Core Insights - Fastly (FSLY) provides edge cloud infrastructure aimed at enhancing digital experiences, with over 90% of its revenue coming from enterprise customers, making customer engagement and platform adoption critical for future growth [1][9] Enterprise Metrics - Fastly's enterprise customer count is projected to increase to 600 in Q2 from 595 in the previous quarter, with enterprise revenues estimated at $135 million, reflecting an 11.6% year-over-year growth. However, net retention is expected to drop to 100.46% from 109.6% in the same quarter last year [2] Product Development and Partnerships - The company is expanding its product suite with AI-driven features such as bot detection and real-time cache APIs, which are designed to enhance secure, high-speed delivery for performance-sensitive workloads. Partnerships with major companies like Alphabet, VMware, Shopify, Azure, and AWS are expected to bolster long-term customer engagement [3] Revenue Guidance - Fastly has guided Q2 revenues to be between $143 million and $147 million, with the Zacks Consensus Estimate at $145.07 million, indicating a 9.59% year-over-year growth [4][9] Competitive Landscape - Fastly faces significant competition from Cloudflare and Akamai, both of which offer similar edge delivery and web security solutions. Cloudflare is enhancing its programmable edge platform, while Akamai is focusing on cloud security and enterprise solutions [5][6] Stock Performance and Valuation - FSLY shares have decreased by 28.9% year-to-date, contrasting with a 7.5% increase in the broader Zacks Computer & Technology sector and a 14.1% rise in the Zacks Internet Software industry. The current forward 12-month price-to-sales ratio for FSLY is 1.58X, significantly lower than the industry's 5.72X [7][10] Earnings Estimates - The Zacks Consensus Estimate for FSLY's loss in 2025 is projected at 9 cents per share, unchanged over the past month. The company reported a loss of 12 cents per share in the same quarter last year [13]

Industry Overview - The content delivery network (CDN) space is expected to grow at a CAGR of 18.04% from 2025 to 2034, indicating strong industry growth potential [1][2]. Company Analysis: Cloudflare - Cloudflare focuses on global expansion and offers a high-performance CDN platform that enhances content delivery while ensuring secure web connectivity [3][4]. - The company employs advanced technologies such as tiered caching and Argo smart routing to optimize delivery efficiency [3]. - Cloudflare's revenue is significantly influenced by international sales, making it vulnerable to U.S. tariffs and competitive pressures from major players like Amazon and Akamai [5]. - Despite revenue growth, Cloudflare's margins are under pressure due to competitive pricing strategies and heavy investments in sales and marketing [6]. - The Zacks Consensus Estimate for Cloudflare's 2025 revenues is $2.09 billion, reflecting a year-over-year growth of 25.4%, while earnings are estimated at 79 cents, indicating a growth of 5.33% [6][7]. Company Analysis: Fastly - Fastly specializes in high-performance, programmable CDN solutions, providing customers with control through dedicated servers within private networks [9][10]. - The company emphasizes faster first-byte delivery and offers features like DDoS protection and advanced rate limiting [10][11]. - Fastly's CDN platform is designed for efficiency, with capabilities that reduce costs and enhance configurability [11]. - The Zacks Consensus Estimate for Fastly's 2025 loss is projected at 9 cents, indicating a year-over-year improvement of 25% [12][13]. Stock Performance and Valuation - Year-to-date, Cloudflare's stock has increased by 69.5%, while Fastly's stock has decreased by 26% [14]. - Cloudflare trades at a forward sales multiple of 28.19X, significantly higher than Fastly's multiple of 1.67X [15]. - Fastly is noted for its robust bottom-line growth expectations and comparatively lower valuation, giving it a potential edge over Cloudflare [17].

Industry Overview - The AI infrastructure space is experiencing significant growth, with fears related to DeepSeek being overblown. Confidence among market participants has increased due to potential trade deals, expected rate cuts by the Fed, and reduced recession worries in the U.S. economy [1] - The AI sector is supported by a bullish demand scenario, with major companies planning to invest $325 billion in AI infrastructure by 2025, representing a 46% year-over-year increase in capital spending [4] Investment Recommendations - Five mid-cap AI infrastructure stocks are recommended for investment, having outperformed the S&P 500 in the past three months and offering deep discounted value for long-term growth. The stocks include UiPath Inc. (PATH), Five9 Inc. (FIVN), C3.ai Inc. (AI), Qualys Inc. (QLYS), and Fastly Inc. (FSLY) [2][3] Company Insights UiPath Inc. (PATH) - UiPath provides an end-to-end automation platform with a focus on robotic process automation solutions. The company has introduced new generative AI features to enhance its automation capabilities [8][10] - Expected revenue and earnings growth rates for UiPath are 8.5% and 5.7%, respectively, for the current year, with a P/E ratio of 23.9X compared to the industry average of 29.7X [11] Five9 Inc. (FIVN) - Five9 offers intelligent cloud software for contact centers, benefiting from the growing adoption of AI tools. The company recently launched its Intelligent CX Platform powered by Five9 Genius AI [12][14] - Expected revenue and earnings growth rates for Five9 are 9.6% and 11.7%, respectively, for the current year, with a P/E ratio of 10.1X compared to the industry average of 29.7X [15] C3.ai Inc. (AI) - C3.ai specializes in enterprise AI applications and aims to deepen its alignment with major cloud providers and government institutions. The company focuses on deploying actionable AI solutions [16][17] - Expected revenue and earnings growth rates for C3.ai are 20.1% and 9.8%, respectively, for the current year, but it has yet to generate profit, with an industry P/E of 20.2X [18] Qualys Inc. (QLYS) - Qualys is experiencing increased demand for cloud-based cybersecurity solutions, supported by strategic acquisitions that enhance its threat detection capabilities [19][21] - Expected revenue and earnings growth rates for Qualys are 7.3% and 0.7%, respectively, for the current year, with a P/E ratio of 8.8X compared to the industry average of 11.6X [22] Fastly Inc. (FSLY) - Fastly provides infrastructure software for cloud computing and has introduced the Fastly AI Accelerator to optimize generative AI applications [23][24] - Expected revenue and earnings growth rates for Fastly are 8.6% and 25%, respectively, for 2025, but it has yet to generate profit, with an industry P/E of 29.7X [25]

Core Insights - Fastly's Security segment is becoming a significant contributor to its edge platform strategy, with Q1 2025 revenues of $26.4 million, reflecting a 7% year-over-year increase and accounting for 18% of total revenues [1][10] Group 1: Security Segment Performance - The Security portfolio is designed for low-latency, automated protection across web and API environments, including solutions like Client-Side Protection, API shielding, DDoS detection, and bot mitigation [2] - Ongoing product additions and upgrades are driving momentum in the Security portfolio, with features like Client-Side Protection for unauthorized activity detection and Attack Insights for real-time DDoS traffic visibility [3][4] Group 2: Competitive Landscape - Fastly's Security stack faces competition from Fortinet and Cloudflare, both enhancing their solutions for secure digital infrastructure [5] - Fortinet is gaining traction with advanced capabilities in bot protection and API security, making it a strong competitor in Fastly's core markets [6] - Cloudflare is expanding its security platform with advanced DDoS protection and bot management, positioning it as a direct competitor to Fastly [7] Group 3: Financial Performance and Valuation - Fastly's shares have declined 25.5% year-to-date, contrasting with a 7% increase in the broader Zacks Computer & Technology sector and a 14.4% appreciation in the Zacks Internet Software industry [8] - Fastly's forward 12-month price-to-sales ratio is 1.63X, significantly lower than the industry's 5.74X, indicating a potential undervaluation [11] - The Zacks Consensus Estimate for Fastly's second-quarter loss is 5 cents per share, reflecting a 28.57% improvement year-over-year, while the 2025 loss estimate is 9 cents per share, indicating a 25% year-over-year improvement [14]

Core Viewpoint - Fastly's shares have declined 26.4% year to date, underperforming the Zacks Internet Software industry's appreciation of 14.8% and the broader Zacks Computer & Technology sector's return of 5.7%, reflecting macroeconomic uncertainty and near-term softness in enterprise IT spending [1][2] Group 1: Company Performance - Fastly's strong partner ecosystem, expanding product portfolio, and consistent enterprise traction provide visibility into sustained execution, making the recent dip an attractive entry point for investors [2][17] - Fastly closed the first quarter of 2025 with 577 enterprise customers, contributing 93% of total revenue, and remaining performance obligations rose 33.5% year over year to $303 million [11][17] - The company expects revenues between $143 million and $147 million for the second quarter of 2025, indicating sequential growth from the March quarter, with a non-GAAP operating loss projected between $8 million and $4 million [15][17] Group 2: Product Innovations - Fastly continues to enhance its platform by introducing capabilities that address modern infrastructure challenges, evolving into a full-stack edge cloud platform [5][17] - New features include Client-Side Protection for browser-based security, expanded Bot Management capabilities, and HTTP Cache API support for programmatic cache control, improving developer experience and security [6][7][8] Group 3: Market Positioning - Fastly benefits from a rich partner base, including Microsoft, Alphabet, and Palo Alto Networks, enhancing its positioning in multi-cloud environments and security-led use cases [9][10] - Fastly shares are attractively valued, trading at a forward 12-month price-to-sales (P/S) of 1.63X, significantly lower than the industry's 5.76X [12][17] Group 4: Future Outlook - The company's stable second-quarter outlook and disciplined execution offer added visibility, with positive estimate trends supporting the case for accumulation [17][18]

Core Insights - Fastly (NYSE: FSLY) is experiencing a slowdown in top-line growth, a concern for investors since the end of the COVID-19 pandemic [1] Group 1 - The company has recently achieved an important milestone despite the growth slowdown [1]

Industry Overview - The Internet Software and Services sector is experiencing growth due to increased IT spending on solutions that support hybrid operating environments [1] - The Internet Software industry is ranked in the top 17% of Zacks Industry Rank, indicating an expectation to outperform the market in the next three to six months [2] Company Highlights UiPath Inc. (PATH) - UiPath offers an end-to-end automation platform with a range of robotic process automation solutions [6] - The platform includes AI, ML, and NLP capabilities, enhancing decision-making and information processing [7] - Expected revenue and earnings growth rates for the current year are 8.5% and 3.8%, respectively, with a 1.9% improvement in earnings estimates over the last week [8] Five9 Inc. (FIVN) - Five9 provides intelligent cloud software for contact centers, enabling a wide range of customer service functions [11] - The platform includes AI-driven features such as virtual agents and workflow automation, benefiting from the growing adoption of AI tools [13] - Expected revenue and earnings growth rates for the current year are 9.6% and 11.7%, respectively, with a 5.7% improvement in earnings estimates over the last 60 days [14] Fastly Inc. (FSLY) - Fastly offers infrastructure software for cloud computing, security, and edge computing solutions [15] - The Fastly AI Accelerator was introduced to optimize LLM generative AI applications [15] - Expected revenue and earnings growth rates for 2025 are 8.6% and 25%, respectively, with a 10% improvement in earnings estimates over the last week [17] Calix Inc. (CALX) - Calix provides cloud and software platforms for broadband service providers [18] - The company has integrated AI into its platforms to enhance operations and service delivery [20] - Expected revenue and earnings growth rates for 2025 are 7.1% and 65.4%, respectively, with a 21.1% improvement in earnings estimates over the last 60 days [20] Confluent Inc. (CFLT) - Confluent operates a data streaming platform that allows real-time data streaming for various industries [21][22] - Expected revenue and earnings growth rates for the current year are 19% and 24.1%, respectively, with a 2.9% improvement in earnings estimates over the last 60 days [23]

Financial Data and Key Metrics Changes - The preliminary results indicate that all nominees for the Board of Directors have been elected, and the ratification of Deloitte as the independent auditors for the current fiscal year has passed [11] - The compensation of named executive officers has been approved [11] Business Line Data and Key Metrics Changes - No specific data or metrics related to individual business lines were discussed in the meeting [10] Market Data and Key Metrics Changes - No specific market data or metrics were provided during the meeting [10] Company Strategy and Development Direction and Industry Competition - The meeting focused on the election of directors and the approval of auditor selection, with no detailed discussion on company strategy or competitive positioning [9][10] Management's Comments on Operating Environment and Future Outlook - Management did not provide specific comments on the operating environment or future outlook during this meeting [10] Other Important Information - The meeting was conducted virtually, and stockholders were able to submit questions through a text box on the virtual meeting screen [8] - A complete list of stockholders entitled to vote was available online [5] Q&A Session Summary - There were no questions submitted during the Q&A session [10]

Core Viewpoint - The current volatile stock market presents a prime opportunity for long-term investors to capitalize on significant price declines in major stock indexes [1][2]. Group 1: Investment Opportunities - Pfizer has been added to the portfolio with a cost basis of $23.47 per share, despite a significant drop in sales from COVID-19 products, indicating a buying opportunity due to investor shortsightedness [5][6][8]. - PubMatic has seen a doubling of investment with a cost basis of $9.29, benefiting from the shift of advertising dollars to digital platforms and strong cash flow generation [9][10][12]. - Sirius XM Holdings was purchased at $19.28 per share, leveraging its subscription-based revenue model which provides stability during economic downturns [13][15][16]. - Intel was added at $18.56, with expectations of a turnaround in its business despite being late to the AI market, supported by strong cash flow from CPU sales [18][20][21]. - BioMarin Pharmaceutical was acquired at $56.01, focusing on ultrarare diseases with high pricing power and projected sales growth from its drug Voxzogo [22][25]. - Fastly was added at $5.08, with a focus on the growing demand for cloud services and a strong revenue retention rate, indicating potential for future profitability [27][29][30].

Fastly (FSLY) FY Conference Summary Company Overview - Fastly has transitioned from a content delivery network (CDN) to an edge delivery platform, focusing on delivering high-quality user experiences for applications, websites, and streaming services [6][8] - The company emphasizes partnerships with customers to provide fast, safe, and engaging web experiences [6] Key Points Business Model and Strategy - Fastly's edge platform includes content delivery, edge security (DDoS, bot mitigation, web application firewall), edge compute, and observability [7] - The transition to a full edge platform has diversified Fastly's customer base beyond media and publishing to include high-tech, retail, e-commerce, hospitality, and healthcare [8] - The company reduced revenue concentration from 40% in top 10 accounts to 32%, indicating a successful diversification strategy [10] - Fastly achieved 17% growth outside the top 10 accounts last quarter, showcasing the effectiveness of its platform expansion [10] Financial Performance and Margins - A more diversified customer base is expected to lead to improved margin potential and customer retention [12] - The exit of competitors like Edgio, StackPath, and Lumen has created a favorable pricing environment for Fastly, enhancing gross margins and customer loyalty [14] - Fastly's security portfolio is anticipated to increase customer stickiness and improve gross margins as more customers adopt multiple products [28] Cybersecurity Developments - Fastly invested heavily in R&D for cybersecurity in 2024, launching new products such as bot mitigation and a turnkey DDoS solution [16][17] - The company aims to enhance its go-to-market strategy with strong leadership in sales and marketing focused on security [17] - Fastly's web application firewall, developed from an acquisition, offers high efficacy and automatic protection, reducing total cost of ownership for customers [20] AI and Edge Compute Opportunities - Fastly is exploring opportunities in AI, particularly in AI bot detection and providing infrastructure for training datasets [30][31] - The company launched an AI accelerator to lower costs and improve response times for AI applications [32] - Fastly's edge compute market is growing, with a reported 67% growth in serverless compute using WebAssembly technology [38] Market Trends and Customer Focus - There is a growing demand for high-performance solutions that enhance user experience, which aligns with Fastly's offerings [39] - Traditional enterprises are increasingly investing in sophisticated digital experiences, driving growth in Fastly's compute services [42] Additional Insights - Fastly's focus on delivering a complete edge solution positions it well against competitors who have exited the market due to high customer concentration and reliance on CDN revenue [14] - The company's strategy to integrate security with delivery services is expected to create a more defensible business model over time [26] - Fastly's ability to provide a seamless experience for dynamic content at the edge is crucial for attracting new customers and retaining existing ones [40]