Akamai Pays $125M for Select Contracts in Edgio’s Bankruptcy Filing

Akamai has provided more details tied to their $125 million bid for customer contracts from Edgio’s security and content delivery businesses as part of Edgio’s bankruptcy auction. These contracts will give “several hundred net new customers” the necessary support to migrate smoothly to Akamai. For the fourth quarter of 2024, Akamai expects this transaction to add approximately $9-$11 million in revenue. For the full year 2025, Akamai anticipates this transaction will add approximately $80-$100 million in revenue and have approximately $25-$30 million of transition service costs.

Akamai agreed to pay certain costs for Edgio to operate its network during the transition and wind-down period, estimated to be $15-$17 million in Q4, until Edgio ceases its content delivery network in mid-January 2025. Akamai Technologies has acquired select customer contracts from Edgio’s businesses in content delivery, security, and non-exclusive license rights to patents in Edgio’s portfolio. The transaction does not include acquiring Edgio personnel, technology, or assets related to the Edgio network.

Overall, Akamai’s costs will be $150-$160 million in the deal, and they expect to generate between $89-$111 million in revenue over the next five quarters. Akamai’s revenue estimates do not include the revenue potential for Akamai selling these new customers cybersecurity and cloud computing services or additional revenue generated from the potential growth of the delivery contracts.

For those who will make statements saying the deal was good or bad for Akamai, it can’t be determined unless you have details of Akamai’s conversations with customers, especially the larger ones. Edgio had some very large delivery contracts with Amazon Prime Video, Sony, Samsung, and Microsoft, and it’s unknown what customers might have committed to Akamai in their conversations. This is the third deal for Akamai, where they acquired CDN contracts from a competitor, and the company has excellent insight into the value of those contracts for their business.