In This Article:
Content delivery company Fastly (NYSE:FSLY) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 8.2% year on year to $144.5 million. Its non-GAAP loss of $0.05 per share was $0.01 above analysts’ consensus estimates.
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Fastly (FSLY) Q1 CY2025 Highlights:
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Revenue: $144.5 million vs analyst estimates of $137.9 million (8.2% year-on-year growth, 4.8% beat)
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Adjusted EPS: -$0.05 vs analyst estimates of -$0.06 ($0.01 beat)
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Adjusted EBITDA: $7.81 million vs analyst estimates of $5.13 million (5.4% margin, 52.2% beat)
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Operating Margin: -26.4%, up from -34.6% in the same quarter last year
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Free Cash Flow was $8.21 million, up from -$7.91 million in the previous quarter
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Customers: 3,035
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Net Revenue Retention Rate: 100%, down from 104% in the previous quarter
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Market Capitalization: $843.5 million
Company Overview
Founded in 2011, Fastly (NYSE:FSLY) provides content delivery and edge cloud computing services, enabling enterprises and developers to deliver fast, secure, and scalable digital content and experiences.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Fastly grew its sales at a 14.3% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, Fastly reported year-on-year revenue growth of 8.2%, and its $144.5 million of revenue exceeded Wall Street’s estimates by 4.8%.
Looking ahead, sell-side analysts expect revenue to grow 5.8% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products and services will face some demand challenges.
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Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Fastly’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 103% in Q1. This means Fastly would’ve grown its revenue by 2.7% even if it didn’t win any new customers over the last 12 months.