Fastly, Inc. (FSLY) Stock Analysis and Metrics

Fastly

NASDAQ: FSLY

$20.23 ▲ +0.80 (+4.12%)

At close: Jul 24, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap2.98 Bn

P/E-28.95

P/S4.57

Div. Yield0.00

ROIC (Qtr)0.00

Total Debt (Qtr)323.62 Mn

Revenue Growth (1y) (Qtr)19.76

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About

Fastly, Inc. provides an edge cloud platform that enables developers to build, secure, and deliver digital experiences with low latency and high reliability. The platform combines content delivery network capabilities with security functions such as web application firewall, bot management, and DDoS protection, as well as observability tools and edge computing services. By locating its Points of Presence near major cloud providers and internet exchange points, Fastly brings computing power close to end users to improve performance for dynamic workloads. The company's programmable infrastructure allows customers to write and deploy code in a serverless environment and to manage traffic, security, and data through a unified set of APIs. Fastly’s mission is to make the Internet a better place where all experiences are fast, safe, and engaging, and it seeks to empower developers worldwide to create the next transformative digital experience on a global scale. The platform offers granular control real time visibility and immediate scalability which enables developers to iterate quickly and deploy new features without delay.

Fastly generates revenue primarily from subscription and usage fees for its edge cloud platform offerings, which include network services, security products, compute solutions, and observability tools. The company also earns income from professional services such as managed security, response security, and managed CDN engagements. For the fiscal year ended December 31 2024 revenue was $543.7 million compared with $506.0 million in 2023 and $432.7 million in 2022. Growth is driven by increased adoption of its platform by enterprises mid market firms and technology savvy organizations seeking faster secure and engaging online experiences. Fastly measures the revenue growth from existing customers using its Last Twelve Months Net Retention Rate which reflects expansion of usage and purchase of additional products and services within the installed base. A high net retention rate indicates that current customers are increasing their spend on the platform which contributes to steady revenue expansion even without acquiring new logos.

Fastly competes in a market that includes legacy CDN providers such as Akamai, application and API security vendors like Cloudflare F5 and Thales, point CDN players including Bunny CDN and CDNetworks, CDN providers that offer serverless edge compute functionality such as Akamai Linode and Cloudflare, public cloud providers that have added CDN and WAF capabilities like AWS Google Cloud Platform and Microsoft Azure, and traditional on premise appliance vendors for load balancing WAF and DDoS such as F5 Thales and Radware. The company differentiates itself by delivering a fully programmable edge cloud platform that integrates content delivery security observability and compute capabilities into a single service. Its global network of Points of Presence low latency performance real time visibility and developer friendly tools give it a competitive advantage in attracting and retaining customers who require high performance secure and scalable digital experiences. Competitive factors in the market include platform functionality scalability performance ease of use programmability reliability security global network coverage ability to support modern application development processes ability to attract and retain developers and ability to identify new markets applications and technologies.

Fastly serves a diverse range of customers across industries including established enterprises mid market companies and technology savvy organizations. Its customer base comprises digital publishers ecommerce platforms content streaming providers and other businesses that rely on fast safe and engaging online experiences. The filing notes that customers use Fastly for use cases such as real time content personalization low latency ad delivery secure API traffic management and edge compute workloads that require low latency processing. While specific customer names are not disclosed the company indicates that its users span sectors such as media gaming financial services software as a service and healthcare.

Investment Thesis

▲ Bull case

Fastly, Inc. is positioned to capitalize on the structural shift toward edge AI inference and autonomous agent traffic, which remains underappreciated by the market despite clear momentum in security and compute growth. The company’s flexible, programmable platform is uniquely suited to secure and scale AI workloads across distributed environments, as evidenced by the 67% year-over-year surge in compute revenue and the launch of products like ContentGuard and the Fastly Agent Toolkit, which directly address emerging needs in AI bot management and API security. Management’s co-innovation strategy with top-tier customers on agentic and LLM interoperability is building a robust pipeline that is not yet fully reflected in forward guidance, particularly as AI traffic grows faster than human browsing and drives demand for privacy, observability, and real-time threat mitigation. This structural tailwind is amplified by the company’s expanded security portfolio, which now includes six products beyond the core WAF, enabling wallet share expansion and cross-sell opportunities that are already contributing to LTM NRR expansion to 113% and accelerating RPO growth of 63% year-over-year. The market is underestimating how these product-led growth initiatives—particularly in security and compute—will drive higher-margin, recurring revenue streams as enterprises move from AI experimentation to production-scale edge deployment, creating a durable competitive advantage that legacy CDNs cannot replicate due to architectural limitations in distributed inference optimization. Fastly, Inc.’s profitability inflection point is being driven by structural gross margin expansion and operating leverage, which the market is overlooking due to temporary focus on CapEx timing and infrastructure spend. The company achieved record non-GAAP gross margins of 65.1% in Q1—up 780 basis points year-over-year—supported by a 190 basis point one-time benefit from server useful life alignment, but more importantly, by an incremental gross margin flow-through of 89% on a trailing twelve-month basis, up from 54% a year ago, indicating that each additional dollar of revenue is now converting to gross profit at nearly double the prior rate. This is further validated by operating margin expansion from negative 4% to positive 11% year-over-year, with incremental operating margin flow-through of 68% on a TTM basis—far exceeding the long-term target of 25% to 40%—demonstrating that scale is now translating directly into profitability without proportional cost growth. Management’s disciplined approach to infrastructure CapEx, front-loading spend to lock in current pricing amid supply chain constraints while maintaining a 10% to 12% of revenue target for 2026, ensures that capital efficiency improves as software-defined infrastructure reduces the need for redundant hardware investments. With $330 million in liquidity and positive free cash flow generation despite CapEx timing, the company is financially positioned to sustain investments in high-growth areas like security and compute without dilution risk, allowing the market to eventually recognize that Fastly’s current valuation does not reflect the quality of its earnings improvement or the sustainability of its margin expansion driven by platform efficiency and product mix shift.

Fastly, Inc. is positioned to capitalize on the structural shift toward edge AI inference and autonomous agent traffic, which remains underappreciated by the market despite clear momentum in security and compute growth. The company’s flexible, programmable platform is uniquely suited to secure and scale AI workloads across distributed environments, as evidenced by the 67% year-over-year surge in compute revenue and the launch of products like ContentGuard and the Fastly Agent Toolkit, which directly address emerging needs in AI bot management and API security. Management’s co-innovation strategy with top-tier customers on agentic and LLM interoperability is building a robust pipeline that is not yet fully reflected in forward guidance, particularly as AI traffic grows faster than human browsing and drives demand for privacy, observability, and real-time threat mitigation. This structural tailwind is amplified by the company’s expanded security portfolio, which now includes six products beyond the core WAF, enabling wallet share expansion and cross-sell opportunities that are already contributing to LTM NRR expansion to 113% and accelerating RPO growth of 63% year-over-year. The market is underestimating how these product-led growth initiatives—particularly in security and compute—will drive higher-margin, recurring revenue streams as enterprises move from AI experimentation to production-scale edge deployment, creating a durable competitive advantage that legacy CDNs cannot replicate due to architectural limitations in distributed inference optimization. Fastly, Inc.’s profitability inflection point is being driven by structural gross margin expansion and operating leverage, which the market is overlooking due to temporary focus on CapEx timing and infrastructure spend. The company achieved record non-GAAP gross margins of 65.1% in Q1—up 780 basis points year-over-year—supported by a 190 basis point one-time benefit from server useful life alignment, but more importantly, by an incremental gross margin flow-through of 89% on a trailing twelve-month basis, up from 54% a year ago, indicating that each additional dollar of revenue is now converting to gross profit at nearly double the prior rate. This is further validated by operating margin expansion from negative 4% to positive 11% year-over-year, with incremental operating margin flow-through of 68% on a TTM basis—far exceeding the long-term target of 25% to 40%—demonstrating that scale is now translating directly into profitability without proportional cost growth. Management’s disciplined approach to infrastructure CapEx, front-loading spend to lock in current pricing amid supply chain constraints while maintaining a 10% to 12% of revenue target for 2026, ensures that capital efficiency improves as software-defined infrastructure reduces the need for redundant hardware investments. With $330 million in liquidity and positive free cash flow generation despite CapEx timing, the company is financially positioned to sustain investments in high-growth areas like security and compute without dilution risk, allowing the market to eventually recognize that Fastly’s current valuation does not reflect the quality of its earnings improvement or the sustainability of its margin expansion driven by platform efficiency and product mix shift.

Product and Service Breakdown of Revenue (2025)

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Investment Thesis

Geographical Breakdown of Revenue (2025)

Product and Service Breakdown of Revenue (2025)

Peer Comparison

Research Tools

Developers

About

Investment Thesis

Geographical Breakdown of Revenue (2025)

Product and Service Breakdown of Revenue (2025)

Peer Comparison

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