Akamai's Q2 2025: Security & Cloud Growth Masks CDN Decline

In the world of the internet, speed and security are paramount. Akamai Technologies (AKAM) is one of the key companies working behind the scenes to deliver both. As a global leader in Content Delivery Network (CDN) and cloud security services, Akamai helps ensure that everything from streaming videos to e-commerce sites runs smoothly and safely.

To understand how this internet giant is performing, we're diving into its latest quarterly report filed with the SEC for the period ending June 30, 2025. The numbers reveal a company in the midst of a significant strategic pivot, navigating a changing digital landscape.

A Tale of Three Businesses

At first glance, Akamai's top line looks healthy, with total revenue growing 6.5% year-over-year to $1.04 billion for the quarter. But the real story emerges when we break down the revenue by its three main solution categories:

• Security: This is Akamai's growth engine. Revenue from security solutions—which protect websites, applications, and networks from cyberattacks—jumped 11% to $552 million. It is now the company's largest and fastest-growing segment, highlighting the surging demand for robust online protection.
• Cloud Computing: This segment, which offers services like compute, storage, and database management, also showed strong momentum, growing 13% to $171 million. This reflects Akamai's strategic push into the cloud infrastructure space.
• Delivery: This is Akamai's traditional CDN business, responsible for accelerating web content. This segment saw a 3% decline in revenue to $320 million. This trend suggests that while still a massive part of its business, the legacy delivery market is facing headwinds from competition and maturation.

The following flow diagram visualizes how Akamai's quarterly revenue breaks down into its various costs and ultimately generates profit.

Profitability Under Pressure

While revenue grew, net income—the bottom-line profit—told a different story. It fell from $132 million in the second quarter of 2024 to $104 million in Q2 2025. Two key factors drove this decline:

1. A Higher Tax Bill: The company's effective tax rate increased significantly, from 21% to 32% year-over-year. This had a substantial impact on after-tax profits.
2. Lower Investment Income: Income from marketable securities dropped from $26.6 million to $14.1 million. As we'll see, this was a result of a deliberate financial maneuver.

This drop in profit underscores that top-line growth doesn't always flow straight to the bottom line, as operational performance can be influenced by factors like tax policy and financial strategy.

A Major Financial Reshuffle

Behind the scenes, Akamai was making significant changes to its financial structure. The cash flow statement reveals a company actively managing its capital.

Most notably, Akamai executed a major debt refinancing. It repaid $1.15 billion of convertible senior notes that were nearing maturity. To fund this and bolster its balance sheet, the company issued $1.7 billion in new convertible notes that mature further in the future, in 2033. This move gives Akamai greater financial flexibility and a longer runway for its investments.

Furthermore, the company significantly increased its share buyback program. In the first six months of 2025, Akamai repurchased nearly $800 million of its own stock, a sharp increase from the $253 million repurchased in the same period last year. This signals management's confidence that its stock is a good investment.

Conclusion

Akamai's latest filing paints a picture of a mature tech company successfully transitioning its focus to the high-growth areas of security and cloud computing. While its legacy CDN business faces challenges, the growth in its newer ventures is more than compensating on the revenue front.

The company is navigating a highly competitive field, with rivals ranging from specialized firms like Cloudflare to cloud giants like Amazon and Microsoft. Akamai's challenge is to continue innovating and growing its security and compute businesses to not only offset the decline in its delivery segment but also drive sustainable, profitable growth for the future. Its recent financial maneuvers suggest it is shoring up its resources for the long haul.