10q10k10q10k.net

What changed in Akamai Technologies's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Akamai Technologies's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+380 added−361 removedSource: 10-K (2025-02-24) vs 10-K (2024-02-28)

Top changes in Akamai Technologies's 2024 10-K

380 paragraphs added · 361 removed · 283 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

47 edited+32 added−16 removed27 unchanged
Biggest changeAdditional features are available to enterprises that purchase our premium and managed security solutions, including a dedicated technical account team, proactive service monitoring, custom technical support handling, security traffic monitoring, technical security reviews, threat advisories and emergency support for security events.
Biggest changeAdditional features are available to enterprises that purchase our premium and managed security solutions, including a dedicated technical account team, proactive service monitoring, custom technical support handling, security traffic monitoring, technical security reviews, threat advisories and emergency support for security events. 5 Table of Content s Human Capital Our employees – our human capital – are our most valuable resources as they are fundamental to our innovation, the operation and ongoing enhancement of Akamai's solutions and global network, the fostering and maintenance of relationships with our customers and the management of our operations.
This acquisition was a significant milestone in our expansion into cloud computing services. While Linode was traditionally focused on individual developers, we are leveraging the Linode cloud computing services for enterprise customers by building new enterprise-grade core computing regions and connecting them to the Akamai network, which we believe will give Akamai an advantage over its bigger cloud rivals.
This acquisition was a significant milestone in our expansion into cloud computing. While Linode was traditionally focused on individual developers, we are leveraging the Linode cloud computing services for enterprise customers by building new enterprise-grade core computing regions and connecting them to the Akamai network, which we believe will give Akamai an advantage over its bigger cloud rivals.
For instance, regulations have been enacted or proposed in a number of countries that limit the delivery of certain types of content into those countries. As an example, restrictions were adopted in India in 2020 prohibiting access to identified Chinese applications.
For instance, regulations have been enacted or proposed in a number of countries that limit the delivery of certain types of content into those countries. As an example, restrictions were adopted in India in 2020 prohibiting access to identified Chinese-owned applications.
Our marketing strategies include public relations, digital programmatic advertising, paid search and SEO marketing, content marketing, social media, strategic alliances, e-mail marketing programs, events and webinars, participation at industry trade shows and ongoing training and sales enablement.
Our integrated marketing strategies include public relations, digital programmatic advertising, paid search and SEO marketing, content marketing, social media, strategic alliances, e-mail marketing programs, events and webinars, participation at industry trade shows and ongoing training and sales enablement.
The cloud computing services running on Akamai Connected Cloud enable companies to distribute workloads and applications across our core to edge infrastructure to help solve the cost, performance and scale challenges that centralized cloud computing platforms present today. In March 2022, Akamai acquired Linode Limited Liability Company ("Linode"), an established cloud computing platform.
The cloud computing services running on Akamai's compute platform enable companies to distribute workloads and applications across our core to edge infrastructure to help solve the cost, performance and scale challenges that centralized cloud computing platforms present today. In March 2022, Akamai acquired Linode Limited Liability Company ("Linode"), an established cloud computing platform.
We also actively sell to government agencies. As of December 31, 2023, our public-sector customers included the U.S. Census Bureau, the U.S. Department of Defense, the U.S. Department of Labor, the U.S. Department of Transportation and the U.S. Department of the Treasury.
We also actively sell to government agencies. As of December 31, 2024, our public-sector customers included the U.S. Census Bureau, the U.S. Department of Defense, the U.S. Department of Labor, the U.S. Department of Transportation and the U.S. Department of the Treasury.
We have eight employee resource groups ("ERGs") that offer opportunities for employees to come together for mutual support, education and development. ERGs encompass different racial and ethnic groups, persons with different physical or cognitive abilities, parents, military veterans, the LGBTQIA+ community and women.
We have eight employee resource groups ("ERGs") that offer opportunities for employees to come together for mutual support, education and development. ERGs encompass different racial and ethnic groups, persons with different physical or cognitive abilities, parents, military veterans, the LGBTQIA+ community and women and are open to all employees.
While our Linode-based solutions have historically competed with alternative cloud computing platforms focused on individual developers, we anticipate that going forward our cloud computing solutions will increasingly compete with the large so-called “hyper-scaler” cloud computing providers.
While our compute solutions have historically competed with alternative cloud computing platforms focused on individual developers, we anticipate that going forward our compute solutions will increasingly compete with the large so-called “hyper-scaler” cloud computing providers.
Our wellness programs include educational offerings on healthy lifestyles, access to mental health experts and access to ergonomic advice and equipment.
Our wellness programs include educational offerings on healthy lifestyles, access to mental health experts, access to ergonomic advice and equipment and financial wellness support.
Our employees are grouped across the following roles, with the approximate percentage of the overall population noted: engineering and research and development (35%), services and support (27%), sales and marketing (18%) and administrative functions (20%).
Our employees are grouped across the following roles, with the approximate percentage of the overall population noted: engineering and research and development (36%), services and support (27%), sales and marketing (17%) and administrative functions (20%).
We are not, however, including the information contained on our website, or information that may be accessed through links on our website, as part of, or incorporating such information by reference into, this annual report on Form 10-K. 8 Table of Contents
We are not, however, including the information contained on our website, or information that may be accessed through links on our website, as part of, or incorporating such information by reference into, this annual report on Form 10-K. 9 Table of Content s
Continuing in 2023, all employees were able to participate in a company-wide program, developed by a behavioral research organization, that was intended to help us increase inclusivity, become more open to change and accelerate our innovation.
Continuing in 2024, all employees were able to participate in a company-wide program, developed by a behavioral research organization, that was intended to help us increase inclusive behaviors, become more open to change and accelerate our innovation.
We believe that we compete favorably with other companies in our industry through the global scale of Akamai Connected Cloud, which we believe provides the most effective means of meeting the needs of enterprise customers and is unique to us.
We believe that we compete favorably with other companies in our industry through our global scale, reliability and expertise, which we believe provides the most effective means of meeting the needs of enterprise customers and is unique to us.
Foreign Corrupt Practices Act and similar anti-bribery laws, which generally prohibit companies and their intermediaries from offering payments or inducements to foreign government officials for the purpose of obtaining or retaining business.
We are subject to the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws, which generally prohibit companies and their intermediaries from offering payments or inducements to foreign government officials for the purpose of obtaining or retaining business.
Engagement We continue to believe that an engaged employee workforce is key to having the productive, ethical and high-performing workplace needed to successfully compete in today’s marketplace. We conduct quarterly surveys of our employees to assess a variety of key metrics related to key topics, such as engagement, inclusion and job satisfaction.
Engagement We continue to recognize that an engaged employee workforce is key to having the productive, ethical and high-performing workplace needed to successfully compete in today’s marketplace. We conduct quarterly surveys of our entire employee population to assess a variety of key metrics related to important topics, such as engagement, inclusion and overall job satisfaction.
Through our service and support offerings we work closely with our customers to develop creative and tailored solutions to assist them with integrating, configuring, optimizing and managing our core offerings. Once customers are deployed on Akamai Connected Cloud, they can rely on our professional services and security experts for customized solutions, problem resolution and 24/7 customer support.
Through our service and support offerings we work closely with our customers to develop creative and tailored solutions to assist them with integrating, configuring, optimizing and managing our core offerings. Customers can rely on our professional services and security experts for customized solutions, problem resolution and 24/7 customer support.
As of December 31, 2023, we owned, or had exclusive rights to, over 550 U.S. patents covering our technology as well as patents issued by other countries. Our U.S.-issued patents have terms extendable to various dates between 2024 and 2042.
As of December 31, 2024, we owned, or had exclusive rights to, over 560 U.S. patents covering our technology as well as patents issued by other countries. Our U.S.-issued patents have terms extendable to various dates between 2025 and 2043.
As of December 31, 2023, we had over 10,250 employees located in more than 30 countries (with approximately 60% of those employees located outside of the U.S.) and representing over 100 nationalities, which we believe helps bring a global perspective to our operations.
As of December 31, 2024, we had over 10,700 employees located in more than 30 countries (with approximately 65% of those employees located outside of the U.S.) and representing over 100 nationalities, all of which we believe helps bring a global perspective to our operations.
With this scale and distribution, Akamai Connected Cloud provides us with visibility and insight into traffic volumes, congestion, attack patterns, vulnerabilities and other activities across the internet's complex intersections of networks and systems.
With this scale and distribution, Akamai has visibility and insight into traffic volumes, congestion, attack patterns, vulnerabilities and other activities across the internet's complex intersections of networks and systems.
We compete primarily on the basis of: • the performance and reliability of our solutions; • massive distribution and availability of our network; • return on investment in terms of cost savings and new revenue opportunities for our customers; • reduced infrastructure complexity; • sophistication and functionality of our offerings; • our long-term product roadmaps; • scalability; • security; • ease of implementation and use of service; • customer support; and • price.
We compete primarily on the basis of: • the performance and reliability of our solutions; • massive distribution and availability of our network; • return on investment in terms of cost savings and new revenue opportunities for our customers; • reduced infrastructure complexity; • sophistication and functionality of our offerings; • our long-term product roadmaps and ability to quickly innovate; • scalability; • security; • ease of implementation and use of service; • first-party global services and support across products; • customer support; and • price.
Sales, Services and Marketing We market and sell our solutions globally through our field sales and services organization and through many channel partners, including AT&T, Avant, BV Tech, Carahsoft, Deutsche Telecom, Kyndryl, Microsoft Azure and Telefonica Group.
Sales, Services and Marketing We market and sell our solutions globally through our field sales and services organization and through many channel partners, including Apukay, AT&T, Avant, BV Tech, Carahsoft, CPD, Deloitte, Deutsche Telecom, Doyen, Kyndryl, Macnica, Microsoft Azure, Netpoleon, Telefonica Group and WWT.
Enactment and expansion of such laws and regulations in other jurisdictions would negatively impact our revenues or cause us to incur costs to redesign our systems to ensure compliance. We are subject to the U.S.
Enactment and expansion of such laws and regulations in other jurisdictions would negatively impact our revenues or cause us to incur costs to redesign our systems to ensure compliance.
Customers Our customers include many of the world's leading corporations, such as Adobe, Airbnb, Alibaba, Autodesk, Capital Group, Carnival Corporation, The Coca-Cola Company, Comcast, Crate & Barrel, eBay, Electronic Arts, Epic Games, FedEx, Fidelity Investments, Honda, IKEA, Japan Airlines, Liberty Mutual, Lufthansa, Maersk Transportation & Logistics, Marriott, NBCUniversal, Panasonic, Panera Bread, Paramount Global, Philips, Rabobank, Riot Games, Sony Interactive Entertainment, Spotify, Telefonica, Toshiba, Ubisoft, WarnerMedia and The Washington Post.
Customers Our customers include many of the world's leading corporations, such as Adobe, Aflac, Airbnb, Asus, Autodesk, Carnival Corporation, The Coca-Cola Company, Comcast, Daiwa Institute of Research, eBay, Electronic Arts, Epic Games, Fidelity Investments, Honda, Japan Airlines, Liberty Mutual, Maersk Transportation & Logistics, Marriott, NBCUniversal, Panasonic, Panera Bread, Paramount Global, Philips, Rabobank, Riot Games, Sony Interactive Entertainment, RTL, Spotify, Telefonica, Toshiba, Ubisoft, WarnerMedia and The Washington Post.
Diversity Akamai is an equal opportunity employer that values the strength that diversity brings to the workplace. We do not tolerate discrimination on the basis of gender, gender identity, sexual orientation, race or ethnicity, protected veteran status, disability, or other protected group status. Akamai supports varied programs and practices designed to promote a diverse and inclusive working environment.
Representation Akamai is an equal opportunity employer that values the strength that diverse perspectives bring to the workplace. We do not tolerate discrimination on the basis of gender, gender identity, sexual orientation, race or ethnicity, protected veteran status, disability, or other protected group status. Akamai supports a variety of programs and practices designed to support an optimal working environment.
The importance of our workforce to our success is underscored by the inclusion of corporate mission critical goals centered on our employees. In 2023, we focused on fostering an inclusive community that supports the success of our employees and continuing to deliver a positive experience for both employees and customers by living our values each day.
The importance of our workforce to our success is underscored by the inclusion of corporate mission critical goals centered on our employees. In 2024, we continued to focus on fostering a community that enables employees to be productive, and continuing to deliver a positive experience for both employees and customers by living our values each day.
Item 1. Business Overview Akamai's mission is to power and protect life online. Since 1998, Akamai has developed and provided solutions for global enterprises to build, deliver and secure their digital experiences on our massively distributed worldwide network.
Item 1. Business Overview Akamai's mission is to power and protect life online. Since 1998, Akamai has developed and provided solutions for global enterprises to build, secure and accelerate their applications and digital experiences.
Our compensation and benefits philosophy is to maximize the effectiveness of pay and benefits programs to attract and retain the high caliber individuals needed to drive the success of our business, while balancing cost-effectiveness and competitive factors.
Retention We have a demonstrated history of investing in our workforce by offering competitive salaries, wages and benefits. Our compensation and benefits philosophy is to maximize the effectiveness of pay and benefits programs to attract and retain the high caliber individuals needed to drive the success of our business, while balancing cost-effectiveness and competitive factors.
Less than 10% of our total revenue in each of the years ended December 31, 2023, 2022 and 2021 was derived from contracts 6 Table of Contents or subcontracts terminable at the election of the federal government, and we do not expect such contracts to account for more than 10% of our total revenue in 2024.
No customer accounted for 10% or more of total revenue for any of the years ended December 31, 2024, 2023 and 2022. Less than 10% of our total revenue in each of the years ended December 31, 2024, 2023 and 2022 was derived from contracts or subcontracts terminable at the election of the federal government.
The Akamai Compassion Fund, created in 2020 by employees for employees with support from the Akamai Foundation, continued to provide a way for Akamai employees to unite and support global colleagues and their families during times of unexpected hardships following a catastrophic event, such as the ongoing war in Ukraine.
The Akamai Compassion Fund was created in 2020, by employees for employees, with support from the Akamai Foundation, and continues to provide a way for Akamai employees to unite and support global colleagues and their families during times of unexpected hardships following a catastrophic event, such as climate events (e.g., hurricane, mudslide, wildfire) and ongoing wars and armed conflicts around the world.
We believe that flexible workforce positions and a focus on employee choice, make us a more attractive employer, increase productivity, enable us to recruit from a more diverse pool of applicants and present additional growth and development opportunities for our employees.
We believe that a focus on employee choice makes us a more attractive employer, increases productivity, enables us to recruit from a broader and more varied pool of applicants and presents additional growth and development opportunities for our employees.
Since 2022, we have rolled out a number of tools and resources to support this program, such as supporting employees with guidance on maximizing our internal tools to deliver great virtual meeting experiences.
Since 2022, we have rolled out a number of tools and resources to support this program, such as supporting employees with guidance on maximizing our internal tools to deliver great virtual meeting experiences. In addition, we have invested in ensuring that workplace connection remains strong and developed a framework for understanding, measuring and optimizing workplace connection, named CLEAR Connections.
Our solutions blend robust automation with customizable protections and managed security services to enable businesses to effectively manage risk and maximize the protections of their infrastructure, networks, applications and APIs.
With insight and automation derived from the world’s most distributed global network, our solutions blend robust automation with customizable protections and managed security services to enable businesses to effectively manage risk and maximize protections.
We currently conduct bi-annual internal pay equity analyses (with the assistance of a nationally-recognized outside consultant), covering gender globally and race and gender in the U.S. We take action to remedy identified discrepancies when we believe it is appropriate. To date, no widespread patterns of disparity have been identified. In addition, succession planning is an ongoing priority for our leadership.
Attrition was slightly up in 2024 when compared to 2023. 6 Table of Content s We conduct annual internal pay equity analyses (with the assistance of a nationally-recognized outside consultant), and we take action to remedy identified discrepancies when we believe it is appropriate. To date, no widespread patterns of disparity have been identified.
("Neosec"), which enabled us to offer a solution we refer to as API Security that works to discover and audit APIs and monitor API activity. API Security uses behavioral analytics to detect and respond to threats and abuse detection and operates using a response platform based on data and behavioral analytics.
("Neosec"), which enabled us to offer a solution we refer to as API Security that works to discover and audit APIs and monitor API activity.
Akamai media delivery solutions include video streaming and video player services, game and software delivery, broadcast operations, authoritative domain name system ("DNS"), resolution and data and analytics. Compute Akamai's cloud computing services, which we sometimes refer to as compute, include compute, storage, networking, database and container management services that are required to build, deploy and secure applications and workloads.
Compute Akamai's cloud computing services, which we sometimes refer to as compute, include compute, storage, networking, database and container management services that are required to build, deploy and secure applications and workloads.
Government Regulation As a global technology company, Akamai is subject to complex foreign and U.S. laws and regulations in areas such as data privacy and localization, cybersecurity, liability for content delivered over our network, various internet regulations, bribery, sanctions, export controls, competition, tax and foreign exchange controls. 7 Table of Contents Privacy laws, such as the European Union General Data Protection Regulation and the California Consumer Privacy Act of 2018, impact how we use data generated from our network as well as our ability to reach current and prospective customers, understand how our solutions are being used, transfer data about our employees and respond to customer requests allowed under the applicable laws.
Privacy laws, such as the European Union General Data Protection Regulation and the California Consumer Privacy Act of 2018, impact how we use data generated from our network as well as our ability to reach current and prospective customers, understand how our solutions are being used, transfer data about our employees and respond to customer requests allowed under the applicable laws.
Our sales, services and marketing professionals are based in locations across the Americas, Europe, the Middle East and Asia-Pacific and focus on direct and channel sales, sales operations, professional services, account management and technical consulting.
Our sales, services and marketing professionals are based in locations across the Americas, Europe, the Middle East and Asia-Pacific and focus on direct and channel sales, sales operations, professional services, account management and technical consulting. 7 Table of Content s To support our sales efforts and promote the Akamai brand, we conduct comprehensive marketing programs to shape perception and drive awareness and consideration of our solutions.
In addition to these required trainings, nearly all of our employees and contractors completed at least one training in our Akamai University program during 2023. FlexBase In May 2022, we launched FlexBase, which is a flexible workspace arrangement that allows over 95% of employees to choose to work from their home office, a Company office or a combination of both.
FlexBase In May 2022, we launched FlexBase, which is a flexible work arrangement that allows over 95% of employees to choose to work from their home office, a Company office, an approved workspace or a combination.
Development We invest significant resources in professional development, career advancement and training for our global workforce. All employees are eligible to participate in our Akamai Elevation performance review program, which provides guidance around setting annual performance objectives, developing competencies and receiving feedback.
All employees are eligible to participate in our Akamai Elevation performance review program, which provides guidance around setting annual performance objectives, developing competencies and receiving feedback. Where appropriate, we offer leadership training workshops, 360-degree feedback and succession planning exercises to encourage and enable internal promotion and advancement.
We conduct annual succession planning for senior leadership, which is overseen by our board of directors, including development plans for the next level of our senior leaders. Annual talent reviews focus on both high performers as well as those with high potential to keep our pipeline of tomorrow’s leaders full.
In addition, succession planning is an ongoing priority for our leadership. We conduct annual succession planning for senior leadership, which is overseen by our board of directors, including development plans for the next level of our senior leaders.
We also provide services and support for our customers as they utilize our solutions. Security Our security solutions are designed to keep infrastructure, websites, applications, application programming interfaces ("APIs") and users safe from a multitude of cyberattacks and online threats while improving performance.
Security Our security solutions, threat intelligence and global operations team work to provide defense in depth to safeguard enterprise data and applications. Customers trust Akamai to help keep infrastructure, websites, applications, application 3 Table of Content s programming interfaces ("APIs"), networks and users safe from a multitude of cyberattacks and online threats while improving performance.
For select employees, we offer leadership training workshops, 360-degree feedback and succession planning exercises to encourage and enable internal promotion and advancement. As a result of these investments and others, approximately 20% of open positions were filled with internal candidates in 2023. All employees are required to complete annual ethics and compliance and data security trainings.
As a result of these investments and others, nearly 15% of open positions were filled with internal candidates in 2024. All employees are required to complete annual ethics and compliance and data security training. In addition to these required trainings, nearly all of our employees and contractors completed at least one training in our Akamai University program during 2024.
We firmly believe that the internet’s role in transforming the way we exchange ideas and information and conduct business is more vital than ever.
We firmly believe that the internet’s role in transforming the way we exchange ideas and information and conduct business is more vital than ever. Our strategy is to help continue to power and protect business online by offering security and compute services with the industry-leading reliability, scale and expertise our customers need to grow their business with confidence.
("Guardicore") in October 2021 was a significant milestone in positioning Akamai as a leader in implementing "zero trust" methodology. Guardicore’s microsegmentation solution helps our customers prevent malicious lateral movement in their network through precise segmentation policies, visuals of activity within their IT environment and network security alerts.
Guardicore’s microsegmentation solution helps our customers prevent malicious lateral movement in their network through precise segmentation policies, visuals of activity within their IT environment and network security alerts. The platform leverages AI to simplify user experience, vulnerability assessments, compliance and incident response, helping to protect businesses from the threat of ransomware.
This platform, which we refer to as Akamai Connected Cloud, is comprised of an edge and cloud architecture and underlying network for cloud computing, security and content delivery services. Akamai Connected Cloud spans more than 4,100 edge points-of-presence in approximately 130 countries and nearly 750 cities, with roughly 1,200 network partners.
Our massively distributed global network is comprised of core and distributed compute sites, more than 4,300 edge points-of-presence in approximately 130 countries and over 700 cities, and our underlying global network integrated with roughly 1,200 network partners.
Akamai’s security solutions include web 3 Table of Contents application and API protection, bot management and mitigation to protect against credential abuse and account takeover, distributed denial of service ("DDoS") mitigation, protection from in-browser threats to protect against supply chain compromise and audience hijacking.
Akamai’s web application and API protection solutions protect web, API and mobile app traffic from attacks that take advantage of security flaws, protection from malicious automated attacks, credential abuse and account takeover, client-side protections that protect end customers from malicious or vulnerable first- and third-party client-side scripts that can lead to audience hijacking and distributed denial of service ("DDoS") mitigation.
Akamai Connected Cloud also offers a continuum of computing designed to efficiently build, deploy and secure performant applications and workloads that require single-digit millisecond latency and global reach. Today, billions of people work, learn, shop, bank, communicate and do more online globally.
Leveraging these insights, Akamai offers solutions designed to protect our customers from threats and attacks, along with full-stack compute solutions to build and deliver distributed, low-latency applications on our globally distributed network. Today, billions of people work, learn, shop, bank, communicate and do more online globally.
Removed
Leveraging these insights, Akamai Connected Cloud offers solutions designed to protect our customers from threats and attacks, while empowering them to securely deliver digital experiences to engage, entertain and interact with their customers.
Added
Our Solutions We provide solutions in three core offerings: security, delivery and compute. We also provide services and support for our customers as they utilize our solutions. As part of our mission to make life better for millions of businesses, trillions of times per day, Akamai is committed to enabling our customers to benefit from the latest technology developments.
Removed
Our strategy is to help continue to drive this transformation by offering compute, security and content delivery services on Akamai Connected Cloud that empower our customers to compete and operate with the scale, resilience and efficiency that their businesses demand. Our Solutions We provide solutions in three core offerings: security, content delivery and compute.
Added
In recent years, artificial intelligence ("AI") has been a major focus of corporate initiatives for enterprises in multiple verticals and across the globe.
Removed
We also offer a growing set of solutions designed to help businesses implement a “zero trust” approach to security.
Added
To help our customers seize on the power and potential of AI, we provide cloud computing infrastructure that they can use to build AI-powered applications; cybersecurity solutions, powered by AI and automation, designed to defend against prompt injections, data exfiltration and toxic outputs; generative AI to improve the speed and efficiency of identifying and investigating malicious or suspect activity; and throughput on our global intelligent network to enable the large volumes of data required to power AI-powered applications and facilitate effective real-time protections.
Removed
Based on the concept of least privilege, which dictates that users, applications and services utilize the bare minimum amount of access needed to perform their function, these tools are intended to shift protections from a legacy approach based on establishing a corporate perimeter, to a more modern, risk-based approach. Our acquisition of Guardicore Ltd.
Added
As adversaries relentlessly refine their evasion techniques, it requires continuous innovation in threat detection and specialized defenses to stay ahead of advanced bot and abuse attacks. Our Bot & Abuse portfolio provides tailored, specialized solutions to help customers protect against these threats.
Removed
Other solutions in this category include zero trust network access, which replaces legacy virtual private networks, multi-factor authentication, micro-segmentation, which replaces legacy network firewalls and helps protect businesses from the threat of ransomware, and secure internet access, which helps protect against the threat of malware and phishing attacks. In May 2023, Akamai acquired Neosec, Inc.
Added
Akamai Account Protector offers full account lifecycle protections including the ability to defend against account takeover and opening abuse, adversarial bot protection, protection against credential stuffing, inventory scalping and hoarding.
Removed
We believe API Security will complement our application and API security portfolio by extending our visibility into the growing API threat landscape. Content Delivery Our content delivery solutions consist primarily of web and mobile performance focused solutions and media delivery solutions.
Added
Akamai Content Protector also helps businesses protect their intellectual property, reputation and revenue potential with solutions designed to stop persistent scrapers from stealing content that can be used for malicious purposes like competitive intelligence/espionage, inventory manipulation, site performance degradation and counterfeiting. In May 2023, Akamai acquired Neosec, Inc.
Removed
While many other cloud providers are building their cloud platforms based on a centralized, data center-centric model, Akamai designed its cloud to be massively distributed based on the fundamental belief that modern applications will be comprised of workloads that will need to be automatically and efficiently distributed across a continuum of computing from cloud to edge in order to meet the specific performance and latency needs of that workload.
Added
API Security complements our application and API security portfolio by extending our visibility into the growing API threat landscape to detect and respond to threats and abuse detection and operates using a response platform based on data and behavioral analytics. In June 2024, Akamai acquired Noname Security Ltd. ("Noname Security"), one of the top API security vendors in the market.
Removed
In 2023, we launched 13 new core computing regions, bringing our total footprint to 24 regions around the world.
Added
This enhanced Akamai’s API Security solution and accelerated our ability to meet growing customer demand and market requirements as the use of APIs continues to expand. Akamai also expects to gain greater scale with Noname Security’s additional sales and marketing resources and established channel and alliance relationships.
Removed
In order to continue the expansion of our cloud computing services, we plan to continue increasing the number of computing regions on our platform. 4 Table of Contents Services and Support We provide an array of service and support offerings across our core offerings.
Added
As a result of the acquisition, Akamai expects to offer a complete API security suite enabling customers to better discover “shadow” APIs and detect vulnerabilities and attacks. Akamai’s enhanced offering expects to have greater deployment choices for customers and access to a portfolio of technology integrations that we believe is unrivaled in the market.
Removed
Human Capital Our employees – our human capital – are our most valuable resources as they are fundamental to our innovation, the operation and ongoing enhancement of Akamai Connected Cloud, the fostering and maintenance of relationships with our customers and the management of our operations.
Added
We also offer microservice and application component protection that analyzes and protects application traffic that moves between application components like containers, APIs and workloads. This is part of a growing set of solutions designed to help businesses implement a Zero Trust security architecture. Our acquisition of Guardicore Ltd.
Removed
We track the diversity of our workforce and report quarterly to the board of directors on our progress to improve our representation. At December 31, 2023, global female representation was 27.4%, up slightly from 27.2.% at the end of 2022.
Added
("Guardicore") in October 2021 has enabled us to deliver the Akamai Guardicore Platform, which simplifies enterprise security with broad visibility and granular controls through one console. The Akamai Guardicore Platform simply and efficiently enables Zero Trust through a fully integrated combination of microsegmentation, Zero Trust Network Access, multi-factor authentication, domain name system ("DNS") firewall and threat hunting.
Removed
Racial and ethnic minority representation in the U.S. was 41.1%, up from 40.3% at the end of 2022, and since the end of 2021, our Black representation and Hispanic representation have both increased. To help us improve the diversity of our workforce, we participate in or sponsor professional development and recruiting forums.
Added
AI network labeling examines how assets are behaving and suggests labels to help security teams apply appropriate controls, and generative AI allows security professionals to ask natural language questions of their network, instead of manually poring through logs, to drastically expedite a variety of use cases like compliance scoping and incident response.
Removed
We also train hiring managers to draft inclusive job descriptions intended to broaden the pool of eligible applicants. 5 Table of Contents Retention We have a demonstrated history of investing in our workforce by offering competitive salaries, wages and benefits.
Added
Akamai provides a continuum of compute solutions for developers to build and deliver distributed, low-latency applications. We empower businesses to build and deploy massively scalable applications, distribute them to reduce latency and reach underserved locations and work to optimize and secure experiences and data from the core to the digital touchpoint.
Removed
Attrition was down in 2023 when compared to 2022. As a signatory to the White House Equal Pay Pledge, we are committed to monitoring our pay practices regularly and making adjustments, as necessary, to deliver on this pledge.
Added
Akamai’s compute solutions include a broad set of distributed cloud and edge computing services, including virtual machines, graphical processing units, cloud storage and databases, network optimization and security services 4 Table of Content s and lightweight serverless functions to help businesses build, deploy and manage applications and workloads with superior performance and affordability on the world’s most distributed platform.
Removed
No customer accounted for 10% or more of total revenue for any of the years ended December 31, 2023, 2022 and 2021.
Added
In 2024, we expanded Akamai's compute platform to span 41 datacenters in 36 locations. This includes upgrades to 5 existing datacenters and the introduction of 11 datacenters. The locations of these datacenters include Denver, Colorado; Houston, Texas; Querétaro, Mexico; Bogotá, Colombia; Santiago, Chile; Marseille, France; Hamburg, Germany; Johannesburg, South Africa; Auckland, New Zealand; Kuala Lumpur, Malaysia; and Melbourne, Australia.
Removed
To support our sales efforts and promote the Akamai brand, we conduct comprehensive marketing programs to shape perception and drive awareness and consideration of our solutions.
Added
Distributed compute regions provide access to powerful dedicated compute, storage and networking services in major metros that lack cloud computing options and availability, enabling organizations to place compute-intensive workloads as close as possible to end users.
Added
These regions act as an extension of primary infrastructure deployed in core compute regions for organizations that aim to improve application performance to attract new customers in new or target regions, and/or stabilize performance to meet user expectations.

… 15 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

103 edited+25 added−15 removed120 unchanged
Biggest changeThese risks include: foreign exchange rate risks; uncertainty regarding liability for content or services, including uncertainty as a result of local laws and lack of legal precedent; loss of revenues if the U.S. or international governments impose limitations on doing business with significant current or potential customers; difficulty in staffing, training, developing and managing international operations as a result of distance, language, cultural differences, differences in employee/employer relationships or regulations; theft of intellectual property in high-risk countries where we operate; difficulties in enforcing contracts, collecting accounts and longer payment cycles in certain countries; difficulties in transferring funds from, or converting currencies in, certain countries; managing the costs and processes necessary to comply with export control, sanctions, such as the sanctions imposed in connection with the Russian invasion of Ukraine, anti-corruption, data protection, cybersecurity and competition laws and regulations or other regulatory or contractual limitations on our ability to sell or develop our products and services in certain international markets; macroeconomic developments and changes in the labor markets in which we operate; geopolitical developments, including any that impact our or our customers’ ability to operate in or deliver content to a country; other circumstances outside of our control such as trade disputes, political unrest, warfare, military or armed conflict, such as the Russian invasion of Ukraine and the ongoing Israel-Hamas War, terrorist attacks, public health emergencies, energy crises and natural disasters that could disrupt our ability to provide services or limit customer purchases of them.
Biggest changeThese risks include: foreign exchange rate risks; uncertainty regarding liability for content or services, including uncertainty as a result of local laws and lack of legal precedent; loss of revenues if the U.S. or international governments impose limitations on doing business with significant current or potential customers; difficulty in staffing, training, developing and managing international operations as a result of distance, language, cultural differences, differences in employee/employer relationships or regulations; theft of intellectual property in high-risk countries where we operate; difficulties in enforcing contracts, collecting accounts and longer payment cycles in certain countries; difficulties in transferring funds from, or converting currencies in, certain countries; managing the costs and processes necessary to comply with export control, sanctions, such as the sanctions imposed in connection with the Russian invasion of Ukraine, anti-bribery, data protection, cybersecurity and competition laws and regulations or other regulatory or contractual limitations on our ability to sell or develop our products and services in certain international markets; macroeconomic developments and changes in the labor markets in which we operate; geopolitical developments, including any that impact our or our customers’ ability to operate in or deliver content to a country; other circumstances outside of our control such as trade disputes, including the imposition of tariffs by the United States on imports from certain countries and any resulting counter-tariffs or macroeconomic impacts, political unrest, warfare, military or armed conflict, such as the Russian invasion of Ukraine and the Israel-Hamas War, terrorist attacks, public health emergencies, energy crises and natural disasters that could disrupt our ability to provide services or limit customer purchases of them. 14 Table of Content s For example, approximately six percent of our global employees are located in Israel and have been and may continue to be impacted by the Israel-Hamas War.
We may not have in place adequate quality assurance procedures to ensure that we detect errors in our hardware, software and open-source components we use in a timely manner, and we may have insufficient resources to efficiently address multiple service incidents happening simultaneously or in rapid succession.
We may not have in place adequate quality assurance procedures to ensure that we detect errors in our hardware, software and open-source components that we use in a timely manner, and we may have insufficient resources to efficiently address multiple service incidents happening simultaneously or in rapid succession.
From time to time, we are or may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including patent, commercial, product liability, breach of contract, employment, class action, whistleblower and other litigation and claims and governmental and other regulatory investigations and proceedings.
From time to time, we are or may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including patent, commercial, product liability, breach of contract, employment, class action, whistleblower, other litigation, claims and governmental and other regulatory investigations and proceedings.
As of the date of this report, we had total principal amount of $1,150.0 million of convertible senior notes outstanding due in 2025, total principal amount of $1,150.0 million of convertible senior notes outstanding due in 2027 and total principal amount of $1,265 million of convertible senior notes outstanding due in 2029.
As of the date of this report, we had total principal amount of $1,150.0 million of convertible senior notes outstanding due in 2025, total principal amount of $1,150.0 million of convertible senior notes outstanding due in 2027 and total principal amount of $1,265.0 million of convertible senior notes outstanding due in 2029.
Trading prices for our common stock may continue to fluctuate in response to a number of events and factors, including the following: quarterly variations in operating results; announcements by our customers related to their businesses that could be viewed as impacting their usage of our solutions; market speculation about whether we are a takeover target or considering a strategic transaction; announcements by us regarding acquisitions; announcements by competitors; activism by any single large stockholder or combination of stockholders or rumors about such activity; changes in financial estimates and recommendations by securities analysts; failure to meet the expectations of securities analysts; purchases or sales of our stock by our officers and directors; general economic conditions and other macroeconomic factors, such as inflationary pressures, foreign currency exchange rate fluctuations, energy prices, reduced consumer spending, elevated interest rates, recessionary economic cycles, protracted economic slowdowns and overall market volatility; repurchases of shares of our common stock; the issuance of additional shares or securities convertible into, or exchangeable or exercisable for, shares of our common stock, including under our equity compensation plans; entry into, or termination of, relationships with material customers and partners; and performance by other companies in our industry.
Trading prices for our common stock may continue to fluctuate in response to a number of events and factors, including the following: quarterly variations in operating results; changes in guidance or failure to meet guidance; announcements by our customers related to their businesses that could be viewed as impacting their usage of our solutions; market speculation about whether we are a takeover target or considering a strategic transaction; announcements by us regarding acquisitions; announcements by competitors; activism by any single large stockholder or combination of stockholders or rumors about such activity; changes in financial estimates and recommendations by securities analysts; failure to meet the expectations of securities analysts; purchases or sales of our stock by our officers and directors; general economic conditions and other macroeconomic factors, such as inflationary pressures, foreign currency exchange rate fluctuations, energy prices, reduced consumer spending, elevated interest rates, imposition of tariffs, recessionary economic cycles, protracted economic slowdowns and overall market volatility; repurchases of shares of our common stock; the issuance of additional shares or securities convertible into, or exchangeable or exercisable for, shares of our common stock, including under our equity compensation plans; entry into, or termination of, relationships with material customers and partners; and performance by other companies in our industry.
The long-term effects of climate change on the global economy and our industry in particular remain unknown. For example, changes in weather where we operate may increase the costs of powering and cooling computer hardware we use to develop software and provide cloud-based services.
The long-term effects of climate change on the global economy and our industry in particular remain unknown. For example, changes in weather where we operate may increase the costs of powering and cooling computer hardware we use to develop software and provide cloud services.
The primary competitive factors in our market are differentiation of technology, global presence, quality of solutions, long-term product roadmap, customer service, technical expertise, security, ease-of-use, breadth of services offered, price and financial strength.
The primary competitive factors in our market are differentiation of technology, global presence, quality of solutions, reliability, long-term product roadmap, customer service, technical expertise, security, ease-of-use, breadth of services offered, price and financial strength.
U.S. and international laws and regulations that apply to the internet related to, among other things, content liability, security requirements, law enforcement access to information, critical infrastructure, net neutrality, so-called "fair share" or internet content taxes, international data transfer restrictions, sanctions, export controls and restrictions on social media or other content could pose risks to our revenues, intellectual property and customer relationships as well as increase expenses or create other disadvantages to our business.
U.S. and international laws and regulations that apply to the internet related to, among other things, content liability, security requirements, law enforcement access to information, critical infrastructure, net neutrality, so-called "fair share" or internet content taxes, international data transfer restrictions, sanctions, export controls and restrictions on social media or other platforms, applications or content could pose risks to our revenues, intellectual property and customer relationships as well as increase expenses or create other disadvantages to our business.
For example, revenue from our delivery solutions increased significantly in 2020 due in large part to greater consumption of online media and games during the onset of the COVID-19 pandemic and the associated stay-at-home orders across the globe. However, as these orders were lifted and more return-to-work policies were adopted, our revenue from delivery solutions declined.
For example, revenue from our delivery solutions increased significantly in 2020 due in large part to greater consumption of online media and games during the onset of the COVID-19 pandemic and the associated stay-at-home orders. However, as these orders were lifted and more return-to-work policies were adopted, our revenue from delivery solutions declined.
A significant portion of our hiring, new customers and revenue growth in recent quarters has been attributable to our business outside the U.S. Our operations in international countries subject us to risks that may increase our costs, impact our financial results, disrupt our operations or make our operations less efficient and require significant management attention.
A significant portion of our hiring, new customers and revenue growth in recent years has been attributable to our business outside the U.S. Our operations in international countries subject us to risks that may increase our costs, impact our financial results, disrupt our operations or make our operations less efficient and require significant management attention.
We also entered into a credit facility in November 2022 that provides for an initial $500.0 million revolving credit facility, and under specified circumstances, the credit facility can be increased to up to $1 billion in aggregate principal amount. As of December 31, 2023, there were no outstanding borrowings under the credit facility.
We also entered into a credit facility in November 2022 that provides for an initial $500.0 million revolving credit facility, and under specified circumstances, the credit facility can be increased to up to $1 billion in aggregate principal amount. As of December 31, 2024, there were no outstanding borrowings under the credit facility.
As a result, our consolidated U.S. dollar financial statements are subject to fluctuations due to changes in exchange rates as the financial results of our international subsidiaries are translated from local currencies into U.S. dollars. For example, in 2023, the strength of the U.S. dollar had a negative impact on our revenue and a positive impact on our operating expenses.
As a result, our consolidated U.S. dollar financial statements are subject to fluctuations due to changes in exchange rates as the financial results of our international subsidiaries are translated from local currencies into U.S. dollars. For example, in 2024, the strength of the U.S. dollar had a negative impact on our revenue and a positive impact on our operating expenses.
As a result, some competitors may be able to: develop superior products or services; leverage better name recognition, particularly in the security and compute markets; enter new markets more easily or better manage the impact of changes in general economic conditions, geopolitical conditions and industry pressures; gain greater market acceptance for their products and services; enter into long-term contracts with our potential customers; increase their points of presence and proximity to enterprise data centers and end users faster than us; expand their offerings more efficiently and more rapidly; bundle their products that are competitive with ours with other solutions they offer in a way that makes our offerings less appealing to, or more costly for, current and potential customers; more quickly adapt to new or emerging technologies and changes in customer requirements; take advantage of acquisition, 10 Table of Contents investment and other opportunities more readily; offer lower prices than ours, including at levels that may not be profitable for us to match; spend more money on the promotion, marketing and sales of their products and services; offer higher salaries to talented professionals which may impact our ability to hire or retain engineering and other personnel; and implement shorter sales cycles with customers and prospects.
As a result, some competitors have in the past and may in the future be able to: develop superior products or services; leverage better name recognition, particularly in the security and compute markets; enter new markets more easily or better manage the impact of changes in general economic conditions, geopolitical conditions and industry pressures; gain greater market acceptance for their products and services; enter into long-term contracts with our potential customers; increase their points of presence and proximity to enterprise data centers and end users faster than us; expand their offerings more efficiently and more rapidly; bundle their products that are competitive with ours with other solutions they offer in a way that makes our offerings less appealing to, or more costly for, current and potential customers; more quickly adapt to new or emerging technologies and changes in customer requirements; take advantage of acquisition, investment and other opportunities more readily; offer lower prices than ours, including at levels that may not be profitable for us to match; spend more money on the promotion, marketing and sales of their products and services; offer higher salaries to talented professionals which may impact our ability to hire or retain engineering and other personnel; and implement shorter sales cycles with customers and prospects.
The success of our activities is affected by general economic and market conditions, including, among others, inflation, interest rates, tax rates, economic uncertainty, political instability, warfare, changes in laws, trade barriers, the actual or perceived failure or financial difficulties of financial institutions, reduced consumer confidence and spending and economic and trade sanctions.
The success of our activities is affected by general economic and market conditions, including, among others, inflation, foreign exchange rates, interest rates, tax rates, economic uncertainty, political instability, warfare, changes in laws, trade barriers, the actual or perceived failure or financial difficulties of financial institutions, reduced consumer confidence and spending and economic and trade sanctions.
Acquisitions and other complex transactions are accompanied by a number of risks, including the following: difficulty integrating technologies, operations and personnel while maintaining the quality standards that are consistent with our reputation; potential disruptions of our ongoing business and distraction of management attention; diversion of financial and business resources from core operations or other attractive investments; financial consequences, such as increased operating expenses, incurrence of material post-closing liabilities, incurrence of additional debt and other dilutive effects on our earnings, particularly in the current environment where we have seen relatively high valuations of, and valuation expectations for, many technology companies and increasing allocation of risk to acquirors; failure to realize synergies or other expected benefits; lawsuits resulting from an acquisition or disposition; the inability to retain the acquired company's key talent; exposure to cybersecurity risks and the cost associated with remediating those risks in connection with the acquisition of IT systems; increased accounting charges such as impairment of goodwill or intangible assets, amortization of intangible assets acquired and a reduction in the useful lives of intangible assets acquired; the need to use substantial portions of available cash or dilutive issuances of securities to finance large transactions; and potential unknown liabilities and regulatory requirements associated with an acquired business.
Acquisitions and other complex transactions are accompanied by a number of risks, including the following: difficulty integrating technologies, operations and personnel while maintaining the quality standards; potential disruptions of our ongoing business and distraction of management attention; diversion of financial and business resources from core operations or other attractive investments; financial consequences, such as increased operating expenses, incurrence of material post-closing liabilities, incurrence of additional debt and other dilutive effects on our earnings, particularly in the current environment where we have seen relatively high valuations of, and valuation expectations for, many technology companies and increasing allocation of risk to acquirors; failure to realize synergies or other expected benefits; lawsuits resulting from an acquisition or disposition; the inability to retain the acquired company's key talent; exposure to cybersecurity risks and the cost associated with remediating those risks in connection with the acquisition of IT systems; increased accounting charges such as impairment of goodwill or intangible assets, amortization of intangible assets acquired and a reduction in the useful lives of intangible assets acquired; the need to use substantial portions of available cash or dilutive 15 Table of Content s issuances of securities to finance large transactions; and potential unknown liabilities and regulatory requirements associated with an acquired business.
If we cannot maintain compatibility with our customers’ IT infrastructure, including their chosen third-party applications, our business will be harmed. Our products interoperate with our customers' IT infrastructures that often have different specifications, utilize diverse technology and require compatibility with multiple communication protocols.
If we cannot maintain compatibility with our customers’ IT infrastructure, including their chosen third-party services, our business will be harmed. Our products interoperate with our customers' IT infrastructures that often have different specifications, utilize diverse technology and require compatibility with multiple communication protocols.
If these software, services, or other technology become unavailable or contain vulnerabilities, our expenses could increase and our ability to operate our network, provide our products, and our results of operations could be impaired until equivalent software, technology, or services are purchased or developed or any identified vulnerabilities are remedied.
If these software, services, or other technology become unavailable, malfunction or contain vulnerabilities, our expenses could increase and our ability to operate our network, provide our products and our results of operations could be impaired until equivalent software, technology, or services are purchased or developed or any identified vulnerabilities or malfunctioning are remedied.
For example, none of our officers or key employees is bound by an employment agreement for any specific term, and members of our senior management have left our company over the years for a variety of reasons.
For example, none of our officers or key employees are bound by an employment agreement for any specific term, and members of our senior management have left our company over the years for a variety of reasons.
All of these systems have become increasingly complex due to the complexity of our business, use of third-party software and services, acquisitions of new businesses with different systems, and increased regulation over controls and procedures.
All of these systems have become increasingly complex due to the complexity of our business, use of third-party software and services, acquisitions of new businesses with different systems and changing regulation over controls and procedures.
As a result of the diversification of our business, personnel growth, the deployment of our FlexBase program, acquisitions and international expansion in recent years, many of our employees are now based outside of our Cambridge, Massachusetts headquarters.
As a result of the diversification of our business, personnel growth, the deployment of our FlexBase program, acquisitions and international expansion in recent years, most of our employees are now based outside of our Cambridge, Massachusetts headquarters.
It is also important to our continued success that we hire qualified personnel, properly train them and manage 15 Table of Contents poorly-performing personnel, all while maintaining our corporate culture and spirit of innovation. If we are not successful in these efforts, our growth and operations could be adversely affected.
It is also important to our continued success that we hire qualified personnel, properly train them and manage poorly-performing personnel, all while maintaining our corporate culture and spirit of innovation. If we are not successful in these efforts, our growth and operations could be adversely affected.
For example, from time to time, it has been, and may continue to be, more difficult to purchase equipment that is manufactured in areas that face disruptions to operations due to unrest, trade sanctions or other political activity, public health issues, safety issues, natural disasters or general economic conditions.
In addition, from time to time, it has been, and may continue to be, more difficult to purchase equipment that is manufactured in areas that face disruptions to operations due to unrest, trade sanctions or other political activity, public health issues, safety issues, natural disasters or general economic conditions.
Improper disclosure or misuse of personal data could harm our reputation, lead to legal exposure to customers or end users, or subject us to liability under laws that protect personal data, resulting in increased costs or loss of revenue. 18 Table of Contents Other regulatory developments could negatively impact our business.
Improper disclosure or misuse of personal data could harm our reputation, lead to legal exposure to customers or end users, or subject us to liability under laws that protect personal data, resulting in increased costs or loss of revenue. Other regulatory developments could negatively impact our business.
Failure to adequately and rapidly deploy additional points of presence, increased proximity to enterprise data centers and end users and develop competitive offerings 11 Table of Contents could result in negative publicity, loss of business, diminishing customer appeal and other negative consequences which could harm our business.
Failure to adequately and rapidly deploy additional points of presence, increased proximity to enterprise data centers and end users and develop competitive offerings could result in negative publicity, loss of business, diminishing customer appeal and other negative consequences which could harm our business.
Taking these actions may also result in significant expense for us, including with respect to workforce reductions, as well as decreased productivity due to employee distraction and unanticipated employee turnover. Substantial expense or business disruptions resulting from restructuring and reorganization activities could adversely affect our operating results. We may have exposure to greater-than-anticipated tax liabilities.
Taking these actions may also result in significant expense, including with respect to workforce reductions, decreased productivity due to employee distraction and unanticipated employee turnover. Substantial expense or business disruptions resulting from restructuring and reorganization activities could adversely affect our operating results. We may have exposure to greater-than-anticipated tax liabilities.
Our board of directors could rely on Delaware law to prevent or delay an acquisition of us. 21 Table of Contents If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
Our board of directors could rely on Delaware law to prevent or delay an acquisition of us. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
In the past, some of our customers have determined that it is better for them to employ a “do-it-yourself” or “DIY” strategy by putting in place equipment, software and other technology solutions for content and application delivery and security protection within their internal systems instead of using our solutions for some or all of their needs.
At times, some of our customers have determined that it is better for them to employ a “do-it-yourself” or “DIY” strategy by putting in place equipment, software and other technology solutions for content and application delivery and security protection within their internal systems instead of using our solutions for some or all of their needs.
See the risk factor titled “ Our stock price has been, and may continue to be, volatile, and your investment could lose value ” above. Provisions of our charter, by-laws and Delaware law may have anti-takeover effects that could prevent a change in control even if the change in control would be beneficial to our stockholders.
See the risk factor titled “Our stock price has been, and may continue to be, volatile, and your investment could lose value” above. Provisions of our charter, by-laws and Delaware law may have anti-takeover effects that could prevent a change in control even if the change in control would be beneficial to our stockholders.
For example, as part of the integration of the Linode compute platform into Akamai Connected Cloud and the migration of certain applications and products from third party cloud providers onto Akamai Connected Cloud, we have been working to enhance the security and reliability of the integrated systems.
For example, as part of the integration of the Linode compute platform into Akamai's platform and the migration of certain applications and products from third party cloud providers onto Akamai's compute platform, we have been working to enhance the security and reliability of the integrated systems.
For example, our ongoing efforts to continually enhance the security and reliability of Akamai Connected Cloud, customer applications and corporate systems comprise various initiatives and mitigation efforts, including, but not limited to, upgrading access and configuration controls; improving security instrumentation, monitoring, detection and prevention tools; enhancing software inventory and tracking and patching systems; upgrading encryption processes and protections; enhancing authorization methods in applications; enhancing data loss prevention and endpoint security management capabilities; upgrading vulnerability identification, assessment and remediation processes and technologies; and enhancing the security of passwords and other credentials, as applicable and appropriate.
For example, our ongoing efforts to continually enhance the security and reliability of our globally distributed infrastructure, customer applications and corporate systems comprise various initiatives and mitigation efforts, including but not limited to upgrading access and configuration controls; improving security instrumentation, monitoring, detection and prevention tools; enhancing software inventory and tracking and patching systems; upgrading encryption processes and protections; enhancing authorization methods in applications; enhancing data loss prevention and endpoint security management capabilities; upgrading vulnerability identification, assessment and remediation processes and technologies; and enhancing the security of passwords and other credentials, as applicable and appropriate.
In addition to regulations related to content, enactment and expansion of laws related to the use of artificial intelligence and machine learning in our operations and increased regulation of cloud services providers also could increase costs of doing business, subject us to potential liability or regulatory risk and introduce other disadvantages to our business, including brand or reputational harm.
In addition, enactment and expansion of laws related to the use of artificial intelligence and machine learning in our operations and increased regulation of cloud service providers also could increase the costs of doing business, subject us to potential liability or regulatory risk and introduce other disadvantages to our business, including brand or reputational harm.
For example, the ongoing Israel-Hamas War has and could continue to impact our workforce in Tel Aviv, Israel as employees have been and may continue to be required to report for military service or have other competing priorities.
For example, the Israel-Hamas War has and could continue to impact our workforce in Israel as employees have been and may continue to be required to report for military service or have other competing priorities.
For example, with the acquisition of Linode, we are investing significant resources in our compute solutions and platform, working on expanding the capacity of these facilities, adding additional sites and developing increased compute features and functionality.
For example, we are investing significant resources in our compute solutions and platform, working on expanding the capacity of these facilities, adding additional sites and developing increased compute features and functionality.
Such economic volatility has in the past and could in the future adversely affect our business, financial condition, results of operations and cash flows and future market disruptions could negatively impact us. For example, these unfavorable economic conditions could increase our operating costs, which could negatively impact our profitability.
Such economic volatility has in the past and could in the future adversely affect our business, financial condition, results of operations and cash flows and future market disruptions could negatively impact us. For example, these unfavorable economic conditions could increase our operating costs, which could 10 Table of Content s negatively impact our profitability.
Interpretations of laws or regulations that would subject us to regulatory enforcement actions, supervision or, in the alternative, require us to exit a line of business or a country, could lead to the loss of significant revenues and have a negative impact on the quality of our solutions.
Interpretations of laws or regulations that would subject us to regulatory enforcement actions, supervision or, in the alternative, require us to exit a line of business or a country, could lead to the loss of significant revenues and have a negative impact on the 20 Table of Content s quality of our solutions.
Many of our current and potential competitors have substantially greater financial, technical and marketing resources, larger customer bases, broader product portfolios, longer operating histories, greater brand recognition and more established relationships in the industry than we do.
Many of our current and potential competitors have substantially greater financial, technical and marketing resources, larger customer bases, broader product portfolios, longer operating histories, greater brand recognition and more established 11 Table of Content s relationships in the industry than we do.
Any actual, alleged or perceived breach of network security in our systems or networks, or any other actual, alleged or perceived compromise or data security incident we, our customers or our third-party suppliers suffer, can result in damage to our reputation; negative publicity; loss of channel partners, customers and sales; loss of revenue; loss of competitive advantages; increased costs to remedy any problems and otherwise respond to any incident; regulatory investigations and enforcement actions and fines; costly litigation; and other liabilities.
Any actual, alleged or perceived breach of network security in our systems or networks, or any other actual, alleged or perceived compromise or data security incident we, our customers or our third-party suppliers suffer, has in the past and could in the future result in damage to our reputation; negative publicity; loss of channel partners, customers and sales; loss of revenue; loss of competitive advantages; increased costs to remedy any problems and otherwise respond to any incident; regulatory investigations and enforcement actions and fines; costly litigation; and other liabilities.
Our efforts to engineer more secure 12 Table of Contents solutions are frequently costly, with a negative impact on near-term profitability, and may be unsuccessful in preventing security incidents that may have an adverse effect on our business and reputation.
Our efforts to engineer more secure solutions are frequently costly, with a negative impact on near-term profitability, and may be unsuccessful in preventing security incidents that may have an adverse effect on our business and reputation.
Defects in our security solutions could lead to negative publicity, loss of business, damages payments to customers, diminishing customer appeal and other negative consequences which could harm our business.
Defects in our security solutions or human error could lead to negative publicity, loss of business, damages payments to customers, diminishing customer appeal and other negative consequences which could harm our business.
A number of our employees have been, and more may be, required to report for military duty which could impact our ability to operate and successfully complete ongoing initiatives particularly with respect to our security offerings and our efforts to move our internal applications from third-party clouds to Akamai Connected Cloud.
A number of our employees have been, and more may be, required to report for military duty which could impact our ability to operate and successfully complete ongoing initiatives particularly with respect to our security offerings and our efforts to move our internal applications from third-party clouds to our compute platform.
Furthermore, some of our products and business functions are hosted or carried out by third parties that may be vulnerable to these same types of disruptions, the response to or resolution of which may be beyond our control.
Furthermore, some of our 21 Table of Content s products and business functions are hosted or carried out by third parties that may be vulnerable to these same types of disruptions, the response to or resolution of which may be beyond our control.
We regularly face attempts to gain unauthorized access or deliver malicious software to Akamai Connected Cloud and our internal IT systems, with the goal of stealing proprietary information related to our business, products, employees and customers; disrupting our systems and services or those of our customers or others; or demanding ransom to return control of such systems and services.
We regularly face attempts to gain unauthorized access or deliver malicious software to Akamai's platforms, products and services and our internal IT systems, with the goal of stealing proprietary information related to our business, products, employees and customers; disrupting our systems and services or those of our customers or others; or demanding ransom to return control of such systems and services.
Certain of our offerings use software that is subject to open-source licenses. Open-source code is software that is freely accessible, usable and modifiable; however, certain open-source code is governed by license agreements, the terms of which could require users of such software to make any derivative works of the software available to others on unfavorable terms or at no cost.
Open-source code is software that is freely accessible, usable and modifiable; however, certain open-source code is governed by license agreements, the terms of which could require users of such software to make any derivative works of the software available to others on unfavorable terms or at no cost.
The risks of such bugs and unforeseen failures introduced to our compute infrastructure by our customers who control many aspects of their use of our compute services and experimental technologies could affect our reputation and ability to execute our strategies.
The risks of such bugs and unforeseen failures introduced to our compute platform by our customers who control many aspects of their use of our compute services and experimental technologies could affect our reputation, ability to execute our strategies and our financial condition.
We also may not use the cash we have raised through future borrowing under the credit facility or the issuance of the convertible senior notes in an optimally productive and profitable manner.
We also may not 22 Table of Content s use the cash we have raised through future borrowing under the credit facility or the issuance of the convertible senior notes in an optimally productive and profitable manner.
As previously disclosed for the year ended December 31, 2022, we identified a material weakness in the Company’s internal control over financial reporting as of December 31, 2022 related to income taxes.
As previously disclosed in our Form 10-K for the year ended December 31, 2022, we identified a material weakness in the Company’s internal control over financial reporting as of December 31, 2022 related to income taxes.
We rolled out our FlexBase program in May 2022, which allows the more than 95% of our workforce designated as flexible to choose to work from an Akamai office, their home office or a combination of both.
We rolled out our FlexBase program in May 2022, which allows the more than 95% of our workforce designated as flexible to choose to work from an Akamai office, their home office, an approved workspace, or a combination of all three.
To operate and grow our network, we are dependent in part upon transmission capacity provided by third-party telecommunications network providers, the availability of co-location facilities to house our servers and equipment to support our operations.
To operate and grow our globally distributed network serving our portfolio of services, we are dependent in part upon transmission capacity provided by third-party telecommunications network providers, the availability of co-location facilities to house our servers and equipment to support our operations.
In addition, we are subject to laws and regulations worldwide that differ among jurisdictions, affecting our operations in areas such as intellectual property ownership and infringement; tax; anti-corruption; internet and technology regulations; so- 13 Table of Contents called "fair share" or internet content taxes; foreign exchange controls and cash repatriation; data privacy; cyber security; competition; consumer protection; and employment.
In addition, we are subject to laws and regulations worldwide that differ among jurisdictions, affecting our operations in areas such as intellectual property ownership and infringement; tax; anti-bribery; internet and technology regulations; so-called "fair share" or internet content taxes; foreign exchange controls and cash repatriation; data privacy; cyber security; competition; consumer protection; corporate sustainability; and employment.
Vulnerabilities, resident in either software or configurations, may require significant operational efforts to mitigate and may persist for extended periods of time and the effects of any such vulnerability could be exacerbated.
Vulnerabilities, resident in software, hardware or configurations, have in the past and may in the future require significant operational efforts to mitigate and may persist for extended periods of time and the effects of any such vulnerability could be exacerbated.
For example, with the acquisition of Linode, we are adapting procedures for mitigating risks that have in the past or may in the future materialize, including any harms that may arise from abuse of our compute products.
For example, with the acquisition of Linode, we continue to adapt procedures for mitigating risks that have in the past or may in the future materialize, including any harms that may arise from abuse of our compute products.
In addition, we are retasking certain employees to work on our compute solutions which will require the use of our resources and if we are unable to successfully retrain our employees, our compute business may suffer. Furthermore, geopolitical events may impact our retention efforts.
We are retasking certain employees to work on our compute solutions which will require the use of our resources and if we are unable to successfully retrain our employees, our compute business may suffer. Furthermore, geopolitical events may impact our 16 Table of Content s retention efforts.
It is also uncertain whether our strategies to develop and deploy our own competing cloud computing offering will attract the customers or generate the revenue required to be successful. These costs may reduce the gross and operating margins we have previously achieved .
It is also uncertain whether our strategies to develop and deploy our own competing compute offering will attract additional customers or generate enough revenue required to be successful. The costs related to these efforts may also reduce the gross and operating margins we have previously achieved .
This could cause our expenses to grow more rapidly than our revenue. Trying to innovate through acquisition can be costly and with uncertain prospects for success; we may find that attractive acquisition targets are too expensive for us to pursue which could cause us to pursue more time-consuming internal development.
Trying to innovate through acquisition can be costly and with uncertain prospects for success; we may find that attractive acquisition targets are too expensive for us to pursue which could cause us to pursue more time-consuming internal development.
Such licenses may also be non-exclusive, meaning our competition may also be able to access such technology. 19 Table of Contents Litigation may adversely impact our business.
Such licenses may also be non-exclusive, meaning our competition may also be able to access such technology. Litigation may adversely impact our business.
Failure to put in place the capacity we require to operate our business effectively could result in a reduction in, or disruption of, service to our customers and ultimately a loss of those customers. Akamai Connected Cloud relies on hardware equipment, including hundreds of thousands of servers deployed around the world.
Failure to put in place the capacity we require to operate our business effectively could result in a reduction in, or disruption of, service to our customers and ultimately a loss of those customers. Akamai's platforms, products and services rely on hardware equipment, including hundreds of thousands of servers deployed around the world.
While we continue to make progress on these efforts, the mitigation of a number of risks is ongoing and thus certain 14 Table of Contents underlying vulnerabilities remain that, if exploited, could negatively impact Akamai Connected Cloud and our customers.
While we continue to make progress on these efforts, the mitigation of a number of risks is ongoing and thus certain underlying vulnerabilities remain that, if exploited, could negatively impact Akamai's platform and our customers.
If we are unable to procure the necessary third-party technology we may need to acquire or develop alternative technology, or we may have to resort to utilizing alternative technology of lower quality. This could limit and delay our ability to offer new or competitive products and increase our costs of production. As a result, our business could be significantly harmed.
If we are unable to procure the necessary third-party technology we may need to acquire or develop alternative technology, or we may 18 Table of Content s have to resort to utilizing alternative technology of lower quality. This could limit and delay our ability to offer new or competitive products and increase our costs of production.
In the future, our customer contracting models may change to move away from a committed revenue structure to a “pay-as-you-go” approach, which could make it easier for 20 Table of Contents customers to reduce the amount of business they do with us or leave altogether.
In the future, our customer contracting models may change to move away from a committed revenue structure to a “pay-as-you-go” approach, which could make it easier for customers to reduce the amount of business they do with us or leave altogether. Changes in billing models and committed revenue requirements could, therefore, create challenges with our forecasting processes.
For example, approximately five percent of our global employees are located in Tel Aviv, 9 Table of Contents Israel and some of our employees have been mobilized as members of the Israeli military reserves. The ongoing war could cause harm to our employees or otherwise impair their ability to work for extended periods of time.
For example, approximately six percent of our global employees are located in Israel and some of our employees have been mobilized as members of the Israeli military reserves. Should the Isreal-Hamas war continue, it could cause harm to our employees or otherwise impair their ability to work for extended periods of time.
These shifts have led or could lead to our customers or partners becoming our competitors; network suppliers no longer seeking to work with us; and technology companies that previously did not appear to show interest in the markets we seek to address entering into those markets as our competitors.
These shifts have led or could lead to our customers or partners becoming our competitors; customers implementing multi-vendor policies and seeking out one or more of our competitors to provide content and application delivery or security protection services; network suppliers no longer seeking to work with us; and technology companies that previously did not appear to show interest in the markets we seek to address entering into those markets as our competitors.
We have continued to experience revenue declines in our delivery solutions and expect this trend to continue in the near future. Our security solutions currently generate the largest portion of our revenue.
Other customers have and may continue to reduce their traffic with us, negatively impacting revenue. We have continued to experience revenue declines in our delivery solutions and expect this trend to continue in the near future. Our security solutions currently generate the largest portion of our revenue.
From time to time, we have needed to correct errors and defects in the proprietary and open-source software that underlies our platform that have given rise to service incidents, outages and disruptions or otherwise impacted our operations. We could face the loss of customers from these incidents as they seek alternative or supplemental providers.
From time to time, we have needed to correct errors and defects in the proprietary and open-source software that underlies our platform that have given rise to service incidents, outages and disruptions or otherwise impacted our operations.
As our solutions are adopted by an increasing number of enterprises and governments, it is possible that the adversaries behind advanced malicious actions will specifically focus on finding ways to defeat our products and services. If they are successful, we could experience a serious impact on our reputation and financial condition as a provider of security solutions.
As our solutions are adopted by an increasing number of enterprises and governments, it is possible that the adversaries behind advanced malicious actions will specifically focus on finding ways to defeat our products and services.
These attempts take a variety of forms, including Distributed Denial of Service (DDoS) attacks, infrastructure attacks, botnets, malicious file uploads, application abuse, credential abuse, social engineering, ransomware, bugs, viruses, worms and malicious software programs. Additionally, the use of artificial intelligence by bad actors has heightened the sophistication and effectiveness of these types of attacks.
These attempts take a variety of forms, including Distributed Denial of Service ("DDoS") attacks, infrastructure attacks, botnets, malicious file uploads, application abuse, credential abuse, social engineering, ransomware, bugs, viruses, worms and malicious software programs.
During the first quarter of 2023, management committed to an action to restructure certain parts of the company, including reducing headcount, to enable it to prioritize investments in the fastest growing areas of the business.
During the first quarter of 2023 and the third quarter of 2024, management committed to actions to restructure certain parts of the Company, including reducing headcount, to enable it to prioritize investments in the fastest growing areas of the business and redeploy resources to support the Company's strategic investments.
The nature and breadth of laws and regulations, or expanded interpretation of these laws and regulations, that relate to privacy on the internet and international data transfer restrictions may increase in the future.
Legal and Regulatory Risks Evolving privacy regulations could negatively impact our profitability and business operations. The nature and breadth of laws and regulations, or expanded interpretation of these laws and regulations, that relate to privacy on the internet and international data transfer restrictions may increase in the future.
Enactment and expansion of such laws and regulations would negatively impact our revenues. For example, restrictions were adopted in India in 2020 prohibiting access to identified Chinese applications, which caused a reduction in revenue to us. In addition, such laws and regulations could cause internet service providers, or others, to block our products in order to enforce content-blocking efforts.
Enactment and expansion of such laws and regulations would negatively impact our revenues. For example, restrictions were adopted in India in 2020 prohibiting access to identified Chinese-owned applications which caused a reduction in revenue to us.
In addition, the stock market in general, and the market prices of stock of publicly-traded technology companies in particular, have experienced significant volatility that often has been unrelated to the operating performance of affected companies. These broad stock market fluctuations may adversely affect the market price of our common stock, regardless of our operating performance.
Any of these events, as well as other circumstances discussed in these Risk Factors, may cause the price of our common stock to fall. In addition, the stock market in general, and the market prices of stock of publicly-traded technology companies in particular, have experienced significant volatility that often has been unrelated to the operating performance of affected companies.
Revenue generated and expenses incurred by our international subsidiaries are often denominated in their local currencies, but many of our expenses related to our operations in foreign jurisdictions are denominated in U.S. dollars.
This exposure is the result of selling in multiple currencies, headcount in foreign locations and operating in countries where the functional currency is the local currency. Revenue generated and expenses incurred by our international subsidiaries are often denominated in their local currencies, but many of our expenses related to our operations in foreign jurisdictions are denominated in U.S. dollars.
Changes in billing models and committed revenue requirements could, therefore, create challenges with our forecasting processes. Because a significant portion of our cost structure is largely fixed in the short-term, revenue shortfalls tend to have a disproportionately negative impact on our profitability.
Because a significant portion of our cost structure is largely fixed in the short-term, revenue shortfalls tend to have a disproportionately negative impact on our profitability.
We are devoting significant resources to develop and deploy our own competing cloud computing offering. The rapid development and deployment of new compute infrastructure bears the risk of bugs and unforeseen failures that could affect our reputation and ability to execute our strategies.
The rapid development and deployment of new compute infrastructure bears the risk of bugs and unforeseen failures that could affect our reputation and ability to execute our strategies.
Any perception that our business practices, our data collection activities or how our solutions operate represent an invasion of privacy or improper practice, whether or not consistent with current regulations and industry practices, may subject us to public criticism or boycotts, class action lawsuits, reputational harm, or actions by regulators, or claims by industry groups or other third parties, all of which could disrupt our business and expose us to liability.
Any perception that our business practices, our data collection activities or how our solutions operate represent an invasion of privacy or improper practice, whether or not consistent with current regulations and industry practices, may subject us to public criticism or boycotts, class action lawsuits, reputational harm, or actions by regulators, or claims by industry groups or other third parties, all of which could disrupt our business and expose us to liability. 19 Table of Content s Engineering efforts to build new capabilities to facilitate compliance with increasing international data transfer restrictions and new and changing privacy laws and related customer demands could require us to take on substantial expenses and divert engineering resources from other projects.
We have discovered vulnerabilities in software used in our technology, such as the vulnerability in Apache Log4j 2 referred to as “Log4Shell” identified in late 2021 that impacted a large portion of the internet ecosystem, and may have other undiscovered vulnerabilities.
We have discovered vulnerabilities in software and hardware used in our technology, such as the AMD "Inception" vulnerability identified in mid-2023 that potentially impacted a large portion of the internet ecosystem, and may have other undiscovered vulnerabilities.
Because we conduct a substantial portion of our business outside the United States, we face exposure to adverse movements in foreign currency exchange rates, which could have a material adverse impact on our financial results and cash flows. These exposures may change over time as business practices evolve and economic conditions change.
Fluctuations in foreign currency exchange rates affect our reported operating results in U.S. dollar terms. Because we conduct a substantial portion of our business outside the United States, we face exposure to adverse movements in foreign currency exchange rates, which could have a material adverse impact on our financial results and cash flows.
In addition, an increasing proportion of our revenue has been generated by our compute solutions. Our ability to generate revenue in our compute business is dependent on our ability to successfully continue building our compute infrastructure, attract a customer base that has traditionally partnered with more established companies in the compute industry and develop effective, price competitive and attractive solutions.
Our ability to generate revenue in our compute business is dependent on our ability to successfully continue building our compute platform, attract a customer base that has traditionally partnered with more established companies in the compute industry, and develop effective, price competitive and attractive solutions. If we are unable to increase revenues, our profitability and stock price could suffer.
If we are unable to increase revenues, our profitability and stock price could suffer. See the risk factor titled, " Global conditions have in the past and may in the future harm our industry, business and results of operations " below. Global conditions have in the past and may in the future harm our industry, business and results of operations.
See the risk factor titled, "Global conditions have in the past and may in the future harm our industry, business and results of operations" below. Global conditions have in the past and may in the future harm our industry, business and results of operations.
Revenue we generate from our delivery solutions is impacted by pricing pressure due to competition and fluctuations in content traffic as a result of, among other factors, changes in the popularity of our customers' content including video delivery and gaming.
Revenue we generate from our delivery solutions is impacted by pricing pressure due to competition and fluctuations in content traffic as a result of, among other factors, changes in the popularity of our customers' content including video delivery and gaming, and economic pressures on our customers that can cause them to take steps to optimize their platforms, including through "do-it-yourself", or DIY, initiatives.
In addition, efforts to block a single product or domain name may end up blocking a number of other products or domain names in an overbroad manner that could affect our business.
Efforts to block a single product or domain name may end up blocking a number of other products or domain names in an overbroad manner that could affect our business. Regulations have also been enacted or proposed in a number of countries that limit the delivery of certain types of content into those countries.
Other parties may attempt to gain unauthorized physical access to our facilities in order to infiltrate our internal-use information systems. Furthermore, nation state and hacktivist attacks against us or our customers may intensify during periods of heightened geopolitical tensions or armed conflict, such as the ongoing war in Ukraine and the Israel-Hamas War.
Furthermore, nation state and hacktivist attacks against us or our customers have in the past and may in the future intensify during periods of heightened geopolitical tensions or armed conflict, such as the ongoing war in Ukraine and the Israel-Hamas War.

… 63 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−1 removed12 unchanged
Biggest changeThe Audit Committee 22 Table of Contents Chair reports to our board at least quarterly on our cybersecurity risk management program, including risk mitigation, cybersecurity incidents and other relevant developments in our cyber threat landscape.
Biggest changeThe Audit Committee Chair reports to our board at least quarterly on our cybersecurity risk management program, including risk mitigation, cybersecurity incidents and other relevant developments in our cyber threat landscape. In addition to formal reporting, the CSO takes part in informal meetings as needed and requested with Akamai's management, including the Chief Executive Officer and the board of directors.
Our current CSO is an accomplished security professional with 15 years of experience in building and leading information security teams at both public and private companies. Akamai’s information security team is comprised of senior ranking staff who have experience in a broad range of security domains, including security operations, software security, risk management and auditing.
Our current CSO is an accomplished security professional with over 15 years of experience in building and leading information security teams at both public and private companies. Akamai’s information security team is comprised of senior ranking staff who have experience in a broad range of security domains, including security operations, software security, risk management and auditing.
The information security team, under the authority of the CSO, has developed a cybersecurity risk management program that addresses four primary operational pillars: • researching, monitoring and identifying significant cybersecurity threats and risks across Akamai Connected Cloud and the larger internet ecosystem taking into account malicious actors, software vulnerabilities and other threat sources; • assessing designated risks applicable to Akamai’s assets and systems, including those associated with third-party vendors and suppliers, and planning and tracking efforts to address significant risks; • managing cybersecurity incidents and associated reporting and communications obligations; and • ongoing compliance assessments through internal and external audits and assessments, certifications and the penetration and vulnerability testing of certain systems.
The information security team, under the authority of the CSO, has developed a cybersecurity risk management program that addresses four primary operational pillars: • researching, monitoring and identifying significant cybersecurity threats and risks across Akamai and the larger internet ecosystem taking into account malicious actors, software vulnerabilities and other threat sources; • assessing designated risks applicable to Akamai’s assets and systems, including those associated with third-party vendors and suppliers, and planning and tracking efforts to address significant risks; • managing cybersecurity incidents and associated reporting and communications obligations; and • ongoing compliance assessments through internal and external audits and assessments, certifications and the penetration and vulnerability testing of certain systems.
Item 1C. Cybersecurity Our customers rely upon Akamai to power and protect the online experiences of their end user customers. We provide security, content delivery and compute services through Akamai Connected Cloud and maintain internal systems and other data associated with running our business.
Item 1C. Cybersecurity Our customers rely upon Akamai to power and protect the online experiences of their end user customers. We provide security, delivery and compute solutions and services and maintain internal systems and other data associated with running our business.
As applicable, in certain circumstances, we also collaborate with industry partners in the security community, our peers and law enforcement agencies, to support our cybersecurity threat intelligence capabilities. This information is collected, categorized and assessed to identify, prioritize and manage significant cybersecurity risks. As a result, our process is continually evaluated and evolves as the threat landscape changes.
As applicable, in certain circumstances, we also collaborate with industry partners in the security community, our peers and law 24 Table of Content s enforcement agencies, to support our cybersecurity threat intelligence capabilities. This information is collected, categorized and assessed to identify, prioritize and manage significant cybersecurity risks.
In addition to ongoing risk management procedures, we have implemented a cybersecurity incident procedure designed to identify and address security incidents through various channels.
As a result, our process is continually evaluated and evolves as the threat landscape changes. In addition to ongoing risk management procedures, we have implemented a cybersecurity incident procedure designed to identify and address security incidents through various channels.
Removed
In addition to formal reporting, the CSO takes part in informal meetings as needed and requested with Akamai's management, including the Chief Executive Officer and the board of directors.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed0 unchanged
Biggest changeWe also have offices in other locations in the United States and other countries, the largest of which are Bangalore, India; Krakow, Poland; and Tel Aviv, Israel. All of our facilities are leased. We are continuing to evaluate our facility footprint in light of our FlexBase program, including our plans and ability to sublease excess space.
Biggest changeWe also have offices in other locations in the U.S. and other countries, the largest of which are Bangalore, India; Krakow, Poland; and Tel Aviv, Israel. All of our facilities are leased. We believe our facilities are sufficient to meet our needs.
Item 2. Properties Since May 2022 we have operated as a flexible workplace, where employees can choose to work from their home office, a Company office or a combination of both. However, our headquarters is located in Cambridge, Massachusetts where we lease approximately 659,000 square feet, of which approximately 285,000 square feet is currently subleased to third parties.
Item 2. Properties Since May 2022 we have operated as a flexible workplace, where employees can choose to work from their home office, a Company office, an approved workspace or a combination. However, our headquarters is located in Cambridge, Massachusetts where we lease approximately 659,000 square feet, of which approximately 285,000 square feet is currently subleased to third parties.
Removed
We believe our facilities are sufficient to meet our needs. 23 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed1 unchanged
Biggest changeIssuer Purchases of Equity Securities The following is a summary of our repurchases of our common stock in the fourth quarter of 2023 (in thousands, except share and per share data): Period (1) Total Number of Shares Purchased (2) Average Price Paid per Share (3) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (4) Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs (4) October 1, 2023 – October 31, 2023 170,075 $ 105.83 170,075 $ 574,837 November 1, 2023 – November 30, 2023 171,914 109.90 171,914 555,943 December 1, 2023 – December 31, 2023 153,634 117.15 153,634 537,944 Total 495,623 $ 110.75 495,623 (1) Information is based on settlement dates of repurchase transactions.
Biggest changeWe currently intend to retain all future earnings, if any, for use in the operation of our business. 25 Table of Content s Issuer Purchases of Equity Securities The following is a summary of our repurchases of our common stock in the fourth quarter of 2024 (in thousands, except share and per share data): Period (1) Total Number of Shares Purchased (2) Average Price Paid per Share (3) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (4) Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs (4) October 1, 2024 – October 31, 2024 452,321 $ 102.87 452,321 $ 2,072,316 November 1, 2024 – November 30, 2024 500,295 92.86 500,295 2,025,861 December 1, 2024 – December 31, 2024 467,548 97.07 467,548 1,980,477 Total 1,420,164 $ 97.43 1,420,164 (1) Information is based on settlement dates of repurchase transactions.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock, par value $0.01 per share, trades under the symbol “AKAM” on the Nasdaq Global Select Market. As of February 23, 2024, there were 157 holders of record of our common stock.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock, par value $0.01 per share, trades under the symbol “AKAM” on the Nasdaq Global Select Market. As of February 20, 2025, there were 173 holders of record of our common stock.
We have never paid or declared any cash dividends on shares of our common stock or other securities and do not anticipate paying or declaring any cash dividends in the foreseeable future. We currently intend to retain all future earnings, if any, for use in the operation of our business.
We have never paid or declared any cash dividends on shares of our common stock or other securities and do not anticipate paying or declaring any cash dividends in the foreseeable future.
During the year ended December 31, 2023, we repurchased 7.8 million shares of our common stock for an aggregate purchase price of $654.0 million.
Effective May 2024, our board of directors authorized a new $2.0 billion share repurchase program through June 2027, which was in addition to amounts remaining under the January 2022 program. During the year ended December 31, 2024, we repurchased 5.6 million shares of our common stock for an aggregate purchase price of $557.5 million. Item 6. [Reserved] Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

113 edited+38 added−44 removed70 unchanged
Biggest changeCost of Revenue Cost of revenue consisted of the following for the periods presented (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change 2022 2021 % Change Bandwidth fees $ 228,038 $ 205,268 11.1 % $ 205,268 $ 209,288 (1.9) % Co-location fees 256,062 197,375 29.7 197,375 177,950 10.9 Network build-out and supporting services 215,557 195,669 10.2 195,669 157,234 24.4 Payroll and related costs 325,851 298,269 9.2 298,269 276,544 7.9 Acquisition-related costs 3,190 4,982 (36.0) 4,982 — 100.0 Stock-based compensation, including amortization of prior capitalized amounts 73,786 57,146 29.1 57,146 57,390 (0.4) Depreciation of network equipment 231,500 259,359 (10.7) 259,359 226,384 14.6 Amortization of internal-use software 177,079 165,751 6.8 165,751 164,166 1.0 Total cost of revenue $ 1,511,063 $ 1,383,819 9.2 % $ 1,383,819 $ 1,268,956 9.1 % As a percentage of revenue 39.6 % 38.3 % 38.3 % 36.7 % The increase in cost of revenue for 2023 as compared to 2022 was primarily due to: • co-location fees as a result of investment in Akamai Connected Cloud, particularly as we build out our compute infrastructure to support future growth and scalability; • bandwidth fees to support the increase in traffic served on our network and for traffic served from higher cost regions; 29 Table of Contents • network build-out and supporting services due to our infrastructure investment in Akamai Connected Cloud and costs associated with the transition services agreements to support the migration of customer contracts acquired from Lumen and StackPath; and • payroll and related costs, including stock-based compensation, as a result of headcount growth to support our network, the increased expected achievement of our performance-based compensation plans and higher average equity awards to employees driven by the talent market; additionally, stock-based compensation increased due to the shift in one of our compensation programs from cash-based to stock-based.
Biggest changeChanges in foreign currency exchange rates negatively impacted our revenue by $22.5 million in 2024 as compared to 2023, and negatively impacted our revenue by $13.9 million in 2023 as compared to 2022. 30 Table of Content s Cost of Revenue Cost of revenue consisted of the following for the periods presented (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2024 2023 % Change 2023 2022 % Change Co-location fees $ 308,314 $ 256,062 20.4 % $ 256,062 $ 197,375 29.7 % Bandwidth fees 233,100 228,038 2.2 228,038 205,268 11.1 Network build-out and supporting services 193,607 215,557 (10.2) 215,557 195,669 10.2 Payroll and related costs 334,215 325,851 2.6 325,851 298,269 9.2 Acquisition-related costs — 3,190 (100.0) 3,190 4,982 (36.0) Stock-based compensation, including amortization of prior capitalized amounts 100,705 73,786 36.5 73,786 57,146 29.1 Depreciation of network equipment 282,106 231,500 21.9 231,500 259,359 (10.7) Amortization of internal-use software 168,746 177,079 (4.7) 177,079 165,751 6.8 Total cost of revenue $ 1,620,793 $ 1,511,063 7.3 % $ 1,511,063 $ 1,383,819 9.2 % As a percentage of revenue 40.6 % 39.6 % 39.6 % 38.3 % The increase in cost of revenue for 2024 as compared to 2023 was primarily due to: • co-location fees and depreciation of network equipment as a result of investment in our network, particularly as we are building out our compute platform to support future growth and scalability; and • payroll and related costs, including stock-based compensation as a result of headcount growth from our strategic initiatives and annual merit increases.
Changes in cash, cash equivalents and marketable securities are dependent upon changes in, among other things, working capital items such as accounts receivable, deferred revenue, accounts payable, various accrued expenses and operating lease obligations, as well as changes in our capital and financial structure due to common stock repurchases, debt repayments and issuances, acquisitions, purchases and sales of marketable securities, cash paid for acquisitions and similar events.
Changes in cash, cash equivalents and marketable securities are dependent upon changes in, among other things, working capital items such as accounts receivable, deferred revenue, accounts payable, various accrued expenses and operating lease obligations, as well as changes in our capital and financial structure due to common stock repurchases, debt repayments and issuances, purchases and sales of marketable securities, cash paid for acquisitions and similar events.
In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of our business. • Amortization of debt discount and issuance costs and amortization of capitalized interest expense – We have convertible senior notes outstanding that mature in 2029, 2027 and 2025.
In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of our business. • Amortization of debt issuance costs and capitalized interest expense – We have convertible senior notes outstanding that mature in 2029, 2027 and 2025.
These charges include severance and related expenses for workforce reductions, impairments of long-lived assets that will no longer be used in operations (including right-of-use assets, other facility-related property and equipment and internal-use software) and termination fees for any contracts cancelled as part of these programs.
These charges include severance and related expenses for workforce reductions, impairments of long-lived assets that will no longer be used in operations (including acquired intangible assets, right-of-use assets, other facility-related property and equipment and internal-use software) and termination fees for any contracts cancelled as part of these programs.
Expenses Our level of profitability is impacted by our expenses, including direct costs to support our revenue such as bandwidth and co-location costs, which includes energy to power our network. We have observed the following trends related to our profitability in recent years: • Network bandwidth costs represent a significant portion of our cost of revenue.
Expenses Our level of profitability is impacted by our expenses, including direct costs to support our revenue such as bandwidth and co-location costs, which includes energy to power our network. We have observed the following trends related to our profitability in recent years: • Co-location costs are a significant portion of our cost of revenue.
These costs include maintenance and supporting services incurred as we continue to build out our compute infrastructure and maintain our global network, and costs of third-party cloud providers used for some of our operations. We have seen these costs increase in recent years as a result of our network expansion, and particularly the build out of our compute infrastructure.
These costs include maintenance and supporting services incurred as we continue to build out our compute platform and maintain our global network, and costs of third-party cloud providers used for some of our operations. We have seen these costs increase in recent years as a result of our network expansion, and particularly the build out of our compute platform.
See Note 13 to our consolidated financial statements included elsewhere in this annual report on Form 10-K for further discussion of these indemnification agreements. The fair value of guarantees issued or modified during 2023 and 2022 was determined to be immaterial.
See Note 13 to our consolidated financial statements included elsewhere in this annual report on Form 10-K for further discussion of these indemnification agreements. The fair value of guarantees issued or modified during 2024 and 2023 was determined to be immaterial.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
We have assigned the entire balance of goodwill to our one reporting unit. The fair value of the reporting unit was based on our market capitalization as of each of December 31, 2023 and 2022, and it was substantially in excess of the carrying value of the reporting unit at each date.
We have assigned the entire balance of goodwill to our one reporting unit. The fair value of the reporting unit was based on our market capitalization as of each of December 31, 2024 and 2023, and it was substantially in excess of the carrying value of the reporting unit at each date.
Off-Balance Sheet Arrangements We have entered into indemnification agreements with third parties, including vendors, customers, landlords, our officers and directors, shareholders of acquired companies, joint venture partners and third parties to which we license technology.
Off-Balance Sheet Arrangements We have entered into indemnification agreements with third parties, including vendors, customers, landlords, our officers and directors, stockholders of acquired companies, joint venture partners and third parties to which we license technology.
Our estimates are based upon assumptions and judgments about matters that are highly uncertain at the time an accounting estimate is made and applied and require us to assess a range of potential outcomes. 42 Table of Contents Review of Critical Accounting Policies and Estimates Revenue Recognition Our contracts with customers sometimes include promises to transfer multiple services to a customer.
Our estimates are based upon assumptions and judgments about matters that are highly uncertain at the time an accounting estimate is made and applied and require us to assess a range of potential outcomes. Review of Critical Accounting Policies and Estimates Revenue Recognition Our contracts with customers sometimes include promises to transfer multiple services to a customer.
Our estimate of the value of our tax reserves contains assumptions based on past experiences and judgments about 44 Table of Contents the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the ultimate tax liability or benefit from these matters may be more or less than the amount that we estimated.
Our estimate of the value of our tax reserves contains assumptions based on past experiences and judgments about the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the ultimate tax liability or benefit from these matters may be more or less than the amount that we estimated.
These non-GAAP financial measures are non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, capital expenditures and impact of foreign currency exchange rates, as discussed below.
These non-GAAP financial measures are non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin and impact of foreign currency exchange rates, as discussed below.
We define Adjusted EBITDA as GAAP net income excluding the following items: interest and marketable securities income and losses; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; foreign exchange gains and losses; interest expense; amortization of capitalized interest expense; certain gains and losses on investments; income and losses from equity method investments; and other non-recurring or unusual items that may arise from time to time.
We define Adjusted EBITDA as GAAP net income excluding the following items: interest and marketable securities income and losses; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; legal settlements; foreign exchange gains and losses; interest expense; amortization of capitalized interest expense; gains and losses on cost method investments; gains and losses from equity method investments; and other non-recurring or unusual items that may arise from time to time.
Management also believes that these non-GAAP financial measures enable investors to evaluate our operating results and future prospects in the same manner as management. These non-GAAP 35 Table of Contents financial measures may exclude expenses and gains that may be unusual in nature, infrequent or not reflective of our ongoing operating results.
Management also believes that these non-GAAP financial measures enable investors to evaluate our operating results and future prospects in the same manner as management. These non-GAAP financial measures may exclude expenses and gains that may be unusual in nature, infrequent or not reflective of our ongoing operating results.
We also acquired Neosec, Inc ("Neosec") in May 2023, which is intended to complement our application and API security portfolio by extending its visibility into the rapidly growing API threat landscape, and StorageOS, Inc. ("StorageOS"), also known as Ondat, in March 2023, which is intended to strengthen our cloud computing offerings.
We also acquired Neosec, Inc ("Neosec") in May 2023, which is intended to complement our application and API security portfolio by extending its visibility into the rapidly growing API threat landscape, and StorageOS, Inc. ("StorageOS"), also known as Ondat, in March 2023, which is intended to strengthen our compute offerings.
Accounting for Stock-Based Compensation We issue stock awards as part of our compensation program which includes stock options, restricted stock, restricted stock units, deferred stock units and employee stock purchases related to our employee stock purchase plan.
Stock-Based Compensation We issue stock awards as part of our compensation program which includes stock options, restricted stock, restricted stock units, deferred stock units and employee stock purchases related to our employee stock purchase plan.
As we continue to build out our new compute locations to provide us with the ability to scale our platform, we expect to enter into longer term leases that include certain financial commitments in order to achieve more favorable unit economics.
As we continue to build out our new compute locations to provide us with the ability to scale our platform, we have entered into, and expect to continue to enter into, longer term leases that include certain financial commitments in order to achieve more favorable unit economics.
We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to these gains and losses are not representative of our core business operations and ongoing operating performance. • Gains and losses from equity method investment – We record income or losses on our share of earnings and losses from our equity method investment, and any gains from returns of investments or impairments.
We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations. • Gains and losses from equity method investment – We record income or losses on our share of earnings and losses from our equity method investment, and any gains from returns of investments or impairments.
Because we 25 Table of Contents publicly report in U.S. dollars, our reported revenue results are negatively impacted when the dollar strengthens and benefit when the dollar weakens. • We have experienced variations in certain types of revenue from quarter-to-quarter.
Because we publicly report in U.S. dollars, our reported revenue results are negatively impacted when the dollar strengthens and benefit when the dollar weakens. • We have experienced variations in certain types of revenue from quarter-to-quarter.
Write-downs, if recorded, could be materially different from the actual market performance of marketable securities in our portfolio if, among other things, relevant information related to our investments and marketable securities was not publicly available or other factors not considered by us would have been relevant to the determination of impairment.
Impairments, if recorded, could be materially different from the actual market performance of marketable securities in our portfolio if, among other things, relevant information related to our investments was not publicly available or other factors not considered by us would have been relevant to the determination of impairment.
Fair value and useful life determinations may be based on, among other factors, estimates of future expected cash flows, royalty cost savings and appropriate discount rates used in calculating present values. The value of our acquired intangible assets could be different if we had used different assumption.
Fair value and amortization period determinations may be based on, among other factors, estimates of future expected cash flows, royalty cost savings and appropriate discount rates used in calculating present values. The value of our acquired intangible assets could be different if we had used different assumption.
During the periods presented, our average stock price was in excess of $95.10, which is the initial conversion price of our convertible senior notes due in 2025. See further discussion below. (2) May not foot due to rounding. Non-GAAP net income per diluted share is calculated as non-GAAP net income divided by weighted average diluted common shares outstanding.
During these periods, our average stock price was in excess of $95.10, which is the initial conversion price of our convertible senior notes due in 2025. See further definition below. (2) Amounts may not foot due to rounding. Non-GAAP net income per diluted share is calculated as non-GAAP net income divided by weighted average diluted common shares outstanding.
Revenue We primarily derive revenue from the sale of services to customers executing contracts having terms of one year or longer, which allows us to have a consistent and predictable base level of revenue. Services included in our contracts consist of security solutions, the delivery of content, applications and software over the internet, cloud computing solutions and professional services.
Revenue We primarily derive revenue from the sale of services to customers pursuant to contracts having terms of one year or longer, which allows us to have a consistent and predictable base level of revenue. Services included in our contracts consist of security solutions, the delivery of content, applications and software over the internet, compute solutions and professional services.
Capitalized Internal-Use Software Costs We capitalize salaries and related costs, including stock-based compensation, of employees and consultants who devote time to the development of internal-use software development projects, as well as interest expense related to our convertible senior notes. Capitalization begins during the application development stage, once the preliminary project stage has been completed.
Capitalized Internal-Use Software Costs We capitalize salaries and related costs, including stock-based compensation, of employees and consultants who devote time to the development of internal-use software development projects, as well as interest expense related to our outstanding debt. Capitalization begins during the application development stage, once the preliminary project stage has been completed.
The increase to interest and marketable securities income, net for 2023 as compared to 2022 was the result of increased marketable securities balances as a result of our August 2023 issuance of $1,265.0 million in par value of convertible senior notes due 2029 and higher interest rates, as well as increased gains associated with the non-qualified deferred compensation plan.
The increase to interest and marketable securities income, net for 2024 as compared to 2023, and 2023 as compared to 2022, was the result of increased cash, cash equivalents and marketable securities balances received from our August 2023 issuance of $1,265.0 million in par value of convertible senior notes due 2029 and higher interest rates, as well as increased gains associated with the non-qualified deferred compensation plan.
We have been able to mitigate some of the negative impacts to our revenue growth rates by upselling incremental solutions to our existing delivery and security customers.
We have been able to mitigate some of the negative impacts to our revenue growth rates by upselling incremental solutions to our existing customers.
It is important to the success of operations that we offer competitive compensation packages. However, we remain disciplined in allocating our resources to support our faster growing security and compute solutions, including maintaining operational efficiencies to mitigate the rising cost of talent.
It is important to the success of operations that we offer competitive compensation packages. However, we are focused on remaining disciplined in allocating our resources to support our faster growing security and compute solutions, including maintaining operational efficiencies to mitigate the rising cost of talent.
Our goal for the share repurchase program is to offset the dilution created by our employee equity compensation programs over time and provide the flexibility to return capital to stockholders as business and market conditions warrant, while still preserving our ability to pursue other strategic opportunities.
Our goals for the share repurchase programs are to offset the dilution created by our employee equity compensation programs over time and provide the flexibility to return capital to stockholders as business and market conditions warrant, while still preserving our ability to pursue other strategic opportunities.
In addition, we experience quarterly variations in revenue attributable to, among other things, the timing of large customer contract renewals; the frequency and timing of purchases of custom solutions or licensed software; the nature and timing of software and gaming releases by our customers; and whether there are large live sporting or other events or situations that impact the amount of media traffic on our network.
These quarterly variations in revenue are attributable to, among other things, the timing of large customer contract renewals; the frequency and timing of purchases of custom solutions or licensed software; the nature and timing of software and gaming releases by our customers; holiday season activity; and whether there are large live sporting or other events or situations that impact the amount of media traffic on our network.
The key factors that influence our financial success are our ability to build on recurring revenue commitments for our security and performance offerings, increase traffic on our network, continue to develop, scale and successfully bring to market our cloud computing platform and compute-to-edge solutions that meet the needs of professional users and enterprises, effectively manage the prices we charge for our solutions, develop new products and appropriately manage our capital spending and other expenses.
The key factors that influence our financial success are our ability to build on recurring revenue commitments, increase traffic on our network, continue to develop, scale and successfully bring to market our compute platform and compute-to-edge solutions that meet the needs of professional users and enterprises, including with respect to reliability, effectively manage the prices we charge for our solutions, develop new products and appropriately manage our capital spending and other expenses.
For the year ended December 31, 2021, our effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates, the excess tax benefit related to stock-based compensation and the benefit of U.S. federal, state and foreign research and development credits.
For the year ended December 31, 2024, our effective income tax rate was lower than the federal statutory tax rate due to the benefit of U.S. federal, state and foreign research and development credits, an intercompany sale of intellectual property, foreign income taxed at lower rates and the excess tax benefit related to stock-based compensation.
(Gain) Loss from Equity Method Investment For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2023 2022 % Change 2022 2021 % Change (Gain) loss from equity method investment $ (1,475) $ 7,635 (119.3) % $ 7,635 $ 14,008 (45.5) % As a percentage of revenue — % 0.2 % 0.2 % 0.4 % The amounts reflected in (gain) loss from equity method investment relate to our investment with MUFG in a joint venture, GO-NET.
(Gain) Loss from Equity Method Investment For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2024 2023 % Change 2023 2022 % Change (Gain) loss from equity method investment $ — $ (1,475) 100.0 % $ (1,475) $ 7,635 (119.3) % As a percentage of revenue — % — % — % 0.2 % The amounts reflected in (gain) loss from equity method investment relate to our investment with MUFG in a joint venture, GO-NET.
We do not expect additional activity related to this investment. Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States of America ("GAAP") we provide additional financial metrics that are not prepared in accordance with GAAP ("non-GAAP financial measures").
Use of Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States of America ("GAAP") we provide additional financial metrics that are not prepared in accordance with GAAP ("non-GAAP financial measures").
Revenue derived in the U.S. and internationally during the periods presented is as follows (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change % Change at Constant Currency 2022 2021 % Change % Change at Constant Currency U.S. $ 1,968,779 $ 1,902,051 3.5 % 3.5 % $ 1,902,051 $ 1,837,508 3.5 % 3.5 % As a percentage of revenue 51.6 % 52.6 % 52.6 % 53.1 % International 1,843,141 1,714,603 7.5 8.3 1,714,603 1,623,715 5.6 % 13.2 As a percentage of revenue 48.4 % 47.4 % 47.4 % 46.9 % Total revenue $ 3,811,920 $ 3,616,654 5.4 % 5.8 % $ 3,616,654 $ 3,461,223 4.5 % 8.0 % For each of the years ended December 31, 2023, 2022 and 2021, no single country outside of the U.S. accounted for 10% or more of revenue.
Revenue derived in the U.S. and internationally during the periods presented is as follows (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2024 2023 % Change % Change at Constant Currency 2023 2022 % Change % Change at Constant Currency U.S. $ 2,075,533 $ 1,968,779 5.4 % 5.4 % $ 1,968,779 $ 1,902,051 3.5 % 3.5 % As a percentage of revenue 52.0 % 51.6 % 51.6 % 52.6 % International 1,915,635 1,843,141 3.9 5.2 1,843,141 1,714,603 7.5 % 8.3 As a percentage of revenue 48.0 % 48.4 % 48.4 % 47.4 % Total revenue $ 3,991,168 $ 3,811,920 4.7 % 5.3 % $ 3,811,920 $ 3,616,654 5.4 % 5.8 % For each of the years ended December 31, 2024, 2023 and 2022, no single country outside of the U.S. accounted for 10% or more of revenue.
We have observed the following trends related to our revenue in recent years: • Increased sales of our security solutions, led by application security solutions and segmentation solutions from our acquisition of Guardicore Ltd., and increased sales of our compute solutions, primarily attributable to our acquisition of Linode in early 2022, have made a significant contribution to revenue growth.
We have observed the following trends related to our revenue in recent years: • Increased sales of our security solutions, led by application security solutions and segmentation solutions from our acquisition of Guardicore Ltd., and increased sales of our compute solutions, attributable to our acquisition of Linode Limited Liability Company ("Linode") and enhanced services on our compute platform, have made a significant contribution to revenue growth.
In 2023, we redesigned one of our non-executive short-term incentive compensation programs by shifting certain employees from a cash-based to stock-based program. We also introduced a non-executive incentive program tied to our initiative to migrate certain third-party cloud services onto Akamai Connected Cloud.
In 2023 we redesigned one of our non-executive short-term incentive compensation programs by shifting certain employees from a cash-based to stock-based program, and in 2024 we transitioned more employees to this program. During 2023, we also introduced a non-executive incentive program tied to our initiative to migrate certain third-party cloud services onto Akamai's platform.
As of December 31, 2023 the total obligation under these agreements was $1,144.2 million, of which $224.2 million is payable in the next 12 months. We have also executed additional operating leases that will commence in 2024 for $195.0 million.
As of December 31, 2024 the total obligation under these agreements was $1,231.6 million, of which $263.1 million is payable in the next 12 months. We have also executed additional operating leases that will commence in 2025 for $197.0 million.
These programs are designed to better align employee incentives with the interests of our stockholders. • Depreciation expense related to our network equipment also contributes to our overall expense levels.
These programs were designed to better align employee incentives with the interests of our stockholders, which increased our stock-based compensation. • Depreciation expense related to our network equipment also contributes to our overall expense levels.
Amortization of Acquired Intangible Assets For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2023 2022 % Change 2022 2021 % Change Amortization of acquired intangible assets $ 66,751 $ 64,983 2.7 % $ 64,983 $ 48,019 35.3 % As a percentage of revenue 1.8 % 1.8 % 1.8 % 1.4 % The increase in amortization of acquired intangible assets for 2023 as compared to 2022, as well as 2022 as compared to 2021, was the result of amortization of acquired intangible assets related to our recent acquisitions.
Amortization of Acquired Intangible Assets For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2024 2023 % Change 2023 2022 % Change Amortization of acquired intangible assets $ 92,081 $ 66,751 37.9 % $ 66,751 $ 64,983 2.7 % As a percentage of revenue 2.3 % 1.8 % 1.8 % 1.8 % The increase in amortization of acquired intangible assets for 2024 as compared to 2023, and 2023 as compared to 2022, was the result of amortization of acquired intangible assets related to our recent acquisitions.
GO-NET intended to operate a blockchain-based online payment network. In February 2022, MUFG, the majority owner of GO-NET, announced it was preparing to suspend the operations of GO-NET and to ultimately liquidate it. The gain from equity method investment in 2023 was related to the liquidation and disbursement of our portion of GO-NET's remaining assets, which were previously impaired.
GO-NET intended to operate a blockchain-based online payment network. However, GO-NET operations were suspended in February 2022, and ultimately liquidated in August 2023. The gain from equity method investment in 2023 was related to the liquidation and disbursement of our portion of GO-NET's remaining assets, which were previously impaired.
Global Economic Conditions Global macroeconomic and geopolitical conditions continue to impact our business and revenue growth rates. We, along with our customers, continue to manage through an uncertain period of fluctuating inflation, economic uncertainty, uncertain energy supplies, heightened geopolitical tensions, potential for supply chain disruptions, changes in international tax laws, fluctuations in foreign exchange rates and elevated interest rates.
We, along with our customers, continue to manage through an uncertain period of fluctuating inflation, regulations that may negatively impact business, economic and political uncertainty, uncertain energy supplies, heightened geopolitical tensions and conflict, potential for supply chain disruptions, changes in U.S. and international tax laws, changes in tariffs, fluctuations in foreign exchange rates and elevated interest rates.
Our foreseeable cash needs, in addition to our recurring operating costs, include our expected capital expenditures, investments in information technology, potential strategic acquisitions, anticipated share repurchases, lease and purchase commitments and settlements of other liabilities.
Our foreseeable cash needs, in addition to our recurring operating costs, include our expected capital expenditures, investments in information technology, potential strategic acquisitions, anticipated share repurchases, lease and purchase commitments, settlements of other liabilities and repayment of our $1,150.0 million convertible senior notes due May 2025.
We believe that our strong balance sheet and cash position are important competitive differentiators that provide the financial stability and flexibility to enable us to continue to make investments at opportune times.
We believe our strong balance sheet and cash position are important competitive differentiators that provide the financial stability and flexibility to 40 Table of Content s enable us to continue to make investments at opportune times. We expect to continue to evaluate strategic investments to strengthen our business.
To the extent these macroeconomic conditions continue, we expect that it may adversely affect our business, operations and financial results. 27 Table of Contents Results of Operations The following sets forth, as a percentage of revenue, consolidated statements of income data for the years indicated: 2023 2022 2021 Revenue 100.0 % 100.0 % 100.0 % Costs and operating expenses: Cost of revenue (exclusive of amortization of acquired intangible assets shown below) 39.6 38.3 36.7 Research and development 10.7 10.8 9.7 Sales and marketing 14.0 13.9 13.3 General and administrative 15.8 16.2 16.0 Amortization of acquired intangible assets 1.8 1.8 1.4 Restructuring charge 1.5 0.4 0.3 Total costs and operating expenses 83.4 81.4 77.4 Income from operations 16.6 18.6 22.6 Interest and marketable securities income, net 1.2 0.1 0.5 Interest expense (0.5) (0.3) (2.1) Other (expense) income, net (0.3) (0.3) 0.1 Income before provision for income taxes 17.0 18.1 21.1 Provision for income taxes (2.8) (3.5) (1.8) Gain (loss) from equity method investment — (0.2) (0.4) Net income 14.2 % 14.4 % 18.9 % Revenue Revenue by solution category during the periods presented was as follows (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change % Change at Constant Currency 2022 2021 % Change % Change at Constant Currency Security $ 1,765,267 $ 1,541,941 14.5 % 14.7 % $ 1,541,941 $ 1,334,836 15.5 % 19.7 % Delivery 1,542,434 1,669,257 (7.6) (7.1) 1,669,257 1,873,243 (10.9) (7.8) Compute 504,219 405,456 24.4 24.7 405,456 253,144 60.2 64.0 Total revenue $ 3,811,920 $ 3,616,654 5.4 % 5.8 % $ 3,616,654 $ 3,461,223 4.5 % 8.0 % The increases in our revenue in 2023 as compared to 2022, and 2022 as compared to 2021, was primarily the result of continued growth in sales of our security solutions and the acquisition of Linode in March 2022 which contributed to the growth in our compute solutions.
Results of Operations The following sets forth, as a percentage of revenue, consolidated statements of income data for the years indicated: 2024 2023 2022 Revenue 100.0 % 100.0 % 100.0 % Costs and operating expenses: Cost of revenue (exclusive of amortization of acquired intangible assets shown below) 40.6 39.6 38.3 Research and development 11.8 10.7 10.8 Sales and marketing 14.0 14.0 13.9 General and administrative 15.6 15.8 16.2 Amortization of acquired intangible assets 2.3 1.8 1.8 Restructuring charge 2.4 1.5 0.4 Total costs and operating expenses 86.7 83.4 81.4 Income from operations 13.4 16.6 18.6 Interest and marketable securities income, net 2.5 1.2 0.1 Interest expense (0.7) (0.5) (0.3) Other expense, net (0.5) (0.3) (0.3) Income before provision for income taxes 14.7 17.0 18.1 Provision for income taxes (2.1) (2.8) (3.5) Gain (loss) from equity method investment — — (0.2) Net income 12.7 % 14.2 % 14.4 % Revenue Revenue by solution category during the periods presented was as follows (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2024 2023 % Change % Change at Constant Currency 2023 2022 % Change % Change at Constant Currency Security $ 2,042,661 $ 1,765,267 15.7 % 16.4 % $ 1,765,267 $ 1,541,941 14.5 % 14.7 % Delivery 1,318,131 1,542,434 (14.5) (14.0) 1,542,434 1,669,257 (7.6) (7.1) Compute 630,376 504,219 25.0 25.4 504,219 405,456 24.4 24.7 Total revenue $ 3,991,168 $ 3,811,920 4.7 % 5.3 % $ 3,811,920 $ 3,616,654 5.4 % 5.8 % The increases in our revenue in 2024 as compared to 2023, and 2023 as compared to 2022, was primarily the result of continued growth in sales of our security and compute solutions and the acquisition of Linode in March 2022 which contributed to the growth in our compute solutions.
These amounts were partially offset by non-deductible stock-based compensation and state income taxes. Our effective income tax rate may fluctuate between fiscal years and from quarter to quarter due to items arising from discrete events, such as tax benefits from the settlement of employee equity awards, tax law changes and settlements of tax audits and assessments.
Our effective income tax rate may fluctuate between fiscal years and from quarter to quarter due to items arising from discrete events, such as tax benefits from the settlement of employee equity awards, tax law changes and settlements of tax audits and assessments.
We will need to continue to effectively manage our network build-out and supporting service costs and continue to migrate third-party cloud services to Akamai Connected Cloud to maintain or improve current levels of profitability. • Our employees are core to the operations of our business, and payroll and related costs, including stock-based compensation, is our largest expense.
We will continue to effectively manage our network build-out and supporting service costs and continue to migrate third-party cloud services to our compute platform in an effort to manage costs. • Our employees are core to the operations of our business, and payroll and related costs, including stock-based compensation, is our largest expense.
Adjusted EBITDA margin represents Adjusted EBITDA stated as a percentage of revenue. 38 Table of Contents The following table reconciles GAAP net income to Adjusted EBITDA and Adjusted EBITDA margin for the years ended December 31, 2023, 2022 and 2021 (in thousands): 2023 2022 2021 Net income $ 547,629 $ 523,672 $ 651,642 Amortization of acquired intangible assets 66,751 64,983 48,019 Stock-based compensation 328,467 217,185 202,759 Amortization of capitalized stock-based compensation and capitalized interest expense 32,981 31,768 35,894 Restructuring charge 56,643 13,529 10,737 Acquisition-related costs 13,345 29,049 13,317 Interest and marketable securities income, net (45,194) (3,258) (15,620) Interest expense 17,709 11,096 72,332 Provision for income taxes 106,373 126,696 62,571 Depreciation and amortization 472,035 496,909 467,048 (Gain) loss on investments (311) 8,260 (3,680) (Gain) loss from equity method investment (1,475) 7,635 14,008 Other expense, net 12,607 2,173 1,895 Adjusted EBITDA $ 1,607,560 $ 1,529,697 $ 1,560,922 Net income margin 14.4 % 14.5 % 18.8 % Adjusted EBITDA margin 42.2 % 42.3 % 45.1 % Impact of Foreign Currency Exchange Rates Revenue and earnings from our international operations have historically been an important contributor to our financial results.
Adjusted EBITDA margin represents Adjusted EBITDA stated as a percentage of revenue. 39 Table of Content s The following table reconciles GAAP net income to Adjusted EBITDA and Adjusted EBITDA margin for the years ended December 31, 2024, 2023 and 2022 (in thousands): 2024 2023 2022 Net income $ 504,918 $ 547,629 $ 523,672 Amortization of acquired intangible assets 92,081 66,751 64,983 Stock-based compensation 393,378 328,467 217,185 Amortization of capitalized stock-based compensation and capitalized interest expense 42,910 32,981 31,768 Restructuring charge 95,441 56,643 13,529 Acquisition-related costs 7,502 13,345 29,049 Legal settlements 2,500 — — Interest and marketable securities income, net (100,280) (45,194) (3,258) Interest expense 27,117 17,709 11,096 Provision for income taxes 82,095 106,373 126,696 Depreciation and amortization 514,455 472,035 496,909 Loss (gain) on cost method investments 5,066 (311) 8,260 (Gain) loss from equity method investment — (1,475) 7,635 Other expense, net 14,495 12,607 2,173 Adjusted EBITDA $ 1,681,678 $ 1,607,560 $ 1,529,697 Net income margin 12.7 % 14.4 % 14.5 % Adjusted EBITDA margin 42.1 % 42.2 % 42.3 % Impact of Foreign Currency Exchange Rates Revenue and earnings from our international operations have historically been an important contributor to our financial results.
The acquisition was intended to enhance our computing services by enabling us to create a unique cloud platform to build, run and secure applications from the cloud to the edge. Linode had approximately 250 employees when we completed the acquisition.
The acquisition was intended to enhance our compute services by enabling us to create a unique cloud platform to build, run and secure applications from the cloud to the edge.
We currently have net deferred tax assets, comprised of net operating loss ("NOL"), carryforwards, tax credit carryforwards and deductible temporary differences. Our management periodically weighs the positive and negative evidence to determine if it is more-likely-than-not that some or all of the deferred tax assets will be realized.
Our management periodically weighs the positive and negative evidence to determine if it is more-likely-than-not that some or all of the deferred tax assets will be realized.
Based on acquired intangible assets as of December 31, 2023, future amortization is expected to be $84.8 million, $80.5 million, $76.1 million, $62.0 million and $49.6 million for the years ending December 31, 2024, 2025, 2026, 2027 and 2028, respectively.
Based on acquired intangible assets as of December 31, 2024, future amortization is expected to be $111.5 million, $104.1 million, $89.2 million, $81.9 million and $76.0 million for the years ending December 31, 2025, 2026, 2027, 2028 and 2029, respectively.
The terms of the notes and the hedge and warrant transactions are discussed more fully in Note 11 to the consolidated financial statements included elsewhere in this annual report on Form 10-K.
The operating lease terms and maturities are discussed more fully in Note 12 to the consolidated financial statements included elsewhere in this annual report on Form 10-K.
The following table reconciles GAAP income from operations to non-GAAP income from operations and non-GAAP operating margin for the years ended December 31, 2023, 2022 and 2021 (in thousands): 2023 2022 2021 Income from operations $ 637,338 $ 676,274 $ 783,148 Amortization of acquired intangible assets 66,751 64,983 48,019 Stock-based compensation 328,467 217,185 202,759 Amortization of capitalized stock-based compensation and capitalized interest expense 32,981 31,768 35,894 Restructuring charge 56,643 13,529 10,737 Acquisition-related costs 13,345 29,049 13,317 Non-GAAP income from operations $ 1,135,525 $ 1,032,788 $ 1,093,874 GAAP operating margin 16.7 % 18.7 % 22.6 % Non-GAAP operating margin 29.8 % 28.6 % 31.6 % The following table reconciles GAAP net income to non-GAAP net income for the years ended December 31, 2023, 2022 and 2021 (in thousands): 2023 2022 2021 Net income $ 547,629 $ 523,672 $ 651,642 Amortization of acquired intangible assets 66,751 64,983 48,019 Stock-based compensation 328,467 217,185 202,759 Amortization of capitalized stock-based compensation and capitalized interest expense 32,981 31,768 35,894 Restructuring charge 56,643 13,529 10,737 Acquisition-related costs 13,345 29,049 13,317 Amortization of debt discount and issuance costs 5,341 4,395 66,025 (Gain) loss on investments (311) 8,260 (3,680) (Gain) loss from equity method investment (1,475) 7,635 14,008 Income tax effect of above non-GAAP adjustments and certain discrete tax items (89,364) (42,768) (96,164) Non-GAAP net income $ 960,007 $ 857,708 $ 942,557 37 Table of Contents The following table reconciles GAAP net income per diluted share to non-GAAP net income per diluted share for the years ended December 31, 2023, 2022 and 2021 (in thousands, except per share data): 2023 2022 2021 GAAP net income per diluted share $ 3.52 $ 3.26 $ 3.93 Adjustments to net income: Amortization of acquired intangible assets 0.43 0.40 0.29 Stock-based compensation 2.11 1.35 1.22 Amortization of capitalized stock-based compensation and capitalized interest expense 0.21 0.20 0.22 Restructuring charge 0.36 0.08 0.06 Acquisition-related costs 0.09 0.18 0.08 Amortization of debt discount and issuance costs 0.03 0.03 0.40 (Gain) loss on investments — 0.05 (0.02) (Gain) loss from equity method investment (0.01) 0.05 0.08 Income tax effect of above non-GAAP adjustments and certain discrete tax items (0.58) (0.27) (0.58) Adjustment for shares (1) 0.02 0.02 0.06 Non-GAAP net income per diluted share (2) $ 6.20 $ 5.37 $ 5.74 Shares used in GAAP per diluted share calculations 155,397 160,467 165,804 Impact of benefit from note hedge transactions (1) (574) (720) (1,600) Shares used in non-GAAP per diluted share calculations (1) 154,823 159,747 164,204 (1) Shares used in non-GAAP per diluted share calculations have been adjusted for the periods presented for the benefit of our note hedge transactions.
We believe that applying the non-GAAP adjustments and their related income tax effect allows us to highlight income attributable to our core operations. 37 Table of Content s The following table reconciles GAAP income from operations to non-GAAP income from operations and non-GAAP operating margin for the years ended December 31, 2024, 2023 and 2022 (in thousands): 2024 2023 2022 Income from operations $ 533,411 $ 637,338 $ 676,274 Amortization of acquired intangible assets 92,081 66,751 64,983 Stock-based compensation 393,378 328,467 217,185 Amortization of capitalized stock-based compensation and capitalized interest expense 42,910 32,981 31,768 Restructuring charge 95,441 56,643 13,529 Acquisition-related costs 7,502 13,345 29,049 Legal settlements 2,500 — — Non-GAAP income from operations $ 1,167,223 $ 1,135,525 $ 1,032,788 GAAP operating margin 13.4 % 16.7 % 18.7 % Non-GAAP operating margin 29.2 % 29.8 % 28.6 % The following table reconciles GAAP net income to non-GAAP net income for the years ended December 31, 2024, 2023 and 2022 (in thousands): 2024 2023 2022 Net income $ 504,918 $ 547,629 $ 523,672 Amortization of acquired intangible assets 92,081 66,751 64,983 Stock-based compensation 393,378 328,467 217,185 Amortization of capitalized stock-based compensation and capitalized interest expense 42,910 32,981 31,768 Restructuring charge 95,441 56,643 13,529 Acquisition-related costs 7,502 13,345 29,049 Legal settlements 2,500 — — Amortization of debt issuance costs 6,521 5,341 4,395 Loss (gain) on cost method investments 5,066 (311) 8,260 (Gain) loss from equity method investment — (1,475) 7,635 Income tax effect of above non-GAAP adjustments and certain discrete tax items (154,735) (89,364) (42,768) Non-GAAP net income $ 995,582 $ 960,007 $ 857,708 38 Table of Content s The following table reconciles GAAP net income per diluted share to non-GAAP net income per diluted share for the years ended December 31, 2024, 2023 and 2022 (in thousands, except per share data): 2024 2023 2022 GAAP net income per diluted share $ 3.27 $ 3.52 $ 3.26 Adjustments to net income: Amortization of acquired intangible assets 0.60 0.43 0.40 Stock-based compensation 2.55 2.11 1.35 Amortization of capitalized stock-based compensation and capitalized interest expense 0.28 0.21 0.20 Restructuring charge 0.62 0.36 0.08 Acquisition-related costs 0.05 0.09 0.18 Legal settlements 0.02 — — Amortization of debt issuance costs 0.04 0.03 0.03 Loss (gain) on cost method investments 0.03 — 0.05 (Gain) loss from equity method investment — (0.01) 0.05 Income tax effect of above non-GAAP adjustments and certain discrete tax items (1.00) (0.58) (0.27) Adjustment for shares (1) 0.03 0.02 0.02 Non-GAAP net income per diluted share (2) $ 6.48 $ 6.20 $ 5.37 Shares used in GAAP per diluted share calculations 154,346 155,397 160,467 Impact of benefit from note hedge transactions (1) (744) (574) (720) Shares used in non-GAAP per diluted share calculations (1) 153,602 154,823 159,747 (1) Shares used in non-GAAP per diluted share calculations have been adjusted for the periods presented for the benefit of our note hedge transactions.
These amounts were partially offset by a decrease in profitability. For the year ended December 31, 2023, our effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates and the benefit of U.S. federal, state and foreign research and development credits.
For the years ended December 31, 2023 and 2022, our effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates and the benefit of U.S. federal, state and foreign research and development 35 Table of Content s credits.
The deferred income tax provision is calculated for the estimated future tax effects attributable to temporary differences and carryforwards by using expected tax rates in effect in the years during which the differences are expected to reverse or the carryforwards are expected to be realized.
The deferred income tax provision is calculated for the estimated future tax effects attributable to temporary differences and carryforwards by using expected tax rates in effect in the years during which the differences are expected to reverse or the carryforwards are expected to be realized. 45 Table of Content s We currently have net deferred tax assets, comprised of net operating loss ("NOL") carryforwards, tax credit carryforwards and deductible temporary differences.
Cash Used in Investing Activities For the Years Ended December 31, (in thousands) 2023 2022 2021 Cash paid for business acquisitions, net of cash acquired $ (106,171) $ (872,091) $ (598,825) Cash paid for asset acquisitions (120,985) — — Purchases of property and equipment and capitalization of internal-use software development costs (730,040) (458,302) (545,230) Net marketable securities activity (884,973) 714,205 501,478 Other, net (6,069) (6,122) (4,322) Net cash used in investing activities $ (1,848,238) $ (622,310) $ (646,899) The increase in cash used in investing activities in 2023 as compared to 2022 was due to an increase in purchases of marketable securities with the proceeds from our August 2023 issuance of convertible senior notes and purchases of property and equipment related to our compute infrastructure build-out.
Cash Used in Investing Activities For the Years Ended December 31, (in thousands) 2024 2023 2022 Cash paid for business acquisitions, net of cash acquired $ (434,066) $ (106,171) $ (872,091) Cash paid for asset acquisitions (132,835) (120,985) — Purchases of property and equipment and capitalization of internal-use software development costs (685,267) (730,040) (458,302) Net marketable securities activity 449,516 (884,973) 714,205 Other, net 3,973 (6,069) (6,122) Net cash used in investing activities $ (798,679) $ (1,848,238) $ (622,310) The decrease in cash used in investing activities in 2024 as compared to 2023 was due to an increase in cash proceeds from net marketable securities activity to fund the acquisition of Noname Security in 2024 and a reduction of purchases of property and equipment related to our compute platform build-out.
These capitalized internal-use software development costs are amortized to cost of revenue over their estimated useful lives, ranging from two to ten years based on the software developed and its expected useful life.
For the years ended December 31, 2024, 2023 and 2022, we capitalized $99.6 million, $77.0 million and $30.0 million, respectively, of stock-based compensation. These capitalized internal-use software development costs are amortized to cost of revenue over their estimated useful lives, ranging from two to ten years based on the software developed and its expected useful life.
We had also experienced increased costs from third-party cloud providers, but have recently begun to mitigate those costs by migrating to our own cloud solutions and optimizing third-party cloud spend.
We previously experienced increased costs from third-party cloud providers, but continue to mitigate those costs by migrating to our own compute solutions and working to optimize third-party cloud spend.
Because we publicly report in U.S. dollars, our expenses are positively impacted when the dollar strengthens and are negatively impacted when the dollar weakens. Recent Acquisitions We acquired certain customer contracts from Lumen Technologies, Inc. ("Lumen") in October 2023 and from StackPath, LLC ("StackPath") in August 2023.
Because we publicly report in U.S. dollars, our expenses are positively impacted when the dollar strengthens and are negatively impacted when the dollar weakens. Recent Acquisitions We acquired certain customer contracts from Edgio, Inc. ("Edgio") in December 2024 as part of a bankruptcy process.
Tax Cuts and Jobs Act establishes a territorial tax system in the U.S., which provides companies with the potential ability to repatriate earnings with minimal U.S. federal income tax impact. As a result, our liquidity is not expected to be materially impacted by the amount of cash and cash equivalents held in accounts outside the U.S.
As of December 31, 2024, we had cash and cash equivalents of $300.3 million held in accounts outside the U.S. The U.S. Tax Cuts and Jobs Act establishes a territorial tax system in the U.S., which provides companies with the potential ability to repatriate earnings with minimal U.S. federal income tax impact.
Research and Development Expenses Research and development expenses consisted of the following for the periods presented (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change 2022 2021 % Change Payroll and related costs $ 494,803 $ 468,928 5.5 % $ 468,928 $ 456,138 2.8 % Stock-based compensation 123,896 78,116 58.6 78,116 65,951 18.4 Capitalized salaries and related costs (239,928) (183,540) 30.7 (183,540) (200,530) (8.5) Acquisition-related costs 721 2,832 (74.5) 2,832 — 100.0 Other expenses 26,556 25,098 5.8 25,098 13,813 81.7 Total research and development $ 406,048 $ 391,434 3.7 % $ 391,434 $ 335,372 16.7 % As a percentage of revenue 10.7 % 10.8 % 10.8 % 9.7 % The increase in research and development expenses for 2023 as compared to 2022 was due to higher payroll and related costs, including stock-based compensation, as a result of headcount growth from our strategic initiatives, annual merit increases, the increased expected achievement of our performance-based compensation plans, a new compensation program tied to our initiative to migrate third-party cloud services onto Akamai Connected Cloud and higher average equity awards to employees driven by the talent market.
Research and Development Expenses Research and development expenses consisted of the following for the periods presented (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2024 2023 % Change 2023 2022 % Change Payroll and related costs $ 562,286 $ 494,803 13.6 % $ 494,803 $ 468,928 5.5 % Stock-based compensation 152,114 123,896 22.8 123,896 78,116 58.6 Capitalized salaries and related costs (272,320) (239,928) 13.5 (239,928) (183,540) 30.7 Acquisition-related costs — 721 (100.0) 721 2,832 (74.5) Other expenses 28,796 26,556 8.4 26,556 25,098 5.8 Total research and development $ 470,876 $ 406,048 16.0 % $ 406,048 $ 391,434 3.7 % As a percentage of revenue 11.8 % 10.7 % 10.7 % 10.8 % The increase in research and development expenses for 2024 as compared to 2023 was primarily due to higher payroll and related costs, including stock-based compensation, as a result of headcount growth from our strategic initiatives and annual merit increases.
However, we plan to continue to carefully manage costs in an effort to manage our operating margins. 31 Table of Contents General and Administrative Expenses General and administrative expenses consisted of the following for the periods presented (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change 2022 2021 % Change Payroll and related costs $ 218,272 $ 213,772 2.1 % $ 213,772 $ 223,238 (4.2) % Stock-based compensation 94,316 62,926 49.9 62,926 63,324 (0.6) Depreciation and amortization 65,817 74,225 (11.3) 74,225 81,934 (9.4) Facilities-related costs 90,061 103,473 (13.0) 103,473 100,769 2.7 Provision for doubtful accounts 1,649 7,042 (76.6) 7,042 763 822.9 Acquisition-related costs 8,050 19,071 (57.8) 19,071 13,317 43.2 Software and related service costs 55,714 50,320 10.7 50,320 40,861 23.1 Other expenses 66,972 53,377 25.5 53,377 28,818 85.2 Total general and administrative $ 600,851 $ 584,206 2.8 % $ 584,206 $ 553,024 5.6 % As a percentage of revenue 15.8 % 16.2 % 16.2 % 16.0 % The increase in general and administrative expenses for 2023 as compared to 2022 was due to higher payroll and related costs, including stock-based compensation, as a result of annual merit increases, headcount growth, the increased expected achievement of our performance-based compensation plans and higher average equity awards to employees driven by the talent market and other expenses due to increased professional service fees to support our business.
General and Administrative Expenses General and administrative expenses consisted of the following for the periods presented (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2024 2023 % Change 2023 2022 % Change Payroll and related costs $ 225,687 $ 218,272 3.4 % $ 218,272 $ 213,772 2.1 % Stock-based compensation 102,494 94,316 8.7 94,316 62,926 49.9 Depreciation and amortization 66,184 65,817 0.6 65,817 74,225 (11.3) Facilities-related costs 86,671 90,061 (3.8) 90,061 103,473 (13.0) Provision for doubtful accounts 3,919 1,649 137.7 1,649 7,042 (76.6) Acquisition-related costs 7,502 8,050 (6.8) 8,050 19,071 (57.8) Software and related service costs 56,557 55,714 1.5 55,714 50,320 10.7 Other expenses 72,771 66,972 8.7 66,972 53,377 25.5 Total general and administrative $ 621,785 $ 600,851 3.5 % $ 600,851 $ 584,206 2.8 % As a percentage of revenue 15.6 % 15.8 % 15.8 % 16.2 % The increase in general and administrative expenses for 2024 as compared to 2023 was primarily due to higher payroll and related costs as a result of annual merit increases, an increase in stock-based compensation as a result of the timing of our performance-based equity award grants and an increase in other expenses related to professional service fees to support our business.
These amounts were partially offset by non-deductible stock-based compensation, tax on global intangible low-taxed income and an intercompany sale of intellectual property.
These amounts were partially offset by non-deductible stock-based compensation and the tax on global intangible low-taxed income. Additionally, our effective income tax rate was lower for the year ended December 31, 2022 due to an intercompany sale of intellectual property.
If such an evaluation indicates that payment is no longer reasonably assured for services provided, any future services provided to that customer will result in the creation of a cash basis reserve until we receive consistent payments.
If such an evaluation indicates that payment is no longer reasonably assured for services provided, any future services provided to that customer will result in the creation of a cash basis reserve until we receive consistent payments. 44 Table of Content s Valuation and Impairment of Marketable Securities We measure the fair value of our financial assets and liabilities at the end of each reporting period.
We periodically evaluate whether a decline in fair value below cost basis is other-than-temporary by considering available evidence regarding these investments including, among other factors, the duration of the period that, and extent to which, the fair value is less than cost basis; the financial health of, and business outlook for, the issuer, including industry and sector performance and operational and financing cash flow factors; overall market conditions and trends; and our intent and ability to retain our investment in the security for a period of time sufficient to allow for an anticipated recovery in market value.
We periodically evaluate whether the decline is due to credit losses by considering available evidence regarding these investments including, among other factors, the extent to which, the fair value is less than the cost basis; the financial health of, and business outlook for, the issuer, including industry and sector performance and operational and financing cash flow factors.
We place our cash investments in instruments that meet high-quality credit standards, as specified in our investment policy. Our investment policy also limits the amount of our credit exposure to any one issue or issuer and seeks to manage these assets to achieve our goals of preserving principal and maintaining adequate liquidity at all times.
Our investment policy is designed to limit the amount of our credit exposure to any one issue or issuer and seeks to manage these assets to achieve our goals of preserving principal and maintaining adequate liquidity at all times.
The increase in the provision for income taxes for 2022 as compared to 2021 was mainly due to an intercompany sale of intellectual property, an increase in the tax on global intangible low-taxed income, a decrease in foreign income taxed at lower rates and a decrease in the excess tax benefit related to stock-based compensation.
The decrease in the provision for income taxes for 2023 as compared to 2022 was mainly due to a reduction in intercompany sales of intellectual property and the tax on global intangible low-taxed income.
Definitions We define our critical accounting policies as those policies that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our consolidated financial statements.
For a complete description of our significant accounting policies, see Note 2 to our consolidated financial statements included elsewhere in this annual report on Form 10-K. 43 Table of Content s Definitions We define our critical accounting policies as those policies that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our consolidated financial statements.
Sales and Marketing Expenses Sales and marketing expenses consisted of the following for the periods presented (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change 2022 2021 % Change Payroll and related costs $ 376,305 $ 374,110 0.6 % $ 374,110 $ 366,501 2.1 % Stock-based compensation 66,453 47,789 39.1 47,789 46,342 3.1 Marketing programs and related costs 59,151 55,033 7.5 55,033 40,553 35.7 Acquisition-related costs 1,387 2,166 (36.0) 2,166 — 100.0 Other expenses 29,930 23,311 28.4 23,311 8,571 172.0 Total sales and marketing $ 533,226 $ 502,409 6.1 % $ 502,409 $ 461,967 8.8 % As a percentage of revenue 14.0 % 13.9 % 13.9 % 13.3 % The increase in sales and marketing expenses for 2023 as compared to 2022 was due to higher payroll and related costs, including stock-based compensation, as a result of annual merit increases, headcount growth and the increased expected achievement of our performance-based compensation plans and other expenses due to increased travel expenses associated with customer meetings and sales events.
We expect our research and development costs to increase in 2025, in particular payroll and related costs, in support of our faster growing security and compute solutions. 32 Table of Content s Sales and Marketing Expenses Sales and marketing expenses consisted of the following for the periods presented (in thousands): For the Years Ended December 31, For the Years Ended December 31, 2024 2023 % Change 2023 2022 % Change Payroll and related costs $ 393,584 $ 376,305 4.6 % $ 376,305 $ 374,110 0.6 % Stock-based compensation 77,593 66,453 16.8 66,453 47,789 39.1 Marketing programs and related costs 53,893 59,151 (8.9) 59,151 55,033 7.5 Acquisition-related costs — 1,387 (100.0) 1,387 2,166 (36.0) Other expenses 31,711 29,930 6.0 29,930 23,311 28.4 Total sales and marketing $ 556,781 $ 533,226 4.4 % $ 533,226 $ 502,409 6.1 % As a percentage of revenue 14.0 % 14.0 % 14.0 % 13.9 % The increase in sales and marketing expenses for 2024 as compared to 2023 was due to higher payroll and related costs, including stock-based compensation as a result of annual merit increases and employees acquired through the Noname Security acquisition.
Our board of directors authorized a share repurchase program that is effective from January 2022 through December 2024, and during 2023, 2022 and 2021, we repurchased 7.8 million, 6.4 million and 4.7 million shares of our common stock, respectively, at an average price per share of $83.83, $94.96 and $109.97, respectively.
During 2024, 2023 and 2022, we repurchased 5.6 million, 7.8 million and 6.4 million shares of our common stock, respectively, at an average price per share of $99.14, $83.83 and $94.96, respectively.
The amount of an acquisition's purchase price allocated to intangible assets and term of its related amortization can vary significantly and is unique to each acquisition; therefore, we exclude amortization of acquired intangible assets from our non-GAAP financial measures to provide investors with a consistent basis for comparing pre- and post-acquisition operating results. • Stock-based compensation and amortization of capitalized stock-based compensation – Although stock-based compensation is an important aspect of the compensation paid to our employees, the grant date fair value varies based on the stock price at the time of grant, varying valuation methodologies, subjective assumptions and the variety of award types.
The amount of an acquisition's purchase price allocated to intangible assets and term of its related amortization can vary significantly and is unique to each 36 Table of Content s acquisition; therefore, we exclude amortization of acquired intangible assets from our non-GAAP financial measures to provide investors with a consistent basis for comparing pre- and post-acquisition operating results. • Stock-based compensation and amortization of capitalized stock-based compensation – Stock-based compensation is an important aspect of the compensation paid to our employees, which includes long-term incentive plans to encourage retention, performance-based plans to encourage achievement of specified financial targets and also short-term incentive awards with a one year vest.
Additionally, due to our focus on third-party cloud application costs, including migrating third-party cloud services to our own cloud solutions and optimizing third-party cloud spending which are included in network build-out and supporting services, our third-party cloud costs decreased for 2023 as compared to 2022.
Additionally, due to our focus on third-party cloud application costs, including migrating third-party cloud services to our own compute platform and optimizing third-party cloud spending which are included in network build-out and supporting services, our third-party cloud costs decreased for 2023 as compared to 2022. 31 Table of Content s During 2025, we expect our cost of revenue to increase as compared to 2024, in particular our co-location costs and depreciation of network equipment, due to investments in our network to support the continued growth of our compute solutions.
The costs of the financial commitments are expensed ratably over the life of the lease, and, as a result, in some cases, we are incurring costs in advance of these compute locations being fully utilized.
The costs of the financial commitments are expensed ratably over the lease term, and, as a result, in some cases, we are incurring costs in advance of these compute locations being fully utilized. We continue to improve our internal-use software and remain disciplined in managing our hardware deployments, which enables us to use servers more efficiently.
Operating Leases We have entered into operating leases for real estate assets related to office space and co-location assets related to space or racks at co-location facilities and related equipment for our servers and other networking equipment.
Any borrowings are secured by collateral consisting primarily of available-for-sale debt securities in our investment portfolio. 42 Table of Content s Operating Leases We have entered into operating leases for real estate assets related to office space and co-location assets related to space or racks at co-location facilities and related equipment for our servers and other networking equipment.
Management's commitment to an action to restructure certain parts of the company was to enable the prioritization of investments in the fastest growing areas of the business. The restructuring charge for this action includes severance and related expenses for certain headcount reductions.
Additionally, the restructuring charge in 2023 included the result of certain actions initiated in the first quarter of 2023. Management's commitment to an action to restructure certain parts of the company was to enable the prioritization of investments in the fastest growing areas of the business.
Other (expense) income, net primarily represents net foreign exchange gains and losses mainly due to foreign exchange rate fluctuations on intercompany transactions and other non-operating expense and income items as well as gains and losses on equity investments.
Other expense, net primarily represents net foreign exchange gains and losses mainly due to foreign exchange rate fluctuations on the remeasurement of monetary assets and liabilities that are not denominated in the functional currency as well as other non-operating expense and income items.
The operating lease terms and maturities are discussed more fully in Note 12 to the consolidated financial statements included elsewhere in this annual report on Form 10-K 41 Table of Contents Purchase Commitments We enter into long-term agreements with network and internet service providers for bandwidth, as well as execute purchase orders for the purchase of goods or services in the ordinary course of business, which may contain minimum commitments.
Purchase Commitments We enter into long-term agreements with network and internet service providers for bandwidth, as well as execute purchase orders for the purchase of goods or services in the ordinary course of business, which may contain minimum commitments.
The issuance costs of the convertible senior notes are amortized to interest expense and are excluded from our non-GAAP results because management believes the non-cash amortization expense is not representative of ongoing operating performance. The imputed interest rates of the 2027 and 2025 convertible senior notes were 3.10% and 4.26%, respectively.
The issuance costs of the convertible senior notes are amortized to interest expense and are excluded from our non-GAAP results because management believes the non-cash amortization expense is not representative of ongoing operating performance. • Gains and losses on cost method investments – We have recorded gains and losses from the disposition, changes to fair value and impairment of cost method investments.
Interest expense is related to our debt transactions, which are described in Note 11 to the consolidated financial statements included elsewhere in this annual report on Form 10-K. The increase to interest expense for 2023 as compared to 2022 was primarily due to the August 2023 issuance of $1,265.0 million in par value of convertible senior notes due 2029.
Interest expense is related to our debt transactions, which are described in Note 11 to the consolidated financial statements included elsewhere in this annual report on Form 10-K.
Provision for Income Taxes For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2023 2022 % Change 2022 2021 % Change Provision for income taxes $ 106,373 $ 126,696 (16.0) % $ 126,696 $ 62,571 102.5 % As a percentage of revenue 2.8 % 3.5 % 3.5 % 1.8 % Effective income tax rate 16.3 % 19.3 % 19.3 % 8.6 % The decrease in the provision for income taxes for 2023 as compared to 2022 was mainly due to a reduction in intercompany sales of intellectual property and the tax on global intangible low-taxed income.
Provision for Income Taxes For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2024 2023 % Change 2023 2022 % Change Provision for income taxes $ 82,095 $ 106,373 (22.8) % $ 106,373 $ 126,696 (16.0) % As a percentage of revenue 2.1 % 2.8 % 2.8 % 3.5 % Effective income tax rate 14.0 % 16.3 % 16.3 % 19.3 % The decrease in the provision for income taxes for 2024 as compared to 2023 was mainly due to the benefit from an intercompany sale of intellectual property in 2024, an increase in the excess tax benefit related to stock-based compensation, lower profitability and an increase in the benefit of U.S. federal and state research and development credits.

… 115 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+2 added−1 removed8 unchanged
Biggest changeWe do not currently hedge our interest rate exposure and do not enter into financial instruments for trading or speculative purposes. If market interest rates were to increase by 100 basis points from December 31, 2023 levels, the fair value of our available-for-sale portfolio would decline by approximately $19.2 million.
Biggest changeIf market interest rates were to increase by 100 basis points, reflected uniformly across the yield curve regardless of the duration to maturity, from December 31, 2024 levels, the fair value of our available-for-sale portfolio would decline by approximately $6.8 million.
We enter into short-term foreign currency forward contracts to offset foreign exchange gains and losses generated by the re-measurement of certain assets and liabilities recorded in non-functional currencies. Changes in the fair value of these derivatives, as well as re-measurement gains and losses, are recognized in our consolidated statements of income within other income (expense), net.
We enter into short-term foreign currency forward contracts to offset foreign exchange gains and losses generated by the re-measurement of certain assets and liabilities recorded in non-functional currencies. Changes in the fair value of these derivatives, as well as re-measurement gains and losses, are recognized in our consolidated statements of income within other expense, net.
Foreign currency transaction gains and losses from these forward contracts were determined to be immaterial during the years ended December 31, 2023, 2022 and 2021. We do not enter into derivative financial instruments for trading or speculative purposes.
Foreign currency transaction gains and losses from these forward contracts were determined to be immaterial during the years ended December 31, 2024, 2023 and 2022. We do not enter into derivative financial instruments for trading or speculative purposes.
There were no outstanding borrowings under the 2022 Credit Agreement as of December 31, 2023.
There were no outstanding borrowings under the 2022 Credit Agreement as of December 31, 2024.
These notes have a fixed annual interest rate, so they do not give rise to financial or economic interest exposure associated with changes in interest rates. However, the fair value of fixed rate debt instruments fluctuates when interest rates change. Additionally, the fair value 45 Table of Contents can be affected when the market price of our common stock fluctuates.
Due to the fixed annual interest rate, these notes do not give rise to financial or economic interest exposure associated with changes in interest rates. However, the fair value of fixed rate debt instruments fluctuates when interest rates change. Additionally, the fair value can be affected when the market price of our common stock fluctuates.
The majority of our investments are classified as available-for-sale securities and carried at fair market value with cumulative unrealized gains or losses recorded as a component of accumulated other comprehensive loss within stockholders' equity. A sharp rise in interest rates could have an adverse impact on the fair market value of certain securities in our portfolio.
The majority of our investments are classified as available-for-sale securities and carried at fair market value with cumulative unrealized gains or losses recorded as a component of accumulated other comprehensive loss within stockholders' equity.
As of December 31, 2023, no customer had an accounts receivable balance greater than 10%, and as of December 31, 2022, there was one customer with an accounts receivable balance greater than 10% of our accounts receivable. We believe that at December 31, 2023, the concentration of credit risk related to accounts receivable was insignificant. 46 Table of Contents
As of December 31, 2024 and 2023, no customer had an accounts receivable balance of 10% or more of our accounts receivable. We believe that at December 31, 2024, the concentration of credit risk related to accounts receivable was insignificant. 47 Table of Content s
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Our portfolio of cash equivalents and short- and long-term investments is maintained in a variety of securities, including money market funds, time deposits, commercial paper, corporate bonds, U.S. government agency obligations and mutual funds.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Our portfolio of cash equivalents and short- and long-term investments is maintained in a variety of securities, that are detailed in Note 3 to the consolidated financial statements included elsewhere in this annual report on Form 10-K.
Removed
In August 2023, we issued $1,265 million in aggregate principal amount of 1.125% convertible senior notes due 2029. In August 2019, we issued $1,150.0 million aggregate principal amount of 0.375% convertible senior notes due 2027. In May 2018, we issued $1,150.0 million aggregate principal amount of 0.125% convertible senior notes due 2025.
Added
A sharp rise in 46 Table of Content s interest rates could have an adverse impact on the fair market value of certain securities in our portfolio. We do not currently hedge our interest rate exposure and do not enter into financial instruments for trading or speculative purposes.
Added
As of December 31, 2024, we had $3,565.0 million in aggregate principal amount of convertible senior notes outstanding that are senior unsecured obligations with fixed annual interest rates. The terms of the notes are discussed more fully in Note 11 to our consolidated financial statements included elsewhere in this annual report on Form 10-K.

Other AKAM 10-K year-over-year comparisons