sandler asked what gives management confidence in the new compute targets given past execution and what is needed to hit $1.1 billion versus $1.3 billion next year.

A: Ed McGowan, CFO, stated that signed contracts, secured power, and equipment schedules support the targets, with the wide range accounting for potential timing delays.

Q: James Fish with Piper Sandler asked about the willingness to take on another large deal before executing on existing commitments.

A: Ed McGowan, CFO, clarified that multibillion-dollar deals are not in current forecasts, but capacity will exist for deals in the several hundred million dollar range after execution next year.

Q: Paramveer Singh with Oppenheimer asked how security growth will translate into the next 1 to 2 years and embed into the $7 billion guide.

A: Ed McGowan, CFO, stated that security continues to grow at a healthy clip with API security, Layer x, and Guardicore adding new customers, and detailed guidance will be provided in February.

Q: Paramveer Singh with Oppenheimer questioned the revenue per CapEx dynamics compared to hyperscalers.

A: Ed McGowan, CFO, responded that short-term GPU contracts cannot be compared to 7-year CPU commitments, and Akamai is pleased with the returns generated.

Q: Rishi Jaluria with RBC asked how Akamai ensures the infrastructure fleet is fungible to pivot to AI adoption trends like sovereign AI.

A: Tom Leighton, CEO, explained that the platform emphasizes flexible CPUs for enterprise post-training and inference, supporting physical and sovereign AI close to users.

Q: Peter Levine with Evercore ISI asked if Anthropic received favorable pricing compared to other customers resulting in lower returns.

A: Ed McGowan, CFO, confirmed that large volume and 7-year commitments yield lower pricing and returns, meaning other customers will have higher IRRs.

Q: Peter Levine with Evercore ISI asked if the political environment is a tailwind or headwind for the CIS business.

A: Tom Leighton, CEO, stated that Akamai is advantaged because it operates smaller, permitted footprints across multiple locations and has locked-in power and space through 2028.

Q: Roger Boyd with UBS asked if compute investment could limit security and delivery investments.

A: Tom Leighton, CEO, replied that security is a strong, growing business requiring little CapEx, whereas delivery investments are disciplined due to lower returns.

Q: Roger Boyd with UBS asked if the $7 billion target is achievable primarily through the existing compute backlog.

A: Ed McGowan, CFO, confirmed that the target is achievable based on signed contracts without assuming additional Anthropic orders.

Q: Rudy Kessinger with DA Davidson asked if future pipeline deals have higher IRRs than the blended average.

A: Ed McGowan, CFO, stated that smaller multi-hundred-million-dollar deals have significantly higher IRRs and management walks away from deals failing profit thresholds.