Akamai Technologies Inc. (NASDAQ:AKAM) stock fell about 6% in Monday premarket trading after the company proposed $2.2 billion of convertible senior notes, putting fresh attention on financing needs as Akamai ramps spending behind its Cloud Infrastructure Services business.
The move came despite a higher broader market, with the SPDR S&P 500 ETF Trust up about 0.8% premarket, suggesting investors were reacting primarily to the company-specific financing announcement.
Akamai Plans $2.2 Billion Convertible Offering
Akamai plans to offer $1.1 billion of convertible senior notes due 2028 and another $1.1 billion due 2031.
The company also granted initial purchasers an option to buy up to an additional $150 million of each series.
Akamai said it expects to use net proceeds, after costs tied to convertible note hedge and warrant transactions, to repay at maturity part of its $1.15 billion of 0.375% convertible senior notes due 2027 and/or fund cash payments tied to earlier conversions.
The company also plans to use proceeds to support capital expenditures for its Cloud Infrastructure Services business.
Q3 Revenue And EPS Beat Estimates
Akamai reported third-quarter revenue of $1.122 billion, up 6% year over year and above the $1.118 billion analyst estimate.
Adjusted net income was $262 million, or $1.77 per diluted share, down 5% year over year but above the $1.67 consensus estimate.
Adjusted operating margin was 25%, in line with management’s expectations.
Cloud And Security Offset Delivery Weakness
Cloud Infrastructure Services revenue rose 34% to $109 million, while security revenue increased 9% to $622 million, led by API Security and Guardicore segmentation.
Delivery and Other Cloud Applications revenue fell 3% to $391 million.
International revenue increased 7% to $563 million, accounting for roughly half of total revenue.
Akamai spent $464 million in capex during the quarter and ended September with about $4.2 billion in cash, cash equivalents and marketable securities.
Management expects operating cash flow to increase meaningfully beginning in 2028 as large CIS contracts ramp.
Guidance Comes In Below Street
For the fourth quarter, Akamai expects revenue of $1.145 billion to $1.170 billion, below the $1.199 billion analyst estimate.
The company guided to adjusted EPS of $1.50 to $1.70, compared with the $1.78 consensus estimate.
For full-year 2026, Akamai now expects revenue of $4.44 billion to $4.465 billion, compared with its prior outlook of $4.445 billion to $4.530 billion and the $4.490 billion analyst estimate.
Akamai narrowed its full-year adjusted EPS outlook to $6.47 to $6.68 from $6.40 to $7.05, compared with the $6.66 estimate.
Anthropic Deal Anchors Cloud Growth Outlook
On the Nov. 5 earnings call, CEO Tom Leighton said Akamai signed an $11.6 billion, seven-year commitment with Anthropic, lifting total multi-year CIS commitments signed this year above $14 billion.
Akamai expects CIS revenue to more than double to $1.1 billion-$1.3 billion in 2027, helping total company revenue grow 17%-22% in constant currency. Management also expects total revenue to exceed $7 billion in 2028.
Modest supply-chain and third-party data-center delays shifted about $30 million of revenue from Q4 into 2027, but management said those issues have been resolved and do not change the contract economics or 2027 outlook.
Leighton identified Akamai’s distributed CPU-heavy infrastructure, cross-selling across cloud, security and delivery, and growing demand for AI inference, agents and security as key growth drivers.
Technical Picture Remains Weak
Based on the premarket price, Akamai trades about 15% below its 20-day SMA of $91.68 and about 31% below its 200-day SMA of $112.34.
The 20-day SMA remains below the 50-day SMA, while the 50-day SMA sits below the 200-day SMA following an October death cross.
Analyst Outlook
Akamai carries a Buy consensus rating with an average analyst price target of $137.47.
Recent actions include Baird maintaining Neutral while lowering its target to $92 on Nov. 9, UBS maintaining Neutral while cutting its target to $90 on Nov. 6, and DA Davidson maintaining Buy while lowering its target to $125 on Nov. 6.
Price Action
AKAM Price Action: Akamai Technologies shares were down 6.25% at $77.90 during premarket trading on Monday, according to Benzinga Pro data.
Photo: Piotr Swat / Shutterstock
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