Executive Summary

Fastly delivered Q1 2025 revenue of $144.5M (+8% YoY), above the high end of guidance, and non-GAAP EPS of $(0.05); the company raised full-year 2025 guidance and posted positive free cash flow ($8.2M), marking improving execution and cash discipline .
Results beat S&P Global consensus: revenue by ~$6.1M (+4.4%) and EPS by ~$0.01, driven by better-than-expected seasonal traffic, share gains, and disciplined OpEx; management cited go-to-market (GTM) transformation and packaging momentum as key contributors . Values retrieved from S&P Global.*
Mix quality improved: top-10 customer concentration held at 33% (down from 38% a year ago) while RPO surged to a record $303M (+24% QoQ), signaling improved revenue visibility from larger commitments and packaging .
2025 outlook nudged higher: FY revenue to $585–$595M (from $575–$585M), non-GAAP operating loss tightened to $(12)–$(6)M, gross margin ~58%±50 bps, OpEx ~ $350M, and FCF improved to $(10)M to breakeven; company anticipates operating profit in 2H 2025 .

What Went Well and What Went Wrong

What Went Well

Beat on revenue and operating loss with positive free cash flow: “outperformed our revenue and operating loss guidance… delivering positive free cash flow” and raised full-year guidance .
Improved demand signals and visibility: RPO hit a record $303M (up from $244M in Q4), reflecting higher commitments and packaging momentum; management emphasized stronger high-touch engagement with largest accounts .
GTM and product velocity: Packaging deals more than doubled YoY; new logo packages +80% YoY; continued security and compute enhancements (Client-Side Protection GA; Bot Management upgrades; HTTP Cache API GA) .
- CEO: “We made great progress in our go-to-market transformation, product release velocity, and growing traffic share with our large enterprise customers” .

What Went Wrong

Margin pressure and pricing backdrop: GAAP gross margin fell 160 bps YoY to 53.2% as 2024 pricing declines weighed on YoY comps; management expects price declines to stabilize to high teens in 2025 .
Security growth remained modest in the quarter: Security revenue grew 7% YoY (to $26.4M), with management noting early-stage adoption in bot/DDoS (single-digit % penetration), expecting acceleration later in 2025 .
Cohort health lag indicators: LTM NRR dipped to 100% (from 102% in Q4’24 and 114% a year ago), tracking prior large-customer declines; management expects expansion in 2H25 as 2024 acquisitions contribute .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025 (Actual)	Q1 2025 (Consensus)*
Revenue ($M)	$137.2	$140.6	$144.5	$138.4*
GAAP Diluted EPS ($)	$(0.27)	$(0.23)	$(0.27)	—
Non-GAAP Diluted EPS ($)	$0.03	$(0.02)	$(0.05)	$(0.062)*
GAAP Gross Margin (%)	54.5%	53.4%	53.2%	—
Non-GAAP Gross Margin (%)	58.6%	57.5%	57.3%	—
Non-GAAP Operating Income (Loss) ($M)	$0.8	$(2.8)	$(5.8)	—

Non-GAAP treatment recast: Beginning Q1’25, Fastly excludes amortization of capitalized stock-based compensation in non-GAAP metrics; prior periods recast for comparability .

Segment breakdown (Revenue, $M):

Segment	Q3 2024	Q4 2024	Q1 2025
Network Services	$107.4	$110.1	$113.3
Security	$26.2	$26.9	$26.4
Other (Compute/Observability)	$3.6	$3.6	$4.8
Total	$137.2	$140.6	$144.5

Key KPIs:

KPI	Q3 2024	Q4 2024	Q1 2025
Enterprise Customers	576	596	595
Total Customers	3,638	3,061	3,035
Top-10 Customers % of Rev	33%	32%	33%
LTM NRR	105%	102%	100%
RPO ($M)	$235.4	$244.4	$303.0

Cash and FCF:

Cash/cash equivalents: $125.5M; current marketable securities: $181.8M; total cash and current securities ~$307.3M; current debt $187.9M (March 2026 converts now current), LT debt $149.9M .
Free Cash Flow: $8.2M (vs $(2.2)M in Q1’24) .
CFO affirmed adequate liquidity and ability to cover notes maturity; positive cash from operations $17.3M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue ($M)	FY 2025	$575–$585	$585–$595	Raised
Non-GAAP Operating Loss ($M)	FY 2025	$(15)–$(9)	$(12)–$(6)	Improved
Non-GAAP EPS ($)	FY 2025	$(0.15)–$(0.09)	$(0.13)–$(0.07)	Improved
Gross Margin (%)	FY 2025	~flat vs 2024 ±50 bps	~58% ±50 bps	Clarified
Operating Expenses ($M)	FY 2025	~$345–$350	~ $350	Maintained
Free Cash Flow ($M)	FY 2025	$(20) to $(10)	$(10) to $0	Improved
Total Revenue ($M)	Q2 2025	—	$143–$147	New
Non-GAAP Operating Loss ($M)	Q2 2025	—	$(8)–$(4)	New
Non-GAAP EPS ($)	Q2 2025	—	$(0.08)–$(0.04)	New

Additional call color: Q2 gross margin +50 bps sequentially; anticipating operating profit in 2H 2025 .

Earnings Call Themes & Trends

Topic	Q3 2024 (prior)	Q4 2024 (prior)	Q1 2025 (current)	Trend
AI/Technology	Launched AI Accelerator beta; security portfolio expansion	GA for AI Accelerator; Object Storage GA	AI bot-scraper mitigation; continued security/compute releases	Increasing
Pricing/Macro	Consolidation may help pricing	Expect healthier environment in 2025	Declines stabilizing to high-teens; margin actions ongoing	Improving
GTM/Packaging	Packages doubled YoY; new-logo packages tripled	Packages +60% YoY in 2024	Packages >2x YoY; new logos +80% YoY	Strong
RPO/Commits	RPO $235M	RPO $244M	RPO $303M record; higher commits/renewals	Up
TikTok/Regulatory	—	Excluding U.S. traffic beyond Q1’25	Excluding U.S. traffic post June 19 in 2025 guide	Ongoing risk
Security Adoption	Portfolio completed (WAF, bot, DDoS)	Focus on security growth in 2025	Security +7% YoY; bot/DDoS early single-digit penetration; refocused cross-sell	Building
Tariffs/CapEx	—	—	Pre-tariff hardware; tariff impact on CapEx immaterial; cash CapEx 9–10% of revenue	Managed

Management Commentary

“We are raising our financial guidance for 2025 and plan to enrich our current revenue mix with the platform enhancements we've recently shipped in security and compute” — CEO .
“Gross margin… was 57.3%, slightly better than our projections… actions to improve fixed overhead and bandwidth costs… supply chain dependencies… any tariff impact on our CapEx spend will be immaterial” — CEO .
“Our trailing 12-month net retention rate was 100%, down from 102%… we anticipate… remain flattish near term, followed by expansion in the second half of 2025” — CFO .
“TikTok… represented less than 10% of our revenue… U.S. traffic less than 2%… our 2025 guidance excludes revenue from their U.S. traffic after June 19” — CFO .

Q&A Highlights

Upside drivers: Better-than-expected seasonal traffic, share gains, and improved execution; top 10 cohort improved; pricing environment stabilizing .
Security adoption: WAF usage beneath half of installed base; bot/DDoS in very early innings (single-digit% penetration); expect acceleration in back half 2025 .
RPO and commitments: Strong growth driven by strategic renewals, sales incentives for higher commits, and packaging; improved senior-level engagement at large accounts .
TikTok policy risk: U.S. traffic excluded from guide post June 19; global relationship remains strong; potential upside if policy changes .
AI and compute: Increasing traction in edge compute for dynamic experiences; AI Accelerator positions for low-latency, lower-cost LLM use cases; AI used in security (bot/DDoS) .

Estimates Context

Revenue: Actual $144.5M vs consensus $138.4M (+$6.1M, +4.4%)*. Values retrieved from S&P Global.
Non-GAAP EPS: Actual $(0.05) vs consensus $(0.062) (beat by ~$0.01)*. Values retrieved from S&P Global.

Q1 2025 Results vs Consensus*

Metric	Consensus*	Actual
Revenue ($M)	138.4*	144.5
Non-GAAP EPS ($)	(0.062)*	(0.05)

*Values retrieved from S&P Global.

Key Takeaways for Investors

Execution inflection: Beat-and-raise with positive FCF and record RPO highlight improving GTM productivity, stronger commitments, and better visibility into growth .
Mix quality improving: Top-10 concentration stabilizing in low–mid 30s; growth outside top-10 +17% YoY points to healthier diversification and reduced volatility over time .
Margin outlook constructive: Pricing declines moderating back to high-teens; targeted cost actions and bandwidth optimization support gross margin near ~58% for 2025 .
Security optionality ahead: Despite modest Q1 security growth, low penetration in bot/DDoS and expanded portfolio set up potential share gains in 2H’25 and 2026 .
Manageable policy/tariff risks: TikTok U.S. exposure excluded from guidance (potential upside if policy shifts); tariff impact on CapEx expected to be immaterial .
2H profitability target: Operating profit expected in second half; OpEx discipline (~$350M) and packaging-driven predictability support the trajectory .
Trading implication: The raise to FY revenue/FCF and record RPO are likely core stock catalysts; watch Q2 margin/NRR trend and security pipeline conversion for durability .

Appendix: Other Q1 2025-period Press Releases (Context)

Fastly DDoS Protection “Attack Insights” adds real-time visibility into mitigations (confidence to operate in blocking mode) .
Forrester TEI study: Fastly Application Security Solutions delivered 235% ROI over three years (composite model), highlighting conversion uplift and productivity gains .

Fastly, Inc. (FSLY)·Q1 2025 Earnings Summary