AKAMAI TECHNOLOGIES INC

1. Nature of Business and Basis of Presentation

Akamai Technologies, Inc. (the “Company”) develops and provides solutions to power and protect an AI-driven world. Its massively distributed global network is comprised of core and distributed compute sites, more than 4,000 edge points-of-presence in over 130 countries and in over 600 cities. The Company was incorporated in Delaware in 1998 and is headquartered in Cambridge, Massachusetts. The Company is currently organized and operates asone operating and reportable segment.

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. These financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation in the accompanying interim condensed consolidated financial statements.

Certain information and footnote disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes have been condensed in, or omitted from, these interim financial statements. Accordingly, the unaudited interim condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 20, 2026. The December 31, 2025 condensed consolidated balance sheet included herein is derived from the Company's audited consolidated financial statements.

The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited interim condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the results of all interim periods reported herein.

Significant Accounting Policies Update

The Company's significant accounting policies are detailed in Note 2 of its annual report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the Company's significant accounting policies, except those described below.

Issuance of Warrant Related to Customer Contract

The Company accounts for warrants issued to customers in conjunction with the sale of its services, which are not issued in exchange for a distinct good or service from the customer, as consideration payable to a customer and, therefore, as a reduction of the transaction price of the related contract with the customer and of revenue. Warrants that are indexed to the Company's own stock and meet the criteria for equity classification are classified as stockholders' equity. These warrants are measured at their grant-date fair value using the Black-Scholes option-pricing model and are not subsequently remeasured.

When a warrant share becomes probable of vesting, the Company records its grant-date fair value as an increase to additional paid-in capital, with a corresponding asset, on the interim condensed consolidated balance sheets. The asset is reduced, and revenue is reduced by the same amount, in proportion to the revenue recognized for the related contract with the customer. The reduction of the asset begins when services under that contract with the customer commence. The asset is classified as prepaid and other current assets or other assets on the interim condensed consolidated balance sheets based on the amount expected to be recognized as a reduction of revenue within the next twelve months.

The Company reassesses the number of warrant shares probable of vesting at each reporting date. If warrant shares are no longer probable of vesting, the Company reverses any previously recognized reductions of revenue attributable to the warrant shares in the period in which the determination is made, and also removes the associated additional paid-in capital and remaining asset.

Recently Adopted Accounting Pronouncements

In July 2025, the Financial Accounting Standards Board ("FASB") issued guidance which provides targeted improvements and clarifications related to the recognition and measurement of expected credit losses, particularly for off-balance-sheet credit exposures and certain practical expedients. The Company adopted this guidance on January 1, 2026 on a prospective basis. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In May 2025, the FASB issued guidance which clarifies how companies account for share-based payments given to a customer as an incentive or consideration in a revenue contract. The guidance revises the definition of a performance condition so that it includes vesting conditions based on a customer's purchases, or the purchases of the customer's customers. It also removes the policy election to account for forfeitures as they occur for such awards with service conditions. In addition, it clarifies that the variable consideration constraint guidance does not apply to share-based consideration payable to a customer, regardless of whether the award's grant date has occurred. Prior to the issuance of the warrant to a customer during the three months ended September 30, 2026, the Company did not have any historical transactions impacted by this guidance and the Company adopted this guidance on a retrospective basis. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In November 2024, the FASB issued guidance which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The Company adopted this guidance on January 1, 2026 on a prospective basis. The adoption of this standard did not have an impact on the Company's condensed consolidated financial statements as it did not have any induced conversions.

Recent Accounting Pronouncements

In September 2025, the FASB issued guidance which modernizes the accounting for internal-use software by removing all references to software development stages given the evolution of software development. The targeted improvements aim to increase the operability of the recognition guidance for internal-use software. The guidance also seeks to clarify the disclosure requirements for internal-use software. This guidance will be effective for the Company on January 1, 2028, and is to be applied prospectively, modified prospectively or retrospectively. The Company is evaluating the potential impact of adopting this guidance on its consolidated financial statements.

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.

2. Investments and Fair Value Measurements

Available-for-sale marketable securities held as of September 30, 2026 and December 31, 2025 were as follows (in thousands):

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 interim condensed consolidated balance sheets.

Unrealized gains and unrealized losses on investments classified as available-for-sale are included within accumulated other comprehensive loss in the interim condensed consolidated balance sheets. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to interest and marketable securities income, net in the interim condensed consolidated statements of income. As of September 30, 2026, the Company held an available-for-sale marketable security with a fair value of $1.5 million that has been in a continuous unrealized loss position for more than 12 months. The unrealized loss related to this security was insignificant and is included in accumulated other comprehensive loss as of September 30, 2026. The unrealized loss is 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.

Contractual maturities of the Company’s available-for-sale marketable securities held as of September 30, 2026 and December 31, 2025 were as follows (in thousands):

Fair Value Measurements

The fair value measurements within the fair value hierarchy of the Company’s financial assets as of September 30, 2026 and December 31, 2025 were as follows (in thousands):

As of September 30, 2026 and December 31, 2025, the fair value of the Company's financial assets was 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).

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.

3. Accounts Receivable

Net accounts receivable consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):

A summary of activity in the accounts receivable allowance for current expected credit losses and other reserves for the nine months ended September 30, 2026 and 2025 was as follows (in thousands):

Charges to income from operations primarily represent charges to provision for doubtful accounts for increases in the allowance for current expected credit losses.

4. Incremental Costs to Obtain a Contract with a Customer

Deferred costs associated with obtaining customer contracts, specifically commission and incentive payments, as of September 30, 2026 and December 31, 2025 were as follows (in thousands):

Information related to incremental costs to obtain a contract with a customer for the three and nine months ended September 30, 2026 and 2025 was as follows (in thousands):

Amortization expense related to deferred costs is primarily included in sales and marketing expense in the interim condensed consolidated statements of income.

5. Acquired Intangible Assets and Goodwill

Acquired intangible assets that are subject to amortization consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):

Based on the Company's acquired intangible assets as of September 30, 2026, aggregate expense related to amortization of acquired intangible assets is expected to be $26.0 million for the remainder of 2026, and $90.1 million, $83.4 million,

$79.1 million and $72.8 million for 2027, 2028, 2029 and 2030, respectively.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2026 were as follows (in thousands):

The Company tests goodwill for impairment at least annually. Through the date the interim condensed consolidated financial statements were issued, no triggering events have occurred that would indicate that a potential impairment exists.

6. Acquisition

Business acquisition costs during the three and nine months ended September 30, 2026 were $0.5 million and $1.5 million, respectively. Business acquisition costs are included in general and administrative expense in the interim condensed consolidated statements of income. Pro forma results of operations for the acquisition completed during the nine months ended September 30, 2026 have not been presented because the effects of the acquisition were not material to the Company's consolidated financial results. Revenue and earnings of the acquired company since the date of the acquisition are included in the Company's interim condensed consolidated statements of income and are not presented separately because they are not material.

LayerX

In July 2026, the Company acquired all the outstanding equity interests of LayerX Security Ltd. ("LayerX") for $192.9 million in cash. The acquisition is intended to enhance the Company's security portfolio with the addition of LayerX's browser-based artificial intelligence usage control and secure enterprise browser technology. As of September 30, 2026, 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 LayerX and fair values of the assets acquired and liabilities assumed were as follows (in thousands):

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 all of the goodwill related to the acquisition of LayerX will be deductible for tax purposes as a result of post-acquisition transactions.

Identified intangible assets acquired were primarily completed technologies with a gross carrying amount of $50.7 million and an estimated useful life of 9.5 years. The Company applied the relief-from-royalty method to estimate the fair values of the completed technologies. The total weighted average amortization period for the intangible assets acquired from LayerX is 9.5 years. The intangible assets are amortized using a method that approximates their economic benefit over their estimated useful lives.

7. Debt

Convertible Senior Notes

In May 2026, the Company issued $1,750.0 million in principal amount of convertible senior notes due 2032 and $1,750.0 million in principal amount of convertible senior notes due 2030, and entered into related convertible note hedge and warrant transactions. The Company intends to use a portion of the net proceeds to fund the accelerated capital expenditure requirements to support its cloud infrastructure services and for general corporate purposes.

The Company hasfive convertible senior notes ("2033 Notes", "2032 Notes", "2030 Notes", "2029 Notes" and "2027 Notes") outstanding with a par value totaling $7,640.0 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:

(1) Holders of the 2033 Notes have the right to require the Company to repurchase for cash all or a portion of their 2033 Notes on May 15, 2031 if the last reported sale price of the Company’s common stock on the trading day immediately preceding the business day immediately preceding May 15, 2031 is less than the conversion price per share. The repurchase price will be equal to 100% of the principal amount of the 2033 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the optional repurchase date.

On May 1, 2025, the Company repaid $1,150.0 million in par value of convertible senior notes that matured (“2025 Notes”). The 2025 Notes were senior unsecured obligations of the Company and bore interest at 0.125%.

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 September 30, 2025 for the 2033 Notes, September 30, 2026 for the 2032 Notes and the 2030 Notes, December 31, 2023 for the 2029 Notes and December 31, 2019 for the 2027 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 thefive business day period after anyfive 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.

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.

The market price trigger condition for the 2033 Notes was met as of June 30, 2026, because the closing price of the Company's common stock exceeded 130% of the conversion price for at least 20 trading days during the 30 consecutive trading days ending June 30, 2026. Accordingly, the 2033 Notes were convertible at the option of the holders during the three months ended September 30, 2026. As a result, the Company reclassified the carrying value of the 2033 Notes from non-current liabilities to current liabilities in the interim condensed consolidated balance sheets as of June 30, 2026. The market price trigger condition for the 2033 Notes was not met as of September 30, 2026, and the Company reclassified the carrying value of the 2033 Notes from current liabilities to non-current liabilities in the interim condensed consolidated balance sheets as of September 30, 2026. As of September 30, 2026, no holders had submitted notes for conversion, and no conversions had occurred.

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 for the outstanding Notes as of September 30, 2026 are as follows:

(1) The conversion rate for the Notes is established as a number of shares of the Company's common 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 September 30, 2026 and December 31, 2025 (in thousands):

(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 interim condensed consolidated financial 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 interim condensed consolidated financial statements. The following table summarizes the main terms impacting the note hedges and warrants (in thousands, except per share data):

Revolving Credit Facilities

In January 2025, the Company entered into a $150.0 million uncommitted revolving credit agreement ("2025 Credit Agreement"). Any outstanding borrowings are secured by collateral, consisting primarily of available-for-sale marketable securities. 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 expire 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, based on the Secured Overnight Financing Rate, and interest period at the time of the confirmed borrowing. There wereno outstanding borrowings under the 2025 Credit Agreement as of September 30, 2026.

In November 2022, the Company entered into a revolving credit agreement (“2022 Credit Agreement”), which was amended in May 2025 to increase the aggregate revolving commitments to $1.0 billion. Borrowings under the 2022 Credit Agreement may be used to finance working capital needs and for general corporate purposes. The 2022 Credit Agreement expires on November 22, 2028, and any amounts outstanding thereunder will become due and payable, subject to up to aone-year extension 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, 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 September 30, 2026, 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 wereno outstanding borrowings under the 2022 Credit Agreement as of September 30, 2026.

Interest Expense

The Notes bear interest at fixed rates that are payable semi-annually in arrears on their respective interest payment dates each year, except for the 2030 Notes and the 2032 Notes, which have a zero coupon interest. Interest expense, together with ongoing commitment fees under the terms of the Company's credit agreements, included in the interim condensed consolidated statements of income for the three and nine months ended September 30, 2026 and 2025 was as follows (in thousands):

8. Restructuring

During the fourth quarter of 2025, manage ment committed to an action to restructure certain parts of the Company to align investments and simplify organizational structure to long-term growth priorities(“Q4 2025 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 completed technologies and customer-related acquired intangible assets, as well as capitalized internal-use software. The Company does not expect to incur material additional charges related to this action.

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 Company's restructuring charges during the three and nine months ended September 30, 2026 and 2025 were as follows (in thousands):

The liability for restructuring charges for employee severance and related expenses is included in other current liabilities on the interim condensed consolidated balance sheets. The changes in the liability for thenine months ended September 30, 2026 were as follows (in thousands):

9. Stockholders’ Equity

Share Repurchase Program

In May 2024, the board of directors authorized a $2.0 billion share repurchase program, effective May 2024 through June 2027, of which $564.8 million remains available for repurchase as of September 30, 2026. The Company's goals for the share repurchase program 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, including investments in its cloud infrastructure services.

During the three months ended September 30, 2026, the Company didnot repurchase shares of its common stock. During the nine months ended September 30, 2026, the Company repurchased 5.0 million shares of its common stock for $615.7 million.

Stock-Based Compensation

Components of total stock-based compensation included in the Company’s interim condensed consolidated statements of income for the three and nine months ended September 30, 2026 and 2025 were as follows (in thousands):

In addition to the amounts of stock-based compensation reported in the table above, the Company’s interim condensed consolidated statements of income also include stock-based compensation reflected as a component of amortization primarily consisting of capitalized internal-use software; the additional stock-based compensation was $15.9 million and $46.0 million for the three and nine months ended September 30, 2026, respectively, before taxes, and $12.6 million and $37.0 million for the three and nine months ended September 30, 2025, respectively, before taxes.

In 2026, the Company introduced a new benefit allowing retirement-eligible employees to qualify for continued vesting of all unvested equity awards post-employment, subject to the satisfaction of specified conditions. This reduced the service periods which resulted in an increase in stock-based compensation expense for the three and nine months ended September 30, 2026.

Series B Non-Voting Convertible Preferred Stock

In September 2026, the Company designated 387,051 shares of Series B Non-Voting Convertible Preferred Stock, par value $0.01 per share (the "Series B Preferred Stock"). Holders of Series B Preferred Stock have no voting rights, except as required by law. The Series B Preferred Stock ranks on parity with the Company's common stock, on an as-converted basis, as to dividends, and junior to each other series of preferred stock of the Company. Each share of Series B Preferred Stock has a liquidation preference of $0.01 per share and automatically converts into 20 shares of the Company's common stock, subject to adjustment, upon transfer to a party other than the initial holder or the initial holder’s wholly owned subsidiaries. As of September 30, 2026, no shares of Series B Preferred Stock have been issued or are outstanding.

Warrant Related to Customer Contract

In September 2026, the Company issued a warrant to purchase up to 387,051 shares (the "Warrant Shares") of Series B Preferred Stock at an exercise price of $2,226.60 per share (the "Warrant") to a customer. The Warrant has aseven-year term and the Warrant Shares vest infour tranches. The first tranche, which represents 40% of the Warrant Shares, vests upon the first payment by the customer under the commercial arrangement entered into with the customer at the same time as the Warrant. The remaining three tranches vest in equal installments of 20% as additional commercial contractual value is committed in $3.0 billion increments (a total of $9.0 billion) above the existing contracts.

As of September 30, 2026, the Company expects the first tranche of Warrant Shares to vest and has recognized the fair value of the first tranche of $149.1 million as additional paid-in capital, with a corresponding current and long-term asset included in prepaid and other current assets and other assets of $0.9 million and $148.2 million, respectively, on the interim condensed consolidated balance sheet.

The Company used the Black-Scholes option pricing model to determine the fair value of the Warrant on its issuance date. This model requires the input of subjective assumptions, including expected stock price volatility. The expected term is based on the Warrant's contractual term. Expected volatility is based on the Company’s historical stock price volatility. The risk-free interest rate for a period commensurate with the expected term of the Warrant is based on the U.S. Treasury yield rate in effect at the time of issuance. The expected dividend yield iszero, as the Company currently does not pay a dividend and does not anticipate doing so in the future.

The fair value of the Warrant was estimated using the Black-Scholes option pricing model with the following assumptions:

As of September 30, 2026, no Warrant Shares have vested or been exercised.

10. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss, net of tax, which is reported as a component of stockholders' equity, for the nine months ended September 30, 2026 were as follows (in thousands):

There were no amounts reclassified from accumulated other comprehensive loss to net income for the nine months ended September 30, 2026.

11. 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 interim condensed consolidated statements of income for the three and nine months ended September 30, 2026 and 2025 was as follows (in thousands):

Beginning with the first quarter of 2026, the Company began reporting its revenue inthree solution categories: security, delivery and other cloud applications and cloud infrastructure services. Recognizing cloud infrastructure services as a primary growth area and a significant focus of investment in the Company's cloud computing portfolio, the Company began reporting its revenue separately. Prior period amounts reported in the table below for revenue by solution category have been recast to reflect this change.

Security includes solutions that are designed to protect business online by keeping infrastructure, websites, applications, APIs, networks and users safe. Delivery and other cloud applications is comprised of delivery solutions that are designed to enable business online, including media delivery and web and mobile performance, as well as other cloud applications. Cloud infrastructure services includes compute and storage solutions, EdgeWorkers product and the compute partner solutions running on the Company's platform. Revenue by solution category included in the Company’s interim condensed consolidated statements of income for the three and nine months ended September 30, 2026 and 2025 was as follows (in thousands):

Most of the Company's solutions represent stand-ready 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 nine months ended September 30, 2026 and 2025, the Company recognized $143.5 million and $136.7 million of revenue that was included in deferred revenue as of December 31, 2025 and 2024, respectively.

As of September 30, 2026, the aggregate amount of remaining performance obligations from contracts with customers was $19.9 billion. The Company expects to recognize approximately 35% of its remaining performance obligations as revenue over the nexttwo years, approximately 28% over the next three tofour years, approximately 21% over the next five tosix years and approximately 16% over the next seven toeight years. 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 unsatisfied at the reporting date. This consists of future committed revenue for monthly, quarterly or annual periods within current noncancellable 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 nine months ended September 30, 2026 and 2025, related to performance obligations satisfied in previous periods was not material.

12. Income Taxes

The Company's effective income tax rate is based on estimated income for the year, the estimated composition of the income in different jurisdictions and discrete adjustments, if any, in the applicable quarterly periods. Potential discrete adjustments include tax charges or benefits related to stock-based compensation, changes in tax legislation, settlements of tax audits or assessments, uncertain tax positions and acquisitions, among other items.

The Company’s effective income tax rate was 16.0% and 26.4% for the nine months ended September 30, 2026 and 2025, respectively. The lower effective tax rate for the nine months ended September 30, 2026 was primarily due to an increase in the excess tax benefit related to stock-based compensation, an increase in the benefit of U.S. federal, state and foreign research and development credits and a change in the valuation allowance recorded against state credits. These amounts were partially offset by a decrease in foreign income taxed at lower rates.

For the nine months ended September 30, 2026, the 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, the excess tax benefit related to stock-based compensation, and foreign income taxed at lower rates. These amounts were partially offset by non-deductible stock-based compensation and non-deductible transfer pricing.

For the nine months ended September 30, 2025, the effective income tax rate was higher than the federal statutory tax rate due to non-deductible stock-based compensation, an increase in certain tax reserves and a shortfall in the tax benefit related to stock-based compensation. These amounts were partially offset by foreign income taxed at lower rates and the benefit of U.S. federal, state and foreign research and development credits.

In July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2026. The OBBBA did not have a material impact on the Company's interim condensed consolidated financial statements.

13. 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, warrants on common stock and warrants on preferred stock that may convert into common stock. The dilutive effect of outstanding stock awards, warrants on common stock and warrants on preferred stock is reflected in diluted earnings per share by application of the treasury stock method and the dilutive effect of the convertible senior notes is reflected in diluted earnings per share by application of the if-converted method. Upon exercise of warrants on preferred stock, the dilutive effect is reflected by application of the if-converted method.

The components used in the computation of basic and diluted net income per share for the three and nine months ended September 30, 2026 and 2025 were as follows (in thousands, except per share data):

For the three and nine months ended September 30, 2026 and 2025, 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 and warrants were excluded from the computation of diluted net income per share because the underlying market and performance conditions for such stock awards and warrants 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 three and nine months ended September 30, 2026 and 2025 was as follows (in thousands):

14. Segment Information

The Company’s chief operating decision-maker ("CODM") is the chief executive officer and the executive management team. As of September 30, 2026, the Company is currently organized and operates asone 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 interim condensed consolidated balance sheets.

Information regarding the Company'sone operating segment for the three and nine months ended September 30, 2026 and 2025 was as follows (in thousands):

(1) Other segment items includes marketing programs and related costs, third-party professional service fees, non-income related tax expense and other expenses.