Fastly’s fourth quarter was marked by notable revenue growth and a significant improvement in profitability, leading to a strong positive reaction from the market. Management attributed this performance to robust demand in its Network Services and Security segments, with security revenue growth accelerating and new products gaining traction with enterprise clients. CEO Kip Compton emphasized the company’s ongoing focus on cross-sell opportunities and disciplined execution, citing larger customers directing more traffic to Fastly’s platform due to stability and performance benefits. He noted, “Our teams drove this success with discipline, focus and execution and we are excited to carry this momentum into 2026.”
Is now the time to buy FSLY? Find out in our full research report (it’s free for active Edge members).
Fastly (FSLY) Q4 CY2025 Highlights:
- Revenue: $172.6 million vs analyst estimates of $161.4 million (22.8% year-on-year growth, 6.9% beat)
- Adjusted EPS: $0.12 vs analyst estimates of $0.06 (significant beat)
- Adjusted Operating Income: $21.23 million vs analyst estimates of $10.16 million (12.3% margin, significant beat)
- Revenue Guidance for Q1 CY2026 is $171 million at the midpoint, above analyst estimates of $160 million
- Adjusted EPS guidance for the upcoming financial year 2026 is $0.26 at the midpoint, beating analyst estimates by 102%
- Operating Margin: -8.7%, up from -24.4% in the same quarter last year
- Net Revenue Retention Rate: 110%, up from 106% in the previous quarter
- Market Capitalization: $2.64 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 Q4 Earnings Call
- Jeff Van Rhee (Craig Hallum): Asked about the impact of agentic AI on platform traffic and customer demand. CEO Kip Compton detailed increasing machine-to-machine requests and AI workloads, viewing AI as a positive demand driver.
- Frank Louthan (Raymond James): Questioned the drivers behind improved revenue guidance and customer commitment trends. CFO Richard Wong cited improved sales alignment and deeper customer engagement from the go-to-market transformation.
- Jonathan Ho (William Blair): Inquired about early trends in agentic AI adoption among customers. Compton explained growing AI-related traffic and more nuanced customer conversations about optimizing versus blocking AI agent requests.
- Fatima Boolani (Citi): Focused on durable contributors to traffic growth and pricing discipline. Wong reported mid-single digit price erosion due to a focus on performance-oriented customers, while Compton emphasized economies of scale as key to margin expansion.
- Param Singh (Oppenheimer): Probed on security product penetration, especially for API and bot management. Wong and Compton highlighted strong adoption and upcoming portfolio enhancements targeting AI-driven workloads.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will focus on (1) the pace of enterprise security product adoption and cross-sell momentum, (2) the scale and profitability of AI-driven edge workloads, and (3) management’s ability to sustain improved pricing discipline and mitigate supply chain cost pressures. Any new product launches or expansion into additional geographies will also be monitored closely.
Fastly currently trades at $17.60, up from $9.31 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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