Fastly's Revenue Surges 15% in Q4 2023

2024-03-05

Fastly, a prominent edge cloud platform, conducted its Q4 2023 earnings call, offering a glimpse into the company's performance and future outlook. The call was attended by Fastly's CEO, Todd Nightingale, and CFO, Ron Kisling. The webcast of the earnings call is available on Fastly's website and will be archived for a year.

During the call, cautionary advice was issued regarding investing in Fastly stock, as the Stock Advisor analyst team did not list Fastly among the top 10 stocks for investors to consider. However, valuable information for potential investors can be found in the company's 8K filing, which encompasses the earnings press release, financial tables, and investor supplement.

In terms of financial performance, Fastly disclosed a revenue of $137.8 million for the fourth quarter of 2023, showcasing a 15% year-over-year growth. The company also achieved a significant milestone in traffic handling, managing over 100 terabits per second on November 8th.

Fastly observed an uptick in its customer count during the fourth quarter of 2023, reaching a total of 3,243 customers, including 578 enterprise clients. The growth in enterprise customers was attributed to the introduction of the new packaging channel program and a renewed emphasis on demand generation.

Furthermore, Fastly is diversifying its reach by venturing into new sub-verticals such as live auctions, travel and leisure (specifically gaming), and cybersecurity. This expansion into fresh sectors aids Fastly in diversifying its traffic load and enhancing gross margins.

The company's gross margin performance has shown improvement over the years, with a 330 basis point increase in 2023 compared to 2022. In the fourth quarter, the gross margin stood at 59.2%, marking a 220 basis point increase year over year.

Fastly's operating loss figures have also demonstrated improvement, decreasing from $76 million in 2022 to $37 million in 2023. In the fourth quarter, the operating loss was a mere $2.3 million, surpassing the provided guidance.

Fastly has rolled out new features and enhancements to its product lineup, including the Fastly WAF and the plugin for Hashicorp Vault, aimed at offering customers enhanced security and ease of use.

Looking forward, Fastly has issued guidance for 2024, projecting an anticipated cash capex range of 6% to 8% and a revenue forecast of $580 million to $590 million, indicating a 16% annual growth rate at the midpoint. The company anticipates an improvement of approximately 200 basis points in gross margins for 2024.

In conclusion, Fastly's Q4 2023 earnings call addressed crucial topics such as financial performance, customer expansion, foray into new verticals, product enhancements, and future projections. These discussions offer valuable insights for investors and stakeholders keen on understanding Fastly's operations.