Summary
Akamai's first fiscal quarter of 2021 produced $842.7 million of revenue, up 10.3% from $764.3 million in the same quarter a year earlier, with growth of 8% once foreign exchange is stripped out. Security did the heavy lifting. The Security Technology Group, created in a March 1, 2021 reorganization, grew 29% year over year. The Edge Technology Group, which now houses media delivery, web performance and edge computing, grew 2% and absorbed the drag from declining website and application performance solutions. Geography and customer mix both helped. U.S. revenue rose 8%, international revenue rose 13%, or 8% at constant currency, and revenue from large internet platform customers, named in the filing as Amazon, Apple, Facebook, Google, Microsoft and Netflix, rose 32%.
Profitability improved alongside the top line. GAAP operating income was $182.4 million, up 19.7%, and GAAP operating margin was 21.6%, up 1.7 percentage points. GAAP net income was $155.7 million, up 26.4%, and diluted EPS was $0.94, up 25.3%. Management's non-GAAP presentation sits higher: non-GAAP income from operations of $264 million, up 15%, non-GAAP net income of $228 million, up 16%, non-GAAP EPS of $1.38, up 15%, and Adjusted EBITDA of $375 million, up 15%, at a 45% margin, up 2 percentage points. Most of the gap between the two views comes from stock-based compensation, amortization of acquired intangibles and restructuring charges that Akamai excludes. Sales and marketing spending fell during the quarter, since pandemic restrictions kept travel and in-person marketing events off the calendar.
Cash generation was steady. Operating cash flow was $249.8 million, up 11.9% and equal to 30% of revenue. Capital expenditures were $87.2 million, down 38.2% from $141.1 million a year earlier, reflecting a network build in 2020 that has not repeated at the same pace. The current portion of deferred revenue was $102.5 million, up 3.5%, and remaining performance obligations were $2.9 billion, up 16%, which supports the recurring revenue base management leans on. Cash, cash equivalents and marketable securities totaled $2.5 billion at March 31, 2021, leaving net cash of $153.6 million once the $2.3 billion principal of convertible senior notes is counted. Akamai spent $58 million repurchasing 0.6 million shares at an average price of $98.39, and $513.7 million remained available under the buyback authorization. Headcount ended the quarter at 8,300, down from 8,368 at the end of 2020.
No quarterly or full-year guidance figures were published with the release; the forward-looking detail sits in the 10-Q. Akamai expects amortization of acquired intangibles of roughly $36.3 million for the remainder of 2021, then $44.3 million for 2022, $36.9 million for 2023, $29.2 million for 2024 and $23.7 million for 2025. Network depreciation should keep rising through 2021 as equipment deployed in 2020 flows through the income statement, and capital spending is planned below 2020 levels. Travel and marketing costs should stay depressed while the pandemic lasts, and headcount is not expected to grow significantly unless a large acquisition closes.
The larger risks look structural rather than cyclical. Management expects the extraordinary traffic growth of 2020 to moderate this year as pandemic restrictions ease. Website and application performance solutions keep shrinking, and customers in commerce and travel and hospitality remain under financial pressure. Prices paid by some customers have declined, particularly on web application contract renewals and large media consolidations, where competition and volume discounts are at work. Bandwidth and co-location costs, both significant pieces of cost of revenue, moved higher. Currency is a swing factor too: foreign exchange added $16.0 million of revenue in the quarter, so a stronger dollar would cut the other way. Akamai also expects to record more losses from GO-NET, its blockchain payments joint venture with Mitsubishi UFJ Financial Group.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $842.7M | $846.3M | -0.4% | $764.3M | +10.3% |
| Gross profit | $536.0M | $542.4M | -1.2% | $495.7M | +8.1% |
| Gross margin | 63.6% | 64.1% | -0.5 pp | 64.9% | -1.3 pp |
| Research & development | $82.0M | $67.2M | +22.0% | $71.2M | +15.2% |
| Sales & marketing | $116.4M | $140.4M | -17.1% | $123.8M | -6.0% |
| General & administrative | $136.7M | $162.5M | -15.8% | $127.4M | +7.3% |
| Total operating expenses | $660.3M | $711.7M | -7.2% | $612.0M | +7.9% |
| Operating income (loss) | $182.4M | $134.6M | +35.5% | $152.3M | +19.7% |
| Operating margin | 21.6% | 15.9% | +5.7 pp | 19.9% | +1.7 pp |
| Net income (loss) | $155.7M | $113.4M | +37.3% | $123.1M | +26.4% |
| Net margin | 18.5% | 13.4% | +5.1 pp | 16.1% | +2.4 pp |
| Diluted EPS | $0.94 | $0.69 | +$0.25 | $0.75 | +$0.19 |
Risks
Akamai said traffic growth began to stabilize in Q4 2020 and does not expect 2021 traffic growth to continue at 2020 levels, absent other significant industry developments. This could slow revenue growth and pressure profitability and the stock price.
Revenue from website and application performance solutions has declined in recent quarters and is expected to continue declining in 2021 because of pricing pressure and financial pressure on customers in commerce and travel and hospitality.
Akamai faces intense competition from larger technology and telecommunications companies and nimble startups that may offer lower prices, bundle competing products, or adapt faster. Management also noted price declines in web application contract renewals and large media consolidations.
Akamai relies on large media and other customers to direct significant traffic to its network. As customer spend increases, the risk rises that they will adopt do-it-yourself or multi-vendor strategies, which would reduce traffic and contracted revenue commitments.
Changes in customer contracting models away from committed revenue toward pay-as-you-go or zero overage plans could make it easier for customers to reduce or stop business with Akamai. This creates forecasting challenges and could disproportionately hurt profitability because much of the cost structure is fixed in the short term.
Growth in security revenue depends on Akamai increasing industry recognition as a security provider and developing new solutions in a rapidly changing threat landscape. Failure to keep pace with competitors could slow revenue growth and hurt profitability.
The COVID-19 pandemic drove a significant increase in 2020 media solutions revenue from online media and games, but the economic fallout continued into 2021 and could bring additional bankruptcies, reduced technology spending, and recession. Those conditions would negatively impact revenues.
Content access restrictions have already hurt revenue, including India's 2020 prohibition on identified Chinese applications, which caused a reduction in revenue. Proposals to repeal or amend Section 230 or impose similar restrictions could further negatively impact revenues.
Rapidly evolving privacy laws such as GDPR and CCPA could limit Akamai's use of network-generated data, require costly engineering changes, and reduce demand if solutions cannot meet legal obligations. Noncompliance could lead to penalties, reputational harm, and lost revenue.
In February 2021 Akamai announced a significant reorganization into two business groups and a unified global sales force. The restructuring may disrupt operations, reduce productivity, increase expenses, and cause unanticipated employee turnover.
Akamai depends on key employees and faces significant competition for talent in its primary office regions. Nearly all employees worked remotely due to COVID-19, and a longer continuation could hurt morale, productivity, and the ability to hire and train staff.
Akamai depends on third-party telecommunications providers, co-location facilities, and server supply. Disruptions from COVID-19, unrest, natural disasters, or component shortages could prevent it from purchasing equipment or expanding capacity, harming service quality and revenue.
Akamai had $1,150.0 million principal amount of convertible senior notes due 2025 and $1,150.0 million due 2027 outstanding. Failure to meet debt obligations or make cash payments upon conversion could harm the business or dilute existing stockholders.
Akamai is subject to tax audits, including a Massachusetts matter where the Appellate Tax Board ruled in its favor in July 2020 but the decision remains eligible for appeal. An adverse outcome could require a financial charge if reserves are inadequate.
SaaS KPIs
All quarters →Adjusted EBITDA margin
Non-GAAP operating margin
Summary, forecast, risks and KPIs are extracted from AKAMAI TECHNOLOGIES INC's SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.