Fastly (FSLY) AI Stock Analysis

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Fastly

(NYSE:FSLY)

62Neutral

Fastly shows moderate financial performance with ongoing challenges in profitability and cash flow management, although the balance sheet remains strong. Technical indicators suggest upward momentum but caution due to potential overbought conditions. The recent earnings call was positive, highlighting revenue and customer growth, yet concerns remain over net retention rates and geopolitical risks. These factors collectively position Fastly with a score reflecting cautious optimism.

Positive Factors

Product Expansion

Fastly's security suite is now fully developed with the addition of a DDoS solution, which enhances its competitive positioning in the web security market.

Revenue Growth

Fastly reported solid results with revenue growth driven by traffic growth and market share gains in network services.

Negative Factors

Financial Challenges

The company has yet to achieve positive operating income and free cash flow, indicating financial challenges.

Macroeconomic Uncertainty

Analyst believes the revenue guidance increase could be overly optimistic due to macro uncertainty and demand volatility.

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

Market Cap

$847.86M

Dividend YieldN/A

Average Volume (3M)2.31M

Price to Earnings (P/E)―

Beta (1Y)2.23

Revenue Growth6.26%

EPS Growth-9.54%

CountryUS

Employees1,100

SectorTechnology

Sector Strength67

IndustrySoftware - Application

Share Statistics

EPS (TTM)-0.05

Shares Outstanding144,686,230

10 Day Avg. Volume1,702,147

30 Day Avg. Volume2,309,805

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.70

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit4.87

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$7.33

Price Target Upside-4.56% Downside

Rating ConsensusHold

Number of Analyst Covering9

Fastly Business Overview & Revenue Model

Company DescriptionFastly, Inc. is a global edge cloud platform provider that enables developers to build, secure, and deliver digital experiences faster. Operating within the technology and cloud computing sectors, Fastly offers a range of services including content delivery network (CDN) solutions, edge computing, image optimization, security services, and video and streaming delivery. The company's platform is designed to help businesses improve the performance, reliability, and security of their websites and applications.

How the Company Makes MoneyFastly generates revenue primarily through a usage-based pricing model, where customers are charged based on the amount of data they transfer through the network and the number of requests made to their platform. This model allows Fastly to benefit from the increasing demand for digital services, as more data means more revenue. Key revenue streams include its CDN services, which enhance the speed and reliability of web content delivery, and its edge cloud services, which allow for computation closer to the end user, reducing latency. Fastly also earns money from its security solutions that protect against cyber threats and its video and streaming services that optimize media delivery. Significant partnerships with major companies and integration with popular development platforms also contribute to its financial performance, as they help attract a diverse range of clients from various industries.

Fastly Key Performance Indicators (KPIs)

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 increase, particularly in enterprise customers, reflecting strategic efforts to diversify revenue and reduce reliance on top clients. Despite a recent dip, the overall trend is upward, supported by new product launches and geographic expansion plans. However, challenges with major customers like TikTok and declining gross margins pose risks. The company's focus on expanding in Latin America, India, and APAC, along with enhanced security offerings, is expected to drive further growth, aligning with their 2025 revenue guidance of 7% annual growth.

Data provided by:

Main Street Data

Fastly Financial Statement Overview

Summary

Fastly demonstrates moderate revenue growth but faces significant profitability challenges with ongoing operational losses and negative cash flows. The balance sheet remains robust with strong equity, yet returns on equity are negative, indicating the need for strategic improvements to enhance shareholder value.

Income Statement

―

Fastly's TTM (Trailing-Twelve-Months) revenue increased by 7.46% compared to the previous year, indicating moderate growth. However, the company reported a negative EBIT margin of -30.30% and a negative net profit margin of -29.07%, highlighting ongoing operational losses. The gross profit margin of 53.17% suggests efficiency in generating revenue, but the negative EBITDA margin of -17.84% points to challenges in achieving profitability.

Balance Sheet

Fastly maintains a healthy equity ratio of 66.50%, reflecting a strong equity position relative to its assets. The debt-to-equity ratio is moderate at 0.42, suggesting manageable leverage. However, the company posted a negative return on equity of -16.38%, indicating insufficient returns to shareholders due to consistent losses.

Cash Flow

―

Fastly experienced a positive operating cash flow to net income ratio of -0.10, indicating a slight improvement in cash generation relative to reported losses. The free cash flow to net income ratio remains negative. Free cash flow growth rate improved significantly from the previous year, but it remains negative at -73.71%, highlighting substantial cash outflows exceeding inflows.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
543.68M	505.99M	432.73M	354.33M	290.87M
	Gross Profit
295.94M	266.33M	209.78M	187.33M	170.87M
	EBIT
-167.91M	-198.03M	-246.20M	-219.02M	-107.21M
	EBITDA
-79.07M	-19.01M	-81.85M	-167.35M	-77.29M
	Net Income Common Stockholders
-158.06M	-133.09M	-190.77M	-222.70M	-95.93M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
295.88M	322.72M	517.97M	527.86M	194.18M
	Total Assets
1.45B	1.53B	1.90B	2.15B	1.16B
	Total Debt
404.66M	433.32M	833.54M	1.05B	90.53M
	Net Debt
118.48M	325.40M	690.15M	885.94M	27.63M
	Total Liabilities
486.11M	545.70M	940.96M	1.14B	158.09M
	Stockholders Equity
965.25M	979.49M	955.16M	1.01B	1.00B
Cash Flow		Free Cash Flow
15.62M	-31.91M	-149.95M	-88.87M	-59.09M
	Operating Cash Flow
16.41M	362.00K	-69.63M	-38.48M	-19.92M
	Investing Cash Flow
178.90M	294.94M	235.75M	-794.51M	-276.68M
	Financing Cash Flow
-17.10M	-331.38M	-189.15M	936.55M	274.40M

Fastly Technical Analysis

Technical Analysis Sentiment

Positive

Last Price7.68

Price Trends

50DMA

6.24

Positive

100DMA

7.86

Negative

200DMA

7.59

Positive

Market Momentum

MACD

0.18

Negative

RSI

74.62

Negative

STOCH

91.00

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 7.68 is above the 20-day moving average (MA) of 5.84, above the 50-day MA of 6.24, and above the 200-day MA of 7.59, indicating a bullish trend. The MACD of 0.18 indicates Negative momentum. The RSI at 74.62 is Negative, neither overbought nor oversold. The STOCH value of 91.00 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 (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YALA	85 Outperform	$1.10B	9.42	21.33%	―	6.52%	14.89%
VTEX	75 Outperform	$1.01B	84.95	6.26%	―	7.71%	―
VMEO	72 Outperform	$764.41M	47.59	4.29%	―	-0.05%	23.22%
DSP	66 Neutral	$937.70M	438.53	4.15%	―	30.64%	―
FSLY	62 Neutral	$847.86M	―	-15.78%	―	6.26%	-9.54%
Sector *	60 Neutral	$10.94B	10.37	-6.73%	2.98%	7.75%	-12.61%
BLND	51 Neutral	$845.67M	―	-93.00%	―	3.30%	68.45%

* Technology Sector Average

Performance Comparison

FSLY

Fastly

7.68

-0.95

-11.01%

YALA

Yalla Group

7.20

2.48

52.54%

DSP

Viant Technology

14.22

5.52

63.45%

VMEO

Vimeo

4.65

0.83

21.73%

BLND

Blend Labs

3.52

0.64

22.22%

VTEX

5.94

-0.68

-10.27%

Fastly Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 27.36%|

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.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.