Summary
Fastly reported first quarter fiscal 2024 revenue of $133.5 million, up 13.6% from $117.6 million in the prior-year quarter. Gross profit rose to $73.2 million from $60.3 million, up 21.5%. Gross margin expanded to 54.8% from 51.3%, up 3.6 percentage points. The company still posted a GAAP operating loss of $46.3 million, narrower than the $47.3 million loss a year earlier. GAAP net loss narrowed to $43.4 million from $44.7 million. Diluted GAAP net loss per share was negative $0.32, compared with negative $0.36. Operating margin improved to negative 34.6% from negative 40.2%, up 5.6 percentage points. On a non-GAAP basis, operating loss was $9.7 million, compared with $14.1 million a year earlier. Non-GAAP net loss was $6.5 million, or $0.05 per share, compared with $10.8 million, or $0.09 per share. Adjusted EBITDA was $3.7 million, compared with negative $1.9 million.
Cash generation improved. Operating cash flow was $11.1 million, compared with negative $8.9 million in the prior-year quarter. Capital expenditures were $1.6 million, down 54.1% from $3.5 million. Free cash flow was negative $2.2 million, compared with negative $25.2 million. Deferred revenue was $41.1 million, up 53.7% from $26.8 million. Remaining performance obligations were $227 million, down 6.4% from $242.4 million a year earlier.
Operational metrics showed mixed customer trends. Last-twelve-month net retention rate increased to 114% from 113% in the fourth quarter of 2023. Total customer count was 3,290, up 47 from the fourth quarter of 2023. Enterprise customer count was 577, down 1 from the fourth quarter of 2023. The company released its Bot Management Solution, simplified product bundles, and added Universal Login for self-service adoption. It expanded its Next-Gen WAF with gRPC Inspection and Advanced Rate Limiting. It also launched Secret Store for its Compute platform, Edge Rate Limiting, Edge Observability, and Alerts. New deal registrations and related revenue contribution more than doubled year over year. Fastly closed more product package deals in the first quarter of 2024 than in the first half of 2023. The company said revenue was primarily from existing customers, and its 10 largest customers generated 38% of revenue in the trailing 12 months ended March 31, 2024. Affiliated customers in the streaming entertainment space generated 12% of revenue in the quarter.
Guidance points to slower near-term growth. For the second quarter of 2024, management guides non-GAAP operating loss to $16.0 million to $12.0 million and non-GAAP net loss per share to negative $0.10 to negative $0.06. For the full year 2024, it guides non-GAAP operating loss to $28.0 million to $22.0 million and non-GAAP net loss per share to negative $0.12 to negative $0.06. CEO Todd Nightingale said the company posted positive cash flow from operations but was not satisfied with the revenue growth outlook. Fastly plans continued investment in customer acquisition and go-to-market efforts to diversify its customer base and accelerate revenue growth. Risks include customer concentration, competition, data localization and cross-border data transfer rules, geopolitical conflicts, cyber-attacks, network capacity constraints, and gross margin pressure. The company expects to continue incurring operating losses for the foreseeable future.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $133.5M | $137.8M | -3.1% | $117.6M | +13.6% |
| Gross profit | $73.2M | $75.8M | -3.4% | $60.3M | +21.5% |
| Gross margin | 54.9% | 55.0% | -0.1 pp | 51.3% | +3.6 pp |
| Research & development | $38.2M | $38.3M | -0.1% | $37.4M | +2.2% |
| Sales & marketing | $49.6M | $48.7M | +1.9% | $44.3M | +12.1% |
| General & administrative | $31.6M | $31.4M | +0.7% | $25.8M | +22.5% |
| Total operating expenses | $119.5M | $118.4M | +1.0% | $107.5M | +11.1% |
| Operating income (loss) | -$46.3M | -$42.6M | -8.6% | -$47.3M | +2.1% |
| Operating margin | -34.6% | -30.9% | -3.7 pp | -40.2% | +5.6 pp |
| Net income (loss) | -$43.4M | -$23.4M | -85.7% | -$44.7M | +2.8% |
| Net margin | -32.5% | -17.0% | -15.6 pp | -38.0% | +5.5 pp |
| Diluted EPS | -$0.32 | -$0.18 | -$0.14 | -$0.36 | +$0.04 |
| Customers | 3,100 | — | — | — | — |
Risks
The 10 largest customers generated 38% of revenue in the trailing 12 months ended March 31, 2024, up from 35% in the prior-year period, and affiliated streaming entertainment customers generated 13% versus 11%. One of the largest customers in the first quarter ended March 31, 2024 operates in and has strong business ties to China, adding geopolitical exposure.
The edge cloud market is highly fragmented and competitive, with rivals including Akamai, AWS, Cloudflare, F5, Thales, Google Cloud, and Microsoft Azure. Pricing pressure, bundled offerings, and customers pursuing do-it-yourself or multi-vendor approaches could reduce demand or pricing.
Fastly has experienced DDoS attacks of significant size and severity and phishing or social engineering schemes, and its multi-tenant architecture means an attack on one customer could affect others. Nation-state and AI-enhanced threats could disrupt systems and operations.
The platform is complex and has experienced defects, interruptions, and outages, and the company has not developed redundancies for all aspects of its platform. Any failure could lead to loss of customers, service level agreement claims, and increased costs.
Enterprise sales cycles are long and unpredictable, ranging from several months to well over a year, and onboarding or ramping new enterprise customers can take several months. The company plans to continue expanding sales and marketing resources, which may not yield timely revenue.
The company relies on a limited number of suppliers for server components, and component delays, shortages, or price increases could limit capacity expansion or replacement of equipment. In the year ended December 31, 2023, it recognized $4.3 million of computer and networking equipment related write-off charges.
The remaining $346.5 million principal amount of 0% convertible senior notes matures on March 15, 2026, and holders may require repurchase upon a fundamental change. The company may lack sufficient cash or financing to repay or settle conversions, and conversion could dilute stockholders.
The company faces significant competition for sales personnel and relies on highly skilled personnel, including senior management and key employees. Failure to recruit, train, incentivize, and retain sufficient sales personnel could impair revenue growth.
Evolving data localization and cross-border data transfer laws create uncertainty for data stored abroad and transferred across borders, which could impact customer growth and acquisition for customers conducting business in Europe and elsewhere outside the United States.
Last-Twelve Months Net Retention Rate was 114.0% for the trailing twelve months ended March 31, 2024, down from 116.2% for the prior-year period. Most customer contracts are only one year in duration and many customers lack long-term financial commitments, so failure to retain and expand usage could reduce revenue.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Gross Margin
Total Customer Count
Non-GAAP Operating Loss
Remaining Performance Obligations (RPO)
Enterprise Customer Revenue %
Adjusted EBITDA
LTM Net Retention Rate
Enterprise Customer Count (>$100K ARR)
Summary, forecast, risks and KPIs are extracted from Fastly, Inc.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.