Akamai Technologies, Inc. (AKAM) Cash Flow Statement

The OCF/NI ratio has ranged from 2.0x to 6.8x over the last ten quarters, with the most recent quarter at 4.1x. This suggests that non-cash charges like depreciation and stock-based compensation are substantial, but the underlying cash generation is solid. The gap between net income and operating cash flow is primarily driven by D&A and SBC, which are non-cash items, indicating that reported earnings understate the company's cash-generating ability.

FCF has been volatile, with margins ranging from 5.4% to 27.3% over the past ten quarters. The recent decline to 9.1% in Q2 2026 is due to a significant increase in capex (20.5% of revenue) and a working capital outflow of $89M. Despite this, the company has generated positive FCF in every quarter, and the cumulative FCF over the period exceeds $1.7B, indicating that the business remains cash-generative even as it invests heavily in its network and compute infrastructure.

The capex-to-revenue ratio has more than doubled over the past two years, from 9.1% in Q4 2024 to 20.5% in Q2 2026. This increase aligns with management's emphasis on expanding the compute and security portfolios, which require significant infrastructure investment. While this may pressure near-term FCF, it suggests that Akamai is positioning itself for future growth in higher-margin services, though investors should monitor whether this investment yields the expected returns.

The working capital line has been a source of volatility in operating cash flow, with negative changes in four of the last five quarters. The most recent quarter saw a $89M outflow, which may reflect timing of collections or payments. However, the company's ability to maintain strong OCF despite these swings suggests that its working capital management is not a structural issue, but rather a function of the lumpy nature of its enterprise contracts.

In the last four quarters, Akamai repurchased $1.5B of shares, while generating $1.3B in FCF. This implies that the company is using balance sheet cash or debt to fund buybacks, which may be a signal of confidence in future cash flows but also increases financial risk. The company has not paid dividends, so buybacks are the primary method of returning capital, and the pace suggests a commitment to offsetting dilution from stock-based compensation, which totaled $500M over the same period.

The cumulative gap between net income and operating cash flow is $2.6B, driven by $1.5B in depreciation and $1.1B in stock-based compensation. This divergence underscores that Akamai's earnings are heavily burdened by non-cash charges, but its cash generation is robust. Investors should focus on cash flow metrics rather than net income when evaluating the company's financial health, as the cash flow statement provides a clearer picture of its ability to fund investments and return capital.