Group 1 - The core viewpoint of the article highlights the mixed performance of AI application software stocks in the U.S. market on February 12, with notable gains for some companies and significant losses for others [1] Group 2 - Fastly experienced a substantial increase of over 60% [1] - HubSpot saw an increase of more than 10% [1] - Duolingo rose by over 3% [1] - ServiceNow had a gain of over 2% [1] Group 3 - Applovin faced a decline of more than 14% [1] - Unity dropped nearly 6% [1] - Spotify fell by over 4% [1]

Market Overview - U.S. stock futures rose on Thursday following a decline on Wednesday, driven by a strong January jobs report [1] - The Dow Jones index declined on Wednesday after reaching a record-high close on Tuesday [1] - The 10-year Treasury bond yield was at 4.175%, while the two-year bond yield was at 3.502% [1] - The CME Group's FedWatch tool indicates a 94.1% likelihood of the Federal Reserve keeping interest rates unchanged in March [1] Index Performance - Dow Jones increased by 0.21% [2] - S&P 500 rose by 0.23% [2] - Nasdaq 100 gained 0.17% [2] - Russell 2000 saw an increase of 0.39% [2] Stocks in Focus - Micron (MU) maintains a strong price trend across short, medium, and long terms according to Benzinga's Edge Stock Rankings [2] - Novocure (NVCR) shows a strong price trend in the short and medium terms but a weaker trend in the long term [3] - Fastly (FSLY) maintains a strong price trend across all time frames [4] - McDonald's (MCD) also shows a strong price trend across short, medium, and long terms [5] - Applovin (APP) has a weak price trend across all time frames [6] Analyst Insights - Analysts at the Schwab Center for Financial Research noted that investors are awaiting the Consumer Price Index (CPI) release [7] - The market is pricing out rate cuts for this year following the jobs report [7] - The likelihood of a Federal Reserve rate cut next month has dropped to 6% from 20% earlier in the week [8] - The chances of at least one rate cut by June are now below 60%, down from 75% [8] - The three-month average of nonfarm payroll growth increased to 73,000 in January, the highest since February 2025 [9] Commodities and Global Markets - Crude oil futures rose by 0.36% to approximately $64.86 per barrel [11] - Gold Spot declined by 0.47% to around $5,059.50 per ounce, with a previous record high of $5,595.46 per ounce [11] - The U.S. Dollar Index increased by 0.03% to 96.8610 [11] - Bitcoin traded 0.15% higher at $66,906.94 per coin [11] Upcoming Economic Data - Initial jobless claims data for the week ending February 7 will be released at 8:30 a.m. ET [12] - January's existing home sales data will be available at 10:00 a.m. ET [12] - Fed governor Stephen Miran is scheduled to speak at 7:00 p.m. ET [12]

Core Insights - The rise of large-language models, such as ChatGPT, is expected to continue driving traffic for Fastly [1] Company Impact - Fastly is likely to benefit from the increasing demand for large-language models, which enhances its traffic [1]

Group 1 - The core viewpoint of the article highlights the mixed performance of AI application software stocks in the U.S. market, with notable gains for some companies and losses for others [1] Group 2 - Fastly experienced a significant increase, rising over 35% [1] - Shopify saw a modest gain, increasing by over 1% [1] - Applovin faced a decline, dropping nearly 6% [1] - Unity continued its downward trend, falling nearly 2% [1]

Core Insights - Fastly reported revenue of $172.61 million for the quarter ended December 2025, reflecting a year-over-year increase of 22.8% and a surprise of +6.94% over the Zacks Consensus Estimate of $161.41 million [1] - The company's EPS was $0.12, a significant improvement from -$0.03 in the same quarter last year, resulting in an EPS surprise of +111.64% compared to the consensus estimate of $0.06 [1] Financial Performance - Fastly's enterprise customer count was 628, which fell short of the average estimate of 648 based on two analysts [4] - Revenue from Network Services was $130.8 million, exceeding the average estimate of $120.83 million [4] - Revenue from Other products was $6.4 million, surpassing the average estimate of $5.57 million [4] - Revenue from Security products was $35.4 million, slightly above the average estimate of $34.85 million [4] Market Performance - Over the past month, Fastly's shares have returned -1.9%, compared to a -0.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported record revenue of $173 million in Q4 2025, representing a 23% year-over-year growth, the highest in over three years, and exceeding guidance [7][17] - Annual revenue for 2025 was $624 million, reflecting a 15% increase over 2024, also above the original guidance range [17][18] - Gross margin reached a record high of 64% in Q4, up from 57.5% in Q4 2024, driven by higher revenue and a balanced traffic mix [22][23] - Operating income for Q4 was $21.2 million, with a net profit of $20.1 million, compared to a net loss of $2.4 million in Q4 2024 [24][26] Business Line Data and Key Metrics Changes - Network services revenue grew 19% year-over-year to $130.8 million, attributed to strong traffic levels and successful upsell motions [18][19] - Security revenue increased 32% year-over-year to $35.4 million, now comprising 21% of total revenue, driven by an expanded security portfolio [18][19] - Other products revenue surged 78% year-over-year to $6.4 million, primarily from compute product sales [18] Market Data and Key Metrics Changes - The top 10 customers accounted for 34% of revenue in Q4, up from 32% in the previous quarter, while revenue from customers outside the top 10 grew 20% year-over-year [19] - The trailing twelve-month net retention rate improved to 110%, up from 106% in the prior quarter, indicating strong revenue growth from larger customers [20] Company Strategy and Development Direction - The company aims to accelerate growth and drive profitability through disciplined execution and a focus on security and resilience [6][9] - Investment in security products and features is a priority, with new launches enhancing customer engagement and driving cross-sell opportunities [9][10] - The company is positioning itself to capitalize on the growing demand for AI-related services, with a focus on managing AI traffic and providing security solutions [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outpace market growth, despite macroeconomic and geopolitical uncertainties [15][51] - The guidance for Q1 2026 anticipates revenue growth of 18% and for the full year 2026, revenue is expected to be in the range of $700 million to $720 million, reflecting a 14% growth [33][34] - Management highlighted the importance of maintaining a disciplined approach to pricing and customer commitments to mitigate revenue volatility [44][51] Other Important Information - The company ended Q4 with a record RPO of $353.8 million, growing 55% year-over-year, indicating strong future revenue visibility [21] - Cash flow from operations was positive $22.4 million in Q4, with free cash flow of $8.6 million, a significant improvement from the previous year [26][27] - The company plans to increase infrastructure capital expenditures to 10%-12% of revenue in 2026, reflecting growth objectives and capacity upgrades [30][31] Q&A Session Summary Question: Can you expand on AI traffic and its impact? - Management noted an increase in traffic related to AI agents, with more requests processed through the Fastly network, indicating a positive trend for the business [37][39] Question: What drove the widening performance gap compared to peers? - Management attributed the performance edge to architectural improvements and a focus on resiliency, which attracted more customer traffic [40] Question: What gives confidence in the increased guidance? - Confidence stems from established customer relationships, RPO growth, and overall market trends, despite caution regarding geopolitical dynamics [50][52] Question: How is the mix of traffic evolving? - Management indicated a shift towards more strategic relationships with customers, leading to increased consumption of multiple services [54] Question: What are the durable inputs to traffic growth? - Management highlighted mid-20s traffic growth across various types, with improved pricing discipline leading to reduced price erosion [71][74]

Financial Data and Key Metrics Changes - The company reported record revenue of $173 million in Q4 2025, representing a 23% year-over-year growth, the highest in over three years, and exceeding guidance [7][17] - Gross margins reached a record high of 64%, up from 57.5% in Q4 2024, driven by higher revenue and a balanced traffic mix [22][23] - Operating income was $21.2 million in Q4, with a net profit of $20.1 million, compared to a net loss of $2.4 million in Q4 2024 [24][26] - Free cash flow for Q4 was positive $8.6 million, a significant improvement from negative $7.9 million in Q4 2024 [26][27] Business Line Data and Key Metrics Changes - Network services revenue grew 19% year-over-year to $130.8 million, driven by strong traffic levels and upsell success [18][19] - Security revenue accelerated to 32% year-over-year growth, reaching $35.4 million, comprising 21% of total revenue [18][19] - Other products revenue increased by 78% year-over-year, primarily due to sales of compute products [18] Market Data and Key Metrics Changes - The company’s top 10 customers represented 34% of revenue, an increase from 32% in the prior quarter, while revenue from customers outside the top 10 grew 20% year-over-year [19] - The trailing 12-month net retention rate improved to 110%, up from 106% in the prior quarter [20] Company Strategy and Development Direction - The company is focused on accelerating growth and driving profitability through disciplined execution and a comprehensive suite of security products [6][9] - Investment in security and resilience is a priority, with new product launches enhancing customer engagement and driving multi-product adoption [10][11] - The company aims to capitalize on the increasing demand for AI-related services, positioning itself as a leader in edge intelligence [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth, projecting Q1 2026 revenue growth of 18% and full-year 2026 revenue of $700 million to $720 million, reflecting 14% growth [15][34] - The company acknowledged potential macroeconomic and geopolitical uncertainties but remains optimistic about its market position and growth trajectory [51][34] Other Important Information - The company ended Q4 with record remaining performance obligations (RPO) of $353.8 million, growing 55% year-over-year [21] - Cash capital expenditures were approximately 8% of revenue in Q4, below the expected range due to timing of expenditures [28][30] Q&A Session Summary Question: Insights on AI traffic and its impact - Management noted an increase in traffic related to AI, with more requests processed through the Fastly network, indicating a positive trend for the business [37][39] Question: Factors driving performance gap between Fastly and peers - Management highlighted a focus on resiliency and performance improvements as key factors attracting more traffic [40] Question: Confidence in revenue guidance - Management attributed confidence to established customer relationships, RPO growth, and overall market trends [50][52] Question: Coupling of network services and security growth - Management acknowledged some coupling between network services and security demand but emphasized the independent growth of the security portfolio [80] Question: CapEx increase due to component costs - Management indicated that the increase in CapEx is driven by both growth needs and rising component prices, particularly in memory [63]

Financial Data and Key Metrics Changes - Fastly reported record revenue of $173 million in Q4 2025, representing a 23% annual growth, the highest in over three years, and exceeding guidance [5][15] - The company achieved record gross margins of 64%, up from 57.5% in Q4 2024, driven by higher revenue and a balanced traffic mix [20][21] - Operating income reached $21.2 million in Q4, with a net profit of $20.1 million, compared to a net loss of $2.4 million in Q4 2024 [23][24] - Free cash flow for Q4 was positive $8.6 million, a significant improvement from negative $7.9 million in Q4 2024 [25][26] Business Line Data and Key Metrics Changes - Network services revenue grew 19% year-over-year to $130.8 million, driven by strong traffic levels and upsell success [16][17] - Security revenue accelerated to $35.4 million, growing 32% year-over-year, and comprised 21% of total revenue [16][17] - Other products revenue increased by 78% year-over-year, primarily due to sales of compute products [16] Market Data and Key Metrics Changes - The top 10 customers represented 34% of revenue, an increase from 32% in the prior quarter, while revenue from customers outside the top 10 grew 20% year-over-year [17] - The trailing twelve-month net retention rate improved to 110%, up from 106% in the prior quarter [18] Company Strategy and Development Direction - Fastly is focused on accelerating growth and driving profitability through disciplined execution and a comprehensive suite of security products [5][7] - The company is investing heavily in security and resilience, with new product launches aimed at enhancing customer engagement and driving multi-product adoption [8][9] - Fastly aims to capitalize on the growing demand for AI-related services, positioning itself as a leading edge cloud provider [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth, projecting Q1 2026 revenue growth of 18% and 14% for the full year [12][33] - The company acknowledged potential macroeconomic and geopolitical uncertainties but remains optimistic about its market position and growth trajectory [50][51] Other Important Information - Fastly ended Q4 with record remaining performance obligations (RPO) of $353.8 million, growing 55% year-over-year [19] - The company raised $180 million in 0% convertible notes to improve liquidity and support growth initiatives [24][25] Q&A Session Summary Question: Can you expand on AI traffic and its impact? - Fastly is seeing increased traffic related to AI agents, with more requests processed through its network, indicating a growing trend in AI workloads [35][36][38] Question: What drove the widening performance gap compared to peers? - Fastly has maintained a performance edge, with recent architectural improvements enhancing platform resiliency, attracting more customer traffic [39][40] Question: What gives confidence in the increased guidance? - Confidence stems from established customer relationships, RPO growth, and overall market trends, despite caution regarding geopolitical dynamics [48][49][51] Question: How is the CapEx increase affected by component costs? - The increase in CapEx is driven by both growth in demand and rising component prices, particularly in memory [60][61] Question: What are the durable inputs to traffic growth? - Traffic growth is broad-based across different types, with improved pricing discipline leading to reduced price erosion [69][72]

Core Viewpoint - Fastly has reported strong quarterly earnings, indicating a significant growth trajectory and positive outlook for the future, particularly with the influence of AI on its business [2][3][4]. Financial Performance - Fastly reported quarterly earnings of 12 cents per share, surpassing the analyst estimate of 6 cents [2]. - Quarterly revenue reached $172.61 million, exceeding the Street estimate of $161.36 million and showing an increase from $140.58 million in the same period last year [2]. - The company achieved record revenue, gross margin, and operating profit in the fourth quarter [3]. Future Outlook - Fastly anticipates adjusted EPS for fiscal 2026 to be between 23 cents and 29 cents, compared to the analyst estimate of 14 cents [4]. - Revenue projections for fiscal 2026 are expected to be in the range of $700 million to $720 million, exceeding the estimate of $667.83 million [4]. - The CEO highlighted the momentum expected in 2026, with AI serving as a significant growth driver for the business [3]. Stock Performance - Following the earnings report, Fastly's stock price increased by 26.10% to $11.75 in extended trading [4].

February 11, 2026 Investor Presentation Q4 FY 2025 ©2026 Fastly, Inc. Fastly Q4 2025 Earnings Investor Deck (2/11/2026) 2 Investment highlights Clear market leader with differentiated technology Unified platform centered on innovation Large and growing addressable market Internet and AI trends driving significant opportunity Mission-critical platform vital for customer operations Multiple ways to accelerate and sustain growth ©2026 Fastly, Inc. Fastly Q4 2025 Earnings Investor Deck (2/11/2026) Forward Looki ...