AKAM · Q1 2026 Earnings

Bullish

Akamai Technologies

Reported May 7, 2026

30-second summary

Akamai printed Q1 revenue of $1.074B (+6% YoY, -1.9% QoQ) and non-GAAP EPS of $1.61, but the print is a sideshow: management disclosed a $1.8B / 7-year AI customer commitment — the largest contract in company history — on top of the $200M deal flagged last quarter, raised CIS FY26 growth to "at least 50%" from 45–50%, and lifted FY26 CapEx guidance from 23–26% to 40–42% of revenue. The 2027 framing was explicitly upgraded to "double-digit" total company growth. This is no longer an investment trough debate — Akamai is signing transformational AI infrastructure deals and rebuilding the P&L around them.

Headline numbers

EPS

Q1 FY2026

$1.61

Revenue

Q1 FY2026

$1.07B

+6.0% YoY

Gross margin

Q1 FY2026

56.1%

Free cash flow

Q1 FY2026

$0.12B

Operating margin

Q1 FY2026

10.7%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$1.07B	+6.0%	$1.09B	-1.9%
EPS	$1.61	—	$1.84	-12.5%
Gross margin	56.1%	—	58.6%	-250bps
Operating margin	10.7%	—	8.7%	+200bps
Free cash flow	$0.12B	—	—	—

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q1 FY2026	$1.060B to $1.085B	$1.074B	-$0.011B below midpoint; within range but toward lower end	Missed
Non-GAAP EPS	Q1 FY2026	$1.50 to $1.67	$1.61	in-line with midpoint ($1.585)	Met
Non-GAAP Operating Margin	Q1 FY2026	26% to 27%	26%	at high end of range	Beat
CapEx as % of Revenue	Q1 FY2026	23% to 25%	19%	-4 to -6 percentage points below guided range	Beat
Cloud Infrastructure Services (CIS) YoY growth	Q1 FY2026	45% to 50% YoY	40%	-5 to -10 percentage points below guided range	Beat
Security YoY growth	Q1 FY2026	high single digits in constant currency	11%	in-line with 'high single digits' qualitative guidance	Met

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY2026	$4.400B to $4.550B	$4.445B to $4.550B	+$0.045B at low end	Raised
Non-GAAP EPS	FY2026	$6.20 to $7.20	$6.40 to $7.15	+$0.20 at low end, -$0.05 at high end; midpoint +$0.075	Raised
Non-GAAP Operating Margin	FY2026	26% to 28%	26%	-2 percentage points at high end (range now fixed at 26%)	Lowered
Non-GAAP Tax Rate	FY2026	19%	18.5%	-0.5 percentage points	Lowered
CapEx as % of Revenue	FY2026	23% to 26%	40% to 42%	+14 to +16 percentage points (significant increase)	Raised
Cloud Infrastructure Services (CIS) YoY growth	FY2026	45% to 50	—	—	Raised

Segment performance

Q1 FY2026

Segment	Q1 FY2026	YoY
Security	$0.59B	+11.0%
Delivery and other cloud applications	$0.389B	-7.0%
Cloud Infrastructure Services	$0.095B	+40.0%

Platform metrics

Q1 FY2026

Segment	Q1 FY2026
AI Customer Commitment (CIS)	$1.8 billion over 7 years

Profitability

Q1 FY2026

Segment	Q1 FY2026
Non-GAAP Operating Margin	26%
Adjusted EBITDA	$427 million
Adjusted EBITDA Margin	40%
Operating Cash Flow	$313 million
Cash from Operations as % of Revenue	29%
Capital Expenditures as % of Revenue	19%

Other KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
U.S.	$0.543B	+3.0%
International	$0.53B	+9.0%
Share Repurchases	$206 million	—

Management tone

Narrative arc: Q2 CIS inflection thesis → Q3 Akamai Inference Cloud launch → Q4 $200M anchor customer with $250M earmarked CapEx → Q1 FY26 $1.8B mega-deal and CapEx doubled to 40–42% of revenue.

Two quarters ago AI inference had a $200M validation customer and management framed FY26 as a deliberate investment year with operating margin guided down 200–400bps. This quarter the $200M deal looks small: the new $1.8B / 7-year contract is 9x larger and the operating model is being rebuilt around it. CEO Tom Leighton: "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." The shift from "transformation underway" to "definitive turning point" is categorical — and it's anchored to a contract, not a thesis.

Three quarters ago management forecast double-digit company-wide growth as an eventual destination contingent on CIS scaling. Last quarter the FY26 guide implied 4.6–8.1% reported growth and EPS down 5.9% at midpoint vs FY25. This quarter Ed McGowan disclosed: "we now expect total company annual top-line revenue growth to reach double digits in 2027." Management is now committing to a 2027 inflection on the record — a level of forward specificity Akamai rarely offers and which would not be possible without contracted revenue backing it.

Two quarters ago the distributed platform was framed as a legacy CDN/security asset with optionality for AI. This quarter Leighton inverted the framing: "By pushing AI inference to the edge and combining it with our massive deployment of CPUs for delivery, security, and functions as a service, we're enabling customers to run complex models within milliseconds of their end users." The 4,300-location footprint is no longer a sunk cost from the CDN era — it's the moat being underwritten by frontier model companies and enterprise AI buyers. The Q&A repeatedly returned to whether Akamai is competing with hyperscalers; management's answer is that distributed geography is what hyperscalers don't have.

Security got an offensive reframe. Last quarter the FY26 security guide was set at "high single digits constant currency" and legacy book decay was the dominant narrative. This quarter Leighton pivoted to demand expansion: "We believe that Akamai's security portfolio will be needed more than ever before as attackers take advantage of the advances in AI... we can expect zero-day attacks to occur much more frequently." The +11% Q1 print supports the framing, though FY26 guidance was reaffirmed at high-single-digit cc, not raised — so the tone shift is currently rhetorical, not numeric.

Margin candor is the quiet story. Last quarter FY26 operating margin was guided 26–28%. This quarter the high end was cut to 26% (the range is now fixed at 26%, not a range at all), even as Q1 beat the low end. Ed: "To fully capitalize on this momentum and support the accelerated growth we anticipate, we will be investing slightly ahead of revenue." Translation: management is choosing to compress 2026 profitability further to land the AI capacity, accepting a -200bps cut to the FY26 margin ceiling in exchange for a 2027 growth inflection. Confidence level reads 5/5.

Recurring themes management leaned on this quarter:

Cloud infrastructure services as transformation vector with AI workloads at scaleFrontier model companies and enterprise AI as primary growth driver and validation of Akamai positioningDistributed edge infrastructure as competitive moat for AI inference and securityAI-enabled attack sophistication requiring expanded security portfolio across massive platformRapid pipeline expansion and demand exceeding current capacity, driving aggressive capital deploymentDouble-digit revenue growth anticipated in 2027 driven by CIS deals and AI adoption acceleration

Risks management surfaced:

Macroeconomic trends impact on forward guidanceGeopolitical developments affecting global operations and customer behaviorIntegration risks from acquisitions (referenced as risk factor)Legacy systems and billions of deployed devices vulnerable to AI-powered attacks despite security solutionsGPU supply and component availability dependency; current pipeline exceeds inventory, potential for additional orders and capital spend volatility

Q&A highlights

Roger Boyd · UBS

Competitive positioning for the landmark deal - are you competing against hyperscalers or neoclouds? What are the use cases (inference, agentic workloads)? How is the customer leveraging Akamai's network?

Cannot provide deal-specific details, but Akamai competes with hyperscalers and neoclouds on distributed systems management, data center scale (4,300 locations, 700 cities, 130 countries), network integration, latency, scalability, and unique capabilities. Strong pipeline supports large deal wins.

4,300 locations across 700 cities and 130 countriesCompetes directly with hyperscalers and neocloudsDifferentiation based on distributed systems management and global data center relationships

Patrick Covell · Scotiabank

Is the mega deal highly distributed across Akamai's 700 cities or concentrated in sub-10 data centers? Also, Ed's comment about potential CapEx increases - what's driving this and what's the timeline?

Cannot discuss the deal specifics, but distributed architecture is core value prop for use cases requiring agent/application proximity to users and data. On CapEx: very strong GPU pipeline exceeds current inventory; considering additional orders if chips can be delivered by year-end; will provide more color next quarter.

GPU pipeline exceeds inventoryPotential additional CapEx order could be 'a couple hundred million'Will revisit CapEx decision in next quarter based on supply availability

John DeFucci · Guggenheim Securities

For the mega deal over 7 years, have you locked in supply chain and hedged against future price increases? Also, will Sora shutdown impact Akamai's delivery or compute forecasts?

Supply chain is secured with delivery expected within 12 months; pricing mechanisms in contracts handle potential cost increases; no impact from Sora shutdown as OpenAI is not an Akamai customer. Deal structure is committed capacity deployment over 7 years, functioning like subscription revenue.

Supply secured for full 7-year delivery within next 12 monthsMajority of CapEx this year, remainder received over timePrice protection mechanisms embedded in contractOpenAI not an Akamai customer - no Sora impact

Fatima Bolani · Citi

Why is Akamai pursuing dedicated capacity models with longer-term commitments rather than higher-margin rental/GPaaS models given better ROI potential?

Akamai supports both models - dedicated capacity and consumption-based (per token/hour). Customer demand is driving dedicated capacity preference due to GPU scarcity in marketplace; customers want guaranteed supply. Lower pricing on committed deals is offset by reduced sales/support costs and more predictable cash flows.

Both models supported simultaneouslyScarcity-driven customer preference for dedicated capacity with volume discountsConsumption models have higher unit pricing but higher sales/support costsMarket-driven selection of pricing model by customers

Aiden Daniels · QBank Capital Markets

How is Akamai balancing capacity allocation between the mega deal commitment and maintaining flexibility for on-demand GPU capacity? What's the CPU vs GPU mix in the deal?

Akamai supports both on-demand (per token/VM hour) and large tranche deals; not trading off between them as GPU purchasing continues as needed. Cannot comment on specific deal composition, but generally both CPU and GPU needed for inference; mix varies by workload and application efficiency.

Dual business model: on-demand and committed capacityGPU purchases ongoing to support pipeline growthCPU/GPU mix varies by application and workload optimization

Answers to last quarter's watch list

CIS Q1 holding at or above 45% — CIS printed +40% YoY in Q1, the first sequential deceleration in five quarters and running below the FY26 annual 45–50% pace. However, management simultaneously raised FY26 CIS growth to "at least 50%" constant currency and explicitly pointed to H2 acceleration as the $1.8B deal ramps. The Q1 print is below the FY pace; the forward guide is above.

Continue monitoring

Second large inference cloud customer commitment — Disclosed the $1.8B / 7-year contract, the largest customer deal in Akamai history and 9x the prior $200M anchor. This is the second mega-deal in two quarters and confirms the pattern that one Q4 disclosure suggested.

Resolved positively

Q1 non-GAAP operating margin landing within 26–27% guide — Margin landed at 26%, exactly at the low end of the guided range. FY26 margin guide was then narrowed from 26–28% to a fixed 26%, signaling the high end is no longer in play.

Resolved negatively

Hardware inflation commentary — pass-through or absorbed — Management confirmed contractual price-protection mechanisms are embedded in the $1.8B deal, and Ed flagged supply (not pricing) as the binding constraint. The FY26 margin cut to 26% suggests current cost inflation is being partially absorbed; the contract price-protection clauses cover forward risk. Status: Resolved positively (mechanism), Continue monitoring (margin impact)

Security growth trajectory in Q1 vs. high-single-digit FY guide — Security printed +11% YoY (+9% cc) in Q1, running ahead of the high-single-digit cc FY guide. Management reaffirmed the FY guide rather than raising it, implying deceleration is expected through the year. The legacy book drag remains the structural issue. Status: Resolved positively (Q1), Continue monitoring (FY trajectory)

High-growth security ARR base disclosed in dollar terms — No dollar disclosure of API security + Guardicore ARR this quarter. The high-growth bucket was not separately quantified on the print.

Continue monitoring

GPU-by-the-hour rental utilization vs. reserved-cluster mix — Q&A confirmed both models continue to be supported but customers are skewing toward dedicated capacity due to GPU scarcity. No specific utilization metrics on the rental product were disclosed.

Continue monitoring

What to watch into next quarter

Whether CIS Q2 growth re-accelerates toward 50%+ — management has now staked the FY26 "at least 50%" guide on H2 acceleration. A second consecutive deceleration print would force a guide reset and undermine the $1.8B deal narrative.

A third large inference customer commitment, or detail on the pipeline funnel beyond the $1.8B contract — management said pipeline "exceeds current inventory," which implies more deals are landable if supply permits. Naming or quantifying this would shift the multi-year setup.

Q2 CapEx landing within the $433–$453M range (40–41% of revenue) — and whether Ed's "couple hundred million" incremental commentary materializes as an FY26 CapEx upward revision. The forward CapEx envelope is now the single biggest swing variable for FY26/FY27 FCF.

Delivery YoY trajectory — at -7% in Q1, the segment has decisively broken from the Q4 "stabilization" narrative. Two consecutive quarters of widening decline would force a re-rating of the non-AI base.

Q2 non-GAAP operating margin landing within 25–26% — and whether the FY26 fixed 26% margin guide proves to be a floor or a ceiling. Q2 at the low end of the range would put the 26% FY at risk.

Initial revenue recognition timing on the $1.8B contract — whether any portion begins in 2026 or is fully back-end-loaded to 2027+. This determines whether the 2027 "double-digit" company growth guide is contracted or pipeline-dependent.

Sources

Akamai Q1 2026 Press Release / Form 8-K Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/1086222/000108622226000054/exhibit991-q12026.htm
Akamai Q1 2026 earnings call prepared remarks and Q&A (transcript excerpts as provided)
Akamai Q4 2025 Tapebrief coverage (prior-quarter guidance baseline)

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