Summary
Akamai closed the second quarter with revenue of $852.824 million, up 7.3% from the prior-year quarter. GAAP operating income was $199.434 million, up 4.7%, and GAAP operating margin was 23.4%, down 0.6 percentage points. Net income was $156.497 million, down 3.3%, and diluted EPS was $0.94, down 4.1%. The quarter showed a split between the top line and GAAP profit. Security Technology Group revenue grew 25% year-over-year, while Edge Technology Group revenue declined 1%. International revenue rose 15%, and U.S. revenue rose 1%. On a constant currency basis, total revenue increased 5%. Non-GAAP EPS was $1.42, up 3%, and Adjusted EBITDA was $385.701 million, up 9%.
First-half results were stronger. Revenue was $1.70 billion, up 8.8%. Operating income was $381.798 million, up 11.4%. Net income was $312.192 million, up 9.5%. Diluted EPS was $1.88, up 8.0%. Operating margin for the first half was 22.5%, up 0.5 percentage points. Cash generation also improved. Operating cash flow was $378.133 million in the quarter, up 26.6%, and $627.926 million for the first half, up 20.3%. Capital expenditures were $107.231 million in the quarter, up 45.2%, but $194.453 million for the first half, down 9.5%. Deferred revenue was $95.216 million, up 1.7% from the prior-year quarter. Remaining performance obligations were $2.80 billion, up 12.0%.
Management's commentary points to a mix shift. Security remains the growth engine, with demand for Bot Manager, Prolexic, and the Access Control Product Suite. The Edge Technology Group faces pressure in website and application performance solutions. Media traffic growth has moderated as pandemic restrictions roll back, and management expects year-over-year traffic and related revenue growth to continue moderating for the rest of 2021. The company also expects research and development costs to increase in the remainder of 2021. Sales and marketing costs should stay relatively consistent with the first half. Amortization of acquired intangible assets is expected to be about $24.2 million for the remainder of 2021, then $44.3 million in 2022, $36.9 million in 2023, $29.2 million in 2024, and $23.7 million in 2025. Network equipment depreciation is expected to rise, and capital expenditures are not expected to match 2020 levels.
The main risks are pricing and demand. Akamai said customers have seen price declines, particularly for website and application delivery solutions, due to contract renewals, large media consolidations, competition, and volume discounts. It expects those revenue challenges to continue in the remainder of 2021. There is also uncertainty about how the COVID-19 pandemic will affect customer purchases. Foreign exchange remains a swing factor; a stronger dollar would hurt reported revenue. The company's equity method investment in GO-NET generated a loss, and management expects additional losses in 2021 and beyond as the joint venture builds its blockchain-based payment network.
Cost pressure is another watch item. Akamai plans to manage bandwidth, co-location, and network build-out costs to protect margins. It expects network equipment depreciation to increase because of equipment deployed in 2020. The company had 8,275 employees at the end of the quarter and said it does not expect overall headcount to increase significantly in 2021 unless it completes one or more significant acquisitions. Management said current cash, cash equivalents, and marketable securities balances, along with forecasted cash flows from operations, should be sufficient for foreseeable cash needs for at least the next 12 months. It also had no outstanding borrowings under its revolving credit facility as of June 30, 2021. The company spent $96 million in the quarter to repurchase 0.9 million shares at an average price of $110.51, and $417.5 million remained under its repurchase program as of June 30, 2021.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $852.8M | $842.7M | +1.2% | $794.7M | +7.3% |
| Gross profit | $532.8M | $536.0M | -0.6% | $517.9M | +2.9% |
| Gross margin | 62.5% | 63.6% | -1.1 pp | 65.2% | -2.7 pp |
| Research & development | $77.3M | $82.0M | -5.8% | $64.1M | +20.5% |
| Sales & marketing | $111.9M | $116.4M | -3.8% | $123.5M | -9.4% |
| General & administrative | $134.3M | $136.7M | -1.8% | $129.7M | +3.5% |
| Total operating expenses | $653.4M | $660.3M | -1.1% | $604.3M | +8.1% |
| Operating income (loss) | $199.4M | $182.4M | +9.4% | $190.4M | +4.7% |
| Operating margin | 23.4% | 21.6% | +1.8 pp | 24.0% | -0.6 pp |
| Net income (loss) | $156.5M | $155.7M | +0.5% | $161.9M | -3.3% |
| Net margin | 18.4% | 18.5% | -0.1 pp | 20.4% | -2.0 pp |
| Diluted EPS | $0.94 | $0.94 | ±$0.00 | $0.98 | -$0.04 |
Risks
The filing states revenue growth may not continue and could decline; media solutions revenue rose significantly in 2020 due to COVID-19 stay-at-home demand, and management does not expect 2021 traffic growth to continue at 2020 levels. MD&A adds that traffic growth in the first half of 2021 moderated versus 2020 and that year-over-year traffic and associated revenue growth are expected to continue to moderate for the remainder of 2021.
The filing says revenue declines from web performance solutions in recent quarters are expected to continue because of pricing pressure and customer business conditions. MD&A reports Edge Technology Group revenue down 1.4% for the three months ended June 30, 2021 versus the same period in 2020, primarily from reductions in application performance solutions, and expects website and application performance revenue challenges to continue during the remainder of 2021.
Security Technology Group revenue increased 25.4% for the three months ended June 30, 2021 and 27.2% for the six months, but the filing says Akamai must maintain or accelerate security revenue growth by increasing industry recognition, developing new solutions in a rapidly changing threat landscape, and keeping its solutions competitive.
The filing describes intensely competitive markets with larger technology and telecommunications competitors and smaller nimble rivals, which can lead to price and revenue reductions, loss of customers, and loss of market share. MD&A notes prices paid by some customers declined, particularly for website and application delivery solutions, due to contract renewals and large media consolidations reflecting competition and volume discounts.
Akamai regularly faces attempts to gain unauthorized access, DDoS, ransomware, supply-chain infiltration, and phishing, and vulnerabilities may persist for extended periods. The filing says protecting its networks is costly and can reduce operating margin, and any actual or perceived breach could cause reputational harm, customer loss, regulatory action, and litigation.
Large media and other customers may adopt do-it-yourself internal delivery and security solutions or multi-vendor policies, especially as spending with Akamai increases. The filing says such shifts would decrease traffic on Akamai's network and contracted revenue commitments and negatively affect business, profitability, financial condition, results of operations, and cash flows.
The filing says Akamai's complex solutions have had errors and defects causing service incidents, outages, and customer dissatisfaction, and it may increase investment in processes and systems in light of recent incidents. Failure to fix issues could cause customer credits, loss of revenue and market share, reputational damage, and reduced profitability.
Akamai expects to continue acquisitions and strategic transactions, with risks including integration difficulties, management distraction, escalating valuations of technology companies, dilutive effects, impairment charges, and unknown liabilities. MD&A also notes the Asavie acquisition contributed to Security Technology Group growth and that GO-NET equity method investment losses increased.
The filing says success depends on key technology, sales, marketing, and support personnel, and there is significant competition for talent in Akamai's primary office regions. Nearly all employees have worked remotely due to COVID-19, and a longer continuation could negatively impact morale, productivity, hiring, and training.
In February 2021 Akamai announced a significant reorganization into Security Technology Group and Edge Technology Group and established a unified global sales force. The filing says restructuring and reorganization may disrupt operations and cause significant expense, employee distraction, and unanticipated turnover.
Privacy and content regulations are evolving, including GDPR, CCPA, data localization, and content access restrictions. The filing specifically notes restrictions adopted in India in 2020 prohibiting access to identified Chinese applications caused a reduction in revenue to Akamai, and compliance efforts could require substantial expense and divert engineering resources.
Akamai's future income taxes could be adversely affected by changes in tax laws; in July 2021 a global consortium proposed a new framework for international tax reform that, if implemented, could increase tax liabilities and reduce profitability. The filing also notes tax audits, including a Massachusetts matter where the MATB ruled in Akamai's favor in July 2020 but the decision is eligible for appeal.
Akamai depends on third-party transmission capacity, co-location facilities, and servers; inability to buy bandwidth or space and supply-chain disruptions could prevent equipment purchases at attractive prices or at all. Governmental restrictions during pandemics could impede network expansion or maintenance, leading to service disruption and customer loss.
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 Q2 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.