Dive Insight:
- Akamai doubled down on expanding its public cloud offerings to compete with hyperscale providers, company executives said Thursday during a Q4 2024 earnings call. The company grew its core data center network to 41 locations in 36 cities globally and will soon add container services, according to CEO Tom Leighton.
- “We've come a long way since we expanded into the cloud computing market in 2022,” Leighton said. “While our security product line is performing very well, our compute product line is growing even faster and has a much larger addressable market.”
- Security products delivered the majority of Akamai’s 2024 revenue for the first time in the company’s nearly three-decade history, growing 16% year over year to more than $2 billion. The company’s cloud revenues grew 25% to $630 million last year, with infrastructure services generating $230 million, up 32% over 2023.
Dive Insight:
Akamai began growing its cloud footprint three years ago with the $900-million acquisition of infrastructure service provider Linode. The company leveraged the Linode infrastructure to integrate compute, content delivery and security services on the Akamai Connected Cloud platform in 2023.
“The expansion aligns with Akamai's goal of bringing cloud capabilities closer to where data is generated and consumed, supporting edge use cases and low-latency applications,” IDC said in a January IaaS vendor report. The analyst firm ranked Akamai among the major players in cloud infrastructure service providers.
Akamai leaned on its infrastructure investments to pare back usage of hyperscaler services, trimming millions of dollars from its IT budget through a strategic migration initiative called Project Cirrus.
“Our work to make Linode enterprise-grade has allowed us to move some of our most important products from hyperscalers to Akamai's cloud,” Leighton said Thursday. “This has resulted in improved performance and savings of well over $100 million per year.”
Akamai is now leaning on cloud services to be the third major pillar of its business, alongside cyber and content delivery.
“We’re transforming the company,” Leighton said. The goal is to grow cloud computing into a $1 billion segment by 2027, he added.
Revenue bumps are easier to achieve than market share gains in a cloud provider ecosphere dominated by AWS, Microsoft and Google Cloud. The three biggest hyperscalers owned nearly two-thirds of global market last year, according to Synergy Research Group. Akamai was among roughly a dozen providers in the 1% range, SRG Chief Analyst John Dinsdale said.
As enterprises turn to cloud for AI capabilities, IDC sees an upside in Akamai’s content delivery networking experience.
“Akamai solved the original bottleneck of the internet by creating a CDN that reduced network traffic,” Dave McCarthy, research VP in IDC's worldwide infrastructure research group, said in an email. “AI will create another significant bottleneck Akamai is addressing by investing in cloud services to deliver AI inference at scale.”
