Summary
Fastly's fiscal 2026 first quarter delivered record revenue and record gross margin. Revenue in the quarter ended March 31, 2026 rose 19.8% to $173.0 million. Gross profit rose 40.9% to $108.2 million. Gross margin was 62.5%, up 9.4 percentage points from the prior-year quarter. The GAAP operating loss narrowed to $23.9 million. The net loss narrowed to $20.5 million. Diluted EPS loss narrowed to $0.13. Operating margin was -13.8%, up 12.6 percentage points. On a non-GAAP basis, gross margin was 65.1%, operating income was $19.1 million, net income was $22.9 million, and Adjusted EBITDA was $29.5 million.
Security remained the fastest-growing product line. Security revenue grew 47% year over year and represented 22% of total revenue. Network Services revenue grew 11%. Other revenue, which includes Compute and Observability, grew 67%. Large customer count was 634, up 39 from the first quarter of 2025, and large customers generated 94% of total annualized current quarter revenue. Last-twelve-months net retention rate was 113%, up from 110% in the fourth quarter of 2025. Top ten customers accounted for 34% of revenue, compared with 33% in the first quarter of 2025. Remaining performance obligations were $368.7 million, up 21.7%. Deferred revenue was $42.7 million, up 24.2%. Operating cash flow rose 67.0% to $28.9 million. Free cash flow was $4.1 million, compared with $8.2 million in the first quarter of 2025. Capital expenditures rose 706.9% to $21.0 million.
Management guided for the second quarter of 2026 to a range of $170.0 million to $176.0 million in total revenue. Non-GAAP operating income guidance for the second quarter was $12.0 million to $16.0 million. Non-GAAP net income per share guidance for the second quarter was $0.05 to $0.08. Full year 2026 guidance called for $710.0 million to $725.0 million in total revenue. Full year non-GAAP operating income guidance was $58.0 million to $68.0 million, and full year non-GAAP net income per share guidance was $0.27 to $0.33. The press release said the first quarter performance enabled the company to raise its 2026 guidance.
Product and customer activity included new Bot Management with Content Guard, enhancements to the API Security suite, expanded Compute Security offerings, and the launch of the Fastly Agent Toolkit. The company cited a multimillion dollar ARR win with a large social media platform for its full platform, a privacy-first web browser using Fastly for an in-browser VPN, a cross-sell win with a global social media provider, expansion by a digital payment conglomerate that added 10 new products and services, and a multi-national tech company selecting Fastly for network, security, and privacy offerings.
Risks remain concentrated. Top ten customers represented 34% of revenue, and the company said TikTok was one of its largest customers for the quarter. The restructuring of TikTok may affect traffic levels. Fastly also noted dependence on media and entertainment customers, international expansion costs, and higher bandwidth costs outside the United States and Europe. It flagged supply chain risks, potential tariffs, component delays, global conflicts, and cyber attacks. The company said it may continue to incur operating losses. The 2026 Notes matured and were repaid in full during the quarter, leaving the 2028 Notes and 2030 Notes outstanding. Fastly expects total operating expenses to increase as it expands. The company said it believes its cash and cash equivalents balances, available borrowing capacity, and cash flows from operations will be sufficient to satisfy anticipated cash needs for working capital and capital expenditures for at least the next 12 months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $173.0M | $172.6M | +0.2% | $144.5M | +19.8% |
| Gross profit | $108.2M | $106.0M | +2.1% | $76.8M | +40.9% |
| Gross margin | 62.5% | 61.4% | +1.1 pp | 53.2% | +9.4 pp |
| Research & development | $42.0M | $41.6M | +0.9% | $37.4M | +12.1% |
| Sales & marketing | $55.1M | $51.0M | +8.0% | $49.3M | +11.8% |
| General & administrative | $35.0M | $28.4M | +23.0% | $28.2M | +23.9% |
| Total operating expenses | $132.1M | $121.0M | +9.1% | $115.0M | +14.9% |
| Operating income (loss) | -$23.9M | -$15.1M | -58.3% | -$38.2M | +37.4% |
| Operating margin | -13.8% | -8.7% | -5.1 pp | -26.4% | +12.6 pp |
| Net income (loss) | -$20.5M | -$15.5M | -32.4% | -$39.1M | +47.6% |
| Net margin | -11.9% | -9.0% | -2.9 pp | -27.1% | +15.2 pp |
| Diluted EPS | -$0.13 | -$0.11 | -$0.02 | -$0.27 | +$0.14 |
Risks
TikTok was one of Fastly's largest customers for the three months ended March 31, 2026 and remains a customer, and the company does not know how ByteDance's January 22, 2026 TikTok USDS Joint Venture restructuring may impact traffic levels. The 10 largest customers generated 32% of revenue for the trailing 12 months ended March 31, 2026.
Component delays, shortages, or price increases could interrupt construction of servers or POPs and limit capacity expansion. The filing highlights U.S. tariffs, retaliatory counter-tariffs, and trade disputes as factors that may increase production costs and disrupt the supply chain.
The market for AI solutions is evolving rapidly, and Fastly may not succeed in its AI initiatives or competitors may incorporate AI into their products more successfully. AI-driven demand may also increase network capacity needs and server expenses, and the company may face challenges securing necessary infrastructure or talent.
Fastly has experienced DDoS attacks of significant size and severity, phishing and social engineering schemes, and cyber-attacks from parties believed to be government-sponsored. A security incident could disrupt its multi-tenant platform, affect many customers simultaneously, and lead to regulatory investigations, litigation, fines, and reputational harm.
Fastly may not have enough available cash or be able to obtain financing to repay or settle conversions of its 2028 Notes and 2030 Notes, or to repurchase Notes upon a fundamental change. The 2026 Notes matured and were repaid in full during the quarter ended March 31, 2026, and the remaining Notes mature in 2028 and 2030.
Failure to efficiently develop and sell new products and respond to rapidly changing technology, evolving industry standards, and changing customer needs could make its products less competitive. The filing specifically notes AI-related product challenges and that its platform relies on VCL, which potential developers may be unfamiliar with or opposed to using.
Future sales or issuances of capital stock could substantially dilute existing stockholders, and the company may issue approximately 19.8 million shares if the Notes convert. The filing also notes that future sales of common stock could depress the market price and impair its ability to raise capital.
Sales to large customers may involve longer sales cycles due to competitive purchasing processes, formal approval processes, and complex requirements. Most customer contracts are only one year in duration, and many customers, including some large customers, do not have long-term contractual financial commitments and can reduce or cease usage at any time without penalty.
Fastly and certain officers are defendants in a putative securities class action and related stockholder derivative lawsuits. The court granted in part and denied in part the motion to dismiss, a second amended complaint was filed, and the company is awaiting a ruling on the motion to dismiss the second amended complaint.
The failure to attract and retain qualified personnel, including senior management and key employees, could prevent Fastly from executing its business strategy. The company also faces significant competition for sales personnel with the required skills and technical knowledge.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Gross Margin
Remaining Performance Obligations (RPO)
Top Ten Customer Revenue %
GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from Fastly, Inc.'s SEC filings for Q1 FY2026 (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 2, 2026.