Sign in

You're signed outSign in or to get full access.

FI

Fastly, Inc. (FSLY)·Q2 2025 Earnings Summary

Executive Summary

  • Record revenue of $148.7M (+12% YoY) and non-GAAP EPS of $(0.03), both ahead of company guidance; FY 2025 revenue and non-GAAP EPS guidance raised, and the company now expects positive FCF for the year .
  • Mix shift continues: Security revenue reached $29.3M (20% of total, +15% YoY); Network Services $114.9M (+10% YoY); Other $4.5M (+60% YoY) .
  • Execution and demand indicators improved: LTM NRR rose to 104% (from 100% in Q1), Enterprise customers to 622, Top-10 revenue concentration fell to 31%, and RPO hit a record $315M (+41% YoY) .
  • Management catalysts: New CEO (Kip Compton), CFO transition to Richard Wong, and CRO Scott Lovett promoted to President, Go-to-Market to accelerate growth and commitments; guidance commentary points to operating profit in H2 and FY FCF breakeven to +$10M .

What Went Well and What Went Wrong

What Went Well

  • Revenue and operating results outperformed guidance; gross margin reached 59.0% non-GAAP on efficiency gains and favorable pricing, with adjusted EBITDA of $8.9M .
  • Demand quality improving: RPO hit a record $315M (+41% YoY), with increased customer commitments; LTM NRR recovered to 104% and Enterprise customers grew to 622 .
  • Security momentum: Security revenue $29.3M (20% of total) and product launches (AI Bot Management GA; DDoS Protection with Attack Insights) support cross-sell/up-sell narrative; “packages” grew >50% YoY and renewals >130% YoY .
    • “Our go-to-market transformation is delivering increased customer acquisition, expanded cross-sell opportunities, and market share growth.” — Kip Compton .

What Went Wrong

  • GAAP profitability remains negative despite improvement: GAAP operating loss $(36.9)M; GAAP net loss $(37.5)M; gross margin GAAP at 54.5% (down 60bps YoY) .
  • YoY non-GAAP gross margin modestly below prior-year Q2 (59.0% vs 59.4%), reflecting ongoing price dynamics even as conditions improved sequentially .
  • Exposure considerations and policy uncertainty: CFO noted ByteDance/TikTok <10% of global revenue and <2% in U.S.; U.S. TikTok revenue beyond Sept 17 excluded from guidance due to policy ambiguity .

Financial Results

Consolidated performance vs prior periods and S&P Global consensus

MetricQ2 2024Q1 2025Q2 2025S&P Consensus (Q2 2025)
Revenue ($USD Millions)$132.371 $144.474 $148.709 $144.855*
GAAP EPS ($)$(0.32) $(0.27) $(0.26) —
Non-GAAP EPS ($)$(0.06) $(0.05) $(0.03) $(0.0524)*
GAAP Gross Margin (%)55.1% 53.2% 54.5% —
Non-GAAP Gross Margin (%)59.4% 57.3% 59.0% —
Adjusted EBITDA ($USD Millions)$1.954 $7.805 $8.911 —

Values with asterisks (*) retrieved from S&P Global.

Actual vs S&P Global consensus (Q2 2025)

  • Revenue: $148.7M vs $144.9M consensus — bold beat .
  • Non-GAAP EPS: $(0.03) vs $(0.0524) consensus — bold beat .
    Values retrieved from S&P Global.

Segment revenue breakdown

Segment ($USD Millions)Q2 2024Q1 2025Q2 2025
Network Services$104.2 $113.3 $114.9
Security$25.4 $26.4 $29.3
Other$2.8 $4.8 $4.5
Total Revenue$132.4 $144.5 $148.7

KPIs

KPIQ2 2024Q1 2025Q2 2025
Enterprise Customers601 595 622
Total Customers3,295 3,035 3,097
Top 10 Customers (% of revenue)34% 33% 31%
LTM Net Retention Rate110% 100% 104%
Remaining Performance Obligations ($M)$223.1 $303.0 $315.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)FY 2025$585–$595 $594–$602 Raised
Non-GAAP Operating Income (Loss) ($M)FY 2025$(12)–$(6) $(9)–$(3) Raised
Non-GAAP Net Income (Loss) per shareFY 2025$(0.13)–$(0.07) $(0.10)–$(0.04) Raised
Free Cash Flow ($M)FY 2025Not explicitly positive Breakeven to +$10 Raised
Total Revenue ($M)Q3 2025N/A$149–$153 New
Non-GAAP Operating Income (Loss) ($M)Q3 2025N/A$(1) to +$3 New
Non-GAAP EPSQ3 2025N/A$(0.02) to +$0.02 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Technology & SecurityLaunched DDoS Protection; AI Accelerator GA; Object Storage; Bot Mgmt awards AI Bot Mgmt GA; DDoS Protection with Attack Insights; IPv6 to Origin; Rust SDK shielding Expanding feature velocity and platform breadth
Pricing & Gross MarginPricing pressures persisted; non-GAAP GM 56.5% in Q4 Favorable pricing and network efficiencies; non-GAAP GM 59.0% Improving sequentially
Go-to-Market & CommitmentsPackage deals up >60% in 2024; focus on efficient acquisition Packages +50% YoY; renewals +130% YoY; record RPO; push for commitments Accelerating
Customer ConcentrationTop-10 % fell to 32% in Q4 Top-10 at 31%; revenue outside Top-10 +17% YoY Diversifying
Regional Expansion—New APJ lead; first PoP in Mexico; focus on international growth Building footprint
Regulatory/LegalDebt re-fi and converts in 2024 TikTok policy uncertainty; excluded U.S. revenue beyond Sep 17 from guide; exposure <10% global, <2% U.S. Managed risk in guidance
Path to ProfitabilityFY 2025 non-GAAP Opex and EPS guided tighter in Q1 Expect operating profit in H2; FY FCF breakeven to +$10M Improving trajectory

Management Commentary

  • “We are raising our financial guidance for 2025 and now expect to generate positive free cash flow for the year.” — Kip Compton, CEO .
  • “Security revenue reached a record high and accounted for 20% of total revenue... We posted a gross margin of 59%... and adjusted EBITDA of $8.9M.” — Prepared remarks .
  • “We saw our LTM NRR increased to 104%... top ten customers represented 31%... revenue outside the top 10 grew 17% YoY.” — Prepared remarks .
  • “We anticipate double-digit growth rates YoY for Q3 revenue... expect operating loss to improve through 2025 and to deliver operating profit during the second half... free cash flow breakeven to +$10M.” — CFO .
  • “ByteDance represented less than 10% of our revenue... U.S. traffic less than 2%; we are excluding TikTok’s U.S. forecasted revenue beyond September 17 from our guide.” — CFO .
  • Leadership changes to accelerate execution: CFO transition to Richard Wong; CRO Scott Lovett promoted to President, Go-to-Market .

Q&A Highlights

  • Cross-sell/upsell momentum driven by unified platform and expanded security portfolio; customers consolidating bot mitigation onto Fastly and expanding use cases .
  • Pricing environment stability aided by industry consolidation and internal discipline on discounts and commitments; supports gross margin outlook .
  • Commitments and RPO strength reflect negotiated trade-offs (discounts for commits) and performance differentiation; Edgeo exit helped traffic allocation but focus on durable commitments continues .
  • Security growth volatility in 2024 linked to top-10 customer dislocations; 2025 shows recovery and stability with accelerating new customer acquisition .
  • Product velocity and profitability: ongoing feature cadence, lower H2 OpEx seasonally, improved cash collections driving stronger FCF .

Estimates Context

  • Q2 2025: Actual revenue $148.709M vs S&P Global consensus $144.855M — beat; Actual non-GAAP EPS $(0.03) vs consensus $(0.0524) — beat. Values retrieved from S&P Global.
  • Q1 2025: Actual revenue $144.474M vs consensus $138.394M — beat; Actual non-GAAP EPS $(0.05) vs consensus $(0.06222) — beat. Values retrieved from S&P Global.
  • Q3 2025: Company guided $149–$153M; subsequent actuals (reported later) and raised FY guidance suggest upward estimate revisions trajectory. Values retrieved from S&P Global and company guidance .
    Where estimates may adjust: Raised FY revenue and EPS guidance, improved margin outlook, and record RPO should support upward revisions to Q3/Q4 revenue and full-year EPS. Values retrieved from S&P Global.
S&P Global Consensus vs ActualQ1 2025Q2 2025
Revenue ($USD Millions)$138.394 vs $144.474* $144.855 vs $148.709*
Primary EPS$(0.06222) vs $(0.05)* $(0.0524) vs $(0.03)*

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Fastly delivered a clean beat on revenue and non-GAAP EPS and raised FY 2025 revenue/EPS/FCF guidance — a positive revision catalyst tied to improving pricing and efficiency .
  • Security is becoming a more material growth driver (20% of revenue) with new capabilities (AI Bot Mgmt; DDoS Attack Insights), reinforcing cross-sell and platform monetization .
  • Quality of revenue improving: lower concentration, higher commitments, and record RPO suggest better visibility and sustainability into H2/H1’26 .
  • Gross margin outlook firming (network efficiencies and peering; pricing moderation), supporting the path to H2 operating profitability and FY positive FCF .
  • Execution is the narrative: new CEO, incoming CFO, and unified go-to-market leadership should accelerate acquisition and renewals, particularly internationally and in security-rich verticals .
  • Watch policy risk (TikTok) and pricing dynamics; guidance prudently excludes U.S. TikTok beyond Sept 17 to avoid downside surprises .
  • Near-term: favorable estimate revisions and H2 operating profit commentary can be stock-supportive; medium-term: platform strategy (delivery/security/compute/observability) and international expansion underpin the thesis .

Notes:

  • Company changed non-GAAP presentation beginning Q1 2025 to exclude amortization of capitalized stock-based compensation; prior periods recast accordingly .
  • All figures cited from company documents include GAAP/non-GAAP reconciliations within exhibits .
  • Values retrieved from S&P Global for consensus estimates where noted.