Summary
Fastly posted third-quarter revenue of $158.2 million, up 15.3% from the prior-year quarter. Gross profit rose 23.5% to $92.3 million, and gross margin expanded to 58.4%, up 3.9 percentage points. The GAAP operating loss narrowed 29.1% to $28.8 million. The GAAP net loss narrowed 22.4% to $29.5 million, and the diluted loss per share narrowed 25.9% to $0.20. The company also reported non-GAAP operating income of $11.6 million, compared with $0.8 million in the prior-year quarter, and non-GAAP net income of $11.1 million, compared with $3.8 million. Management described the quarter as one with record revenue and record cash from operations.
Cash generation improved sharply. Operating cash flow was $28.9 million, up 478.2% from the prior-year quarter. Capital expenditures were $6.0 million, up 202.9%. Free cash flow, a non-GAAP measure, was $18.1 million, compared with negative $7.1 million in the third quarter of 2024. Deferred revenue ended the quarter at $40.0 million, up 23.1%. Remaining performance obligations were $268.0 million, up 13.8% from the prior-year quarter. Those figures suggest Fastly is converting more of its revenue into cash while building a larger backlog. The company said it believes cash, cash equivalents, available borrowing capacity and operating cash flows will cover anticipated needs for at least the next twelve months.
Operational metrics were mixed. Enterprise customer count was 627, up 51 from the third quarter of 2024. Total customer count was 3,223, down 415 over the same period. Last-twelve-month net retention rate rose to 106% from 104% in the second quarter of 2025. The top ten customers accounted for 32% of revenue, compared with 33% in the prior-year quarter. Enterprise customers generated 94% of total annualized current quarter revenue, and usage on the platform drove approximately 96% of revenue in the quarter. Fastly said existing customers drove growth, with new customers contributing less than 10% of revenue. Security products and cross-selling did the heavy lifting, and the company shipped API Discovery, a deception capability in its Next-Gen WAF, DDoS Precise Defense, and the Fastly Model Context Protocol Server. It also published a Sustainability Dashboard and a threat insights report on AI bot traffic.
Guidance points to more growth. For the fourth quarter, management guided non-GAAP operating income of $8.0 million to $12.0 million and non-GAAP net income per share of $0.04 to $0.08. For the full fiscal year 2025, the company guided non-GAAP operating income of $9.0 million to $13.0 million and non-GAAP net income per share of $0.03 to $0.07. The outlook also covers total revenue for both the fourth quarter and the full year. No reconciliation of the forward-looking non-GAAP measures to GAAP is provided, because the company says the uncertain expenses involved cannot be predicted without unreasonable effort.
Risks remain. Fastly noted that TikTok was one of its largest customers in the three and nine months ended September 30, 2025, and that U.S. legislation could eventually reduce TikTok's U.S. traffic levels. The company also flagged higher bandwidth costs outside the United States and Europe, potential supply chain disruption from tariffs, data localization rules, and competition for sales talent. Interest expense rose primarily on coupon interest tied to the 2028 Notes. Fastly recorded restructuring charges in the prior-year quarter and none in 2025. Management expects operating losses to continue for the foreseeable future and plans to keep investing in the platform and network, a spending path that could pressure gross margins if costs outrun revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $158.2M | $148.7M | +6.4% | $137.2M | +15.3% |
| Gross profit | $92.3M | $81.1M | +13.8% | $74.7M | +23.5% |
| Gross margin | 58.4% | 54.5% | +3.8 pp | 54.5% | +3.9 pp |
| Research & development | $41.4M | $42.2M | -1.9% | $31.9M | +29.9% |
| Sales & marketing | $50.0M | $51.1M | -2.2% | $46.0M | +8.7% |
| General & administrative | $29.7M | $24.3M | +22.1% | $27.2M | +9.3% |
| Total operating expenses | $121.1M | $118.1M | +2.6% | $115.3M | +5.0% |
| Operating income (loss) | -$28.8M | -$36.9M | +22.1% | -$40.6M | +29.1% |
| Operating margin | -18.2% | -24.8% | +6.6 pp | -29.6% | +11.4 pp |
| Net income (loss) | -$29.5M | -$37.5M | +21.5% | -$38.0M | +22.4% |
| Net margin | -18.6% | -25.2% | +6.6 pp | -27.7% | +9.1 pp |
| Diluted EPS | -$0.20 | -$0.26 | +$0.06 | -$0.27 | +$0.07 |
| Customers | 3,223 | 3,097 | +4.1% | 3,102 | +3.9% |
Risks
A substantial portion of revenue comes from a limited number of customers and industries. The 10 largest customers generated 32% of revenue in the trailing 12 months ended September 30, 2025, compared with 35% in the prior-year period, and TikTok was one of the largest customers for the three and nine months ended September 30, 2025. U.S. legislation could eventually reduce TikTok's U.S. traffic, and non-enforcement was extended to January 23, 2026 pending a proposed divestiture.
The remaining 2026 Notes with $188.6 million aggregate principal mature on March 15, 2026, and interest expense increased 568% to $3.2 million for the three months ended September 30, 2025 due to coupon interest on the 2028 Notes. The company may not have enough cash or be able to obtain financing to repay or settle conversions.
The company has identified a material weakness in internal control over financial reporting. If unable to remediate and maintain effective controls, investors may lose confidence in the accuracy and completeness of financial reports and the market price of common stock may be seriously harmed.
The company is defending a putative securities class action and multiple stockholder derivative lawsuits. On September 24, 2025, the court granted in part and denied in part the motion to dismiss, and a second amended complaint was filed on October 24, 2025, with further briefing scheduled into 2026.
Component delays, shortages, or price increases could interrupt server construction and network capacity expansion. The company relies on a limited number of suppliers, and international trade disputes and tariffs may disrupt or delay the supply chain or raise production costs. In 2024, it recognized $4.1 million of equipment, internal-use software, and right-of-use asset write-off charges.
Failure to effectively develop and expand marketing and sales capabilities could harm customer base growth. The company plans to continue expanding its sales force and strategic partners, and there is significant competition for sales personnel with the required skills and technical knowledge.
The company relies on highly skilled personnel, including senior management and key employees, and the loss or transition of one or more such personnel could harm the business. General and administrative costs for the nine months ended September 30, 2025 included a $1.0 million increase in executive transition costs.
International expansion adds complexity and cost, and bandwidth costs are higher in markets outside the United States and Europe, which may impact gross margins. Evolving data localization and cross-border data transfer laws create uncertainty for customers conducting business in Europe and elsewhere outside the United States.
The company has experienced DDoS attacks of significant size and severity and phishing and social engineering schemes, and its multi-tenant architecture means a cyber-attack on one customer could affect others. It also faces heightened risk of retaliatory cyber-attacks during geopolitical conflicts.
SaaS KPIs
All quarters →Free Cash Flow
Total Customer Count
Remaining Performance Obligations (RPO)
Enterprise Customer Revenue %
Enterprise Customer Count
LTM Net Retention Rate
Top Ten Customer Revenue %
Summary, forecast, risks and KPIs are extracted from Fastly, Inc.'s SEC filings for Q3 FY2025 (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.