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Fastly (FSLY)
NYSE:FSLY

Fastly (FSLY) AI Stock Analysis

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Fastly

(NYSE:FSLY)

Rating:66Neutral
Price Target:
$9.00
▲(12.08%Upside)
Fastly's overall stock score reflects a mixed outlook. The company's positive earnings call and technical momentum are offset by valuation concerns and financial performance challenges. The most significant factors are the revenue growth and positive cash flow highlights from the earnings call, tempered by profitability and geopolitical risks.
Positive Factors
Customer Base
The customer base is diversifying, with non-top 10 customers growing and now accounting for a larger share of revenues, indicating broadening market appeal.
Product Diversification
Fastly is making solid progress in diversifying from the core delivery business into higher growth areas like security and emerging products, which saw significant growth.
Revenue Growth
Fastly reported solid results with revenue growth driven by traffic growth and market share gains in network services.
Negative Factors
Core Market Deceleration
The core market, which accounts for 78% of revenues, continues to decelerate, and there is skepticism about Fastly's ability to execute against the guidance.
Financial Challenges
The company has yet to achieve positive operating income and free cash flow, indicating financial challenges.
Growth Risks
The primary growth drivers for 2025 carry execution risk, particularly with GTM transitions and expansion into new markets like Asia.

Fastly (FSLY) vs. SPDR S&P 500 ETF (SPY)

Fastly Business Overview & Revenue Model

Company DescriptionFastly, Inc. is a global edge cloud platform provider that delivers content delivery network (CDN) services, edge compute, and security solutions. The company operates in the technology sector, focusing on improving internet performance and providing real-time insights for businesses. Fastly's core products include its content delivery network, which accelerates the delivery of digital content, edge cloud services that enable developers to deploy and run applications closer to end users, and security solutions that protect against cyber threats.
How the Company Makes MoneyFastly makes money primarily through a usage-based model, where customers pay for the volume of data delivered through its content delivery network. The company charges based on the amount of data transferred and the number of requests processed. Additionally, Fastly generates revenue from its edge compute and security services, which are typically priced based on the level of usage and the specific features required by the customer. Fastly has partnered with various companies to expand its service offerings, and its earnings are influenced by its ability to attract and retain customers in an increasingly competitive market for cloud and CDN services.

Fastly Key Performance Indicators (KPIs)

Any
Any
Customer Count
Customer Count
Tracks the total number of customers, providing insight into market reach and growth potential as the company attracts new clients.
Chart InsightsFastly's customer count shows a notable decline at the end of 2024, but the recent earnings call reveals resilience with 19 new enterprise customers and a 4% increase in average enterprise spend. Despite geopolitical uncertainties affecting TikTok-related revenue, Fastly's diversification strategy is paying off, with revenue outside the top 10 customers growing 17% year-over-year. The company's focus on expanding its security portfolio and emerging products, along with improved cost controls, positions it well for anticipated 9% annual growth in 2025.
Data provided by:Main Street Data

Fastly Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 33.17%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflects positive achievements in revenue growth, customer acquisition, and product expansion, with successful cost control measures leading to positive cash flow. However, challenges such as the decline in net retention rate and slower-than-expected security revenue growth, coupled with geopolitical uncertainties around TikTok, temper the optimism.
Q1-2025 Updates
Positive Updates
Revenue and Operating Loss Guidance Exceeded
Fastly surpassed the upper ends of both revenue and operating loss guidance ranges, leading to an increase in 2025 revenue guidance by $10 million and operating loss guidance by $3 million at their respective midpoints.
Positive Free Cash Flow
Fastly generated $8 million in positive free cash flow, marking progress towards breakeven for the year.
Customer and Revenue Growth
Revenue was $144.5 million, an 8% year-over-year increase. Enterprise customer count grew by 3%, and average enterprise customer spend increased by 4% quarter-over-quarter.
Diversified Revenue and Market Share Gains
Revenue outside of the top 10 customers grew 17% year-over-year. The top 10 customers represented a decreased share of total revenue, reflecting diversification.
Security and Product Expansion
Enhanced security offerings and product portfolio expansion, including AI bot detection, with a focus on cross-selling security solutions to existing customers.
Significant Growth in Compute and Emerging Products
Revenue from emerging products grew 64% year-over-year, driven primarily by compute products.
Improved Gross Margin and Cost Control
Gross margin was 57.3%, slightly better than projections. Cost controls and efficiency improvements have been implemented.
Negative Updates
Decline in Net Retention Rate
The trailing 12-month net retention rate was 100%, down from 102% in the prior quarter and 114% in the year-ago quarter, due to revenue declines with a few of the largest customers.
Security Revenue Growth Lagging
Security revenue only grew 7% year-over-year, not reflecting the potential from last year's portfolio expansion.
Conservative Guidance Due to TikTok Uncertainty
Guidance excludes U.S. TikTok revenue after June 19 due to geopolitical uncertainties, impacting revenue projections.
Company Guidance
During the Fastly First Quarter 2025 Earnings Conference Call, the company announced impressive results, exceeding the upper ends of both revenue and operating loss guidance ranges. Fastly increased its 2025 revenue guidance by $10 million and operating loss guidance by $3 million at their respective midpoints. The company reported $144.5 million in revenue, surpassing the original guidance range of $136 to $140 million, marking an 8% year-over-year growth. Fastly's gross margin was 57.3%, slightly better than anticipated, and the operating loss was $6 million, better than the guidance range of $11 million to $7 million loss. The company generated $8 million in positive free cash flow, nearing breakeven for the year. Fastly's customer count stood at 3,035, with 595 enterprise customers, and they onboarded 19 new enterprise customers with over $100,000 in annual revenue. The average enterprise customer spend increased by 4% quarter-over-quarter to $907,000. The top 10 customers accounted for 33% of revenue, down from 38% in the first quarter of 2024, while revenue outside the top 10 grew by 17% year-over-year, indicating strong diversification. Fastly also highlighted significant progress in its security portfolio, with security revenue growing 7% year-over-year. Looking ahead, Fastly anticipates a 9% annual growth for 2025, raising their prior guidance, with a cautious approach due to macro uncertainties and excluding U.S. TikTok revenue beyond June 19 from their guidance.

Fastly Financial Statement Overview

Summary
Fastly demonstrates revenue growth and a strong gross margin, yet faces challenges with profitability and cash flow, as evidenced by negative income margins and free cash flow. The balance sheet is stable with moderate leverage and a solid equity base, but improvements in operational efficiency and profitability are needed.
Income Statement
60
Neutral
Fastly's income statement shows a consistent growth in revenue over the years, with a TTM revenue of $554.63 million, marking a 2.02% increase from the previous year. However, the company is experiencing negative net income and EBIT margins, indicating profitability challenges. The gross profit margin is 53.19%, which is relatively strong, but the negative net profit margin of -27.72% suggests ongoing struggles with cost management.
Balance Sheet
70
Positive
The balance sheet reflects a healthy equity ratio of 66.05%, showing a stable capital structure dominated by equity. The debt-to-equity ratio is 0.42, which indicates a moderate level of leverage, suggesting manageable debt levels. However, the return on equity is negative at -16.06%, highlighting the impact of net losses on shareholder returns.
Cash Flow
55
Neutral
Fastly's cash flow statement reveals a negative free cash flow, though it improved from prior years. The operating cash flow to net income ratio is negative, indicating that cash generated from operations is insufficient to cover net losses. Free cash flow to net income ratio is also negative, underscoring liquidity challenges.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
217.83M543.68M505.99M432.73M354.33M290.87M
Gross Profit
121.96M295.94M266.33M209.78M187.33M170.87M
EBIT
-50.45M-167.91M-198.03M-246.20M-219.02M-107.21M
EBITDA
-28.90M-79.07M-19.01M-81.85M-167.35M-77.29M
Net Income Common Stockholders
-53.81M-158.06M-133.09M-190.77M-222.70M-95.93M
Balance SheetCash, Cash Equivalents and Short-Term Investments
67.12M295.88M322.72M517.97M527.86M194.18M
Total Assets
163.74M1.45B1.53B1.90B2.15B1.16B
Total Debt
52.23M404.66M433.32M833.54M1.05B90.53M
Net Debt
30.87M118.48M325.40M690.15M885.94M27.63M
Total Liabilities
73.78M486.11M545.70M940.96M1.14B158.09M
Stockholders Equity
89.95M965.25M979.49M955.16M1.01B1.00B
Cash FlowFree Cash Flow
-55.38M-20.81M-31.91M-149.95M-88.87M-59.09M
Operating Cash Flow
-28.41M16.41M362.00K-69.63M-38.48M-19.92M
Investing Cash Flow
-74.34M178.90M294.94M235.75M-794.51M-276.68M
Financing Cash Flow
173.84M-17.10M-331.38M-189.15M936.55M274.40M

Fastly Technical Analysis

Technical Analysis Sentiment
Positive
Last Price8.03
Price Trends
50DMA
6.64
Positive
100DMA
7.40
Positive
200DMA
7.68
Positive
Market Momentum
MACD
0.31
Negative
RSI
62.35
Neutral
STOCH
80.67
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FSLY, the sentiment is Positive. The current price of 8.03 is above the 20-day moving average (MA) of 7.67, above the 50-day MA of 6.64, and above the 200-day MA of 7.68, indicating a bullish trend. The MACD of 0.31 indicates Negative momentum. The RSI at 62.35 is Neutral, neither overbought nor oversold. The STOCH value of 80.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FSLY.

Fastly Risk Analysis

Fastly disclosed 74 risk factors in its most recent earnings report. Fastly reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Fastly Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$1.09B8.9521.03%6.40%9.72%
72
Outperform
$744.64M45.544.29%-0.05%23.22%
71
Outperform
$1.21B80.656.26%7.71%
66
Neutral
$1.17B-15.78%6.26%-9.54%
DSDSP
65
Neutral
$840.89M446.844.15%30.64%
62
Neutral
$11.93B10.60-7.51%3.00%7.40%-8.09%
57
Neutral
$925.51M-93.00%-0.40%63.36%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FSLY
Fastly
8.03
0.53
7.07%
YALA
Yalla Group
6.69
2.09
45.43%
DSP
Viant Technology
13.45
3.72
38.23%
VMEO
Vimeo
4.44
0.43
10.72%
BLND
Blend Labs
3.59
0.95
35.98%
VTEX
VTEX
6.67
-0.05
-0.74%

Fastly Corporate Events

Shareholder Meetings
Fastly Holds 2025 Annual Stockholders Meeting
Neutral
Jun 11, 2025

On June 11, 2025, Fastly, Inc. held its 2025 Annual Meeting of Stockholders, where key decisions were made regarding the election of directors, the ratification of Deloitte & Touche LLP as the independent registered public accounting firm, and the approval of executive compensation. All three directors proposed were elected to serve until the 2028 Annual Meeting, Deloitte & Touche LLP’s selection was ratified, and the executive compensation was approved on an advisory basis, reflecting shareholder support for the company’s governance and financial strategies.

The most recent analyst rating on (FSLY) stock is a Hold with a $7.00 price target. To see the full list of analyst forecasts on Fastly stock, see the FSLY Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.