Akamai

Annual Report
2024

2023
$3,812
2022
$3,617
2024
$3,991
$ Millions
2022
$676
2023
$637
$ Millions
2024
$533
2022
$1,275
2024
$1,519
2023
$1,348
$ Millions
2024
2023
2022
$3.26
$3.27
$3.52
REVENUE
INCOME FROM OPERATIONS
Comparison of 5-Year Cumulative Total Return
CASH FROM OPERATIONS
EARNINGS PER SHARE
Financial Highlights
Stock Performance
$0
$50
$150
$100
$200
$250
$300
$350
12/19 3/20
6/20 9/20 12/20 3/21
6/21
9/21
12/21
3/22
6/22
9/22 12/22 3/23
6/23
9/23 12/23 3/24
6/24
9/24 12/24
Akamai Technologies, Inc
NASDAQ Composite
S&P Information Technology

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission file number: 0-27275
Akamai Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
04-3432319
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
145 Broadway
Cambridge, Massachusetts 02142
(Address of principle executive offices) (Zip Code)
Registrant’s telephone number, including area code: (617) 444-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock - par value $0.01 per share
AKAM
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.
Yes þ
No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes ¨
No þ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ
No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).
Yes þ
No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑
Accelerated filer
☐Non-accelerated filer ☐
Smaller reporting
company
☐
Emerging growth
company
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of
the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. þ
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐
No þ
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was
approximately $13,428.8 million based on the last reported sale price of the Common Stock on the Nasdaq Global Select Market
on June 28, 2024. For the purposes of this disclosure only, the registrant has assumed that its directors and executive officers (as
defined in Rule 3b-7 under the Exchange Act) are the affiliates of the registrant.
The number of shares outstanding of the registrant’s Common Stock, par value $0.01 per share, as of February 20, 2025:
150,317,536 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission relative to the
registrant’s 2025 Annual Meeting of Stockholders are incorporated by reference into Items 10, 11, 12, 13 and 14 of Part III of this
annual report on Form 10-K.
Auditor name:
PricewaterhouseCoopers LLP
Auditor location:
Boston, Massachusetts
PCAOB ID:
238

AKAMAI TECHNOLOGIES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
PART I
Item 1.
Business
4
Item 1A.
Risk Factors
11
Item 1B.
Unresolved Staff Comments
25
Item 1C.
Cybersecurity
25
Item 2.
Properties
26
Item 3.
Legal Proceedings
26
Item 4.
Mine Safety Disclosures
26
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
26
Item 6.
[Reserved]
27
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
27
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
47
Item 8.
Financial Statements and Supplementary Data
49
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
90
Item 9A.
Controls and Procedures
91
Item 9B.
Other Information
92
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
92
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
92
Item 11.
Executive Compensation
92
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
92
Item 13.
Certain Relationships and Related Transactions, and Director Independence
92
Item 14.
Principal Accounting Fees and Services
93
PART IV
Item 15.
Exhibits, Financial Statement Schedules
93
Item 16.
Form 10-K Summary
96
SIGNATURES
97

Forward-Looking Statements
This annual report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995 regarding future events and the future results of Akamai Technologies, Inc., which we refer to as
“we,” “us,” or the “Company.” All statements other than statements of historical facts are statements that could be deemed
forward-looking statements. These statements are subject to risks and uncertainties and are based on the beliefs and
assumptions of our management as of the date hereof based on information currently available to our management. Use of
words such as “believes,” “could,” “expects,” “anticipates,” “intends,” “plans,” “seeks,” “projects,” “estimates,”
“should,” “would,” “forecasts,” “if,” “continues,” “goal,” “likely,” “may,” “will,” variations of such words or similar
expressions are intended to identify a forward-looking statement. Forward-looking statements are not guarantees of future
performance and involve risks, uncertainties and assumptions. Actual results may differ materially from the forward-looking
statements we make as a result of various factors, including, but not limited to: potential slowing revenue growth, global
economic and geopolitical conditions, including changes in customer spending and inflation, our ability to acquire or develop
new solutions, our ability to compete effectively, including our ability to continue to grow our compute services and solutions,
security risks stemming from ineffective information technology systems or cybersecurity breaches, risks of maintaining global
operations, regulatory developments, intellectual property claims or disputes, investment related risks and maintaining an
effective system of internal controls. See “Risk Factors” elsewhere in this annual report on Form 10-K and in our other reports
filed with the Securities and Exchange Commission for a discussion of certain risks associated with our business. We disclaim
any obligation to update any forward-looking statements as a result of new information, future events or otherwise, including
the potential impact of any mergers, acquisitions, divestitures or other events that may be announced after the date hereof.
PART I
Item 1. Business
Overview
Akamai's mission is to power and protect life online.
Since 1998, Akamai has developed and provided solutions for global enterprises to build, secure and accelerate their
applications and digital experiences. Our 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. With this scale and distribution, Akamai has visibility and insight into
traffic volumes, congestion, attack patterns, vulnerabilities and other activities across the internet's complex intersections of
networks and systems. 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. 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 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. In recent years,
artificial intelligence ("AI") has been a major focus of corporate initiatives for enterprises in multiple verticals and across the
globe. 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.
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
4

programming interfaces ("APIs"), networks and users safe from a multitude of cyberattacks and online threats while improving
performance. With insight and automation derived from the world’s most distributed global network, our solutions blend robust
automation with customizable protections and managed security services to enable businesses to effectively manage risk and
maximize protections. 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. 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. 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 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. ("Neosec"), which enabled us to offer a solution we refer to as API Security
that works to discover and audit APIs and monitor API activity. API Security complements our application and API security
portfolio by extending our visibility into the growing API threat landscape to detect and respond to threats and abuse detection
and operates using a response platform based on data and behavioral analytics. In June 2024, Akamai acquired Noname
Security Ltd. ("Noname Security"), one of the top API security vendors in the market. 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. 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.
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. ("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. 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. 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.
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. 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.
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. 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. 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
5

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.
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. 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. 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. 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. 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.
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. The application platform
provides ready-to-run templates that address common challenges in deploying, managing and scaling Kubernetes clusters at
scale. Instead of relying on multiple departments and spending months sourcing, connecting and configuring the software
needed to operate Kubernetes fleets, Akamai’s solution automates the provisioning process, allowing developers to build and
deploy highly distributed applications in a few clicks. 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.
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. These
services leverage intelligent performance optimization and real-time monitoring, origin offload and network reliability and
insights that enable enterprises to identify and address performance issues. Akamai web and mobile performance capabilities
also include global traffic management, site acceleration, application load balancing, large-scale load testing and real-user
monitoring.
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. Underlying these solutions is technology to address variable connection speeds and device
types, facilitate access to disparate locations around the world, accelerate large file downloads, reliably deliver high-quality live
content across various devices and platforms and enable comprehensive insights and real-time online video monitoring. Akamai
media delivery solutions include video streaming and video player services, game and software delivery, broadcast operations,
authoritative DNS, resolution and data and analytics.
Services and Support
We provide an array of service and support offerings across our core offerings. Through our service and support offerings
we work closely with our customers to develop creative and tailored solutions to assist them with integrating, configuring,
optimizing and managing our core offerings. Customers can rely on our professional services and security experts for
customized solutions, problem resolution and 24/7 customer support. 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.
6

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. 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. Different aspects of our human capital management are overseen by our board of
directors as well as its Talent, Leadership and Compensation Committee and Environmental, Social and Governance
Committee.
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. 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%).
Engagement
We continue to recognize that an engaged employee workforce is key to having the productive, ethical and high-
performing workplace needed to successfully compete in today’s marketplace. We conduct quarterly surveys of our entire
employee population to assess a variety of key metrics related to important topics, such as engagement, inclusion and overall
job satisfaction. Results from these surveys have consistently shown a strong sense of engagement and confidence in Akamai’s
future. We have been acknowledged in respected publications across the U.S., India and Poland, among other countries, as a
great place to work. 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. In addition, we work closely with the Akamai Foundation, to provide community service and
charitable matching fund opportunities for Akamai employees, endeavors that have been shown to increase employee
engagement. 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.
Representation
Akamai is an equal opportunity employer that values the strength that diverse perspectives bring to the workplace. We do
not tolerate discrimination on the basis of gender, gender identity, sexual orientation, race or ethnicity, protected veteran status,
disability, or other protected group status. Akamai supports a variety of programs and practices designed to support an optimal
working environment. 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.
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 benefits programs (which vary by country and region) include healthcare and insurance benefits, health savings and
flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules and locations, adoption
and fertility assistance, employee assistance programs, tuition assistance and holistic wellness programs. Our wellness
programs include educational offerings on healthy lifestyles, access to mental health experts, access to ergonomic advice and
equipment and financial wellness support. To foster a stronger sense of ownership and align the interests of employees with
shareholders, stock awards are held by the vast majority of our employees under our broad-based stock incentive programs and
most employees are eligible to participate in our employee stock purchase plan. We monitor voluntary attrition in assessing our
overall human capital. Attrition was slightly up in 2024 when compared to 2023.
7

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. 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.
Development
We invest significant resources in professional development, career advancement and training for our global workforce. All
employees are eligible to participate in our Akamai Elevation performance review program, which provides guidance around
setting annual performance objectives, developing competencies and receiving feedback. 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 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.
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. We believe that a focus on employee
choice makes us a more attractive employer, increases productivity, enables us to recruit from a broader and more varied pool
of applicants and presents additional growth and development opportunities for our employees. Since 2022, we have rolled out
a number of tools and resources to support this program, such as supporting employees with guidance on maximizing our
internal tools to deliver great virtual meeting experiences. 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. CLEAR stands for Colleague, Leader, Employer and Role. We measure each dimension in a quarterly anonymous
survey, which allows us to track and report on workplace connection around the world.
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. 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.
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.
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. In addition to entering into agreements with resellers, we have
several other types of sales and marketing focused alliances with entities such as system integrators, application service
providers, technology solution distributors, referral partners and marketplaces. By aligning with these partners, we believe we
are better able to market our solutions and leverage partners to add valuable services to complement our offerings and improve
the customer experience. 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.
8

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 integrated marketing strategies include public relations,
digital programmatic advertising, paid search and SEO marketing, content marketing, social media, strategic alliances, e-mail
marketing programs, events and webinars, participation at industry trade shows and ongoing training and sales enablement.
Competition
The market for our solutions is intensely competitive and characterized by rapidly changing technology, evolving industry
standards and frequent new product and service innovations. We expect competition for our offerings to increase both from
existing competitors and new market entrants. 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 with companies offering products and services that provide internet content delivery and hosting services,
security and cloud computing solutions, technologies used by carriers to improve the efficiency of their systems, streaming
content delivery services and equipment-based solutions for internet performance problems, such as load balancers and server
switches. Other companies offer online distribution of digital media assets through advertising-based billing or revenue-sharing
models that may represent an alternative method for charging for the delivery of content and applications over the internet. In
addition, existing and potential customers may decide to purchase or develop their own hardware, software or other technology
solutions rather than rely on a third-party provider like us. Our security solutions compete with those offered by both hardware
and software providers. While our compute solutions have historically competed with alternative cloud computing platforms
focused on individual developers, we anticipate that going forward our compute solutions will increasingly compete with the
large so-called “hyper-scaler” cloud computing providers.
We believe that we compete favorably with other companies in our industry through our global scale, reliability and
expertise, which we believe provides the most effective means of meeting the needs of enterprise customers and is unique to us.
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.
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.
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. 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. For instance, regulations have been enacted or proposed in a number of countries that limit the delivery of certain
types of content into those countries. As an example, restrictions were adopted in India in 2020 prohibiting access to identified
Chinese-owned applications. 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. 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
9

application was not sold to a neutral third party by January 19, 2025. 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. 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. It
is difficult to predict whether the passed legislation will ultimately be enforced and whether any future judicial challenges
brought against the executive order will be successful. Even though President Trump has extended the enforcement deadline for
a ban on the Chinese application, there is no assurance that we will not be exposed to liability and we may be exposed to
significant fines, litigation, indemnification claims, negative publicity, reputational harm, diversion of management attention,
interruptions in our operations, financial loss and other similar harms by continuing to provide services to the Chinese
application.
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. 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.
Many of these laws and regulations are evolving and could be interpreted and applied in a manner that is inconsistent from
country to country and inconsistent with our current policies and practices and in ways that could harm our business. 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. In general, the nature and breadth of laws and
regulations governing the internet may increase in the future; accordingly, we are unable to assess the possible effect of
compliance with future requirements or whether our compliance with such regulations will materially impact our business,
results of operations or financial condition.
For further discussion of how government regulations may affect our business, see the related discussion below in Item 1A.
Risk Factors – Financial and Operational Risks – We face risks associated with global operations that could harm our business;
– Legal and Regulatory Risks – Evolving privacy regulations could negatively impact our profitability and business operations;
and – Legal and Regulatory Risks – Other regulatory developments could negatively impact our business.
Intellectual Property
Our success and ability to compete are dependent on developing and maintaining the proprietary aspects of our technology
and operating without infringing on the proprietary rights of others. We rely on a combination of patent, trademark, trade secret
and copyright laws and contractual restrictions to protect the proprietary aspects of our technology. 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. 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.
Additional Information
Our internet website address is www.akamai.com. We make available, free of charge, on or through our internet website,
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments thereto that
we have filed or furnished with the Securities and Exchange Commission (the "Commission") as soon as reasonably practicable
after we electronically file them with the Commission. We also use our https://www.ir.akamai.com website as a means of
disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. 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.
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Item 1A. Risk Factors
The following are important factors that could cause our actual operating results to differ materially from those indicated or
suggested by forward-looking statements made in this annual report on Form 10-K or presented elsewhere by management
from time to time.
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. Our ability to generate revenue depends on the amount of services we
deliver, continued growth in demand for our security, delivery and compute solutions and our ability to maintain the prices we
charge for them.
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. For example, revenue from our delivery solutions increased significantly in 2020
due in large part to greater consumption of online media and games during the onset of the COVID-19 pandemic and the
associated stay-at-home orders. However, as these orders were lifted and more return-to-work policies were adopted, our
revenue from delivery solutions declined. In addition, a large social media company has recently taken steps to lower costs and
reduce reliance on U.S. providers, including a DIY component, which we believe is in part a reaction to certain geopolitical
pressures, and which has reduced traffic on our network and negatively impacted revenue in 2024. Other customers have and
may continue to reduce their traffic with us, negatively impacting revenue. We have continued to experience revenue declines
in our delivery solutions and expect this trend to continue in the near future.
Our security solutions currently generate the largest portion of our revenue. 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. Further, security revenue for some products is impacted by
traffic levels on our network and recently has, and may continue to be, negatively impacted by reduced traffic on our network,
including the reduced traffic from a large social media company among other customers.
In addition, an increasing proportion of our revenue has recently been generated by our compute solutions. Our ability to
generate revenue in our compute business is dependent on our ability to successfully continue building our compute platform,
attract a customer base that has traditionally partnered with more established companies in the compute industry, and develop
effective, price competitive and attractive solutions.
If we are unable to increase revenues, our profitability and stock price could suffer. See the risk factor titled, "Global
conditions have in the past and may in the future harm our industry, business and results of operations" below.
Global conditions have in the past and may in the future harm our industry, business and results of operations.
We operate globally and as a result, our business, revenues and profitability are impacted by global macroeconomic
conditions. The success of our activities is affected by general economic and market conditions, including, among others,
inflation, foreign exchange rates, interest rates, tax rates, economic uncertainty, political instability, warfare, changes in laws,
trade barriers, the actual or perceived failure or financial difficulties of financial institutions, reduced consumer confidence and
spending and economic and trade sanctions. Global economic and geopolitical conditions can impact our customers, causing
them to take cost-savings measures that can include optimization and "do-it-yourself", or DIY, initiatives, which can impact our
revenues. For example, a large social media company has recently taken steps to lower costs and reduce reliance on U.S.
providers by optimizing its platform, including a DIY component, which reduced traffic on our network and negatively
impacted our revenue in 2024. The U.S. capital markets have experienced and may continue to experience extreme volatility
and disruption in the recent past. Furthermore, inflation rates in the U.S. have been elevated compared to historical rates and
have fluctuated. In addition, the Trump administration has indicated an intention to impose tariffs on certain countries that
could adversely impact trade relations, result in higher costs and decreased purchasing power of our customers, put increased
pressure on supply chains and create general market instability. 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
11

negatively impact our profitability. Geopolitical destabilization and warfare have impacted and could continue to impact global
currency exchange rates, resources from our suppliers and our ability to operate or grow our business.
Additionally, we have offices and employees located in regions that historically have and may again experience periods of
political instability, warfare, changes in laws, trade barriers and economic and trade sanctions. 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. For example, approximately six percent of our global employees are located in Israel and
some of our employees have been mobilized as members of the Israeli military reserves. Should the Isreal-Hamas war continue,
it could cause harm to our employees or otherwise impair their ability to work for extended periods of time.
Failure to control expenses could reduce our profitability, which would negatively impact our stock price.
Maintaining or improving our profitability depends both on our ability to increase our revenue and limit our expenses. 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. In addition, many of our expenses are fixed costs for a certain amount of time which
may impact our ability to reduce costs in a timely manner or without incurring additional costs. If we are unable to increase
revenue and limit expenses, our results of operations will suffer. 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.
If we do not develop or acquire new solutions that are attractive to our customers, our revenue and operating results could
be adversely affected.
Innovation is important to our future success. 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.
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. 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. 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. In addition, we
have experienced, and may in the future experience, delays in developing and releasing new products and product
enhancements. This could cause our expenses to grow more rapidly than our revenue.
Trying to innovate through acquisition can be costly and with uncertain prospects for success; we may find that attractive
acquisition targets are too expensive for us to pursue which could cause us to pursue more time-consuming internal
development.
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.
We compete in markets that are intensely competitive and rapidly changing. 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. 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.
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
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relationships in the industry than we do. This is particularly true with respect to our compute solutions, as a small number of
very large competitors have established themselves as leaders in the compute business. 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.
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.
Ultimately, any type of increased competition could result in price and revenue reductions, loss of customers and loss of
market share or inability to penetrate new markets, each of which could materially impact our business, profitability, financial
condition, results of operations and cash flows.
We and other companies that compete in this industry and these markets experience continually shifting business
relationships, reputations, commercial focuses and business priorities, all of which occur in reaction to industry and market
forces and the emergence of new opportunities. These shifts have led or could lead to our customers or partners becoming our
competitors; customers implementing multi-vendor policies and seeking out one or more of our competitors to provide content
and application delivery or security protection services; network suppliers no longer seeking to work with us; and technology
companies that previously did not appear to show interest in the markets we seek to address entering into those markets as our
competitors. With this constantly changing environment, we may face operational difficulties in adjusting to the changes or our
core strategies could become obsolete. Any of these or other developments could harm our business.
Defects or disruptions in our products and IT systems could require us to increase spending on upgrading systems, diminish
demand for our solutions or subject us to substantial liability.
Our solutions are highly complex and are designed to be deployed in and across numerous large and complex networks that
we do not control. From time to time, we have needed to correct errors and defects in the proprietary and open-source software
that underlies our platform that have given rise to service incidents, outages and disruptions or otherwise impacted our
operations. We have in the past and could in the future face the loss of customers from these incidents as they seek alternative
or supplemental providers. 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. 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.
We may not have in place adequate quality assurance procedures to ensure that we detect errors in our hardware, software
and open-source components that we use in a timely manner, and we may have insufficient resources to efficiently address
multiple service incidents happening simultaneously or in rapid succession. 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.
Defects in our security solutions or human error could lead to negative publicity, loss of business, damages payments to
customers, diminishing customer appeal and other negative consequences which could harm our business. As our solutions are
adopted by an increasing number of enterprises and governments, it is possible that the adversaries behind advanced malicious
actions will specifically focus on finding ways to defeat our products and services. If they are successful, we could experience a
serious impact on our reputation and financial condition as a provider of security solutions.
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We are devoting significant resources to develop and deploy our own competing compute offering. The rapid development
and deployment of new compute infrastructure bears the risk of bugs and unforeseen failures that could affect our reputation
and ability to execute our strategies. The 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. 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.
Failure to adequately and rapidly deploy additional points of presence, increased proximity to enterprise data centers and end
users and develop competitive offerings could result in negative publicity, loss of business, diminishing customer appeal and
other negative consequences which could harm our business.
Our business relies on our data systems, traffic measurement systems, billing systems, ordering processes and other
operational and financial reporting and control systems. We also rely on third-party software for certain essential operational
services and a failure or disruption in these services could materially and adversely affect our ability to manage our business
effectively. All of these systems have become increasingly complex due to the complexity of our business, use of third-party
software and services, acquisitions of new businesses with different systems and changing regulation over controls and
procedures. As a result, these systems have in the past and could in the future generate errors that impact traffic measurement or
invoicing, revenue recognition and financial forecasting or other parts of our business. 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. If we are unable to adapt our
systems and organization in a timely, efficient and cost-effective manner to accommodate changing circumstances, our business
may be adversely affected.
Cybersecurity breaches and attacks on us, our contractors or our third-party vendors, as well as steps we need to take in an
effort to prevent them, can lead to significant costs and disruptions that would harm our business, financial results and
reputation.
We regularly face attempts to gain unauthorized access or deliver malicious software to Akamai's platforms, products and
services and our internal IT systems, with the goal of stealing proprietary information related to our business, products,
employees and customers; disrupting our systems and services or those of our customers or others; or demanding ransom to
return control of such systems and services. These attempts take a variety of forms, including Distributed Denial of Service
("DDoS") attacks, infrastructure attacks, botnets, malicious file uploads, application abuse, credential abuse, social engineering,
ransomware, bugs, viruses, worms and malicious software programs. Additionally, the use of artificial intelligence by bad
actors has heightened the sophistication and effectiveness of these types of attacks, and may be used to create attacks that
current processes and technologies are unable to adequately address. There have in the past and could in the future be attempts
to infiltrate our systems through our supply chain and contractors. Malicious actors are known to attempt to fraudulently induce
employees and suppliers to disclose sensitive information through illegal electronic spamming, phishing or other tactics. Other
parties may attempt to gain unauthorized physical access to our facilities in order to infiltrate our internal-use information
systems. Furthermore, nation state and hacktivist attacks against us or our customers 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. 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. While we have, from time to
time, experienced threats to and breaches of our and our third-party vendors' data and systems, to date, to our knowledge, cyber
threats and other attacks have not resulted in any material adverse effect to our business or operations, but such threats are
constantly evolving, increasing the difficulty of detecting and successfully defending against them.
The complexities in managing the security profile of a distributed network with vast scale and geographic reach that
evolves to incorporate new capabilities expose us to both known and unknown vulnerabilities. We have discovered
vulnerabilities in software and hardware used in our technology, such as the AMD "Inception" vulnerability identified in
mid-2023 that potentially impacted a large portion of the internet ecosystem, and may have other undiscovered vulnerabilities.
Vulnerabilities, resident in software, hardware or configurations, have in the past and may in the future require significant
operational efforts to mitigate and may persist for extended periods of time and the effects of any such vulnerability could be
exacerbated. Similar security risks exist with respect to acquired companies, our business partners and the third-party vendors
that we rely on for aspects of our information technology support services and administrative functions. As a result, we are
subject to risks that the activities of our business partners and third-party vendors may adversely affect our business even if an
attack or breach does not directly target our systems.
14

To protect our corporate and deployed networks, we aim to continuously engineer more secure solutions, enhance security
and reliability features, improve the deployment of software updates to address security vulnerabilities, develop mitigation
technologies that help to secure customers from attacks and maintain the digital security infrastructure that protects the integrity
of our network and services. 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. Our efforts to
engineer more secure solutions are frequently costly, with a negative impact on near-term profitability, and may be unsuccessful
in preventing security incidents that may have an adverse effect on our business and reputation.
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. 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.
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.
If we cannot maintain compatibility with our customers’ IT infrastructure, including their chosen third-party services, our
business will be harmed.
Our products interoperate with our customers' IT infrastructures that often have different specifications, utilize diverse
technology and require compatibility with multiple communication protocols. Therefore, the functionality of our technology
often needs to have, and maintain, compatibility with our customers' technology environment, including their chosen third-party
technology. Aspects of our technology's compatibility with our customers' technology is dependent on our customers because
our customers, and in particular those who implement third-party applications within their environments, may change features,
restrict our access to, or alter their applications within their discretion and in a manner that causes incompatibilities or causes us
significant costs to maintain compatibility. Such changes could functionally limit or prevent the compatibility of our products
with our customers’ IT infrastructure, which would negatively affect adoption of our products and harm our business. If we fail
to update our products to achieve compatibility with new third-party applications that our customers use, we may not be able to
offer the functionality that our customers need, which would harm our business.
We face risks associated with global operations that could harm our business.
A significant portion of our hiring, new customers and revenue growth in recent years has been attributable to our business
outside the U.S. Our operations in international countries subject us to risks that may increase our costs, impact our financial
results, disrupt our operations or make our operations less efficient and require significant management attention. These 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.
15

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. A number of our employees have been, and more may be, required to report for military
duty which could impact our ability to operate and successfully complete ongoing initiatives particularly with respect to our
security offerings and our efforts to move our internal applications from third-party clouds to our compute platform.
Furthermore, a widening of the conflict in the Middle East or further escalation could lead to broader geopolitical
destabilization and macro-economic impacts.
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. Compliance with such requirements can be onerous and
expensive and may otherwise impact our business operations negatively. Although we have policies, controls and procedures
designed to help ensure compliance with applicable laws, there can be no assurance that our employees, contractors, suppliers,
customers or agents will not violate such laws or our policies. 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.
Our business strategy depends on the ability to source adequate transmission capacity, co-location facilities and the
equipment we need to operate our network; failure to have access to those resources could lead to loss of revenue and
service disruptions.
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. We may be unable to purchase the bandwidth and space we need
from these providers due to limitations on their resources, increasing energy costs or other reasons outside of our control. In
particular, our efforts to increase the size and scale of our network infrastructure have required and may continue to require
procuring significant additional space in co-location facilities. Inability to access facilities where we would like to install
servers, or perform maintenance on existing servers for any reason impedes our ability to expand or maintain capacity. As a
result, there can be no assurance that we are adequately prepared for unexpected increases in capacity demands by our
customers. Failure to put in place the capacity we require to operate our business effectively could result in a reduction in, or
disruption of, service to our customers and ultimately a loss of those customers.
Akamai's platforms, products and services rely on hardware equipment, including hundreds of thousands of servers
deployed around the world. Disruptions in our supply chain have occurred in the past and could prevent us from purchasing
needed equipment at attractive prices or at all. For example, we are experiencing continued volatility in certain server
component costs that support the continued build out of our compute platform. 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. For example, tariffs imposed by the United States on other countries and any resulting counter-tariffs will likely
lead to increasing costs and supply chain disruptions. Failure to have adequate equipment, including server and other
networking equipment, could harm the quality of our services, which could lead to the loss of customers and revenue.
Acquisitions and other strategic transactions could result in operating difficulties, dilution, diversion of management
attention and other harmful consequences that may adversely impact our business and results of operations.
We expect to continue to pursue acquisitions and other types of strategic relationships that involve technology sharing or
close cooperation with other companies. 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
16

issuances of securities to finance large transactions; and potential unknown liabilities and regulatory requirements associated
with an acquired business.
The data practices and technology systems of businesses that we have acquired, or may acquire, and our efforts to integrate
our acquisitions with our existing technologies have in the past and may in the future pose risks, such as cybersecurity
vulnerabilities or past cybersecurity or privacy incidents. Following an acquisition, we work to enhance the security and
reliability of our systems. As such, there is a period of increased cybersecurity risk during the period between closing an
acquisition and the completion of our security upgrades and integration. For example, as part of the integration of the Linode
compute platform into Akamai's platform and the migration of certain applications and products from third party cloud
providers onto Akamai's compute platform, we have been working to enhance the security and reliability of the integrated
systems. While we continue to make progress on these efforts, the mitigation of a number of risks is ongoing and thus certain
underlying vulnerabilities remain that, if exploited, could negatively impact Akamai's platform and our customers. Despite our
efforts to enhance the security and reliability of our systems, our information technology systems and those of third parties with
whom we do business or communicate may be damaged, disrupted, or shut down due to attacks by unauthorized access,
malicious software, computer viruses, undetected intrusion, hardware failures, or other events. In addition, our disaster recovery
plans may be ineffective or inadequate.
Any inability to integrate completed acquisitions or combinations in an efficient and timely manner could have an adverse
impact on our results of operations.
If current and potential large customers shift to DIY internal solutions for content and application delivery or security
protection, our business will be negatively impacted.
We are reliant on some of our larger customers to direct traffic to our network for a significant part of our revenues. 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. As the amount of money a customer
spends with us increases, the risk that they will seek alternative solutions such as DIY or a multi-vendor policy likewise
increases. While the number of customers implementing a DIY strategy had been decreasing, current global economic and
geopolitical conditions may cause customers to increase their focus on DIY solutions, which could negatively impact traffic on
our network, and, as a result, our revenue. 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. If our customers
increase their use of DIY solutions or if multiple additional large customers shift to this model, traffic on our network and our
contracted revenue commitments could decrease more significantly, which could negatively impact our business, profitability,
financial condition, results of operations and cash flows.
If we are unable to recruit and retain key employees and qualified sales, research and development, technical, marketing
and support personnel, our ability to compete could be harmed.
Our future success depends upon the services of our executive officers and other key technology, sales, research and
development, marketing and support personnel who have critical industry experience and relationships. Attracting, hiring and
retaining highly skilled and qualified employees continues to be a priority and a key dependency for our ongoing success. If we
fail to attract new personnel, fail to retain and motivate our current personnel or fail to effectively train our employees to
support our business needs, our business and future growth prospects could suffer. For example, none of our officers or key
employees are bound by an employment agreement for any specific term, and members of our senior management have left our
company over the years for a variety of reasons. In addition, effective succession planning is important to our long-term success
and our failure to ensure effective transfer of knowledge and smooth transitions involving our officers and other key personnel
could hinder our strategic planning and execution.
In addition, our future success will depend upon our ability to attract, train and retain employees, particularly in our
expected areas of growth such as security and cloud computing. Such efforts will require time, expense and attention by our
employees as there is significant competition for talented individuals. This competition results in increased costs in the form of
cash and stock-based compensation and can have a dilutive impact on our stock. 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. 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
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retention efforts. 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. 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 maintain our company culture and manage new risks as our business evolves and our work practices change
could harm us.
We believe our culture has been a key contributor to our success to date. 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.
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. 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.
We rolled out our FlexBase program in May 2022, which allows the more than 95% of our workforce designated as
flexible to choose to work from an Akamai office, their home office, an approved workspace, or a combination of all three. This
program could, among other things, negatively impact employee morale and productivity, inhibit our ability to effectively train
new employees and impede our ability to support customers at the levels they expect. 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. Members of our workforce who access company data and systems remotely may not have access to
technology that is as robust as that in our offices, which could cause the networks, information systems, applications and other
tools available to those remote workers to be more limited or less reliable than in our offices. We may also be exposed to risks
associated with the locations of remote workers, including compliance with local laws and regulations or exposure to
compromised internet infrastructure. Further, if employees fail to inform us of changes in their work location, we may be
exposed to additional risks without our knowledge. 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.
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. 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. 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. Taking these actions
may also result in significant expense, including with respect to workforce reductions, decreased productivity due to employee
distraction and unanticipated employee turnover. Substantial expense or business disruptions resulting from restructuring and
reorganization activities could adversely affect our operating results.
We may have exposure to greater-than-anticipated tax liabilities.
Our future income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions that have
lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, or changes in tax laws,
regulations or accounting principles, as well as certain discrete items such as equity-related compensation. The Organisation for
Economic Co-operation and Development (“OECD”) and participating OECD member countries continue to work toward the
enactment of a 15% global minimum corporate tax rate for large multinational enterprise groups, also known as "Pillar Two".
Many of the participating countries have enacted legislation that became effective beginning in 2024, while other countries
continue to work on defining the underlying rules and administrative procedures. 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
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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.
We have recorded certain tax reserves to address potential exposures involving our income tax and indirect tax positions.
These potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different
jurisdictions. We are currently subject to tax audits in various jurisdictions. If the ultimate outcome of any tax audits are adverse
to us, our reserves may not be adequate to cover our total actual liability, and we would need to take a financial charge.
Although we believe our estimates, our reserves and the positions we have taken in all jurisdictions are reasonable, the ultimate
tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in
the period or periods for which such determination is made.
Fluctuations in foreign currency exchange rates affect our reported operating results in U.S. dollar terms.
Because we conduct a substantial portion of our business outside the United States, we face exposure to adverse
movements in foreign currency exchange rates, which could have a material adverse impact on our financial results and cash
flows. These exposures may change over time as business practices evolve and economic conditions change.
The fluctuations of currencies in which we conduct business can both increase and decrease our overall revenue and
expenses for any given period. This exposure is the result of selling in multiple currencies, headcount in foreign locations and
operating in countries where the functional currency is the local currency. Revenue generated and expenses incurred by our
international subsidiaries are often denominated in their local currencies, but many of our expenses related to our operations in
foreign jurisdictions are denominated in U.S. dollars. As a result, our consolidated U.S. dollar financial statements are subject to
fluctuations due to changes in exchange rates as the financial results of our international subsidiaries are translated from local
currencies into U.S. dollars. For example, in 2024, the strength of the U.S. dollar had a negative impact on our revenue and a
positive impact on our operating expenses. In addition, our financial results are subject to changes in exchange rates that impact
the settlement of transactions in non-functional currencies.
In addition, we have recently experienced increased volatility in foreign currency exchange rates, due to a number of
factors, including geopolitical and economic developments. We may not be able to effectively manage such volatility, and our
financial results have in the past and could in the future be adversely impacted as a result of such volatility. In addition, such
volatility, even when it increases our revenues or decreases our expenses, impacts our ability to accurately predict our future
results and earnings.
Our sales to government clients subject us to risks, including early termination, audits, investigations, sanctions and
penalties.
We have customer contracts with the U.S. government, as well as international, state and local governments and their
respective agencies and we may in the future increase sales to government entities. Sales to government entities are subject to a
number of risks. Selling to government entities can be highly competitive, expensive and time consuming, often requiring
significant upfront time and expense without any assurance that these efforts will generate a sale. Such government entities
often have the right to terminate these contracts at any time, without cause. There is increased pressure for governments and
their agencies, both domestically and internationally, to reduce spending and demand and payment for our services may be
impacted by public sector budgetary cycles and funding authorizations. These factors may combine to potentially limit the
revenue we derive from government contracts in the future. 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.
Such contracts are also subject to audits and investigations that could result in civil and criminal penalties and administrative
sanctions, including contract termination, fee refunds, forfeiture of profits, suspension of payments, fines and suspensions or
debarment from future government business.
We utilize third-party technology in our business, and failures or vulnerabilities, and/or litigation, related to these
technologies may adversely affect our business.
We utilize third-party technology software, services and other technology to operate critical functions of our business,
including the integration of certain of these technologies into our network, products and services. If these software, services, or
other technology become unavailable, malfunction or contain vulnerabilities, our expenses could increase and our ability to
operate our network, provide our products and our results of operations could be impaired until equivalent software,
technology, or services are purchased or developed or any identified vulnerabilities or malfunctioning are remedied. If we are
unable to procure the necessary third-party technology we may need to acquire or develop alternative technology, or we may
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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. 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 rely on certain “open-source” software, which may contain security flaws or other deficiencies, and the use of which
could result in our having to distribute our proprietary software, including source code, to third parties on unfavorable
terms, either of which could materially affect our business.
Certain of our offerings use software that is subject to open-source licenses. Open-source code is software that is freely
accessible, usable and modifiable; however, certain open-source code is governed by license agreements, the terms of which
could require users of such software to make any derivative works of the software available to others on unfavorable terms or at
no cost. Because we use open-source code, we may be required to take remedial action in order to protect our proprietary
software. Such action could include replacing certain source code used in our software, discontinuing certain of our products or
taking other actions that could be expensive and divert resources away from our development efforts. In addition, the terms
relating to disclosure of derivative works in many open-source licenses are unclear and have not been interpreted by U.S.
courts. If a court interprets one or more such open-source licenses in a manner that is unfavorable to us, we could be required to
make certain of our key software generally available at no cost. We could also be subject to similar conditions or restrictions
should there be any changes in the licensing terms of the open-source software incorporated into our products. In either event,
we could be required to seek licenses from third parties in order to continue offering our products, to re-engineer our products
or to discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely or successful basis,
any of which could adversely affect our business, operating results and financial condition. 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. We have made, and
expect to continue to make investments to integrate AI and machine learning technology into our products and solutions. Given
the nature of AI technology, we face significant competition from other companies and an evolving regulatory landscape. 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. 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. Despite our implementation of programs designed to
support responsible AI use and development, we may not successfully address all issues that may arise. For example, privacy
concerns, user consent, supply chain security, transparency and the accuracy, completeness and suitability of data sets are all
potential issues that could adversely affect our business, reputation, or financial results.
Legal and Regulatory Risks
Evolving privacy regulations could negatively impact our profitability and business operations.
The nature and breadth of laws and regulations, or expanded interpretation of these laws and regulations, that relate to
privacy on the internet and international data transfer restrictions may increase in the future. Accordingly, we are unable to
assess the possible effect of compliance with future requirements or whether our compliance efforts will materially impact our
business, results of operations or financial condition, as well as increase expenses or create other disadvantages to our business.
Privacy laws are rapidly proliferating, changing and evolving globally. Governments, private citizens and privacy
advocates with class action attorneys are increasingly scrutinizing how companies collect, process, use, store, share and
transmit personal data. 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.
Any perception that our business practices, our data collection activities or how our solutions operate represent an invasion of
privacy or improper practice, whether or not consistent with current regulations and industry practices, may subject us to public
criticism or boycotts, class action lawsuits, reputational harm, or actions by regulators, or claims by industry groups or other
third parties, all of which could disrupt our business and expose us to liability.
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Engineering efforts to build new capabilities to facilitate compliance with increasing international data transfer restrictions
and new and changing privacy laws and related customer demands could require us to take on substantial expenses and divert
engineering resources from other projects. We 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.
Our ability to leverage the data generated by our global networks is important to the value of many of the solutions we
offer, our operational efficiency and future product development opportunities. Our ability to use data in this way may be
constrained by regulatory developments. Compliance with applicable laws and regulations regarding personal data may require
changes in services, business practices or internal systems that result in increased costs, lower revenue, reduced efficiency or
greater difficulty in competing with other companies. Compliance with data regulations might limit our ability to innovate or
offer certain features and functionality in some jurisdictions where we operate. Failure to comply with existing or new rules
may result in significant penalties or orders to stop the alleged non-compliant activity, as well as negative publicity and
diversion of management time and effort.
Our security controls over personal data, our training of employees and third parties on privacy, data security and other
ethical data use practices we follow may not prevent the improper disclosure or misuse of customer or end-user data we
process. Improper disclosure or misuse of personal data could harm our reputation, lead to legal exposure to customers or end
users, or subject us to liability under laws that protect personal data, resulting in increased costs or loss of revenue.
Other regulatory developments could negatively impact our business.
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. 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. 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. Efforts to block a single product or domain name may end up blocking a number of
other products or domain names in an overbroad manner that could affect our business.
Regulations have also been enacted or proposed in a number of countries that limit the delivery of certain types of
content into those countries. Enactment and expansion of such laws and regulations would negatively impact our revenues. For
example, restrictions were adopted in India in 2020 prohibiting access to identified Chinese-owned applications which caused a
reduction in revenue to us. In addition, in April 2024, the U.S. government passed legislation that prohibited the provision of
certain types of services to a Chinese application if the application was not sold to a neutral third party by January 19, 2025.
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. 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. In the past year, this customer has taken steps to lower costs and
reduce reliance on U.S. providers by optimizing its platform, including using a DIY component. This has negatively impacted
revenue growth rates in 2024, and we expect revenue from this customer to decline over the next few years, regardless of
whether this legislation is enforced or takes effect. It is difficult to predict whether the passed legislation will ultimately be
enforced and whether any future judicial challenges brought against the Executive Order will be successful. Even though
President Trump has extended the enforcement deadline for a ban on the Chinese application, there is no assurance that we will
not be exposed to liability and we may be exposed to significant fines, litigation, indemnification claims, negative publicity,
reputational harm, diversion of management attention, interruptions in our operations, financial loss and other similar harms by
continuing to provide services to the Chinese application.
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.
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
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quality of our solutions. 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.
We may need to defend against patent or copyright infringement claims, which would cause us to incur substantial costs or
limit our ability to use certain technologies in the future.
As we expand our business and develop new technologies, products and services, we have become increasingly subject to
intellectual property infringement and other claims and related litigation. 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. Any litigation or claims, whether or not valid, brought against us
or pursuant to which we indemnify our customers or partners could result in substantial costs and diversion of resources and
require us to do one or more of the following: cease selling, incorporating or using features, functionalities, products or services
that incorporate the challenged intellectual property; pay substantial damages and incur significant litigation expenses; obtain a
license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at
all; or redesign products or services. If we are forced to take any of these actions, our business may be seriously harmed.
Our business will be adversely affected if we are unable to protect our intellectual property rights from unauthorized use or
infringement by third parties.
We rely on a combination of patent, copyright, trademark and trade secret laws and contractual restrictions on disclosure to
protect our intellectual property rights. These legal protections afford only limited protection, particularly in some regions
outside the U.S. We have previously brought lawsuits against entities that we believed were infringing our intellectual property
rights but have not always prevailed. Such lawsuits can be expensive and require a significant amount of attention from our
management and technical personnel, and the outcomes are unpredictable. Monitoring unauthorized use of our solutions is
difficult, and we cannot be certain that the steps we have taken or will take will prevent unauthorized use of our technology.
Furthermore, we cannot be certain that any pending or future patent applications will be granted, that any future patent will not
be challenged, invalidated or circumvented, or that rights granted under any patent that may be issued will provide competitive
advantages to us. If we are unable to protect our proprietary rights from unauthorized use, the value of our intellectual property
assets may be reduced. Although we have licensed from other parties proprietary technology covered by patents, we cannot be
certain that any such patents will not be challenged, invalidated or circumvented. Such licenses may also be non-exclusive,
meaning our competition may also be able to access such technology.
Litigation may adversely impact our business.
From time to time, we are or may become involved in various legal proceedings relating to matters incidental to the
ordinary course of our business, including patent, commercial, product liability, breach of contract, employment, class action,
whistleblower, other litigation, claims and governmental and other regulatory investigations and proceedings. In addition, under
our charter, we could be required to indemnify and advance expenses to our directors and officers in connection with their
involvement in certain actions, suits, investigations and other proceedings. Such matters can be time-consuming, divert
management’s attention and resources and cause us to incur significant expenses. Furthermore, because litigation is inherently
unpredictable and may not be covered by insurance, there can be no assurance that the results of any litigation matters will not
have an adverse impact on our business, results of operations, financial condition or cash flows.
Global climate change, other disruptions and related natural resource conservation regulations could adversely impact our
business.
The long-term effects of climate change on the global economy and our industry in particular remain unknown. For
example, changes in weather where we operate may increase the costs of powering and cooling computer hardware we use to
develop software and provide cloud services. In addition, catastrophic natural disasters, such as an earthquake, fire, flood or
other act of God and any similar disruption, as well as any derivative disruption, such as those to services provided through
localized physical infrastructure, including utility or telecommunication outages, or any to the continuity of our, our partners’,
suppliers’ and our customers’ workforce, could have a material adverse impact on our business and operating results. In
addition, pandemics or other public health crises, as well as any derivative disruptions such as those experienced during the
COVID-19 pandemic, in places where we operate may adversely affect our results of operations. Our global operations are
dependent on our network infrastructure, technology systems and website, including the supply of servers from our third-party
partners, as well as our intellectual property and personnel and any disruption to these dependencies may negatively impact our
ability to respond to customers, provide services and maintain local and global business continuity. Furthermore, some of our
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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. 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. Our deployed network
of servers consumes significant energy resources, including those generated by the burning of fossil fuels. While we have
invested in projects to support renewable energy development, our customers, investors and other stakeholders may require us
to take more steps to demonstrate that we are taking ecologically responsible measures in operating our business. The costs and
any expenses we may incur to make our network more energy-efficient and comply with any new regulations could make us
less profitable in future periods. Failure to comply with applicable laws and regulations or other requirements imposed on us
could lead to fines, lost revenue and damage to our reputation.
Investment-Related Risks
Our stock price has been, and may continue to be, volatile, and your investment could lose value.
The market price of our common stock has historically been volatile. 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.
Furthermore, our revenue, particularly that portion attributable to usage of our solutions beyond customer commitments,
can be difficult to forecast, and, as a result, our quarterly operating results can fluctuate substantially. This concern is
particularly acute with respect to our media and commerce customers. In the future, our customer contracting models may
change to move away from a committed revenue structure to a “pay-as-you-go” approach, which could make it easier for
customers to reduce the amount of business they do with us or leave altogether. Changes in billing models and committed
revenue requirements could, therefore, create challenges with our forecasting processes. Because a significant portion of our
cost structure is largely fixed in the short-term, revenue shortfalls tend to have a disproportionately negative impact on our
profitability. If we announce revenue or profitability results that do not meet or exceed our guidance, issue guidance that does
not meet or exceed market expectations, or make changes in our guidance with respect to future operating results, our stock
price may decrease significantly as a result.
Any of these events, as well as other circumstances discussed in these Risk Factors, may cause the price of our common
stock to fall. In addition, the stock market in general, and the market prices of stock of publicly-traded technology companies in
particular, have experienced significant volatility that often has been unrelated to the operating performance of affected
companies. These broad stock market fluctuations may adversely affect the market price of our common stock, regardless of
our operating performance.
Any failure to meet our debt obligations or obtain financing would damage our business.
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. We also entered into a credit facility in
November 2022 that provides for an initial $500.0 million revolving credit facility, and under specified circumstances, the
credit facility can be increased to up to $1 billion in aggregate principal amount. As of December 31, 2024, there were no
outstanding borrowings under the credit facility. Our ability to repay any amounts we borrow under our credit facility, refinance
the notes, make cash payments in connection with conversions of the notes or repurchase the notes in the event of a
fundamental change (as defined in the applicable indenture governing the notes) will depend on market conditions and our
future performance, which is subject to economic, financial, competitive and other factors beyond our control. We also may not
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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. 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 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. 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. In addition, if we are unable to obtain financing to fund additional capital expenditures,
acquisitions and general corporate and other purposes on reasonable terms, or at all, then our business, operations and financial
condition may be harmed.
Because we currently do not intend to pay dividends, stockholders will benefit from an investment in our common stock only
if it appreciates in value.
We currently intend to retain our future earnings, if any, for use in the operation of our business and do not expect to pay
any cash dividends in the foreseeable future on our common stock. As a result, the success of an investment in our common
stock will depend upon any future appreciation in its value. There is no guarantee that our common stock will appreciate in
value or even maintain the price at which stockholders have purchased their shares, and our stock price has been, and may
continue to be, volatile, and your investment could lose value. See the risk factor titled “Our stock price has been, and may
continue to be, volatile, and your investment could lose value” above.
Provisions of our charter, by-laws and Delaware law may have anti-takeover effects that could prevent a change in control
even if the change in control would be beneficial to our stockholders.
Provisions of our charter, by-laws and Delaware law could make it more difficult for a third party to control or acquire us,
even if doing so would be beneficial to our stockholders. 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.
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. Our board of
directors could rely on Delaware law to prevent or delay an acquisition of us.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or
prevent fraud. 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 previously disclosed in our Form 10-K for the year ended December 31, 2022, we
identified a material weakness in the Company’s internal control over financial reporting as of December 31, 2022 related to
income taxes. Although this material weakness has been remediated, there can be no assurance that we will not identify
additional material weaknesses in internal controls in the future or that the measures we may take to remediate any such future
control deficiencies will be effective.
We need to continue to enhance and maintain our processes and systems and adapt them to changes as our business evolves
and we rearrange management responsibilities and reorganize our business. This continuous process of maintaining and
adapting our internal controls and complying with Section 404 is expensive and time-consuming and requires significant
management attention. Furthermore, as our business changes, including by expanding our operations in different markets,
increasing reliance on channel partners and completing acquisitions, our internal controls may become more complex and we
may be required to expend significantly more resources to ensure our internal controls remain effective. Failure to implement
required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or
cause us to fail to meet our reporting obligations. If we or our independent registered public accounting firm identify additional
material weaknesses, the disclosure of that fact, even if quickly remediated, could reduce the market's confidence in our
financial statements and harm our stock price.
24

We cannot be certain that our internal control measures will provide adequate control over our financial processes and
reporting and ensure compliance with Section 404. 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.
Item 1B. Unresolved Staff Comments
None.
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. We have implemented cybersecurity risk management programs and procedures designed to identify and address
threats to both internal and customer facing data and systems that are subject to ongoing compliance assessments, certifications
and testing.
Under the oversight and direction of the Akamai executive management team and the Audit Committee of Akamai’s board
of directors, the Chief Security Officer (the “CSO”) has primary responsibility for overseeing Akamai’s management of
cybersecurity risks. 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. Our current CSO is an accomplished security professional with over 15 years of
experience in building and leading information security teams at both public and private companies. Akamai’s information
security team is comprised of senior ranking staff who have experience in a broad range of security domains, including security
operations, software security, risk management and auditing.
The 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. On a quarterly basis and as needed, the CSO reports to the Audit Committee to provide information on, as
applicable and appropriate, cybersecurity risk management programs, risk mitigation, cybersecurity incidents and related
disclosure obligations, if any, information on new or changing threats and other cybersecurity matters. The Audit Committee
Chair reports to our board at least quarterly on our cybersecurity risk management program, including risk mitigation,
cybersecurity incidents and other relevant developments in our cyber threat landscape. In addition to formal reporting, the CSO
takes part in informal meetings as needed and requested with Akamai's management, including the Chief Executive Officer and
the board of directors.
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.
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. Akamai’s information security team gathers
threat and risk data and updates through various sources, such as systems reviews, security research activities, product
development processes, diligence efforts in acquisitions and internal and external security scans and alerts, as appropriate. As
applicable, in certain circumstances, we also collaborate with industry partners in the security community, our peers and law
25

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.
In addition to ongoing risk management procedures, we have implemented a cybersecurity incident procedure designed to
identify and address security incidents through various channels. As part of this process, cybersecurity incidents are evaluated,
as appropriate, by a cross-functional team to assess the impact of the incident or threat to Akamai from a financial, reputational
and operational perspective, and to determine notification obligations to customers and regulators and disclosure obligations to
investors, as applicable. 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. We have a process for employees to formally acknowledge
their review and understanding of security obligations, and the information security and legal teams conduct periodic security
and data protection training aimed to emphasize the importance of security and data protection. In addition, we have
implemented a review process to assess the security profile and data protection practices of certain third-party service providers
that have exposure to Akamai’s systems, including, as appropriate, review of vendor security policies and procedures and
contractually required security commitments.
Although risks from cybersecurity threats have to date not materially affected us, our business strategy, results of
operations or financial condition, we have, from time to time, experienced threats to and breaches of our and our third-party
vendors’ data and systems. For more information, see "Risk Factors" included elsewhere in this annual report on Form 10-K.
Item 2. Properties
Since May 2022 we have operated as a flexible workplace, where employees can choose to work from their home office, a
Company office, an approved workspace or a combination. However, our headquarters is located in Cambridge, Massachusetts
where we lease approximately 659,000 square feet, of which approximately 285,000 square feet is currently subleased to third
parties. We also have offices in other locations in the U.S. and other countries, the largest of which are Bangalore, India;
Krakow, Poland; and Tel Aviv, Israel. All of our facilities are leased. We believe our facilities are sufficient to meet our needs.
Item 3. Legal Proceedings
We are party to various litigation matters, governmental proceedings, investigations, claims and disputes that we consider
routine and incidental to our business. We do not currently expect the results of any of these matters to have a material effect on
our business, results of operations, financial condition or cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common stock, par value $0.01 per share, trades under the symbol “AKAM” on the Nasdaq Global Select Market.
As of February 20, 2025, there were 173 holders of record of our common stock.
We have never paid or declared any cash dividends on shares of our common stock or other securities and do not anticipate
paying or declaring any cash dividends in the foreseeable future. We currently intend to retain all future earnings, if any, for use
in the operation of our business.
26

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.
(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. Effective May 2024, our
board of directors authorized a new $2.0 billion share repurchase program through June 2027, which was in addition to amounts remaining under the
January 2022 program.
During the year ended December 31, 2024, we repurchased 5.6 million shares of our common stock for an aggregate
purchase price of $557.5 million.
Item 6. [Reserved]
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), should be read
in conjunction with our consolidated financial statements and notes thereto that appear elsewhere in this annual report on
Form 10-K. See “Risk Factors” elsewhere in this annual report on Form 10-K for a discussion of certain risks associated with
our business. The following discussion contains forward-looking statements. The forward-looking statements do not include the
potential impact of any mergers, acquisitions, divestitures or other events that may be announced after the date hereof.
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. 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 purpose of this discussion and analysis section is to provide material information
relevant to an assessment of our financial condition and results of operations from management’s perspective, including to
describe and explain key trends, events and other factors that impacted our reported results and that are likely to impact our
future performance.
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. In addition to a base level of revenue, we are also dependent on our ability to increase our product offerings and to
cross-sell additional services to our new and existing customers, particularly for our security and compute solutions portfolios.
27

Our revenue is also impacted by customer renewals and the pricing for such renewals, the rate of adoption and timing of
customer offerings, variability of one-time events, usage of compute services and the amount of traffic we serve on our
network. Geopolitical, economic and other developments that impact our customers' businesses can also impact our ability to
attract new customers or continue to cross-sell additional services to existing customers and traffic levels for customers with
variable usage. 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.
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. Our security and compute solutions represented over two-thirds of our total revenue
during 2024. We plan to continue to invest in these areas with a focus on further advancing our product portfolios and
sales capabilities.
•
Traffic on our network has moderated as compared to prior years. 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. For instance, 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 “do-it-
yourself” component, which has reduced traffic on our network and negatively impacted our revenue in 2024. We
expect this trend to continue in 2025. If our customers' businesses continue to be impacted by economic and
geopolitical headwinds, they may reduce their spending, optimize their traffic or may increase their reliance on “do-it-
yourself” solutions, which may negatively impact traffic on our network and revenue.
•
The prices paid by some of our delivery and security customers have declined in recent years due to competition and
contract renewals, which negatively impacts our revenue growth rates. We have been able to mitigate some of the
negative impacts to our revenue growth rates by upselling incremental solutions to our existing customers. 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. 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. These quarterly variations in
revenue are attributable to, among other things, the timing of large customer contract renewals; the frequency and
timing of purchases of custom solutions or licensed software; the nature and timing of software and gaming releases by
our customers; holiday season activity; and whether there are large live sporting or other events or situations that
impact the amount of media traffic on our network.
Expenses
Our level of profitability is impacted by our expenses, including direct costs to support our revenue such as bandwidth and
co-location costs, which includes energy to power our network. We have observed the following trends related to our
profitability in recent years:
•
Co-location costs are a significant portion of our cost of revenue. 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. The
costs of the financial commitments are expensed ratably over the lease term, and, as a result, in some cases, we are
incurring costs in advance of these compute locations being fully utilized. We continue to improve our internal-use
software and remain disciplined in managing our hardware deployments, which enables us to use servers more
efficiently. We will continue to effectively manage our co-location costs.
•
Network bandwidth costs are also a significant portion of our cost of revenue. Historically, we have been able to
mitigate increases in these costs through investment in internal-use software development to improve the performance
and efficiency of our network. We will continue to effectively manage our bandwidth costs.
28

•
Network build-out and supporting service costs represent another significant portion of our cost of revenue. 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. We previously experienced increased costs from third-party cloud providers, but continue to mitigate those
costs by migrating to our own compute solutions and working to optimize third-party cloud spend. 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. 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. In 2023 we redesigned one of our non-executive short-term incentive compensation programs by
shifting certain employees from a cash-based to stock-based program, and in 2024 we transitioned more employees to
this program. During 2023, we also introduced a non-executive incentive program tied to our initiative to migrate
certain third-party cloud services onto Akamai's platform. 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. In recent years,
we have invested in our network, particularly as part of building out our compute infrastructure, which increased our
capital expenditures and resulting depreciation expense. We are also experiencing an increase in certain server
component costs that support the continued build out of our compute platform. We plan to continue to make
investments in capital expenditures, including to support recently acquired contracts, and focus investments on our
faster growing compute solutions, including support for a new enterprise compute customer.
•
Growth in our international operations incrementally increases our exposure to foreign currency fluctuations. Because
we publicly report in U.S. dollars, our expenses are positively impacted when the dollar strengthens and are negatively
impacted when the dollar weakens.
Recent Acquisitions
We acquired certain customer contracts from Edgio, Inc. ("Edgio") in December 2024 as part of a bankruptcy process. 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. 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.
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. 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. Neither Neosec or Ondat included a significant number
of employees when we completed the acquisitions.
In March 2022, we acquired Linode, an infrastructure-as-a-service platform provider, which allows for developer-friendly
cloud computing capabilities. The acquisition was intended to enhance our compute services by enabling us to create a unique
cloud platform to build, run and secure applications from the cloud to the edge. Linode had approximately 250 employees when
we completed the acquisition.
29

Global Economic Conditions
Global macroeconomic and geopolitical conditions continue to impact our customers, as well as our business and revenue
growth rates. We, along with our customers, continue to manage through an uncertain period of fluctuating inflation,
regulations that may negatively impact business, economic and political uncertainty, uncertain energy supplies, heightened
geopolitical tensions and conflict, potential for supply chain disruptions, changes in U.S. and international tax laws, changes in
tariffs, fluctuations in foreign exchange rates and elevated interest rates. To the extent these macroeconomic conditions
continue, we expect that it may adversely affect our business, operations and financial results.
Results of Operations
The following sets forth, as a percentage of revenue, consolidated statements of income data for the years indicated:
2024
2023
2022
Revenue
100.0 %
100.0 %
100.0 %
Costs and operating expenses:
Cost of revenue (exclusive of amortization of acquired intangible assets shown
below)
40.6
39.6
38.3
Research and development
11.8
10.7
10.8
Sales and marketing
14.0
14.0
13.9
General and administrative
15.6
15.8
16.2
Amortization of acquired intangible assets
2.3
1.8
1.8
Restructuring charge
2.4
1.5
0.4
Total costs and operating expenses
86.7
83.4
81.4
Income from operations
13.4
16.6
18.6
Interest and marketable securities income, net
2.5
1.2
0.1
Interest expense
(0.7)
(0.5)
(0.3)
Other expense, net
(0.5)
(0.3)
(0.3)
Income before provision for income taxes
14.7
17.0
18.1
Provision for income taxes
(2.1)
(2.8)
(3.5)
Gain (loss) from equity method investment
—
—
(0.2)
Net income
12.7 %
14.2 %
14.4 %
Revenue
Revenue by solution category during the periods presented was as follows (in thousands):
For the Years Ended December 31,
For the Years Ended December 31,
2024
2023
% Change
% Change
at Constant
Currency
2023
2022
% Change
% Change
at Constant
Currency
Security
$ 2,042,661
$ 1,765,267
15.7 %
16.4 % $ 1,765,267
$ 1,541,941
14.5 %
14.7 %
Delivery
1,318,131
1,542,434
(14.5)
(14.0)
1,542,434
1,669,257
(7.6)
(7.1)
Compute
630,376
504,219
25.0
25.4
504,219
405,456
24.4
24.7
Total
revenue
$ 3,991,168
$ 3,811,920
4.7 %
5.3 % $ 3,811,920
$ 3,616,654
5.4 %
5.8 %
The increases in our revenue in 2024 as compared to 2023, and 2023 as compared to 2022, was primarily the result of
continued growth in sales of our security and compute solutions and the acquisition of Linode in March 2022 which contributed
to the growth in our compute solutions. These increases were partially offset by a decline in revenue from our delivery solutions
due to impacts from economic and geopolitical uncertainty our customers are facing which resulted in slower traffic growth
rates and the continued downward pricing of renewals.
30

The increase in security solutions revenue for 2024 as compared to 2023, and 2023 as compared to 2022, was due to
growth in a number of key products in our security solutions portfolio, including our segmentation and web application
solutions, and the growth in certain products that combine elements of our security and delivery offerings to provide robust
security solutions.
The decrease in delivery solutions revenue for 2024 as compared to 2023, and 2023 as compared to 2022, was due to our
customers' economic and geopolitical headwinds which resulted in slower traffic growth rates and the continued downward
pricing of renewals. In 2024, these headwinds caused a large social media customer to increase their focus on cost optimization
and "do-it-yourself" solutions, which additionally reduced traffic on our network and had a negative impact on our delivery
revenue.
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 compute solutions revenue in 2023 as compared to 2022 was also due to a
price increase for some of our compute solutions in 2023.
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. 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.
31

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. Additionally, the increase in stock-based compensation programs from
cash-based to stock-based for certain employees and the timing of our performance-based equity award grants.
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 2023 as compared to 2022 was primarily due to:
•
co-location fees as a result of investment in our network, particularly as we are building out our compute platform
to support future growth and scalability;
•
bandwidth fees to support the increase in traffic served on our network and for traffic served from higher cost
regions;
•
network build-out and supporting services due to our investment in our network and costs associated with the
transition services agreements to support the migration of customer contracts acquired from Lumen and
StackPath; and
•
payroll and related costs, including stock-based compensation, as a result of headcount growth to support our
network, the increased expected achievement of our performance-based compensation plans and higher average
equity awards to employees driven by the talent market; additionally, stock-based compensation increased due to
the shift in one of our compensation programs from cash-based to stock-based.
The increase in cost of revenue for 2023 as compared to 2022 was partially offset by lower depreciation expense of
network equipment due to software and hardware initiatives we have implemented to manage our global network more
efficiently. As a result, we increased the expected average useful life of our servers from five to six years effective January 1,
2023, which resulted in a reduction to depreciation expense of $62.7 million for the year ended December 31, 2023.
Additionally, due to our focus on third-party cloud application costs, including migrating third-party cloud services to our
own compute platform and optimizing third-party cloud spending which are included in network build-out and supporting
services, our third-party cloud costs decreased for 2023 as compared to 2022.
32

During 2025, we expect our cost of revenue to increase as compared to 2024, in particular our co-location costs and
depreciation of network equipment, due to investments in our network to support the continued growth of our compute
solutions.
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, 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 increases in capitalized salaries and related costs as we had
additional resources focused on development activities related to our platform and solutions.
The increase in research and development expenses for 2023 as compared to 2022 was due to higher payroll and related
costs, including stock-based compensation, as a result of headcount growth from our strategic initiatives, annual merit
increases, the increased expected achievement of our performance-based compensation plans, a new compensation program tied
to our initiative to migrate third-party cloud services onto our compute platform and higher average equity awards to employees
driven by the talent market. Additionally, stock-based compensation increased due to the shift in one of our compensation
programs from cash-based to stock-based. These increases were partially offset by an increase in capitalized salaries and related
costs as we focused resources to work on development activities related to our platform.
Research and development costs are expensed as incurred, other than certain internal-use software development costs
eligible for capitalization. Capitalized development costs consist of payroll and related costs for personnel and external
consulting expenses involved in the development of internal-use software used to deliver our services and operate our network.
For the years ended December 31, 2024, 2023 and 2022, we capitalized $99.6 million, $77.0 million and $30.0 million,
respectively, of stock-based compensation. These capitalized internal-use software development costs are amortized to cost of
revenue over their estimated useful lives, ranging from two to ten years based on the software developed and its expected useful
life.
We expect our research and development costs to increase in 2025, in particular payroll and related costs, in support of our
faster growing security and compute solutions.
33

Sales and Marketing Expenses
Sales and marketing expenses consisted of the following for the periods presented (in thousands):
For the Years Ended December 31,
For the Years Ended December 31,
2024
2023
% Change
2023
2022
% Change
Payroll and related costs
$ 393,584
$ 376,305
4.6 % $ 376,305
$ 374,110
0.6 %
Stock-based compensation
77,593
66,453
16.8
66,453
47,789
39.1
Marketing programs and related
costs
53,893
59,151
(8.9)
59,151
55,033
7.5
Acquisition-related costs
—
1,387
(100.0)
1,387
2,166
(36.0)
Other expenses
31,711
29,930
6.0
29,930
23,311
28.4
Total sales and marketing
$ 556,781
$ 533,226
4.4 % $ 533,226
$ 502,409
6.1 %
As a percentage of revenue
14.0 %
14.0 %
14.0 %
13.9 %
The increase in sales and marketing expenses for 2024 as compared to 2023 was due to higher payroll and related costs,
including stock-based compensation as a result of annual merit increases and employees acquired through the Noname Security
acquisition. 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.
The increase in sales and marketing expenses for 2023 as compared to 2022 was due to higher payroll and related costs,
including stock-based compensation, as a result of annual merit increases, headcount growth and the increased expected
achievement of our performance-based compensation plans and other expenses due to increased travel expenses associated with
customer meetings and sales events. Additionally, stock-based compensation increased due to the shift in one of our
compensation programs from cash-based to stock-based.
During 2025 we do not expect significant increases in sales and marketing expenses as we plan to continue to carefully
manage costs related to our go-to-market efforts to align resources with higher growth areas of our business.
General and Administrative Expenses
General and administrative expenses consisted of the following for the periods presented (in thousands):
For the Years Ended December 31,
For the Years Ended December 31,
2024
2023
% Change
2023
2022
% Change
Payroll and related costs
$ 225,687
$ 218,272
3.4 % $ 218,272
$ 213,772
2.1 %
Stock-based compensation
102,494
94,316
8.7
94,316
62,926
49.9
Depreciation and amortization
66,184
65,817
0.6
65,817
74,225
(11.3)
Facilities-related costs
86,671
90,061
(3.8)
90,061
103,473
(13.0)
Provision for doubtful accounts
3,919
1,649
137.7
1,649
7,042
(76.6)
Acquisition-related costs
7,502
8,050
(6.8)
8,050
19,071
(57.8)
Software and related service
costs
56,557
55,714
1.5
55,714
50,320
10.7
Other expenses
72,771
66,972
8.7
66,972
53,377
25.5
Total general and
administrative
$ 621,785
$ 600,851
3.5 % $ 600,851
$ 584,206
2.8 %
As a percentage of revenue
15.6 %
15.8 %
15.8 %
16.2 %
The increase in general and administrative expenses for 2024 as compared to 2023 was primarily due to higher payroll and
related costs as a result of annual merit increases, an increase in stock-based compensation as a result of the timing of our
performance-based equity award grants and an increase in other expenses related to professional service fees to support our
business. These increases were partially offset by decreased facilities-related costs as we exited certain facilities in connection
34

with our FlexBase program.
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. Additionally, stock-based
compensation increased due to the shift in one of our compensation programs from cash-based to stock-based. These increases
were partially offset by decreases in facilities-related costs as a result of growth in sublease income from the execution of our
FlexBase program and acquisition-related costs in connection with our acquisition of Linode in the first quarter of 2022.
During 2025, we expect our general and administrative expenses to increase as compared to 2024, to support the operations
of the business.
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. 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.
Restructuring Charge
For the Years Ended December 31,
For the Years Ended December 31,
(in thousands)
2024
2023
% Change
2023
2022
% Change
Restructuring charge
$
95,441
$
56,643
68.5 % $
56,643
$
13,529
318.7 %
As a percentage of revenue
2.4 %
1.5 %
1.5 %
0.4 %
The restructuring charge in 2024 was driven by management's commitment to an action with the primary intent to redeploy
resources to support our strategic investments and as a result of our completed acquisitions. 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 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. Additionally, the restructuring charge in 2023 included the result of certain
actions initiated in the first quarter of 2023. Management's commitment to an action to restructure certain parts of the company
was to enable the prioritization of investments in the fastest growing areas of the business. The restructuring charge for this
action includes severance and related expenses for certain headcount reductions. We do not expect to incur material additional
charges related to this action.
The restructuring charge in 2022 was primarily related to capitalized internal-use software impairment charges related to
our investment with Mitsubishi UFJ Financial Group ("MUFG") in the joint venture Global Open Network, Inc. ("GO-NET"),
and MUFG's decision to suspend GO-NET's operations, and impairments of right-of-use-assets for facilities that are no longer
needed as a result of our FlexBase program.
35

Non-Operating Income (Expense)
For the Years Ended December 31,
For the Years Ended December 31,
(in thousands)
2024
2023
% Change
2023
2022
% Change
Interest and marketable
securities income, net
$ 100,280
$
45,194
121.9 % $
45,194
$
3,258
1,287.2 %
As a percentage of revenue
2.5 %
1.2 %
1.2 %
0.1 %
Interest expense
$
(27,117)
$
(17,709)
53.1 % $
(17,709)
$
(11,096)
59.6 %
As a percentage of revenue
(0.7)%
(0.5)%
(0.5)%
(0.3)%
Other expense, net
$
(19,561)
$
(12,296)
59.1 % $
(12,296)
$
(10,433)
17.9 %
As a percentage of revenue
(0.5)%
(0.3)%
(0.3)%
(0.3)%
Interest and marketable securities income, net primarily consists of interest earned on invested cash and marketable
securities balances and income and losses on mutual funds that are associated with our employee non-qualified deferred
compensation plan. The increase to interest and marketable securities income, net for 2024 as compared to 2023, and 2023 as
compared to 2022, was the result of increased cash, cash equivalents and marketable securities balances received from our
August 2023 issuance of $1,265.0 million in par value of convertible senior notes due 2029 and higher interest rates, as well as
increased gains associated with the non-qualified deferred compensation plan.
Interest expense is related to our debt transactions, which are described in Note 11 to the consolidated financial statements
included elsewhere in this annual report on Form 10-K. The increase to interest expense for 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.
Other expense, net primarily represents net foreign exchange gains and losses mainly due to foreign exchange rate
fluctuations on the remeasurement of monetary assets and liabilities that are not denominated in the functional currency as well
as other non-operating expense and income items. 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.
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. These amounts
were partially offset by a decrease in foreign income taxed at lower rates, an increase in non-deductible transfer pricing and an
increase in certain tax reserves.
The decrease in the provision for income taxes for 2023 as compared to 2022 was mainly due to a reduction in
intercompany sales of intellectual property and the tax on global intangible low-taxed income. These items were partially offset
by a decrease in the excess tax benefit related to stock-based compensation and the revaluation of certain foreign income tax
liabilities due to foreign exchange rate fluctuations.
For the year ended December 31, 2024, our effective income tax rate was lower than the federal statutory tax rate due to the
benefit of U.S. federal, state and foreign research and development credits, an intercompany sale of intellectual property,
foreign income taxed at lower rates and the excess tax benefit related to stock-based compensation. These amounts were
partially offset by non-deductible stock-based compensation and non-deductible transfer pricing.
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
36

credits. These amounts were partially offset by non-deductible stock-based compensation and the tax on global intangible low-
taxed income. Additionally, our effective income tax rate was lower for the year ended December 31, 2022 due to an
intercompany sale of intellectual property.
Our effective income tax rate may fluctuate between fiscal years and from quarter to quarter due to items arising from
discrete events, such as tax benefits from the settlement of employee equity awards, tax law changes and settlements of tax
audits and assessments. Our effective income tax rate is also impacted by, and may fluctuate in any given period because of, the
composition of income in foreign jurisdictions where tax rates differ depending on the local statutory rates. The Organisation
for Economic Co-operation and Development (“OECD”) and participating OECD member countries continue to work toward
the enactment of a 15% global minimum corporate tax rate for large multinational enterprise groups, also known as "Pillar
Two". Many of the participating countries have enacted legislation that became effective beginning in 2024, while other
countries continue to work on defining the underlying rules and administrative procedures. 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.
(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. 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. The
loss from equity method investment in 2022 was the result of our impairment of our investment in GO-NET in the first quarter
of 2022 since the operations will no longer generate future cash flows. We do not expect additional activity related to this
investment.
Use of Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the United States of
America ("GAAP") we provide additional financial metrics that are not prepared in accordance with GAAP ("non-GAAP
financial measures"). Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand
and compare operating results across accounting periods, for financial and operational decision making, for planning and
forecasting purposes, to measure executive compensation and to evaluate our financial performance. These non-GAAP
financial measures are non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP
net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin and impact of foreign currency exchange rates, as
discussed below.
Management believes that these non-GAAP financial measures reflect our ongoing business in a manner that allows for
meaningful comparisons and analysis of trends in the business, as they facilitate comparison of financial results across
accounting periods and to those of our peer companies. 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.
The non-GAAP financial measures do not replace the presentation of our GAAP financial measures and should only be
used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.
The non-GAAP adjustments, and our basis for excluding them from non-GAAP financial measures, are outlined below:
•
Amortization of acquired intangible assets – We have incurred amortization of intangible assets, included in our
GAAP financial statements, related to various acquisitions we have made. 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
37

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 grant date fair value of the stock-based compensation awards
varies based on the stock price at the time of grant, varying valuation methodologies, subjective assumptions and the
variety of award types. This makes the comparison of our current financial results to previous and future periods
difficult to interpret; therefore, we believe it is useful to exclude stock-based compensation and amortization of
capitalized stock-based compensation from our non-GAAP financial measures in order to highlight the performance of
our core business and to be consistent with the way many investors evaluate our performance and compare our
operating results to peer companies.
•
Acquisition-related costs – Acquisition-related costs include transaction fees, advisory fees, due diligence costs and
other direct costs associated with strategic activities, as well as certain additional compensation costs payable to
employees acquired from the Linode acquisition if employed for a certain period of time. The additional compensation
cost was initiated by and determined by the seller and is in addition to normal levels of compensation, including
retention programs, offered by Akamai. Acquisition-related costs are impacted by the timing and size of the
acquisitions, and we exclude acquisition-related costs from our non-GAAP financial measures to provide a useful
comparison of operating results to prior periods and to peer companies because such amounts vary significantly based
on the magnitude of our acquisition transactions and do not reflect our core operations.
•
Restructuring charge – We have incurred restructuring charges from programs that have significantly changed either
the scope of the business undertaken by us or the manner in which that business is conducted. These charges include
severance and related expenses for workforce reductions, impairments of long-lived assets that will no longer be used
in operations (including acquired intangible assets, right-of-use assets, other facility-related property and equipment
and internal-use software) and termination fees for any contracts cancelled as part of these programs. We exclude these
items from our non-GAAP financial measures when evaluating our continuing business performance as such items
vary significantly based on the magnitude of the restructuring action and do not reflect expected future operating
expenses. In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or
past operations of our business.
•
Amortization of debt issuance costs and capitalized interest expense – We have convertible senior notes
outstanding that mature in 2029, 2027 and 2025. 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. We believe excluding these amounts from our non-GAAP
financial measures is useful to investors as the types of events giving rise to these gains and losses are not
representative of our core business operations and ongoing operating performance.
•
Legal settlements – We have incurred losses related to the settlement of legal matters. 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 exclude such
income and losses because we do not have direct control over the operations of the investment and the related income
and losses are not representative of our core business operations.
•
Income tax effect of non-GAAP adjustments and certain discrete tax items – The non-GAAP adjustments
described above are reported on a pre-tax basis. The income tax effect of non-GAAP adjustments is the difference
between GAAP and non-GAAP income tax expense. Non-GAAP income tax expense is computed on non-GAAP pre-
tax income (GAAP pre-tax income adjusted for non-GAAP adjustments) and excludes certain discrete tax items (such
as the impact of intercompany sales of intellectual property related to our acquisitions), if any. We believe that
applying the non-GAAP adjustments and their related income tax effect allows us to highlight income attributable to
our core operations.
38

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
39

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. 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. 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. Under GAAP, shares delivered under hedge transactions are not considered offsetting
shares in the fully-diluted share calculation until they are delivered. However, we would receive a benefit from the note hedge
transactions and would not allow the dilution to occur, so management believes that adjusting for this benefit provides a
meaningful view of operating performance. 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.
We consider Adjusted EBITDA to be another important indicator of the operational strength and performance of our
business and a good measure of our historical operating trends. Adjusted EBITDA eliminates items that we do not consider to
be part of our core operations. We define Adjusted EBITDA as GAAP net income excluding the following items: interest and
marketable securities income and losses; income taxes; depreciation and amortization of tangible and intangible assets; stock-
based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges;
legal settlements; foreign exchange gains and losses; interest expense; amortization of capitalized interest expense; gains and
losses on cost method investments; gains and losses from equity method investments; and other non-recurring or unusual items
that may arise from time to time. Adjusted EBITDA margin represents Adjusted EBITDA stated as a percentage of revenue.
40

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. Consequently, our financial results have been impacted, and management expects they will continue to be impacted, by
fluctuations in foreign currency exchange rates. For example, when the local currencies of our international subsidiaries
weaken, generally our consolidated results stated in U.S. dollars are negatively impacted.
Because exchange rates are a meaningful factor in understanding period-to-period comparisons, management believes the
presentation of the impact of foreign currency exchange rates on revenue and earnings enhances the understanding of our
financial results and evaluation of performance in comparison to prior periods. The dollar impact of changes in foreign currency
exchange rates presented is calculated by translating current period results using monthly average foreign currency exchange
rates from the comparative period and comparing them to the reported amount. The percentage change at constant currency
presented is calculated by comparing the prior period amounts as reported and the current period amounts translated using the
same monthly average foreign currency exchange rates from the comparative period.
Liquidity and Capital Resources
To date, we have financed our operations primarily through public and private sales of debt and equity securities and cash
generated by operations. 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. 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.
Changes in cash, cash equivalents and marketable securities are dependent upon changes in, among other things, working
capital items such as accounts receivable, deferred revenue, accounts payable, various accrued expenses and operating lease
obligations, as well as changes in our capital and financial structure due to common stock repurchases, debt repayments and
issuances, purchases and sales of marketable securities, cash paid for acquisitions and similar events. We believe our strong
balance sheet and cash position are important competitive differentiators that provide the financial stability and flexibility to
41

enable us to continue to make investments at opportune times. We expect to continue to evaluate strategic investments to
strengthen our business.
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 a result, our liquidity is not expected to be materially
impacted by the amount of cash and cash equivalents held in accounts outside the U.S.
Cash Provided by Operating Activities
For the Years Ended December 31,
(in thousands)
2024
2023
2022
Net income
$
504,918
$
547,629
$
523,672
Non-cash reconciling items included in net income
1,048,595
931,507
756,321
Changes in operating assets and liabilities
(34,342)
(130,697)
(5,317)
Net cash provided by operating activities
$
1,519,171
$
1,348,439
$
1,274,676
The increase in cash provided by operating activities for 2024 as compared to 2023 was due to increased collections from
customers as a result of increased revenue and timing of customer collections. The increase was also due to the shift in our
performance-based compensation program from cash-based to stock-based, which led to cash performance-based program
payments in 2023 that did not recur in 2024.
The increase in cash provided by operating activities for 2023 as compared to 2022 was due to increased profitability in
2023, as well as cash paid for income taxes related to an intercompany sale of intellectual property and additional compensation
costs paid to employees acquired from the Linode acquisition, both of which occurred in 2022 and did not re-occur in 2023.
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. 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.
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. These increases were partially offset by cash paid for the acquisition
of Linode in March 2022 and by net marketable securities activity as we sold marketable securities during 2022 to fund the
acquisition.
42

Cash (Used in) Provided by Financing Activities
For the Years Ended December 31,
(in thousands)
2024
2023
2022
Net convertible senior notes activity
$
—
$
1,101,028
$
—
Activity related to stock-based compensation
(111,663)
(3,243)
(25,774)
Repurchases of common stock
(557,468)
(654,046)
(608,010)
Other, net
(10,504)
(360)
(393)
Net cash (used in) provided by financing activities
$
(679,635) $
443,379
$
(634,177)
The increase in cash used in financing activities in 2024 as compared to 2023 was due to the net proceeds received in 2023
from our convertible senior notes due 2029 that did not recur in 2024 and increased employee taxes paid in 2024 related to
vesting of stock awards driven by the shift in our performance-based compensation program from cash-based to stock-based
and an increase in stock price. These increases were partially offset by a reduction in repurchases of our common stock as part
of our share repurchase program.
The increase in cash used in financing activities in 2023 as compared to 2022 was due to the net proceeds from our
convertible senior notes due 2029 that were issued in August 2023. 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. 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. 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. Our goals for the share
repurchase programs are to offset the dilution created by our employee equity compensation programs over time and provide
the flexibility to return capital to stockholders as business and market conditions warrant, while still preserving our ability to
pursue other strategic opportunities. The timing and amount of any future share repurchases will be determined by our
management based on its evaluation of market conditions and other factors.
Convertible Senior Notes
As of December 31, 2024, we had $3,565.0 million of convertible senior notes outstanding that are senior unsecured
obligations and bear interest payable semi-annually in arrears. These notes mature between May 2025 and February 2029. 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 Facility
In November 2022, we entered into a $500.0 million, five-year revolving credit agreement ("2022 Credit Agreement"). The
2022 Credit Agreement allows us to borrow up to $500.0 million at various interest rates and contains customary
representations and warranties, affirmative and negative covenants and events of default. As of December 31, 2024, we were in
compliance with all covenants.
There were no outstanding borrowings under the 2022 Credit Agreement as of December 31, 2024. 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 2025 Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events
of default. Any borrowings are secured by collateral consisting primarily of available-for-sale debt securities in our investment
portfolio.
43

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. As of December 31, 2024
the total obligation under these agreements was $1,231.6 million, of which $263.1 million is payable in the next 12 months. We
have also executed additional operating leases that will commence in 2025 for $197.0 million. Additionally, during the fourth
quarter of 2024, we entered into an operating lease with a data center operator for space in the Virginia area that is expected to
commence beginning in the third quarter of 2025. The lease is for a datacenter with gross payments of approximately $750.0
million over a 12 year lease term. We have contemporaneously entered into a sublease with the affiliate of a large social media
customer for the use of the space on substantially similar terms. The operating lease costs and associated sublease income will
be recorded as general and administrative expense in the consolidated statements of income and are expected to substantially
offset each other. The operating lease terms and maturities are discussed more fully in Note 12 to the consolidated financial
statements included elsewhere in this annual report on Form 10-K.
Purchase Commitments
We enter into long-term agreements with network and internet service providers for bandwidth, as well as execute purchase
orders for the purchase of goods or services in the ordinary course of business, which may contain minimum commitments.
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.
Liquidity Outlook
Based on our present business plan, we expect our current cash, cash equivalents and marketable securities balances and
our forecasted cash flows from operations to be sufficient to meet our foreseeable cash needs for at least the next 12 months.
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.
Off-Balance Sheet Arrangements
We have entered into indemnification agreements with third parties, including vendors, customers, landlords, our officers
and directors, stockholders of acquired companies, joint venture partners and third parties to which we license technology.
Generally, these indemnification agreements require us to reimburse losses suffered by a third party due to various events, such
as lawsuits arising from patent or copyright infringement or our negligence. These indemnification obligations are considered
off-balance sheet arrangements in accordance with the authoritative guidance for guarantor’s accounting and disclosure
requirements for guarantees, including indirect guarantees of indebtedness of others. 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.
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.
These principles require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and
expenses, cash flow and related disclosure of contingent assets and liabilities. Our estimates include those related to revenue
recognition, accounts receivable and related reserves, valuation and impairment of marketable securities, capitalized internal-
use software development costs, goodwill and acquired intangible assets, income tax reserves, impairment and useful lives of
long-lived assets and stock-based compensation. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances at the time such estimates are made. Actual results may
differ from these estimates. 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.
44

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. Our estimates
are based upon assumptions and judgments about matters that are highly uncertain at the time an accounting estimate is made
and applied and require us to assess a range of potential outcomes.
Review of Critical Accounting Policies and Estimates
Revenue Recognition
Our contracts with customers sometimes include promises to transfer multiple services to a customer. Determining whether
services are distinct performance obligations often requires the exercise of judgment by management. Advanced features that
enhance a main product or service and are highly interrelated are generally not considered distinct; rather, they are combined
with the service they relate to into one performance obligation. Different determinations related to combining services into
performance obligations could result in differences in the timing and amount of revenue recognized in a period.
Determination of the standalone selling price ("SSP") for each distinct performance obligation in a contract also requires
the exercise of judgment by management. SSP is based on observable inputs such as the price we charge for the service when
sold separately, or the discounted list price per management’s approved price list. In cases where services are not sold
separately or price list rates are not available, a cost-plus-margin approach or adjusted market approach is used to determine
SSP. Changes to SSP could result in differences in the allocation of transaction price among performance obligations, which
could result in differences in the timing and amount of revenue recognized in a period.
From time to time, we enter into contracts to sell services or license technology to unrelated enterprises at or about the
same time that we enter into contracts to purchase products or services from the same enterprises. Consideration payable to a
customer is reviewed as part of the transaction price. If the payment to the customer does not represent payment for a distinct
service, revenue is recognized only up to the net amount of consideration after customer payment obligations are considered.
Different determinations on whether a payment represents a distinct service could result in differences in the amount of revenue
recognized.
We may also resell licenses or services of third parties. If we are acting as an agent in an arrangement with a customer to
provide third party services, the transaction price reflects only the net amount to which we will be entitled, after accounting for
payments made to the third party responsible for satisfying the performance obligation. Different determinations on whether we
are acting as an agent or a principal could change the amount of revenue recognized.
Accounts Receivable and Related Reserves
Trade accounts receivable are recorded at the invoiced amounts and do not bear interest. In addition to trade accounts
receivable, our accounts receivable balance includes unbilled accounts that represent revenue recorded for customers that is
typically billed within one month. We record allowances against our accounts receivable balance, primarily for current expected
credit losses. 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.
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. 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. 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.
45

Valuation and Impairment of Marketable Securities
We measure the fair value of our financial assets and liabilities at the end of each reporting period. Fair value is defined as
the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
We have certain financial assets and liabilities recorded at fair value (principally cash equivalents and short- and long-term
marketable securities) that have been classified as Level 1, 2 or 3 within the fair value hierarchy. Fair values determined by
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we can access at the
reporting date. Fair values determined by Level 2 inputs utilize data points other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly. Fair values determined by Level 3 inputs are based on
unobservable data points for the asset or liability.
Marketable securities, which consist primarily of securities available-for-sale, are evaluated for impairment when the fair
value declines below the cost basis. We periodically evaluate whether the decline is due to credit losses by considering
available evidence regarding these investments including, among other factors, the extent to which, the fair value is less than
the cost basis; the financial health of, and business outlook for, the issuer, including industry and sector performance and
operational and financing cash flow factors. Additionally, we consider our intent and ability to retain our investment in the
security for a period of time sufficient to allow for an anticipated recovery in market value. Assessing the above factors
involves inherent uncertainty. If a portion of the unrealized loss is due to credit losses or we do not have the intent or ability to
retain our investment in the security, an impairment will be recorded in interest and marketable securities income, net.
Impairments, if recorded, could be materially different from the actual market performance of marketable securities in our
portfolio if, among other things, relevant information related to our investments was not publicly available or other factors not
considered by us would have been relevant to the determination of impairment.
Impairment of Long-Lived Assets
We review our long-lived assets, such as property and equipment, operating lease right-of-use assets and acquired
intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be recoverable. Events that would trigger an impairment review include a change in the use of the asset or forecasted
negative cash flows related to the asset. When such events occur, we compare the carrying amount of the asset to the
undiscounted expected future cash flows related to the asset. If this comparison indicates that impairment is present, the amount
of the impairment is calculated as the difference between the carrying amount and the fair value of the asset. If a readily
determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the asset.
The estimates required to apply this accounting policy include forecasted usage of the long-lived assets, the useful lives of these
assets and expected future cash flows. Changes in these estimates could materially impact results from operations.
Goodwill and Acquired Intangible Assets
We test goodwill for impairment on an annual basis, as of December 31, or more frequently if events or changes in
circumstances indicate that the asset might be impaired. We have concluded that we have one reporting unit and that our chief
operating decision maker is our chief executive officer and the executive management team. 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.
Acquired intangible assets consist of completed technologies, customer relationships, trademarks and trade names, non-
compete agreements and acquired license rights. We engage third party valuation specialists to assist us with the initial
measurement of the fair value of acquired intangible assets. Fair value and amortization period determinations may be based on,
among other factors, estimates of future expected cash flows, royalty cost savings and appropriate discount rates used in
calculating present values. The value of our acquired intangible assets could be different if we had used different assumption.
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. The current income tax provision is
calculated as the estimated taxes payable or refundable on tax returns for the current year. 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.
46

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. In determining our net deferred tax assets
and valuation allowances, annualized effective tax rates and cash paid for income taxes, management is required to make
judgments and estimates about domestic and foreign profitability, the timing and extent of the utilization of NOL
carryforwards, applicable tax rates, transfer pricing methodologies and tax planning strategies. Judgments and estimates related
to our projections and assumptions are inherently uncertain; therefore, actual results could differ materially from our
projections.
We have recorded certain tax reserves to address potential exposures involving our income tax positions. These potential
tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing
jurisdictions. Our estimate of the value of our tax reserves contains assumptions based on past experiences and judgments about
the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the ultimate tax liability
or benefit from these matters may be more or less than the amount that we estimated.
Uncertainty in income taxes is recognized in our consolidated financial statements using a two-step process to determine
the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be
sustained upon external examination. If the tax position is deemed more-likely-than-not to be sustained based on technical
merit, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount
of the benefit that may be recognized is the largest amount that we believe has a greater than 50% likelihood of being realized
upon ultimate settlement.
Stock-Based Compensation
We issue stock awards as part of our compensation program which includes stock options, restricted stock, restricted stock
units, deferred stock units and employee stock purchases related to our employee stock purchase plan. 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. 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. Determining the fair
value of stock-based awards at the grant date requires judgment, including estimating the expected life of the stock awards and
the volatility of the underlying common stock. Our assumptions may differ from those used in prior periods. Changes to the
assumptions may have an impact on the fair value of stock awards, which could have an impact on our financial statements.
Judgment is also required in estimating the number of stock awards that are expected to be forfeited. Should our actual
forfeiture rates differ significantly from our estimates, our stock-based compensation expense and results of operations could be
materially impacted. In addition, for awards that vest and become exercisable only upon achievement of specified performance
conditions, we make judgments and estimates each quarter about the probability that such performance conditions will be met
or achieved. Changes to the estimates we make from time to time may have an impact on our stock-based compensation
expense and our results of operations.
Capitalized Internal-Use Software Costs
We capitalize salaries and related costs, including stock-based compensation, of employees and consultants who devote
time to the development of internal-use software development projects, as well as interest expense related to our outstanding
debt. Capitalization begins during the application development stage, once the preliminary project stage has been completed. If
a project constitutes an enhancement to previously-developed software, we assess whether the enhancement creates additional
functionality to the software, thus qualifying the work incurred for capitalization. Once the project is available for general
release, capitalization ceases and we estimate the useful life of the asset and begin amortization. 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Our portfolio of cash equivalents and short- and long-term investments is maintained in a variety of securities, that are
detailed in Note 3 to the consolidated financial statements included elsewhere in this annual report on Form 10-K. 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
47

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. 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.
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. Due to the fixed annual interest
rate, these notes do not give rise to financial or economic interest exposure associated with changes in interest rates. However,
the fair value of fixed rate debt instruments fluctuates when interest rates change. Additionally, the fair value can be affected
when the market price of our common stock fluctuates. 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. There were no outstanding borrowings under the 2022 Credit Agreement as of
December 31, 2024.
Foreign Currency Risk
Growth in our international operations will incrementally increase our exposure to foreign currency fluctuations as well as
other risks typical of international operations that could impact our business, including, but not limited to, differing economic
conditions, changes in political climate, differing tax structures and other regulations and restrictions. Due 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.
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. We enter into short-term foreign currency forward contracts to offset
foreign exchange gains and losses generated by the re-measurement of certain assets and liabilities recorded in non-functional
currencies. Changes in the fair value of these derivatives, as well as re-measurement gains and losses, are recognized in our
consolidated statements of income within other expense, net. Foreign currency transaction gains and losses from these forward
contracts were determined to be immaterial during the years ended December 31, 2024, 2023 and 2022. We do not enter into
derivative financial instruments for trading or speculative purposes.
Translation Exposure
To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency-denominated
transactions will result in increased revenue and operating expenses. Conversely, our revenue and operating expenses will
decrease when the U.S. dollar strengthens against foreign currencies. A hypothetical 10% strengthening or weakening in the
value of the U.S. dollar relative to the foreign currencies in which our revenues and expenses are denominated would not result
in a material impact to our consolidated financial statements.
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.
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. 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.
48

Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Akamai Technologies, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Akamai Technologies, Inc. and its subsidiaries (the
"Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income,
of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the
related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal
control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for
convertible instruments in 2022.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
49

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition
As described in Notes 2 and 16 to the consolidated financial statements, the Company’s total revenue was $3.991 billion for the
year ended December 31, 2024. The Company primarily derives revenue from the sale of services to customers executing
contracts having terms of one year or longer. Services included in the Company’s contracts consist of security solutions, the
delivery of content, applications and software over the internet, compute solutions and professional services. Revenue is
recognized upon transfer of control of promised services in an amount that reflects the consideration the Company expects to
receive in exchange for those services. Most security, delivery and compute services represent stand-ready obligations that are
satisfied over time as the customer simultaneously receives and consumes the benefits provided by the Company. Accordingly,
revenue for those services is recognized over time, generally ratably over the term of the arrangement due to consistent monthly
usage commitments that expire each period. A small percentage of the Company's contracts are satisfied at a point in time, such
as one-time professional services contracts, integration services and most license sales where the primary obligation is delivery
of the license at the start of the term. In these cases, revenue is recognized at a point in time of delivery or satisfaction of the
performance obligation.
The principal considerations for our determination that performing procedures relating to revenue recognition is a critical audit
matter are a high degree of auditor effort involved in performing procedures and evaluating audit evidence related to the
Company’s revenue recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
revenue recognition, including controls over the recording of revenue at the amount of consideration the Company expects to
receive as the promised services are delivered to the customer. These procedures also included, among others, (i) evaluating and
recalculating, on a sample basis, the revenue recognized by obtaining and inspecting source documents, such as executed
contracts, invoices, and delivery documents; (ii) testing the delivery documents provided by management; and (iii) confirming a
sample of outstanding customer invoice balances as of December 31, 2024, and for confirmations not returned, obtaining and
inspecting source documents, such as executed contracts, invoices, delivery documents, and subsequent cash receipts.
Acquisition of Noname Gate Ltd. – Valuation of Completed Technologies
As described in Note 8 to the consolidated financial statements, in June 2024, the Company completed the acquisition of
Noname Gate Ltd. (“Noname Security”) for $452.3 million in cash. Of the acquired intangible assets, $132.3 million of
completed technologies were recorded. Management applied the multi-period excess earnings method to estimate the fair value
of the completed technologies. Management applied significant judgment in estimating the fair value of the acquired completed
technologies, which involved significant estimates and assumptions with respect to forecasted revenue growth rates, forecasted
operating margin rates, the technology obsolescence curve and discount rate.
The principal considerations for our determination that performing procedures relating to the valuation of completed
technologies acquired in the acquisition of Noname Security is a critical audit matter are (i) the significant judgment by
management when developing the fair value estimate of the completed technologies acquired; (ii) a high degree of auditor
judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to
50

forecasted revenue growth rates, forecasted operating margin rates, the technology obsolescence curve and discount rate; and
(iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
acquisition accounting, including controls over management’s valuation of the completed technologies acquired. These
procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing
the fair value estimate of the completed technologies acquired; (iii) evaluating the appropriateness of the multi-period excess
earnings method used by management; (iv) testing the completeness and accuracy of the underlying data used in the multi-
period excess earnings method; and (v) evaluating the reasonableness of the significant assumptions used by management
related to forecasted revenue growth rates, forecasted operating margin rates, the technology obsolescence curve and discount
rate. Evaluating management’s assumptions related to forecasted revenue growth rates and forecasted operating margin rates
involved considering (i) the current and past performance of the Noname Security business; (ii) the consistency with external
market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.
Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period
excess earnings method and (ii) the reasonableness of the technology obsolescence curve and discount rate assumptions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 24, 2025
We have served as the Company’s auditor since 1998.
51

AKAMAI TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
517,707
$
489,468
Marketable securities
1,078,876
374,971
Accounts receivable, net of reserves of $3,522 and $3,469 at December 31, 2024 and
2023, respectively
727,687
724,302
Prepaid expenses and other current assets
253,827
216,114
Total current assets
2,578,097
1,804,855
Marketable securities
275,592
1,431,354
Property and equipment, net
1,995,071
1,825,944
Operating lease right-of-use assets
1,006,738
908,634
Acquired intangible assets, net
727,585
536,143
Goodwill
3,151,077
2,850,470
Deferred income tax assets
483,249
418,297
Other assets
151,376
124,340
Total assets
$
10,368,785
$
9,900,037
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
130,447
$
146,927
Accrued expenses
370,888
352,181
Deferred revenue
149,222
107,544
Convertible senior notes
1,149,116
—
Operating lease liabilities
259,134
222,944
Other current liabilities
32,516
6,442
Total current liabilities
2,091,323
836,038
Deferred revenue
26,314
23,006
Deferred income tax liabilities
16,066
24,622
Convertible senior notes
2,396,695
3,538,229
Operating lease liabilities
829,660
774,806
Other liabilities
130,370
106,181
Total liabilities
5,490,428
5,302,882
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 700,000 shares
designated as Series A Junior Participating Preferred Stock; no shares issued or
outstanding
—
—
Common stock, $0.01 par value; 700,000,000 shares authorized; 155,647,988 shares
issued and 150,025,096 shares outstanding at December 31, 2024, and 151,232,908
shares issued and outstanding at December 31, 2023
1,556
1,512
Additional paid-in capital
2,618,384
2,222,993
Accumulated other comprehensive loss
(155,993)
(95,330)
Treasury stock, at cost, 5,622,892 shares at December 31, 2024, and no shares at
December 31, 2023
(558,488)
—
Retained earnings
2,972,898
2,467,980
Total stockholders’ equity
4,878,357
4,597,155
Total liabilities and stockholders’ equity
$
10,368,785
$
9,900,037
The accompanying notes are an integral part of the consolidated financial statements.
52

AKAMAI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
For the Years Ended December 31,
2024
2023
2022
Revenue
$
3,991,168
$
3,811,920
$
3,616,654
Costs and operating expenses:
Cost of revenue (exclusive of amortization of acquired intangible
assets shown below)
1,620,793
1,511,063
1,383,819
Research and development
470,876
406,048
391,434
Sales and marketing
556,781
533,226
502,409
General and administrative
621,785
600,851
584,206
Amortization of acquired intangible assets
92,081
66,751
64,983
Restructuring charge
95,441
56,643
13,529
Total costs and operating expenses
3,457,757
3,174,582
2,940,380
Income from operations
533,411
637,338
676,274
Interest and marketable securities income, net
100,280
45,194
3,258
Interest expense
(27,117)
(17,709)
(11,096)
Other expense, net
(19,561)
(12,296)
(10,433)
Income before provision for income taxes
587,013
652,527
658,003
Provision for income taxes
(82,095)
(106,373)
(126,696)
Gain (loss) from equity method investment
—
1,475
(7,635)
Net income
$
504,918
$
547,629
$
523,672
Net income per share:
Basic
$
3.34
$
3.59
$
3.29
Diluted
$
3.27
$
3.52
$
3.26
Shares used in per share calculations:
Basic
151,392
152,510
159,089
Diluted
154,346
155,397
160,467
The accompanying notes are an integral part of the consolidated financial statements.
53

AKAMAI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31,
(in thousands)
2024
2023
2022
Net income
$
504,918
$
547,629
$
523,672
Other comprehensive (loss) gain:
Foreign currency translation adjustments
(59,064)
18,439
(44,665)
Change in unrealized (loss) gain on investments, net of income tax
benefit (expense) of $515, $(8,562) and $6,589 for the years ended
December 31, 2024, 2023 and 2022, respectively
(1,599)
26,563
(26,562)
Other comprehensive (loss) gain
(60,663)
45,002
(71,227)
Comprehensive income
$
444,255
$
592,631
$
452,445
The accompanying notes are an integral part of the consolidated financial statements.
54

AKAMAI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Years Ended December 31,
2024
2023
2022
Cash flows from operating activities:
Net income
$
504,918
$
547,629
$
523,672
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
648,410
570,776
592,754
Stock-based compensation
393,378
328,467
217,185
Benefit for deferred income taxes
(70,268)
(22,987)
(104,971)
Amortization of debt issuance costs
6,521
5,341
4,395
Loss (gain) on investments
5,066
(311)
15,895
Other non-cash reconciling items, net
65,488
50,221
31,063
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable
(22,300)
(49,203)
(21,214)
Prepaid expenses and other current assets
(46,094)
(18,726)
(20,125)
Accounts payable and accrued expenses
344
(39,825)
(26,499)
Deferred revenue
20,687
48
16,713
Other current liabilities
26,860
1,516
(5,318)
Other non-current assets and liabilities
(13,839)
(24,507)
51,126
Net cash provided by operating activities
1,519,171
1,348,439
1,274,676
Cash flows from investing activities:
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
(390,433)
(457,909)
(241,266)
Capitalization of internal-use software development costs
(294,834)
(272,131)
(217,036)
Purchases of short- and long-term marketable securities
(236,176)
(1,461,890)
(17,975)
Proceeds from sales of short- and long-term marketable securities
333,069
201,585
575,522
Proceeds from maturities and redemptions of short- and long-term
marketable securities
352,623
375,332
156,658
Other, net
3,973
(6,069)
(6,122)
Net cash used in investing activities
(798,679)
(1,848,238)
(622,310)
55

AKAMAI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(in thousands)
For the Years Ended December 31,
2024
2023
2022
Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility
—
90,000
125,000
Repayment of borrowings under revolving credit facility
—
(90,000)
(125,000)
Proceeds from the issuance of convertible senior notes, net of issuance
costs
—
1,247,388
—
Proceeds from the issuance of warrants related to convertible senior notes
—
90,195
—
Purchases of note hedges related to convertible senior notes
—
(236,555)
—
Proceeds related to the issuance of common stock under stock plans
61,513
62,979
56,462
Employee taxes paid related to net share settlement of stock awards
(173,176)
(66,222)
(82,236)
Repurchases of common stock
(557,468)
(654,046)
(608,010)
Other, net
(10,504)
(360)
(393)
Net cash (used in) provided by financing activities
(679,635)
443,379
(634,177)
Effects of exchange rate changes on cash, cash equivalents and restricted cash
(12,243)
3,868
(12,918)
Net increase (decrease) in cash, cash equivalents and restricted cash
28,614
(52,552)
5,271
Cash, cash equivalents and restricted cash at beginning of year
490,470
543,022
537,751
Cash, cash equivalents and restricted cash at end of year
$
519,084
$
490,470
$
543,022
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds received of $5,888, $11,006 and
$15,458 for the years ended December 31, 2024, 2023 and 2022,
respectively
$
136,322
$
134,478
$
183,900
Cash paid for interest expense
20,420
6,328
6,158
Cash paid for operating lease liabilities
288,067
257,961
224,898
Non-cash activities:
Operating lease right-of-use assets obtained in exchange for operating lease
liabilities
356,912
333,590
202,409
Purchases of property and equipment and capitalization of internal-use
software development costs included in accounts payable and accrued
expenses
55,515
65,048
80,170
Capitalization of stock-based compensation
107,488
83,676
33,060
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents
$
517,707
$
489,468
$
542,337
Restricted cash
1,377
1,002
685
Cash, cash equivalents and restricted cash
$
519,084
$
490,470
$
543,022
The accompanying notes are an integral part of the consolidated financial statements.
56

AKAMAI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
Common Stock
Additional
Paid-in Capital
Treasury Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Shares
Amount
Balance at January 1, 2022
160,512,111
$
1,605
$
3,340,822
$
—
$
(69,105) $
1,256,692
$
4,530,014
Cumulative-effect adjustment from adoption
of new accounting pronouncement
(375,414)
139,987
(235,427)
Issuance of common stock upon the exercise
of stock options and vesting of restricted and
deferred stock units, net of shares withheld
for employee taxes
1,697,410
17
(82,294)
(82,277)
Issuance of common stock under employee
stock purchase plan
687,945
7
56,563
56,570
Stock-based compensation
246,872
246,872
Repurchases of common stock
(6,402,650)
(608,010)
(608,010)
Treasury stock retirement
(64)
(607,946)
608,010
—
Net income
523,672
523,672
Foreign currency translation adjustment
(44,665)
(44,665)
Change in unrealized loss on investments,
net of tax
(26,562)
(26,562)
Balance at December 31, 2022
156,494,816
$
1,565
$
2,578,603
$
—
$
(140,332) $
1,920,351
$
4,360,187
57

AKAMAI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY, continued
(in thousands, except share data)
Common Stock
Additional
Paid-in Capital
Treasury Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Shares
Amount
Balance at December 31, 2022
156,494,816
$
1,565
$
2,578,603
$
—
$
(140,332) $
1,920,351
$
4,360,187
Issuance of common stock upon the exercise
of stock options and vesting of restricted and
deferred stock units, net of shares withheld
for employee taxes
1,743,329
17
(69,621)
(69,604)
Issuance of common stock under employee
stock purchase plan
796,541
8
62,357
62,365
Stock-based compensation
398,495
398,495
Issuance of warrants related to convertible
senior notes
90,195
90,195
Purchase of note hedge related to convertible
senior notes, net of deferred taxes of $57,628
(178,927)
(178,927)
Repurchases of common stock
(7,801,778)
(658,187)
(658,187)
Treasury stock retirement
(78)
(658,109)
658,187
—
Net income
547,629
547,629
Foreign currency translation adjustment
18,439
18,439
Change in unrealized gain on investments,
net of tax
26,563
26,563
Balance at December 31, 2023
151,232,908
1,512
2,222,993
—
(95,330)
2,467,980
4,597,155
Issuance of common stock upon the exercise
of stock options and vesting of restricted and
deferred stock units, net of shares withheld
for employee taxes
3,627,278
36
(172,560)
(172,524)
Issuance of common stock under employee
stock purchase plan
787,802
8
61,123
61,131
Stock-based compensation
506,828
506,828
Repurchases of common stock
(5,622,892)
(558,488)
(558,488)
Net income
504,918
504,918
Foreign currency translation adjustment
(59,064)
(59,064)
Change in unrealized loss on investments,
net of tax
(1,599)
(1,599)
Balance at December 31, 2024
150,025,096
$
1,556
$
2,618,384
$
(558,488) $
(155,993) $
2,972,898
$
4,878,357
The accompanying notes are an integral part of the consolidated financial statements.
58

AKAMAI TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Basis of Presentation
Akamai Technologies, Inc. (the “Company”) develops and provides solutions for global enterprises to build, secure and
accelerate their applications and digital experiences. Its 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. The
Company was incorporated in Delaware in 1998 and is headquartered in Cambridge, Massachusetts. The Company is currently
organized and operates as one operating and reportable segment.
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying consolidated financial
statements.
2. Summary of Significant Accounting Policies
Use of Estimates
The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in
the United States of America. These principles require management to make estimates, judgments and assumptions that affect
the reported amounts of assets, liabilities, revenue and expenses and the amounts disclosed in the related notes to the
consolidated financial statements. Actual results and outcomes may differ materially from management’s estimates, judgments
and assumptions. Significant estimates, judgments and assumptions used in these financial statements include, but are not
limited to, those related to revenue, accounts receivable and related reserves, valuation and impairment of investments and
marketable securities, valuation and amortization periods of acquired intangible assets, useful lives and realizability of long-
lived assets, capitalized internal-use software development costs, income tax reserves and accounting for stock-based
compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The effects of
material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in
estimate.
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents consist of cash held in bank deposit accounts and short-term, highly-liquid investments with
remaining maturities of three months or less at the date of purchase. Marketable securities consist of corporate, government and
other securities. Securities having remaining maturities of less than one year from the date of the balance sheet are classified as
short-term, and those with maturities of more than one year from the date of the balance sheet are classified as long-term in the
consolidated balance sheets.
The Company classifies its fixed income securities with readily determinable fair values as available-for-sale. These
investments are classified as marketable securities on the consolidated balance sheets and are carried at fair value, with
unrealized gains and losses reported as accumulated other comprehensive loss, a separate component of stockholders’ equity.
Available-for-sale securities are evaluated for impairment when the fair value declines below the cost basis. The Company
periodically evaluates whether the decline is due to credit losses by considering available evidence regarding these investments
including, among other factors, the extent to which, the fair value is less than the cost basis; the financial health of, and business
outlook for, the issuer, including industry and sector performance and operational and financing cash flow factors. Additionally,
the Company considers its intent and ability to retain its investment in the security for a period of time sufficient to allow for an
anticipated recovery in market value. Assessing the above factors involves inherent uncertainty. If a portion of the unrealized
loss is due to credit losses, or if the Company does not have the intent or ability to retain its investment in the security, an
impairment will be recorded in interest and marketable securities income, net. Impairments, if recorded, could materially differ
from the actual market performance of marketable securities in the Company's portfolio if, among other things, relevant
information related to the Company's investments was not publicly available, or other factors not considered by the Company
would have been relevant to the determination of impairment.
Accounts Receivable and Related Reserves
The Company’s accounts receivable balance includes unbilled amounts that represent revenue recorded for customers that
are typically billed monthly in arrears. The Company records reserves against its accounts receivable balance which primarily
59

consists of allowances for current expected credit losses. 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. The
allowance for current expected credit losses has been developed using historical loss rates for the previous twelve months as
well as expectations about the future where the Company has been able to develop forecasts to support its estimates. In
addition, the allowance considers outstanding balances on a customer-specific, account-by-account basis. The Company
assesses collectibility based upon a review of customer receivables from prior sales with collection issues where the Company
no longer believes that the customer has the ability to pay for services previously provided. The Company also performs
ongoing credit evaluations of its customers. 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 the
Company receives consistent payments. The Company does not have any off-balance sheet credit exposure related to its
customers.
Incremental Costs to Obtain a Contract with a Customer
The Company capitalizes incremental costs associated with obtaining customer contracts, specifically certain commission
and incentive payments. The Company pays commissions and incentives up-front based on contract value upon signing a new
arrangement with a customer and upon renewal and upgrades of existing contracts with customers if the renewal and upgrades
result in an incremental increase in contract value. To the extent commissions and incentives are earned, the expenses, including
estimated payroll taxes, are deferred on the Company's consolidated balance sheet and amortized over the expected life of the
customer arrangement on a straight-line basis. Based on the nature of the Company's unique technology and services, and the
rate at which the Company continually enhances and updates its technology, the expected life of the customer arrangement is
determined to be approximately three years. Additionally, the Company may pay commissions and incentives based upon
contract value, rather than incremental increase in contract value, to certain sales groups within the Company. For these
commission arrangements, the Company amortizes capitalized costs for contract renewals over an average renewal contract
period of 16 months. The Company also incurs commission expense on an ongoing basis based upon revenue recognized. In
these cases, no incremental costs are deferred, as the commissions are earned and expensed in the same period for which the
associated revenue is recognized.
Amortization of the costs is primarily included in sales and marketing expense in the consolidated statements of
income. The current portion of deferred commission and incentive payments is included in prepaid expenses and other current
assets, and the long-term portion is included in other assets on the Company's consolidated balance sheets.
Concentrations of Credit Risk
The amounts reflected in the consolidated balance sheets for accounts receivable, other current assets, accounts payable,
accrued liabilities and other current liabilities approximate fair values due to their short-term maturities. The Company
maintains the majority of its cash, cash equivalents and marketable securities with major financial institutions that the Company
believes to be of high credit standing. The Company believes that, as of December 31, 2024, its concentration of credit risk
related to cash equivalents and marketable securities was not significant.
Concentrations of credit risk with respect to accounts receivable are primarily limited to certain customers to which the
Company makes substantial sales. The Company’s customer base consists of a large number of geographically-dispersed
customers diversified across several industries. To reduce risk, the Company routinely assesses the financial strength of its
customers. Based on such assessments, the Company believes that its accounts receivable credit risk exposure is limited. For
the years ended December 31, 2024, 2023 and 2022, no customer accounted for more than 10% of total revenue. As of
December 31, 2024 and 2023, no customer had an accounts receivable balance greater than 10% of total accounts receivable.
The Company believes that, as of December 31, 2024 and 2023, its concentration of credit risk related to accounts receivable
was not significant.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. When the Company has certain financial assets and liabilities recorded at fair value, principally cash
equivalents and short- and long-term marketable securities, they are classified as Level 1, 2 or 3 within the fair value hierarchy.
Fair values determined by Level 1 valuations are based upon the market prices for such investments that are readily available in
active markets and Level 2 valuations are based upon the available quoted prices for similar assets in active markets (or
identical assets in an inactive market). Fair values determined by Level 3 inputs are based on unobservable data points for the
asset or liability.
60

Property and Equipment
Property and equipment are recorded at cost, net of accumulated depreciation and amortization. Property and equipment
generally include purchases of items with a per-unit value greater than $1,000 and an estimated useful life greater than one year.
Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Leasehold
improvements are amortized over the shorter of the related lease terms or their estimated useful lives.
The Company periodically reviews the estimated useful lives of property and equipment. Changes to the estimated useful
lives are recorded prospectively from the date of the change. Upon retirement or sale, the cost of the assets disposed of and the
related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in income from
operations. Repairs and maintenance costs are expensed as incurred.
The Company has implemented software and hardware initiatives to manage its global network more efficiently and, as a
result, the expected average useful life of its servers increased from five years to six years, effective January 1, 2023. These
changes decreased depreciation expense by $47.7 million for the year ended December 31, 2024, and increased net income by
$39.8 million, or $0.26 per share, for the year ended December 31, 2024. These changes decreased depreciation expense by
$62.7 million for the year ended December 31, 2023, and increased net income by $52.3 million, or $0.34 per share, for the
year ended December 31, 2023.
Operating Leases
The Company enters 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 its servers and other networking equipment. The Company
determines if an arrangement contains a lease at the inception of a contract by assessing whether there is an identified asset and
whether the contract conveys the right to control the use of the identified asset in exchange for consideration and the right to
obtain the economic benefits from the use of the identified asset.
Upon commencement of a lease, the Company records a right-of-use asset that represents the Company’s right to use the
underlying asset for the lease term and a lease liability that represents an obligation to make lease payments arising from the
lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease
payments over the lease term. Lease payments are discounted at the lease commencement date. As the implicit rates in the
Company’s leases are not readily determinable, an incremental borrowing rate has been applied based on the Company's credit-
adjusted risk-free rate.
The Company often enters into contracts that contain both lease and non-lease components. Real estate non-lease
components include real estate taxes, insurance, maintenance, parking and other operating costs. Co-location non-lease
components include utilities and other operating costs. The Company accounts for both lease and non-lease components of
fixed costs in its lease arrangements as a single lease component. Variable costs, primarily utilities based on actual usage,
common area maintenance and real estate taxes, are not included in the measurement of right-of-use assets and lease liabilities
but are expensed when the event determining the amount of variable consideration to be paid occurs.
The Company’s lease terms often include renewal options and, particularly in the case of co-location arrangements, may
include evergreen provisions. The Company’s right-of-use assets and lease liabilities generally do not include the options to
extend, or terminate, unless it is reasonably certain that the Company will exercise these options. The Company has elected to
exclude leases for certain networking equipment and leases assumed through acquisitions with terms of 12 months or less from
its right-of-use assets and lease liabilities on its consolidated balance sheets.
Lease expense is recognized on a straight-line basis over the expected lease term. Reductions in right-of-use assets and
changes in lease liabilities are presented on a net basis within other non-current assets and liabilities within the operating section
of the Company's consolidated statement of cash flows.
Cost Method Investments
The Company accounts for its cost method investments at cost, less impairment, and adjusts for subsequent observable
price changes. The Company's cost method investments consist primarily of equity securities of companies which do not have
readily determinable fair values, and in which the Company does not have the ability to exercise significant influence over the
companies' operations. As of December 31, 2024 and 2023, the carrying amount of the Company's cost method investments
was $20.5 million and $19.6 million, respectively, and are included in other assets in the consolidated balance sheets. In 2024
61

and 2022, impairment losses of $5.1 million and $8.9 million, respectively, were recognized in other expense, net within the
Company's consolidated statements of income. There were no impairments in 2023.
Equity Method Investments
The Company accounts for equity investments in which it has significant influence, but not a controlling financial interest,
using the equity method of accounting. Under the equity method of accounting, investments are initially recorded at cost, less
impairment, and subsequently adjusted to recognize the Company’s share of earnings or losses.
The Company and Mitsubishi UFJ Financial Group ("MUFG") established Global Open Network, Inc. ("GO-NET") as a
joint venture. The Company's 20% stake in GO-NET was accounted for using the equity method. In 2022, MUFG announced
its intention to suspend operations and liquidate GO-NET. The liquidation was finalized in 2023. Due to these actions, the
Company impaired its remaining investment of $7.5 million in GO-NET in 2022. In 2023, a gain of $1.5 million was
recognized related to the Company's receipt of its share of GO-NET's remaining assets upon final liquidation.
While GO-NET was in operation, the Company recognized revenue of $4.0 million for the year ended December 31, 2022
for services provided to GO-NET. The Company no longer provided these services after June 2022 due to the suspension of
operations.
Goodwill, Acquired Intangible Assets and Long-Lived Assets
Goodwill is the amount by which the cost of acquired net assets in a business combination exceeds the fair value of the net
identifiable assets on the date of purchase and is carried at its historical cost. The Company tests goodwill for impairment on an
annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company
performs its impairment test of goodwill as of December 31 each year. As of December 31, 2024, 2023 and 2022, the Company
concluded that it has one reporting unit and that its chief operating decision maker is its chief executive officer and the
executive management team. The Company has assigned the entire balance of goodwill to one reporting unit. The fair value of
the reporting unit was based on the Company's 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.
Acquired intangible assets consist of completed technologies, customer-related intangible assets, trademarks and trade
names and acquired license rights. Acquired intangible assets, other than goodwill, are amortized over their estimated useful
lives based upon the estimated economic value derived from the related intangible asset. Significant judgment is used in
determining fair values of acquired intangibles assets and their estimated useful lives. Fair value and useful life determinations
may be based on, among other factors, estimates of future expected cash flows, royalty cost savings and appropriate discount
rates used in calculating present values.
Long-lived assets, including property and equipment, operating lease right-of-use assets and acquired intangible assets, are
reviewed for impairment whenever events or changes in circumstances, such as service discontinuance, technological
obsolescence, significant decreases in the Company’s market capitalization, facility closures or work-force reductions indicate
that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the
carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If this comparison indicates that
an impairment is present, the amount of the impairment is calculated as the difference between the carrying amount and the fair
value of the asset.
Contract Liabilities
Contract liabilities primarily represent payments received from customers for which the related performance obligations
have not yet been satisfied. These balances consist of the unearned portion of monthly service fees and integration fees and
prepayments made by customers for future periods. The current and long-term portions of the Company's contract liabilities are
included in deferred revenue in the respective sections of the Company's consolidated balance sheets.
Revenue Recognition
The Company primarily derives revenue from the sale of services to customers executing contracts having terms of one
year or longer. Services included in the Company's contracts consist of security solutions, the delivery of content, applications
and software over the internet, compute solutions and professional services. Revenue is recognized upon transfer of control of
promised services in an amount that reflects the consideration the Company expects to receive in exchange for those services.
62

The Company enters into contracts that may include various combinations of these services, which are generally capable of
being distinct and accounted for as separate performance obligations. These contracts generally commit the customer to a
minimum of monthly, quarterly or annual levels of usage and specify the rate at which the customer must pay for actual usage
above the stated minimum. Based on the typical structure of the Company's contracts, which are generally for monthly
recurring services that are essentially the same over time and have the same pattern of transfer to the customer, most
performance obligations represent a promise to deliver a series of distinct services over time.
The Company's contracts with customers sometimes include promises to deliver multiple services to a customer.
Determining whether services are distinct performance obligations often requires the exercise of judgment by management. For
example, advanced features that enhance a service and are highly interrelated are generally not considered distinct; rather, they
are combined with the service they relate to into one performance obligation. Different determinations related to combining
services into performance obligations could result in differences in the timing and amount of revenue recognized in a period.
Generally, the transaction price in a contract is equal to the committed price stated in the contract, less any discounts or
rebates. The Company's typical contracts qualify for series accounting, and the pricing terms generally do not require estimation
of the transaction price beyond the reporting period. As a result, any incremental fees generated as a result of usage or
“bursting” over committed contract levels are recorded in the period to which the services relate. The amount of consideration
recognized for usage above contract minimums is limited to the amount the Company expects to be entitled to receive in
exchange for providing the services. Once the transaction price has been determined, the Company allocates such price among
all performance obligations in the contract on a relative standalone selling price (“SSP”) basis.
Determination of SSP requires the exercise of judgment by management. SSP is based on observable inputs such as the
price the Company charges for the service when sold separately or the discounted list price per management’s approved price
list. In cases where services are not sold separately or price list rates are not available, a cost-plus-margin approach or adjusted
market approach is used to determine SSP.
Most security, delivery and compute services represent stand-ready obligations that are satisfied over time as the customer
simultaneously receives and consumes the benefits provided by the Company. Accordingly, revenue for those services is
recognized over time, generally ratably over the term of the arrangement due to consistent monthly usage commitments that
expire each period. Any bursting over given commitments is recognized in the period in which the usage was served. For
services that involve traffic consumption, revenue is recognized in an amount that reflects the level of traffic served to a
customer in a given period. For custom arrangements, other methods may be used as a measure of progress towards satisfying
the performance obligations.
A small percentage of the Company's contracts are satisfied at a point in time, such as one-time professional services
contracts, integration services and most license sales where the primary obligation is delivery of the license at the start of the
term. In these cases, revenue is recognized at the point in time of delivery or satisfaction of the performance obligation.
From time to time, the Company enters into contracts to sell its services or license its technology to unrelated enterprises at
or about the same time that it enters into contracts to purchase products or services from the same enterprises. Consideration
payable to a customer is reviewed as part of the transaction price. If the payment to the customer does not represent payment for
a distinct service, revenue is recognized only up to the net amount of consideration after customer payment obligations are
considered. The Company may also resell the licenses or services of third parties. If the Company is acting as an agent in an
arrangement with a customer to provide third party services, the transaction price reflects only the net amount to which the
Company will be entitled, after accounting for payments made to the third party responsible for satisfying the performance
obligation.
Cost of Revenue
Cost of revenue consists primarily of fees paid to network providers for bandwidth and to third-party network data centers
for housing servers, also known as co-location costs. Cost of revenue also includes employee costs for services delivery and
network operation, build-out and support of the Company's network; network storage costs; cost of software licenses;
depreciation of network equipment used to deliver the Company’s services; and amortization of network-related internal-use
software. The Company enters into contracts for bandwidth with third-party network providers with terms typically ranging
from several months to two years. These contracts generally commit the Company to pay minimum monthly fees plus
additional fees for bandwidth usage above the committed level. In some circumstances, internet service providers (“ISPs”)
make rack space available for the Company to locate its servers and provide access to their bandwidth at a discount or no cost.
Although the Company does not provide any goods or services to the ISPs or the ISPs’ customers under these arrangements, the
ISPs and their customers indirectly benefit by accessing content through a local Company server, resulting in better content
63

delivery. The Company records the cost of these vendor relationships at their negotiated transaction price, which is either at a
discount or no cost.
Research and Development Costs and Capitalized Internal-Use Software
Research and development costs consist primarily of payroll and related personnel costs for the design, development,
deployment, testing and enhancement of the Company’s solutions and global network. Costs incurred in the development of the
Company’s services are expensed as incurred, except certain internal-use software development costs eligible for capitalization.
Capitalized costs include external consulting fees, payroll and payroll-related costs and stock-based compensation for
employees in the Company’s engineering, research and development and information technology groups who are directly
associated with, and who devote time to, the Company’s internal-use software projects. Capitalization begins when the planning
stage is complete and the Company commits resources to the software project; capitalization continues during the application
development stage. Capitalization ceases when the software has been tested and is ready for its intended use. Costs incurred
during the planning, training and post-implementation stages of the software development life-cycle are expensed as incurred.
The Company amortizes completed internal-use software that is used on its network to cost of revenue over its estimated useful
life.
Restructuring Charges
The Company classifies certain expenses as restructuring charges that result from programs that have significantly changed
either the scope of the business undertaken by management or the manner in which that business is conducted. These charges
include employee severance and related expenses for workforce reductions, impairments of long-lived assets that will no longer
be used in operations (including acquired intangible assets, operating lease right-of-use assets, other facility-related property
and equipment and internal-use software) and termination fees for any contracts cancelled as part of these programs.
Employee severance and related expenses are recognized when the action giving rise to the expense is probable. Employee
severance and related expenses are based upon contractual severance plans.
Stock-Based Compensation
The Company issues various forms of stock-based compensation, which includes stock options, restricted stock, restricted
stock units and deferred stock units, and has an employee stock purchase plan (collectively referred to as "stock awards"). The
Company’s stock awards are classified as equity and the fair value is determined at the time of grant, unless the number of
shares to be granted is unknown. Stock awards that are settleable in shares based upon a future determinable stock price are
classified as liabilities until the price is established and the resulting number of shares are known, at which time the stock
awards are re-classified to equity. For liability-classified awards, the fair value is determined each reporting period beginning at
the grant date until final vesting.
The Company has selected the Black-Scholes option-pricing model to determine the fair value of its stock options. For
stock awards with market-based vesting conditions, the Company uses a Monte Carlo simulation to determine the fair value of
the award. For stock awards that contain only a service-based vesting feature, the Company recognizes compensation cost on a
straight-line basis over the award's vesting period. For awards with a performance-based vesting condition feature, the
Company recognizes compensation cost on a graded-vesting basis over the award's expected vesting period, commencing when
achievement of the performance condition is deemed probable. In addition, for awards that vest and become exercisable only
upon achievement of specified performance conditions, the Company makes judgments and estimates each quarter about the
probability that such performance conditions will be met or achieved.
The Company excludes from stock-based compensation the fair value of stock awards it estimates will be forfeited.
Forfeitures are estimated using historical forfeiture rates, adjusted for any non-recurring one-time events, and are revised in
subsequent periods if actual forfeitures differ from those estimates.
Foreign Currency Translation and Forward Currency Contracts
The assets and liabilities of the Company's subsidiaries are translated at the applicable exchange rate as of the balance sheet
date, and revenue and expenses are translated at an average rate over the period. Resulting currency translation adjustments are
recorded as a component of accumulated other comprehensive loss, a separate component of stockholders’ equity. Gains and
losses on inter-company and other non-functional currency transactions are recorded in other (expense) income, net.
64

The Company enters into short-term foreign currency forward contracts to offset foreign exchange gains and losses
generated by the re-measurement of certain assets and liabilities recorded in non-functional currencies. Changes in the fair
value of these derivatives, as well as re-measurement gains and losses, are recognized in current earnings in other income
(expense), net. As of December 31, 2024 and 2023, the fair value of the forward currency contracts and the underlying gains
and losses for the years ended December 31, 2024, 2023 and 2022 were immaterial.
The Company's foreign currency forward contracts may be exposed to credit risk to the extent that its counterparties are
unable to meet the terms of the agreements. The Company seeks to minimize counterparty credit (or repayment) risk by
entering into transactions only with major financial institutions of investment grade credit rating.
Income Taxes
The Company's provision for income taxes is comprised of a current and a deferred portion. The current income tax
provision is calculated as the estimated taxes payable or refundable on tax returns for the current year. The deferred income tax
provision is calculated as the estimated future tax effects attributable to temporary differences and carryforwards using expected
tax rates in effect in the years during which the differences are expected to reverse or the carryforwards are expected to be
realized.
The Company currently has net deferred tax assets consisting of net operating loss (“NOL”) carryforwards, tax credit
carryforwards and deductible temporary differences. 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.
The Company has recorded certain tax reserves to address potential exposures involving its income tax positions. These
potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing
jurisdictions. The Company's estimate of the value of its tax reserves contains assumptions based on past experiences and
judgments about the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the
ultimate tax liability or benefit from these matters may be more or less than the amount the Company estimated.
Uncertainty in income taxes is recognized in the Company's consolidated financial statements using a two-step process.
First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the
tax position is deemed more-likely-than-not to be sustained based on technical merit, the tax position is then assessed to
determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is
the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.
Recently Adopted Accounting Pronouncements
Effective January 1, 2022, the Company adopted guidance issued by the Financial Accounting Standards Board ("FASB")
associated with accounting for convertible instruments and contracts in an entity’s own equity on a modified retrospective basis.
Prior to the adoption of this guidance, the Company separated its convertible senior notes into a liability and an equity
component. The equity portion was eliminated. The net effect of adoption was recorded as an increase of $140.0 million to
retained earnings as of January 1, 2022.
With the elimination of the debt discount created by the equity component, amortization of the debt discount to interest
expense was eliminated. Additionally, the guidance eliminated the application of the treasury stock method and required the
application of the if-converted method for convertible instruments that can be settled in whole or in part with equity, when
calculating diluted earnings per share.
For the annual period ending December 31, 2024, the Company adopted guidance issued by the FASB to improve
reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense and
application of all segment disclosure requirements to entities with a single reportable segment, on a retrospective basis. Other
than additional required disclosures, adoption of the standard did not have an impact on the Company's consolidated financial
statements.
Recent Accounting Pronouncements
In November 2024, the FASB issued guidance to enhance income statement disclosures through additional disclosures of
specified information about certain costs and expenses. This guidance will be effective for the Company's annual period ending
December 31, 2027 and interim periods beginning on January 1, 2028, and is to be applied prospectively with the option to
adopt retrospectively. The Company is evaluating the impact the update will have on its disclosures.
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In December 2023, the FASB issued guidance to improve income tax disclosures, primarily through enhanced disclosures
for the rate reconciliation and income taxes paid, in addition to the modification or elimination of other disclosures. This
guidance will be effective for the Company's annual period ending December 31, 2025 and is to be applied prospectively with
the option to adopt retrospectively. The Company is evaluating the impact the update will have on its disclosures.
3. Investments and Fair Value Measurements
Available-for-sale marketable securities held as of December 31, 2024 and 2023 were as follows (in thousands):
Gross Unrealized
Aggregate
Fair Value
Classification on Balance
Sheet
Amortized
Cost
Short-Term
Marketable
Securities
Long-Term
Marketable
Securities
As of December 31, 2024
Gains
Losses
Time deposits
$
11,330
$
—
$
—
$
11,330
$
11,330
$
—
Corporate bonds
1,003,915
1,369
(307)
1,004,977
808,800
196,177
U.S. government agency obligations
303,816
567
(36)
304,347
249,318
55,029
$ 1,319,061
$
1,936
$
(343) $ 1,320,654
$ 1,069,448
$
251,206
As of December 31, 2023
Time deposits
$
14,426
$
—
$
—
$
14,426
$
14,426
$
—
Commercial paper
6,249
—
(5)
6,244
6,244
—
Corporate bonds
1,328,980
6,429
(4,201)
1,331,208
276,975
1,054,233
U.S. government agency obligations
428,157
2,462
(979)
429,640
74,369
355,271
$ 1,777,812
$
8,891
$
(5,185) $ 1,781,518
$
372,014
$ 1,409,504
The Company holds money market funds and mutual funds, which are classified as equity securities. These securities are
not included in the available-for-sale securities table above, but are included in marketable securities in the consolidated
balance sheet.
Unrealized gains and unrealized losses on investments classified as available-for-sale are included within accumulated
other comprehensive loss in the consolidated balance sheets. Upon realization, those amounts are reclassified from accumulated
other comprehensive loss to interest and marketable securities income, net in the consolidated statements of income. As of
December 31, 2024, the Company held for investment corporate bonds with a fair value of $14.4 million, which are classified
as available-for-sale marketable securities and have been in a continuous unrealized loss position for more than 12 months. The
unrealized losses related to these securities were insignificant and are included in accumulated other comprehensive loss as of
December 31, 2024. The unrealized losses are attributable to changes in interest rates. Based on the evaluation of available
evidence, the Company does not believe any portion of the unrealized loss is due to credit losses.
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Fair Value Measurements
The fair value measurements within the fair value hierarchy of the Company’s financial assets as of December 31, 2024
and 2023 were as follows (in thousands):
Total Fair Value
Fair Value Measurements at
Reporting Date Using
Level 1
Level 2
As of December 31, 2024
Cash Equivalents and Marketable Securities:
Money market funds
$
163,722
$
163,722
$
—
Time deposits
64,202
—
64,202
Corporate bonds
1,004,977
—
1,004,977
U.S. government agency obligations
304,347
—
304,347
Mutual funds
26,580
26,580
—
$
1,563,828
$
190,302
$
1,373,526
As of December 31, 2023
Cash Equivalents and Marketable Securities:
Money market funds
$
177,240
$
177,240
$
—
Time deposits
39,670
—
39,670
Commercial paper
6,244
—
6,244
Corporate bonds
1,331,208
—
1,331,208
U.S. government agency obligations
429,640
—
429,640
Mutual funds
22,942
22,942
—
$
2,006,944
$
200,182
$
1,806,762
As of December 31, 2024 and 2023, the fair value of the Company's financial assets were determined utilizing a Level 1 or
Level 2 valuation. Level 1 valuations are based upon the market prices for such investments that are readily available in active
markets and Level 2 valuations are based upon the available quoted prices for similar assets in active markets (or identical
assets in an inactive market). The Company did not have any transfers of assets or liabilities between Level 1 or Level 2 of the
fair value measurement hierarchy during the years ended December 31, 2024 and 2023.
When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of
unobservable inputs. When available, the Company uses quoted market prices to measure fair value. The valuation technique
used to measure fair value for the Company's Level 1 and Level 2 assets is a market approach, using prices and other relevant
information generated by market transactions involving identical or comparable assets. If market prices are not available, the
fair value measurement is based on models that use primarily market-based parameters including yield curves, volatilities,
credit ratings and currency rates. In certain cases where market rate assumptions are not available, the Company is required to
make judgments about the assumptions market participants would use to estimate the fair value of a financial instrument.
Contractual maturities of the Company’s available-for-sale marketable securities held as of December 31, 2024 and 2023
were as follows (in thousands):
December 31,
2024
December 31,
2023
Due in 1 year or less
$
1,069,448
$
372,014
Due after 1 year through 5 years
251,206
1,409,504
$
1,320,654
$
1,781,518
67

4. Accounts Receivable
Net accounts receivable consisted of the following as of December 31, 2024 and 2023 (in thousands):
December 31,
2024
December 31,
2023
Trade accounts receivable
$
508,928
$
516,175
Unbilled accounts receivable
222,281
211,596
Gross accounts receivable
731,209
727,771
Allowances for current expected credit losses and other reserves
(3,522)
(3,469)
Accounts receivable, net
$
727,687
$
724,302
A summary of activity in the accounts receivable allowance for current expected credit losses and other reserves for the
years ended December 31, 2024, 2023 and 2022 was as follows (in thousands):
2024
2023
2022
Beginning balance
$
3,469
$
5,917
$
1,397
Charges to income from operations
6,954
13,431
9,292
Collections from customers previously reserved and other
(6,901)
(15,879)
(4,772)
Ending balance
$
3,522
$
3,469
$
5,917
Charges to income from operations primarily represents charges to provision for doubtful accounts for increases in the
allowance for current expected credit losses.
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following as of December 31, 2024 and 2023 (in thousands):
December 31,
2024
December 31,
2023
Prepaid income taxes
$
36,822
$
33,448
Prepaid sales and other taxes
39,069
40,843
Prepaid software and related service costs
35,490
29,155
Deferred commissions
72,391
44,383
Other prepaid expenses
23,604
26,316
Other current assets
46,451
41,969
Total
$
253,827
$
216,114
Incremental Costs to Obtain a Contract with a Customer
Deferred costs associated with obtaining customer contracts, specifically commission and incentive payments, as of
December 31, 2024 and 2023 were as follows (in thousands):
December 31,
2024
December 31,
2023
Deferred costs included in prepaid expenses and other current assets
$
72,391
$
44,383
Deferred costs included in other assets
58,996
42,738
Total deferred costs
$
131,387
$
87,121
68

Information related to incremental costs to obtain a contract with a customer for the years ended December 31, 2024, 2023
and 2022 were as follows (in thousands):
2024
2023
2022
Amortization expense related to deferred costs
$
66,366
$
50,414
$
52,691
Incremental costs capitalized
$
114,238
$
70,072
$
47,416
Amortization expense related to deferred costs is primarily included in sales and marketing expense in the consolidated
statements of income.
6. Property and Equipment
Property and equipment consisted of the following as of December 31, 2024 and 2023 (in thousands, except years):
December 31,
2024
December 31,
2023
Estimated
Useful Life
(in years)
Computer and networking equipment
$
2,665,002
$
2,456,470
3-7
Purchased software
88,033
96,979
3-10
Furniture and fixtures
63,876
67,657
1-7
Office equipment
36,340
40,546
3-5
Leasehold improvements
197,663
214,712
1-15
Internal-use software
2,103,054
1,829,933
2-10
Property and equipment, gross
5,153,968
4,706,297
Accumulated depreciation and amortization
(3,158,897)
(2,880,353)
Property and equipment, net
$
1,995,071
$
1,825,944
Depreciation and amortization expense on property and equipment and capitalized internal-use software for the years ended
December 31, 2024, 2023 and 2022 was $556.0 million, $504.0 million and $527.8 million, respectively. During the years
ended December 31, 2024, 2023 and 2022, the Company capitalized $105.3 million, $81.8 million and $32.3 million,
respectively, of stock-based compensation related to employees who developed and enhanced internal-use software
applications.
During the years ended December 31, 2024 and 2023, the Company wrote off $250.6 million and $174.3 million,
respectively, of property and equipment, gross, along with the associated accumulated depreciation and amortization. The write-
offs were primarily related to computer and networking equipment and internal-use software no longer in use. These assets had
been substantially depreciated and amortized. In addition, the Company recorded a restructuring charge of $32.8 million and
$13.8 million during the years ended December 31, 2024 and 2023, respectively, related to the impairment of internal-use
software and facility-related property and equipment.
69

7. Acquired Intangible Assets and Goodwill
Acquired intangible assets that are subject to amortization consisted of the following as of December 31, 2024 and 2023 (in
thousands):
December 31, 2024
December 31, 2023
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Completed technologies
$
463,766
$
(223,480) $
240,286
$
354,539
$
(196,572) $
157,967
Customer-related intangible
assets
758,817
(313,991)
444,826
616,267
(273,758)
342,509
Trademarks and trade names
15,318
(10,579)
4,739
14,659
(9,117)
5,542
Acquired license rights
44,810
(7,076)
37,734
34,810
(4,685)
30,125
Total
$
1,282,711
$
(555,126) $
727,585
$
1,020,275
$
(484,132) $
536,143
Aggregate expense related to amortization of acquired intangible assets for the years ended December 31, 2024, 2023 and
2022 was $92.1 million, $66.8 million and $65.0 million, respectively. Based on the Company's acquired intangible assets as of
December 31, 2024, aggregate expense related to amortization of acquired intangible assets 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. During 2024, the Company recorded a restructuring charge of $23.7 million related to the impairment of
completed technologies and customer-related acquired intangible assets whose values were no longer supported by future cash
flows. The impairment primarily related to acquired intangible assets acquired as part of the Neosec, Inc. ("Neosec")
acquisition.
The changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023 were as follows (in
thousands):
2024
2023
Beginning balance
$
2,850,470
$
2,763,838
Acquisition of Noname Gate Ltd.
312,065
—
Acquisition of StorageOS, Inc.
—
14,046
Acquisition of Neosec, Inc.
—
66,882
Measurement period adjustments related to acquisitions completed in prior years
18
—
Foreign currency translation
(11,476)
5,704
Ending balance
$
3,151,077
$
2,850,470
8. Acquisitions
Asset Acquisitions
The Company acquired certain customer contracts from Edgio, Inc. ("Edgio"), Lumen Technologies, Inc. ("Lumen") and
StackPath, LLC ("StackPath"), and certain of their affiliates. The acquisitions are intended to further strengthen the Company's
existing delivery and security businesses by integrating the acquired customers to its platform and offering them the Company’s
broader portfolio of services. Substantially all of the purchase price related to these acquisitions has been ascribed to customer-
related acquired intangible assets.
70

The following table summarizes the details of the asset acquisitions:
Asset Acquisition
Acquisition Date
Purchase Price (1)
(in thousands)
Weighted Average
Amortization Period
(in years)
Edgio
December 2024
$
158,247
(2)(3)
9.0
Lumen
October 2023
$
79,682
12.2
StackPath
August 2023
$
51,211
13.4
(1) Includes capitalized transaction costs and a portion of the transition services agreement costs.
(2) Purchase price is estimated and is subject to adjustment for certain post-closing activities expected to be completed in the first quarter of 2025.
(3) As of December 31, 2024, the Company paid the majority of the purchase price in cash to Edgio and expects to pay the remaining consideration, if any, by
the end of the first quarter of 2025.
Business Acquisitions
Business acquisition-related costs were $7.5 million, $2.7 million and $10.7 million during the years ended December 31,
2024, 2023 and 2022, respectively, and are included in general and administrative expense in the consolidated statements of
income. Pro forma results of operations for the acquisitions completed in the years ended December 31, 2024, 2023 and 2022
have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the
Company's consolidated financial results. Revenue and earnings of the acquired companies since the dates of the acquisitions
are included in the Company's consolidated statements of income and are not presented separately because they are not
material.
Noname Security
In June 2024, the Company acquired all the outstanding equity interests of Noname Gate Ltd. ("Noname Security") for
$452.3 million in cash, subject to post-closing adjustments. Noname Security is intended to expand the Company’s existing
application programming interface ("API") security offering by providing more flexible deployment options, extensive vendor
integrations and enhanced attack analysis. The Company believes this acquisition will accelerate its ability to meet increasing
customer and market demand. As of December 31, 2024, the purchase price allocation is preliminary, pending finalization of
net working capital and certain income tax matters.
The preliminary allocation of the purchase price for Noname Security and fair values of the assets acquired and liabilities
assumed were as follows (in thousands):
Total purchase consideration
$
452,319
Allocation of the purchase consideration:
Cash
$
18,253
Accounts receivable
5,984
Prepaid expenses and other current assets
3,020
Identifiable intangible assets
137,800
Deferred income tax assets
2,487
Total assets acquired
167,544
Accounts payable
(2,074)
Accrued expenses
(5,926)
Deferred revenue
(19,289)
Total liabilities assumed
(27,289)
Identifiable net assets acquired
140,255
Goodwill
312,064
Total purchase price allocation
$
452,319
The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales
workforce, and revenue and cost synergies expected to be realized. The Company expects that $248.8 million of the goodwill
71

related to the acquisition of Noname Security will be deductible for tax purposes as a result of post-acquisition transactions.
Identified intangible assets acquired and their respective weighted average amortization period were as follows (in
thousands, except years):
Gross Carrying
Amount
Weighted Average
Amortization Period
(in years)
Completed technologies
$
132,300
10.5
Customer-related intangible assets
4,800
10.5
Trademarks
700
2.5
Total
$
137,800
The Company applied the multi-period excess earnings method to estimate the fair values of the completed technologies
and customer-related acquired intangible assets, and the relief-from-royalty method to estimate the fair values of the
trademarks. The Company applied significant judgment in estimating the fair values of the acquired intangible assets, which
involved significant estimates and assumptions with respect to forecasted revenue growth rates, forecasted operating margins,
the technology obsolescence curve and discount rates. The total weighted average amortization period for the intangible assets
acquired from Noname Security is 10.5 years. The intangible assets are amortized using a method that approximates their
economic benefit over their estimated useful lives.
Neosec
In May 2023, the Company acquired all the outstanding equity interests of Neosec for $91.4 million in cash. Neosec is an
API detection and response platform based on data and behavioral analytics. The acquisition is intended to complement the
Company's application and API security portfolio by extending its visibility into the rapidly growing API threat landscape. The
Company allocated $66.9 million of the purchase price to goodwill and $19.9 million to identifiable intangible assets, primarily
consisting of completed technologies, with a total weighted average amortization period of 9.7 years. The intangible assets are
being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. The value of
the goodwill can be attributed to a number of business factors, including the expected impact from the ability to interface with
the Company's platform. The value of goodwill deductible for tax purposes as a result of post-acquisition transactions is
$33.8 million. The Company finalized its allocation of the purchase price in the second quarter of 2024.
StorageOS
In March 2023, the Company acquired all the outstanding equity interests of StorageOS, Inc. ("StorageOS"), also known as
Ondat, a cloud-based storage technology provider for $20.6 million in cash. The acquisition of StorageOS's cloud storage
technology and its industry-recognized talent is intended to strengthen the Company's compute offerings. Storage is a key
component of any cloud computing offering, and this acquisition is expected to enhance the Company's storage capabilities,
allowing the Company to offer a fundamentally different approach to cloud that integrates core and distributed compute sites
with a massively scaled edge network. The Company allocated $14.0 million of the purchase price to goodwill and $4.5 million
to a completed technology identifiable intangible asset with a total weighted average amortization period of 8.8 years. The
intangible asset is being amortized based upon the pattern in which the economic benefit of the intangible asset is being utilized.
The value of the goodwill is primarily attributable to synergies related to the integration of StorageOS technology onto the
Company's platform as well as a trained technical workforce. All of the goodwill related to the acquisition of StorageOS is
deductible for tax purposes as a result of post-acquisition transactions. The Company finalized its allocation of purchase price in
the first quarter of 2024.
Linode
In March 2022, the Company acquired all the outstanding equity interests of Linode Limited Liability Company ("Linode")
for $898.5 million in cash. Linode is an infrastructure-as-a-service platform provider that allows for developer-friendly cloud
computing capabilities. The acquisition is intended to enhance the Company’s computing services by enabling it to create a
unique cloud platform to build, run and secure applications from the cloud to the edge. Revenue attributable to Linode in the
year of acquisition, included in the Company's consolidated statements of income, for 2022 was $103.5 million. The Company
finalized its allocation of the purchase price in the first quarter of 2023.
72

The allocation of the purchase price for Linode was as follows (in thousands):
Total purchase consideration
$
898,516
Allocation of the purchase consideration:
Cash
$
26,678
Accounts receivable
7,171
Prepaid expenses and other current assets
4,478
Property and equipment
56,268
Operating lease right-of-use assets
17,000
Identifiable intangible assets
196,020
Deferred income tax assets
2,528
Other assets
292
Total assets acquired
310,435
Accounts payable
(5,767)
Accrued expenses
(1,958)
Operating lease liabilities
(17,235)
Other liabilities
(4,251)
Total liabilities assumed
(29,211)
Net assets acquired
281,224
Goodwill
$
617,292
The value of the goodwill can be attributed to a number of business factors, including a trained technical workforce and
cost synergies expected to be realized. All of the goodwill related to the acquisition of Linode was deductible for tax purposes
as a result of post-acquisition transactions.
Identified intangible assets acquired and their respective weighted average amortization period were as follows (in
thousands, except years):
Gross Carrying
Amount
Weighted Average
Amortization Period
(in years)
Customer-related intangible assets
$
84,200
16.8
Completed technologies
70,900
5.8
Acquired license rights
34,320
15.0
Trademarks and trade name
6,600
8.8
Total
$
196,020
The Company applied the relief-from-royalty method to estimate the fair values of the completed technologies and
trademarks and the multi-period excess earnings method under the income approach to estimate the fair values of the customer-
related acquired intangible assets. The Company applied significant judgment in estimating the fair values of the acquired
intangible assets, which involved significant estimates and assumptions with respect to forecasted revenue growth rates, cost of
revenue, operating expenses, contributory asset charges and discount rates. The Company used readily available market data to
estimate the fair values of the acquired license rights. The total weighted average amortization period for the intangible assets
acquired from Linode is 12.2 years. The intangible assets are being amortized based upon the pattern in which the economic
benefits of the intangible assets are being utilized.
73

9. Accrued Expenses
Accrued expenses consisted of the following as of December 31, 2024 and 2023 (in thousands):
December 31,
2024
December 31,
2023
Payroll and other related benefits
$
146,841
$
143,010
Income taxes payable
76,375
70,017
Bandwidth and co-location expenses
77,603
78,210
Property, use and other taxes
31,357
38,270
Convertible senior notes interest
6,926
6,807
Other accrued expenses
31,786
15,867
Total
$
370,888
$
352,181
10. Restructuring
During the third quarter of 2024, management committed to an action to restructure certain parts of the Company with the
primary intent of redeploying resources to support the Company's strategic investments ("Q3 2024 Action"). As a result, certain
headcount reductions were necessary. Additionally, the Company planned for the end of life of certain solutions which resulted
in impairments to capitalized internal-use software, as well as completed technologies and customer-related acquired intangible
assets. The Company does not expect to incur material additional charges related to this action.
During the first quarter of 2023, management committed to an action to restructure certain parts of the Company to enable
it to prioritize investments in the fastest growing areas of the business ("Q1 2023 Action"). As a result, certain headcount
reductions were necessary. The Company does not anticipate incurring any material additional charges related to this action.
The Company launched its FlexBase program in May 2022, which is a flexible workplace arrangement that allows
employees to choose to work from their home office, a Company office, an approved workspace, or a combination of all three,
which is a significant change to the way employees worked prior to the program. As a result, impairments of right-of-use assets
and property and equipment were recognized. The Company does not expect to incur any material additional charges related to
this action.
As a result of MUFG’s suspension of GO-NET’s operations, the Company recognized a restructuring charge during the
year ended December 31, 2022. This charge primarily related to the impairment of certain capitalized internal-use software
assets that were no longer used in operations or were unable to generate sufficient future cash flows to support their carrying
values. The Company does not anticipate incurring any additional charges related to this action.
At times the Company also recognizes restructuring charges related to completed acquisitions for severance and related
expenses paid to redundant employees, fees paid to terminate redundant contracts and impairments of redundant long-lived
assets, primarily duplicative facility-related assets, acquired intangible assets and capitalized internal-use software. The
Company does not expect to incur material additional charges related to past acquisitions.
The following table summarizes the Company's restructuring charges during the years ended December 31, 2024, 2023 and
2022 (in thousands):
2024
2023
2022
Q3 2024 Action
$
63,398
$
—
$
—
Q1 2023 Action
—
20,668
—
FlexBase
1,717
27,654
3,637
GO-NET
—
—
7,490
Acquisitions related and other
30,326
8,321
2,402
Total restructuring charge
$
95,441
$
56,643
$
13,529
74

The changes in the Company's accrual for employee severance and related expenses, included in other current liabilities,
for all restructuring actions during the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
Q3 2024
Action
Q1 2023
Action
GO-NET
Acquisitions
Related and
Other
Total
Balance as of January 1, 2022
$
—
$
—
$
—
$
1,188
$
1,188
Cost incurred
—
—
224
523
747
Cash disbursements
—
—
(180)
(1,029)
(1,209)
Translation adjustments and other
—
—
(44)
(141)
(185)
Balance as of December 31, 2022
—
—
—
541
541
Cost incurred
—
20,668
—
417
21,085
Cash disbursements
—
(19,798)
—
(950)
(20,748)
Translation adjustments and other
—
(51)
—
10
(41)
Balance as of December 31, 2023
—
819
—
18
837
Cost incurred
34,447
—
—
2,360
36,807
Cash disbursements
(9,326)
(60)
—
(1,394)
(10,780)
Translation adjustments and other
(515)
(1)
—
3
(513)
Balance as of December 31, 2024
$
24,606
$
758
$
—
$
987
$
26,351
11. Debt
Convertible Senior Notes
The Company has three convertible senior notes ("2029 Notes", "2027 Notes" and "2025 Notes") outstanding with a par
value totaling $3,565.0 million (collectively, the "Notes") that are senior unsecured obligations of the Company and bear
interest payable semi-annually in arrears. The following table summarizes further details of the Notes:
Notes
Issuance Date
Maturity Date
Principal Amount
(in thousands)
Coupon Interest
Rate
Effective Interest
Rate
2029 Notes
August 18, 2023
February 15, 2029
$
1,265,000
1.125 %
1.388 %
2027 Notes
August 16, 2019
September 1, 2027
$
1,150,000
0.375 %
0.539 %
2025 Notes
May 21, 2018
May 1, 2025
$
1,150,000
0.125 %
0.350 %
Conversion Rights of the Notes
At their option, holders may exercise the conversion right of the respective Notes at the following specified times and rates
to receive the principal amount in cash and receive any amount in excess of the principal amount in cash, shares of the
Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election.
Prior to the close of business on the business day immediately preceding the conversion date, as noted in the table below,
under the following circumstances a holder may exercise their conversion right:
•
during any calendar quarter commencing after the calendar quarter ended December 31, 2023 for the 2029 Notes,
December 31, 2019 for the 2027 Notes and June 30, 2018 for the 2025 Notes (and only during such calendar quarter),
if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive)
during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately
preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•
during the five business day period after any five consecutive trading day period in which the trading price per $1,000
principal amount of the respective Notes for each trading day of the measurement period was less than 98% of the
product of the last reported sale price of the Company's common stock and the conversion rate on each such trading
day; or
•
upon the occurrence of specified corporate events.
75

On or after the respective conversion date, as noted in the table below, holders may convert all or any portion of their
respective Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the
maturity date.
If the Company undergoes a fundamental change at any time prior to the maturity date, holders of the Notes will have the
right, at their option, to require the Company to repurchase for cash all or any portion of their Notes at a repurchase price equal
to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the
fundamental change repurchase date.
The conversion rights of the Notes are as follows:
Notes
Conversion Date
Conversion Rate (1)
Conversion Price per
Share (1)
2029 Notes
October 15, 2028
7.9170
$
126.31
2027 Notes
May 1, 2027
8.6073
$
116.18
2025 Notes
January 1, 2025
10.5150
$
95.10
(1) The conversion rate for the Notes is established as a number of shares of the Company's commons stock per $1,000 principal amount of the Notes, that is
equivalent to the conversion price per share, subject to adjustments in certain events. Upon the occurrence of certain corporate events the Company will
increase the conversion rate for a holder that elects to convert its Notes.
Components and Fair Value of the Notes
The Notes consisted of the following components as of December 31, 2024 and 2023 (in thousands):
2029 Notes
2027 Notes
2025 Notes
Total
As of December 31, 2024
Principal
$
1,265,000
$
1,150,000
$
1,150,000
$
3,565,000
Less: issuance costs, net of amortization
(13,354)
(4,951)
(884)
(19,189)
Net carrying amount
$
1,251,646
$
1,145,049
$
1,149,116
$
3,545,811
Estimated fair value (1)
$
1,239,068
$
1,155,865
$
1,219,345
$
3,614,278
As of December 31, 2023
Principal
$
1,265,000
$
1,150,000
$
1,150,000
$
3,565,000
Less: issuance costs, net of amortization
(16,478)
(6,831)
(3,462)
(26,771)
Net carrying amount
$
1,248,522
$
1,143,169
$
1,146,538
$
3,538,229
Estimated fair value (1)
$
1,376,915
$
1,289,219
$
1,467,274
$
4,133,408
(1) The fair values were determined based on the quoted prices of the Notes in an inactive market on the last trading day of the reporting period and have been
classified as Level 2 within the fair value hierarchy.
Note Hedges and Warrants
To minimize the impact of potential dilution upon conversion of the Notes, the Company entered into convertible note
hedge transactions with respect to its common stock concurrently with each respective note issuance. The note hedge
transactions cover an approximate number of shares of the Company’s common stock at a strike price that corresponds to the
conversion prices for the Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The note hedge
transactions expire upon the respective maturity dates of the Notes. The Company determined that the note hedges meet the
definition of a derivative and are classified in stockholders’ equity, as the note hedges are indexed to the Company's common
stock, and the Company, at its election, may receive cash, shares of the Company's common stock or a combination of cash and
shares of the Company's common stock. The Company recorded the purchase of the hedges as a decrease to additional paid-in
capital. The Company does not recognize subsequent changes in fair value of the note hedges in its consolidated financial
76

statements.
Separately, the Company also entered into warrant transactions concurrently with each of the note issuances, whereby the
Company sold warrants to acquire, subject to anti-dilution adjustments, shares of the Company’s common stock at a
predetermined strike price per share. The convertible note hedge and warrant transactions will generally have the effect of
increasing the conversion price of each of the Notes to the respective strike price related to the warrant transactions. The
Company determined that the warrants meet the definition of a derivative and are classified in stockholders’ equity, as the
warrants are indexed to the Company's common stock, and the Company, at its election, may pay or deliver to holders cash or
shares of the Company's common stock. The Company recorded the proceeds from the issuance of the warrants as an increase
to additional paid-in capital. The Company does not recognize subsequent changes in fair value of the warrants in its
consolidated financial statements. The following table summarizes the main terms impacting the note hedges and warrants (in
thousands, except per share data):
2029 Notes
2027 Notes
2025 Notes
Note hedge transaction costs
$
236,555
$
312,225
$
261,740
Shares covered by note hedge transactions
10,015
9,898
12,093
Shares related to warrant transactions
10,015
9,898
12,093
Strike price per share related to warrant transactions
$
180.44
$
178.74
$
149.18
Aggregate proceeds from sale of warrants
$
90,195
$
185,150
$
119,945
Revolving Credit Facility
In November 2022, the Company entered into a $500.0 million five-year, revolving credit agreement (the “2022 Credit
Agreement”). Borrowings under the 2022 Credit Agreement may be used to finance working capital needs and for general
corporate purposes. The 2022 Credit Agreement provides for an initial $500.0 million in revolving loans. Under specified
circumstances, the facility can be increased to up to $1.0 billion in aggregate principal amount. The 2022 Credit Agreement
expires on November 22, 2027, and any amounts outstanding thereunder will become due and payable, subject to up to two
one-year extensions at the Company's request and with the consent of the lenders party thereto.
Borrowings under the 2022 Credit Agreement bear interest, at the Company's option, and subject to a credit spread
adjustment, at a term benchmark rate plus a spread of 0.75% to 1.125%, a reference rate plus a spread of 0.75% to 1.125%, or a
base rate plus a spread of 0.00% to 0.125%, in each case with such spread being determined based on the Company's
consolidated leverage ratio specified in the 2022 Credit Agreement. Regardless of what amounts, if any, are outstanding under
the 2022 Credit Agreement, the Company is also obligated to pay an ongoing commitment fee on undrawn amounts at a rate of
0.07% to 0.125%, with such rate being based on the Company's consolidated leverage ratio specified in the 2022 Credit
Agreement.
The 2022 Credit Agreement contains customary representations and warranties, affirmative and negative covenants and
events of default. As of December 31, 2024, the Company was in compliance with all covenants. The negative covenants
include restrictions on subsidiary indebtedness, liens and fundamental changes. These covenants are subject to a number of
important exceptions and qualifications. The principal financial covenant requires a maximum consolidated leverage
ratio. There were no outstanding borrowings under the 2022 Credit Agreement as of December 31, 2024.
In January 2025, the Company entered into a $150.0 million uncommitted revolving credit agreement (the "2025 Credit
Agreement"). Any outstanding borrowings are secured by collateral, consisting primarily of available-for-sale marketable
securities. The 2025 Credit Agreement contains customary representations and warranties, affirmative and negative covenants
and events of default. Borrowings under the 2025 Credit Agreement may be used to finance working capital needs and for
general corporate purposes. The 2025 Credit Agreement does not have an expiration date but is cancellable at any time and any
borrowings can be due on demand. Borrowings under the 2025 Credit Agreement will bear a specified interest rate, considering
Secured Overnight Financing Rate, and interest period at the time of the confirmed borrowing.
77

Interest Expense
The Notes bear interest at fixed rates that are payable semi-annually in arrears on their respective interest payment dates
each year. Interest expense, together with ongoing commitment fees under the terms of the Company's credit agreements,
included in the consolidated statements of income for the years ended December 31, 2024, 2023 and 2022 was as follows (in
thousands):
2024
2023
2022
Amortization of debt issuance costs
$
7,802
$
5,803
$
4,688
Coupon interest payable on 2029 Notes
14,232
5,218
—
Coupon interest payable on 2027 Notes
4,312
4,312
4,312
Coupon interest payable on 2025 Notes
1,436
1,436
1,437
Interest payable and commitment fees under the credit agreements
616
1,402
952
Capitalization of interest expense
(1,281)
(462)
(293)
Total interest expense
$
27,117
$
17,709
$
11,096
12. Leases
The Company has entered into various operating lease agreements for its offices and co-location sites and related
equipment. The Company has also entered into sublease agreements with tenants of various offices previously vacated by the
Company. These operating leases have lease periods expiring between 2025 and 2034. The Company’s operating lease costs for
the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
Real Estate
Arrangements
Co-location
Arrangements
Total
2024
Operating lease cost
$
67,757
$
225,145
$
292,902
Short-term lease cost
660
25,288
25,948
Variable lease cost
26,122
67,728
93,850
Sublease income
(31,722)
—
(31,722)
Total operating lease costs
$
62,817
$
318,161
$
380,978
2023
Operating lease cost
$
74,054
$
179,552
$
253,606
Short-term lease cost
133
23,565
23,698
Variable lease cost
25,860
62,084
87,944
Sublease income
(32,024)
—
(32,024)
Total operating lease costs
$
68,023
$
265,201
$
333,224
2022
Operating lease cost
$
82,761
$
152,215
$
234,976
Short-term lease cost
52
21,741
21,793
Variable lease cost
25,167
35,025
60,192
Sublease income
(25,743)
—
(25,743)
Total operating lease costs
$
82,237
$
208,981
$
291,218
Lease costs for real estate arrangements are included in general and administrative expenses in the consolidated statements
of income. Lease costs for co-location arrangements are primarily included in cost of revenue.
78

Weighted average remaining lease terms and discount rates related to the Company's operating leases as of December 31,
2024 and 2023 were as follows:
December 31, 2024
December 31, 2023
Real Estate
Arrangements
Co-location
Arrangements
Real Estate
Arrangements
Co-location
Arrangements
Weighted average remaining lease term (in years)
9.1
4.6
9.9
4.6
Weighted average discount rate
3.5 %
4.3 %
3.5 %
4.2 %
Maturities of operating lease liabilities as of December 31, 2024 were as follows (in thousands):
Real Estate
Arrangements
Co-location
Arrangements
2025
$
67,939
$
195,152
2026
67,334
134,556
2027
61,036
113,227
2028
56,355
80,465
2029
54,556
66,100
Thereafter
261,818
73,094
Total lease payments
569,038
662,594
Less: imputed interest
81,745
61,093
Total lease liabilities
$
487,293
$
601,501
The table above excludes $182.5 million of future sublease income that is expected to be recognized through 2034. As of
December 31, 2024, the Company had additional operating leases for co-location sites that had not yet commenced of $197.0
million, of which a majority will commence in 2025, with lease terms of one year to ten years. Additionally, during the fourth
quarter of 2024, the Company entered into an operating lease with a data center operator for space in the Virginia area that is
expected to commence beginning in the third quarter of 2025. The lease is for a datacenter with gross payments of
approximately $750.0 million over a 12 year lease term. The Company has contemporaneously entered into a sublease with the
affiliate of a large social media customer for the use of the space on substantially similar terms. The operating lease costs and
associated sublease income will be recorded as general and administrative expense in the consolidated statements of income and
are expected to substantially offset each other.
As of December 31, 2024, the Company had outstanding letters of credit in the amount of $4.0 million, primarily related to
operating leases. The letters of credit remain in effect until the Company fulfills its obligations under these leases or as such
obligations expire under the terms of the letters of credit.
13. Commitments and Contingencies
Purchase Commitments
The Company enters into long-term agreements with network and internet service providers for bandwidth, as well as
executes purchase orders for the purchase of goods or services in the ordinary course of business, which may contain minimum
commitments. These minimum commitments may vary from period to period depending on the timing and length of contract
renewals with vendors, and on the Company's plans for network expansion, including expansion plans related to the Company's
compute business. Minimum commitments are not recorded as liabilities on the consolidated balance sheet until the Company
has received the related good or service.
Legal Matters
The Company is party to various litigation matters that management considers routine and incidental to its business.
Management does not expect the results of any of these routine actions to have a material effect on the Company’s business,
results of operations, financial condition or cash flows.
79

Indemnification
The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these
agreements, the Company agrees to indemnify, hold harmless and reimburse the indemnified party for losses suffered or
incurred by the indemnified party, generally the Company's business partners, vendors or customers, in connection with its
provision of its services. Generally, these obligations are limited to claims relating to infringement of a patent, copyright or
other intellectual property right or the Company’s negligence, willful misconduct or violation of law. Subject to applicable
statutes of limitation, the term of each of these indemnification agreements is generally perpetual from the time of execution of
the agreement. The maximum potential amount of future payments the Company could be required to make under these
indemnification agreements is unlimited; however, the Company carries insurance that covers certain third-party claims relating
to its services and activities and that could limit the Company’s exposure in that respect.
The Company has agreed to indemnify each of its officers and directors, or employees who serve as officers or directors of
its subsidiaries at management's request, during his or her lifetime for certain events or occurrences that happen by reason of the
fact that the officer or director is or was or has agreed to serve as an officer or director of the Company. The Company has
director and officer insurance policies that may limit its exposure and may enable the Company to recover a portion of certain
future amounts paid.
To date, the Company has not encountered material costs as a result of such indemnification obligations and has not
accrued any related liabilities in its consolidated financial statements. In assessing whether to establish an accrual, the Company
considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of
the amount of loss.
14. Stockholders’ Equity
Stock Repurchase Program
In October 2021, the board of directors authorized a $1.8 billion share repurchase program, effective January 2022 through
December 2024. In May 2024, the board of directors authorized a new $2.0 billion share repurchase program, effective May
2024 through June 2027. The Company's goals for the share repurchase programs are to offset the dilution created by its
employee equity compensation programs over time and provide the flexibility to return capital to stockholders as business and
market conditions warrant, while still preserving its ability to pursue other strategic opportunities.
The following summarizes the share repurchase activity pursuant to the share repurchase programs described above (in
thousands):
2024
2023
2022
Repurchases of common stock
$
557,468
$
654,046
$
608,010
Number of shares repurchased
5,623
7,802
6,403
As of December 31, 2024, the Company had $2.0 billion available for future purchases of shares under the current
repurchase program.
The board of directors authorized the retirement of all the outstanding shares of its treasury stock as of each of December
31, 2023 and 2022. The retired shares were returned to the number of authorized but unissued shares of the Company's common
stock, and the retirement was recorded to additional paid-in capital.
80

15. Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss, net of tax, which is reported as a component of stockholders' equity, for
the years ended December 31, 2024 and 2023 were as follows (in thousands):
Foreign
Currency
Translation
Net Unrealized
(Losses) Gains
on Investments
Total
Balance as of January 1, 2023
$
(116,474) $
(23,858) $
(140,332)
Other comprehensive income
18,439
26,563
45,002
Balance as of December 31, 2023
(98,035)
2,705
(95,330)
Other comprehensive loss
(59,064)
(1,599)
(60,663)
Balance as of December 31, 2024
$
(157,099) $
1,106
$
(155,993)
Amounts reclassified from accumulated other comprehensive loss to net income were insignificant for the years ended
December 31, 2024 and 2023.
16. Revenue from Contracts with Customers
The Company sells its services through a sales force located both domestically and internationally. Revenue derived from
operations outside of the U.S. is determined based on the country in which the sale originated. Other than the U.S., no single
country accounted for 10% or more of the Company’s total revenue for any reported period. Revenue by geography included in
the Company’s consolidated statements of income for the years ended December 31, 2024, 2023 and 2022 was as follows (in
thousands):
2024
2023
2022
U.S.
$
2,075,533
$
1,968,779
$
1,902,051
International
1,915,635
1,843,141
1,714,603
Total revenue
$
3,991,168
$
3,811,920
$
3,616,654
The Company reports its revenue in three solution categories: security, delivery and compute. Security includes solutions
that are designed to protect business online by keeping infrastructure, websites, applications, APIs, networks and users safe.
Delivery includes solutions that are designed to enable business online, including media delivery and web and mobile
performance. Compute includes compute, storage, networking, database and container management services. Revenue by
solution category included in the Company’s consolidated statements of income for the years ended December 31, 2024, 2023
and 2022 was as follows (in thousands):
2024
2023
2022
Security
$
2,042,661
$
1,765,267
$
1,541,941
Delivery
1,318,131
1,542,434
1,669,257
Compute
630,376
504,219
405,456
Total revenue
$
3,991,168
$
3,811,920
$
3,616,654
Most security, delivery and compute services represent obligations that are satisfied over time as the customer
simultaneously receives and consumes the services provided by the Company. Accordingly, the majority of the Company's
revenue is recognized over time, generally ratably over the term of the arrangement due to consistent monthly usage
commitments that expire each period. Any usage over a given commitment is recognized in the period in which the units are
served. A small percentage of the Company's contracts are satisfied at a point in time, such as one-time professional services
contracts, integration services and most license sales where the primary obligation is delivery of the license at the start of the
term. In these cases, revenue is recognized at a point in time of delivery or satisfaction of the performance obligation.
During the years ended December 31, 2024, 2023 and 2022, the Company recognized $109.1 million, $105.9 million and
$105.1 million of revenue that was included in deferred revenue as of December 31, 2023, 2022 and 2021, respectively.
81

As of December 31, 2024, the aggregate amount of remaining performance obligations from contracts with customers was
$4.3 billion. The Company expects to recognize approximately 60% of its remaining performance obligations as revenue over
the next 12 months and approximately 35% over the next two to three years, with the remaining thereafter. Remaining
performance obligations represent the amount of the transaction price under contracts with customers that are attributable to
performance obligations that are unsatisfied or partially satisfied at the reporting date. This consists of future committed
revenue for monthly, quarterly or annual periods within current contracts with customers, as well as deferred revenue arising
from consideration invoiced in prior periods for which the related performance obligations have not been satisfied. It excludes
estimates of variable consideration such as usage-based contracts with no committed contract as well as anticipated renewed
contracts. Revenue recognized during the years ended December 31, 2024, 2023 and 2022, related to performance obligations
satisfied in previous periods was not material.
17. Employee Benefit Plans
Defined Contribution Plans
The Company has a savings plan for its U.S. employees that is designed to be qualified under Section 401(k) of the Internal
Revenue Code. Eligible employees are permitted to contribute to this plan through payroll deductions within statutory and plan
limits. The Company contributed $19.1 million, $19.7 million and $18.8 million of cash to the savings plan for the years ended
December 31, 2024, 2023 and 2022, respectively, under a matching program.
The Company also maintains defined contribution benefit plans covering eligible foreign employees. The expense for these
plans was not material in any period presented.
Deferred Compensation Plan
The Company offers certain eligible employees the ability to participate in a non-qualified deferred compensation plan,
under which certain executives may elect to defer a portion of their compensation. Deferrals of cash compensation are invested
by the Company in restricted mutual funds that mirror hypothetical investments elected by the plan participants. Deferrals of
stock awards remain in the Company’s stock. As of December 31, 2024 and 2023, the total cash obligation under the deferred
compensation plan was $26.6 million and $22.9 million, respectively.
18. Stock-Based Compensation
Equity Plans
In May 2013, the Company's stockholders approved the Akamai Technologies, Inc. 2013 Stock Incentive Plan, which was
amended with Company shareholder approval in each of 2015, 2017, 2019, 2021, 2022 and 2023 (as amended and restated, the
"2013 Plan"). The 2013 Plan replaced the Akamai Technologies, Inc. 2009 Stock Incentive Plan (the "2009 Plan"), which in
turn replaced the Akamai Technologies, Inc. 2006 Stock Incentive Plan, the Akamai Technologies, Inc. 2001 Stock Incentive
Plan and the Akamai Technologies, Inc. 1998 Stock Incentive Plan (such plans, together with the 2009 Plan, the "Previous
Plans"). The Company no longer issues equity awards under the Previous Plans, and there are no outstanding equity awards
related to those plans. The 2013 Plan allows for the issuance of incentive stock options, non-statutory stock options, stock
appreciation rights, restricted stock, restricted stock units, other stock-based awards and cash-based awards for up to 38.8
million shares of common stock, subject to certain adjustments, to employees, officers, directors, consultants and advisers of the
Company. There are no shares of common stock that are currently outstanding under the Previous Plans available to grant under
the 2013 Plan. As of December 31, 2024, the Company had reserved 7.6 million shares of common stock available for future
issuance of equity awards under the 2013 Plan.
The Company has assumed certain stock incentive plans and the outstanding stock incentives of companies that it has
acquired (“Assumed Plans”). Stock awards outstanding as of the date of acquisition under the Assumed Plans were exchanged
for the Company’s stock awards and adjusted to reflect the appropriate conversion ratio as specified by the applicable
acquisition agreement, but are otherwise administered in accordance with the terms of the Assumed Plans. Stock awards under
the Assumed Plans generally vest over three years to four years, and outstanding stock options under the Assumed Plans expire
ten years from the date of grant.
Additionally, the Company has the 1999 Employee Stock Purchase Plan ("1999 ESPP") that permits eligible employees to
purchase up to 1.5 million shares each June 1 and December 1, provided that the aggregate number of shares issued shall not
exceed 20.0 million. The 1999 ESPP allows participants to purchase shares of common stock at a 15% discount from the fair
82

market value of the stock as determined on specific dates at six-month intervals. As of December 31, 2024, the Company had
reserved 1.6 million shares of common stock available for future purchases under the 1999 ESPP Plan.
Stock-Based Compensation Expense
Components of total stock-based compensation expense included in the Company’s consolidated statements of income for
the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
2024
2023
2022
Cost of revenue
$
61,177
$
43,802
$
28,354
Research and development
152,114
123,896
78,116
Sales and marketing
77,593
66,453
47,789
General and administrative
102,494
94,316
62,926
Total stock-based compensation
393,378
328,467
217,185
Provision for income taxes
(96,607)
(59,359)
(46,829)
Total stock-based compensation, net of taxes
$
296,771
$
269,108
$
170,356
In addition to the amounts of stock-based compensation reported in the table above, the Company’s consolidated
statements of income for the years ended December 31, 2024, 2023 and 2022 also include stock-based compensation reflected
as a component of amortization primarily consisting of capitalized internal-use software; the additional stock-based
compensation was $42.5 million, $32.5 million and $31.3 million, respectively, before taxes.
During 2023, the Company redesigned one of its non-executive short-term incentive compensation programs from a cash-
based to a stock-based program that vests in one year. The Company also introduced a non-executive incentive program tied to
its initiative to migrate certain applications from third-party cloud platforms onto its compute platform that vests over two
years. These programs, headcount growth, an increase in equity award sizes to some new hires and existing employees due to
market conditions and expected achievement of executive performance-based compensation plans increased stock-based
compensation for the year ended December 31, 2023.
As of December 31, 2024, total pre-tax unrecognized compensation cost for stock awards was $491.2 million. The expense
is expected to be recognized through 2028 over a weighted average period of 1.5 years.
Employee Stock Purchase Plan
The following summarizes the activity under the 1999 ESPP (in thousands, except per share amounts):
2024
2023
2022
Shares issued
788
797
688
Weighted average purchase price per share
$
77.60
$
78.29
$
82.83
Issuance of common stock
$
61,131
$
62,365
$
56,570
As of December 31, 2024, $6.8 million had been withheld from employees for future purchases under the 1999 ESPP.
The Company uses the Black-Scholes option pricing model to determine the fair value of the stock awards issued under the
Company’s 1999 ESPP. This model requires the input of subjective assumptions, including expected stock price volatility and
the estimated term of each award. The estimated fair value of the stock awards issued under the Company's 1999 ESPP, less
expected forfeitures, is amortized over the stock awards' six-month contribution period on a straight-line basis. Expected
volatilities are based on the Company’s historical stock price volatility. The risk-free interest rate for periods commensurate
with the expected term of the stock award is based on the U.S. Treasury yield rate in effect at the time of grant. The expected
dividend yield is zero, as the Company currently does not pay a dividend and does not anticipate doing so in the future.
83

The grant-date fair values of awards granted under the 1999 ESPP during the years ended December 31, 2024, 2023 and
2022 were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
2024
2023
2022
Expected term (in years)
0.5
0.5
0.5
Risk-free interest rate
5.2 %
5.2 %
1.9 %
Expected volatility
24.4 %
29.1 %
26.0 %
Dividend yield
— %
— %
— %
For the years ended December 31, 2024, 2023 and 2022, the weighted average fair value of awards granted under the 1999
ESPP was $22.63 per share, $23.12 per share and $33.26 per share, respectively.
Restricted Stock Units, Restricted Stock and Deferred Stock Units
Restricted stock units ("RSUs") represent the right to receive one share of the Company’s common stock upon vesting,
while restricted stock is a grant of one share of the Company's common stock subject to vesting conditions. These awards are
granted at the discretion of the board of directors, a committee thereof or, subject to defined limitations, the Chief Executive
Officer of the Company, acting as a committee of one director, to whom such authority has been delegated. The Company has
issued service-based RSUs and restricted stock that vest based on the passage of time assuming continued service with the
Company, market-based RSUs that vest based upon total shareholder return ("TSR") measured against the benchmark TSR of a
peer group and performance-based RSUs that vest only upon the achievement of defined internal performance metrics tied
primarily to defined financial metrics.
In addition to granting RSUs and restricted stock to its employees, the Company has granted deferred stock units ("DSUs")
to non-employee members of its board of directors. These DSUs are granted at the discretion of the board of directors, subject
to defined limitations. Each DSU represents the right to receive one share of the Company’s common stock upon vesting. The
holder may elect to defer receipt of the vested shares of stock represented by the DSU for a period of at least one year but not
more than ten years from the grant date. DSUs vest 100% on the first anniversary of the grant date. If a director has completed
one year of service, vesting of 100% of the DSUs held by such director will accelerate at the time of his or her departure from
the board.
The RSUs, restricted stock and DSUs granted by the Company during the year ended December 31, 2024 were as follows
(in thousands):
December 31,
2024
Service-based (1)
4,850
Market-based
166
Performance-based
428
Total
5,444
(1) Includes DSU grants of 29,274 shares
For service-based RSUs, restricted stock and DSUs, the fair value is calculated based upon the Company’s closing stock
price on the date of grant, and the stock-based compensation expense is being recognized over the vesting period. The majority
of these awards vest over a three- or four-year period following the grant date, with some programs vesting over less time.
84

For market-based RSUs, the Company uses the Monte Carlo simulation model to determine the fair value. This model
requires the input of assumptions, including the estimated term of each award, the risk-free interest rate, historical stock price
volatility of the Company's shares and historical stock price volatility of peer-company shares. The grant-date fair values of the
TSR-based RSUs granted during the years ended December 31, 2024, 2023 and 2022 were estimated using a Monte Carlo
simulation model with the following assumptions:
2024
2023
2022
Expected term (in years)
3.0
3.0
3.0
Risk-free interest rate
4.3 %
4.5 %
1.7 %
Akamai historical share price volatility
25.6 %
28.8 %
30.3 %
Average volatility of peer-company share price
30.6 %
33.6 %
40.7 %
For performance-based RSUs, management measured compensation expense based upon a review of the Company’s
expected achievement against specified financial performance targets. Such compensation cost is being recognized using a
graded-vesting method for each series of grants of performance-based RSUs, to the extent management has deemed that such
awards are probable of vesting based upon the expected achievement against the specified targets. Each reporting period,
management reviews the Company’s expected performance and adjusts the compensation cost, if needed, at such time.
RSU, restricted stock and DSU activity for the year ended December 31, 2024 was as follows:
Units
(in thousands)
Weighted
Average Grant
Date Fair Value
Outstanding at January 1, 2024
8,077
$
83.12
Granted
5,444
108.09
Vested (1)
(5,253)
82.43
Forfeited
(558)
99.47
Outstanding at December 31, 2024
7,710
$
100.04
(1) Includes DSUs of 26,426 shares which have vested and been distributed. Excludes DSUs which have vested, but have not yet been distributed.
The pre-tax intrinsic value and fair value of RSUs, restricted stock and DSUs were as follows (in thousands, except per
share amounts):
2024
2023
2022
Pre-tax intrinsic value of awards vested
$
429,491
$
254,686
$
227,143
Fair value of awards vested
$
433,026
$
259,919
$
231,708
Weighted average fair value of awards granted, per share (1)
$
108.09
$
74.89
$
107.17
(1) The grant-date fair value is calculated based upon the Company’s closing stock price on the date of grant.
As of December 31, 2024, outstanding and unvested RSUs, restricted stock and DSUs had an aggregate intrinsic value of
$737.4 million and a weighted average remaining vesting period of approximately 1.5 years. These awards are expected to vest
on various dates through 2028.
As of December 31, 2024 and 2023, the Company had liability-classified awards outstanding of $10.0 million and $16.3
million, respectively. The liability-classified awards outstanding at December 31, 2024 are expected to vest and be re-classified
to equity in less than one year. The liability-classified awards outstanding at December 31, 2023 vested and were re-classified
to equity in 2024.
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19. Income Taxes
The components of income before provision for income taxes were as follows for the years ended December 31, 2024,
2023 and 2022 (in thousands):
2024
2023
2022
U.S.
$
54,465
$
20,146
$
61,383
Foreign
532,548
632,381
596,620
Income before provision for income taxes
$
587,013
$
652,527
$
658,003
The provision for income taxes consisted of the following for the years ended December 31, 2024, 2023 and 2022 (in
thousands):
2024
2023
2022
Current tax provision:
Federal
$
23,870
$
23,406
$
49,808
State
6,998
6,731
9,214
Foreign
121,495
99,223
172,645
Deferred tax benefit:
Federal
(43,695)
(18,213)
(73,826)
State
(14,959)
(6,692)
(18,657)
Foreign
(7,525)
(2,536)
(16,595)
Change in valuation allowance
(4,089)
4,454
4,107
Total
$
82,095
$
106,373
$
126,696
The Company’s effective tax rate differed from the U.S. federal statutory tax rate as follows for the years ended December
31, 2024, 2023 and 2022:
2024
2023
2022
U.S. federal statutory tax rate
21.0 %
21.0 %
21.0 %
State taxes
1.1
1.0
0.7
Stock-based compensation
0.7
3.6
2.0
U.S. federal, state and foreign research and development credits
(6.4)
(4.7)
(5.1)
Foreign earnings
(2.3)
(6.5)
(6.6)
Nondeductible (nontaxable) foreign items
1.0
(0.2)
0.7
Global intangible low-taxed income
1.0
1.1
2.5
Change in prior year uncertain tax position reserve
1.4
—
0.4
Release of uncertain tax position reserve
(0.6)
(0.4)
(0.7)
Intercompany sale of intellectual property
(4.7)
0.6
4.0
Valuation allowance
(0.7)
0.7
0.6
Nondeductible transfer pricing
1.9
1.0
0.5
Foreign-derived intangible income
(1.4)
(1.1)
(0.8)
Other
2.0
0.2
0.1
14.0 %
16.3 %
19.3 %
86

The components of the net deferred tax assets and liabilities and the related valuation allowance as of December 31, 2024
and 2023 were as follows (in thousands):
2024
2023
Accrued bonus
$
1,958
$
3,716
Deferred revenue
20,598
14,223
Acquired intangible assets
23,731
—
Operating lease liabilities
108,429
116,752
Stock-based compensation
48,486
42,856
NOLs
21,769
19,791
Tax credit carryforwards
101,508
96,020
Capitalized research and development costs
188,470
108,592
Convertible senior notes interest
82,881
111,509
Depreciation and amortization
43,601
66,053
Other
39,917
21,856
Deferred tax assets
681,348
601,368
Acquired intangible assets
—
(12,126)
Operating lease right-of-use assets
(96,683)
(103,392)
Deferred commissions
(25,477)
(14,752)
Capitalized internal-use software development costs
(50,390)
(31,719)
Deferred tax liabilities
(172,550)
(161,989)
Valuation allowance
(41,615)
(45,704)
Net deferred tax assets
$
467,183
$
393,675
As summary of activity in the valuation allowance on deferred tax assets for the years ended December 31, 2024, 2023 and
2022 is as follows (in thousands):
2024
2023
2022
Beginning balance
$
45,704
$
41,250
$
37,143
Charges to income tax expense
3,469
4,814
4,392
Release of valuation allowance
(7,558)
(360)
(285)
Ending balance
$
41,615
$
45,704
$
41,250
Valuation allowances will be recognized on deferred tax assets if it is more-likely-than-not that some or all of the deferred
tax assets will not be utilized. In measuring deferred tax assets, the Company considers all available evidence, both positive and
negative, to determine whether a valuation allowance is needed. As of December 31, 2024, the Company recorded a $41.6
million valuation allowance against deferred tax assets related to state and foreign tax credits, foreign tax deductions and
foreign NOLs in which it is more-likely-than-not that such attributes will expire prior to utilization. The decrease in the
valuation allowance during 2024 was $4.1 million, which includes a decrease in the beginning balance of $6.5 million due to a
change in expected utilization of state tax credits and foreign tax deductions.
87

The Company's NOL and tax credit carryforwards in U.S. federal, state and foreign jurisdictions as of December 31, 2024
and 2023 were as follows (in thousands, except years):
2024
2023
Expirations at
Various Dates
Through:
NOL carryforwards:
Federal
$
31,500
$
32,700
2035
State
$
58,600
$
33,100
2046
Foreign
$
47,900
$
42,600
2039
Federal and state research and development tax credit and other credit
carryforwards
$
133,400
$
125,200
2039
A portion of the Company's U.S. federal, state and foreign NOL carryforwards relate to acquisitions completed between
2012 and 2023.
As of December 31, 2024, accumulated earnings outside the U.S. totaled $2.3 billion, the majority of which have been
taxed due to the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings and the tax on
global intangible low-taxed income required by the U.S. Tax Cuts and Jobs Act ("TCJA"). No provision for U.S. state income
taxes and foreign withholding taxes has been provided for any remaining undistributed foreign earnings not subject to tax under
the TCJA, or any additional basis differences inherent in the Company's international subsidiaries, as these amounts continue to
be indefinitely reinvested. Determination of the amount of the unrecognized deferred tax liability on outside basis differences is
not practicable because of the complexity of laws and regulations, the varying tax treatment of alternative repatriation scenarios
and the variation due to multiple potential assumptions relating to the timing of any future repatriation.
The changes in the Company’s unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022 were as
follows (in thousands):
2024
2023
2022
Balance at beginning of year
$
68,658
$
67,958
$
22,563
Gross increases – tax positions of prior periods
11,150
2,074
3,880
Gross increases – current period tax positions
4,223
4,091
45,975
Gross decreases – tax positions of prior periods
(1,445)
(3,685)
(688)
Gross decreases – lapse of applicable statute of limitations
(2,665)
(1,780)
(3,772)
Balance at end of year
$
79,921
$
68,658
$
67,958
As of December 31, 2024, 2023 and 2022, the Company had $48.8 million, $39.1 million and $38.3 million of
unrecognized tax benefits, respectively. Total interest and penalties for unrecognized tax benefits includes $16.3 million, $11.0
million and $8.6 million as of December 31, 2024, 2023 and 2022, respectively. Interest and penalties related to unrecognized
tax benefits are recorded in the provision for income taxes and were $7.5 million, $2.4 million and $2.0 million for the years
ended December 31, 2024, 2023 and 2022, respectively. The amount of unrecognized tax benefits that, if recognized, would
impact the effective income tax rate is $43.7 million.
As of December 31, 2024, it is reasonably possible that $2.6 million of unrecognized tax benefits may be recognized within
the next 12 months due to the expiration of local statutes of limitations. Certain U.S. federal, state and foreign income tax
returns from 2015 through 2022 are currently under audit. The Company has reserved for those positions that are not more-
likely-than-not to be sustained.
20. Net Income per Share
Basic net income per share is computed using the weighted average number of common shares outstanding during the
applicable period. Diluted net income per share is computed using the weighted average number of common shares outstanding
during the period, plus the dilutive effect of potential common stock. Potential common stock consists of shares issuable
pursuant to stock awards, convertible senior notes and warrants issued by the Company. The dilutive effect of outstanding stock
awards is reflected in diluted earnings per share by application of the treasury stock method and the dilutive effect of the
convertible securities is reflected in diluted earnings per share by application of the if-converted method.
88

The components used in the computation of basic and diluted net income per share for the years ended December 31, 2024,
2023 and 2022 were as follows (in thousands, except per share data):
2024
2023
2022
Numerator:
Net income
$
504,918
$
547,629
$
523,672
Denominator:
Shares used for basic net income per share
151,392
152,510
159,089
Effect of dilutive securities:
Stock awards
2,210
2,312
658
Convertible senior notes
744
575
720
Warrants related to issuance of convertible senior notes
—
—
—
Shares used for diluted net income per share
154,346
155,397
160,467
Basic net income per share
$
3.34
$
3.59
$
3.29
Diluted net income per share
$
3.27
$
3.52
$
3.26
For the years ended December 31, 2024, 2023 and 2022, certain potential outstanding shares from service-based stock
awards and warrants were excluded from the computation of diluted net income per share because the effect of including these
items was anti-dilutive. Additionally, certain market- and performance-based stock awards were excluded from the computation
of diluted net income per share because the underlying market and performance conditions for such stock awards had not been
met as of these dates. The number of potentially outstanding shares excluded from the computation of diluted net income per
share for the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
2024
2023
2022
Service-based stock awards
2,171
2,947
2,211
Market- and performance-based stock awards
1,316
1,371
1,030
Warrants related to issuance of convertible senior notes
32,006
26,998
21,991
Total shares excluded from computation
35,493
31,316
25,232
21. Segment and Geographic Information
The Company’s chief operating decision-maker ("CODM") is the chief executive officer and the executive management
team. As of December 31, 2024, the Company is currently organized and operates as one operating and reportable segment. The
Company is not organized by market and is managed and operated as one business. A single management team that reports to
the chief executive officer comprehensively manages the entire business. The Company does not operate any material separate
lines of business or separate business entities with respect to its services. Accordingly, the Company does not accumulate
discrete financial information with respect to separate entities. The CODM assesses performance and makes decisions on
optimizing the allocation of resources across functions and strategic investments using consolidated net income. Segment assets
represent total assets as reported on the consolidated balance sheet.
89

Information regarding the Company's one operating segment for the years ended December 31, 2024, 2023 and 2022 were
as follows (in thousands):
2024
2023
2022
Revenue
$
3,991,168
$
3,811,920
$
3,616,654
Less:
Co-location fees
308,314
256,062
197,375
Bandwidth fees
233,100
228,038
205,268
Network build-out and supporting services
193,607
215,557
195,669
Payroll and related costs
1,511,272
1,408,866
1,346,769
Capitalized salaries and related costs
(302,830)
(261,728)
(202,794)
Facilities-related costs
86,671
90,061
103,473
Software and related services
71,687
69,970
70,736
Other segment items (1)
211,205
198,525
171,367
Depreciation and amortization
648,410
570,776
592,754
Stock-based compensation
393,378
328,467
217,185
Restructuring charges
95,441
56,643
13,529
Acquisition-related costs
7,502
13,345
29,049
Interest and marketable securities income, net
(100,280)
(45,194)
(3,258)
Interest expense
27,117
17,709
11,096
Other expense, net
19,561
12,296
10,433
Income tax expense
82,095
106,373
126,696
(Gain) loss from equity method investment
—
(1,475)
7,635
Net income
$
504,918
$
547,629
$
523,672
(1) Other segment items includes marketing programs and related costs, third-party professional service fees, non-income related tax expense and other
expenses.
The Company deploys its servers into networks worldwide. Net property and equipment, excluding internal-use software,
and operating lease right-of-use assets, located in the U.S. and international locations, as of December 31, 2024 and 2023 was
as follows (in thousands):
December 31,
2024
December 31,
2023
Property and equipment, net, excluding internal-use software, located in the U.S.
$
616,376
$
639,816
Property and equipment, net, excluding internal-use software, located internationally
$
663,914
$
616,750
Operating lease right-of-use assets located in the U.S.
$
600,015
$
624,489
Operating lease right-of-use assets located internationally
$
406,723
$
284,145
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
90

Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and
procedures as of December 31, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended ("the Exchange Act"), means controls and other procedures
of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal
executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures. Based on the
evaluation of our disclosure controls and procedures as of December 31, 2024 our Chief Executive Officer and Chief Financial
Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Annual Report on Internal Control over Financial Reporting
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for
establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is
defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the
supervision of, the company's principal executive and principal financial officers and effected by the company’s board of
directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the company;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and
•
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the company’s assets that could have a material effect on the financial statements.
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2024. Based on this assessment, our management concluded that as of December 31, 2024, our internal control over financial
reporting was effective based on those criteria at the reasonable assurance level. In making this assessment, our management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control — Integrated Framework (2013).
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report, which is included in
Item 8 of this annual report on Form 10-K.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during the fourth quarter ended December 31, 2024 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
91

Item 9B. Other Information
(b) Director and Officer Trading Arrangements
The following table describes, for the quarterly period ended December 31, 2024, each trading arrangement for the sale or
purchase of Company securities adopted, terminated or for which the amount, pricing or timing provisions were modified by
our directors and officers that is either (1) a contract, instruction or written plan intended to satisfy the affirmative defense
conditions of Rule 10b5-1(c) (a “Rule 10b5-1 trading arrangement”) or (2) a “non-Rule 10b5-1 trading arrangement” (as
defined in Item 408(c) of Regulation S-K):
Name (Title)
Action Taken (Date
of Action)
Type of Trading
Arrangement
Nature of Trading
Arrangement
Duration of
Trading
Arrangement
Aggregate Number
of Securities to be
Purchased or Sold
Adam Karon (Chief
Operating Officer
and General
Manager of the
Cloud Technology
Group)
Adoption
(December 2, 2024)
Rule 10b5-1
trading
arrangement
Sales
Until June 2, 2025,
or such earlier date
upon which all
transactions are
completed or expire
without execution
Up to 46,778 shares
of common stock(1)
Mani Sundaram
(Executive Vice
President and
General Manager
of the Security
Technology Group)
Adoption
(December 4, 2024)
Rule 10b5-1
trading
arrangement
Sales
Until September 1,
2025, or such
earlier date upon
which all
transactions are
completed or expire
without execution
Up to 16,867 shares
of common stock
(1) The Rule 10b5-1 trading arrangement provides for the sale of a percentage of shares to be received upon future vesting of certain outstanding equity awards,
net of any shares withheld by us to satisfy applicable taxes. The number of shares to be withheld, and thus the exact number of shares to be sold pursuant to
Mr. Karon's Rule 10b5-1 trading arrangement, can only be determined upon the occurrence of future vesting events. For purposes of this disclosure, we
have reported the maximum aggregate number of shares to be sold without subtracting any shares to be withheld upon future vesting events.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item is incorporated herein by reference to the information that will be contained in our
Proxy Statement for the 2025 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended
December 31, 2024 (the "2025 Proxy Statement").
Item 11. Executive Compensation
The information required by this Item is incorporated herein by reference to the information that will be contained in our
2025 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated herein by reference to the information that will be contained in our
2025 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated herein by reference to the information that will be contained in our
2025 Proxy Statement.
92

Item 14. Principal Accounting Fees and Services
The information required by this Item is incorporated herein by reference the information that will be contained in our 2025
Proxy Statement.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Documents Filed as Part of this annual report on Form 10-K
1.
Financial Statements (included in Item 8 of this annual report on Form 10-K):
•
Report of Independent Registered Public Accounting Firm
•
Consolidated Balance Sheets as of December 31, 2024 and 2023
•
Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022
•
Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022
•
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
•
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2024, 2023 and 2022
•
Notes to Consolidated Financial Statements
2.
Financial Statement Schedules
Financial statements schedules are omitted as they are either not required or the information is otherwise included
in the consolidated financial statements.
(b) Exhibits
93

EXHIBIT INDEX
Incorporated by Reference
Exhibit No.
Exhibit Description
Form
Exhibit No.
Date Filed
3.1
Amended and Restated Certificate of Incorporation of Akamai
Technologies, Inc.
8-K
3.1
May 16, 2024
3.2
Amended and Restated Bylaws of Akamai Technologies, Inc.
8-K
3.1
December 16, 2022
3.3
Amendment No. 1 to Amended and Restated Bylaws of Akamai
Technologies, Inc.
8-K
3.1
September 19, 2023
4.1
Specimen common stock certificate
S-1/A
4.1
October 13, 1999
4.2
Indenture (including form of Notes) with respect to Akamai’s
0.125% Convertible Senior Notes due 2025, dated as of May 21,
2018, between Akamai and U.S. Bank National Association, as
trustee
8-K
4.1
May 22, 2018
4.3
Indenture (including form of Notes) with respect to the Registrant’s
0.375% Convertible Senior Notes due September 1, 2027, dated as
of August 16, 2019, between the Registrant and U.S. Bank National
Association, as trustee
8-K
4.1
August 16, 2019
4.4
Indenture (including form of Notes) with respect to the Registrant's
1.125% Convertible Senior Notes due February 15, 2029, dated as
of August 18, 2023, between Akamai Technologies, Inc. and U.S.
Bank Trust Company, National Association, as trustee
8-K
4.1
August 18, 2023
4.5
First Supplemental Indenture with respect to 0.125% Convertible
Senior Notes due 2025, dated December 16, 2021, between Akamai
Technologies, Inc. and U.S. Bank National Association, as trustee
8-K
4.1
December 16, 2021
4.6
First Supplemental Indenture with respect to 0.375% Convertible
Senior Notes due 2027, dated December 16, 2021, between Akamai
Technologies, Inc. and U.S. Bank National Association, as trustee
8-K
4.2
December 16, 2021
4.7
Description of Registrant's Securities Registered Under Section 12
of the Exchange Act
10-K
4.4
February 28, 2020
10.1@
Amended and Restated 1999 Employee Stock Purchase Plan of the
Registrant
10-K
10.5
March 16, 2006
10.2@
Amendment to Amended and Restated 1999 Employee Stock
Purchase Plan of the Registrant
10-Q
10.46
May 12, 2008
10.3@
2009 Akamai Technologies, Inc. Stock Incentive Plan, as amended
8-K
99.1
May 23, 2011
10.4@*
Akamai Technologies, Inc. Second Amended and Restated 2013
Stock Incentive Plan, as amended
10.5
Linode Limited Liability Company 2022 RSU Plan
S-8
99.1
March 21, 2022
10.6@
Form of Restricted Stock Unit Agreement for use under the 2013
Stock Incentive Plan (time vesting)
10-Q
10.39
May 09, 2019
10.7@
Form of Performance-Based Restricted Stock Unit Agreement for
use under the 2013 Stock Incentive Plan
10-K
10.9
February 28, 2023
10.8@
Form of Non-Qualified Stock Option Agreement for use under the
2013 Stock Incentive Plan
10-Q
10.4
August 09, 2013
10.9
Form of Deferred Stock Unit Agreement for use under the 2013
Stock Incentive Plan
10-Q
10.5
August 09, 2013
10.10@
Form of Performance-Based Vesting Restricted Stock Unit
Agreement with Retirement Provision
10-K
10.12
February 28, 2023
10.11@
Non-Employee Director Compensation Plan
10-Q
10.1
November 08, 2024
10.12@
Form of Executive Bonus Plan
8-K
99.1
February 24, 2023
10.13@
Akamai Technologies, Inc. Executive Severance Pay Plan, as
amended
8-K
10.1
October 02, 2019
10.14@
Form of Change in Control and Severance Agreement
8-K
99.1
February 25, 2022
10.15@
Akamai Technologies, Inc. Amended and Restated U.S. Non-
Qualified Deferred Compensation Plan
10-Q
10.2
November 08, 2024
94

Incorporated by Reference
Exhibit No.
Exhibit Description
Form
Exhibit No.
Date Filed
10.16@
Employment Letter Agreement between the Registrant and F.
Thomson Leighton dated February 25, 2013
10-K
10.28
March 01, 2013
10.17@
Amendment to Employment Letter Agreement between the
Registrant and F. Thomson Leighton dated November 12, 2015
8-K
99.3
November 17, 2015
10.18
Indenture of Lease for 145 Broadway, Cambridge, Massachusetts
dated November 7, 2016
8-K
10.47
November 10, 2016
10.19
Must-Take Premises and Right of First Offer Agreement among the
Registrant, Boston Properties Limited Partnership and the Trustees
of Ten Cambridge Center Trust dated November 7, 2016
8-K
10.48
November 10, 2016
10.2
150 Broadway Real Property Lease Dated December 20, 2017
10-K
10.19
March 01, 2018
10.21†
Exclusive Patent and Non-Exclusive Copyright License Agreement,
dated as of October 26, 1998, between the Registrant and
Massachusetts Institute of Technology
S-1/A
10.16
October 28, 1999
10.22
Credit Agreement by and among Akamai Technologies, Inc., the
financial institutions identified therein as lenders and JPMorgan
Chase Bank, N.A., as administrative agent, dated November 22,
2022
8-K
10.1
November 23, 2022
10.23
Form of Call Option Confirmation between Akamai and each
Option Counterparty
8-K
10.1
May 22, 2018
10.24
Form of Warrant Confirmation between Akamai and each Option
Counterparty
8-K
10.2
May 22, 2018
10.25
Form of Call Option Confirmation between the Registrant and each
Option Counterparty
8-K
10.1
August 16, 2019
10.26
Form of Warrant Confirmation between the Registrant and each
Option Counterparty
8-K
10.2
August 16, 2019
10.27
Form of Call Option Transaction Confirmation between the
Registrant and each Option Counterparty
8-K
10.1
August 18, 2023
10.28
Form of Warrant Confirmation between the Registrant and each
Option Counterparty
8-K
10.2
August 18, 2023
19.1*
Akamai Technologies, Inc. Statement of Company Policy on
Securities Transactions by Akamai Personnel
21.1*
Subsidiaries of the Registrant
23.1*
Consent of Independent Registered Public Accounting Firm
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a-
14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a- 14(a)/
Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
32.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
97.1
Akamai Clawback Policy
10-K
97
February 28, 2024
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Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB*
Inline XBRL Taxonomy Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as inline XBRL and
contained in Exhibit 101.INS)
95

@
Management contract or compensatory plan or arrangement filed as an exhibit to this annual report on Form 10-K
pursuant to Item 15(b) of this annual report.
†
Confidential Treatment has been granted as to certain portions of this exhibit. Such portions have been omitted and filed
separately with the Securities and Exchange Commission.
*
Submitted electronically herewith.
(c) Not applicable.
Item 16. Form 10-K Summary
None.
96

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 24, 2025
AKAMAI TECHNOLOGIES, INC.
By:
/s/
EDWARD MCGOWAN
Edward McGowan
Executive Vice President, Chief Financial Officer and
Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/
F. THOMSON LEIGHTON
Chief Executive Officer, President and
Director (Principal Executive Officer)
February 24, 2025
F. Thomson Leighton
/s/
EDWARD MCGOWAN
Executive Vice President, Chief Financial
Officer and Treasurer (Principal Financial
Officer)
February 24, 2025
Edward McGowan
/s/
LAURA HOWELL
Senior Vice President, Chief Accounting
Officer (Principal Accounting Officer)
February 24, 2025
Laura Howell
/s/
SHARON Y. BOWEN
Director
February 24, 2025
Sharon Y. Bowen
/s/
MARIANNE C. BROWN
Director
February 24, 2025
Marianne C. Brown
/s/
MONTE E. FORD
Director
February 24, 2025
Monte E. Ford
/s/
DANIEL R. HESSE
Director
February 24, 2025
Daniel R. Hesse
/s/
PETER T. KILLALEA
Director
February 24, 2025
Peter T. Killalea
/s/
JONATHAN F. MILLER
Director
February 24, 2025
Jonathan F. Miller
/s/
MADHU RANGANATHAN
Director
February 24, 2025
Madhu Ranganathan
/s/ BERNARDUS VERWAAYEN
Director
February 24, 2025
Bernardus Verwaayen
/s/ WILLIAM R. WAGNER
Director
February 24, 2025
William R. Wagner
97

 

 

 

EXECUTIVE OFFICERS
Tom Leighton 
President, º¼¬µŕĀ¬£ðí¼ú¬ŕ?Ķ£¬ãŕ
Aaron Ahola 
Executive Vice President,  
General Counsel and Corporate Secretary
Robert Blumofe 
Executive Vice President and  
º¼¬µŕV¬£ºÐÖÊÖ¶āŕ?Ķ£¬ã
Paul Joseph 
Executive Vice President,  
Global Sales and Services
Adam Karon 
º¼¬µŕ?à¬ã–í¼Ð¶ŕ?Ķ£¬ãŕ–Шŕ 
General Manager, Cloud Technology Group
Edward McGowan 
Executive Vice President,  
º¼¬µŕ ¼Ð–У¼–Êŕ?Ķ£¬ãŕ–ШŕV㬖çðã¬ãŕ
Kim Salem-Jackson 
Executive Vice President  
–Шŕº¼¬µŕ8–ãȬí¼Ð¶ŕ?Ķ£¬ã
Mani Sundaram 
Executive Vice President and  
General Manager, Security Technology Group
Anthony Williams 
Executive Vice President and  
º¼¬µŕ%ðϖÐŕL¬çÖð㣬çŕ?Ķ£¬ã
BOARD OF DIRECTORS
Daniel Hesse 
Board Chair
Sharon Bowen 
Director
Marianne Brown 
Director
Monte Ford 
Director
Tom Killalea 
Director
Tom Leighton 
Director
Jonathan Miller 
Director
Madhu Ranganathan 
Director
Bernardus Verwaayen 
Director
Our Leadership

Corporate Headquarters 
Akamai Technologies, Inc.  
145 Broadway 
Cambridge, MA 02142  
Tel: 617.444.3000  
U.S. Toll-Free Tel: 877.425.2624 
Transfer Agent 
Computershare 
462 South 4th Street, Suite 1600  
Louisville, KY 40202  
U.S. Toll-Free Tel: 877.282.1168  
Independent Auditors 
PricewaterhouseCoopers LLP 
Boston, MA
Corporate Counsel 
Goodwin Procter LLP  
Boston, MA 
Stock Listing
Akamai’s common stock is traded  on  
the Nasdaq Global Select Market  
under  the symbol “AKAM”
Investor Inquiries
Additional copies of this report  
–ШŕÖíº¬ãŕĸЖУ¼–Êŕ¼ÐµÖãϖí¼ÖÐŕ–ã¬ŕ 
available through investor relations  
at akamai.com