Financial Data and Key Metrics Changes - The company reported Q3 2025 revenue of $158.2 million, exceeding the high end of guidance and marking a record high [6][16] - Gross margin improved to 62.8%, up 380 basis points sequentially, and operating income reached a record $11.6 million, significantly above guidance [6][19] - Free cash flow for the quarter was $18 million, demonstrating strong financial performance [6][21] Business Line Data and Key Metrics Changes - Network services revenue grew 11% year over year to $118.8 million, with healthy traffic levels contributing to this growth [16][17] - Security revenue increased 30% year over year to $34 million, representing 21% of total revenue, driven by an expanded security portfolio [17][19] - Other products revenue surged 51% year over year to $5.4 million, primarily from compute products [17] Market Data and Key Metrics Changes - The top 10 customers accounted for 32% of revenue, with revenue from customers outside the top 10 growing 17% year over year [17] - The trailing 12-month net retention rate improved to 106%, up from 104% in the prior quarter [17][18] Company Strategy and Development Direction - The company is focused on accelerating growth and innovation while maintaining operational discipline, raising full-year guidance for revenue and profitability [5][12] - Strategic initiatives include expanding the security portfolio and enhancing the customer experience through AI integration [8][11] - The company aims to increase international expansion, particularly in the APJ region, to capture more market opportunities [11][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategy and raised financial targets for the upcoming quarters [12][24] - The company anticipates continued revenue growth driven by successful cross-sell and upsell motions, with Q4 revenue guidance set at $159-$163 million [22][24] Other Important Information - The company discovered an error in the historical calculation of RPO, which has been recapped in the investor supplement, but this change will not impact customer growth focus [18] - The company is implementing a rigorous budgeting process to enhance financial discipline and ROI on spending [15] Q&A Session Summary Question: Concerns about delivery business expansion - Management noted that network services delivered 11% year-over-year growth, indicating ongoing strength in that segment [26] Question: One-time items in the quarter - Management clarified that the strong performance was due to a combination of successful cross-sell efforts and strong bookings linearity [29] Question: Strength in security portfolio - Management highlighted broad-based demand for new security offerings, including AI bot management and DDoS capabilities [30] Question: International expansion returns - Management emphasized that the international strategy focuses on sales coverage and is seeing early positive results, particularly in the APJ region [34][35] Question: Stability of security revenue - Management confirmed that the $34 million in security revenue is expected to continue, with no one-time revenue recognition impacting future quarters [37] Question: Net retention rate outlook - Management expressed optimism about improving the net retention rate in Q4, indicating potential for further growth [46]

Revenue and Growth - Total revenue for Q3 2025 was $158.2 million, representing a 15% year-over-year growth, with security revenue growing 30% year-over-year and accounting for 21% of total revenue[7] - Q4 2025 total revenue guidance is projected between $159.0 million and $163.0 million, with full year 2025 guidance between $610.0 million and $614.0 million[4] - Revenue is projected to grow to $158.2 million by Q3 2025, indicating a positive trend in sales[37] Customer Metrics - The enterprise customer count increased to 627 in Q3 2025, up 51 from Q3 2024, while total customer count decreased to 3,223, down 415 from Q3 2024[7] - Last 12-month net retention rate (LTM NRR) improved to 106% in Q3 2025 from 104% in Q2 2025[7] Financial Performance - Positive free cash flow of $18.1 million was generated in Q3 2025, compared to $7.1 million of negative free cash flow in Q3 2024[7] - Non-GAAP net income per share for Q4 2025 is expected to be between $0.04 and $0.08, with full year 2025 guidance between $0.03 and $0.07[4] - GAAP net loss per common share is projected to decrease to $0.20 in Q3 2025 from $0.32 in Q2 2024, showing improvement in financial performance[34] Operating Expenses - Operating expenses for Q4 2023 totaled $118,358,000, leading to a loss from operations of $42,584,000[33] - Operating expenses are expected to stabilize around $87.7 million by Q3 2025, showing a focus on cost management[37] Cash Flow and Investments - Free Cash Flow for Q4 2023 was $(21,904) thousand, improving to $18,091 thousand by Q3 2025[42] - Cash flows from operating activities showed a net cash provided of $5,220 thousand in Q4 2024, increasing to $28,924 thousand by Q3 2025[41] - Net cash used in investing activities was $(37,245) thousand in Q4 2023, with a recovery to $70,909 thousand by Q4 2024[41] Product Development and Innovation - The company launched several new products, including API Discovery and DDoS Precise Defense, enhancing security and operational efficiency[6] - Non-GAAP research and development expenses for Q1 2025 are estimated at $30,466, a rise from $27,123 in Q2 2024, indicating increased investment in innovation[34] Stock and Equity - Total stock-based compensation expense for Q4 2023 was $35,447,000, impacting overall operating results[33] - Stock-based compensation decreased from $35,447 thousand in Q4 2023 to $33,129 thousand in Q3 2025[41] - The weighted average diluted common shares are expected to increase to 161,229 by Q3 2025, up from 145,780 in Q1 2025, reflecting potential equity financing or stock option exercises[34] Sustainability and Corporate Responsibility - Fastly's Sustainability Dashboard was introduced, providing customers visibility into the environmental impact of their usage[7] Debt and Liabilities - The company reported a net gain on extinguishment of debt of $15,656,000 in Q4 2023[33] - The company experienced a significant cash outflow of $(113,606) thousand for debt extinguishment in Q4 2023[41] - Long-term debt remained stable, with only a slight decrease from $343,507 in Q4 2023 to $337,614 in Q4 2024[40]

Core Insights - Fastly, Inc. has reported an inducement award under NYSE Listing Rule 303A.08, indicating a strategic move to attract and retain talent within the company [1] Company Summary - The inducement award is part of Fastly's efforts to comply with NYSE regulations and enhance its workforce [1] - This action reflects the company's commitment to maintaining a competitive edge in the market by incentivizing key personnel [1]

Core Viewpoint - Halper Sadeh LLC is investigating potential breaches of fiduciary duties by certain officers and directors of Fastly, Inc. [1] Company Summary - Fastly, Inc. (NYSE: FSLY) is under scrutiny for possible misconduct by its leadership, which may affect shareholder interests [1] - Long-term shareholders of Fastly may have the opportunity to pursue corporate governance reforms and seek financial restitution [1]

Core Insights - Fastly, Inc. has been recognized as a 2025 Gartner® Peer Insights™ Customers' Choice for Cloud Web Application and API Protection (WAAP) [1] - The company received overall high ratings and is the only vendor to achieve this recognition for seven consecutive years [1] Company Performance - Fastly is a leader in global edge cloud platforms, indicating strong market positioning and customer trust [1] - The recognition from Gartner highlights the effectiveness and reliability of Fastly's services in the cloud web application and API protection sector [1] Industry Recognition - The Gartner Peer Insights platform includes user-generated content such as posts, reviews, ratings, surveys, and polls, reflecting the voice of the customer in the evaluation process [1] - Fastly's consistent recognition over seven years suggests a sustained commitment to quality and customer satisfaction in a competitive industry [1]

Core Viewpoint - Kuehn Law, PLLC is investigating potential breaches of fiduciary duties by certain officers and directors of Fastly, Inc. due to allegations of misrepresentation regarding the company's growth and market position [1][2]. Summary by Relevant Sections Allegations of Misrepresentation - Insiders at Fastly allegedly caused the company to misrepresent its growth, indicating a significant deceleration among its largest customers and a loss of market share gained from the 2023 CDN consolidation trend [2]. - The issues mentioned are likely to have a material negative impact on Fastly's revenue growth [2]. - Fastly is unlikely to meet its previously issued revenue guidance for FY 2024 due to these challenges [2]. - Consequently, the company's financial position and prospects were overstated, leading to materially false and misleading public statements [2]. Legal Action - Shareholders who purchased Fastly stock prior to February 15, 2024, are encouraged to contact Kuehn Law for potential legal action, as there may be limited time to enforce their rights [3].

Core Insights - Fastly (NYSE: FSLY) was a prominent meme stock in 2020, achieving a market capitalization exceeding $12 billion at its peak [1] - As of now, Fastly has experienced a significant decline, losing approximately 90% of its value over the past five years, leading to stagnation in its stock performance [1] Company Analysis - The company has faced challenges in maintaining its market value, indicating potential issues in growth or market perception [1] - The current stock performance suggests a need for strategic reassessment to identify new growth opportunities within the technology sector [1]

Core Insights - Fastly (NYSE: FSLY) was a prominent meme stock in 2020, achieving a market capitalization exceeding $12 billion at its peak [1] - As of now, Fastly has experienced a significant decline, losing approximately 90% of its value over the past five years, leading to stagnation in its stock performance [1] Company Analysis - The company has been impacted by broader market trends, particularly in the technology sector, which has seen fluctuations in growth opportunities [1] - Fastly's current valuation reflects a challenging environment for tech-related securities, indicating potential risks for investors [1] Market Context - The decline in Fastly's stock value is indicative of the volatility associated with meme stocks and the tech industry [1] - The performance of Fastly serves as a case study for the risks involved in investing in high-growth technology companies that may not sustain their initial market enthusiasm [1]

Group 1: Fastly (FSLY) - Fastly shares increased by 13.3% to close at $8.76, supported by high trading volume, compared to an 11.2% gain over the past four weeks [1] - The company is experiencing benefits from improved go-to-market execution, product expansion, and favorable pricing dynamics [1] - The consensus EPS estimate for the upcoming quarter has been revised marginally higher, indicating a positive trend that may lead to price appreciation [3] Group 2: CS Disco (LAW) - CS Disco's consensus EPS estimate for the upcoming report remains unchanged at -$0.06, consistent with the previous year's report [4] - CS Disco has a Zacks Rank of 3 (Hold), similar to Fastly [4] - CS Disco's stock closed 4.3% higher at $6.04, with an 18.2% return over the past month [3]

Company Overview - Fastly has recently welcomed a new Chief Financial Officer (CFO), Richard Wong, who is attending his first conference in this role [2] - Wong has a background as a third-time CFO and aims to contribute significantly to Fastly's financial profile and overall value [2] Product and Business Insights - The company offers a product that is well-received by customers, providing substantial value [3] - Fastly's business model integrates various functions including R&D, product technology, and go-to-market strategies, indicating a comprehensive approach to its operations [3]