Akamai (AKAM) 8 Aug 242024 Q2 Earnings call transcript

Good day, and welcome to the Second Quarter 2024 Akamai Technology Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Mark Stoutenberg, Head of Investor Relations. Please go ahead.

Thank you, operator. thank joining and XXXX Second everyone, Call. Earnings afternoon, you Akamai's for Quarter Good

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

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

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

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

and I'll CEO, call our off Leighton. now hand to Dr. the Co-Founder Tom

margins to operating Mark. and in delivered continued healthy compute, the growth Thanks, strong pleased report steady second earnings I'm the momentum security our strong in that quarter, line. bottom portfolio, Akamai growth on in

These line X% as Non-GAAP above up up million, $X.XX, earnings currency. our year-over-year operating and share Non-GAAP $XXX reported XX%. constant year-over-year up was per to grew X% constant guidance. X% results revenue with quarter up margin X% and in Second in or currency. are in was

to Akamai color we performance, I'd evolving review I provide as on our Before how more grow. is like

performance and them market the help for content for near and leader providing broadcasters brands Recent in the by delivering that digital invention As made as experiences. scale most services, were the name deliver summer still we examples we're world's around you first delivery in flawless required tournament We and Paris of the reliable, stand today. world's and top know, the football with games its secure world. Euro's the Akamai top of the out

previous As recent been macroeconomic calls, has challenged geopolitical in delivery in headwinds. said and quarters our business by we've

Our plan threefold. for delivery is

remain profitability First, we it serve. we traffic to will to when disciplined comes the choose of that

And steps the also to continue our continue position leadership will product enterprises cash and the we of major Second, of the our market opportunities. installed from reinvesting to areas to most third, flow into our while business. leadership will take leverage to generate market of delivery base retain we cross-selling fast-growing line

as revenue. for through from change continuous business been growth. new million. In our than we part Firewall diversification for Akamai to be revenue X/X long-term a listen accounted doing web to app successful us long Akamai proved already more was for our created was for customer delivery. X we security did to This across innovation customers. service with expanded what has revenue for opportunity customers app QX, clear was a profitable The delivery revenue X/X We way a We A ago, we of is delivery markets of core decade cloud as years web strategy has our of firewall. with or of accounted The of to because quite our into what a Akamai's what when ago very to $XXX a little cloud complementary meet a that creation the recognized service. In a this need. growing

billion up million run XX% majority amounts in of per currency. history, year-over-year Akamai about revenue. Akamai's an year. the for QX, annual in This constant to now $X Security up And in XX% the $XXX first and time rate delivered of

and solution. we Of DDoS segmentation and set and prevention, by our greatly protection, product expanded management, security bot solutions Guardicore app led Trust market-leading now security account our content for the years. We course, API over offer Zero security enterprise

our many is had significant strong in QX. we solutions in security interest wins and Customer

the Zero energy largest companies One became world's Trust of with customer new a Akamai.

stock and leading top major in Life, from API as app Zalando of maker solution One to a German the in We [ ] moving U.S. architecture ]. software services of HR VPN and is the did a U.S. the ], high-speed and our to Douglas, Trust management [ Akamai. provided and of to company of industrial a to cybersecurity architecture the the segmentation Epaflex one providers [ Akamai German X America. a exchange Zero purchased in retailers largest Bodner doors airlines and legacy Latin with protector

DDoS protection, utility DDoS deal to East. app for one in web account provided takeover of We government X-year our the we in and the prevention at Middle Southeast major world firewall, electric in banks bot to a the one competitor ministry replaced API a and protection well-known a largest management, security. And in Asia,

we In excited Akamai about especially announced security to additions recent We're Guardicore the platform. new QX, our our most portfolio.

to The to agent enterprise Trust its teams controls. DNS security products console and and The questions security tell with want us powered information ask about to Akamai segmentation, simplify and language If they Hunting. strengthen operations their a can growing their multifactor think combination they and consolidate customers' first evolution our interface to are unified visibility human micro access, will a our this of security and Threat new we Gen granular gain Trust comprehensive Zero platform kind reflects trust, and fully and firewall new networks. integrated Gen enterprise broader Customers point enables of vendor, more designed offering. Guardicore authentication, by vendors broad single tools AI through AI to a with to Network in Zero appeal The security enable needs. as security control a to beyond solutions

companies Within forecast companies good Security, and adopters. Noname security and fast-growing acquisition this some Akamai in of most $X XX% as customers, Noname, the of and And new will with that believe see API of significant solutions of in Europe CAGR upsell and in integration web works including protector has closed momentum increase we leading early of nearly in insurance click our to We're market the Noname API we at also Noname Asia. and Noname Edge software XXXX. beginning a billion a In app button. largest grow at deals saw by IDC connector. a to with close, the accelerate America security QX, Akamai with in at the a wins With X North market. offered in our we industry. a the now also that closed of weeks Akamai motion comprehensive one the QX, API banks

For the insurers million annually. care largest $X.X of doubled U.S. example, than their Noname more over one to contract QX health in

expanded entered decade the much we again Akamai's in market offering broader security future a developing after by About we a opportunity cloud computing.

Edge hyperscalers. of to offerings would has is a They costly used sites of than they it This computing many were this in Akamai and offered more on many them you our delivering our provided by like as deeply function of be They they for securing like platform of also kind their platform. apps years. less a customers, Many by As that don't way Akamai into knew been service thousands efficient and integrated reliability, that do it fact know, of containers our edge the Akamai so be trust our us our to that customers and delivery security good and wanted on us record platform. hyperscalers. ask compete computing to we full Akamai their they the wanted partner. they more, VMs offer a comparable them to And cloud stack they our because do track services. can unlike and they wanted already against in and run for could and But the has

our to makes portfolio also Adding Akamai. cloud good for sense computing

into demand, can with deepening we strong stop capacity to cyber a delivery, as the addition carrier security other seamless to and our for detect The same services, include visibility the that and insights of improved and quickly at compute gain operational threat security volumes traffic from all and efficiencies, reap performance attacks cross-selling customer synergies integration customer the advantages retention, margins offering for increased unmatched platform. customers In result. bundling on enormous and we networks, massive the intelligence edge, relationships and of satisfying

there. The a more started there that view look how synergy marketplace achieve They and a X different with centralized as moved to in back customers at all a you have how delivery, has the validating computing hyperscalers offerings, the security route and offering into and also service and infrastructure cloud our is a architecture. together. then taken you see worked get step have evolved, although of they've can similar If to hyperscalers suite

cities While in distributed customers We XXX economics more reliability. performance, Akamai of X,XXX with points has and provides the better world's platform, distributor across XXX with cloud that greater believe most presence better countries. than being more over

we to last call, The up in strong XX% early with momentum very QX revenue in offering initial year-over-year in new the XX% QX up growing continued in constant response we reported and customers encouraging. million, that from currency. our As earnings our has compute been to cloud achieved $XXX

qualified our reaches store include MWAreTV events compute biggest cybersecurity large and customers the our company, Australia. video of leveraging added data technology observability which a into ], [ in half and large-scale behavior, and Latin here media one we option platform workload call [ for in workloads satellite IPTV and U.S., provider to cybersecurity of known America, partners the platform. ]. Akamai almost compute brands cable more latency sets to makes best sequoa.io in The attractive telco ], cost-effective IPTV also are In need brand world's OTT [ entertainment where that New competitors. than [indiscernible] include in a low ISV run QX based Customers These the the the on a the very for of solutions households partners Clare services. video compute

now provides provides with where ad transcoding. machine Customers the can around media take latest And and new data advanced better qualified Cloud. [ is Our distribution offerings for for full workflow companies and and valuable which engines also globe the apps a Cloud training their power across at efficient customer our processing manipulation, Akamai security and scale Connected Connected that delivery cost. media advantage platform partner reduced Akamai media ], with strategies One tech Yospace a customers decisioning customer experience Akamai's compute platform their learning and customers synergy latency are ad leverage suite their on on image more significantly product. of can at user our scanning low of video testing building the

models. application Such popular very Akamai is intelligent conversational are with AI-powered operations and is chatbot engagement. new with improve Another solution. language an increasingly in to recent our customer advances cloud of streamline applications customer a experience user also building large large their AI-powered

As hyperscalers of a of cost. reduce greatly seeing most better the result we're to migrating Akamai and cloud, own from apps our performance connected

million to spending our In expect large third-party saving fact, writing on to that in well us to feels feeling what your X/X annual the our been competitors and we we $XXX OpEx. have a of to on forward It and every less we this over hyperscalers, enterprise year not reduce is customers. check X-figure would providing a it stayed sure clouds look this good, year, to than

provide upon we In this And our a content computing for platform. by X/X cloud now believe margins fast-growing and online. and of the enabled life the robust and rapidly We with we've and and fundamental and our they transformation into business, of massively portfolio portfolio, delivery from our revenue, that summary, company security distributed highly a growing while successfully large our Security because growth product Akamai cloud pioneer both powers future achieved foundation that built generate maintaining undergone our transformed of excellent areas, our and are potential has Compute profitability. efficient protects Akamai transformation. delivery

Our the time near-term margin XX%, remains operating expand over profitability. goal we margin fast-growing business upside see our potential areas as and the of

our half the of compute. by security pleased at we're strong in and first back performance XXXX, Looking

our we with integrate customers. our Looking very gain and about traction future is excited as fast-growing Noname to compute ahead, for offerings continue potential growth we're

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

Thank full and for review to QX you, and Tom. the expectations then I color some our our results Today, on year. QX plan provide

revenue was second quarter our Total X% in for million, $XXX as up quarter X% reported to XX% Compute currency. Turning as year-over-year up year-over-year and currency. and second million, results. reported the $XXX revenue in constant was constant XX%

leveraging more very customers are enterprise our the be to level continue pleased We compute enthusiasm solutions. the with of market in and more as

array including broad insight, observability, services. aggregation e-commerce, access, deep live and real-time spatial a many verticals, enterprise we use storage, and models computing particular, secure In across seeing of and software transcoding, are impute financial learning AI cases, log including media, object

quarter, million, noting and second revenue by It's XX% by Moving revenue. our quarter in currency, XX% of We're continued Guardicore constant was the revenue that Zero Trust Security revenue. as than to solution XX% seeing in constant and we our security API compute the million. Combined, representing in XX% transaction year-over-year late launched security $XXX solution. encouraged closed the June, the revenue worth and second in the was In security up very recently reported reported performance grew contribution currency. XX% are pleased less and traction $X the in and year-over-year as Noname highly of total

XX% last constant declined year-over-year million, primarily that $XXX to related The $XXX was X% and line the constant currency. representing as revenue our with was was year-over-year X% and in of QX. million, revenue was delivery revenue reported Revenue quarter delivery. XX% impacting revenue currency, to which expectations. items Moving in outlined in decline in and XX% up in International I up total

Non-GAAP impact currency. a share, of negative QX up a earnings basis $X.XX XX%. And a basis. on margin X% $XX million impact million $X net $XXX or had our fluctuations exchange a million negative of on Foreign up and operating on constant was diluted per and income year-over-year non-GAAP X% in in was revenue sequential year-over-year

capital. and Moving our now to of cash use

billion. $X.X marketable June equivalents of and approximately cash, cash totaled As securities our XX,

spent of During we aggregate million, authorization. the our approximately in quarter, now repurchasing share million We have roughly shares. $X.X $XXX approximately billion an remaining X.X second buyback

cash acquisition million also used for We second Noname. of the approximately $XXX in in the quarter

to be and equity capital, M&A to our use employee from both share offset back opportunistic intention and repurchases. relates time to to it shares our buying As the remains over of same dilution programs in continue

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

Security regarding First, the the close Noname acquisition. of

We approximately expect the million year million to transaction in $XX $X of QX million to revenue this approximately add full for revenue $XX to and $XX million XXXX. in

and operating $X.XX it non-GAAP by XX year points XXXX. expect to EPS in by to dilutive be approximately XXXX to the $X.XX XX full non-GAAP dilutive also basis for to We to margin be approximately to

impact guidance the a reminder, As our the updated acquisition. of year full includes

Second, and specific to traffic.

expected Summer last is a third quarter. approximately to million traffic the QX, strongest And drive our $X This impact year-over-year while $X QX muted year. revenue Games. primarily that expect million more similar in uptick modest typically a quarter saw seasonality seasonally, expect a We of to and in additional this to due we the in of Paris year, is event to see we result

India the XXXX. of digital Third, X, country eliminate effective August of its plans as recently to service tax announced

small on adjusted could in on increase to We are of advisers rate. guidance determine and a tax tax have tax working effective impact the in our our non-GAAP tax believe Based we accordingly. tax with change rate, this full effective our this result we non-GAAP our assessment, initial our

environment could meaningful our geopolitical impact persist. macroeconomic the developments business. on have tensions challenging, and a negative Finally, Any remains

move those guidance. with QX factors our So in I'll mind,

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

XX%. We EBITDA QX margin approximately expect of

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

on Moving to CapEx.

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

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

growth the of we new last to $XX revenue from customers, run and quarter [ momentum expect to million El We Compute adoption strong the security now we compute rate revenue both currency annualized from ]. XXXX, double contribution the XX% existing $XXX we XX% continue of in in the And over in XXXX. to exit million including from approximately acquisition to given expect Enterprise enterprise as reported constant

our As increasing a growth expected XX% to constant XXXX. full in now overall approximately result, compute year for we are revenue the currency XX% to

approximately Moving margin $X.XX non-GAAP per XX%, non-GAAP earnings to We to estimate of share profitability. operating of diluted $X.XX.

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

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

traction we Connected customers In to compute to closing, migrate and the helping services we in pleased our look are with enterprise forward seeing Cloud. are the Thank Akamai you.

to happy questions. be take now would I and Tom your Operator?

Patrick The Bank. will begin Deutsche now the session. with comes today first We from question question-and-answer [Operator Colville Instructions]

the opened mean can of want mix my story. to remarks. of you really kind I that's about to prepared I great talk business the your Frank add shift. be part where

Akamai kind and see hockey focus revenue called ramping. great of the compute. Akamai that to might over kind from the Like out if revenue quarters of base? you of compelling what's just and we really $XXX Cloud When Connected think of million want coming I of that's that? is trajectory to Cloud stick kind The Specifically, beyond out Connected greater kind an on become even to

the Yes, pleased end think to the a that's can of last I early great to say, in year. were which see end we're we towards got very year $XXX And the for adoption. to very We started going adopters we this of ARR million year. earnest if That's great capability first of product. that the to do, year, we question. selling And the rapid we just really up early by some had get the

where we year, see we'll but compute, then there, by in very February growth of capability And and at in obviously. in the about driven year compute, for we're give our next guidance there. beginning we'll are customers the the optimistic enormous new There's market an enterprise strong

into so into And looking tapping that. we're forward really

Very but the this in nature? of of been appreciate want the are Or headwinds? give year, seeing to headwinds cyclical delivery. clear I kind helpful. very I to mean, whether about I second wondering kind headwinds are, part not question, XXXX. delivery I about the XXXX, ask structural guidance And they guess want the might you my beyond we're to you've right of now business in

think long the I a is rate persist certainly did to times. here term. will grow, that during slower But over stay. continue COVID Traffic, maybe I the think, little I what at a don't of seeing today we're grow delivery, bit to it believe,

web remaining that. And in app business it's leader We're us. about by are we careful our emerging firewall very compute We We're profitable on very what market our very for margin. efficient and a synergistic security, good It's with a do. the business. very business intent

the don't see persisting I term. headwinds over So these long

don't over lines, given is years. very geopolitical about in year. growth any the for are our and worried nearly in they next case, of And this a compute tripled revenue considerations phenomenon. X that But long-term last we're security product the fast I think There

where revenue they're So X/X overall. now of our

add see sometimes you what forward. do impact the the anything delivery less has overall think rates have I with with good, challenges, sometimes to you lot that? it you want go growth a we as to on Ed,

Tom. covered well, you I No, it think

question The next Morgan with from comes Keith Weiss Stanley.

math in the wanted for Ed, year parsing I'm about full year full I by bit guidance. the that's getting that about a a midpoint to If guidance, particularly full little the some the year. cautious adding more But that of Noname you million right, kind the full equation part Congratulations of $XX up of the solid Security, for ask coming of down quarter. for on sounds it year. comes make part like out a difference? revenues about a on my doing million that $X the of Is you're there we're the business

guidance Keith. included we so as quarter our in Yes, No, well. Noname last

has So changed. there's better. a bit that's business If little the nothing gotten anything,

bit up So reflect to our guidance come that. has a

real Tom, into to means, on start it. of margins Got Can sort future your give it. side quite out you of what hyperscaler I million or is more X in-house on Or years equation, that, us near moving the or thinking future. the that ability sort future? further? X expense that's the savings Got $XXX is of And the about the indication a then in near the pushing from Congratulations talked an we operating you from of feat. are savings. guess, XXXX

Yes, savings getting, Ed and we've back the been plowing operating -- saving the business that as into large. said, by we're

in the is on the mix compute margins. shift us, margins, margin come So the growth. tailwinds accretive. beneficial good on and And we we that for that but add really invest can get as it's customers, continues, upward There's more pressure there, savings we as to

it's is customers add accretive. Security we there,

grow as improves there, revenue noted, we every customer dilutive. that they're we initially, add, signed as margins. security today, Now the with we Ed But the new every products, deal

our we So very today. close that we think grow is good potential to time, have with over time, goal over if beyond But to that. that XX%

question next Guggenheim from DiFucci John with Securities. The comes

Guardicore. a have I on question

more in for it. becoming it. it's to But a Trust have It's not Guardicore are couple of years been you has frankly, thing. bought there a and like ago. it the market. more everybody seems an seems while, and Zero essential you it of environment, guys component a a has new like relevant longer Customers no been then accepting broadly segmentation So And like

Akamai a ago. the all Zero about how So some few this how about And need business, establish bit enterprise when of Guardicore in to fits that a of you that can just more your assets about really months of platform sort environment. talk ecosystem -- but an their launched Trust of to protect Zero they you little that trust

this I always Zero also essential, me Trust. the said, you can in like that with, you hit to this else to for the And through fits efforts seemed guess, regarding is Because it channel. was I I your addition on -- know and if it channel technologies in can what also this platform? Because sold

you this it's like just like that. said it buying really somebody not a solution. but firewall a think I or sophisticated before, something Like seems you're for

-- can just how talk channel? -- it's working how the early, that's I it's If about that little is a only through know but you how bit

Yes.

you well. think enterprises can Guardicore. an the very mean And lock now the gets as means most on do but doors think your it device. got important and is best I have I every you're to I every in. agent down characterized in means really application still essential, it. lock you most is right, Segmentation having inside we're enterprise It can, that thing you don't windows everything And on the

was years, done it really a because community When segmentation. few was way crude. and you then back disfavored I of go And the think back that's large really the

the it purpose. You hardware, at giant all, And of you at segments did to you the do. inflexible, did the which it's hard defeated if whole in had it very day, end

software, get you and malware wipe a segment big controls. very fine out an had You manipulate, would through Guardicore in the much more because secure, entire And very problem and easy problem. solved that secure to weren't make green updates giant

viewed for that process is to And as not it think, headlines been in I an are it's so proving that, ransomware essential was really to what of disasters, course, going marketplace. you see they the with something need waking surprising be and up And do this. people and to it's We us why as education the noted. out,

what applications. platform. we've combine which is with inside question Guardicore, the So with done to there, device the protecting the the now communication is app-to-app next internal device-to-device is employee And

we've North, so And West. what's South and called East, combined

we years then together go sure put were this "Hey, panel internal be want got say, buyers We back a control and a to so enough, to going we single deal same platform. it's now we But were not business X and applied that want same that you ago, can and a different again, time Now devices to make as the thinking the treated employee the we're agent, they back with to differently. on single few same is to all agents then, logic and seeing applications." sense customers the way boy, different it at

not tell And what with so it can platform you've that that's DNS got is into so combine where when actually authentication, a is, We capabilities the also Guardicore on you about. all multifactor to platform now firewall, which threat-hunting it what's cool. going control this single important it's pretty a excited that's it's underestimate AI, real And estate. agent of to Gen I powered And do actually the panel think importance by because important about. are new really customers the

can You your if a converse infrastructure. with network you language, in will, human

as result, visibility which a You better compliance much security. means better get greater much probably

channel firewall It's Guardicore deployment. really you're value. not channel. sophisticated like yes, that's your just And it right, is partners out question, Now integration all where can is the add and there. throw a a And

revenue partners can it's growing add And your value more and for devices, they will when more in cases, than and derive Guardicore, because and cases, partner even ongoing Akamai revenue. applications include many the you're segmentation will, so great to footprint generate and your in some it's

lot se, So the And really be. product. channel-friendly it's do of a than way easier but segmentation good course, per used a not to easy to

me. as a makes like, company, are familiar Tom, I'm don't all another that but But it -- like seen people do don't implemented. raises with Like I I've what the the segmentation of they ] lot sense [ because you TruPort Olumio question, said, like alternatives? could, are And ] and [ called enterprises if even ton do? What have of to people what also

a lot of lot don't. So do, a but

saying, just Or things the something because they [ other it? Palos it? we're I'm ] there that here? just really And Are platform. so kind know, just we ] trying you [ I'm -- just is -- Like don't to of are buy what that does like big don't have Poll missing I need whole is are -- that opportunity just seems the the

today, better. with our No, opportunity. to very And I enterprises companies And it adopters is we speaking, believe is do leading few, big [ the the a critical competitor. Guardicore We because really they early compete relatively think solution have Illumio rely really, cover which it it. a to We infrastructure have probably more have They're are OS, have ]. the We can be firewall the a systems there, firewall consistent. legacy which to it universal on coverage. actually get the in don't that's not to of have important enterprises mini lot the be lot won't in the We own sometimes our might Asia.

think ton there greenfield. is I a of

really And talking the their they I solution spend probably be is because wouldn't lot for platforms. it. other of of a don't when competitors have time one don't segmentation a there talking about about They

from The Murphy JPMorgan. Mark next with comes question

headwind. been from, just any the Ed, headwind I believe, if curious FX forecast. your I at full think, been there's you've is looking million movement what that the latest to previously, as, year $XX I'm there thinking on revenue

Mark, yes, exactly same. The quite down, not up and it's but much the bit of a dollar the change. pretty much around a quarter, moved during

the in the just quarter-over-quarter the gave year-over-year, same, it's of guidance for full for still about $XX. quarter already year, but it's around full in about terms impact for the So and I year. XX the the

the computing the you Okay. of text those models that, deep types the And newer are workload pretty seeing end, mentioned double-click relating toward wondering ARR image What cloud percentage for learning you And models it be models. can AI estimate to on as mentioned follow-up, LLM, a then, workloads? you something what you're types and you of of AI is wide instance. array if that the cloud your a quick Are might on possible And model? I'm or to seeing else? or of your platform. Tom, types

the Yes. is say ARR. would Great AI fraction question. I a small today, of probably workload

potential for over time, I there. think growth

at in that commerce because applications, of engines. ad models more would smaller useful models not GPT, the are giant used they're chat are knowledgeable everything. have The content and focused. your chatbots, that security, about about really question all, to it you targeting talked As sort companies, business. to tailoring models ask targeting, any we it everything, recommendation try giant we're are say be Those I can for learn

the But lot focused site, whole more to security for an need it's on value. And maybe site, world company. do. a a they're commerce to it's to to trying ad really maybe a they base, Maybe our customer be learn provide they don't it's tend what

the means In great are works don't have Akamai provide And in really fact, which ROI. suite to with own looking do customers on the this Really, great run platform, which that the for doesn't AI their just to application, much model our see GPUs us primarily you terms better giant our powered platform GPUs, has very which a Gen run it's interface, Guardicore on our that solution that AI. of with gives means that applications. control of what value. specific we but CPU-based, And to can gigantic with the by need it it

next The question from with Brooks Bank America. of comes Madeline

and Cloud? that adoption I their of the growth of if Cloud? they of more continue I of mentioned Connected versus same of customers nice just in of enterprise growth And kind What of around click your Connected the Cloud help So for the Are bit non-e-commerce. maybe customers could us wanted color. double Connected traditional cases on get to wins to nonmedia, and CDN customers? in customers. some growing your little a those customers on that terms discussion you want of are What out guess outside you from But are traditional those finding to break use are those just

Yes, we're seeing the outside base. the both and base growth within

of on know need I our with their example, observability, would companies think, a going Security to companies compute that. with need qualified program partner that with for lot what's applications.

customers. media say of today. Now would probably the we a I that's segment biggest And have lot also

QCP We a of through design, customers advantage ecosystem that. of program full to on take supported the by and so platform a media have, our now lot starting workflow media

for improved We hints user and example, performance based site a talked OS waiting what experience, page storage, Outside the AI so personalized for and patch tailoring with with of on room that, forth. about firmware kinds been We log into a on they've on it. things. logs, have doing your a it, and gateway of system Internet running insights so even aggregation observability, PBX, running telephone far. Real-time XG switching

So it future. which I does segment the is, broaden But today, the biggest be would base us think, exciting for the probably media. in

Alex Henderson Needham. next The with comes from question

Great.

traditional great a business compute to results because area I the out of new little the existing customer many I increasing the of look if coming of the the anything base into of bit compute. customers order a is are the and critical wanted much Just customers? congratulations on I upsell? more on an it else. the of of from -- internal? mechanics go that some security that's What compute business? off, needs to And what that's coming to as converting is that out to bit compute of How little their success out the was and the side from metrics think how those are the about think, kind analyzing of talk portion proven of both Can be focus First it that true a to give around growth portion you Street stand-alone than the business at ultimately, us that

users our similar of companies. the design. And QCP, our Yes. -- our be the pretty turn say compute that's answer is and it And biggest And half for our segment a lot over first to today Partners will I'll Quality the Ed. large question. take our Compute our media by biggest are and would media workflow I last customers. to

say and all very biggest capability, customers. one as the of spans sort verticals well, new segment. that's I across So that as a would would large observability a and include

do up companies But new we would is nontraditional Akamai are today some And biggest do biggest. using the verticals us. on So to that think be in want for that you chunk over run, color And bunch compute. that? Ed, the verticals customers whole a market have opens I media the add a longer of existing Akamai

quickly. for Tom the from stuff but applications on of bulk growth seeing so We the you is broke for that's pipeline. and sure. very new customers. growth is quarter, Yes, the platform significant ramp some that existing to numbers been last The Alex, in nicely. as both the for new while, actually in continues customer we're coming additions out And very, a mentioned, growing very we're seeing increase a

repeatable compute areas customers is probably seeing are new talked customers fairly -- workloads about seeing platform. in are be And large even some customers. what's outside CEM to the Tom we're that and more interesting may come small but And media. We seeing workloads of customers media, we're relatively

adding growth, I'd say start and it's board customers from the then they it's the to seeing across to where but we're the So mix ramp. new mostly

next Citi. The question from comes Fatima with Boolani

back be guidance delivery the in wanted expected on I to and in the performance the half.

please. appreciate I So Tom, a degradation traffic curious then a first just I'm actually experienced back half. the business lot follow-up the the the have patterns worsening But is you for the trajectory in in And of why half? of

Yes, sure.

for I talked about bit So expectations a QX. little the

not we've of keep also StackPath on the with prior we're normal mind, now any hockey year, expecting based last and the seen significant revenue. Just like we're to degree what what transaction that's And we in and in years. in saw delivery traffic last year, closed Lumen stick and we growth terms seeing all

year-over-year tougher to looking at your a sure perspective of QX rates, makes comparison you're growth skew that's that bit. going if So sort

model, dynamics last And like a some that. as media the StackPath as news the the larger of playing biggest one are may say on I'd as customers. call, But expected. why anniversary-ing with it issue good we contribution deteriorating talked talked as a you we is we've put that and about, it's bit. of year. that move sort out look That's on QX factors there the got there our little were on The social is going from you're those your fact the that we handle good But last into about

managing back share which situation or even becoming bumps That makes for taking examples a think of momentum Tom, And as sort scaling a been garnering as this part franchise the step sense. fair. you question not the being in as revenue overall are along wallet compute many plugging ensuring compute you've strategy very -- broader you, as compute That's opportunity. the and story. I opposed But essentially an constructive it the very for that about How a around straddling specific of base against are notion your the franchise There have hole? potentially been the using in of of sort accretive compute franchise. of you so compute think you've up and bigger ends delivery to you,

accretion some of net extracting are existing the from compute delivery are drive for you customers growth in of the actual place now? have what continue wallet Just to mechanisms a new to where lot and share within you demand

Compute than Yes. is different delivery.

going case opportunity delivery And magnitude opportunity. delivery [indiscernible] not revenue the that it's a than compute. not That's the situation here. was bigger where compute into So

a a terms becomes think, business of I time, very cross-selling. business in delivery us over it's terms think much in generation, for its thing does it so of And and bigger good And than delivery. cash I

go there of plugging And economics have a platform, of hole chatty compute the but in it's terms and moving applications delivery. offer because hyperscalers for we lower it's especially much a so where and actually at we of in than it applications the not the around data is out -- a where delivery and the situation price at can doesn't point platform,

I think for future, huge compute a in of independent revenue delivery. is us in driver growth the anything

comes Piper from Jim question Fish Sandler. with next The

pricing the customers the Fish. some away that about past for the seeing of on getting opportunities? the Quinton in that those driving of the first impact? couple question in This your you Are over given medium lower largest recently some and A pressures worse market margin Jim that's seeing touching StackPath of there. talked Maybe space maybe is pressures on months. from half Lumen are alongside, these you these really Or from weakness obviously, delivery move to kind pricing decision trends of second not competitor

Ed. is this Quinton,

some large this talked had about, we year. As renewals we

say I'd we've pressure the those, there. we've it's different significantly is seen all wouldn't pricing there and than marketplace. nothing So that certain in traditionally been it's through I obviously, say what worse. those

issue is not the just much I think growth. traffic as

customer, reprice significant you a traffic to tend as you growth. So see

in this. situation don't a revenue they like declines long the as So persist have as

anything always competitive, changed been always very the the pricing. it I be. say So trajectory wouldn't has will if terms in It's of of

not not So is normally that really we're that's traffic of issue. seeing see. issue just we growth The the the type

here a between kind really And you you acquisition. maybe existing That's platforms full kind to opportunity? the suite any API here Yes. on those and helpful. it's with Noname integration early can But can you and the two your balance a go-to-market still provide really obviously, then the of Noname grow update kind within of wallet leverage customer. that how of of how Neosec And

integrated I would Yes, firewall within in go through we we Akamai with are where a now Akamai fully mentioned, existing a web the APIs X as going And to with had of weeks app of products, products, close, particular, Noname. market the lot that. our

integrated basically we're today. I So would say

the over get are that some from We who of so have some we Noname both evolve worlds. customers will Neosec, Neosec with product capabilities we time, best the of the maintaining into

Yes.

add -- came sophisticated just well a acquisition of specialists. Noname with the as pretty a as channel add the number to Just

when have so a we close saw nice minute those, to we the ultimately deals both deal to that's pickup going or in closed. the So closed, some announced sales. And actually, we help drive of we closed the from announced

the impact no not selling. already out and the on there teams funnel So

that. about excited very So

I think enhanced part we've just our of capability as acquisition. go-to-market the

Jonathan question The Ho Blair with comes William Company. next & from

to listen faster core even maybe the that that things. want like need pretty compute potentially catalyst feel for adoption? soon going you're Are to customers you they missing are you're any you add from As or and or there side of services what capabilities or

that the media now we excited have I have hyperscalers size a be there. an think think today enormous competitive the we're getting difference would of marketplace. the We're probably really the I and marketplace. very marketplace biggest workflow Obviously, started

know, presence, think out, laws. observability as that position so don't We're handle be hyperscalers to also have that's locations to than got going in capabilities building a where performance be I a advantage grow. also in to data our sovereignty a the very in be We'll distributed competitive got continuing you in And marketplace. and that. we'll compute more an which we're locations where many will better we've in that you've countries us give something

the ongoing. We're improve develop effort continuing there including yes, But and to it's a on with storage, platform, of too. going lot it's

But So results, it. if out that's to we adoption. the for there foreseeable be tell And the going a that -- rapid selling get from can future. the ongoing can early you to will be now, and in be position it's see we're great

of That sense. ton makes a

business, be two move of see of are directions? terms you opposite Just the margins. the of carrying business of continue seems as it we as to business efficiency over terms revenue, this delivery sort to in we the percentage the of a in in see sides decline deleveraging and concerned How as effects CapEx

The down margins a be the margin so it's pretty we've intensive. the there. Sure capital a But compute to helpful. core I is Yes, of the very that concern and gross business the will huge new been delivery of high products, products said bit not dramatically. more CapEx business drive are able

more of we're to we as percentage taking that the spending in of CapEx of that a average traffic as as and type a compute platform the digits as part type average on revenue for of that to taking and sure profitable being low low growing will we significantly. And strategy more maintain is in on is business, not posture the is That so as not traffic by that traffic So as single to efficiency business. our long sort we're you're can the that maintain do peak CapEx we're of down delivery, as long the peak make maintain business. design, delivery not selective that

from comes Tim question next The Oppenheimer. Horan with

kind kind It sounds of constrained that? cloud. growing look new and And services you unique have market platform? on talk do they're to to are then a to on And you legacy your think use you're maybe range. of Cloud you on cloud that do XX% how platform. of get there you improve services question there? SMB CapEx in in growth? kind of peers at can to maybe hit your Or think, of just yourself you Google moving lot can of about you of legacy you Do the a kind flare, up services services And create to few that do Microsoft, for the get what you part there. XX% like kind or if Can of, Kind own secondly, type

Yes.

ourselves question, of as we On the capabilities part first for our built migration. have

there. Data So big had bricks we're we Snowflake and off of which spends

a is Looking is efficient, for which available at to making service our time, that more I customers. capabilities again, important over customers, really think

we've of talked of you the want end will QX. a year. rate, ARR say terms than about look that growth would enterprise In was $XX want more the compare of That's at that I compute the end the comparable. number million to number, We which at sort that's double by you think the to the of

more products in looking have overall which the image at Akamai got number, video legacy those -- for like in things. and manager, what growth. of terms kinds hyperscaler net other but you're the We've compute of comparable are as aren't storage,

-- of hyperscalers. be now course, that? So have much, much the to growth if enterprise number going the smaller compute, us, to that's than for driver do going on very to you on which really a and, you want is percentage add in a focus Ed, the fast

more than time, think to that's it absolutely big that where material, seeing we're seeing a see geo. just see participation world. that continue. cases right. can across growth, Obviously, It's lot I one we is the where is pipeline not Tom we all growth folks No, more is market something right. that, But And our That's a use to That's we easy that that reps make growing. We're from think we'll for the start great you the is. break exactly as and the see expected. I from. to number that's out explosive for over that where becomes coming of

excited very about it. we're So

the or all you think you're constrained product do constrained in there? at all enterprise And at capital

I mean But a problem. constraint customer ton to produce us free may a geography. a flow. where big some perhaps got may balance as have particular of We a envision you task concentrated could to out strong capital with that a a build it's cash there's think don't we do very you I if sheet. come in No,

there's So from perspective. no constraint issue capital a

think a a size can I this right business and I problem don't significant is to we grow capital think time, now. over

from comes with Davidson. Rudy D.A. question next Kessinger The

quarters. the out On looks about last it the at been security, adjusting I organic like I in And a last X at on puts versus in volatile the give X in guess us it half, the second takes the constant slowdown look is several over Could Obviously, Noname, XX%. second XX% if and of growth quarters. it's been growth the half. currency some just to has pretty tough you general, rate just maybe to kind compares security

security out expect had forward, kind of should DDoS of I just some the spike business? growth range think we the in also you what's year. that last going strength just But right

Yes, sure.

So some we couple terms license of takes, the a in had percentage just remember, $X just over of in QX, puts last that's little of points. and million year, revenue, of

to QX that's little your make going challenging. more compare So bit a

phenomenally bundles year, keep some to in new mind, web introduced well. for we thing app too, other that security The last firewall did

So they going And we've very, bit between a API we that to start anniversaried APIs security then quickly. little as so number. ramp, our that, very smaller think It's more compare a is sure just Guardicore makes ramp to and challenging.

start a growth brought a and products the they to bit up, into Batman ramp dollars. go bring about, we when around [ hundreds to market. bounced new to millions That you think of over as talked then you've manager as the It of So was and time. little happens has product ] small the about market

and I you'll think with API see thing security. Guardicore the same

Yes.

guys I mean, customer And to then guess, that certainly it's aren't one Okay. Any like and traffic your year was lower-cost the media that on into seem it the guide. be they it or to not more just broader already maybe shifting -- mean, seem on it factored than has to say large dynamic you indicate really several outside, I I providers. outlook, the seeing that? fastly, directly, delivery that comment was I'll sounds customers It social media

No, Yes. low-cost a moving providers. not someone to phenomenon seeing we're of

fact, a the there's As today. less in matter them of of two market

seeing not we're that. So

been it not [indiscernible] compare I shift just As the year. or video earlier, we've That robust tough happens time, any unusually QX. we're lower seeing to Gaming from weak, traffic in providers about a time then talked as seen just we low-cost And traffic new but with a normally a to as market. is. has have low-cost isn't providers stuff a

The question comes last from Power William Baird. Okay. with today

maybe broad-based? I now verticals expectation? This is and for trends year, expecting those going in remember [ is it Ed, you're some Samilton to also Yan uptick you little or probably same year. again weaker that you're delivery others year you're bankruptcies ] including it this Will. Or in more forecast then correctly, QX but an informing weaker just If for muted back terms more seasonality last of still early it's to that weaker retail, your were though, expecting where gaming. I a And traffic is again to it's know in pointing there this

and sort it's or combination those seasonal of the be Yes. less of to seen We've I'd say less. retail two verticals. a time over

And major anything then will haven't leave we're strong Some have ago. X as customers any say, in just has in to to offer that or Zero of it hasn't still robust seen do general, not yes, as from launches gaming, be perspective. believe been, or the from our from that that hearing the just me X But overage product market. years that that we been with QX weak. we I

then times been just has here, sluggish general. traffic And a a talked in about perspective as from also, just several bit I growth in general

that, me anything going to that's change So into I going QX. don't see tells that

on when of that So this just again worthwhile there. today, models. in their they as to seeing what go we obviously, out But update here out you few calling We'll folks I'm we've we talk a got build before out November. get months to based

like would to the I session. question-and-answer remarks. our closing for turn Stoutenberg concludes to Mark over This conference back

evening the seeing tonight. at Thank nice We quarter now you, rest closing, has presenting We of forward and with call. end rest of those. throughout be everyone the the may In everyone. hope look you to several the you we a year. the investor will Operator, conferences

The Thank today's conference you presentation. attending for has now concluded.

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