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Fastly, Inc (FSLY)
:FSLY
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Fastly
(NYSE:FSLY)48Neutral
Positive Factors
Business 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.
Customer Base Growth
The customer base is diversifying, with non-top 10 customers growing and now accounting for a larger share of revenues, indicating broadening market appeal.
Negative Factors
Convertible Debt Refinancing
Fastly needs to refinance $340M convertible debt within the next nine months, which requires disciplined pricing and expense management.
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.
Profitability Challenges
Expansion into new markets might pressure margins further, delaying Fastly's pathway to profitability, an important milestone for investors.
Fastly (FSLY) vs. S&P 500 (SPY)
Market Cap
$939.18M
Dividend YieldN/A
Average Volume (3M)3.63M
Price to Earnings (P/E)―
Beta (1Y)2.60
Revenue Growth7.45%
EPS Growth-10.76%
CountryUS
Employees1,207
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)-1.15
Shares Outstanding142,300,000
10 Day Avg. Volume3,379,977
30 Day Avg. Volume3,627,570
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.73
Price to Cash Flow (P/CF)45.00
P/FCF Ratio38.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$7.93Price Target Upside13.45% Upside
Rating ConsensusHold
Number of Analyst Covering8
Fastly Business Overview & Revenue Model
Company DescriptionFastly, Inc. provides real-time content delivery network services. It offers edge cloud platform, edge software development kit (SDK), content delivery and image optimization, video and streaming, cloud security, load balancing, and managed CDN. The company was founded by Artur Bergman, Simon Wistow, and Gil Penchina in March 2011 and is headquartered in San Francisco, CA.
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 Financial Statement Overview
Summary
Fastly shows moderate revenue growth but struggles with operational losses and negative cash flows. The balance sheet is robust with strong equity, but returns on equity are negative, suggesting a need for strategic improvements. Debt levels are manageable, but enhancing cash flow management is essential for long-term stability.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.55
Neutral
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.60
Neutral
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.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| 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
Negative
6.99
Price Trends
9.15
Negative
8.66
Negative
7.93
Negative
Market Momentum
-0.83
Positive
35.14
Neutral
20.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FSLY, the sentiment is Negative. The current price of 6.99 is below the 20-day moving average (MA) of 8.13, below the 50-day MA of 9.15, and below the 200-day MA of 7.93, indicating a bearish trend. The MACD of -0.83 indicates Positive momentum. The RSI at 35.14 is Neutral, neither overbought nor oversold. The STOCH value of 20.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $2.16T | 37.73 | 24.29% | ― | 10.99% | 91.61% | |
67 Neutral | $12.35B | 25.18 | 10.35% | ― | 4.70% | -7.33% | |
67 Neutral | $48.63B | ― | -8.71% | ― | 28.76% | 58.13% | |
60 Neutral | $2.49B | ― | 16.58% | ― | 8.99% | 63.84% | |
59 Neutral | $2.86B | ― | -35.48% | ― | 4.75% | -736.54% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
48 Neutral | $939.18M | ― | -16.25% | ― | 7.45% | -10.76% |
* Technology Sector Average
Performance Comparison
FSLY
Fastly
6.99
-6.22
-47.09%
VNET
VNET Group, Inc. Sponsored ADR
12.47
10.89
689.24%
AKAM
Akamai
82.82
-27.34
-24.82%
AMZN
Amazon
208.36
34.85
20.09%
RNG
RingCentral
27.97
-4.32
-13.38%
NET
Cloudflare
143.75
46.26
47.45%
Fastly Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -30.59% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
Fastly's earnings call presented a mixed picture with record revenue and improved cash flow, but also highlighted ongoing challenges with operating losses and gross margin declines. The company is making strides in revenue diversification and product innovation, but uncertainties with major customers like TikTok pose risks.Highlights
Record Fourth Quarter Revenue
Fastly reported record fourth quarter revenue of $140.6 million, exceeding the guidance range of $136 million to $140 million. This represented a 2% growth both year-over-year and quarter-over-quarter.
Revenue Diversification
Revenue from top 10 customers dropped from 33% in Q3 to 32% in Q4, down from 40% at the end of 2023. Revenue outside of the top 10 customers grew 16% year-over-year in Q4.
Enterprise Customer Growth
Fastly's enterprise customer count grew 3% year-over-year and quarter-over-quarter, reaching 596 enterprise customers.
Improved Cash Flow
Cash from operations increased from $400,000 in 2023 to $16 million in 2024. Cash flow burn was reduced from $59 million in 2023 to $36 million in 2024.
New Product Launches
Fastly announced several new products including AI Accelerator and Fastly's Object Storage. These innovations are aimed at enhancing performance and reducing costs for customers.
Lowlights
Operating Loss
Fastly reported an operating loss of $4.2 million in Q4, within the guidance range but still a loss.
Decline in Gross Margin
Gross margin was 56.5% in Q4, down from 59.2% in Q4 2023, attributed to increased bandwidth costs and a higher mix of international traffic.
Challenges with Largest Customers
The decline in the top 10 customer concentration was partly due to revenue declines from a few of Fastly's largest customers in prior quarters.
TikTok Revenue Concerns
The 2025 guidance excludes revenue from U.S. traffic with TikTok due to legislative uncertainties, impacting revenue visibility.
Company Guidance
During the Fastly Fourth Quarter 2024 Earnings Conference Call, CEO Todd Nightingale and CFO Ron Kisling provided guidance for 2025, highlighting several key metrics and strategic initiatives. Fastly reported record fourth-quarter revenue of $140.6 million, exceeding their guidance range of $136 million to $140 million, marking a 2% year-over-year growth. They noted a 7% annual revenue growth for 2024, with a total of $544 million, despite facing headwinds from some large customers. The company reduced its top 10 customer concentration from 40% at the end of 2023 to 32% in the fourth quarter of 2024, while revenue outside the top 10 grew 16% year-over-year. Fastly's operating loss for the quarter was $4.2 million, within the guidance range of $1 million to $5 million. They projected a 7% annual revenue growth for 2025, aiming for $575 million to $585 million, while targeting double-digit growth with improved sales strategies. The company is focusing on expanding its geographic presence, particularly in Latin America, India, and APAC, and enhancing its security offerings, with security revenue growing 17% year-over-year when normalized for a prior true-up payment. Fastly also reported an increase in enterprise customers, with 596 at the end of Q4, and plans to continue refining its sales strategies and compensation structures to drive new logo acquisition and cross-selling opportunities.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.