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What changed in Akamai Technologies's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Akamai Technologies's 2024 and 2025 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 2025 report.

+427 added−382 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-24)

Top changes in Akamai Technologies's 2025 10-K

427 paragraphs added · 382 removed · 323 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

55 edited+20 added−16 removed35 unchanged
Biggest change("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.
Biggest changeThe Akamai Guardicore Platform simply and efficiently enables Zero Trust through a fully integrated combination of microsegmentation, Zero Trust Network Access, multi-factor authentication, DNS firewall and threat hunting. Akamai’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.
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.
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 and abuse portfolio provides tailored, specialized solutions to help customers protect against these threats.
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.
Akamai 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.
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.
The Akamai Compassion Fund was created 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.
In November 2024, we launched the Akamai App Platform, a ready-to-run solution that makes it easy to deploy, manage and scale highly distributed applications. The Akamai App Platform is built on top of the cloud native Kubernetes technology Otomi, which Akamai acquired from Red Kubes Holding B.V. and its subsidiary earlier in the year.
In November 2024, we launched the Akamai App Platform, a ready-to-run solution that makes it easy to deploy, manage and scale highly distributed applications. The Akamai App Platform is built on top of the cloud native Kubernetes technology Otomi, which Akamai acquired from Red Kubes Holding B.V. and its subsidiary.
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.
The importance of our workforce to our success is underscored by the inclusion of corporate mission critical goals centered on our employees. In 2025, 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.
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.
Continuing in 2025, 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.
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’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 DDoS mitigation.
Our media delivery solutions are designed to enable enterprises to execute their digital media distribution strategies by addressing volume and global reach requirements, improving the end-user experience, boosting reliability and reducing the cost of internet-related infrastructure.
Our media delivery solutions are designed to enable enterprises to execute their digital media distribution strategies by addressing volume and global reach requirements, improving the end-user experience, boosting reliability and reducing the cost 5 Table of Contents of internet-related infrastructure.
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.
While our cloud computing services have historically competed with alternative cloud computing platforms focused on individual developers, we anticipate that going forward our cloud computing services will increasingly compete with the large so-called “hyper-scaler” cloud computing providers.
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.
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; • the ability of our products to function in hybrid cloud environments; • the placement and availability of our compute infrastructure; • 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.
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.
We have implemented 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.
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, impact how we use data generated from our network to improve and develop services, as well as our ability to reach current and prospective customers, understand how our solutions are being used, use and transfer data about our employees and respond to customer requests allowed under applicable laws.
Other laws and regulations that apply to the internet related to, among other things, content liability, security and disclosure requirements, critical infrastructure designations, internet resiliency, law enforcement access to information, net neutrality, so-called "fair share" or internet content taxes, data localization requirements, industry regulations applicable to key suppliers to some of our customers and restrictions on social media or other content can have an impact on our business.
Other laws and regulations that apply to the internet related to, among other things, content liability, security and disclosure requirements, critical infrastructure designations, internet resiliency, law enforcement access to information, net neutrality, so-called "fair share" or internet content taxes, data localization and data residency requirements and developing digital or cloud sovereignty frameworks, industry regulations applicable to key suppliers to some of our customers and restrictions on social media or other content can have an impact on our business.
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.
Customers Our customers include many of the world's leading corporations, such as adidas, Adobe, Aflac, Airbnb, Asus, Autodesk, Bank of Montreal, Carnival Corporation, Comcast, Commerzbank, 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.
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
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. 10 Table of Contents
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%).
Our employees are grouped across the following roles, with the approximate percentage of the overall population noted: engineering and research and development (37%), services and support (26%), sales and marketing (17%) and administrative functions (20%).
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.
As of December 31, 2025, we had over 11,000 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.
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.
We provide cloud computing infrastructure that they can use to build low-latency, AI-powered applications; cybersecurity solutions, powered by adaptive 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 suspicious 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.
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.
Akamai 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.
Our web and mobile performance solutions are architected to enable dynamic websites and applications to have rapid response times, no matter where the user is, what device or browser they are using or how they are connected to the internet.
Delivery Our delivery solutions consist primarily of web and mobile performance focused solutions and media delivery solutions. Our web and mobile performance solutions are architected to enable dynamic websites and applications to have rapid response times, no matter where the user is, what device or browser they are using or how they are connected to the internet.
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, 2025, we owned, or had exclusive rights to, over 560 U.S. patents covering our technology as well as patents issued in other countries. Our U.S.-issued patents have terms extendable to various dates between 2026 and 2044.
These GPUs are well-suited for video transcoding and live video streaming, virtual reality and augmented reality content, gaming and graphics rendering, training and inference with neural networks, data analysis and scientific computing and high-performance computing applications, such as modeling and simulation, that require fast and efficient processing of large amounts of data.
We also introduced new NVIDIA Corporation ("NVIDIA") graphics processing units ("GPUs") that are well-suited for video transcoding and live video streaming, virtual reality and augmented reality content, gaming and graphics rendering, training and inference with neural networks, data analysis and scientific computing and high-performance computing applications, such as modeling and simulation, that require fast and efficient processing of large amounts of data.
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 also actively sell to government agencies. As of December 31, 2025, our public-sector customers included the U.S. Department of Defense, the U.S. Department of Labor, the U.S. Department of Transportation and the U.S.
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.
As of December 31, 2025, our massively distributed global infrastructure was comprised of core and distributed compute sites, more than 4,300 edge points-of-presence in over 130 countries and approximately 700 cities, and our underlying global network integrated with roughly 1,200 network partners.
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.
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 high-performance, low-latency applications across our uniquely distributed architecture and edge network. Today, billions of people go online to work, learn, shop, bank, communicate and more.
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.
Less than 10% of our total revenue in each of the years ended December 31, 2025, 2024 and 2023 was derived from contracts or subcontracts terminable at the election of the federal government.
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.
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.
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.
Sales, Services and Marketing We market and sell our solutions globally through our field sales and services organization and through many channel partners, including adidas, AHEAD, Avant, BV Tech, Carahsoft, CPD, Deloitte, Deutsche Telecom, Doyen, Guidepoint, Kyndryl, LevelBlue, Macnica, Microsoft Azure, Netpoleon, Oplium, Optiv, Presidio, SHI, Telefonica Group, Trace3 and WWT.
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.
Attrition was slightly up in 2025 when compared to 2024. 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. In addition, succession planning is an ongoing priority for our leadership.
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.
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. 4 Table of Contents Cloud Computing Akamai provides a continuum of cloud computing services for developers to build and deliver distributed, low-latency applications.
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.
In 2025, we continued to expand Akamai's compute platform to include additional data centers to 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.
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.
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.
This can cut deployment time from months to less than an hour and provides near-instant scaling as production workloads grow. Delivery Our delivery solutions consist primarily of web and mobile performance focused solutions and media delivery solutions.
This can cut deployment time from months to less than an hour and provides near-instant scaling as production workloads grow.
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.
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 anti-bribery and anti-corruption laws in the U.S. and other countries in which we operate, including, without limitation, the U.S.
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.
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. Akamai cloud computing is comprised of Cloud Infrastructure Services as well as other cloud applications.
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.
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.
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.
In our view, we also benefit from the high quality of our offerings, our customer service and the information we can provide to our customers about their online operations and value. 8 Table of Contents Government Regulation As a global technology company, Akamai is subject to complex foreign and U.S. laws and regulations in areas, both existing as well as new and rapidly evolving, such as data privacy and localization, cybersecurity, AI, technology sovereignty, liability for content delivered over our network, various internet regulations, bribery, sanctions, export controls, competition, tax and foreign exchange controls.
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.
Our strategy is to help continue to power and protect business online by offering security, compute, delivery and AI infrastructure services with the industry-leading reliability, scale and expertise our customers need to grow their business with confidence. Our Solutions We provide solutions in three core offerings: security, cloud computing and delivery.
Additional 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.
Additional 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.
For example, while we are generally not subject to regulations applicable to telecommunications companies, new or different interpretations of laws or regulations could subject us to regulatory supervision.
For example, while we are generally not subject to regulations applicable to telecommunications companies, new or different interpretations of laws or regulations could subject us to regulatory supervision. Additionally, increasingly complex interactions between existing and emerging regulatory developments may constrain our product vision and impede us from fully realizing returns on our product investments.
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.
Foreign Corrupt Practices Act, which generally prohibits companies and their intermediaries from offering, authorizing or providing anything of value to foreign government officials or employees of state-owned or state-controlled entities for the purpose of obtaining or retaining business.
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.
Development We invest significant resources in professional development, career advancement and training for our global workforce. All employees are eligible to participate in our performance review program, which provides guidance around setting annual performance objectives, developing competencies and receiving feedback.
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.
We have eight employee resource groups ("ERGs") that offer opportunities for employees to come together for mutual support, education and development.
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 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 a full pipeline of tomorrow’s leaders.
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.
In addition to these required trainings, nearly all of our employees and contractors completed at least one training in our Akamai University program during 2025. FlexBase We offer 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.
To the extent we export technical services, data, products or other technology outside of the U.S., we are subject to U.S. and international laws and regulations governing international trade and exports, including, but not limited to, the International Traffic in Arms Regulations, the Export Administration Regulations and sanctions against embargoed countries and other designated entities and individuals.
We are subject to U.S. and international laws and regulations governing international trade and exports, including, but not limited to, the International Traffic in Arms Regulations, the Export Administration Regulations, U.S. economic and trade sanctions administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, as well as other sanctions and export control regimes.
We do not believe that the expiration of any particular patent in the near future would be materially detrimental to our business. We seek to limit disclosure of our intellectual property by requiring employees and consultants with access to our proprietary information to execute confidentiality agreements with us and by restricting access to our source code.
We do not believe that the expiration of any particular patent in the near future would be materially detrimental to our business.
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.
Where appropriate, 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, nearly 16% of open positions were filled with internal candidates in 2025. All employees are required to complete annual ethics and compliance and data security training.
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.
The platform leverages AI to simplify user experience, vulnerability assessments, compliance and incident response, helping to protect businesses from the threat of ransomware.
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.
Akamai’s enhanced offering offers greater deployment choices for customers and access to a portfolio of technology integrations that we believe is unrivaled in the market. 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 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.
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. As a result of the acquisition, Akamai now offers a complete API security suite enabling customers to better discover “shadow” APIs and detect vulnerabilities and attacks.
("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.
The purpose-built security solution is designed to protect AI-powered applications, LLMs and AI-driven APIs from emerging cyberthreats by helping to secure inbound AI queries and outbound AI responses. In May 2023, Akamai acquired Neosec, Inc. ("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.
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.
Our solutions are designed to serve businesses across every vertical, providing security controls to support both cloud-native application development and the rapidly expanding surface area introduced by AI-driven technologies. Customers trust Akamai to help keep infrastructure, websites, applications, APIs, networks and users safe from a multitude of cyberattacks and online threats while improving performance.
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.
This is part of a growing set of solutions designed to help businesses implement a Zero Trust security architecture. The Akamai Guardicore Platform simplifies enterprise security with broad visibility and granular controls through one console.
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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.
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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, especially as those interactions are increasingly driven by AI.
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In recent years, artificial intelligence ("AI") has been a major focus of corporate initiatives for enterprises in multiple verticals and across the globe.
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We also provide services and support for our customers as they utilize our solutions. As AI is a major focus of corporate initiatives for enterprises across the globe, we are committed to helping our customers seize on its power and potential.
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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.
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Security Our security solutions, threat intelligence and global operations team work to provide defense in depth to safeguard enterprise data and applications across hybrid cloud environments. Akamai operates two security platforms – Application 3 Table of Contents Protection and Zero Trust Network Security – designed to address the expanding and evolving threat landscape facing modern enterprises.
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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.
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Our portfolio encompasses mature, market-leading security products including web application firewall ("WAF"), bot management, distributed denial-of-service ("DDoS") protection and domain name system ("DNS") security, complemented by fast-growing solutions in application programming interface ("API") security and network segmentation.
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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.
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As chief information security officers and security teams navigate increasingly complex hybrid cloud environments, the proliferation of generative AI interfaces, AI-powered automation, and emerging AI agent ecosystems, Akamai's platforms aim to deliver real-time protection across applications, APIs, networks and private access infrastructure.
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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.
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In 2025, Akamai launched Firewall for AI, a new solution that is designed to provide protection for AI applications against unauthorized queries, adversarial inputs and large-scale data-scraping attempts.
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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.
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Organizations are quickly deploying large language models ("LLMs"), AI agents and generative AI interfaces and tools, which introduces new security vulnerabilities, such as adversarial attacks, model extraction, prompt and API abuse and large-scale data scraping. Existing WAFs are not designed to mitigate these threats. Akamai Firewall for AI addresses this gap.
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We also introduced new NVIDIA graphics processing units ("GPUs") to provide better productivity and economics for companies in the media and entertainment industry that are challenged with processing video content faster and more efficiently, and for organizations seeking to deploy AI inferencing workloads closer to end users.
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Cloud Infrastructure Services, which represent the majority of Akamai’s strategic investment and differentiation, consist of compute, storage, cloud-native and networking solutions, along with the Akamai EdgeWorkers serverless products and partner solutions running on our cloud platform.
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Annual talent reviews focus on both high performers as well as those with high potential to keep a full pipeline of tomorrow’s leaders. Development We invest significant resources in professional development, career advancement and training for our global workforce.
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Other cloud applications include API Acceleration, cloudlets (which are value-added apps that add discrete functionality to solve specific business or operational challenges), cloud and global traffic management and our legacy NetStorage solution.
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In our view, we also benefit from the high quality of our offerings, our customer service and the information we can provide to our customers about their online operations and value.
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In November 2025, Akamai acquired serverless WebAssembly company Fermyon Technologies, Inc. ("Fermyon"). As AI inference shifts to the edge, combining Fermyon’s cloud-native WebAssembly function-as-a-service with Akamai’s globally distributed platform enables enterprises to build edge-native applications that offer improved performance and lower costs compared to traditional cloud-native apps.
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In addition, in April 2024, the U.S. government passed legislation that prohibited the provision of certain types of services to a Chinese application if the 8 Table of Content s application was not sold to a neutral third party by January 19, 2025.
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By acquiring Fermyon, Akamai plans to deepen the integration between the edge functions platform and its performance and security products.
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The Chinese application was not sold to a neutral third party by the January 19th deadline, but President Trump subsequently signed an executive order instructing the U.S. Attorney General to not take any action to enforce the passed legislation for a period of 75 days from January 20, 2025.
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The resulting cloud computing platform aims to make it even faster and easier for developers to build, deploy and secure applications at the edge that outperform cloud-native applications, for less money, the same way they can in core data centers today.
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The Attorney General has since determined that our provision of services to this customer has not violated the law and that we can continue providing services as contemplated by the Executive Order without violating the law and without incurring any legal liability.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
Biggest changeThese risks 15 Table of Contents 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, anti-bribery and 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; changes in regulatory rules or policies or changes in government enforcement priorities and resources; macroeconomic developments and changes in the labor markets in which we operate; geopolitical developments, including increasing international tensions or 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, the Israel-Hamas war, and periodic escalations involving Israel and Iran or Hezbollah, as well as broader military confrontations involving the United States, terrorist attacks, public health emergencies, energy crises and natural disasters that could disrupt our ability to provide services or limit customer purchases of them.
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.
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, the announcement or 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.
Failure to develop, on a cost-effective basis, innovative or enhanced solutions that are attractive to customers and profitable to us could have a material detrimental effect on our business, results of operations, financial condition and cash flows. If we are unable to compete effectively and adapt to changing market conditions, our business will be adversely affected.
Failure to develop or acquire, on a cost-effective basis, innovative or enhanced solutions that are attractive to customers and profitable to us could have a material detrimental effect on our business, results of operations, financial condition and cash flows. If we are unable to compete effectively and adapt to changing market conditions, our business will be adversely affected.
Further, as a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction.
As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction.
We may not be able to anticipate the techniques used in such attacks, as they change frequently and may not be recognized until launched. The rapidly changing geopolitical landscape may also create new, unexpected, or unknown risks for which we may not immediately be prepared, requiring increased risk mitigation expenditures.
We may not be able to anticipate the techniques used in such attacks, as they change frequently and may not be recognized until launched. The rapidly changing technological and geopolitical landscape may also create new, unexpected, or unknown risks for which we may not immediately be prepared, requiring increased risk mitigation expenditures.
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.
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 war, unrest, trade sanctions or other political activity, public health issues, safety issues, natural disasters or general economic conditions.
The process of developing new solutions and product enhancements is complex, lengthy and uncertain and has become increasingly complex due to the sophistication of our customers’ needs. The development timetable is uncertain and we may commit significant resources to developing solutions for which a viable market may not ultimately develop.
The process of developing new solutions and product enhancements is complex, lengthy and uncertain and has become increasingly complex due to the sophistication of our customers’ needs. The development timetable is uncertain and we may commit significant resources to developing solutions for which a viable market may not develop.
If we are unable to appropriately increase management depth, enhance succession planning and decentralize our decision-making at a pace commensurate with our actual or desired growth rates, we may not be able to achieve our financial or operational goals.
Additionally, if we are unable to appropriately increase management depth, enhance succession planning and decentralize our decision-making at a pace commensurate with our actual or desired growth rates, we may not be able to achieve our financial or operational goals.
In addition, our ability to hire and retain employees may be adversely affected by volatility in the price of our stock or our ability to obtain shareholder approval to offer additional stock to our employees, because a significant portion of our compensation is in the form of equity grants.
Our ability to hire and retain employees may be adversely affected by volatility in our stock price or our ability to obtain shareholder approval to offer additional stock to our employees, because a significant portion of our compensation is in the form of equity grants.
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.
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 issuances of securities to finance large transactions; and potential unknown liabilities and regulatory requirements associated with an acquired business.
Our Acceptable Use Policy prohibits customers from using our network to deliver illegal or inappropriate content; if customers violate that policy, we may nonetheless face reputational damage, enforcement actions or lawsuits related to their content. Further, laws and regulations related to content could cause internet service providers, or others, to block our products in order to enforce content-blocking efforts.
Our Acceptable Use Policy prohibits customers from using our network to deliver illegal or inappropriate content; if customers violate that policy, we may nonetheless face reputational damage, enforcement actions or lawsuits related to their content. In addition, laws and regulations related to content could cause internet service providers, or others, to block our products in order to enforce content-blocking efforts.
Furthermore, open-source software may have security flaws and other deficiencies that could make our solutions less reliable and damage our business. We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation, or financial results. Artificial intelligence ("AI"), presents new risks and challenges that may affect our business.
Furthermore, open-source software may have security flaws and other deficiencies that could make our solutions less reliable and damage our business. We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation, or financial results. Artificial intelligence presents new risks, opportunities and challenges that may affect our business.
As a result, our stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
As a result, our stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock. Section 404 of the Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
If we are unable to efficiently and cost-effectively fix errors or other problems that we identify and improve the quality of our solutions or systems, or if there are unidentified errors that allow persons to improperly access our services or systems, we could experience litigation, the need to issue credits to customers, loss of revenue and market share, damage to our reputation, diversion of management attention, increased expenses, reduced profitability and other negative consequences which could harm our business.
If we are unable to efficiently and cost-effectively fix errors or other problems that we identify and improve the quality of our solutions or systems, or if there are unidentified errors that allow persons to improperly access our services or systems, we could experience litigation, the need to issue credits 13 Table of Contents to customers, loss of revenue and market share, damage to our reputation, diversion of management attention, increased expenses, reduced profitability and other negative consequences which could harm our business.
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.
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 and co-location facilities to house our servers and equipment to support our operations.
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.
During the first quarter of 2023, the third quarter of 2024 and the fourth quarter of 2025, 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.
If we are unable to remain profitable or if we use more cash than we generate in the future, our level of indebtedness at such time could adversely affect our operations by increasing our vulnerability to adverse changes in general economic and industry conditions and by limiting or prohibiting our ability to obtain additional financing for additional capital expenditures, acquisitions and general corporate and other purposes.
If we are unable to remain profitable or if we use more cash than we generate in the future, our level of indebtedness at such time could adversely affect our 24 Table of Contents operations by increasing our vulnerability to adverse changes in general economic and industry conditions and by limiting or prohibiting our ability to obtain additional financing for additional capital expenditures, acquisitions and general corporate and other purposes.
Success in these efforts is not guaranteed and will largely depend on our ability to create products that are competitive in the enterprise market, source additional co-location facilities, manage an uncertain supply chain for server related hardware and adapt our offerings to new or emerging technologies and changes in customer requirements, including those related to artificial intelligence workloads.
Success in these efforts is not guaranteed and will largely depend on our ability to create products that are competitive in the enterprise market, source additional co-location facilities, manage an uncertain supply chain for server related hardware and adapt our offerings to new or emerging technologies and changes in customer requirements, including those related to AI workloads.
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.
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 cloud computing services and experimental technologies could affect our reputation, ability to execute our strategies and our financial condition.
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.
For example, 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.
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.
For example, our 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 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.
Any disruption to our business could cause us to incur significant costs to repair damages to our facilities, equipment, infrastructure and business relationships. In addition, in response to concerns about global climate change, governments may adopt new regulations affecting the use of fossil fuels or requiring the use of alternative fuel sources which could adversely impact our business.
Any disruption to our business could cause us to incur significant costs to repair damages to our facilities, equipment, infrastructure and business relationships. 23 Table of Contents In addition, in response to concerns about global climate change, governments may adopt new regulations affecting the use of fossil fuels or requiring the use of alternative fuel sources which could adversely impact our business.
Our current and potential competitors vary by size, product offerings and geographic region and range from start-ups that offer solutions competing with a discrete part of our business to large technology or telecommunications companies that offer, or may be planning to introduce, products and services that are broadly competitive with what we do.
Our current and potential competitors vary by size, product offerings and geographic region and range from start-ups that offer solutions competing with a discrete part of our business to large technology or telecommunications companies that offer, or may be planning to introduce, products and 12 Table of Contents services that are broadly competitive with what 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, 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.
Any actual, alleged or perceived breach of network security in our systems or networks, or any other actual, alleged or perceived outage, 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 legal reporting obligations; 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.
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.
In addition, enactment and expansion of laws related to the use of AI 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.
Section 230 of the U.S. Communications Decency Act, often referred to as Section 230, gives websites that host user-generated content broad protection from legal liability for content posted on their sites. Proposals to repeal or amend Section 230 could expose us to greater legal liability in the conduct of our business.
Section 230 of the U.S. Communications Decency Act ("Section 230"), gives websites that host user-generated content broad protection from legal liability for content posted on their sites. Proposals to repeal or amend Section 230 could expose us to greater legal liability in the conduct of our business.
Smaller and more nimble competitors may be able to: attract customers by offering less sophisticated versions of products and services than we provide at lower prices than those we charge; develop new business models that are disruptive to us; and respond more quickly than we can to new or emerging technologies, changes in customer requirements and market and industry developments, resulting in superior offerings.
Smaller and more nimble competitors have in the past and may in the future be able to: attract customers by offering less sophisticated versions of products and services than we provide at lower prices than those we charge; develop new business models that are disruptive to us; and respond more quickly than we can to new or emerging technologies, changes in customer requirements and market and industry developments, resulting in superior offerings.
In addition, certain security systems in homes or other remote workplaces may be less secure than those used in our offices, which may subject us to increased security risks, including cybersecurity-related events, and expose us to risks of data or financial loss and associated disruptions to our business operations.
For example, certain security systems in homes or other remote workplaces may be less secure than those used in our offices, which may subject us to increased security risks, including cybersecurity-related events, and expose us to risks of data or financial loss and associated disruptions to our business operations.
We might experience reduced demand for our offerings if we are unable to engineer products that meet our legal duties or help our customers meet their obligations under the GDPR, the CCPA or other applicable data regulations, or if the changes we implement to comply with such laws and regulations make our offerings less attractive.
We might experience reduced demand for our offerings if we are unable to engineer products that meet our legal duties or help our customers meet their obligations under applicable data regulations, or if the changes we implement to comply with such laws and regulations make our offerings less attractive.
We have also periodically experienced customer dissatisfaction with the quality of some of our delivery, security, compute and other services, which has led to a loss of business and could lead to a loss of customers in the future. Furthermore, most of our customer agreements contain service level commitments.
We have also periodically experienced customer dissatisfaction with the quality of some of our delivery, security, cloud computing and other services, which has led to a loss of business and could lead to a loss of customers in the future. Furthermore, most of our customer agreements contain service level commitments.
If we fail to mitigate these harms or if there is a significant cybersecurity event using our compute products or our compute products are perceived to be less reliable than our competitors, it could result in loss of customers and reputational damage.
If we fail to mitigate these harms or if there is a significant cybersecurity event using our cloud computing products or our cloud computing products are perceived to be less reliable than our competitors, it could result in loss of customers and reputational damage.
In particular, as security and compute solutions have become, and are expected to continue to be, an important part of our business, we must be particularly adept at developing new security solutions that meet the constantly-changing threat landscape and compute and compute-to-edge solutions that meet the needs of professional users and enterprises looking to increase the utility of the internet for their business.
In particular, as security and cloud computing solutions have become, and are expected to continue to be, an important part of our business, we must be particularly adept at developing new security solutions that meet the constantly-changing threat landscape and cloud computing, compute-to-edge and AI inference solutions that meet the needs of professional users and enterprises looking to increase the utility of the internet for their business.
Although the enacted and effective legislation in some countries was applicable to us as of January 1, 2024, and increased our effective income tax rate, the increase did not 17 Table of Content s have a material impact on our overall results of operations or cash flows. We will continue to monitor and evaluate the impacts of the developing legislation.
Although the enacted and effective legislation in some countries was applicable to us as of January 1, 2024, and increased our effective income tax rate, the increase did not have a material impact on our overall results of operations or cash flows. We will continue to monitor and evaluate the impacts of the developing legislation.
For example, a large social media customer has recently taken steps to lower costs and reduce reliance on U.S. providers by optimizing its platform, including using a DIY component, which has reduced traffic on our network and negatively impacted our revenue in 2024 and is likely to continue to do so in the future.
For example, a large social media customer has taken steps to lower costs and reduce reliance on U.S. providers by optimizing its platform, including using a DIY component, which reduced traffic on our network and negatively impacted our revenue in 2024 and may continue to do so in the future.
We base our decisions about expense levels and investments on estimates of our future revenue and future anticipated rates of growth and may incur varying levels of expense based on strategic initiatives, including acquisitions and the build out of our network to support our compute solutions.
We base our decisions about expense levels and investments on estimates of our future revenue and future anticipated rates of growth and may incur varying levels of expense based on strategic initiatives, including acquisitions and the build out of our network to support our cloud computing solutions.
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.
At times, some of our customers have determined that it is better for them to employ a 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.
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.
Revenue 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" ("DIY") initiatives or redistributing traffic among multiple providers.
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 .
It is also uncertain whether our strategies to develop and deploy our own competing cloud computing offering will attract additional customers or generate enough revenue to be successful. The costs related to these efforts may also reduce the gross and operating margins we have previously achieved .
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.
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.
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.
In addition, we are subject to laws and regulations worldwide that differ among jurisdictions and may change, affecting our operations in areas such as intellectual property ownership and infringement; tax; anti-bribery and anti-corruption; technology sovereignty, internet, technology and export 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 and immigration.
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.
As of the date of this report, we had total principal amount of $1,150.0 million of convertible senior notes outstanding due in 2027, total principal amount of $1,265.0 million of convertible senior notes outstanding due in 2029 and total principal amount of $1,725.0 million of convertible senior notes outstanding due in 2033.
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.
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.
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; attractive acquisition targets may be too expensive for us to pursue, which could cause us to pursue more time-consuming internal development.
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, the Israel-Hamas War and other hostilities in the Middle East have 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.
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.
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.
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.
It is also important to our continued success that we hire qualified personnel, integrate new employees from our recent acquisitions, 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.
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.
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 cloud computing 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; secure server components (including memory), co-location space and power on preferred terms and with priority access, which can constrain industry supply and increase our costs; 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.
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.
U.S. and international laws and regulations that apply to the internet, including 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, restrictions on social media or other platforms, applications or content, as well as developing regulatory concerns related to digital or cloud sovereignty, could pose risks to our revenues, intellectual property and customer relationships and could increase expenses or create other disadvantages to our business.
We have in the past and may in the future take certain steps to reduce expenses, however, there are no assurances that we will be able to effectively reduce our expenses and such actions may negatively affect our ability to invest in our business for innovation, systems improvements and other initiatives.
We have in the past and may in the future take certain steps to reduce expenses or to raise our prices to offset cost increases, however, there are no assurances that we will be able to effectively reduce or offset our expenses and such actions may negatively affect our ability to invest in our business for innovation, systems improvements and other initiatives.
We will need to continue to upgrade and improve our data systems, traffic measurement systems, billing systems, ordering processes and other operational and financial systems, procedures and controls. These upgrades and improvements may be difficult and costly.
We will need to continue to upgrade and improve our data systems, traffic measurement systems, billing systems, ordering processes and other operational and financial systems, procedures and controls, which may be difficult and costly.
Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results, may result in a restatement of our financial statements for prior periods, cause us to fail to meet our reporting obligations, and could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in the periodic reports we will file with the Securities and Exchange Commission.
Failure to develop or maintain effective controls, or difficulties encountered in their implementation or improvement, or the identification of additional material weaknesses—by us or by our independent registered public accounting firm—could harm our operating results, result in a restatement of prior-period financial statements, cause us to fail to meet our reporting obligations, and adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in the periodic reports we will file with the Securities and Exchange Commission.
Engineering efforts to build new capabilities to facilitate compliance with law enforcement access requirements, content access restrictions or other regulations could require us to take on substantial expenses and divert engineering resources from other projects. These circumstances could harm our profitability.
Engineering efforts to build new capabilities to facilitate compliance with law enforcement access requirements, content access restrictions or other regulations could require us to take on substantial expenses and divert engineering resources from other projects.
Additionally, government contracts generally have requirements that are more complex than those found in commercial enterprise agreements and therefore are more costly to comply with.
Additionally, government contracts generally have requirements that are more complex than those found in commercial enterprise agreements 19 Table of Contents and therefore are more costly to comply with.
Although the terms of our credit facility include certain financial ratios that potentially limit our future indebtedness, the terms of the notes do not. If we incur significantly more debt, this could intensify the risks described above.
Although the terms of our credit facilities include certain covenants that potentially limit our future indebtedness, the terms of the notes do not. If we incur significantly more debt, this could intensify the risks described above.
These provisions include: our board of directors having the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director; stockholders needing to provide advance notice, additional disclosures and representations and warranties to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders' meeting; and the ability of our board of directors to issue, without stockholder approval, shares of undesignated preferred stock.
For example, our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director; stockholders must provide advance notice, additional disclosures and representations and warranties to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders' meeting; and our board of directors can issue, without stockholder approval, shares of undesignated preferred stock.
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.
For example, with the acquisition of Linode Limited Liability Company ("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 cloud computing products.
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.
The primary competitive factors in our market are differentiation of technology, global presence, quality of solutions, reliability, long-term product roadmap, data center maintenance and acquisition, supply chain resilience, customer service, technical expertise, security, ease-of-use, breadth of services offered, price and financial strength.
We may take similar steps in the future as we seek to realize operating synergies, optimize our operations to achieve our target operating model and profitability objectives, respond to market forces or better reflect changes in the strategic direction of our business. Disruptions in operations may occur as a result of taking these actions.
We may take similar steps in the future as we seek to realize operating synergies, optimize our operations to achieve our target operating model and profitability objectives, respond to market forces or better reflect changes in the strategic direction of our business.
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.
Interpretations of laws or regulations that would subject us to regulatory enforcement actions, supervision or, alternatively, 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.
If we fail to meet these contractual commitments, we could be obligated to provide credits for future service, or face contract termination with refunds of prepaid amounts, which could harm our business.
If we fail to meet these contractual commitments, we have in the past and may in the future be obligated to provide credits for future service, or face contract termination with refunds of prepaid amounts, which could harm our business.
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.
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 slow our revenue growth or increase our operating costs, which could negatively impact our profitability.
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.
We are retasking certain employees to work on our cloud computing solutions which will require the use of our resources and if we are unable to successfully retrain our employees, our cloud computing business may suffer. Furthermore, geopolitical events may impact our retention efforts.
If we are unable to effectively maintain a hybrid workforce, manage the cybersecurity and other risks of remote work and maintain our corporate culture and workforce morale, our business could be harmed or otherwise negatively impacted. Our restructuring and reorganization activities may be disruptive to our operations and harm our business.
If we are unable to effectively maintain a hybrid workforce, manage the cybersecurity and other risks of remote work and maintain our corporate culture and workforce morale, our business could be harmed or otherwise negatively impacted.
Over the past several years, we have implemented internal restructurings and reorganizations designed to reduce the size and cost of our operations, improve operational efficiencies and reprioritize investments, enhance our ability to pursue market opportunities and accelerate our technology development initiatives.
Our restructuring and reorganization activities may be disruptive to our operations and harm our business. Over the past several years, we have implemented internal restructurings and reorganizations designed to reduce the size and cost of our operations, improve operational efficiencies and reprioritize investments, enhance our ability to pursue market opportunities and accelerate our technology development initiatives.
Financial and Operational Risks Slowing revenue growth has in the past and may continue to negatively impact our profitability and stock price. The overall revenue growth we have enjoyed in recent years may not continue in future periods and could decline, which could negatively impact our profitability and stock price.
Financial and Operational Risks Slowing, flat or limited revenue growth has in the past and may continue to negatively impact our profitability and stock price. The overall revenue growth we have enjoyed in recent years may not continue and could decline, negatively impacting our profitability and stock price.
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.
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. Because most of our employees work remotely, we are subject to additional risks.
The rapid evolution of AI combined with the uncertain and often inconsistent regulatory landscape may require significant additional resources and costs and could in some cases limit our ability to implement AI capabilities in our solutions or to use AI to support business operations. Further, data used to train AI-based systems may lead to harm to our reputation.
Further, the rapid evolution of AI combined with the uncertain, rapidly evolving and often inconsistent regulatory landscape may require significant additional resources and costs and could in some cases limit our ability to implement AI capabilities in our solutions or to use AI to support business operations.
Our AI efforts may not be successful and our competitors may incorporate AI into their products more successfully than us, which could impair our ability to compete effectively and adversely affect our financial results.
Our AI focused initiatives, including AIC, may not be successful, and our competitors may incorporate AI into their products or market their AI solutions more successfully than us, which could impair our ability to compete effectively and adversely affect our financial results.
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.
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.
Our ability to generate revenue in our security business depends on our ability to increase our industry recognition as a provider of security solutions, develop or acquire new solutions in a rapidly-changing environment where security threats are constantly evolving and ensure that our solutions operate effectively and are competitive with products offered by others.
Our ability to generate security revenue depends on our ability to increase our industry recognition as a provider of security solutions, navigate a highly competitive market, develop or acquire new solutions in a rapidly-changing environment where security threats are constantly evolving and ensure that our solutions operate effectively and are competitive with products offered by others, particularly as larger providers increasingly offer broader platforms of security services.
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.
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, the Israel-Hamas war and the escalation of military conflict between Israel and Iran, as well as broader military confrontations involving the United States.
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.
For example, we are investing significant resources in our cloud computing solutions and platform, working on expanding capacity, adding additional sites and developing increased cloud computing features and functionality.
As a result, our business could be significantly harmed. In addition, the use of third-party technology may expose us to third-party claims of intellectual property infringement which could cause us to incur significant costs in defense or alternative sourcing.
In addition, the use of third-party technology may expose us to third-party claims of intellectual property infringement which could cause us to incur significant costs in defense or alternative sourcing.
We have also agreed to indemnify our customers and channel and strategic partners if our solutions infringe or misappropriate specified intellectual property rights. As a result, we have been and could again become involved in litigation or claims brought against customers or channel or strategic partners if our solutions or technology are the subject of such allegations.
As a result, we have been and could again become involved in litigation or claims brought against customers or channel or strategic partners if our solutions or technology are the subject of such allegations.
Adverse conditions in these countries have in the past and may in the future affect our operations, including disruptions to our workforce, supply chains, networks, financial systems and other critical infrastructure, which could adversely affect our business, results of operations, financial condition and cash flows.
Adverse conditions in these countries or actions by them to adopt policies that are unfavorable to other countries in which we operate have in the past and may in the future affect our operations, including by causing disruptions to our workforce, supply chains, networks, financial systems and other critical infrastructure, which could adversely affect our business, results of operations, financial condition and cash flows.
If we do not have sufficient cash upon conversion of the notes or to repurchase the notes following a fundamental change, we would be in default under the terms of the notes, which could seriously harm our business.
If we do not have sufficient cash upon conversion of the notes or to repurchase the notes if required by purchasers in accordance with the terms thereof, we would be in default under the terms of the notes, which could seriously harm our business.
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.
Taking these actions may also result in significant expense, including with respect to workforce reductions, decreased productivity due to 18 Table of Contents employee distraction and unanticipated employee turnover, which could adversely affect our operating results. We may have exposure to greater-than-anticipated tax liabilities.
Violations of these laws and regulations can result in fines; additional costs related to governmental investigations; criminal sanctions against us, our officers or our employees; prohibitions on the conduct of our business; and damage to our reputation.
Violations of these laws and regulations can result in fines or disgorgement of profits; additional costs related to internal or governmental investigations; remedial undertakings; contract damages, criminal sanctions against us, our officers or our employees; suspension or debarment; loss of licenses or certifications; prohibitions on the conduct of our business; and damage to our reputation.
The loss of the services of a significant number of our employees or any of our key employees or our inability to attract and retain new talent in a timely fashion may be disruptive to our operations and overall business.
The loss of the services of a significant number of our employees or any of our key employees or our inability to attract and retain new talent in a timely fashion may be disruptive to our operations and overall business. Our failure to manage new risks as our business evolves and our work practices change could harm us.
Numerous laws, such as the European Union's General Data Protection Regulation ("GDPR"), and the California Consumer Privacy Act of 2018 ("CCPA"), and industry self-regulatory codes have been enacted, and more laws are being considered that may affect 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 and respond to customer requests allowed under the laws.
Numerous laws and industry self-regulatory codes have been enacted, and additional and revised laws are being considered that may affect 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 and respond to customer requests allowed under the laws.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+3 added−0 removed10 unchanged
Biggest changeThe CSO and Akamai’s information security team regularly communicate the nature and state of security risks to senior business leaders across the organization. In addition, the CSO meets on a regular basis with the Information Security Committee to provide cybersecurity program updates and to discuss potential risks and changes in the cyber threat landscape in which we operate.
Biggest changeIn addition, the CSO meets on a regular basis with the Information Security Committee, which is comprised of Akamai's senior leadership, to provide cybersecurity program updates and to discuss potential risks and changes in the cyber threat landscape in which we operate.
Reporting to the Chief Executive Officer through the Company's Executive Vice President and General Manager of the Security Technology Group, the CSO leads Akamai’s Information Security Committee, which works cross-functionally with other Akamai departments, including legal, business, policy and technical functions, as appropriate, to exchange information related to cybersecurity.
Reporting to the Chief Executive Officer through Akamai's Executive Vice President and General Manager of the Security Technology Group, the CSO leads Akamai’s Information Security Committee, which works cross-functionally with other Akamai departments, including legal, business, policy and technical functions, as appropriate, to exchange information related to cybersecurity.
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.
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 cloud computing solutions and services and maintain internal systems and other data associated with running our business.
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.
This program is integrated into our overall enterprise risk management program and 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.
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.
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.
These operational pillars and the programs established from them are informed by cybersecurity industry standards. Our programs are designed to identify and categorize cybersecurity threats and risks through different sources. We conduct assessments of threat models to determine which risks are most likely to impact us.
Our programs are designed to identify and categorize cybersecurity threats and risks through different sources. We conduct assessments of threat models to determine which risks are most likely to impact us.
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.
In addition to ongoing risk management procedures, we have implemented a cybersecurity incident procedure designed to identify and address security incidents through various channels.
The results of such evaluation are discussed with the board of directors as appropriate. On a regular basis, our cybersecurity professionals conduct internal assessments of this process. Additionally, we have implemented an incident response plan that is reviewed by the Audit Committee and the board of directors from time to time. We also incorporate security practices into employee training.
Additionally, we have implemented an incident response plan that is reviewed by the Audit Committee and the board of directors from time to time. 26 Table of Contents We also incorporate security practices into employee training.
Added
The CSO and Akamai’s information security team regularly communicate the nature and state of security risks to senior business leaders across the organization.
Added
The information security team, under the authority of the CSO, has developed a cybersecurity risk management program, informed by industry cybersecurity standards, to identify, assess and manage risks presented by cybersecurity threats.
Added
The results of such evaluation are discussed with the board of directors as appropriate. On a regular basis, our cybersecurity professionals conduct internal assessments of this process.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 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.
Biggest changeItem 2. Properties We operate 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed1 unchanged
Biggest changeEffective 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.
Biggest changeDuring the year ended December 31, 2025, we repurchased 10.0 million shares of our common stock for an aggregate purchase price of $800.0 million. Item 6. [Reserved] Not applicable.
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.
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 16, 2026, there were 185 holders of record of our common stock.
(2) Consists of shares of our common stock, par value $0.01 per share. (3) Includes commissions paid, but excludes any estimated excise taxes payable on share repurchases. (4) Effective January 2022, our board of directors authorized a $1.8 billion share repurchase program through December 2024.
(2) Consists of shares of our common stock, par value $0.01 per share. (3) Includes commissions paid, but excludes any estimated excise taxes payable on share repurchases. (4) Effective May 2024, our board of directors authorized a $2.0 billion share repurchase program through June 2027.
We 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.
We currently intend to retain all future earnings, if any, for use in the operation of our business. 27 Table of Contents Issuer Purchases of Equity Securities The following is a summary of our repurchases of our common stock in the fourth quarter of 2025 (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, 2025 – October 31, 2025 — $ — — $ 1,180,514 November 1, 2025 – November 30, 2025 — — — 1,180,514 December 1, 2025 – December 31, 2025 — — — 1,180,514 Total — $ — — (1) Information is based on settlement dates of repurchase transactions.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. [Reserved] 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46 Item 8. Financial Statements and Supplementary Data 48 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 89 Item 9A. Controls and Procedures 90 Item 9B.
Biggest changeItem 6. [Reserved] 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 49 Item 8. Financial Statements and Supplementary Data 51 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 93 Item 9A. Controls and Procedures 94 Item 9B.

Item 7. Management's Discussion & Analysis

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

115 edited+38 added−21 removed85 unchanged
Biggest changeResults 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.
Biggest changeResults of Operations The following sets forth, as a percentage of revenue, consolidated statements of income data for the years indicated: 2025 2024 2023 Revenue 100 % 100 % 100 % Costs and operating expenses: Cost of revenue (exclusive of amortization of acquired intangible assets shown below) 41 41 40 Research and development 12 12 11 Sales and marketing 14 14 14 General and administrative 16 16 16 Amortization of acquired intangible assets 3 2 2 Restructuring charge 1 2 1 Total costs and operating expenses (1) 87 87 83 Income from operations (1) 13 13 17 Interest and marketable securities income, net 2 3 1 Interest expense (1) (1) — Other expense, net — — — Income before provision for income taxes (1) 14 15 17 Provision for income taxes (4) (2) (3) Gain from equity method investment — — — Net income (1) 11 % 13 % 14 % (1) Amounts may not foot due to rounding.
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.
Because we publicly report in U.S. dollars, our reported revenue results are negatively impacted when the U.S. dollar strengthens and benefit when the U.S. dollar weakens. • We have experienced variations in certain types of revenue from quarter-to-quarter.
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.
We also acquired 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.
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.
The increase to interest and marketable securities income, net for 2024 as compared to 2023, 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.
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.
During these periods, our average stock price was in excess of $95.10, which is the initial conversion price of our convertible senior notes which matured in May 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.
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.
Our investment policy is also 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.
As of December 31, 2024, our cash, cash equivalents and marketable securities, which are detailed in Note 3 to the consolidated financial statements included elsewhere in this annual report on Form 10-K, totaled $1.9 billion. We place our cash investments in instruments that meet high-quality credit standards, as specified in our investment policy.
As of December 31, 2025, our cash, cash equivalents and marketable securities, which are detailed in Note 3 to the consolidated financial statements included elsewhere in this annual report on Form 10-K, totaled $1.9 billion. We place our cash investments in instruments that meet high-quality credit standards, as specified in our investment policy.
In May 2024, our board of directors authorized a new $2.0 billion share repurchase program, effective May 2024 through June 2027, which was in addition to amounts remaining under the January 2022 program. As of December 31, 2024, the January 2022 $1.8 billion program was fully utilized and $2.0 billion remains available for repurchase on the May 2024 program.
In May 2024, our board of directors authorized a new $2.0 billion share repurchase program, effective May 2024 through June 2027, which was in addition to amounts remaining under the January 2022 program. As of December 31, 2025, the January 2022 program was fully utilized and $1.2 billion remains available for repurchase on the May 2024 program.
The restructuring charge in 2023 was primarily driven by our FlexBase program as we exited certain facilities that were no longer needed, resulting in impairments of right-of-use-assets and leasehold improvements. We do not expect to incur material additional charges related to the FlexBase program.
We do not expect to incur material additional charges related to this action. The restructuring charge in 2023 was primarily driven by our FlexBase program as we exited certain facilities that were no longer needed, resulting in impairments of right-of-use-assets and leasehold improvements. We do not expect to incur material additional charges related to the FlexBase program.
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.
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 2025 and 2024 was determined to be immaterial.
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.
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, 2025 and 2024, and it was substantially in excess of the carrying value of the reporting unit at each date.
Significant Accounting Policies and Estimates See Note 2 to the consolidated financial statements included elsewhere in this annual report on Form 10-K for information regarding recent and newly adopted accounting pronouncements. Application of Critical Accounting Policies and Estimates Overview Our MD&A is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
Significant Accounting Policies and Estimates See Note 2 to the consolidated financial statements included elsewhere in this annual report on Form 10-K for information regarding recent and newly adopted accounting pronouncements. 45 Table of Contents Application of Critical Accounting Policies and Estimates Overview Our MD&A is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
This acquisition is intended to further strengthen our existing delivery and other businesses as we transition the acquired customers to our platform and offer our portfolio of other services to them. We also acquired Noname Gate Ltd. ("Noname Security") in June 2024.
This acquisition is intended to further strengthen our existing delivery and other businesses as we transition the acquired customers to our platform and offer our portfolio of other services to them. We also acquired Noname Security in June 2024.
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.
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. 39 Table of Contents • 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.
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.
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, cloud computing solutions and professional services.
The increase to interest expense for 2024 as compared to 2023, and 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.
The increase to interest expense for 2024 as compared to 2023 was primarily due to the August 2023 issuance of $1,265.0 million in par value of convertible senior notes due 2029.
These minimum commitments may vary from period to period depending on the timing and length of contract renewals with our vendors, and on our plans for network expansion, including our expansion plans related to our compute business.
These minimum commitments may vary from period to period depending on the timing and length of contract renewals with our vendors, and on our plans for network expansion, including our expansion plans related to our compute locations.
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.
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 38 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.
Acquired intangible assets, other than goodwill, are amortized over their estimated useful lives based upon the estimated economic value derived from the related intangible assets. Income Taxes Our provision for income taxes is comprised of a current and a deferred portion.
Acquired intangible assets, other than goodwill, are amortized over their estimated useful lives based upon the estimated 47 Table of Contents economic value derived from the related intangible assets. Income Taxes Our provision for income taxes is comprised of a current and a deferred portion.
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.
These programs are designed to better align employee incentives with the interests of our stockholders, which has increased our stock-based compensation. • Depreciation expense related to our network equipment also contributes to our overall expense levels.
We periodically assess whether triggering events are present to review internal-use software for impairment. Changes in our estimates related to internal-use software would increase or decrease operating expenses or amortization recorded during the period.
We periodically assess whether triggering events are present to review internal-use software for impairment. Changes in our estimates related to internal-use software would increase or decrease operating expenses or amortization recorded during the period. 48 Table of Contents
With respect to the convertible senior notes due in each of 2029, 2027 and 2025, unless our weighted average stock price is greater than $126.31, $116.18 and $95.10, respectively, the initial conversion prices, there will be no difference between GAAP and non-GAAP diluted weighted average common shares outstanding.
With respect to the convertible senior notes due in each of 2033, 2029 and 2027, and those that matured in 2025, unless our weighted average stock price is greater than $93.01, $126.31, $116.18 and $95.10, respectively, the initial conversion prices, there will be no difference between GAAP and non-GAAP diluted weighted average common shares outstanding.
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.
As of December 31, 2025, we had cash and cash equivalents of $382.7 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.
The restructuring charge included severance and related expenses for certain headcount reductions, as well as impairments of acquired intangible assets and capitalized internal-use software. We do not expect to incur material additional charges related to these actions.
The charge included severance and related expenses for certain headcount reductions, as well as impairments of acquired intangible assets and capitalized internal-use software. We do not expect to incur material additional charges related to this action.
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.
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. We do not expect additional activity related to this investment.
Overview We develop and provide solutions for global enterprises to build, secure and accelerate their applications and digital experiences through our massively distributed global network, which underpins our security, delivery and compute solutions, and is central to our financial success.
Overview We develop and provide solutions for global enterprises to build, secure and accelerate their applications and digital experiences through our massively distributed global infrastructure, which underpins our security, delivery and cloud computing solutions, and is central to our financial success.
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.
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 – 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, short-term incentive awards with a one year vest and shares issued as part of a retirement savings program.
Other expense, net for 2024 and 2022 also includes impairments of $5.1 million and $8.9 million, respectively, from cost method investments. Other expense, net may fluctuate in the future based on changes in foreign currency exchange rates or other events.
Other expense, net for 2025 and 2024 also includes a net gain of $9.4 million and impairments of $5.1 million, respectively, from cost method investments. Other expense, net may fluctuate in the future based on changes in foreign currency exchange rates or other events.
We, and the industry more broadly, are seeing growth at a slower pace than we have experienced in the past. In particular, we are seeing traffic growth slowing in verticals such as media and gaming, as these customers optimize their traffic and manage through underlying business challenges at a time of global economic and geopolitical headwinds.
We, and the industry more broadly, are seeing growth at a slower pace than we have experienced in the past. In particular, customers in verticals such as media and gaming have optimized their traffic to manage through underlying business challenges at a time of global macroeconomic and geopolitical headwinds.
The terms of the revolving credit agreements are discussed more fully in Note 11 to the consolidated financial statements included elsewhere in this annual report on Form 10-K. In January 2025, we entered into a $150.0 million uncommitted revolving credit agreement ("2025 Credit Agreement").
The terms of the notes and 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. Revolving Credit Facilities In January 2025, we entered into a $150.0 million uncommitted revolving credit agreement ("2025 Credit Agreement").
The increase in cost of revenue for 2024 as compared to 2023 was partially offset by lower network build-out and supporting services due to a decrease in third-party cloud costs as we have been migrating third-party cloud services onto our own compute platform and working to optimize third-party cloud spending.
The increase in cost of revenue for 2024 as compared to 2023 was partially offset by lower network build-out and supporting services due to a decrease in third-party cloud costs as we have migrated third-party cloud services onto our own compute platform and have focused on optimizing third-party cloud spending.
We have selected the Black-Scholes option pricing model to determine the fair value of stock option awards and the Monte Carlo simulation model to determine the fair value of market-based restricted stock unit awards.
We have selected the Black-Scholes option pricing model to determine the fair value of stock awards issued under our 1999 Employee Stock Purchase Plan and the Monte Carlo simulation model to determine the fair value of market-based restricted stock unit awards.
This increase was partially offset by an increase in repurchases of our common stock. In October 2021, our board of directors authorized a $1.8 billion share repurchase program that was effective from January 2022 through December 2024.
These increases were partially offset by a reduction in repurchases of our common stock as part of our share repurchase program. In October 2021, our board of directors authorized a $1.8 billion share repurchase program that was effective from January 2022 through December 2024.
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.
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, 2025 2024 % Change % Change at Constant Currency 2024 2023 % Change % Change at Constant Currency U.S. $ 2,139,173 $ 2,075,533 3 % 3 % $ 2,075,533 $ 1,968,779 5 % 5 % As a percentage of revenue 51 % 52 % 52 % 52 % International 2,069,002 1,915,635 8 7 1,915,635 1,843,141 4 % 5 As a percentage of revenue 49 % 48 % 48 % 48 % Total revenue $ 4,208,175 $ 3,991,168 5 % 5 % $ 3,991,168 $ 3,811,920 5 % 5 % For each of the years ended December 31, 2025, 2024 and 2023, no single country outside of the U.S. accounted for 10% or more of revenue.
To the extent these macroeconomic conditions continue, we expect that it may adversely affect our business, operations and financial results.
To the extent these macroeconomic conditions continue, the impact may adversely affect our business, operations and financial results.
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.
The key factors that influence our financial success are our ability to build on recurring revenue commitments across our security, delivery and cloud computing product portfolios, increase traffic on our network, continue to develop, scale and successfully bring to market our compute platform, including AIC 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 considering the market dynamics on our cost structure driven by hyperscalers, continuously develop new and existing products and appropriately manage our capital spending and other operational expenses.
Diluted weighted average common shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to us pursuant to the note hedge transactions entered into in connection with the issuance of $1,265 million of convertible senior notes due 2029 and the issuances of $1,150 million of convertible senior notes due 2027 and 2025, respectively.
Diluted weighted average common shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to us pursuant to the note hedge transactions entered into in connection with the issuances of our convertible senior notes.
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.
We believe our strong balance sheet, cash position and access to funds available under our revolving credit facilities are important competitive 42 Table of Contents differentiators that provide the financial stability and flexibility to enable us to continue to make investments at opportune times. We expect to continue to evaluate strategic investments to strengthen our business.
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.
During 2025, 2024 and 2023, we repurchased 10.0 million, 5.6 million and 7.8 million shares of our common stock, respectively, at an average price per share of $79.77, $99.14 and $83.83, respectively.
We continue to take steps upon contract renewals to sign customers to multi-year contracts and to optimize how we charge certain high-volume traffic customers to maintain alignment between customer traffic volumes and unit pricing. • Revenue from our international operations continues to grow, particularly from new customer acquisition and cross-selling of incremental solutions.
We continue to take steps upon contract renewals to sign customers to multi-year contracts and to optimize how we charge customers to maintain alignment between customer traffic volumes, significant cost increases we have experienced due to market dynamics driven by hyperscalers and unit pricing. • Revenue from our international operations continues to grow, particularly from new customer acquisition and cross-selling of incremental solutions.
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.
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.
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.
Amortization of Acquired Intangible Assets For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2025 2024 % Change 2024 2023 % Change Amortization of acquired intangible assets $ 111,066 $ 92,081 21 % $ 92,081 $ 66,751 38 % As a percentage of revenue 3 % 2 % 2 % 2 % The increase in amortization of acquired intangible assets for 2025 as compared to 2024, and 2024 as compared to 2023, was the result of amortization of acquired intangible assets related to our recent acquisitions.
We assess collectability based upon a review of customer receivables from prior sales with collection issues where we no longer believe that the customer has the ability to pay for services previously provided. We also perform ongoing credit evaluations of our customers.
In addition, the allowance for current expected credit losses considers outstanding balances on a customer-specific, account-by-account basis. We assess collectability based upon a review of customer receivables from prior sales with collection issues where we no longer believe that the customer has the ability to pay for services previously provided. We also perform ongoing credit evaluations of our customers.
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.
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 our microsegmentation solutions, and increased sales of our cloud computing solutions, attributable to enhanced services on our compute platform, and growth in our Cloud Infrastructure Services, have made a significant contribution to revenue growth.
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.
Adjusted EBITDA margin represents Adjusted EBITDA stated as a percentage of revenue. 41 Table of Contents The following table reconciles GAAP net income to Adjusted EBITDA and Adjusted EBITDA margin for the years ended December 31, 2025, 2024 and 2023 (in thousands): 2025 2024 2023 Net income $ 452,031 $ 504,918 $ 547,629 Amortization of acquired intangible assets 111,066 92,081 66,751 Stock-based compensation 459,402 393,378 328,467 Amortization of capitalized stock-based compensation and capitalized interest expense 50,890 42,910 32,981 Restructuring charge 58,051 95,441 56,643 Acquisition-related costs 3,247 7,502 13,345 Legal settlements 4,000 2,500 — Interest and marketable securities income, net (70,808) (100,280) (45,194) Interest expense 30,759 27,117 17,709 Provision for income taxes 150,374 82,095 106,373 Depreciation and amortization 548,012 514,455 472,035 (Gain) loss on cost method investments, net (9,370) 5,066 (311) Gain from equity method investment — — (1,475) Other expense, net 13,958 14,495 12,607 Adjusted EBITDA $ 1,801,612 $ 1,681,678 $ 1,607,560 Net income margin 11 % 13 % 14 % Adjusted EBITDA margin 43 % 42 % 42 % Impact of Foreign Currency Exchange Rates Revenue and earnings from our international operations have historically been an important contributor to our financial results.
(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.
Gain from Equity Method Investment For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2025 2024 % Change 2024 2023 % Change Gain from equity method investment $ — $ — — % $ — $ (1,475) 100 % As a percentage of revenue — % — % — % — % The gain from equity method investment relates to our investment with MUFG in a joint venture, GO-NET.
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.
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 – The issuance costs of our 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.
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.
We, along with our customers, continue to manage through an uncertain period of fluctuating inflation, regulatory policies and resources that may negatively impact business, economic and political uncertainty, decreased consumer confidence and pressure on prices during contract renewals, uncertain energy supplies, heightened geopolitical tensions and conflict, potential for supply chain disruptions, changes in legislation and regulations, including U.S. and international tax laws, volatility and increasing tensions related to changing trade policies, including announced or expected tariffs, fluctuations in foreign exchange rates and elevated interest rates.
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.
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.
Additionally, cash used in investing activities in 2023 included an increase in purchases of marketable securities with the proceeds from our August 2023 issuance of convertible senior notes. These decreases were partially offset by cash paid for the acquisition of Noname Security.
Additionally, cash used in investing activities in 2023 included an increase in purchases of marketable securities with the proceeds from our August 2023 issuance of convertible senior notes.
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.
However, we are focused on remaining disciplined in allocating our resources to support our faster growing security and cloud computing solutions, including maintaining operational efficiencies to mitigate the rising cost of talent.
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.
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, 2025, 2024 and 2023 (in thousands): 2025 2024 2023 Income from operations $ 566,944 $ 533,411 $ 637,338 Amortization of acquired intangible assets 111,066 92,081 66,751 Stock-based compensation 459,402 393,378 328,467 Amortization of capitalized stock-based compensation and capitalized interest expense 50,890 42,910 32,981 Restructuring charge 58,051 95,441 56,643 Acquisition-related costs 3,247 7,502 13,345 Legal settlements 4,000 2,500 — Non-GAAP income from operations $ 1,253,600 $ 1,167,223 $ 1,135,525 GAAP operating margin 13 % 13 % 17 % Non-GAAP operating margin 30 % 29 % 30 % The following table reconciles GAAP net income to non-GAAP net income for the years ended December 31, 2025, 2024 and 2023 (in thousands): 2025 2024 2023 Net income $ 452,031 $ 504,918 $ 547,629 Amortization of acquired intangible assets 111,066 92,081 66,751 Stock-based compensation 459,402 393,378 328,467 Amortization of capitalized stock-based compensation and capitalized interest expense 50,890 42,910 32,981 Restructuring charge 58,051 95,441 56,643 Acquisition-related costs 3,247 7,502 13,345 Legal settlements 4,000 2,500 — Amortization of debt issuance costs 7,053 6,521 5,341 (Gain) loss on cost method investments, net (9,370) 5,066 (311) Gain from equity method investment — — (1,475) Income tax effect of above non-GAAP adjustments and certain discrete tax items (89,945) (154,735) (89,364) Non-GAAP net income $ 1,046,425 $ 995,582 $ 960,007 40 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, 2025, 2024 and 2023 (in thousands, except per share data): 2025 2024 2023 GAAP net income per diluted share $ 3.07 $ 3.27 $ 3.52 Adjustments to net income: Amortization of acquired intangible assets 0.76 0.60 0.43 Stock-based compensation 3.12 2.55 2.11 Amortization of capitalized stock-based compensation and capitalized interest expense 0.35 0.28 0.21 Restructuring charge 0.39 0.62 0.36 Acquisition-related costs 0.02 0.05 0.09 Legal settlements 0.03 0.02 — Amortization of debt issuance costs 0.05 0.04 0.03 (Gain) loss on cost method investments, net (0.06) 0.03 — Gain from equity method investment — — (0.01) Income tax effect of above non-GAAP adjustments and certain discrete tax items (0.61) (1.00) (0.58) Adjustment for shares (1) — 0.03 0.02 Non-GAAP net income per diluted share (2) $ 7.12 $ 6.48 $ 6.20 Shares used in GAAP per diluted share calculations 147,023 154,346 155,397 Impact of benefit from note hedge transactions (1) — (744) (574) Shares used in non-GAAP per diluted share calculations (1) 147,023 153,602 154,823 (1) Shares used in non-GAAP per diluted share calculations have been adjusted for the years ended December 31, 2024 and 2023, for the benefit of our note hedge transactions.
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.
Provision for Income Taxes For the Years Ended December 31, For the Years Ended December 31, (in thousands) 2025 2024 % Change 2024 2023 % Change Provision for income taxes $ 150,374 $ 82,095 83 % $ 82,095 $ 106,373 (23) % As a percentage of revenue 4 % 2 % 2 % 3 % Effective income tax rate 25 % 14 % 14 % 16 % The increase in the provision for income taxes for 2025 as compared to 2024 was mainly due to a shortfall in the tax benefit related to stock-based compensation, the benefit from an intercompany sale of intellectual property in 2024 that did not recur in 2025, revaluation of deferred tax assets and a decrease in the benefit of U.S. federal and state research and development credits.
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.
These costs include maintenance and supporting services, as well as partner program costs, 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 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.
We will need to continue to effectively manage our network build-out and supporting service costs in an effort to control costs. • Our employees are core to the operations of our business, and payroll and related costs, including stock-based compensation, is our largest expense. It is important to the success of our operations that we offer competitive compensation packages.
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.
These amounts were partially offset by non-deductible stock-based compensation and the tax on global intangible low-taxed income. 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.
Although the enactment and effective legislation in many countries was applicable to us beginning on January 1, 2024, and increased our effective income tax rate, the increase did not have a material impact on our overall results of operations or cash flows. We will continue to monitor and evaluate the impacts of the developing legislation.
Although the enactment and effective legislation in many countries was applicable to us beginning on January 1, 2024, and increased our effective income tax rate, the increase did not have a material impact on our overall results of operations or cash flows. In July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law.
Additionally, the increase in stock-based compensation was a result of the timing of our performance-based equity award grants These increases were partially offset by a reduction in marketing programs and related costs as a result of the timing of events and advertising campaigns.
These increases were partially offset by a reduction in marketing programs and related costs as a result of the timing of events and advertising campaigns.
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.
The increase in general and administrative expenses for 2024 as compared to 2023 was primarily due to higher payroll and related costs, including stock-based compensation, as a result of annual merit increases and the shift in timing of our performance-based compensation. Additionally, other expenses increased due to professional service fees to support our business.
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.
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.
We acquired certain customer contracts from Lumen Technologies, Inc. ("Lumen") in October 2023 and from StackPath, LLC ("StackPath") in August 2023. These acquisitions are intended to further strengthen our existing delivery and other businesses as we transition the acquired customers to our platform and offer our portfolio of other services to them.
These acquisitions are intended to further strengthen our existing delivery and other businesses as we transition the acquired customers to our platform and offer our portfolio of other services to them.
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.
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 equity classified awards, we measure the fair value of these awards at the grant date and recognize such fair value as expense over the vesting period. For liability classified awards, the fair value is determined each reporting period beginning at the grant date until final vesting.
For liability classified awards, the fair value is determined each reporting period beginning at the grant date until final vesting.
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.
Based on acquired intangible assets as of December 31, 2025, future amortization is expected to be $100.2 million, $85.6 million, $79.0 million, $74.0 million and $66.7 million for the years ending December 31, 2026, 2027, 2028, 2029 and 2030, respectively.
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 platform build-out.
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.
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.
As we continue to build out our new compute locations to provide us with the ability to scale our platform, we have experienced a significant increase in our co-location costs due to the market dynamics driven by the hyperscalers. We have entered into, and expect to continue to enter into, longer term leases that include certain financial commitments.
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.
Cash Used in Investing Activities For the Years Ended December 31, (in thousands) 2025 2024 2023 Cash paid for business acquisitions, net of cash acquired $ (55,112) $ (434,066) $ (106,171) Cash paid for asset acquisitions (29,930) (132,835) (120,985) Purchases of property and equipment and capitalization of internal-use software development costs (819,500) (685,267) (730,040) Net marketable securities activity 369,093 449,516 (884,973) Other, net (5,294) 3,973 (6,069) Net cash used in investing activities $ (540,743) $ (798,679) $ (1,848,238) The decrease in cash used in investing activities in 2025 as compared to 2024 was due to: • the acquisitions of Noname Security and Edgio in 2024; and • a decrease in net marketable securities activity, primarily due to higher purchases compared to maturities and sales, which resulted from net proceeds from our convertible senior notes activities.
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.
These amounts were partially offset by non-deductible stock-based compensation and non-deductible transfer pricing. 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.
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.
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.
The increase in compute solutions revenue in 2024 as compared to 2023, and 2023 as compared to 2022, was due to growth in sales of compute products, including cloud optimization solutions to new and existing customers and through the acquisition of Linode in the first quarter of 2022.
The increase in cloud computing revenue in 2024 as compared to 2023 was due to growth in sales of Cloud Infrastructure Services, as well as cloud optimization solutions, to new and existing customers.
Over the longer term, our ability to expand our product portfolio and to effectively manage the prices we charge for our solutions are key factors impacting our revenue growth.
Over the longer term, our ability to continually develop and expand our product portfolio, to successfully bring those products to market and to effectively manage the prices we charge for our solutions considering the market dynamics on our cost structure driven by hyperscalers, are key factors impacting our revenue growth.
Changes 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 foreign currency exchange rates positively impacted our revenue by $13.7 million in 2025 as compared to 2024, and negatively impacted our revenue by $22.5 million in 2024 as compared to 2023. 32 Table of Contents 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, 2025 2024 % Change 2024 2023 % Change Co-location costs $ 349,191 $ 308,314 13 % $ 308,314 $ 256,062 20 % Bandwidth fees 192,875 233,100 (17) 233,100 228,038 2 Network build-out and supporting services 236,644 193,607 22 193,607 215,557 (10) Payroll and related costs 340,991 334,215 2 334,215 325,851 3 Acquisition-related costs — — — — 3,190 (100) Stock-based compensation, including amortization of prior capitalized amounts 123,617 100,705 23 100,705 73,786 36 Depreciation of network equipment 328,221 282,106 16 282,106 231,500 22 Amortization of internal-use software 155,974 168,746 (8) 168,746 177,079 (5) Total cost of revenue $ 1,727,513 $ 1,620,793 7 % $ 1,620,793 $ 1,511,063 7 % As a percentage of revenue 41 % 41 % 41 % 40 % The increase in cost of revenue for 2025 as compared to 2024 was primarily due to: • co-location costs and depreciation of network equipment as a result of investment in our network, particularly as we build out our compute platform to support future growth and scalability; • network build-out and supporting services, particularly due to our partner program costs related to our cloud computing solutions; and • payroll and related costs, including stock-based compensation, as a result of headcount growth, annual merit increases and increased achievement of our performance-based compensation plans; additionally, stock-based compensation increased due to the shift in some of our compensation programs from cash-based to stock-based for certain employees, including our employer 401(k) match program, effective in 2025, which partially offset the increase in payroll and related costs.
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.
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.
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.
Additionally, we expect network build-out and supporting services to increase due to our partner programs to support the growth of our cloud computing solutions. 33 Table of Contents 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, 2025 2024 % Change 2024 2023 % Change Payroll and related costs $ 601,288 $ 562,286 7 % $ 562,286 $ 494,803 14 % Stock-based compensation 169,404 152,114 11 152,114 123,896 23 Capitalized salaries and related costs (286,816) (272,320) 5 (272,320) (239,928) 14 Acquisition-related costs — — — — 721 (100) Other expenses 29,684 28,796 3 28,796 26,556 8 Total research and development $ 513,560 $ 470,876 9 % $ 470,876 $ 406,048 16 % As a percentage of revenue 12 % 12 % 12 % 11 % The increase in research and development expenses for 2025 as compared to 2024 was primarily due to higher payroll and related costs, including stock-based compensation, as a result of headcount growth from our strategic initiatives, annual merit increases and the increased achievement of our performance-based compensation plans.
Linode had approximately 250 employees when we completed the acquisition. 28 Table of Content s Global Economic Conditions Global macroeconomic and geopolitical conditions continue to impact our customers, as well as our business and revenue growth rates.
Additionally, of note, we added approximately 200 employees from the acquisition of Noname Security. 30 Table of Contents Global Economic Conditions Global macroeconomic and geopolitical conditions continue to impact our customers, as well as our business and revenue growth rates.
We will continue to effectively manage our bandwidth costs. 27 Table of Content s • Network build-out and supporting service costs represent another significant portion of our cost of revenue.
We will need to continue to focus on effectively managing our bandwidth costs to maintain or improve current levels of profitability. • Network build-out and supporting service costs represent another significant portion of our cost of revenue.
Estimates are used in determining our allowance for current expected credit losses using historical loss rates for the previous twelve months as well as expectations about the future where we have been able to develop forecasts to supports our estimates. In addition, the allowance for current expected credit losses considers outstanding balances on a customer-specific, account-by-account basis.
Increases and decreases in the allowance for current expected credit losses are included as a component of general and administrative expense in the consolidated statements of income. 46 Table of Contents Estimates are used in determining our allowance for current expected credit losses using historical loss rates for the previous twelve months as well as expectations about the future where we have been able to develop forecasts to supports our estimates.
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.
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.
Noname Security is intended to expand our existing API Security offering by providing more flexible deployment options, extensive vendor integrations and enhanced attack analysis. We believe this acquisition will accelerate our ability to meet increasing customer and market demand. As part of the acquisition, we integrated approximately 200 Noname Security employees primarily within sales and marketing and research and development.
Noname Security is intended to expand our existing API Security offering by providing more flexible deployment options, extensive vendor integrations and enhanced attack analysis. We believe this acquisition will accelerate our ability to meet increasing customer and market demand. We acquired certain customer contracts from Lumen Technologies, Inc. ("Lumen") in October 2023 and from StackPath, LLC ("StackPath") in August 2023.
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.
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, 2025 2024 % Change 2024 2023 % Change Payroll and related costs $ 232,671 $ 225,687 3 % $ 225,687 $ 218,272 3 % Stock-based compensation 122,624 102,494 20 102,494 94,316 9 Depreciation and amortization 66,909 66,184 1 66,184 65,817 1 Facilities-related costs 86,081 86,671 (1) 86,671 90,061 (4) Provision for doubtful accounts 6,324 3,919 61 3,919 1,649 138 Acquisition-related costs 3,247 7,502 (57) 7,502 8,050 (7) Software and related service costs 70,361 56,557 24 56,557 55,714 2 Other expenses 68,522 72,771 (6) 72,771 66,972 9 Total general and administrative $ 656,739 $ 621,785 6 % $ 621,785 $ 600,851 3 % As a percentage of revenue 16 % 16 % 16 % 16 % The increase in general and administrative expenses for 2025 as compared to 2024 was primarily due to higher stock-based compensation as a result of the increased achievement of our performance-based compensation plans, an increase in the number of participants in the equity compensation program, as well as a shift in our employer 401(k) match program from cash-based to stock-based effective in 2025, which increased stock-based compensation and partially offset the increase in payroll and related costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDue to the strengthening U.S. dollar, our revenue results have been negatively impacted. The strengthening U.S. dollar has the opposite effect on expenses that are denominated in foreign currencies, but only partially offsets the impact to our revenue.
Biggest changeBecause we publicly report in U.S. dollars, our reported revenue results are negatively impacted when the U.S. dollar strengthens and benefit when the U.S. dollar weakens and has an opposite effect on our expenses where our expenses are positively impacted when the U.S. dollar strengthens and are negatively impacted when the U.S. dollar weakens.
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.
Foreign currency transaction gains and losses from these forward contracts were determined to be immaterial during the years ended December 31, 2025, 2024 and 2023. We do not enter into derivative financial instruments for trading or speculative purposes.
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.
As of December 31, 2025, we had $4,140.0 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.
If 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.
If 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, 2025 levels, the fair value of our available-for-sale portfolio would decline by approximately $14.2 million.
We carry the notes at face value less an unamortized discount on our consolidated balance sheet, and we present the fair value for required disclosure purposes only. Our exposure to risk for changes in interest rates relates primarily to any borrowings under our 2022 Credit Agreement, which has a variable rate of interest.
We carry the notes at face value less an unamortized discount on our consolidated balance sheet, and we present the fair value for required disclosure purposes only. Our exposure to risk for changes in interest rates relates primarily to any borrowings under our credit agreements, which have variable rates of interest.
There were no outstanding borrowings under the 2022 Credit Agreement as of December 31, 2024.
There were no outstanding borrowings under the 2025 Credit Agreement or 2022 Credit Agreement as of December 31, 2025.
Transaction Exposure Foreign exchange rate fluctuations may adversely impact our consolidated results of operations as exchange rate fluctuations on transactions denominated in currencies other than functional currencies result in gains and losses that are reflected in our consolidated statements of income.
However, the impact to expenses only partially offsets the impact to our revenue. Transaction Exposure Foreign exchange rate fluctuations may adversely impact our consolidated results of operations as exchange rate fluctuations on transactions denominated in currencies other than functional currencies result in gains and losses that are reflected in our consolidated statements of income.
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.
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.
Foreign exchange rate fluctuations may also adversely impact our consolidated financial condition as the assets and liabilities of our international operations are translated into U.S. dollars in preparing our consolidated balance sheet. These gains or losses are recorded as a component of accumulated other comprehensive loss within stockholders' equity.
Foreign exchange rate fluctuations may also adversely impact our consolidated financial condition as the assets and liabilities of our international operations are translated into U.S. dollars in preparing our consolidated balance sheet.
Credit Risk Concentrations of credit risk with respect to accounts receivable are limited to certain customers to which we make substantial sales. Our customer base consists of a large number of geographically dispersed customers diversified across numerous industries. We believe that our accounts receivable credit risk exposure is limited.
These gains or losses are recorded as a component of accumulated other comprehensive loss within stockholders' equity. 49 Table of Contents Credit Risk Concentrations of credit risk with respect to accounts receivable are limited to certain customers to which we make substantial sales. Our customer base consists of a large number of geographically dispersed customers diversified across numerous industries.
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
We believe that at December 31, 2025, the concentration of credit risk related to accounts receivable was insignificant. 50 Table of Contents
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.
We do not currently hedge our interest rate exposure and do not enter into financial instruments for trading or speculative purposes.
Added
We believe that our accounts receivable credit risk exposure is limited. As of December 31, 2025, there was one customer with an accounts receivable balance greater than 10% of total accounts receivable. As of December 31, 2024, no customer had an accounts receivable balance greater than 10% of total accounts receivable.

Other AKAM 10-K year-over-year comparisons