Akamai Technologies AKAM · USD

Segment and Geographic InformationThe Company’s chief operating decision-maker ("CODM") is the chief executive officer and the executive management team. As of December 31, 2025, the Company is currently organized and operates as one operating and reportable segment. The Company is not organized by market and is managed and operated as one business. A single management team that reports to the chief executive officer comprehensively manages the entire business. The Company does not operate any material separate lines of business or separate business entities with respect to its services. Accordingly, the Company does not accumulate discrete financial information with respect to separate entities. The CODM assesses performance and makes decisions on optimizing the allocation of resources across functions and strategic investments using consolidated net income. Segment assets represent total assets as reported on the consolidated balance sheets.Information regarding the Company's one operating segment for the years ended December 31, 2025, 2024 and 2023 was as follows (in thousands):202520242023Revenue$4,208,175 $3,991,168 $3,811,920 Less:Co-location costs349,191 308,314 256,062 Bandwidth fees192,875 233,100 228,038 Network build-out and supporting services236,644 193,607 215,557 Payroll and related costs1,565,108 1,511,272 1,408,866 Capitalized salaries and related costs(322,703)(302,830)(261,728)Facilities-related costs86,081 86,671 90,061 Software and related service costs85,483 71,687 69,970 Other segment items (1)219,241 211,205 198,525 Depreciation and amortization708,611 648,410 570,776 Stock-based compensation459,402 393,378 328,467 Restructuring charge58,051 95,441 56,643 Acquisition-related costs3,247 7,502 13,345 Interest and marketable securities income, net(70,808)(100,280)(45,194)Interest expense30,759 27,117 17,709 Other expense, net4,588 19,561 12,296 Income tax expense150,374 82,095 106,373 Gain from equity method investment— — (1,475)Net income$452,031 $504,918 $547,629 (1) Other segment items includes marketing programs and related costs, third-party professional service fees, non-income related tax expense and other expenses.The Company deploys its servers into networks worldwide. Net property and equipment, excluding internal-use software, and operating lease right-of-use assets, located in the U.S.

Revenue from Contracts with CustomersThe Company sells its services through a sales force located both domestically and internationally. Revenue derived from operations outside of the U.S. is determined based on the country in which the sale originated. Other than the U.S., no single country accounted for 10% or more of the Company’s total revenue for any reported period. Revenue by geography included in the Company’s consolidated statements of income for the years ended December 31, 2025, 2024 and 2023 was as follows (in thousands):202520242023U.S.$2,139,173 $2,075,533 $1,968,779 International2,069,002 1,915,635 1,843,141 Total revenue$4,208,175 $3,991,168 $3,811,920 The Company reports its revenue in three solution categories: security, delivery and cloud computing. Security includes solutions that are designed to protect business online by keeping infrastructure, websites, applications, APIs, networks and users safe. Delivery includes solutions that are designed to enable business online, including media delivery and web and mobile performance. Cloud computing is comprised of Cloud Infrastructure Services, which includes compute and storage solutions, EdgeWorkers product and the partner solutions running on the Company's compute platform, and other cloud applications. Revenue by solution category included in the Company’s consolidated statements of income for the years ended December 31, 2025, 2024 and 2023 was as follows (in thousands):202520242023Security$2,243,404 $2,042,661 $1,765,267 Delivery1,256,721 1,318,131 1,542,434 Cloud computing708,050 630,376 504,219 Total revenue$4,208,175 $3,991,168 $3,811,920 Revenue for Cloud Infrastructure Services for the years ended December 31, 2025, 2024 and 2023 were $313.9 million, $230.0 million, and $174.4 million, respectively.Most security, delivery and cloud computing services represent stand-ready obligations that are satisfied over time as the customer simultaneously receives and consumes the services provided by the Company. Accordingly, the majority of the Company's revenue is recognized over time, generally ratably over the term of the arrangement due to consistent monthly usage commitments that expire each period. Any usage over a given commitment is recognized in the period in which the units are served.

Commitments and ContingenciesPurchase CommitmentsThe Company enters into long-term agreements with network and internet service providers for bandwidth, as well as executes purchase orders for the purchase of goods or services in the ordinary course of business, which may contain minimum commitments. These minimum commitments may vary from period to period depending on the timing and length of contract renewals with vendors, and on the Company's plans for network expansion, including expansion plans related to the Company's compute business. Minimum commitments are not recorded as liabilities on the consolidated balance sheet until the Company has received the related good or service.Legal MattersThe Company is party to various litigation matters that management considers routine and incidental to its business. Management does not expect the results of any of these routine actions to have a material effect on the Company’s business, results of operations, financial condition or cash flows.IndemnificationThe Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company agrees to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company's business partners, vendors or customers, in connection with its provision of its services. Generally, these obligations are limited to claims relating to infringement of a patent, copyright or other intellectual property right or the Company’s negligence, willful misconduct or violation of law. Subject to applicable statutes of limitation, the term of each of these indemnification agreements is generally perpetual from the time of execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company carries insurance that covers certain third-party claims relating to its services and activities and that could limit the Company’s exposure in that respect.The Company has agreed to indemnify each of its officers and directors, or employees who serve as officers or directors of its subsidiaries at management's request, during his or her lifetime for certain events or occurrences that happen by reason of the fact that the officer or director is or was or has agreed to serve as an officer or director of the Company.

DebtConvertible Senior NotesIn May 2025, the Company issued $1,725.0 million in principal amount of convertible senior notes due 2033 and entered into related convertible note hedge and warrant transactions. The Company intends to use a portion of the net proceeds to repay at maturity its $1,150.0 million outstanding aggregate principal amount of convertible senior notes due in 2027.Including the May 2025 issuance of $1,725.0 million in principal amount of convertible senior notes, the Company has three convertible senior notes ("2033 Notes", "2029 Notes" and "2027 Notes") outstanding with a par value totaling $4,140.0 million (collectively, the "Notes") that are senior unsecured obligations of the Company and bear interest payable semi-annually in arrears. The following table summarizes further details of the Notes:NotesIssuance DateMaturity DatePrincipal Amount (in thousands)Coupon Interest RateEffective Interest Rate2033 NotesMay 19, 2025May 15, 2033(1)$1,725,000 0.250 %0.484 %2029 NotesAugust 18, 2023February 15, 2029$1,265,000 1.125 %1.388 %2027 NotesAugust 16, 2019September 1, 2027$1,150,000 0.375 %0.539 %(1) Holders of the 2033 Notes have the right to require the Company to repurchase for cash all or a portion of their 2033 Notes on May 15, 2031 if the last reported sale price of the Company’s common stock on the trading day immediately preceding the business day immediately preceding May 15, 2031 is less than the conversion price per share. The repurchase price will be equal to 100% of the principal amount of the 2033 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the optional repurchase date.Additionally, on May 1, 2025, the Company repaid $1,150.0 million in par value of convertible senior notes that matured (“2025 Notes”). The 2025 Notes were senior unsecured obligations of the Company and bore interest at 0.125%.Conversion Rights of the NotesAt their option, holders may exercise the conversion right of the respective Notes at the following specified times and rates to receive the principal amount in cash and receive any amount in excess of the principal amount in cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election.

Income TaxesThe components of income before provision for income taxes were as follows for the years ended December 31, 2025, 2024 and 2023 (in thousands): 202520242023U.S.$26,232 $54,465 $20,146 Foreign576,173 532,548 632,381 Income before provision for income taxes$602,405 $587,013 $652,527 The provision for income taxes consisted of the following for the years ended December 31, 2025, 2024 and 2023 (in thousands): 202520242023Current tax provision (benefit):Federal$13,625 $23,870 $23,406 State(3,637)6,998 6,731 Foreign113,733 121,495 99,223 Deferred tax provision (benefit):Federal9,791 (43,695)(18,213)State9,048 (17,313)(3,759)Foreign7,814 (9,260)(1,015)Total$150,374 $82,095 $106,373 In July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. The OBBBA did not have a material impact on the Company's consolidated financial statements for the year ended December 31, 2025.The Company’s effective tax rate differed from the U.S. federal statutory tax rate as follows for the years ended December 31, 2025, 2024 and 2023 (in thousands): 202520242023Income before provision for income taxes$602,405 $587,013 $652,527 U.S. federal statutory tax rate126,505 21.0 %123,273 21.0 %137,031 21.0 %U.S. tax effects State and local income taxes, net of federal effect (1)8,027 1.3 (14,231)(2.4)(731)(0.1)FederalEffect of cross-border tax lawsForeign-derived intangible income(5,168)(0.9)(9,655)(1.6)(7,547)(1.2)Other(32)— 3,730 0.6 (1,530)(0.2)Tax creditsResearch and development credit(17,084)(2.8)(27,194)(4.6)(18,296)(2.8)Other credits(732)(0.1)345 — (922)(0.1)Non-taxable or non-deductible itemsStock-based compensation13,589 2.2 (16,723)(2.8)6,214 0.9 Officers' compensation8,588 1.4 6,401 1.1 6,647 1.0 Transfer pricing14,974 2.5 11,417 1.9 6,722 1.0 Other(744)(0.1)1,137 0.2 419 0.1 Other adjustmentsIntercompany sale of intellectual property— — (20,640)(3.5)5,740 0.9 Other(284)— 4,388 0.7 6,008 0.9 Foreign tax effectsIsraelStock-based compensation3,354 0.5 8,268 1.4 5,803 0.9 Intercompany sale of intellectual property— — 14,174 2.4 — — Other(216)— 8,530 1.5 (473)(0.

Stock-Based CompensationEquity PlansIn May 2013, the Company's stockholders approved the Akamai Technologies, Inc. 2013 Stock Incentive Plan, which was amended with Company shareholder approval in each of 2015, 2017, 2019, 2021, 2022, 2023, 2024 and 2025 (as amended and restated, the "2013 Plan"). The 2013 Plan allows for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and cash-based awards for up to 46.8 million shares of common stock, subject to certain adjustments, to employees, officers, directors, consultants and advisers of the Company. As of December 31, 2025, the Company had reserved 9.3 million shares of common stock available for future issuance of equity awards under the 2013 Plan.The Company has assumed certain stock incentive plans and the outstanding stock incentives of companies that it has acquired (“Assumed Plans”). Stock awards outstanding as of the date of acquisition under the Assumed Plans were exchanged for the Company’s stock awards and adjusted to reflect the appropriate conversion ratio as specified by the applicable acquisition agreement, but are otherwise administered in accordance with the terms of the Assumed Plans. Stock awards under the Assumed Plans generally vest over three years to four years, and outstanding stock options under the Assumed Plans expire ten years from the date of grant.Additionally, the Company has the 1999 ESPP that permits eligible employees to purchase up to 1.5 million shares each June 1 and December 1, provided that the aggregate number of shares issued shall not exceed 20.0 million. The 1999 ESPP allows participants to purchase shares of common stock at a 15% discount from the fair market value of the stock as determined on specific dates at six-month intervals. As of December 31, 2025, the Company had reserved 0.6 million shares of common stock available for future purchases under the 1999 ESPP.

LeasesThe Company has entered into various operating lease agreements for its offices and co-location sites and related equipment. The Company has also entered into sublease agreements with tenants of various offices previously vacated by the Company. These operating leases have lease periods expiring between 2026 and 2046. Additionally, the Company entered into an operating lease with a data center operator for space in the Virginia area. Contemporaneously, the Company entered into a sublease with the affiliate of a large social media customer for the use of the space on substantially similar terms. Both the lease and sublease for the data center expire in 2037.The Company’s operating lease costs for the years ended December 31, 2025, 2024 and 2023 were as follows (in thousands):Real Estate ArrangementsCo-location ArrangementsData Center SubleaseTotal2025Operating lease cost$66,545 $260,243 $6,959 $333,747 Short-term lease cost381 25,590 — 25,971 Variable lease cost26,218 73,375 1,074 100,667 Sublease income(31,459)— (8,187)(39,646)Total operating lease costs (income)$61,685 $359,208 $(154)$420,739 2024Operating lease cost$67,757 $225,145 $— $292,902 Short-term lease cost660 25,288 — 25,948 Variable lease cost26,122 67,728 — 93,850 Sublease income(31,722)— — (31,722)Total operating lease costs$62,817 $318,161 $— $380,978 2023Operating lease cost$74,054 $179,552 $— $253,606 Short-term lease cost133 23,565 — 23,698 Variable lease cost25,860 62,084 — 87,944 Sublease income(32,024)— — (32,024)Total operating lease costs$68,023 $265,201 $— $333,224 Lease costs for real estate arrangements and the data center sublease are included in general and administrative expenses in the consolidated statements of income. Lease costs for co-location arrangements are primarily included in cost of revenue in the consolidated statements of income. Weighted average remaining lease terms and discount rates related to the Company's operating leases as of December 31, 2025 and 2024 were as follows:December 31, 2025December 31, 2024Real Estate ArrangementsCo-location ArrangementsData Center SubleaseReal Estate ArrangementsCo-location ArrangementsData Center SubleaseWeighted average remaining lease term (in years)8.14.811.99.14.60.0Weighted average discount rate3.6 %4.4 %5.1 %3.5 %4.

AcquisitionsAsset AcquisitionsThe Company acquired certain customer contracts from Edgio, Inc. ("Edgio"), Lumen Technologies, Inc. ("Lumen") and StackPath, LLC ("StackPath"), and certain of their affiliates. The acquisitions are intended to further strengthen the Company's existing delivery and security businesses by integrating the acquired customers onto its platform and offering them the Company’s broader portfolio of services. Substantially all of the purchase price related to these acquisitions has been ascribed to customer-related acquired intangible assets.The following table summarizes the details of the asset acquisitions:Asset AcquisitionAcquisition DatePurchase Price (1)(in thousands)Weighted Average Amortization Period(in years)EdgioDecember 2024$158,341 9.0LumenOctober 2023$79,682 12.2StackPathAugust 2023$51,211 13.4(1) Includes capitalized transaction costs and a portion of the transition services agreement costs.Business AcquisitionsBusiness acquisition-related costs were $3.2 million, $7.5 million and $2.7 million during the years ended December 31, 2025, 2024 and 2023, respectively, and are included in general and administrative expense in the consolidated statements of income. Pro forma results of operations for the acquisitions completed in the years ended December 31, 2025, 2024 and 2023 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the Company's consolidated financial results. Revenue and earnings of the acquired companies since the dates of the acquisitions are included in the Company's consolidated statements of income and are not presented separately because they are not material.FermyonIn November 2025, the Company acquired all the outstanding equity interests of Fermyon Technologies, Inc. ("Fermyon") for $56.6 million in cash, subject to post-closing adjustments. By acquiring Fermyon, a serverless WebAssembly company, the Company plans to deepen the integration between the edge functions platform and its performance and security products. The resulting cloud computing platform aims to make it even faster and easier for developers to build, deploy and secure applications at the edge that outperform cloud-native applications, for less money, the same way they can in core data centers today. The Company allocated $36.0 million of the purchase price to goodwill and $17.