Akamai Provides Update on Its Delivery Business for 2025 and Beyond

Dan Rayburn | Monday March 3, 2025 | 09:17 PM | Comments (0)

On Akamai’s Q4 2024 earnings call, the company provided an update on its delivery business for 2025 and beyond. Edgio contracts contributed $9M of revenue in Q4 2024 and full year 2025, Akamai expects $85M-105M in revenue from Edgio customer contracts. Akamai said its capex spend will increase by approximately 1% of revenue to accommodate the increased traffic resulting from the Edgio transaction. “Over 100” of the Edgio contracts were new customers for the company, and Akamai does not expect “significant churn” of the customers.

Akamai noted they are “beginning to see signs of improvement in the delivery marketplace. With more customers willing to sign multiyear contracts and with predictable pricing. A more stable pricing environment generally and early signs of stabilizing traffic growth.” If these trends continue, Akamai expects its delivery revenue to decline 10% YoY in 2025 versus the 15% decline it saw in 2024. And if the positive trends continue, Akamai expects the decline to shrink even further in 2026 and beyond. For the full year 2024, Akamai’s Delivery revenue (not CDN) was $1.31B, down 15% year-over-year. Akamai’s Delivery revenue by year:

  • 2024: $1.31B
  • 2023: $1.54B
  • 2022: $1.66B
  • 2021: $1.87B

Akamai mentioned that their largest customer is navigating “political challenges” in the US and pursuing a DIY (CDN) strategy. While Akamai didn’t mention the customer by name, it’s TikTok. Both of these factors could impact Akamai’s revenue. The good news is that in Q4, Akamai signed a 5-year contract that includes a “substantial minimum annual spend,” which provides greater predictability and reduces Akamai’s exposure to the customer’s political situation in the U.S.

Akamai paid $125M for select customer contracts from Edgio’s bankruptcy. In addition, they spent $25-$30M on transition service costs, so Akamai spent $150-$160 million on the deal. Based on their guidance of $85M-105M in revenue from Edgio customer contracts in 2025, it appears the contracts Akamai acquired will pay off the Edgio deal by year two.

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