Akamai Technologies Inc Investor update

Please go ahead. Good afternoon, everyone, and thank you for joining us today on short notice.

We have some very exciting news to share from a customer win perspective, and we will get to that in just a moment. Speaking today will be Tom Leighton, Akamai's Chief Executive Officer, and Ed McGowan, Akamai's Chief Financial Officer. Please note that today's comments include forward-looking statements that include revenue guidance. These forward-looking statements are based on current expectations and assumptions that are subject to certain risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied. The factors include, but are not limited to, any impact from macroeconomic trends, the integration from any acquisition, geopolitical developments, and other risk factors identified with our filings with the SEC.

The statements included on today's call represent the company's views on September 24th, 2026, and we assume no obligation to update any forward-looking statements. As a reminder, we will be referring to certain non-GAAP financial metrics during today's call. A detailed GAAP to non-GAAP reconciliation is available in the Investor Relations section of akamai.com under financials. Before I hand the call off to Tom, I have two quick housekeeping items to cover. First, we have published a presentation of slides outlining the financials and timing of this new contract. You can access this presentation in the IR section of our website in both the presentations and events or quarterly earnings sections. Second, during today's abbreviated Q&A, please limit yourself to one question and one follow-up focused strictly on today's announcements. We will not be addressing questions related to our third quarter results.

With that, I'll now hand the call off to our CEO, Dr. Tom Leighton.

Thanks, Mark, and thank you all for joining us. As we announced in our press release earlier today, I am very excited to tell you that Akamai has signed the largest contract in our company's history, a commitment of $11.6 billion over seven years with Anthropic to support their accelerating CPU workload demands with Akamai Cloud's distributed AI infrastructure and software. Anthropic is advancing the AI revolution, and we are thrilled they chose Akamai's capabilities for building and operating AI infrastructure at scale. When combined with the $2.8 billion in multi-year commitments for our cloud infrastructure services that we signed earlier this year, this transaction will significantly accelerate Akamai's CIS business and overall revenue growth. For nearly 30 years, Akamai has amassed industry-leading expertise in building and operating the world's most distributed platform for content delivery and cybersecurity at global scale and with a strong reputation for reliability, quality, and trust.

We were also pioneers in edge computing and took a major step forward with our cloud strategy when we acquired Linode's developer-friendly compute platform in 2022, and then integrated it with our world-leading capabilities for delivery and security and our unique distributed platform with more than 4,000 points of presence across 700 cities in 130 countries. Over the last four years, we have made major investments to upgrade Linode's core compute and storage infrastructure to create Akamai Cloud, a leading cloud platform that provides the performance, security, and reliability required by the world's largest enterprises and their most critical applications. We have scaled and deployed the platform into dozens of cities around the world, all interconnected with our global network fabric, which is one of the largest in the industry. As a result of this hard work, we have made Akamai the cloud company that powers and protects an AI-driven world.

Our cloud platform extends high-performance cloud computing from the core to the edge, enabling organizations to build and scale next-generation AI applications while also providing comprehensive multi-layered security to safeguard enterprises against evolving cyber threats. Customers are using our cloud infrastructure services today for a wide variety of applications, with many powered by AI. Examples include conversational voice agents for customer service and personal assistance, translation for local language and cultural etiquette, speech recognition for subtitle generation, photorealistic image generation for personalized commerce, live transcoding and ad break detection, robotics and physical AI, site reliability and root cause investigation, real-time virtual world generation and rendering for simulations, real-time AI video intelligence to transform raw CCTV feeds into actionable insights, strategic findings from complex gameplay data in seconds instead of hours, and B2B agentic DevOps assistance designed for large-scale enterprise workflows.

Enterprises choose Akamai for their cloud infrastructure needs because of our low latency and global scalability, our proven ability to manage and scale distributed systems, our decades-long track record of reliability, our global network fabric, our market-leading security services, threat intelligence and expertise, our ability to get the hardware and space around the world to support our contracts, our talented and experienced technical team that puts the customer first, and our reputation as a stable, trusted and dependable partner. Akamai Cloud spans the full spectrum from core to edge and training to inference, with dozens of core regions in major cities around the world, hundreds of cities with edge container support, and thousands of locations for function as a service.

We plan to continue expanding our cloud platform with greater capacity and scale, with diversified hardware, and with new capabilities for agent sandboxing and security, AI gateway and firewall, model as a service, and intelligent orchestration to ensure that each workload runs on the most cost-effective hardware with minimal startup time and low latency to users and data. With the AI business we've signed this year, backed up by a very strong pipeline, we're building upon our global footprint and years of experience in serving the world's largest enterprises to enable and secure responsible AI, as we position Akamai to be the infrastructure provider for the next generation of AI-powered applications. I'll turn the call over to Ed to say more from the financial perspective.

Ed? Thanks, Tom. As Tom just outlined, today we announced a significant expansion of our strategic relationship with Anthropic, signing an $11.6 billion seven-year commitment for CIS services to support their accelerating CPU workload demands.

Additionally, our agreement provides for the potential to expand to an additional $9 billion of revenue commitments for a total of up to $20 billion over seven years. As part of this expanded relationship, Akamai has issued a warrant to Anthropic to purchase up to 7.7 million common share equivalents of Series B non-voting convertible preferred stock of Akamai, which is equal to approximately 5% of total shares outstanding. The common stock equivalent exercise price of the warrants is $111.33. The warrants have a term of seven years and vest based on the size of committed revenue from Anthropic.

Approximately 3.1 million common share equivalents, or 2% of shares outstanding, are expected to vest as part of today's announcement and related to the $11.6 billion commitment. The remaining 3% would vest as Anthropic commits additional revenue in commercial agreements, with approximately 1% of total shares outstanding vesting for each additional $3 billion of committed revenue, up to a total of $9 billion of additional revenue commitments. While I can't talk to all the specific details regarding the $11.6 billion commitment, what I plan to discuss today is the following.

The expected timing and amount of revenue we expect to generate from this contract over the next several years as the business ramps, the expected capital expenditures and expected timing of the CapEx, some details on colocation required to power deals of this size, and finally, accounting treatment for the warrants and other items for you to consider as you update your models. These points I'm about to cover are also detailed in the supplemental slides we published today to the IR section of our website. Starting with revenue, please note that the fair value of the warrant will be deducted from the revenue ratably over the life of the contract and is included in the $11.6 billion total. First, we do not expect to generate any revenue in 2026 related to this contract.