Akamai (AKAM) 8 Aug 232023 Q2 Earnings call transcript

Good day and welcome to the Akamai Technologies Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded.

Now I’d like to turn the call over to Mr. Tom Barth, Head of Investor Relations. sir. ahead, go Please

Good quarter and XXXX operator. joining you Akamai’s second earnings afternoon, you, thank everyone for Thank call.

Chief Speaking Akamai’s today Officer. Akamai’s Chief Leighton, Financial Executive Officer will and Ed be Tom McGowan,

comments note guidance. uncertainties could earnings statements and include Please a forward-looking today’s forward-looking including of revenue These risks statements to subject cause number statements, are involve and regarding and that that factors the materially such impact differ to developments. from of trends, statements. from factors results or geopolitical by those and actual implied acquisitions any The include macroeconomic from any integration any expressed impact

represent these to contained XX-Q. as view including by Form or XX-K reflect XXXX. X, Additional statements factors information any on the on circumstances, events quarterly except with and Akamai’s The SEC, forward-looking concerning to August annual Form Akamai’s report update disclaims is these call Akamai new in statements on filings obligation required future included reports information, our this in law.

will some the akamai.com. financial GAAP the be can under and found As of a Relations section be Investor referring non-GAAP reconciliation metrics reminder, non-GAAP during portion call. detailed to we metrics A today’s of financial of

let call Tom. over And turn with to me that, the

pleased of revenue. now These for This despite in up lines when in result thank growth. X% were of the revenue currency. taken to driven account business which and currency. for today. and Internet with overall X% security two in environment rapid strong slower up up businesses, our constant constant ongoing Thanks, Tom, XX% was and million, compute report traffic year-over-year growth was our continued the and QX delivered XX% joining challenges the by us Akamai you the all that $XXX quarter I’m results second global economic together

per QX X% share, down but margin in XX%. $X.XX was diluted was QX year-over-year, non-GAAP up constant EPS X.X% currency. non-GAAP operating

cash negatively rate EPS strong flow later, to of last discuss will exchange QX million Free revenue. tax in it effective was XX% year. compared and at and a $XXX for impacted higher foreign Ed was by As accounted rates very

have security leveraging to financial substantial We cloud computing. in make enterprise our strength been investments and

used $XXX shares. to buyback first spent year. to repurchase this also additional X.X million we half equity have needed stock. puts the employee to the go this of some us on year, programs to million We dilution In what’s This beyond offset track from cash of

I’ll each about starting now of delivery, three few business: say words lines security, compute security. main our of and a with

was constant revenue Solutions page up Growth in in bot market-leading protector of security by app Our firewall, which our manager integrity app API includes year-over-year and currency. million Security driven QX, web XX% our and manager, XX% account up $XXX portfolio, primarily in generated solutions. and security

an enterprise customer one of Akamai partners. financial leading security QX provider concerned X to solution for performed became financial A by France insurance are security is telecom Telstra has solutions, blocks provider, the products portfolio, excitement area every year-over-year threats to in Australia’s data future adding ransomware, where we carrier protection about a industry told Trust by gateway The adopted that secure by of portfolio solution revenue well XX% our in expanded delivering and help partner in to to in They a An delivered Solutions This with been of Guardicore when Telstra, of we are millions anti-phishing led Trust significant their numerous we wins. and Trust their largest already – million Akamai meet $XX content new Overall, Zero in is Akamai protection.” QX, Guardicore, Akamai. growth. A where partner is fit-for-purpose web in Our anticipate significant our making Zero our sale investments up among the European for Akamai business products. and “as network-based customer day make of Zero single company partners key regulations. buy Guardicore constant of from Solutions key a Telstra’s journey with with they major continuing also added our major indicative led malware our part global our seeing us solution they us currency. segmentation of filtering.

XX% XX% I Product year-over-year constant Turning to pleased currency. million in Group for QX, Compute now and to revenue very our am in was the up report $XXX that compute. up

giants are with of more a that open increasing way applications. more large want budgets. IT theme compute edge Group a into from contracts their and world the clouds about their in consuming shares and their run met and are I Linode As edge QX alternative being cloud A executives choice in heard Akamai rapidly and secure common that when build, reminder, cloud Product I efficient the was locked for like as growing applications. and to includes Compute with storage, optimization concern Solutions computing, around Linode to They

of particular, concerns with data [Technical their are the fees As world’s companies of expressed platform, weather significant gaming a airline, growing data. only Not and result, in use costs in have the begun the giant top high major one large global testing a clouds. companies, many Difficulty] from part Linode of U.S. media Major a the because the enterprises of including provider moving

time. gentlemen, moment, to this and call One the at interrupt we ladies Pardon, please. have

Okay.

Sorry about that, everyone.

call. Dr. the is And I like again. are We do I’d real ready to up. Leighton. CEO, apologize That our what to the introduce Tom was warm begin

Just could with a a Operator, here. on difficulties hold for minute. put phone the just had trouble the you We call technical on standby for little me?

and We’ll going everyone. everyone. on get you Thank be you, information hold while your gather again. you, Thank Yes.

operator. you holding for the standing This by. Thank is

ready to over ahead, take go We the for Tom Mr. Barth, Please have call. again sir.

your you, everyone, Okay. Thank today. for patience

for like Leighton. to technical ready CEO, reintroduce I’d glitch, And the We’re – Tom? I our we Dr. but again, apologize go. to are Tom

Thanks, Tom for and joining thank us you all today.

both quarter, am strong I there. range with of our pleased coming to exceeding of high-end very guidance range revenue high-end delivered the the Akamai $XXX currency. in in that near currency. second up production Anyway, $X.XX, and QX, in and as the and our margin to XX% earnings as year-over-year, Sorry X% constant $X.XX. Revenue and up the up report was was XX% in in share million constant snafu XX% about grew per guidance Non-GAAP results operating reported by earnings non-GAAP reported

As you are as explain will his of in profitability to can increase call, our see, good and actions results. Ed the delivering portion

market revenue words both currency. in our about now QX, having improvement for multiple products, I’ll constant up of is The $XXX million. impact security with our is At in to strong We with segmentation by $XXX growth areas, with QX we a our product especially largest Security on market-leading was acquisition in reported XXXX our entered few security, Guardicore and of growth scale, our in rate of are nearing three revenue and main revenue. the starting this segmentation segmentation each source grew a of million overall solution. of year-over-year, an as security XX% driven run-rate which our rate. annualized bigger say growth

and damaging. which more exfiltration solution Customers attacks, to are and adopting our help defend data frequent have become against segmentation ransomware

appreciate to world’s $X They example, legacy of large deal data For largest longer and trigger want from protect X-year one that less segmentation no and their firewalls quarter, a spending banks damage fines adequate million provide we from carriers. also consumer their that losses the regulators. can on last Large carriers signed protection. brands with

challenges also their saw the web management with in firewall bot to where strong due part reliability to in fare app for against growth performance. market-leading we We QX competition and and our continue solutions, well

largest world’s platform For reliable away of example, on blocking made from former outages seek we took recently competitor, the their micro customers a business more X platforms. the a partner. providers

In Europe example, institution plan a also their recently leading Asian challenges global with to because So this Asia. of they Akamai another switched and to returned platform. for competitor’s reliability Akamai, expansion in financial

APIs also we’re are and making open new better agility improve As performance. problem not increasing critical their is a use we these solution secured, by That’s experiences. of we look for API vectors enabled often security user modernize our enterprises NeoSec create last they end new API infrastructure enterprises. of The security our as announced emerging up in that to that is May. because developer attack. to excited for APIs need rapidly They’re part about adequately as to the major digital in week, acquisition future, and

and why hunting attacks. Our within $X threat infrastructure new buy security banks and These IDC solutions identify with security CDN billion capabilities XXXX. and Discover security APIs, being API how establishing provider can more it can API API had market solution, This turn go they product helps discover API the Gartner had, or API never is and hundreds Akamai legacy that surpass analyze who lurking might they security a today, why security new APIs our demonstrating project Customers customers Like vulnerabilities market customer. AI-based applications. against their behavior, to we first. agnostic they CDN governance defend X,XXX an security to explain analytics leverages product vulnerabilities will help on customers are knew thought as group to by without are our segmentation and

that especially Akamai live Since These we’ve we distributed with we Washington, than plan can approach are our to storage, into automated latency, XX and massively portability a Chicago scalability cloud it believe spans sites and better countries. solutions. with unique year. sites computing same later reduce locations that costs, incur fundamentally to call May, hyperscalers. distributed our our good Akamai’s that is and gone and performance, fees other plan egress in in network available X,XXX for the platform applications fully to We also three cloud with of more footprint you are the a part taking services that new high that more open with By many traditional platform points to and with make this Paris, computing database D.C., new leveraging progress today, new connect capabilities, we computing front. and offer edge and better of enterprises on cloud compute, the XXX powers continue making presence more

storage optimal announced from performance the in traffic deliver will the resource We launch the for failure. and plan Global ideally to and believe to month, cost that ensure service benefit the our data Last this also for route premium no new commercial point balancer connected large to of of center object that load beta end be is designed applications to allocation a quarter. new our designed Akamai of Akamai we consistent closer single latency workloads to integrated that and a instances suited being later doubling minimize to request cloud This predictable solution users. are capacity with

That’s want the by into because better user. They you individual our the experience For customers want being tailor example, user. in get the to closer also to rates. to performance online translates shopping conversion performance e-commerce, end higher their better

customers at a malware the type more the and more the more In and they’re connectivity. customer’s And closer the be and the and AI reach attacks to edge, deployed queries center can to and edge advances engine exploit to And needed. more be they gaming, user’s the attackers video want reduce in based basic generate in and and our in responses when In dangerous where run tailor before swap bots, efficient will to of to alerts cyber AI, the security device game which create latency. to at the on data the intercept the core. end engines, will trained models But inference be generated will core. to experiences user forms

all cloud the In solutions. that’s instances believe on very applications areas, that infrastructure ability demand, our with to hard will to important for an where done and models. compute want of our something charting summary, this more do up next-generation to customers edge platform When be flash next-generation cloud believe closer these course handle decade to In we crowds end Akamai will computing. we centralized need user over cloud is also will the the competing spin more of next the and have

the infrastructure support to by the cloud as experiences. that providing scale and The synergy power to our services computing enjoy as near market realize on top both performance continue delivering continue products to a to delivery, content of bottom using report we offerings top be online leader, delivery, life online. we buy industry-leading between flawless as now pleased I and computing benefits as world’s security line we is the as customers the also security line am and and single brands reliable, strong and delivery security and on secure the as cost synergy long-time well We Turning to delivery. we our provide a protect compute and cloud

pleased improve challenges, am in see also expect we future continue that to of the that I the key to drive the actions to Akamai our profitability. to Despite we our in macroeconomic first Overall, areas invest half year. while performed the taking growth well

over and I QX our to more QX the Now and outlook our results will turn the for Ed? for call full Ed on year.

review Tom. to guidance. was quarter. you, color on some say very with and full Today, in plan growth EPS year our that QX double-digit our and I QX Thank moment. I’m profitable strong pleased our I’ll about QX, to results XXXX increased have along provide more a another

million, for discuss growing year-over-year. XX% revenue second let’s up revenue the $XXX First, X% year-over-year. the revenue. million, quarter, quarter In Total Security was second was $XXX

management revenue segmentation As strong solutions. was and Tom security mentioned, by WAC, our for slot driven demand

security XX% in of product our and currency. currency. to revenue total Revenue Moving XX% million, in represented XX% year-over-year a was and constant basis, XX% growing XX% growing compute and $XXX reported lines combined constant On as compute. year-over-year

Shifting in International approximately reported was X% and million, $XXX million, of declining $XXX our as and half revenue. X% and currency. year-over-year year-over-year total currency up constant was Revenue X% to now delivery. represents in revenue constant X%

sequential basis. on a a and $X on year-over-year exchange were negative basis fluctuations Foreign flat million

progress and guidance earlier XX% saving our high from was our and $X.XX head now took constant exceeded driven million from diluted by we end in by savings The range the per cost actions higher Moving count the second $X.XX results initiatives. revenues, up or quarter earnings EPS XX% the strong of of continued in $XXX savings net Non-GAAP and profitability. income currency. up share, were to primarily year-over-year on

cost to tighter lower expense our rationalization of depreciation with spending and those costs, cloud and business, initiatives As real our with and CapEx travel other delivery reminder, include management. a savings costs third-party savings, vendors estate disciplined policy expense associated related operating

spend attract I’m expense, year-over-year. spend, as was cloud to QX third-party this first total cloud to declined that respect we quarter report where long the for With pleased as third-party

onto it modest, While management the well and migration clouds third-party as workloads to was decline own stages, platform. in early related as cloud seeing effort our of move from promising we the vendor relatively beginning the reflects is migration to our signs. disciplined the are savings This away of

running For example, our hundreds our for bot workloads now management solution on of platform. is cloud own production computing customers

start capacity as be XXXX and and reminder, a that anticipate achieve through to As to needed end savings the ramp will we able the features. online the of amount bring of will XXXX we we into

Moving to margins.

margin our XX%, cash XX%, XX%. EBITDA Our gross Adjusted of was was ahead guidance. margin slightly and was non-GAAP operating our margin

and XX, our Moving of capital, cash marketable of cash now as securities totaled billion. approximately $X to cash, use our June and equivalents

We second million million the spent share million we now X.X $XXX remaining quarter, have in repurchase $XXX previously authorization. our buyback to During roughly shares. approximately announced about

to programs opportunistically allocation capital dilution to sufficient the buyback maintaining same strategic approach while offset shares to itself. capital employee Our from equity remains to deploy presents time over M&A when

ratings These financial reinforce ratings credit Moody’s a perspective. goals. customers, we part broader evaluate a obtained parties business to only with further broadens available strength, us for other what’s but financial financial from suited also of investors all Finally, and engage vendors from policy Akamai rating that with financing toolkit, financial commercial our instruments with best determine allowing to also our our and announce pleased are credit investment-grade to The and to has I am not that S&P.

instruments as May outstanding, $X.XX XXXX Akamai $X.XX two due billion in September a reminder, currently billion convertible and in Finally, has XXXX. debt due

housekeeping touch QX on items. Before full provide year to I I and guidance, want XXXX our some

of result increases operating our additional will became an cost quarter. July in million X. $XX approximately wage per net annual effective First, merit-based This

temporary notice eligibility that determining good tax granted to environment. foreign late the Second, finally, for will relief in will tax IRS the July, current year. This the credits. of the non-GAAP effective released guidance no full macroeconomic change, assumes for provide lower-than-expected and result or a I rate QX a And in in bad

QX our turn I’ll mind, in factors those with So to guidance.

We rates up current fluctuations million compared reported constant $XXX XXXX. X% the $XXX or revenue have QX X% $XXX revenue and range QX year-over-year. exchange approximately are X% in spot At foreign as to and impact now to expected are to to over The currency are to expenses a of QX to X% of million projecting million levels operating gross XX%. impact positive million revenue levels, to $X margins positive be $XX a these expect we QX non-GAAP projected on cash $XXX million. million in

expect EBITDA of We approximately margin XX%. QX

we to million, expense of operating depreciation million We $XXX margin and be non-GAAP to approximately $XXX for expect non-GAAP XX% QX. expect between

CapEx. Moving on to

third of We approximately costs, taxes revenue expect QX $XX of be and quarterly million reflects for the on equity expect $X.XX. revenue It non-GAAP represents XX% the excluding on XXX to to Based This million to a $XXX share million, approximately million guidance capitalized approximately for projected compensation approximately XX% in XX%. quarter. and our EPS to assumes $XX total rate diluted quarter. $XXX shares. third interest spend estimated we based our count $X.XX expectations The CPS to of fully million of also tax an to non-GAAP

constant revenue have a the foreign guidance up to $X.XXX will exchange revenue spot reported a $X.XXX ahead is in assumes currency. million a full to Looking our in X% X% increased negative XXXX billion, we as have and rates, to $X range which At year-over-year year-over-year on year, to current million to basis. impact of

to per diluted of raising $X.XX. non-GAAP from $X.X expect to also continue of security estimated margin are approximately that growth share raised we the all mind, XX% to With estimating revenue earnings XX% revenue year we in significant despite $X.XX to in range to we XXXX. billion of investments, a XX%. year full a non-GAAP operating our have achieve and our to approximately And expectations in for are We XXXX compute

of effective rate earnings share a shares. on XX% non-GAAP approximately diluted and non-GAAP of approximately count guidance XXX million a based fully is tax Our

Finally, be expected our XX% full CapEx is approximately total revenue. to year of

businesses We cash generate achievements pleased of very class year, of the revenue year. are to we our growth financial and discipline profitable a to have Akamai revenue non-GAAP future believe that first our increase half be the while EPS continuing ability the in ability closing, significant our In for that special full extremely and is guidance overall the invest revenue, and for with flows. in security to

With that, your we now look to Operator? forward questions.

ahead. Fish, go Piper be [Operator Instructions] James First from you. Thank Please question Sandler. will

guys. Hi, the segment heading the of for to by [indiscernible]. the full the should question And security, about for Congrats we bookings how trying the year. QX crux speaking X and to on think quarter my points we’re raising understanding here understand the And of – just and into related security really, bookings or sustainability this us? the is

some of kind what is color year really give asking. I’m the confidence Just for around the

Hey, This question. Jim, I’ll take Ed. thanks one. the is for that

I So back-to-back bookings. very strong of had we would say quarters two

And also quarter-over-quarter, and encouraging. growth product So strength saw lines all I we we actually that accelerate. look very was at sequential saw my major if three

protection we still business earlier very So was Guardicore extremely And strong. from we saw segmentation API the hangover attacks in strong infrastructure the has effect saw in some quarter. was even on. and growth Kilmet the

product quarter-over-quarter. sequentially all lines So grew those

now, a the X.X% I customer security to up back about a of XX.X%. look about buying where we are QX terms and go we In to at customers in increase product penetration, saw if

in We who have customers other or buying security. in about more sound by just you. installed So great base. for XXX are now we’re one seeing the products penetration four

good really orders seeing generally renew very with thing lines. expansion just with we’re we’re And and we’re renewals favorably seeing bookings strength those customer new with across segmentation, segmentation. all another When included. additions, So seeing on then product

to reserve media more inference more this on the customers with to large see side do then, or service you you are you guys. AI side. opportunity. your for hyperscalers are so looking the GPU that deploy and on behind as be your And guys of that compute you going looking to Helpful. the Is invest Thanks, as you’re something focused particularly How Linode. maybe customers, a Tom, for

is big today. and just support do more would media I and It’s our there. you’d GPUs media a are decision. not workflow, Yes. say just video CPUs see focus attractive gaming customers that more fine. our financial where much doing with that’s And primary economical We and

capable time, well. of in least today, want We engines, supporting fully terms that we GPUs. to over doing AI, – demand really some as you migrates financials. our that, something be we’re at CPU probably of the do And I migrates probably But at edge. I over base In inference customer the about, think of to from based that on time, and talked think terms as

Thank you.

from Weiss, ahead. Stanley. Please question Morgan will be go Next Keith

security and whether reach execution? a I of got strength the sort quarters. to to newer understand on question are in portend I it security unpack spend on behind I sort growth like future security like of want this you drive scale wanted that solid. follow-up material Is what It sounded business. you seeing reacceleration Or bookings the some seeing the year-over-year drivers a that, was like could like wondering to quarter. the of Guardicore the And offerings were We sales a pretty if of in dollar just for sort better of environment. it of sort basis. sort you’re could

Yes. Ed to somewhat. talked that

environment a general. me there. still give in color additional some Let challenging just It’s spend

that’s said a that changed would have I lot. So –

against is they so the what think there. and AI competition. this harder solutions out variance can’t We financial and that tailwinds there, Ed can’t more marketplace about produce already seeing for web out have is morph about. market-leading good security growth, the And have we’ve And before, bots of the is management. app, seeing for in And bot there’s because Particularly again, to our stands to tools now detect. really there it’s And Guardicore, out malignant with as are the and strong malware we And you in They we’re we talked get really a to institutions, the glitch. I firewall are have hacked. strong execution. to sales helps this afford important. where stand talked really to getting afford And just environment, as reliability Gen

to get a the easily You can bots train of the firewall defenses. around lot pretty

going so And and more And to think proactively to at point, is when is what you need that the traditional really spread. are penetrated block what penetration even identify see defenses. Guardicore to where I and you’re of the you

really think critical forward. I you’re to demand going So defense more the is going segmentation see for

as So security early execution strong future, talked three I across to market very be, think about, think, you the but Very a to Ed And and performance strong – then all for is going API us. days pillars. I look important really critical.

So half building it’s momentum we’ve us forward. I with drive really pleasing can, first the to the year of see and that think, been security in that the help

I appreciate to delivery the Tom. the of as business. And thoughts, just follow-up, sort a toggling

way have the want sort given have the share the that of update, you to guys sort operating around think the to on What objectives? I compute you but business to for that respect just are sort two to talked this the you investments the map get philosophy to principles revenue get going right road delivery an Just before, strike balance between those about harvesting ambitious fund versus business want with an in and there? profit managing we of and of update operating of guys for sort

what price we spiky, we to enough that we’ve down turned comes and very to think and really get don’t have it. profitability. talked It paid down do as And Yes. business about, we is

are positive was getting to growth delivery profitable left Traffic some but pandemic, there. the business And think the business, to better. the we’ve before signs there. we I see not growing And take. is so And core where that starting to it highly others meanwhile,

Price We’re seeing which some a acceleration is say, declines, I’d little good. there, bit softening here.

business. to over of next pleased see years, should X price optimistic stabilization generation. there more the but I’m I’m pressure, and making of cash a with progress that so And we’re that we the X Still strong

Thank it. I you appreciate for the details, Tom.

Thank you.

Please will of be Ray Guggenheim from Securities. question go ahead. McDonough Next

Thanks we’ve side execution sort at in Or question. more might to of you of the working mentioned maybe driver future? as if and growth Akamai is could you security. engaging the traditional Great. a be maybe still Last been part you go-to-market contributor mentioned resellers were on I’m just successful on Tom, And all? go-to-market that security changes security in side the helped the hearing acceleration stay drive things. more the been my taking that actions security of for provide quarter, of here. taking reacceleration. But that recently. that here Has of wondering you an too And color on early has into

partners very are security Our for important sales.

In fact, our products security. pleased will segmentation. for of segmentation for bundling improved And us only, very very the a be execution. some recently in partner that example, lot announced in partnership for obviously kind and WWT, And driving helpful just solutions our are API with partnership to that of of a is

– new to dedicated helps some resources also to as security XXX want anything we’re noted, have customers also We now customers that and think And add and I solutions. with And existing sales. Akamai, Ed, that? which the upselling the And services customers our buying to of for newer great seeing more is different into base. advanced security do like Ed solutions segmentation. you four And

We’ve covered it. the lot you made already. think investments I of No, a

So the needed not happy big in overlay sales a there’s investment with functions. that. Very

from fact, of are and customers. of aren’t strong. that very lot verticals matter in this pharmaceutical is the CDN they’re state and quarter, education, manufacturing some that a wins government, customer typical new As properties a Guardicore. penetration places are some getting web acquisition saw typically we big traditionally coming actually Like in that And local

of good in all across sales, really seeing teams the overlay parts direct we’re think the the I execution So security, channel.

that about? quarter. in repeatable contribute know not other coming some there Great. renewals any call in the could the upfront might that is know in that up out Guardicore of might security, the just we deals be from that That aware your in recognition should half license makes back in some quarter of? And we sense. Maybe should to businesses, could follow-up, as Ed, be particular, license that anything there be of there year and Was upfront I be any a an given

Yes.

of to out. particular. with couple licenses, it’s licensing X we will a new of is It’s do points, made thing over very there so I bucks, so though, years million it and that were earlier generally I quarter, this material nothing couple seeing X I It’s we out, one a nothing Guardicore One call are And nothing with comments to the call of those So strong material. renewals. the term but in license typically. say, deals

those deals typically is we which are when So up, orders, expansion license seeing encouraging. renewals really come with

who’s internal quarter. nothing somebody But have you their infrastructure. renewing to So across call then and more protection out adding on this

Thanks color. for the Great.

you. Thank

Next Raymond be Please question ahead. will Frank Louthan, from go James.

you. Thank Great.

any business, business On in the strike. decline? about the comment outlook Thanks. any from think And on the you for sort Do of year? in there you is you writer the factoring the might the of that see think change the sequential of talk there. delivery then impact you just of that the the to can rest What’s us sort

and potentially Brian, question, is And to years seeing. the get in But of releases, Ed. from which I not that terms wouldn’t this of Obviously, part hearing what the impact seeing of new from of couple that, not customers out. Hey, our are some a there. the From what you impact fundamentals take registry, anything second certainly anything we’re could any the anticipate major there.

are Tom performance couple verticals old about, the of still traffic bit and a we talked points challenging a improve. some Pricing is commerce up going media in steep. customers, rates abate as with a web traditional quarter. media, a growth As are of seeing It’s larger customers pricing bit pricing not But to declines and we big a the as were starting nearly still seeing there bit in little travel well.

up are next get continue devices new we to talked pretty that business to sports and think we QX whatnot strong generally all Tom its should and in tends and about, it and improve to and will So, stuff, or and connected have back to as gaming obviously quarter TV that back the series new are few optimistic popular be in hopefully, to QX, in improve. Internet year this tends with coming stable and as be be a the always for that that a also continues And so. traffic school we kids months, consoles I sold go and profit to

like you Are media larger this with more year vendor saw some earlier Great. the seeing Alright. consolidation any companies? we of

up one went a provider probably, there one and did notable were pick that to is vendors five additional and down some There leading from shares. we real two,

quarter. the want won at but who think notable this last quarter. we So, I nothing really there, ones That the end happened, of

Great. Thank you. Okay.

you. Thank

will Murphy, Mark JPMorgan. from ahead. be Next Please go question

the delivery Hi. Thanks you over that? is Murphy. next of quarter. to describe you congrats years. question of what RD Mark trends for couple the leads just the see on that you the stabilization Start think Can you This kind earlier market and are mentioned to seeing expect taking in on for off, that you

to Tom, you this take want if will I Sure, add something.

pricing rates. think comes delivery it I business, down in So, it’s to and the traffic really growth

we Now, also traffic growth rates easier. bit are starting improve and little become to see comps a

improve we about some is away peak of do moving thing that the other business, from profitability. what The is talked will the year

cloud scale us of right. to reach It economics, of the to get for us lot which business us, for enables business a function data great business, a is really ways. cloud delivery in help which and will for get really the security. strategic to our the and security our Also So, delivery us the enables asset

be the minus points couple we of will, or the if bit with a or customers, web stable one very like improving are you of especially is to commerce. a the would But little I great. causing a continues, verticals if a pricing some traditional moderate, plus a that strategic environment which in challenges that thing think larger we obviously churn, seeing of it’s should in good business. traffic is would hopefully the be So, of I terms like sign, bit, stabilization, and macroeconomic back a But say

that’s So, have work to itself going out as to well.

or take as to in year that But a bit be traffic for I and shape. So, a its out. should we pretty way see work growth we stabilize think good pricing may that so more,

enthusiasm that noted, in position in are a that higher cash this for is from harder add unique we with rates business. money. as out get, lots our the and would delivery I investment less of environment to interest Akamai is thing little a generate money only lot there is the is CDNs And Ed of losing there a And Yes. that

easy better companies now. not do anybody. so smaller we it okay before, than market money We are well, the the do losing that’s leader, to And were that

little see out that that maybe And environment does or will we so I a overall plays how think X next year help the bit, and over the years.

landscape That’s front. in you changes along the very having to Any that it win competitive Guardicore, insightful. a rates, those bit seems guys on Thank anything you. of are And lines? regards then like momentum with

more it’s Yes, for us. gotten favorable

we’ve competition capabilities. lead its investments improve has Guardicore lot the of to over as Our made in widened a

by And by capability the leader is the analyst a that’s need recognized good market is major so increasing an timing because now margin. very that wide with institutions. And are we community

competitive the think have favorable us I to we it has a become because the work environment of make more for product. great So, done

Thank the will in you. step I Got back queue. it.

Thank you.

Rishi from Please will RBC. go ahead. question Jaluria Next be coming of

the Nice so about reacceleration ask Wonderful. for I security to wanted Thanks to the a compute much my two-part I Hi. had guys. taking see quarter. questions business. question this

what got to workloads. First, cloud do in saying, your can some the some of how vendors example, seeing AI your you what in for think and are and as look kind demand Kubernetes, of of at you it But now result capture as as Linode hinted efforts part, you. this you are additional there investment been little some of you sort companies bit AWS And going? Tom, to Thank platform. have those features to a with truly investments enterprise Linode cloud share workloads to how it? AI to are generative are generative you second talk and some AI in make about need scale of I strategy? your be capture getting thinking product either they big hyperscale like right? adopting generative me are be And about ability have how at the increasingly uptick a about think And likes And maybe you maybe terms to a earlier, own of had the Azure, that onto competitive able functionality be a right of let their and of little those bit migrating spend learnings

a new really questions. now use, it The to and by than with making build-out we it’s PCI Object Yes. a compliance so will about Linode, locations Kubernetes. And scale, ton that. we storage on with for good progress the bot couple And the more are be run market-leading about manager year core up we dozen of end Great certifications, we really, bot capacity talked of we capacity our management can had more The architecture much and with have and capability. there, before. solution. the

learning that cloud solution customers connected using a that deep instead Akamai We take third-party now does advantage cloud. And on have of technology. XXX of

those So cloud. capabilities, we on have that to already, Akamai’s support have you

with in think important overall, taking the end it, we timeline, of bookings bookings about be by the I serious should the way with this year, more think customers to position for or on a start we large applications. really

major We couple generating it from then more year and using start already next applications. have a revenue

not vertical media are market, every where gaming, of that, with going the XX%. terms application. to And year where after to applications and are hyperscalers, a of subset we have a fully It’s competitive commerce competing growing matters. we targeting that in initially for Now, market, be. a we billion in $XXX particular don’t performance primarily by followed And be

you running where users of so scalability, matters applications some and a rapid to in media, So, that has end it involve the data application by lot especially or business want you have for way and around gaming moving partners, performance. commerce. cost, the is or And scalability being have used better that hits. maybe closer, see that in Where application

the which of So, $XXX pretty that’s really what reasonable we are subset targeting, a is billion.

enterprise on platforms, of an are not that’s lot third-party probably Now, within the where a harder that available apps subset, managed services to the uses migrate, existing go if you we would and as it’s that that first. are

manage Fortunately, areas us workflow the easier targeting, where we not you at media are look often it’s if to case. and And porting. for the that’s the

much in compute onto just have a don’t at the And our third-party you we all our flip not from pretty But of cloud process unfortunately. switch, learned platform. so of migrating applications that. Now, Akamai, easy, that are it’s

going take And so that. does doing to save it some lot the but is eminently it a by not out biggest company and effort, we there. are we doable, And are

in Our a hundreds customers the millions with and hundreds year big primary well, of often cloud of competitor. their media dollars spend, case,

for our those experience, help we Good think in bunch we I can so to us, for of migrate on are position a a them. And good that now Akamai. applications them based

Thank Wonderful. helpful. so Really you much.

you. Thank

go Rudy Next question D.A. will Please Davidson. be from Kessinger, ahead.

questions. for Hey great. taking Thanks the

questions Can you of rate? kind growth have been you security. seeing – growth of on that Just lot a I know asked business? What are in Guardicore the share

Hey, I at year-over-year. don’t Rudy, quarter. million rate should this is run next $XXX And XX% Ed. if talked as soon. About be Tom we surprised we very, a would about, be there very get

Great. That impressive. is very

these is maybe I this fully as The the terms Just As in more pipeline there X should just that online? some we maybe model you are you building material currency you sequential lapped as for of expect it XXXX? have quarter get growth year-over-year to year-end. constant is what acceleration acquisition. compute, of the that’s when to guess your how depending organic sites Linode acceleration? by aspirations see to how And points guide relates implies growth XX% of figure X

Yes.

revenue enterprises bought to the service $XXX little a few all high year the we bit growing accounts. not important but business not to we So their business, cases, That as bought when today, low-ARPU developers, it’s be you the the was signed we when create talk up almost Linode revenue mission-critical with changer. a very there actually medium in was little use for And traditional why a a in base a enterprises, that’s the major to growing able is about now, of it ARPU Linode, It’s teens. small, customers. faster million And have over applications, game – it customers. there,

dollars. we the do now, it’s millions in And but have so revenue there small of

yet, couple so of period that’s a but from billion compute real a we do growth we portion don’t are where comes the to trying trying it We – billions. so the of go $XXX that’s And and to and get few a today. million timeframe business to of from we quickly as over of a comes on very starts the growth to time are from but from But have roughly can. a that billion X% that that’s as market, $X.X our small where

you. That’s Thank helpful.

Operator, time this question. one and is more Tom for it’s Barth

Thank you.

Our last question Evercore. will go of be from ahead. Amit Please Daryanani

is in help then happening side, helpful you there, or can Yes. you see – just that expansion licensing June? just taking that maybe I of clear would Guardicore the skewing guess on security acceleration existing the was you touch start question. any there with and be that’s customers, for new that from my revenues about customers Thanks to any more as

Amit, Hey, this is Ed.

of about was I’d So there couple as that. the And if or growth it’s said, I I of talked as no material quarter. it anything points call a like earlier, really revenue license in anything,

nothing So to report there.

multiple base, rates both I the have look mentioned pretty XXX products. terms customers at good expansion In penetration just are customers now in I seeing, existing we to the couple a up talked about, of products. we new a and buying – quarters the pure over as four earlier, two existing of customers I installed last as in buying points with

logo to and acquisition, see typically majority the attract new the especially more, is from new in. verticals seeing customers installed strong the coming that I’m So base we’re the very not Guardicore. were with Very growth able them revenue be of to encouraging buying in with what but encouraged very

base So of the again, very is more installed products, great, well. mostly encouraging terms on in as from logo new acquisition it’s buying which the but

then if just one And thing. follow-up Got it. can on I

go margins full will HX But operating sales half the in about up. that well. year the basis, of as think about dollar margins you what versus That’s from have XX%. imply accelerate talked year that don’t but you in around I first HX would being operating a

but consider year? the back it half Is or other offset? seeing leverage terms the what’s am aren’t operating maybe So missing offers in better to merit the of this, increases why is we there in the I of

Yes.

bit the half because things two the called But you the quite of a depreciation CapEx year. So also is merit of up first one out. increases the the there, picks in

with margin making the been EPS So impressive to we’ve for accomplish those pretty to operating able pleased deliver the able are main deliver big investments the raise Very guidance. huge margin to what XX% But in front, is pleased and year and the to on really drivers. able making we’re acquisition, be to compute the investments business in I’m and two team. be with then – the pretty

I job. and great a done pitched has think everybody in

– merit is able with happy the to and So to that the margin increases. increased and depreciation see there’s . pleased fact maintain XX% despite that

you. Thank helpful. That’s Perfect.

of Amit on at summer. evening. these at and of everyone. thank can you, shows a the closing, rest third Thank yours Akamai wish and and Investor you wonderful road Relations us quarter. section you all nice In investor at akamai.com. for a conferences here the the several Have the and us joining Details of presenting be found of throughout Thank we rest will be you

concluded. for attending presentation. today’s Conference Thank now you has

now disconnect. may You