Group 1 - The article discusses the strategy of "buying the dip" in a volatile stock market that is near all-time highs, suggesting that certain stocks may rebound for reasons not related to broader market risks [1] - It highlights the importance of caution when investing in stocks that are declining, referred to as "falling knives," indicating that careful analysis is required [1] - The author, Gary Alexander, has extensive experience in technology companies and has been a contributor to Seeking Alpha since 2017, providing insights into industry trends [1] Group 2 - The article does not provide any specific investment recommendations or advice, emphasizing that past performance does not guarantee future results [3] - It clarifies that the opinions expressed are those of the author and do not necessarily reflect the views of Seeking Alpha as a whole [3] - The article notes that the analysts contributing to Seeking Alpha may not be licensed or certified by any regulatory body, indicating a diverse range of perspectives [3]

Core Insights - Fastly's stock experienced a significant decline of 22.1% during trading, despite positive movements in major indices like the S&P 500 and Nasdaq [1] - The company reported fourth-quarter sales that exceeded market expectations but fell short on earnings, leading to bearish sentiment among investors [2] Financial Performance - Fastly recorded a non-GAAP loss per share of $0.03 on revenue of $140.57 million in Q4, compared to Wall Street's expectation of break-even results on sales of $138.63 million [3] - Revenue increased by 2% year-over-year in Q4, marking an all-time high for the period, with the top 10 customers accounting for 32% of revenue, down from 33% in Q3 and 40% in Q4 2023 [4] Customer Diversification and Margins - The company is making progress in customer diversification, closing the quarter with 596 enterprise customers, a 3% year-over-year increase [4] - Despite better-than-expected sales, margins missed expectations, raising concerns about competitive positioning and pricing power [5] Future Guidance - For Q1, Fastly is guiding for a loss per share of $0.09 to $0.05 on sales of $136 million to $140 million, while analysts expected a loss per share of $0.01 on sales of $137.14 million [6] - For the full year, Fastly projects sales between $575 million and $585 million, indicating an annual growth of approximately 6.7%, with an adjusted loss per share forecasted between $0.15 and $0.09 [7] Investor Sentiment - With projected sales growth in the mid-single-digit range and losses expected to be similar to last year, investor confidence in Fastly's growth narrative is waning [8]

Fastly (FSLY) Q4 2024 Earnings Call February 13, 2025 03:00 AM ET Company Participants Vernon Essi - Investor RelationsTodd Nightingale - CEO and DirectorRon Kisling - Chief Financial OfficerFrank Louthan - Managing DirectorSanjit Singh - Executive DirectorMadeline Brooks - Vice President - Equity ResearchJeff Van Rhee - Partner - Equity ResearchChris Fountain - Equity Research Senior AssociateQuinton Gabrielli - VP - Equity Research Conference Call Participants None - AnalystRudy Kessinger - Managing Direc ...

Financial Data and Key Metrics Changes - The company reported record fourth quarter revenue of $140.6 million, exceeding guidance and representing 2% growth year-over-year and quarter-over-quarter [10][35] - Annual revenue for 2024 was $544 million, reflecting a 7% year-over-year growth, although below the previous guidance of $580 million to $590 million [11][36] - Operating loss for the fourth quarter was $4.2 million, within the guidance range [14][50] - Cash from operations increased from $400,000 in 2023 to $16 million in 2024, and cash flow burn was reduced from $59 million to $36 million [16][55] - Gross margin for the fourth quarter was 56.5%, down from 57.7% in Q3 2024 and 59.2% in Q4 2023 [47][50] Business Line Data and Key Metrics Changes - Network services revenue was flat year-over-year at $110.1 million, while security revenue grew 4% to $26.9 million, with a normalized growth of 17% when excluding prior true-up payments [35][36] - Revenue from emerging products grew 63% year-over-year to $3.6 million, driven primarily by compute products [36] - The top 10 customers accounted for 32% of total revenue in Q4 2024, down from 40% a year ago, indicating a diversification in the customer base [12][38] Market Data and Key Metrics Changes - The trailing 12-month net retention rate was 102%, down from 105% in the prior quarter and 113% a year ago [39] - The company anticipates that revenue from top 10 customers will remain in the low to mid-30% range throughout 2025 [38] Company Strategy and Development Direction - The company aims to diversify its revenue base and grow its enterprise customer mix outside of the top 10 [12][31] - A focus on geographic expansion, particularly in Latin America and India, is part of the growth strategy for 2025 [17][31] - The company is investing in sales leadership and restructuring compensation to drive new logo acquisition and cross-selling [20][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to double-digit growth, with a 7% annual revenue growth guidance for 2025 [32][63] - The company is cautious about potential risks, particularly regarding U.S. traffic from TikTok, which has been excluded from 2025 guidance [59][91] - Management noted that the pricing environment is expected to improve in 2025 due to market changes [97] Other Important Information - The company ended the quarter with approximately $296 million in cash and equivalents, and refinanced a portion of its convertible debt [52][53] - Free cash flow improved by $23 million year-over-year, indicating better financial health [55] Q&A Session Summary Question: Investments needed for Asia Pacific expansion - Management indicated that capital investment would be nominal, with a focus on hiring a dedicated leader for the region [68][70] Question: Changes in sales structure for new logos - The sales team is being refocused with existing resources, and there is a strong emphasis on security specialization [72][74] Question: Insights on business mix and gating factors - Management noted significant revenue diversification efforts, particularly in the mid-market, but acknowledged the need for further improvement [78][81] Question: NRR trajectory and confidence in expansion - Management expects NRR to lag behind revenue growth initially but anticipates acceleration in the second half of 2025 [84][86] Question: TikTok U.S. revenue status - Management confirmed that TikTok's U.S. traffic is still operational but has excluded it from future guidance due to uncertainty [90][91] Question: Impact of Edgio's shutdown - The company saw new logo wins from Edgio's customers and is working to bring that traffic onto its platform [92][95] Question: Stability of top 10 customer revenue - Management is confident in the stabilization of revenue from top customers due to improved engagement and new workloads [100][102] Question: Security business growth expectations - Management believes that security growth can improve in 2025, driven by a more focused go-to-market strategy [104][106]

Revenue Projections - Total revenue for Q1 2025 is projected to be between $136.0 million and $140.0 million, with full-year 2025 guidance set at $575.0 million to $585.0 million[5] - Revenue for Q1 2024 was $133,520 thousand, a decrease of 3.1% from Q4 2023's $137,777 thousand[34] - The company expects revenue for Q2 2024 to be in the range of $132,371 thousand to $137,206 thousand, indicating a cautious outlook[34] - Revenue for Q4 2023 was $137,777, showing a 7.5% increase from Q3 2023's $127,816[37] - The company expects revenue growth to continue, projecting Q1 2024 revenue to be around $133,520[37] Financial Performance - Non-GAAP operating loss for Q1 2025 is expected to be between ($11.0) million and ($7.0) million, while the full-year 2025 loss is projected to be between ($15.0) million and ($9.0) million[5] - The net loss for Q1 2024 was $43,427 thousand, compared to a net loss of $23,386 thousand in Q4 2023, indicating a worsening financial position[34] - The company reported a non-GAAP net loss of $6,477 thousand for Q1 2024, compared to a non-GAAP net income of $1,730 thousand in Q4 2023[35] - The net loss for Q4 2023 was $2,268, a significant improvement compared to the loss of $12,552 in Q3 2023[37] - Adjusted EBITDA for Q4 2023 was $11,459, compared to $650 in Q3 2023, indicating strong operational performance[36] Customer Metrics - The enterprise customer count increased to 596 in Q4 2024, up from 576 in Q3 2024, representing a growth of 3.5%[8] - Customer packages grew over 60% year-over-year, with new logo packages growing 70% year-over-year[8] - The last 12-month net retention rate (LTM NRR) decreased to 102% in Q4 2024 from 105% in Q3 2024[8] - Fastly's top ten customers accounted for 32% of revenue in Q4 2024, down from 40% in Q4 2023[8] - Annual revenue retention rate (ARR) was 99.0% in 2024, a slight decrease from 99.2% in 2023[8] Operational Insights - Remaining performance obligations (RPO) were $244 million in Q4 2024, up 4% from $235 million in Q3 2024[8] - Fastly launched several new products, including Fastly DDoS Protection and Fastly AI Accelerator, expanding its service offerings[7] - The company identified an immaterial error in the historical calculation of total customer count, affecting revenue by less than $0.1 million for Q4 2024[1] - The Last Twelve Months (LTM) Net Retention Rate is calculated by adjusting for revenue contraction and expansion, providing a clearer view of customer revenue stability[2] - The Annual Revenue Retention (ARR) rate is 99.0%, down 0.2% year-over-year, indicating slight revenue loss from churned customers[4] Share and Equity Information - The company assumes a weighted average of 143.4 million basic shares outstanding in Q1 2025 and 147.1 million for the full year 2025[6] - The weighted average shares used in computing net loss per share for Q1 2024 were 134,587 thousand, an increase from 131,843 thousand in Q4 2023[35] - The weighted-average diluted shares increased from 129,873 in Q3 2023 to 141,162 in Q4 2023, indicating potential dilution effects[36] - Total stockholders' equity increased from $958,555 in Q1 2023 to $965,250 in Q4 2024, a growth of approximately 0.7%[39] Cash Flow and Expenses - Free Cash Flow is calculated as net cash used in operating activities minus capital expenditures, providing insight into cash generation capabilities[23] - The company experienced a net cash provided by operating activities of $11,132 thousand in Q1 2024, showing a recovery from prior losses[41] - The company reported a net cash used in financing activities of $(2,682) thousand in Q3 2023, reflecting ongoing debt management efforts[40] - The company’s stock-based compensation expense was $35,713 thousand in Q3 2023, reflecting ongoing employee incentive programs[40] - Capital expenditures in Q3 2023 included purchases of property and equipment totaling $(325) thousand, with capitalized internal-use software costs of $(4,951) thousand[41] Asset and Liability Overview - Total current assets decreased from $661,640 in Q1 2023 to $440,195 in Q4 2024, representing a decline of approximately 33.4%[39] - Cash and cash equivalents dropped significantly from $348,463 in Q1 2023 to $286,175 in Q4 2024, a decrease of about 17.9%[39] - Total liabilities decreased from $903,855 in Q1 2023 to $486,109 in Q4 2024, reflecting a reduction of approximately 46.3%[39] - Long-term debt, less current portion, decreased from $705,378 in Q1 2023 to $337,614 in Q4 2024, a decline of about 52.1%[39] - Total assets decreased from $1,862,410 in Q1 2023 to $1,451,359 in Q4 2024, a decline of about 22.0%[39]

Shares of Fastly (FSLY) are down 2% at $9.85 at last check, trading at multi-week lows ahead of its fourth-quarter earnings release. Due out after the close today, Feb. 12, analysts are anticipating a breakeven result. FSLY is sitting just above its year-to-date breakeven level and struggling longer term, down 57% in the past 12 months. The equity has pulled back to a historically bullish signal, however, per historic data from Schaeffer’s Quantitative Analyst Rocky White.Per White, FSLY has recently come w ...

Company Performance and Growth Drivers - Strong performance driven by expanding channel partner network, product innovation, advancements in security solutions, and a growing customer base [1] - Shares gained 29.6% over the trailing three months, outperforming the broader Zacks Computer & Technology sector (2.8%) and the Zacks Internet - Software industry (4.2%) [8] - Revenues from customers outside the top 10 grew 20% year over year, reflecting successful efforts to broaden the customer base [3] Product Innovations and Enhancements - Updated Bot Management with a new bot analysis feature, offering better visibility and control over bot management costs [2] - Expanded security offerings, including adaptive DDoS protection, providing automatic defense against sophisticated attacks [5] - Rolled out enhancements to its KV Store, enabling more powerful edge applications through high-performance key-value storage [6] - Launched a beta version of its AI accelerator to boost performance and cut costs for large language model applications, with added support for Google Gemini and OpenAI [9] - Upgraded Next-Gen WAF with faster activation, improved threat detection, and added context through Country and IP Corp/Site lists [9] Strategic Partnerships and Customer Base - Cineverse chose Fastly's Media Video Delivery solution to enhance its digital cinema, streaming, and content distribution capabilities [3] - Channel Partner Program offers benefits such as flexible pricing, added discounts, deal registration, and dedicated support to drive partners' growth and profitability [10] Financial Estimates and Market Position - Zacks Consensus Estimate for first-quarter 2025 revenues is $138.01 million, indicating year-over-year growth of 3.36% [7] - Consensus mark for the bottom line is a loss of 3 cents per share, unchanged over the past 30 days, indicating a year-over-year increase of 40% [7] - Zacks Consensus Estimate for 2025 revenues is $579.97 million, implying growth of 7.03% from 2023 actual [11] - Consensus mark for 2025 earnings is 3 cents per share, indicating a year-over-year upsurge of 124.29% [11] - Earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average surprise of 81.1% [11]

Company Performance and Outlook - Fastly (NYSE: FSLY) has been a significant disappointment in 2024, struggling with profitability [2] - The company could potentially have a strong year in 2025 if it continues to scale its customer footprint [2] Investment Strategy and Portfolio - The analyst focuses on high-risk, high-reward opportunities, primarily in the technology sector [2] - The analyst's portfolio is concentrated on companies with asymmetric long-term upside potential, including Bitcoin, Tesla, Google, Amazon, and Nvidia [2] Analyst Position and Disclosure - The analyst holds a beneficial long position in Fastly (FSLY) through stock ownership, options, or other derivatives [3]

Fastly’s (FSLY) shares have surged 68.8% in the past month, outperforming the broader Zacks Computer & Technology sector’s 5.8% return and the Zacks Internet - Software industry’s 7.9% growth.FSLY’s shares have also beat industry peers like Reddit (RDDT) , Blend Labs (BLND) and Gitlab (GTLB) .During the same period, shares of Reddit and Blend Labs have gained 23.1% and 1.4%, respectively, while GitLab stock has lost 2.9%.FSLY’s robust stock price performance has been driven by its impressive third-quarter 2 ...

Beaten-down stocks can, at first glance, look like an opportunity to buy in at a cheap price. However, stocks usually have a reason to be down significantly. Buying into these stocks can sometimes mean that a value trap has lured an investor. A value trap is where the decline in a stock’s price makes it feel undervalued, but in actuality, the business fundamentals support the decline in value. This can make investors think they are getting a good deal, but the shares never recover or continue declining. In ...