Summary
Fastly closed fiscal 2021 with fourth quarter revenue of $97.7 million, up 18.2% year over year. Full-year revenue reached $354.3 million, up 21.8%. The company said growth came from a full year of Signal Sciences contribution and further adoption of its edge platform, though purchase accounting adjustments offset some of the increase. Gross profit was $49.8 million for the quarter, up 1.8%, and $187.3 million for the full year, up 9.6%. The top line grew, but profitability metrics moved in opposite directions. GAAP gross margin fell 8.2 percentage points to 50.9% in the quarter, and full-year GAAP gross margin fell 5.9 percentage points to 52.9%. Non-GAAP gross margin was 55.8% in the quarter, compared with 63.7% a year earlier, and 57.7% for the full year, compared with 60.9%.
Operating losses narrowed in the quarter but widened for the year. GAAP operating loss was $56.7 million in the fourth quarter, and the loss narrowed 1.2% from the prior-year quarter. For the full year, GAAP operating loss widened 104.3% to $219.0 million. GAAP net loss was $57.5 million in the quarter, and the loss widened 25.9%. Full-year GAAP net loss widened 132.1% to $222.7 million. Full-year diluted EPS was negative $1.92, and the loss widened 106.5%. GAAP operating margin was negative 58.0% in the quarter, up 11.4 percentage points from the prior-year quarter, but full-year GAAP operating margin fell 25.0 percentage points to negative 61.8%.
Cash flow and balance sheet metrics were mixed. Operating cash flow was negative $7.9 million for the quarter, up 74.6% from the prior-year quarter. For the full year, operating cash flow was negative $38.5 million, down 93.2%. Capital expenditures were $3.5 million in the quarter, down 40.5% from the prior-year quarter, while full-year capital expenditures rose 17.7% to $34.8 million. Deferred revenue was $28.9 million at December 31, 2021, up 60.4% from the prior-year quarter. Remaining performance obligations were $152.3 million, down 1.9%.
Customer metrics showed retention and expansion. Dollar-Based Net Expansion Rate was 121% in the fourth quarter, up from 118% in the third quarter. LTM Net Retention Rate was 118%, up from 114% in the third quarter. Annual revenue retention was 99.2% in 2021, compared with 99.3% in 2020. Fastly ended the year with 2,804 total customers, including 445 enterprise customers. Enterprise customers generated 88% of revenue for the 12 months ended December 31, 2021, and the company had 378 enterprise customers generating 89% of revenue in 2020. The 10 largest customers generated 33% of revenue in 2021, down from 38% in 2020. Product momentum included the launch of the Next-Gen WAF, Origin Inspector, and Domain Inspector, plus a Glitch integration for Compute@Edge. The company also launched Fastly Academy and added native support for programming languages such as Javascript, Swift and Zig on Compute@Edge.
Guidance points to continued losses. For the first quarter of fiscal 2022, Fastly guided non-GAAP operating loss to $18 million to $15 million and non-GAAP net loss per share to $0.15 to $0.13. For full fiscal 2022, the company guided non-GAAP operating loss to $70 million to $60 million and non-GAAP net loss per share to $0.60 to $0.50. Risks include the COVID-19 pandemic, data localization and cross-border data transfer rules, and the possibility that its largest customer could further reduce usage. The company also faces pressure from network infrastructure investments, competition for sales personnel, and customer concentration. Fastly said it expects to continue incurring operating losses for the foreseeable future. The company also noted that an outage in June 2021 affected revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $97.7M | $86.7M | +12.7% | $82.6M | +18.2% |
| Gross profit | $49.8M | $45.5M | +9.4% | $48.9M | +1.8% |
| Gross margin | 50.9% | 52.5% | -1.5 pp | 59.2% | -8.2 pp |
| Research & development | $35.0M | $32.5M | +7.6% | $25.6M | +36.8% |
| Sales & marketing | $42.2M | $39.3M | +7.3% | $34.8M | +21.2% |
| General & administrative | $29.3M | $28.6M | +2.3% | $45.9M | -36.2% |
| Total operating expenses | $106.4M | $100.4M | +6.0% | $106.2M | +0.2% |
| Operating income (loss) | -$56.7M | -$54.9M | -3.1% | -$57.3M | +1.2% |
| Operating margin | -58.0% | -63.3% | +5.4 pp | -69.4% | +11.4 pp |
| Net income (loss) | -$57.5M | -$56.2M | -2.4% | -$45.7M | -25.9% |
| Net margin | -58.9% | -64.8% | +5.9 pp | -55.3% | -3.6 pp |
| Diluted EPS | -$0.50 | -$0.48 | -$0.02 | — | — |
Risks
The June 8, 2021 global platform outage, caused by an undiscovered software bug triggered by a valid customer configuration change, led customers including some of the largest to reduce or remove traffic and generated service level agreement claims; while traffic has returned, not all customer traffic has returned to pre-outage levels. A January 2021 software bug also caused a platform interruption and SLA claims.
Gross margin fell to 50.9% in FY2021 Q4 from 59.2% in FY2020 Q4, down 8.2 pp, and to 52.9% year to date from 58.7%, down 5.9 pp. Management attributes the decline to lower network utilization versus 2020, infrastructure and capacity investment made ahead of expected demand, and $7.5 million of additional Signal Sciences intangible amortization.
For the year ended December 31, 2021, the top ten customers accounted for approximately 34% of revenue and the top five approximately 22%. The largest customer in 2020, which had strong business ties to China, significantly reduced its usage of the platform, and further reductions could have an additional negative impact.
Management and the independent registered public accounting firm identified material weaknesses in internal control over financial reporting for the years ended December 31, 2021, 2020, 2019 and 2018, some newly identified in 2021, related to insufficient qualified accounting resources, untimely identification of internal-use software costs for capitalization, and stock plan administration system implementation.
Fastly relies on a limited number of suppliers for server components, and the ongoing global microchip shortage throughout 2021 caused supply constraints, delivery and installation delays at colocation facilities, and pricing increases. Disruption could limit capacity expansion or replacement of defective or obsolete equipment.
During 2021 Fastly experienced DDoS attacks of increased size and severity that strained its network and required investment in systems, and the December 2021 Log4j remote code execution vulnerability affected large numbers of systems worldwide. The company expects to continue encountering vulnerabilities and attacks related to open source libraries.
Evolving data localization and cross-border data transfer laws, particularly EU privacy requirements, have lengthened the sales negotiation process and caused potential customers to decline to do business with Fastly due to concerns about transfers of personal information to the United States.
Sales to enterprise customers involve longer cycles due to competitive purchasing processes, formal approval requirements and more complex needs, and the onboarding and ramping process with new enterprise customers can take several months and be subject to delays. COVID-19 related travel and data center restrictions in South Asia delayed network build outs and customer code freezes.
Dollar-Based Net Expansion Rate declined to 120.9% for the 12 months ended December 31, 2021 from 143.6% in 2020, NRR declined to 106.6% from 116.3%, and LTM NRR declined to 117.6% from 137.4%. Most customer contracts are only one year in duration and most customers, including some of the largest, have no long-term contractual financial commitments.
Fastly has $948.75 million aggregate principal of 0% convertible senior notes due March 15, 2026, and servicing this debt requires significant cash. If the stock price is below the conversion price at maturity, holders will not convert and the notes must be repaid in cash, and the conditional conversion feature could require reclassifying principal as a current liability.
There is significant competition for sales personnel with the required skills and technical knowledge, and new hires require significant training before reaching full productivity. Failure to recruit, train and retain sufficient effective sales personnel would harm revenue growth.
The cloud computing platform market is highly fragmented and competitive, with legacy CDNs such as Akamai, Limelight and EdgeCast, small business-focused CDNs such as Cloudflare, and cloud providers such as Amazon CloudFront, AWS Lambda and Google Cloud Platform. Some competitors bundle competing services at lower or no additional cost, creating pricing pressure.
SaaS KPIs
All quarters →Total Customer Count
Net Retention Rate (NRR)
Dollar-Based Net Expansion Rate (DBNER)
LTM Net Retention Rate (LTM NRR)
Summary, forecast, risks and KPIs are extracted from Fastly, Inc.'s SEC filings for Q4 FY2021 (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.