Fastly FSLY shares have declined 52.4% year to date (YTD), underperforming the broader Zacks Computer & Technology sector’s appreciation of 28.1% and the Zacks Internet Software industry’s return of 32.5%.
FSLY shares have also underperformed industry peers like Innovid CTV, Toast TOST and Fortinet FTNT, which have returned 102.6%, 138.4% and 62.4%, respectively, YTD.
FSLY shares’ subpar performance can be attributed to challenging macroeconomic uncertainties and revenue declines from some of Fastly’s largest customers.
However, these negatives have partly been offset by the success of FSLY's improved go-to-market strategy, better customer acquisition and expanding sales through its platform solutions.
In the third quarter of 2024, FSLY’s revenues were $137 million, which increased 7.03% year over year and surpassed the Zacks Consensus Estimate by 4.07%. Non-GAAP earnings were 2 cents per share.
FSLY Benefits From Expanding Edge-Computing Footprint
Fastly has been focusing on edge computing, which has become a key component of its platform, driving momentum with next-generation applications.
The Fastly platform, a software-driven edge network, provides top-tier services like network delivery, security, computing and observability. FSLY’s focus remains on investing in advanced technology innovations that strengthen the platform and enhance its capabilities for the future of web application development.
FSLY has enhanced its Next-Gen WAF with new capabilities that reduce the time to activate the product, enrich detection signals and provide additional context to data with Country and IP Corp/Site lists.
FSLY’s latest Support Portal allows customers to seamlessly navigate the Fastly Control Panel, Next-Gen WAF Console and Support Portal.
Customer acquisition efforts saw solid progress in the third quarter of 2024, with the enterprise customer count rising to 576, a year-over-year increase of 5%. At the end of the third quarter of 2024, the total customer base reached 3,638, a net increase of 343 compared to the previous quarter.
FSLY Offers Positive Q4 Guidance
For fourth-quarter 2024, Fastly expects revenues of $136 million to $140 million, representing almost flat annual growth.
FSLY anticipates gross margin to fall by approximately 150 basis points (bps) sequentially, plus or minus 50 bps due to increased bandwidth and colocation deployment costs related to increased traffic in international markets.
FSLY expects a non-GAAP loss of 2 cents per share to non-GAAP earnings of 2 cents per share for fourth-quarter 2024.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $138.75 million, indicating a year-over-year growth of 0.70%. The consensus mark for earnings is pegged at the breakeven point.
Fastly, Inc. Price and Consensus
Fastly, Inc. price-consensus-chart | Fastly, Inc. Quote
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
What Should Investors Do With FSLY Stock?
Fastly’s strong product portfolio and an expanding clientele make the stock attractive. Hence, the dip offers a buying opportunity.
Fastly currently carries a Zacks Rank #2 (Buy), suggesting that it may be wise for investors to start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
