Summary
Revenue reached $1.10 billion in the second quarter of fiscal 2026, up 5.4% from the prior-year quarter. The mix kept shifting. Security revenue rose 10% year over year and 9% at constant currency. Cloud infrastructure services revenue rose 39% year over year and 39% at constant currency. Delivery and other cloud applications revenue fell 6% year over year and 5% at constant currency, hurt by renewal pricing and by customers who keep optimizing traffic and cost.
Profitability fell faster than revenue. GAAP operating income was $80.28 million, down 47.0% from the prior-year quarter. GAAP operating margin was 7.3%, down 7.2 percentage points. GAAP net income was $79.40 million, down 23.4%. Diluted EPS was $0.52, down 26.8%. Costs rose across the board: cost of revenue, research and development, sales and marketing, and general and administrative all grew, with stock-based compensation climbing as a new retirement benefit shortened the service period for retirement-eligible employees and performance-based awards were achieved. Non-GAAP income from operations was $271 million, down 12%. Non-GAAP operating margin was 25%, down 5 percentage points. Non-GAAP net income was $236 million, down 6%. Non-GAAP net income per diluted share was $1.59, down 8%. Adjusted EBITDA was $416 million, down 6%.
The quarter's headline was demand for cloud infrastructure. Year to date, Akamai signed numerous multi-year cloud infrastructure services contracts worth more than $2.8 billion. One new customer, a U.S.-based technology company, committed more than $600 million over four years. Remaining performance obligations were $7.60 billion, up 76.7% from the prior-year quarter. Current deferred revenue was $200.27 million, up 11.4%. Cash generation slipped. Operating cash flow was $326.27 million, down 28.9%. Capital expenditures were $144.93 million, flat versus the prior-year quarter. Akamai spent $410 million to repurchase 3 million shares at a weighted average price of $134.54, and it held 144 million shares of common stock outstanding at June 30, 2026.
Guidance covers the third quarter and the full year 2026. Third quarter guidance is a range of $1,105 million to $1,130 million, and full year guidance is a range of $4,445 million to $4,530 million. Non-GAAP operating margin guidance is 24% to 26% for the third quarter and 25% to 26% for the full year. Non-GAAP net income per diluted share guidance is $1.60 to $1.80 for the third quarter and $6.40 to $7.05 for the full year. The non-GAAP tax rate is guided to 19%, and shares used in non-GAAP per diluted share calculations are guided to 150 million. Akamai says non-GAAP guidance cannot be reconciled to the closest GAAP measures without unreasonable effort.
Risks are visible in the numbers. Delivery revenue keeps shrinking and renewal pricing stays under pressure. Traffic growth has moderated, especially in media and gaming. Co-location, bandwidth, server, and memory costs are rising as hyperscalers compete for the same capacity, and Akamai expects capital expenditures and depreciation to climb as it builds for cloud infrastructure services and AI. Large customer commitments carry execution risk, from the customers' ability to meet purchase obligations to Akamai's ability to procure hardware and memory on schedule. Debt also grew: $7,640.0 million of convertible senior notes were outstanding, and no share repurchases are expected for the remainder of 2026.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.10B | $1.07B | +2.4% | $1.04B | +5.4% |
| Gross profit | $613.8M | $602.3M | +1.9% | $617.0M | -0.5% |
| Gross margin | 55.8% | 56.1% | -0.3 pp | 59.1% | -3.3 pp |
| Research & development | $148.8M | $141.6M | +5.1% | $125.8M | +18.3% |
| Sales & marketing | $170.0M | $157.1M | +8.3% | $146.2M | +16.3% |
| General & administrative | $187.7M | $163.8M | +14.6% | $162.6M | +15.4% |
| Total operating expenses | $1.02B | $959.1M | +6.3% | $892.0M | +14.3% |
| Operating income (loss) | $80.3M | $114.5M | -29.9% | $151.5M | -47.0% |
| Operating margin | 7.3% | 10.7% | -3.4 pp | 14.5% | -7.2 pp |
| Net income (loss) | $79.4M | $106.3M | -25.3% | $103.6M | -23.4% |
| Net margin | 7.2% | 9.9% | -2.7 pp | 9.9% | -2.7 pp |
| Diluted EPS | $0.52 | $0.71 | -$0.19 | $0.71 | -$0.19 |
Risks
The filing expands Middle East conflict risk, noting Iranian strikes on Persian Gulf data center facilities in early 2026 and that state actors have identified U.S. technology assets in the region as potential targets. Akamai relies on third-party co-location and network infrastructure in the Middle East, and physical attacks could disrupt its network and raise remediation costs.
MD&A says Akamai is experiencing significant increases in server and memory costs due to hyperscaler market dynamics and expects co-location, server and memory price increases to raise future capital expenditures and depreciation. Cost of revenue rose 14% in the quarter, driven by co-location, bandwidth, network build-out and stock-based compensation.
GAAP operating margin fell to 7% in FY2026 Q2 from 15% in FY2025 Q2, and non-GAAP operating margin fell to 25% from 30%, as total costs and operating expenses rose to 93% of revenue. MD&A expects cost of revenue, R&D, sales and marketing and G&A to increase for the remainder of 2026.
Delivery and other cloud applications revenue declined 6% in FY2026 Q2 due to downward pricing at contract renewals, and MD&A says macroeconomic headwinds are causing customers to increase cost optimization, reducing traffic on Akamai's network. Traffic growth remains moderated, and Akamai expects that moderation to continue for the remainder of 2026.
The filing warns that a small number of very large competitors are incumbents in AI and cloud infrastructure and can secure servers, memory, co-location capacity and power on preferred terms with priority access, constraining industry supply and increasing Akamai's costs. It also cites pricing pressure and shorter sales cycles from competitors.
Akamai issued $3.5 billion of convertible senior notes in the first half of 2026 and had $7.64 billion outstanding as of June 30, 2026, with capital expenditures expected to increase for cloud infrastructure services and AI infrastructure. Operating cash flow decreased 28.9% in FY2026 Q2 and 10.1% year to date, and no share repurchases are expected for the remainder of 2026.
The filing expands cybersecurity risk from AI capabilities, including AI models and coding agents that can autonomously discover and exploit software vulnerabilities, which could increase the speed and scale of attacks and compress patch time. Akamai also notes it has discovered vulnerabilities such as the AMD Inception vulnerability and may have undiscovered vulnerabilities.
Akamai says it may not be successful in its AI initiatives and that its use of AI may introduce operational, security, intellectual property and regulatory risks. Success in cloud infrastructure services and AI workloads depends on creating competitive enterprise products, sourcing additional co-location facilities and managing an uncertain server supply chain.
The filing says Akamai relies on larger customers to direct traffic to its network and notes that a large social media customer's DIY optimization reduced traffic and negatively impacted revenue in 2024 and may continue to do so. Customers increasing DIY or multi-vendor use could reduce traffic and contracted revenue commitments.
The filing highlights digital sovereignty and data localization frameworks, the EU AI Act taking effect in August 2026, and U.S. restrictions on sensitive personal data transfers to countries of concern. Compliance could require in-country hosting, local partners or segregated infrastructure, increasing costs and reducing addressable market.
Akamai faces competition for talent, with compensation increases and stock-based compensation dilution, and geopolitical events may impact retention, including employees in Israel required to report for military service. Stock-based compensation rose 27% in cost of revenue and 36% in R&D in the quarter.
SaaS KPIs
All quarters →Adjusted EBITDA margin
Non-GAAP operating margin
Adjusted EBITDA
Cash from operations
Cash from operations margin
Summary, forecast, risks and KPIs are extracted from AKAMAI TECHNOLOGIES INC's SEC filings for Q2 FY2026 (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.