Fastly, Inc.

Fastly, Inc. operates in the edge cloud industry, a category of Infrastructure as a Service (IaaS) that enables software engineers to build, secure, and deliver digital experiences at the edge of the Internet. The company's platform converges Content Delivery Network (CDN) functionality with capabilities traditionally provided by hardware appliances such as Application Delivery Controllers (ADC), Web Application Firewalls (WAF), API Management, Bot Detection, Distributed Denial of Service (DDoS), Web Application and API Protection (WAAP), and infrastructure protection. Fastly positions itself as an essential platform for resilient, highly performant, always-on software and services at global scale, particularly capitalizing on the rise of agentic AI-driven traffic. The company serves organizations across various industries including ecommerce, streaming media, gaming, digital publishing, high tech, and financial services ¹.

Fastly's core business model revolves around generating revenue primarily from usage-based fees for its platform, with a substantial majority coming from customers with negotiated contracts. Customers are typically charged based on their committed or actual use of the platform, measured in gigabytes and requests. The company also generates fixed-rate recurring revenue from security and other products and services, which are often annual subscriptions billed in advance. A significant portion of revenue, approximately 96% ² and 95% ³ for the years ended December 31, 2025 and 2024, respectively, is driven by platform usage. The company employs a direct selling model, focusing on expanding existing customer relationships and acquiring new enterprise customers ⁴.

The company's product and service lines are disaggregated into three main categories: Network Services, Security, and Other. Network Services, which accounted for 77% ⁵ of total revenue in 2025, include solutions designed to improve the performance of websites, apps, APIs, and digital media. Key offerings in this segment include Dynamic Site Acceleration, Origin Shield, Instant Purge, Surrogate Keys, Programmatic Control, Content Compression, Reliability Features, Fanout, Domainr, Modern Protocols and Performance, Staging Environment, Live Streaming, Video on Demand, Media Shield, Cache Reservation, Live Event Monitoring, Object Storage, Load Balancing, Image Optimization, and Origin Connect ⁶.

The Security product line, representing 20% ⁷ of total revenue in 2025, focuses on protecting websites, apps, APIs, and users from unwanted activity. This suite includes Next-Gen WAF (with Bot Management, API Protection, Account Takeover Protection, Deception, and Advanced Rate Limiting features), a separate Bot Management product, API Security (with API Discovery and API Inventory), Client-Side Protection, and Fastly DDoS Protection. The platform also offers TLS Encryption (including Platform TLS and its own Certification Authority, Certainly), Privacy enablement capabilities like OHTTP Relay and Private Access Tokens (PATs), and compliance support for standards such as HIPAA, EU GDPR, U.K. GDPR, PCI Data Security Standard, and SSAE-18 ⁸.

The "Other" product line, which contributed 3% ⁹ of total revenue in 2025, encompasses Compute and Observability solutions. Compute enables developers to build edge-native applications, APIs, authentication layers, and mission-critical edge functions on Fastly's programmable edge platform, supporting various use cases like SEO ranking enhancement, high-volume data pipelines, user authentication, and ad personalization. Key features include a serverless execution environment, multi-language support (WASM-supported languages like JavaScript, C++, Rust, Go), and edge data storage solutions (Key Value Store, Config Store, Secret Store, Object Storage). Observability provides real-time insights across all product lines through Real-time Logging, Logging Insights, Regional Log Aggregation, Metrics, Edge Observer, Alerts, and a Sustainability dashboard, with add-on tools like Log Explorer & Insights, Origin Inspector, Domain Inspector, Log Tailing, and Tracing ¹⁰. Fastly also offers AI capabilities such as AI Bot Management, Edge Data Storage for AI workloads, Fanout for AI agents, Image Optimizer for AI preprocessing, and AI solutions for service management like MCP Server and AI Assistant ¹¹.

For the fiscal year ended December 31, 2025, Fastly reported total revenue of $624.0 million ¹², an increase of 15% ¹³ from $543.7 million ¹⁴ in 2024. Gross profit for 2025 was $356.2 million ¹⁵, resulting in a gross margin of 57% ¹⁶. Operating expenses totaled $475.2 million ¹⁷, leading to a loss from operations of $119.0 million ¹⁸. The company recorded a net loss of $121.7 million ¹⁹, with a diluted EPS of $(0.83) ²⁰. Cash and cash equivalents stood at $180.6 million ²¹ as of December 31, 2025, while total long-term debt (net of current portion) was $323.3 million ²². The company's remaining performance obligations (RPO) were $353.8 million ²³.

Comparing 2025 to 2024, total revenue increased by $80.3 million ²⁴, or 15% ²⁵. Network Services revenue grew by $50.1 million ²⁶, or 12% ²⁷, to $477.8 million ²⁸. Security revenue increased by $22.0 million ²⁹, or 21% ³⁰, to $125.1 million ³¹. Other revenue saw a significant increase of $8.2 million ³², or 64% ³³, reaching $21.2 million ³⁴. Gross margin expanded by 3% ³⁵ from 54% ³⁶ in 2024 to 57% ³⁷ in 2025. Operating expenses increased by $11.4 million ³⁸, or 2% ³⁹, from $463.9 million ⁴⁰ in 2024 to $475.2 million ⁴¹ in 2025. The net loss improved from $158.1 million ⁴² in 2024 to $121.7 million ⁴³ in 2025.

During 2025, Fastly issued $180.0 million ⁴⁴ aggregate principal amount of 0% convertible senior unsecured notes due in 2030 (2030 Notes) and concurrently repurchased $150.0 million ⁴⁵ aggregate principal amount of 2026 Notes for approximately $148.9 million ⁴⁶ in cash. The company also incurred an impairment charge of $0.4 million ⁴⁷ primarily for the write-off of intangible assets no longer in use, a decrease from $4.1 million ⁴⁸ in 2024. There were no restructuring activities in 2025, compared to $9.7 million ⁴⁹ in charges in 2024 related to a workforce reduction. Charles Compton began serving as the new Chief Executive Officer on June 16, 2025 ⁵⁰.

Fastly's growth strategy is centered on making its edge cloud platform more accessible to a broader customer base. This involves enhancing the product experience, making strategic investments in technology and infrastructure, attracting new business, expanding partnerships, and pursuing vertical market expansion. The company plans to continue expanding existing product lines, such as Network Services and Security, and to further incubate newer products for future growth ⁵¹.

A major growth vector for Fastly is its product strategy, which aims for durable innovation within its programmable edge cloud platform. The company intends to expand existing product lines and incubate newer products. A key focus is building a single, unified platform for customers to access and manage all Fastly services, simplifying customer onboarding and service usage through self-training information and code samples. The security products—DDoS Protection, Next-Gen WAF, Bot Management, Client-side Protection, and API Security—are already available on one platform and accessible via the Fastly Control Panel ⁵².

Another significant growth area is the expansion into additional vertical markets. Fastly's platform, with its high performance, low-latency delivery network, edge compute platform, and enhanced security capabilities, is designed to serve existing customers and attract new ones across diverse industries. The company also aims to expand existing customer relationships by increasing platform usage and selling additional products and features, leveraging its initial engagement with organizations to facilitate cloud migration and then extending product use cases ⁵³.

Fastly plans to grow its technical partner ecosystem, positioning itself as a unifying layer for cloud services that complements major origin cloud platforms like Amazon Web Services (AWS), Microsoft (Azure), and Google Cloud Platform. The strategy involves creating economic, reputational, and technical value with partners, including global channel partners (referral, reseller, MSP/MSSP), cloud partners (with Private Network Interconnects and marketplace availability), and integration partners across security, logging & analytics, compute, and media & entertainment ⁵⁴. The company also intends to attract new customers by leveraging product innovations, vertical focus, partner growth, and an optimized go-to-market engine, specifically helping new customers accelerate, protect, and optimize AI-driven workloads and traditional applications with agentic interactions ⁵⁵. International expansion is also a key element, with plans to scale the network and increase presence in international markets, recognizing significant opportunities for global growth ⁵⁶.

Operationally, Fastly expects its total operating expenses to increase as it expands, driven by increased discretionary marketing spend, including account-based, targeted demand generation, and brand spend, to enhance the effectiveness of its sales teams. The company will continue to invest in resources to enhance its development capabilities and introduce new products and features on its platform, with research and development expenses as a percentage of revenue at 26% ⁵⁷ for 2025, up from 25% ⁵⁸ in 2024. Fastly anticipates making investments in upgrading its technology and hardware to maintain a fast and secure platform, which impacts gross margins and operating results ⁵⁹.

Fastly plans to continue investing in its network infrastructure by strategically increasing its Points of Presence (POPs) to expand the scale and capacity of its software-defined modern network. This investment is in anticipation of winning new customers and staying ahead of customer needs. The company also expects to make investments in upgrading its technology and hardware to continue providing a fast and secure platform. These investments could lead to increased network service provider fees, which may affect gross margins if not offset by revenue growth from new and existing customers ⁶⁰.

The company's capital allocation plans include continued investment in its platform and network infrastructure. Research and development expenses were $162.7 million ⁶¹ for the year ended December 31, 2025. Fastly also has material cash requirements for non-cancelable contractual obligations, including $38.6 million ⁶² for the remaining 2026 Notes maturing on March 15, 2026, $150.0 million ⁶³ for the 2028 Notes maturing on June 1, 2028, and $180.0 million ⁶⁴ for the 2030 Notes maturing on December 15, 2030. Additionally, as of December 31, 2025, the company had a $7.7 million ⁶⁵ purchase commitment for equipment due within the next twelve months. Fastly does not intend to pay cash dividends in the foreseeable future, with any future determination at the discretion of its board of directors, subject to applicable laws and restrictions from its Credit Agreement ⁶⁶.

Fastly faces structural headwinds and execution risks, including the potential for component delays, shortages, or price increases that could interrupt its ability to construct servers or POPs and meet customer usage needs. International trade disputes, such as tariffs imposed by the United States, could disrupt supply chains or increase component pricing. Government policy changes and related uncertainty could also increase market volatility. The company's reliance on a limited number of suppliers for key components exposes it to risks if adequate replacements are not available on favorable terms ⁶⁷.

Geographic, regulatory, and macro factors also pose constraints. Fastly's international expansion efforts face challenges such as varying seasonality patterns, adverse currency exchange rate movements, longer payment cycles, difficulties in collecting accounts receivable, tariffs and trade barriers, regulatory limitations, adverse tax events, and reduced intellectual property protection in some countries. Laws on data localization and cross-border data transfers, particularly in Europe, create uncertainty that could impact customer growth. The company is also monitoring global conflicts, such as those in Russia-Ukraine and the Middle East, which could lead to heightened cybersecurity risks and economic disruptions ⁶⁸. The U.S. government's actions regarding companies operating in China, such as the bill potentially banning TikTok, could also impact Fastly's ability to do business with certain customers ⁶⁹.

Fastly's business is subject to significant risks, including operational failures such as defects, interruptions, outages, or delays in its platform, which could lead to customer loss, service performance claims, or increased costs ⁷⁰. The company faces substantial customer concentration risk, with its 10 largest customers generating 32% ⁷¹ of revenue in the trailing 12 months ended December 31, 2025, and affiliated customers of a single company contributing 10% ⁷² of revenue in 2025, making it vulnerable to usage reductions or loss of major clients like TikTok, which was one of its largest customers ⁷³. Supply chain disruptions, including component delays, shortages, or price increases, could hinder the construction of servers and POPs, impacting its ability to meet customer demand ⁷⁴. Cybersecurity threats, including sophisticated cyber-attacks, ransomware, and supply-chain attacks, pose a material risk to its IT systems and data, potentially leading to regulatory actions, litigation, fines, revenue loss, and reputational harm, especially given its multi-tenant architecture and role in the supply chain of other companies ⁷⁵. The rapidly evolving technology landscape, particularly in AI solutions, means Fastly must continuously develop new products and adapt to changing standards, or risk its offerings becoming less competitive or obsolete ⁷⁶. Regulatory and legislative developments concerning AI technologies, such as the EU AI Act and various U.S. state laws, could impose significant compliance costs, restrict its use of AI, or expose it to liability for biased or flawed AI models ⁷⁷. Furthermore, the company's substantial debt, including $38.6 million ⁷⁸ in 2026 Notes, $150.0 million ⁷⁹ in 2028 Notes, and $180.0 million ⁸⁰ in 2030 Notes, requires significant cash for servicing and potential repayment or conversion, and its ability to raise future capital may be limited by existing credit facility covenants ⁸¹.

Management emphasizes that Fastly is an essential platform for delivering resilient, highly performant, always-on software and services at global scale, particularly as the internet approaches an inflection point with increasing automated, AI-driven traffic. The company is uniquely positioned to lead the intelligence fabric for enterprises adapting to this shift, supporting edge workloads and AI traffic management to optimize AI-driven services and block abuse. Management believes its powerful unified edge platform, designed for programmability and agile software development, provides customers with a significant competitive advantage. Key strategic priorities include continuing to attract new customers, especially enterprise clients, and expanding relationships with existing customers by enhancing the product experience, investing in technology, and leveraging its partner ecosystem. Management also highlights the importance of developer outreach as a cost-efficient customer acquisition strategy and plans to continue increasing discretionary marketing spend to drive sales team effectiveness. The company is closely monitoring global conflicts and developments, such as those in Russia-Ukraine and the Middle East, but does not believe they will have a material impact on its business or results of operations ⁸².