Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q, particularly Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth below, and notes to our unaudited condensed consolidated financial statements included herein contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management as of the date hereof based on information currently available to our management. Use of words such as “believes,” “could,” “expects,” “anticipates,” “intends,” “plans,” “projects,” “estimates,” “forecasts,” “if,” “continues,” “goal,” “likely,” “may,” “will” or similar expressions indicates a forward-looking statement. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions. Actual results may differ materially from the forward-looking statements we make. See “Risk Factors” elsewhere in this quarterly report on Form 10-Q and in our other reports with the Securities and Exchange Commission for a discussion of certain risks associated with our business. We disclaim any obligation to update forward-looking statements as a result of new information, future events or otherwise, including the potential impact of any mergers, acquisitions, divestitures or other events that may be announced after the date hereof.

Our management’s discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q, which we have prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), for interim periods and with Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related items, including, but not limited to, revenue recognition, accounts receivable and related reserves, valuation and impairment of marketable securities, goodwill and acquired intangible assets, capitalized internal-use software development costs, impairment and useful lives of long-lived assets, income taxes and stock-based compensation. We base our estimates and judgments on historical experience and on various other assumptions that we believe to be reasonable under the circumstances at the time they are made. Actual results may differ from our estimates. See the section entitled “Application of Critical Accounting Policies and Estimates” in our annual report on Form 10-K for the year-ended December 31, 2021 for further discussion of our critical accounting policies and estimates.

Overview

We provide solutions to power and protect life online. The key factors that influence our financial success are our ability to build on recurring revenue commitments for our security and performance offerings, increase traffic on our network, continue to develop and successfully bring to market compute and compute-to-edge solutions that meet the needs of professional users and enterprises, effectively manage the prices we charge for our solutions, develop new products and carefully manage our capital spending and other expenses. The purpose of this discussion and analysis section is to provide material information relevant to an assessment of our financial condition and results of operations from management’s perspective, including to describe and explain key trends, events and other factors that impacted our reported results and that are likely to impact our future performance.

Revenue

For most of our solutions, our customers commit to contracts having terms of a year or longer, which allows us to have a consistent and predictable base level of revenue. In addition to a base level of revenue, we are also dependent on delivery customers where usage of our solutions is more variable. As a result, our revenue is impacted by the amount of traffic we serve on our network, the rate of adoption of gaming, social media and video platform offerings, the timing and variability of customer-specific one-time events and geopolitical, economic and other developments that impact our customers' businesses. Seasonal variations that impact traffic on our network, such as holiday-related activities, can cause revenue fluctuations from quarter to quarter. Over the longer term, our ability to expand our product portfolio and to effectively manage the prices we charge for our solutions are key factors impacting our revenue growth.

We have observed the following trends related to our revenue in recent years:

• Increased sales of our security solutions, led by our Guardicore segmentation solution, and more recently, increased sales of our compute solutions primarily attributable to our acquisition of Linode in the first quarter of 2022, have made a significant contribution to revenue growth. During the first half of 2022, security and compute revenue represented over half of our total revenue. We plan to continue to invest in these areas with a focus on further

enhancing our product portfolios and extending our go-to-market capabilities, particularly in certain markets and through our channel partners.

• During 2020 and in early 2021, we saw a dramatic increase in traffic growth on our network due to the shutdowns and restrictions related to the COVID-19 pandemic. While traffic on our network continues to grow as compared to prior years, the rate of traffic growth has decelerated. Our delivery revenue was negatively impacted by the deceleration, which we believe is is partly due to the rollback of COVID-19 pandemic-related restrictions. We expect slower traffic growth rates for the remainder of 2022 as we and other companies manage through a time of economic headwinds and uncertainty.

• The prices paid by some of our customers have declined in recent years due to competition and contract renewals, which negatively impacts our revenue growth rates. We have been able to mitigate some of the negative impacts to our revenue growth rates by upselling incremental solutions to our existing customers and by adding new customers. Additionally, we are taking steps to ensure that customer traffic volumes and unit pricing are aligned, and have also decided to turn away some business from a small number of customers who have extreme traffic peaks compared to their daily usage patterns.

• Revenue from our international operations has generally been growing at a faster pace over the last couple of years than from our U.S. operations, particularly in terms of new customer acquisition and cross-selling of incremental solutions. Because we publicly report in U.S. dollars, and due to the strengthening U.S. dollar, our reported revenue results have been negatively impacted during the first half of 2022. We expect to continue to be impacted by the strengthening U.S. dollar during the remainder of 2022.

• We have experienced variations in certain types of revenue from quarter to quarter. In particular, we typically experience higher revenue in the fourth quarter of each year for some of our solutions as a result of holiday season activity. In addition, we experience quarterly variations in revenue attributable to, among other things, the nature and timing of software and gaming releases by our customers; whether there are large live sporting or other events or situations that impact the amount of media traffic on our network; the timing of large customer contract renewals; and the frequency and timing of purchases of custom solutions or licensed software.

Expenses

Our level of profitability is also impacted by our expenses, including direct costs to support our revenue such as bandwidth and co-location costs, which includes energy to power our network. We have observed the following trends related to our profitability in recent years:

• Network bandwidth costs represent a significant portion of our cost of revenue. Historically, we have been able to mitigate increases in these costs by reducing our network bandwidth costs per unit and investing in internal-use software development to improve the performance and efficiency of our network. We will need to continue to effectively manage our bandwidth costs to maintain current levels of profitability.

• Co-location costs are also a significant portion of our cost of revenue. By improving our internal-use software and managing our hardware deployments to enable us to use servers more efficiently, we have been able to manage the growth of co-location costs, including minimizing the impact of rising energy costs, particularly in Europe. We expect to continue to scale our network in the future, which will allow us to continue to effectively manage our co-location costs to maintain current levels of profitability.

• Network build-out and supporting service costs represent another significant portion of our cost of revenue. These costs include maintenance and supporting services incurred as we continue to build-out and maintain our global network, and costs of third-party cloud providers used for some of our operations. We have seen these costs increase in recent years, as a result of our network expansion and increased use of third-party cloud services. As we continue to invest in our network in support of our strategic initiatives, including migrating from third-party cloud providers to Linode, we will need to effectively manage our network build-out and supporting costs.

• Our employees are core to the operations of our business, and payroll and related costs, including stock-based compensation, is one of our largest expenses. It is important to the success of operations that we offer competitive compensation packages. However, we remain disciplined in allocating our resources to support our faster growing security and compute solutions, including maintaining operational efficiencies to mitigate the rising cost of talent. We plan to continue to hire employees to support our strategic initiatives, but do not expect overall headcount to increase significantly in 2022.

• Depreciation expense related to our network equipment also contributes to our overall expense levels. In recent years we have invested in our network as traffic levels have increased, which increased our capital expenditures and resulting depreciation expense. However, our overall investment strategy in the near term is to shift away from investments in the network to support peak delivery capacity, and instead further invest in support of our faster growing security and compute solutions. As a result, in the near term, we do not expect our capital expenditures to be at the levels they have been in recent years.

• Growth in our international operations will incrementally increase our exposure to foreign currency fluctuations. Due to the strengthening U.S. dollar, our expenses that are denominated in foreign currencies have been positively impacted and partially offset the negative impact on revenue. We expect this impact on expenses to continue during the remainder of 2022.

Recent Acquisitions

In March 2022, we acquired all of the outstanding equity interests of Linode Limited Liability Company ("Linode") for $898.8 million. Linode is an infrastructure-as-a-service platform provider that allows for developer-friendly cloud computing capabilities. The acquisition is intended to enhance our computing services by enabling us to create a unique cloud platform to build, run and secure applications from the cloud to the edge. Linode had approximately 250 employees when we completed the acquisition.

In October 2021, we acquired Guardicore Ltd. ("Guardicore") for $610.4 million in cash. Guardicore's micro-segmentation solution is designed to limit user access to only those applications that are authorized to communicate with each other, thereby limiting the spread of malware and protecting the flow of enterprise data across the network. Guardicore had approximately 270 employees when we completed the acquisition, and the acquisition is expected to be dilutive to our earnings per share at least through 2022.

Remote Work

In May 2022, we launched our FlexBase program, which allows the more than 90% of our workforce designated as flexible to choose whether they want to work from an Akamai office, their home office or a combination of both. As of May 2022, all of our offices are open for employees who would prefer to work from one of our offices. We have a rigorous process for assessing whether any office can remain open, in light of the COVID-19 pandemic, based on local government regulations, local health trends and business needs.

Our operations have not been significantly disrupted by the shift to remote working. While we have incurred and expect to continue to incur expenses associated with enabling remote work, reconfiguring work spaces to help ensure the safety and well-being of employees accessing our locations and re-thinking our facility footprint and the way we utilize office space, we do not currently believe those costs will materially impact our financial condition or results of operations.

Global Developments

Since the start of 2022, several global macro-economic and geopolitical developments have emerged. These developments impacted our traffic growth rates, and as a result, our revenue growth rates. For the remainder of 2022, we anticipate they may have a significant impact on our results of operations. Specifically, we were negatively impacted by the strengthening of the U.S. dollar at the end of the first quarter of 2022, which accelerated during the second quarter and is expected to have a continuing negative impact on our revenue for the remainder of 2022. We have also experienced a decline in revenue related to the war in Ukraine. Approximately 1% of our 2021 revenue was generated from traffic we serve into Russia, Belarus and Ukraine. We have seen a decrease in traffic in these countries since the war began in late February 2022 and expect to continue to experience a decline in 2022 as compared to 2021. In addition, we, along with our customers, continue to manage through an uncertain period with escalating inflation, growing recessionary concerns and rising interest rates. Our board of directors is continuing to oversee risks related to macro-economic and geopolitical developments, including the ongoing war in Ukraine, and management is monitoring these developments, including the potential impact from the war on our business. As a result of overall macro-economic trends, growing concerns of a potential global recession and future projections of traffic consumption that suggest traffic growth will moderate as restrictions related to the COVID-19 pandemic are lifted, we anticipate our traffic will grow, but at a more moderate pace than we have experienced previously. The extent of the ongoing impact of these macro-economic events on our business and on global economic activity is uncertain and may continue to adversely affect our business, operations and financial results.

Results of Operations

The following table sets forth, as a percentage of revenue, condensed consolidated statements of income data for the periods indicated:

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2022						2021						2022						2021
Revenue			100.0		%				100.0		%				100.0		%				100.0		%
Costs and operating expenses:
Cost of revenue (exclusive of amortization of acquired intangible assets shown below)			38.4						37.5						37.6						37.0
Research and development			10.2						9.1						10.6						9.4
Sales and marketing			14.0						13.1						13.8						13.5
General and administrative			15.6						15.7						16.3						16.0
Amortization of acquired intangible assets			1.9						1.4						1.7						1.4
Restructuring charge (benefit)			0.5						(0.2)						0.7						0.3
Total costs and operating expenses			80.6						76.6						80.7						77.6
Income from operations			19.4						23.4						19.3						22.4
Interest and marketable securities (loss) income, net			(0.3)						0.6						(0.1)						0.5
Interest expense			(0.3)						(2.1)						(0.3)						(2.1)
Other income (expense), net			0.1						(0.1)						(0.5)						(0.1)
Income before provision for income taxes			18.9						21.8						18.4						20.7
Provision for income taxes			(5.7)						(2.1)						(4.7)						(1.8)
Loss from equity method investment			—						(1.3)						(0.4)						(0.7)
Net income			13.2		%				18.4		%				13.3		%				18.2		%

Revenue

Prior to January 1, 2022, revenue by solution was reported by product group: Security Technology Group and Edge Technology Group. Revenue from security solutions was previously presented as Security Technology Group revenue. Revenue from delivery and compute solutions was previously presented as Edge Technology Group revenue. The periods presented prior to January 1, 2022 have been revised to reflect this new presentation. Revenue by solution category during the periods presented was as follows (in thousands):

			For the Three Months Ended June 30,																								For the Six Months Ended June 30,
			2022						2021						% Change						% Change at Constant Currency						2022						2021						% Change						% Change at Constant Currency
Security			$	380,664					$	325,128					17.1		%				21.1		%				$	762,231					$	635,347					20.0		%				23.3		%
Delivery			416,678						466,739						(10.7)						(7.7)						860,826						940,408						(8.5)						(6.0)
Compute			105,990						60,957						73.9						77.9						183,922						119,777						53.6						56.7
Total revenue			$	903,332					$	852,824					5.9		%				9.4		%				$	1,806,979					$	1,695,532					6.6		%				9.4		%

During the three- and six-month periods ended June 30, 2022, the increase in our revenue as compared to the same periods in 2021 was primarily the result of continued strong growth in sales of solutions offered by our security solutions, in addition to growth in compute solutions. However, these increases were negatively impacted by the significant strengthening of the U.S. dollar and a decline in revenue from our delivery solutions.

The increase in security solutions revenue for the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was due to growth across our security products portfolio, including our application and application programming interfaces security portfolio and our Zero Trust Enterprise portfolio, which is led by our Guardicore segmentation solution.

The decrease in delivery solutions revenue for the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was primarily due to reductions in sales of application performance. In addition, we believe some of the decrease is attributed to macro-economic challenges our media customers are experiencing, most notably for our advertising and gaming customers.

The increase in compute solutions revenue for the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was primarily due to strong growth in compute products, including through the acquisition of Linode in the first quarter of 2022, and continued growth in cloud optimization solutions. Revenue attributable from Linode since the date of the acquisition, and included in the Company's condensed consolidated statements of income, for the three and six months ended June 30, 2022 was $32.0 million and $35.8 million, respectively.

Revenue derived in the U.S. and internationally during the periods presented was as follows (in thousands):

			For the Three Months Ended June 30,																								For the Six Months Ended June 30,
			2022						2021						% Change						% Change at Constant Currency						2022						2021						% Change						% Change at Constant Currency
U.S.			$	477,154					$	449,553					6.1		%				6.1		%				$	958,161					$	912,733					5.0		%				5.0		%
International			426,178						403,271						5.7						13.1						848,818						782,799						8.4						14.5
Total revenue			$	903,332					$	852,824					5.9		%				9.4		%				$	1,806,979					$	1,695,532					6.6		%				9.4		%

For the three-month period ended June 30, 2022, approximately 47.2% of our revenue was derived from our operations located outside the U.S., compared to 47.3% for the three-month period ended June 30, 2021. For the six-month period ended June 30, 2022, approximately 47.0% of our revenue was derived from our operations located outside the U.S., compared to 46.2% for the six-month period ended June 30, 2021. We have generally seen revenue growth across all our international regions over the prior two years. No single country outside the U.S. accounted for 10% or more of revenue during either of these periods. Changes in foreign currency exchange rates impacted our revenue by an unfavorable $29.4 million and

$47.1 million during the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021. We expect to continue to be impacted by the significant strengthening of the U.S. dollar for the remainder of 2022.

Cost of Revenue

Cost of revenue consisted of the following for the periods presented (in thousands):

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
			2022						2021						% Change						2022						2021						% Change
Bandwidth fees			$	50,863					$	54,660					(6.9)		%				$	101,945					$	107,890					(5.5)		%
Co-location fees			51,408						43,734						17.5						99,906						86,277						15.8
Network build-out and supporting services			46,417						40,822						13.7						89,336						77,256						15.6
Payroll and related costs			73,941						68,743						7.6						148,422						136,992						8.3
Acquisition-related costs			1,589						—						100.0						1,764						—						100.0
Stock-based compensation, including amortization of prior capitalized amounts			14,426						15,232						(5.3)						27,884						29,561						(5.7)
Depreciation of network equipment			66,724						55,601						20.0						128,110						107,497						19.2
Amortization of internal-use software			41,281						41,208						0.2						82,034						81,214						1.0
Total cost of revenue			$	346,649					$	320,000					8.3		%				$	679,401					$	626,687					8.4		%
As a percentage of revenue			38.4		%				37.5		%										37.6		%				37.0		%

The increase in cost of revenue for the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was primarily due to recent acquisitions, increased investment in our network, which resulted in higher depreciation costs of our network equipment, increases to expenses related to our co-location facilities including energy to power our network, increases to amounts paid for network build-out and supporting services for third-party cloud applications and increases in payroll and related costs.

During the remainder of 2022, we anticipate cost of revenues to increase, in particular supporting services for third-party cloud applications, depreciation of network equipment and payroll and related costs, due to investments in our network to support our faster growing security and compute solutions. We plan to continue to focus our efforts on managing our operating margins, including our bandwidth, co-location and network build-out costs.

Research and Development Expenses

Research and development expenses consisted of the following for the periods presented (in thousands):

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
			2022						2021						% Change						2022						2021						% Change
Payroll and related costs			$	111,377					$	112,369					(0.9)		%				$	233,625					$	225,789					3.5		%
Stock-based compensation			17,408						15,937						9.2						37,640						34,306						9.7
Capitalized salaries and related costs			(43,470)						(54,475)						(20.2)						(92,140)						(106,966)						(13.9)
Acquisition-related costs			692						—						100.0						768						—						100.0
Other expenses			6,063						3,424						77.1						12,112						6,171						96.3
Total research and development			$	92,070					$	77,255					19.2		%				$	192,005					$	159,300					20.5		%
As a percentage of revenue			10.2		%				9.1		%										10.6		%				9.4		%

The increase in research and development expenses during the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was due to a reduction in capitalized salaries as a result of a shift in resources. During the six-month period ended June 30, 2022, payroll and related costs, including stock-based compensation, also increased primarily due to headcount growth from our strategic initiatives and recent acquisitions.

Research and development costs are expensed as incurred, other than certain internal-use software development costs eligible for capitalization. Capitalized development costs consist of payroll and related costs for personnel and external consulting expenses involved in the development of internal-use software used to deliver our services and operate our network. During the three-month periods ended June 30, 2022 and 2021, we capitalized $7.6 million and $8.4 million, respectively, of stock-based compensation. During the six-month periods ended June 30, 2022 and 2021, we capitalized $14.8 million and $17.1 million, respectively, of stock-based compensation. These capitalized internal-use software development costs are amortized to cost of revenue over their estimated useful lives, which is generally two years, but can be up to seven years based on the software developed and its expected useful life.

We expect research and development costs to increase in the remainder of 2022, in particular payroll and related costs, in support of our faster growing security and compute solutions, annual merit increase and employees acquired through recent acquisitions.

Sales and Marketing Expenses

Sales and marketing expenses consisted of the following for the periods presented (in thousands):

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
			2022						2021						% Change						2022						2021						% Change
Payroll and related costs			$	91,435					$	87,955					4.0		%				$	186,296					$	181,514					2.6		%
Stock-based compensation			11,452						11,547						(0.8)						23,778						24,025						(1.0)
Marketing programs and related costs			16,133						10,297						56.7						27,691						18,747						47.7
Acquisition-related costs			692						—						100.0						768						—						100.0
Other expenses			6,953						2,095						231.9						10,851						3,962						173.9
Total sales and marketing			$	126,665					$	111,894					13.2		%				$	249,384					$	228,248					9.3		%
As a percentage of revenue			14.0		%				13.1		%										13.8		%				13.5		%

The increase in sales and marketing expenses during the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was due to increased marketing programs and related costs due to advertising and customer events held in the first half of 2022. Other expenses also increased due to travel associated with customer events and meetings and a sales recognition event during the three-month period ended June 30, 2022.

We expect sales and marketing costs to increase in the remainder of 2022 as a result of increased payroll costs due to annual merit increases. However, we plan to continue to carefully manage costs in an effort to manage our operating margins and to refine and optimize our go-to-market efforts.

General and Administrative Expenses

General and administrative expenses consisted of the following for the periods presented (in thousands):

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
			2022						2021						% Change						2022						2021						% Change
Payroll and related costs			$	52,974					$	54,974					(3.6)		%				$	106,291					$	111,424					(4.6)		%
Stock-based compensation			15,888						16,123						(1.5)						33,324						32,485						2.6
Depreciation and amortization			18,423						20,489						(10.1)						38,101						41,398						(8.0)
Facilities-related costs			26,820						24,845						7.9						53,399						49,192						8.6
Provision for doubtful accounts			529						971						(45.5)						1,817						711						155.6
Acquisition-related costs			2,798						140						1,898.6						13,414						204						6,475.5
Other expenses			23,787						16,753						42.0						48,135						35,596						35.2
Total general and administrative			$	141,219					$	134,295					5.2		%				$	294,481					$	271,010					8.7		%
As a percentage of revenue			15.6		%				15.7		%										16.3		%				16.0		%

The increase in general and administrative expenses for the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was primarily due to acquisition-related costs from our acquisition of Linode and other expenses due to an increase in professional service fees and software-related costs to support our operations.

General and administrative expenses for the three- and six-month periods ended June 30, 2022 and 2021 are broken out by category as follows (in thousands):

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
			2022						2021						% Change						2022						2021						% Change
Global functions			$	50,445					$	53,314					(5.4)		%				$	106,576					$	109,113					(2.3)		%
As a percentage of revenue			5.6		%				6.3		%										5.9		%				6.4		%
Infrastructure			87,447						79,878						9.5						172,646						160,987						7.2
As a percentage of revenue			9.7		%				9.4		%										9.6		%				9.5		%
Other			3,327						1,103						201.6						15,259						910						1,576.8
Total general and administrative			$	141,219					$	134,295					5.2		%				$	294,481					$	271,010					8.7		%
As a percentage of revenue			15.6		%				15.7		%										16.3		%				16.0		%

Global functions expense includes payroll, stock-based compensation and other employee-related costs for administrative functions, including finance, purchasing, order entry, human resources, legal, information technology and executive personnel, as well as third-party professional service fees. Infrastructure expense includes payroll, stock-based compensation and other employee-related costs for our network infrastructure functions, as well as facility rent expense, depreciation and amortization of facility and IT-related assets, software and software-related costs, business insurance and taxes. Our network infrastructure function is responsible for network planning, sourcing, architecture evaluation and platform security. Other expense includes acquisition-related costs and provision for doubtful accounts.

During the remainder of 2022, we expect payroll and related costs of our general and administrative functions to increase as compared to 2021 as a result of our annual merit increase and employees acquired through recent acquisitions, but we plan to continue to carefully manage costs in an effort to manage our operating margins.

Amortization of Acquired Intangible Assets

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
(in thousands)			2022						2021						% Change						2022						2021						% Change
Amortization of acquired intangible assets			$	16,972					$	12,060					40.7		%				$	30,616					$	23,487					30.4		%
As a percentage of revenue			1.9		%				1.4		%										1.7		%				1.4		%

The increase in amortization of acquired intangible assets for the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was the result of amortization of assets related to our recent acquisitions. Based on our intangible assets at June 30, 2022, we expect amortization of acquired intangible assets to be approximately $33.6 million for the remainder of 2022, and $61.3 million, $62.5 million, $63.3 million and $57.4 million for 2023, 2024, 2025 and 2026, respectively.

Restructuring Charge (Benefit)

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
(in thousands)			2022						2021						% Change						2022						2021						% Change
Restructuring charge (benefit)			$	4,715					$	(2,114)					(323.0)		%				$	12,731					$	5,002					154.5		%
As a percentage of revenue			0.5		%				(0.2)		%										0.7		%				0.3		%

The restructuring charge for the three-month period ended June 30, 2022 was primarily related to an impairment of a right-of-use asset for facilities that are no longer needed as a result of our FlexBase program. The restructuring charge for the six-month period ended June 30, 2022 was primarily related to software impairment charges related to the suspension of Global Open Network, Inc. ("GO-NET"). See Note 8 to the condensed consolidated financial statements for additional information. We do not expect to incur any material additional restructuring charges related to these actions.

The restructuring (benefit) charge for the three- and six-month periods ended June 30, 2021 was primarily the result of management actions initiated in late 2020 to better position us to become more agile in delivering our solutions, partially offset by the reduction of the lease obligation. The restructuring charge for this 2020 action predominately consists of certain severance and related benefits. We do not expect to incur any material additional restructuring charges related to these actions.

Non-Operating Income (Expense)

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
(in thousands)			2022						2021						% Change						2022						2021						% Change
Interest and marketable securities (loss) income, net			$	(2,331)					$	4,736					(149.2)		%				$	(2,542)					$	9,314					(127.3)		%
As a percentage of revenue			(0.3)		%				0.6		%										(0.1)		%				0.5		%
Interest expense			$	(2,932)					$	(18,037)					(83.7)		%				$	(5,627)					$	(35,871)					(84.3)		%
As a percentage of revenue			(0.3)		%				(2.1)		%										(0.3)		%				(2.1)		%
Other income (expense), net			$	816					$	(811)					(200.6)		%				$	(8,749)					$	(1,628)					437.4		%
As a percentage of revenue			0.1		%				(0.1)		%										(0.5)		%				(0.1)		%

Interest and marketable securities (loss) income, net consists of interest earned on invested cash and marketable securities balances and income and losses on mutual funds that are associated with our employee non-qualified deferred compensation plan. The decrease for the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was due to increased losses associated with the non-qualified deferred compensation plan and lower interest earned on invested cash balances and marketable securities as a result of lower marketable securities balances in 2022 due to the funding our acquisition of Linode.

Interest expense is related to our debt transactions, which are described in Note 7 to the condensed consolidated financial statements. The decrease in interest expense for the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, was primarily the result of the adoption of the new guidance for accounting for convertible senior notes on January 1, 2022 which resulted in the elimination of the amortization of debt discounts.

Other income (expense), net primarily represents net foreign exchange gains and losses mainly due to foreign exchange rate fluctuations on intercompany transactions and other non-operating expense and income items as well as gains and losses on equity investments. The three-month period ended June 30, 2022, as compared to the same period in 2021, includes a gain from an equity investment. The six-month period ended June 30, 2022, as compared to the same period in 2021, includes an $8.9 million impairment from an equity investment in 2022, partially offset by a favorable impact of changes in foreign currency exchange rates.

Provision for Income Taxes

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
(in thousands)			2022						2021						% Change						2022						2021						% Change
Provision for income taxes			$	(51,058)					$	(18,009)					183.5		%				$	(85,108)					$	(29,907)					184.6		%
As a percentage of revenue			(5.7)		%				(2.1)		%										(4.7)		%				(1.8)		%
Effective income tax rate			(29.9)		%				(9.7)		%										(25.7)		%				(8.5)		%

For the three- and six-month periods ended June 30, 2022, as compared to the same periods in 2021, our provision for income taxes increased due to an intercompany sale of intellectual property, an increase in the tax on global intangible low taxed income and a decrease in the excess tax benefit related to stock-based compensation. These amounts were partially offset by a decrease in profitability and state taxes.

For the three- and six-month periods ended June 30, 2022, our effective income tax rate was higher than the federal statutory tax rate due to an intercompany sale of intellectual property, tax on global intangible low taxed income and non-deductible stock-based compensation. These amounts were partially offset by foreign income taxed at lower rates, the excess tax benefit related to stock-based compensation and the benefit of U.S. federal, state and foreign research and development credits.

For the three- and six-month periods ended June 30, 2021, our effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates, the excess tax benefit related to stock-based compensation, the revaluation of certain foreign income tax liabilities due to foreign exchange rate fluctuations and the benefit of U.S. federal, state and foreign research and development credits. These amounts were partially offset by non-deductible stock-based compensation and state taxes.

In determining our net deferred tax assets and valuation allowances, annualized effective income tax rates and cash paid for income taxes, management is required to make judgments and estimates about domestic and foreign profitability, the timing and extent of the utilization of net operating loss carryforwards, applicable tax rates, transfer pricing methodologies and tax planning strategies. Judgments and estimates related to our projections and assumptions are inherently uncertain; therefore, actual results could differ materially from our projections.

Loss from Equity Method Investment

			For the Three Months Ended June 30,																		For the Six Months Ended June 30,
(in thousands)			2022						2021						% Change						2022						2021						% Change
Loss from equity method investment			$	—					$	(10,816)					(100.0)		%				$	(7,635)					$	(11,514)					(33.7)		%
As a percentage of revenue			—		%				(1.3)		%										(0.4)		%				(0.7)		%

The amounts reflected in loss from equity method investment relate to recognition of our share of losses from our investment with Mitsubishi UFJ Financial Group ("MUFG") in a joint venture, GO-NET. GO-NET intended to operate a blockchain-based online payment network. In February 2022, MUFG, the majority owner of GO-NET, announced it was preparing to suspend the operations of GO-NET and to ultimately liquidate it. The loss from equity method investment for the six-month period ended June 30, 2022 is the result of our impairment of our investment in GO-NET in the first quarter of 2022 since the operations are planning to wind down and no longer generate future cash flows. We do not expect additional material impacts related to this investment.

Non-GAAP Financial Measures

In addition to providing financial measurements based on GAAP, we provide additional financial metrics that are not prepared in accordance with GAAP ("non-GAAP financial measures"). Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes, to measure executive compensation and to evaluate our financial performance. These non-GAAP financial measures are non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, capital expenditures and impact of foreign currency exchange rates, as discussed below.

Management believes that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparison of financial results across accounting periods and to those of our peer companies. Management also believes that these non-GAAP financial measures enable investors to evaluate our operating results and future prospects in the same manner as management. These non-GAAP financial measures may exclude expenses and gains that may be unusual in nature, infrequent or not reflective of our ongoing operating results.

The non-GAAP financial measures do not replace the presentation of our GAAP financial measures and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.

The non-GAAP adjustments, and our basis for excluding them from non-GAAP financial measures, are outlined below:

• Amortization of acquired intangible assets** – We have incurred amortization of intangible assets, included in our GAAP financial statements, related to various acquisitions we have made. The amount of an acquisition's purchase price allocated to intangible assets and term of its related amortization can vary significantly and is unique to each acquisition; therefore, we exclude amortization of acquired intangible assets from our non-GAAP financial measures to provide investors with a consistent basis for comparing pre- and post-acquisition operating results.

• Stock-based compensation and amortization of capitalized stock-based compensation** – Although stock-based compensation is an important aspect of the compensation paid to our employees, the grant date fair value varies based on the stock price at the time of grant, varying valuation methodologies, subjective assumptions and the variety of award types. This makes the comparison of our current financial results to previous and future periods difficult to interpret; therefore, we believe it is useful to exclude stock-based compensation and amortization of capitalized stock-based compensation from our non-GAAP financial measures in order to highlight the performance of our core business and to be consistent with the way many investors evaluate our performance and compare our operating results to peer companies.

• Acquisition-related costs** – Acquisition-related costs include transaction fees, advisory fees, due diligence costs and other direct costs associated with strategic activities, as well as certain additional compensation costs payable

to employees acquired from the Linode acquisition if employed for a certain period of time. The additional compensation cost was initiated by and determined by the seller and is in addition to normal levels of compensation, including retention programs, offered by Akamai. Acquisition-related costs are impacted by the timing and size of the acquisitions, and we exclude acquisition-related costs from our non-GAAP financial measures to provide a useful comparison of operating results to prior periods and to peer companies because such amounts vary significantly based on the magnitude of our acquisition transactions and do not reflect our core operations.

• Restructuring charges** – We have incurred restructuring charges from programs that have significantly changed either the scope of the business undertaken by us or the manner in which that business is conducted. These charges include severance and related expenses for workforce reductions, impairments of long-lived assets that will no longer be used in operations (including right-of-use assets, other facility-related property and equipment and internal-use software) and termination fees for any contracts cancelled as part of these programs. We exclude these items from our non-GAAP financial measures when evaluating our continuing business performance as such items vary significantly based on the magnitude of the restructuring action and do not reflect expected future operating expenses. In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of our business.

• Amortization of debt discount and issuance costs and amortization of capitalized interest expense** – In August 2019, we issued $1,150 million of convertible senior notes due 2027 with a coupon interest rate of 0.375%. In May 2018, we issued $1,150 million of convertible senior notes due 2025 with a coupon interest rate of 0.125%. The imputed interest rates of these convertible senior notes were 3.10% and 4.26%, respectively. This is a result of the debt discounts recorded for the conversion features that, prior to January 1, 2022, were required to be separately accounted for as equity under GAAP, thereby reducing the carrying values of the convertible debt instruments. The debt discounts were amortized as interest expense. On January 1, 2022, we adopted the new guidance for accounting for convertible instruments. This new guidance eliminated separate accounting for the equity portion, and thus the amortization of the debt discount that was recorded as interest expense. Prior to January 1, 2022, we excluded this non-cash interest expense from our non-GAAP results because it was not representative of ongoing operating performance. After January 1, 2022, this interest expense is no longer included in or excluded from GAAP or non-GAAP results. Additionally, the issuance costs of the convertible senior notes are amortized to interest expense and are also excluded from our non-GAAP results because management believes the non-cash amortization expense is not representative of ongoing operating performance.

• Gains and losses on investments** – We have recorded gains and losses from the disposition, changes to fair value and impairment of certain investments. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to these gains and losses are not representative of our core business operations and ongoing operating performance.

• Legal settlements** – We have incurred losses related to the settlement of legal matters. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations.

• Endowment of Akamai Foundation** – We have incurred expenses to endow the Akamai Foundation, a private corporate foundation dedicated to encouraging the next generation of technology innovators by supporting math and science education. Our first endowment was in 2018 to enable a permanent endowment for the Akamai Foundation to allow it to expand its reach. In the fourth quarter of 2020 we supplemented the endowment to enable specific initiatives to increase diversity in the technology industry. We believe excluding these amounts from non-GAAP financial measures is useful to investors as these infrequent expenses are not representative of our core business operations.

• Income and losses from equity method investment** – We record income or losses on our share of earnings and losses from our equity method investment. We exclude such income and losses because we do not direct control over the operations of the investment and the related income and losses are not representative of our core business operations.

• Income tax effect of non-GAAP adjustments and certain discrete tax items** – The non-GAAP adjustments described above are reported on a pre-tax basis. The income tax effect of non-GAAP adjustments is the difference between GAAP and non-GAAP income tax expense. Non-GAAP income tax expense is computed on non-GAAP

pre-tax income (GAAP pre-tax income adjusted for non-GAAP adjustments) and excludes certain discrete tax items (such as recording or releasing of valuation allowances), if any. We believe that applying the non-GAAP adjustments and their related income tax effect allows us to highlight income attributable to our core operations.

The following table reconciles GAAP income from operations to non-GAAP income from operations and non-GAAP operating margin for the periods presented (in thousands):

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2022						2021						2022						2021
Income from operations			$	175,042					$	199,434					$	348,361					$	381,798
Amortization of acquired intangible assets			16,972						12,060						30,616						23,487
Stock-based compensation			51,882						50,481						108,109						104,786
Amortization of capitalized stock-based compensation and capitalized interest expense			8,068						9,840						16,015						18,438
Restructuring charge (benefit)			4,715						(2,114)						12,731						5,002
Acquisition-related costs			5,771						140						16,714						204
Non-GAAP income from operations			$	262,450					$	269,841					$	532,546					$	533,715
GAAP operating margin			19.4		%				23.4		%				19.3		%				22.5		%
Non-GAAP operating margin			29.1		%				31.6		%				29.5		%				31.5		%

The following table reconciles GAAP net income to non-GAAP net income for the periods presented (in thousands):

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2022						2021						2022						2021
Net income			$	119,537					$	156,497					$	238,700					$	312,192
Amortization of acquired intangible assets			16,972						12,060						30,616						23,487
Stock-based compensation			51,882						50,481						108,109						104,786
Amortization of capitalized stock-based compensation and capitalized interest expense			8,068						9,840						16,015						18,438
Restructuring charge (benefit)			4,715						(2,114)						12,731						5,002
Acquisition-related costs			5,771						140						16,714						204
Amortization of debt discount and issuance costs			1,091						16,460						2,210						32,717
(Gain) loss on investments			(641)						—						8,260						—
Loss from equity method investment			—						10,816						7,635						11,514
Income tax effect of above non-GAAP adjustments and certain discrete tax items			9,049						(21,428)						249						(47,774)
Non-GAAP net income			$	216,444					$	232,752					$	441,239					$	460,566

The following table reconciles GAAP net income per diluted share to non-GAAP net income per diluted share for the periods presented (in thousands, except per share data):

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2022						2021						2022						2021
GAAP net income per diluted share			$	0.74					$	0.94					$	1.47					$	1.88
Amortization of acquired intangible assets			0.10						0.07						0.19						0.14
Stock-based compensation			0.32						0.30						0.66						0.63
Amortization of capitalized stock-based compensation and capitalized interest expense			0.05						0.06						0.10						0.11
Restructuring charge (benefit)			0.03						(0.01)						0.08						0.03
Acquisition-related costs			0.04						—						0.10						—
Amortization of debt discount and issuance costs			0.01						0.10						0.01						0.20
Loss on investments			—						—						0.05						—
Loss from equity method investment			—						0.07						0.05						0.07
Income tax effect of above non-GAAP adjustments and certain discrete tax items			0.06						(0.13)						—						(0.29)
Adjustment for shares(1)			0.01						0.02						0.03						0.03
Non-GAAP net income per diluted share (2)			$	1.35					$	1.42					$	2.74					$	2.80
Shares used in GAAP per diluted share calculations			161,710						166,263						162,674						165,976
Impact of benefit from note hedge transactions(1)			(1,057)						(1,782)						(1,440)						(1,369)
Shares used in non-GAAP per diluted share calculations(1)			160,653						164,481						161,234						164,607

(1) Shares used in non-GAAP per diluted share calculations have been adjusted for the periods presented for the benefit of our note hedge transactions. During the periods presented our average stock price was in excess of $95.10, which is the initial conversion price of our convertible senior notes due in 2025. See further definition below.

(2) Amounts may not foot due to rounding.

Non-GAAP net income per diluted share is calculated as non-GAAP net income divided by weighted average common diluted shares outstanding. Diluted weighted average common shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to us pursuant to the note hedge transactions entered into in connection with the issuances of $1,150 million of convertible senior notes due 2027 and 2025, respectively. Under GAAP, shares delivered under hedge transactions are not considered offsetting shares in the fully-diluted share calculation until they are delivered. However, we would receive a benefit from the note hedge transactions and would not allow the dilution to occur, so management believes that adjusting for this benefit provides a meaningful view of operating performance. With respect to the convertible senior notes due in each of 2027 and 2025, unless our weighted average stock price is greater than $116.18 and $95.10, respectively, the initial conversion price, there will be no difference between GAAP and non-GAAP diluted weighted average common shares outstanding.

We consider Adjusted EBITDA to be another important indicator of the operational strength and performance of our business and a good measure of our historical operating trends. Adjusted EBITDA eliminates items that we do not consider to be part of our core operations. We define Adjusted EBITDA as GAAP net income excluding the following items: interest income; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; foreign exchange gains and losses; interest expense; amortization of capitalized interest expense; certain gains and losses on investments; income and losses on equity method investment; and other non-recurring or unusual items that may arise from time to time. Adjusted EBITDA margin represents Adjusted EBITDA stated as a percentage of revenue.

The following table reconciles GAAP net income to Adjusted EBITDA and Adjusted EBITDA margin for the periods presented (in thousands):

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2022						2021						2022						2021
Net income			$	119,537					$	156,497					$	238,700					$	312,192
Interest and marketable securities loss (income), net			2,331						(4,736)						2,542						(9,314)
Provision for income taxes			51,058						18,009						85,108						29,907
Depreciation and amortization			125,815						115,860						247,003						227,344
Amortization of capitalized stock-based compensation and capitalized interest expense			8,068						9,840						16,015						18,438
Amortization of acquired intangible assets			16,972						12,060						30,616						23,487
Stock-based compensation			51,882						50,481						108,109						104,786
Restructuring charge (benefit)			4,715						(2,114)						12,731						5,002
Acquisition-related costs			5,771						140						16,714						204
Interest expense			2,932						18,037						5,627						35,871
(Gain) loss on investments			(641)						—						8,260						—
Loss from equity method investment			—						10,816						7,635						11,514
Other (income) expense, net			(175)						811						489						1,628
Adjusted EBITDA			$	388,265					$	385,701					$	779,549					$	761,059
Net income margin			13.2		%				18.4		%				13.2		%				18.4		%
Adjusted EBITDA margin			43.0		%				45.2		%				43.1		%				44.9		%

Impact of Foreign Currency Exchange Rates

Revenue and earnings from our international operations have historically been important contributors to our financial results. Consequently, our financial results have been impacted, and management expects they will continue to be impacted, by fluctuations in foreign currency exchange rates. For example, when the local currencies of our foreign subsidiaries weaken, our consolidated results stated in U.S. dollars are negatively impacted.

Because exchange rates are a meaningful factor in understanding period-to-period comparisons, management believes the presentation of the impact of foreign currency exchange rates on revenue and earnings enhances the understanding of our financial results and evaluation of performance in comparison to prior periods. The dollar impact of changes in foreign currency exchange rates presented is calculated by translating current period results using monthly average foreign currency exchange rates from the comparative period and comparing them to the reported amount. The percentage change at constant currency presented is calculated by comparing the prior period amounts as reported and the current period amounts translated using the same monthly average foreign currency exchange rates from the comparative period.

Liquidity and Capital Resources

To date, we have financed our operations primarily through public and private sales of debt and equity securities and cash generated by operations. As of June 30, 2022, our cash, cash equivalents and marketable securities, which consisted of corporate bonds and U.S. government agency obligations, totaled $1.3 billion. We place our cash investments in instruments that meet high-quality credit standards, as specified in our investment policy. Our investment policy is also designed to limit the amount of our credit exposure to any one issue or issuer and seeks to manage these assets to achieve our goals of preserving principal and maintaining adequate liquidity at all times.

Changes in cash, cash equivalents and marketable securities are dependent upon changes in, among other things, working capital items such as accounts receivable, deferred revenues, accounts payable and various accrued expenses, as well as changes in our capital and financial structure due to common stock repurchases, debt repayments and issuances, purchases and sales of marketable securities and similar events. We believe our strong balance sheet and cash position are important competitive

differentiators that provide the financial stability and flexibility to enable us to continue to make investments at opportune times. We expect to continue to evaluate strategic investments to strengthen our business.

As of June 30, 2022, we had cash and cash equivalents of $329.1 million held in accounts outside the U.S. The U.S. Tax Cuts and Jobs Act establishes a territorial tax system in the U.S., which provides companies with the potential ability to repatriate earnings with minimal U.S. federal income tax impact. As a result, our liquidity is not expected to be materially impacted by the amount of cash and cash equivalents held in accounts outside the U.S.

Cash Provided by Operating Activities

			For the Six Months Ended June 30,
(in thousands)			2022						2021
Net income			$	238,700					$	312,192
Non-cash reconciling items included in net income			398,592						427,568
Changes in operating assets and liabilities			(73,410)						(111,834)
Net cash provided by operating activities			$	563,882					$	627,926

The decrease in cash provided by operating activities for the six-month period ended June 30, 2022, as compared to the same period in 2021, was primarily due to timing of income tax payments and income tax paid on an intercompany sale of intellectual property.

Cash Used in Investing Activities

			For the Six Months Ended June 30,
(in thousands)			2022						2021
Cash paid for acquisitions, net of cash acquired			$	(872,099)					$	(15,638)
Purchases of property and equipment and capitalization of internal-use software development costs			(249,526)						(319,288)
Net marketable securities activity			693,707						139,210
Other, net			(4,206)						(212)
Net cash used in investing activities			$	(432,124)					$	(195,928)

The increase in cash used in investing activities during the six-month period ended June 30, 2022, as compared to the same period in 2021, was due to cash paid for the acquisition of Linode, partially offset by an increase to net marketable securities activities since we used marketable securities to fund our acquisition of Linode in March 2022 and a decrease in purchases of property and equipment as we remain disciplined with the use of our resources to fund other areas that are less capital intensive.

Cash Used in Financing Activities

			For the Six Months Ended June 30,
(in thousands)			2022						2021
Net proceeds from borrowings and repayments under revolving credit facility			$	75,000					$	—
Activity related to stock-based compensation			(33,997)						(45,138)
Repurchases of common stock			(267,642)						(154,416)
Other, net			(104)						(67)
Net cash used in financing activities			$	(226,743)					$	(199,621)

The increase in cash used in financing activities during the six-month period ended June 30, 2022, as compared to the same period in 2021, was primarily the result of increases in share repurchases, which was partially offset by borrowings under the revolving credit facility. Effective January 2022, our board of directors authorized a new $1.8 billion share repurchase program through December 2024. As of June 30, 2022, $1.5 billion remained available for future share repurchases under this authorization. Our goal for the share repurchase program is to offset the dilution created by our employee equity compensation programs over time and provide the flexibility to return capital to stockholders as business and market conditions warrant, while still preserving our ability to pursue other strategic opportunities.

During the six-month period ended June 30, 2022, we repurchased 2.6 million shares of common stock at a weighted average price of $104.58 per share for an aggregate of $267.6 million. The timing and amount of any future share repurchases will be determined by our management based on its evaluation of market conditions and other factors.

Convertible Senior Notes

In August 2019, we issued $1,150.0 million in principal amount of convertible senior notes due 2027 and entered into related convertible note hedge and warrant transactions. We intend to use the net proceeds of the offering for share repurchases, working capital and general corporate purposes, including potential acquisitions and other strategic transactions.

In May 2018, we issued $1,150.0 million in principal amount of convertible senior notes due 2025 and entered into related convertible note hedge and warrant transactions. We used a portion of the net proceeds to repay at maturity all of our $690.0 million outstanding aggregate principal amount of convertible senior notes due in 2019.

The terms of the notes and hedge transactions are discussed more fully in Note 7 to the condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q.

Revolving Credit Facility

In May 2018, we entered into a $500.0 million, five-year revolving credit agreement ("the Credit Agreement"). Borrowings under the facility may be used to finance working capital needs and for general corporate purposes. The facility provides for an initial $500.0 million in revolving loans. Under specified circumstances, the facility can be increased to up to $1.0 billion in aggregate principal amount.

Borrowings under the Credit Agreement bear interest, at our option, at a base rate plus a spread of 0.00% to 0.25% or an adjusted LIBOR rate plus a spread of 0.875% to 1.25%, in each case with such spread being determined based on our consolidated leverage ratio specified in the Credit Agreement. Regardless of what amounts, if any, are outstanding under the Credit Agreement, we are also obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.075% to 0.15%, with such rate being based on our consolidated leverage ratio specified in the Credit Agreement.

The Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default. Principal covenants include a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio. As of June 30, 2022, we had $75.0 million of outstanding borrowings under the Credit Agreement.

Liquidity Outlook

Based on our present business plan, we expect our current cash, cash equivalents and marketable securities balances and our forecasted cash flows from operations to be sufficient to meet our foreseeable cash needs for at least the next 12 months. Our foreseeable cash needs, in addition to our recurring operating costs, include our expected capital expenditures, investments in information technology, potential strategic acquisitions, anticipated share repurchases, lease and purchase commitments, repayment of amounts outstanding under our Credit Agreement and settlements of other long-term liabilities.

Contractual Obligations

Our principal commitments consist of service agreements with various vendors for bandwidth usage, obligations under leases with co-location facilities for data center capacity, obligations under leases for office space and open vendor purchase orders. Our minimum commitments related to bandwidth usage and co-location leases may vary from period to period depending on the timing and length of contract renewals with our vendors. As of June 30, 2022, there have been no significant changes in our future non-cancelable minimum payments under these commitments from those reported in our annual report on Form 10-K for the year ended December 31, 2021, other than normal period-to-period variations.

Off-Balance Sheet Arrangements

We have entered into indemnification agreements with third parties, including vendors, customers, landlords, our officers and directors, stockholders of acquired companies, joint venture partners and third parties to which we license technology. Generally, these indemnification agreements require us to reimburse losses suffered by a third party due to various events, such as lawsuits arising from patent or copyright infringement or our negligence. These indemnification obligations are considered off-balance sheet arrangements in accordance with the authoritative guidance for guarantor’s accounting and disclosure requirements for guarantees, including indirect guarantees of indebtedness of others. See also Note 13 to our consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2021 for further discussion of these indemnification agreements. The fair value of guarantees issued or modified during the six months ended June 30, 2022 was determined to be immaterial.

As of June 30, 2022, we did not have any additional material off-balance sheet arrangements.

Significant Accounting Policies and Estimates

See Note 1 and Note 7 to the condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q for information regarding newly adopted accounting pronouncements, including our adoption of the new standard for accounting for convertible instruments. See also Note 2 to our consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2021. Except for our adoption of the new standard for accounting for convertible instruments, there have been no material changes to our significant accounting policies and estimates from those reported in our annual report on Form 10-K for the year ended December 31, 2021.