Quick Thoughts On AKAM's Convert Proposal & Post-EPS IR Catch-Up Notes

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Quick Thoughts On AKAM's Convert Proposal & Post-EPS IR Catch-Up Notes

May 19, 2026

Thinking Through the Potential Financial Impact of AKAM’s Convert Proposal

AKAM announced a proposed $2.6bn offering of 0% convertible senior notes to help fund accelerated CapEx investments within

its CIS business. The offering consists of two tranches: $1.3bn due 2030 with an approximately 40% conversion premium, and

$1.3bn due 2032 with an approximately 30% conversion premium. AKAM intends to use ~$350mn of the proceeds to repurchase

shares from note purchasers and to establish a call spread overlay, both of which are designed to help offset potential dilution

associated with the convertible notes. Following the recent landmark $1.8bn 7-yr deal, we view this financing proposal as further

evidence of the strong pipeline activity and demand visibility in CIS, which should support more sustained topline acceleration in

CY27 and beyond. Based on our post-EPS catch-up with IR last week, mgmt views the $1.8bn deal as a flagship customer win and

proofpoint for the capability and scale of its platform, which should help attract additional customers over time, despite less favorable

near-term profitability and deal economics. That said, based on our discussion, we believe the investments and costs associated

with the CIS buildout could pressure N/T op. margins, with a likely floor in the ~24-25% range. IR emphasized that AKAM is not

attempting to become a neocloud provider. Our interpretation is that AKAM rather position themselves as a hybrid “Distributed

Edge Cloud” platform.

Based on our recent industry conversations, AKAM continues to differentiate through its distributed architecture, which is well suited