Summary
Fastly reported second quarter fiscal 2026 revenue of $183.3 million, up 23.3% from the prior-year quarter. GAAP gross margin expanded to 63.3%, up 8.7 percentage points. The GAAP operating loss narrowed to $14.4 million from $36.9 million. The GAAP net loss narrowed to $15.6 million from $37.5 million, and diluted GAAP loss per share narrowed to -$0.10 from -$0.26. Non-GAAP operating income was $27.0 million, against a loss of $4.6 million a year earlier. Non-GAAP net income was $26.2 million, against a loss of $5.0 million. Adjusted EBITDA was $38.1 million, compared with $8.9 million. For the six months, revenue was $356.3 million, up 21.5%, and GAAP gross margin was 62.9%, up 9.0 percentage points. The year-to-date GAAP operating loss narrowed to $38.3 million from $75.1 million, the year-to-date GAAP net loss narrowed to $36.1 million from $76.7 million, and year-to-date diluted GAAP loss per share narrowed to -$0.23 from -$0.53.
Operating metrics were mixed. Remaining performance obligations were $340.9 million, up 8.2% from the prior-year quarter. Deferred revenue was $36.2 million, down 12.8%. Last-twelve-month net retention rate rose to 117.2% from 104.4%, the highest level in over three years. Large customer count was 624, against 622 a year ago. Customer concentration is a live issue: the top ten customers accounted for 37% of revenue, versus 31% in the prior-year quarter. Management pointed to AI traffic growth, a Skyfire partnership for trusted commerce at the edge, a joint anti-piracy effort with LALIGA, and a C++ SDK for Fastly Compute. Much of the revenue base is usage-based Network Services, and the customer mix leans toward media and entertainment, both of which can swing results.
Cash generation improved even as investment rose. Operating cash flow was $39.3 million, up 52.5% from the prior-year quarter, and year-to-date operating cash flow was $68.2 million, up 58.3%. Capital expenditures were $31.6 million, up 221.0%, and year-to-date capital expenditures were $52.6 million, up 322.6%. Free cash flow, a non-GAAP measure that nets capital spending against operating cash flow, fell to $3.6 million from $10.9 million in the prior-year quarter. The company also repaid the remaining balance of its 2026 Notes during the six months.
Guidance for the third quarter of fiscal 2026 calls for non-GAAP operating income of $20.0 million to $24.0 million and non-GAAP net income per share of $0.11 to $0.13. For the full fiscal year 2026, the company guided to non-GAAP operating income of $88.0 million to $96.0 million and non-GAAP net income per share of $0.50 to $0.54. Both periods also carry revenue guidance. The per-share figures assume weighted average diluted shares of 181.4 million for the third quarter and 180.3 million for the full year. Fastly notes that a reconciliation of the non-GAAP guidance to the comparable GAAP measures is not available without unreasonable effort because future expenses cannot be predicted. The CEO said the platform strategy is driving business momentum and that the results gave the company confidence to raise its full-year outlook.
The risk list is familiar but real. Management flagged global conflicts, including the conflict between Russia and Ukraine and conflicts in the Middle East, and the heightened threat of cyber-attacks during such periods. Fastly has no points of presence in Russia, Ukraine, Iran, or Israel. Tariffs, trade disputes, and supply chain delays could raise hardware costs or delay server capacity. Bandwidth costs are higher outside the United States and Europe, which can pressure gross margin. Data localization and data sovereignty rules add uncertainty for international customers, and expanding the sales organization will raise total operating expenses. Management also warned that it may keep incurring operating losses and that gross margin can move with network utilization, customer pricing, and the timing of infrastructure spending.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $183.3M | $173.0M | +6.0% | $148.7M | +23.3% |
| Gross profit | $116.0M | $108.2M | +7.2% | $81.1M | +42.9% |
| Gross margin | 63.3% | 62.5% | +0.7 pp | 54.5% | +8.7 pp |
| Research & development | $42.1M | $42.0M | +0.2% | $42.2M | -0.4% |
| Sales & marketing | $56.7M | $55.1M | +2.9% | $51.1M | +11.0% |
| General & administrative | $31.6M | $35.0M | -9.8% | $24.3M | +29.8% |
| Total operating expenses | $130.4M | $132.1M | -1.3% | $118.1M | +10.4% |
| Operating income (loss) | -$14.4M | -$23.9M | +39.6% | -$36.9M | +60.9% |
| Operating margin | -7.9% | -13.8% | +5.9 pp | -24.8% | +17.0 pp |
| Net income (loss) | -$15.6M | -$20.5M | +24.0% | -$37.5M | +58.5% |
| Net margin | -8.5% | -11.9% | +3.4 pp | -25.2% | +16.7 pp |
| Diluted EPS | -$0.10 | -$0.13 | +$0.03 | -$0.26 | +$0.16 |
| Net retention rate | 117.0% | — | — | — | — |
Risks
The 10 largest customers accounted for 37% of revenue for the three months ended June 30, 2026, up from 31% for the three months ended June 30, 2025, and one customer accounted for 11% of revenue in the quarter and 10% for the six months ended June 30, 2026. Revenue remains concentrated in a limited number of industries such as media and entertainment, so the loss of or reduced usage by a major customer would lower revenue.
Fastly relies on a limited number of suppliers for server and POP components and warns that component delays, shortages, or price increases, including from tariffs and retaliatory counter-tariffs, could interrupt capacity expansion. Rising AI-driven demand for network capacity and higher energy prices could raise server and POP operating costs, and excess capacity has previously required write-offs, including $0.4 million of equipment, internal-use software, and right-of-use asset charges in the year ended December 31, 2025.
The market for AI solutions is evolving rapidly and Fastly may not succeed in its AI initiatives if competitors incorporate AI into their products or market AI solutions more successfully. The filing cites specific challenges including a lack of talented personnel, inability to secure necessary infrastructure, and the risk that AI products it uses or develops may not deliver intended value.
Sales to large enterprise customers involve longer sales cycles, competitive purchasing processes, and more formal approvals, and most customers, including some of the largest, have no long-term contractual financial commitments and can reallocate usage or leave with little notice. Deferred revenue was $36.24 million in FY2026 Q2, down 12.8% versus the prior-year quarter, and the company notes that negotiated lower rates can reduce revenue even when usage has not declined.
The 2028 Notes and 2030 Notes require cash repayment or repurchase upon a fundamental change, and if the stock price is below the conversion price holders likely will not convert, forcing cash repayment. Conversion could dilute stockholders by approximately 19.4 million shares, and the company may lack sufficient cash or financing capacity at the time repayment is required.
Fastly has experienced DDoS attacks of significant size and severity and cyber-attacks from parties it believes are sponsored by government actors, and its multi-tenant architecture means an attack on one customer can affect others. The filing also flags emerging AI-facilitated threats such as prompt injection and AI model inversion attacks, plus ransomware and supply-chain attacks.
A putative securities class action filed in May 2024 remains unresolved, with a second amended complaint filed October 24, 2025 and a motion to dismiss pending after an April 30, 2026 hearing was vacated. Multiple stockholder derivative complaints, including one filed June 29, 2026, have been filed based on substantially similar allegations and stayed pending resolution of the securities action.
The trading price of the common stock has been highly volatile, ranging from $34.82 to $7.87 per share from January 1, 2026 to July 31, 2026, after trading as high as $12.59 and as low as $4.65 during the year ended December 31, 2025. Volatility is tied to factors including usage decreases by customers, variance from analyst expectations, and network outage publicity.
Fastly cites significant competition for sales representatives, sales managers, and sales engineers with the required technical knowledge, and states that new hires require significant training and may take significant time to reach full productivity. Failure to hire, train, and retain effective sales personnel would impair revenue growth.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Gross Margin
Remaining Performance Obligations (RPO)
Adjusted EBITDA
LTM Net Retention Rate (LTM NRR)
Summary, forecast, risks and KPIs are extracted from Fastly, Inc.'s SEC filings for Q2 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.