Akamai Technologies, Inc. (NASDAQ: AKAM), a leading cybersecurity and cloud computing provider, announced on May 13, 2025, its proposal to offer \(1.35 billion in aggregate principal amount of convertible senior notes due 2033. This offering targets qualified institutional buyers and includes an option for initial purchasers to acquire an additional \)202.5 million in notes. The notes will feature semi-annual interest payments, maturity in 2033, and convertible terms that allow payment in cash, shares, or a combination thereof, depending on Akamai’s election.
Key financial maneuvers outlined include the intention to use net proceeds primarily to repay approximately \(250 million from outstanding borrowings under its five-year senior unsecured revolving credit facility and to address a portion of the \)1.15 billion convertible senior notes due in 2027, which Akamai had already started repaying after the first quarter using cash and credit facilities. Additionally, Akamai plans to repurchase up to $275 million of its common stock to offset dilution from convertible note conversions.
From recent disclosures, Akamai ended Q1 2025 with \(1.3 billion in cash, equivalents, and marketable securities, and had executed share repurchases totaling approximately \)500 million, reflecting the company’s commitment to shareholder value and managing equity dilution. Notably, in Q1 2025, Akamai fully repaid $1.15 billion of convertible senior notes maturing in May 2025 using funds from cash reserves and revolving credit.
Financial context from FY 2024 shows Akamai carried long-term debt totaling approximately \(2.4 billion against \)4.9 billion in shareholder equity, indicating a debt-to-equity ratio of about 0.49, a moderate leverage level for a tech infrastructure company. Operating income for FY 2024 was strong at $533 million, supporting robust interest coverage and capacity to service debt.
Akamai’s convertible note hedge and warrant transactions associated with this offering are expected to reduce dilution risks for existing shareholders. The hedge transactions allow offsetting cash payments exceeding principal conversion amounts, while warrant transactions could cause dilution only if Akamai’s common stock price surpasses warrant strike prices.
This capital raise and refinancing effort exemplify Akamai’s strategic financial management aiming to optimize its capital structure, reduce borrowing costs, and sustain growth in its cybersecurity and cloud computing segments. Such moves align with past management commentary emphasizing opportunistic share repurchases and debt management to support ongoing investments in platform reliability and cloud services scalability.
In summary, Akamai’s proposed $1.35 billion convertible notes offering, supplemented by strategic debt repayments and equity repurchases, reinforces its commitment to balanced financial engineering, shareholder value preservation, and funding innovation in cybersecurity infrastructure.
Source Document: https://sec.gov/Archives/edgar/data/1086222/000119312525118908/d942780dex991.htm
Tags: AkamaiConvertibleNotes, CybersecurityFinance, CloudComputingCapital, DebtRefinancing2025, ShareRepurchaseStrategy