Fastly’s second quarter was met with a significant positive market reaction, reflecting stronger-than-expected revenue growth and improving operating margins. Management attributed the outperformance to new customer acquisitions, effective competitive takeout strategies, and disciplined pricing. CEO Charles Compton highlighted the impact of Fastly’s expanded security offerings, which now account for a higher share of total revenue, and cited improved network efficiency as another contributor. Fastly also reported progress in diversifying its customer base, with revenue outside its top 10 customers outpacing overall growth.
Is now the time to buy FSLY? Find out in our full research report (it’s free).
Fastly (FSLY) Q2 CY2025 Highlights:
- Revenue: $148.7 million vs analyst estimates of $144.8 million (12.3% year-on-year growth, 2.7% beat)
- Adjusted EPS: -$0.03 vs analyst estimates of -$0.05 ($0.02 beat)
- Adjusted Operating Income: -$4.59 million vs analyst estimates of -$5.94 million (-3.1% margin, 22.7% beat)
- Revenue Guidance for the full year is $598 million at the midpoint, above analyst estimates of $590 million
- Adjusted EPS guidance for the full year is -$0.07 at the midpoint, beating analyst estimates by 31.7%
- Operating Margin: -24.8%, up from -35.3% in the same quarter last year
- Net Revenue Retention Rate: 104%, up from 100% in the previous quarter
- Market Capitalization: $1.01 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Fastly’s Q2 Earnings Call
- Jonathan Frank Ho (William Blair) asked if recent executive changes signal a new chapter and what opportunities management sees for faster growth. CEO Charles Compton described it as a strategic evolution, emphasizing momentum in go-to-market and product velocity as pathways to profitability.
- James Edward Fish (Piper Sandler) questioned the effectiveness of cross-sell initiatives and the durability of higher revenue commitments. Compton cited strong customer feedback and increasing use of multiple products, while CFO Ronald Kisling noted improved customer commitments due to platform expansion and sales incentives.
- Rudy Grayson Kessinger (D.A. Davidson) asked about security revenue volatility and the factors behind recent acceleration. Kisling attributed past volatility to customer concentration but emphasized current stability and new customer acquisition as the main drivers of recent growth.
- Frank Garrett Louthan (Raymond James) inquired about further management changes and strategic shifts. Compton stressed the importance of evolving leadership as the business grows but does not anticipate imminent changes beyond those announced. The focus remains on executing the existing strategy.
- Daniel Uriah Hibshman (Craig Hallum) sought specifics on product velocity and profitability priorities. Compton pointed to increased feature releases and a disciplined investment approach, while Kisling discussed sustainable improvements in cash flow from operational efficiency and customer payment discipline.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will be watching (1) how successfully Fastly expands its international footprint and leverages new leadership in key regions, (2) the pace of adoption for recently launched security and compute products among both existing and new customers, and (3) continued progress in cross-sell and upsell initiatives that drive higher customer retention and revenue diversification. Execution on operational efficiency and free cash flow generation will also serve as important indicators of Fastly’s ability to achieve sustainable profitability.
Fastly currently trades at $6.89, up from $6.51 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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