[Management View]
Akamai reported above-guidance performance in revenue, margin, and non-GAAP EPS for fiscal Q2 2025, driven by stabilization in delivery and robust growth in security and compute businesses. Management highlighted major multi-year CIS contracts and large security renewals, signaling increasing demand in AI and zero trust domains. New AI and security products, including AI Gateway and AI Firewall, were introduced as flagship edge solutions.

[Outlook]
Projected revenue range for fiscal Q3 2025 is $1.035 billion to $1.050 billion, representing 3%-4% growth. Full-year 2025 revenue is expected to be $4.135 billion to $4.205 billion, up 4%-5%. CIS ARR growth is targeted at 40%-45% by year-end 2025. Management anticipates ongoing margin pressure from increased colocation, partner sales, and go-to-market investments.

[Financial Performance]
Total revenue for Q2 2025 was $1.043 billion, up 7% YoY. Non-GAAP EPS was $1.73, up 9% YoY and $0.15 above guidance. Security revenue grew 11% YoY, while CIS revenue increased 30% YoY. Delivery revenue declined 3% YoY but exceeded expectations.

[Q&A Highlights]
Question 1: Can you walk us through how the first half of the year transpired versus expectations for compute revenue?
Answer: Compute and cloud infrastructure services exceeded expectations, with significant customer signings. Revenue recognition timing may impact overall compute revenue, but CIS ARR is forecasted to grow 40%-45% by year-end.

Question 2: Are you seeing an incremental benefit from the exit of some CDN peers in recent years?
Answer: The competitive landscape has changed significantly, with four major competitors gone. Akamai acquired desired contracts and improved traffic trends, leading to better pricing and a more stable environment.

Question 3: Can you give a sense of the contract structure for large CIS deals signed this year?
Answer: Large contracts have minimum commitments and revenue ramps throughout the year. Revenue depends on customer application movement, but confidence remains high due to commitments.

Question 4: How much of the guidance uptick is due to TikTok inclusion, and what's happening in the compute business besides Linode?
Answer: TikTok contributes $40-$50 million annually, but guidance increase is broader. Other cloud applications are transitioning to compute partners, with legacy net storage migrating to CIS.

Question 5: How much visibility or control do you have over the movement of applications in large CIS contracts?
Answer: Visibility varies by customer. Some require Akamai capacity build-out, while others depend on customer schedules. Communication is strong, and contracts have upside potential.

Question 6: What does the pipeline look like for CIS heading into the second half?
Answer: CIS pipeline is healthy, with growth across verticals and geographies. Existing customers are expanding, and new logos are being added. API security pipeline is particularly strong.

Question 7: What's driving demand for API and micro-segmentation security, and why isn't security revenue growth stronger?
Answer: Demand is driven by increased attack rates and vulnerabilities. API security and micro-segmentation are growing rapidly, but overall security growth is moderated by slower-growing legacy products.

Question 8: How does Akamai's AI security compare with competitors?
Answer: Akamai's AI Firewall offers unique protection against prompt injection attacks. Early market interest is strong, with positive customer feedback and numerous proofs of concept underway.

Question 9: How is Edgeo tracking relative to the $85-$105 million range?
Answer: Edgeo acquisition is tracking as expected, contributing to delivery growth. Traffic growth in video and software download is strong, aligning with acquisition thesis.

Question 10: What would compute revenue growth be if adjusted for legacy compute revenue transferred to partners?
Answer: Adjusting for legacy compute transfer would have minimal impact on compute revenue growth.

[Sentiment Analysis]
Analysts expressed positive sentiment regarding Akamai's strategic positioning and growth prospects, particularly in security and compute. Management conveyed confidence in CIS revenue acceleration and highlighted strong demand for security solutions.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|--------|---------|---------|------------|
| Total Revenue | $1.043B | $0.975B | +7% |
| Non-GAAP EPS | $1.73 | $1.59 | +9% |
| Security Revenue | $552M | $497M | +11% |
| CIS Revenue | $71M | $55M | +30% |
| Delivery Revenue | $320M | $330M | -3% |

[Risks and Concerns]
Risks include potential delays in revenue recognition from large CIS contracts, ongoing margin pressure from increased colocation and partner sales, and competitive dynamics in the delivery business. Security threats, particularly ransomware, remain a significant concern.

[Final Takeaway]
Akamai's Q2 2025 results demonstrate strong growth in security and compute, driven by strategic contracts and product innovation. The company is well-positioned to capitalize on AI and zero trust opportunities, despite industry shifts and competitive pressures. Management's confidence in CIS revenue acceleration and robust security demand underscores Akamai's potential for sustained growth.