Fastly 2025 Q1 Earnings Beats Expectations as Net Loss Narrows 9.9%

Fastly (FSLY) reported its fiscal 2025 Q1 earnings on May 07th, 2025, demonstrating strong growth. The company exceeded Wall Street’s revenue expectations with an 8.2% increase to $144.5 million, surpassing analyst estimates by 4.8%. Additionally, Fastly raised its 2025 revenue guidance, projecting a full-year range of $585 million to $595 million, reflecting 9% annual growth at the midpoint. The company also anticipates improved operating conditions for the remainder of the year, suggesting a positive outlook.

Revenue

Fastly's revenue for 2025 Q1 reached $144.47 million, marking an 8.2% increase from the previous year. The enterprise customer segment contributed significantly, generating $134.89 million, while the non-enterprise segment added $9.58 million to the total. This growth demonstrates the company's continued expansion and strategic focus on enterprise customers.

Earnings/Net Income

Fastly narrowed its losses, reporting a net loss of $39.15 million for 2025 Q1, a 9.9% improvement from the $43.43 million net loss recorded in 2024 Q1. The loss per share decreased to $0.27 from $0.32 per share previously, indicating positive progress in a challenging financial environment.

Price Action

The stock price of Fastly has edged up 2.55% during the latest trading day, has climbed 4.87% during the most recent full trading week, and has surged 16.86% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing Fastly (FSLY) shares following a quarter of declining revenue and holding them for 30 days has consistently yielded moderate returns over the past five years. This approach achieved an overall return of 84.26%, slightly trailing the benchmark return of 84.08%, with an excess return of 0.18%. The compound annual growth rate (CAGR) was 13.06%. Despite a maximum drawdown of -14.84% and volatility at 17.47%, the strategy effectively managed risk, offering conservative returns. This performance suggests suitability for investors seeking stability amidst market fluctuations.

CEO Commentary

Todd Nightingale, Chief Executive Officer, expressed enthusiasm over Fastly's first-quarter results, highlighting an 8% year-over-year revenue growth to $144.5 million, which exceeded guidance. He noted the success of their go-to-market transformation, emphasizing increased traffic share with enterprise customers and a robust addition of 19 new enterprise customers. Nightingale conveyed optimism regarding the strategic focus on cross-selling security products, indicating that almost half of their customers utilize multiple product lines. He acknowledged macro uncertainties but underscored a healthy demand environment, stating, “We expect to accelerate customer acquisition and capture more market share.”

Guidance

Fastly raised its 2025 revenue guidance to a range of $585 million to $595 million, reflecting 9% annual growth at the midpoint. For Q2 2025, the revenue is projected between $143 million and $147 million, suggesting a 10% year-over-year increase. The non-GAAP operating loss is expected to range from $12 million to $6 million, with a projected operating profit in the second half of the year. The company anticipates gross margins of approximately 58% for 2025, with free cash flow expected to be between negative $10 million and breakeven.

Additional News

Fastly has unveiled significant updates to its DDoS Protection service, introducing the Attack Insights capabilities for enhanced security transparency. This feature offers real-time visibility into attack mitigation, enabling security teams to validate actions and protect applications effectively. These insights include event identification for individual DDoS attacks, granular details on attack attributes, and short-lived mitigation rules. The solution offers automatic threat mitigation without requiring tuning or security expertise and provides predictable pricing with no fees for mitigated attack traffic. Additionally, Fastly's Bot Management solution has been updated with features such as Dynamic Challenges, Advanced Client-Side Detection, and Compromised Credential Checking, aiming to enhance security without disrupting user experience.