Abstract
Fastly, Inc. will report its quarterly results on November 04, 2026 Post-Mkt, with investors focused on revenue trajectory, margins, adjusted EPS, and management’s guidance as the company navigates demand for security and AI-related workloads and executes on recent customer partnerships.
Market Forecast
Market consensus for the current quarter points to revenue of 187.80 million US dollars, up 18.69% year over year, adjusted EPS of 0.12 US dollars, up 69.40% year over year, and EBIT near 22.53 million US dollars, up 94.11% year over year; forecasts for gross profit margin and GAAP net margin are not consistently disclosed, and the market will focus on whether the company can sustain gross margin near or above last quarter’s 63.25%. Management’s prior update and recent sell-side previews suggest demand concentration around larger contracts, expanding cross-sell of newer security products, and incremental monetization of agentic AI traffic, with consensus expecting results at or near the high end of prior revenue guidance.
The company’s primary revenue driver remains network services, with ongoing product enhancements and recent scale deployments supporting usage, while the outlook emphasizes execution on larger enterprise deals and traffic growth from new workloads. Security is highlighted as the most promising segment: earlier this year it was reported at 35.40 million US dollars in the fourth quarter of 2025 with year-over-year growth around 32%, and in the last reported quarter it contributed 41.72 million US dollars, reflecting continued customer adoption and cross-sell momentum.
Last Quarter Review
In the previous quarter, Fastly, Inc. reported revenue of 183.32 million US dollars, a gross profit margin of 63.25%, a GAAP net loss attributable to the parent of 15.59 million US dollars with a net margin of -8.50%, and adjusted EPS of 0.15 US dollars; revenue grew 23.27% year over year and adjusted EPS rose 600.00% year over year.
A key highlight was the broad-based beat versus consensus on both revenue and adjusted EPS, underscoring improved operating leverage and disciplined cost control despite a still negative GAAP net margin. Main business highlights included network services revenue of 133.90 million US dollars and security revenue of 41.72 million US dollars, complemented by 7.70 million US dollars from other services, with total company revenue up 23.27% year over year.
Current Quarter Outlook
Main business: revenue concentration in network services
Network services remain the largest revenue contributor and the central driver of quarterly variability. The last quarter’s gross profit margin of 63.25% set a high reference point for investors, and sustaining a margin profile in this range hinges on traffic mix, pricing discipline, and network optimization. In recent months, commentary from sell-side previews indicates larger contract sizes, which can increase near-term volumes but also place a premium on profitable traffic and efficient delivery routing. Execution risks are primarily internal: onboarding new workloads, optimizing traffic across points of presence, and ensuring capacity plans track demand without eroding unit economics.
Near-term catalysts include the operational impact of recent partnerships. The announced collaboration with Comcast to embed programmable edge software across a broad edge-compute footprint aims to reduce latency and improve reliability for streaming and real-time experiences. While not all agreements disclose financial terms, such deployments can reinforce usage growth in network services and potentially reduce delivery costs at scale. The company’s expanded cooperation with Jio in India similarly targets growth in a large and expanding digital market, which could add incremental volumes over time if traffic ramps as planned.
Investors will monitor whether revenue lands at or near the high end of guidance again, and whether gross margin holds near last quarter’s level despite mix shifts. A robust top line combined with stable unit economics would support continued operating profit improvement. Conversely, outsized traffic from lower-margin workloads could pressure profitability; accordingly, commentary on traffic mix and pricing will be closely watched. The trajectory of net retention and the conversion of pipeline to billings will be key tells for how network services performs into the fourth quarter and into 2027 planning.
Most promising business: security momentum and cross-sell
Security continues to provide the clearest path to durable growth and margin expansion. Earlier this year, security revenue in the fourth quarter of 2025 grew at roughly 32% year over year, and the most recent quarter shows this category contributing 41.72 million US dollars, with demand aided by bot management, WAF, API security, and adjacent products. Recent analyst checks cited increased cross-selling of newer security capabilities, which can elevate attach rates and increase deal values without proportionally expanding delivery costs. This mix shift has an observable impact: security products typically carry higher gross margins than core delivery, so progress here can support consolidated gross margin resilience even when network services volumes rise sharply.
Product velocity is also a factor. Newly introduced features for AI-related governance and protection, including AI Runtime Control, AI Firewall, and augmented API security functions, give customers more granular controls as they deploy AI-enabled services at scale. These features can build a stronger value proposition in enterprise accounts and help convert logos into broader platform adoption. Management tone on attach rates, expansion within existing customers, and win-rates against alternative approaches will be important for gauging sustainability of the security growth curve over the next several quarters.
In this print, pay special attention to how management frames the balance between security growth and network services volumes. If security attach continues to climb, blended margins could improve without requiring large price increases in delivery. Conversely, if network services outgrows security by a wide margin, aggregate margin outcomes may depend more on efficiency gains and routing optimizations. The message to look for is whether security is on track to maintain a low- to mid-double-digit mix contribution in the near term and what that implies for consolidated gross margin targets.
Key stock price drivers this quarter
The stock’s near-term reaction will likely hinge on four items: revenue placement versus guidance, forward guidance, margin trajectory, and AI/security monetization updates. Consensus expects revenue of 187.80 million US dollars, up 18.69% year over year; an outcome at or above the upper end of prior guidance would validate sell-side commentary about larger contract sizes and increasing cross-sell. Conversely, a result near the midpoint or a sequential deceleration would raise questions about the timing of new workload ramps and the pace of AI-related traffic monetization.
Guidance will be scrutinized for 2026 revenue growth directionality. Some analysts anticipate management nudging the revenue growth outlook modestly higher, citing larger transactions and ongoing security attach, while others remain guarded pending clearer evidence of AI-driven monetization at scale. Any change in outlook language around 2026 growth bands, target gross margin ranges, or operating profit cadence will be material for valuation.
Finally, commentary on AI workloads and agentic traffic will influence sentiment. Investors will want quantification: how much of current traffic growth is attributable to AI use cases, what monetization mechanics are in place, how differentiated the AI-centric products are, and what customer adoption patterns look like. Given that last quarter's GAAP net margin remained negative at -8.50% despite strong adjusted EPS, the market will also assess whether operating leverage can continue to improve as higher-margin security products expand and as efficiency gains persist in delivery. Stronger operating metrics—such as improvements in EBIT, sustained gross margin levels relative to 63.25%, and continued adjusted EPS growth—would support a constructive setup into the seasonally strong periods.
Analyst Opinions
Cautious views are more prevalent among recent institutional notes, with multiple firms emphasizing execution dependence and uncertainty around AI monetization timelines. Bank of America maintained an Underperform rating and adjusted its price target to 22 US dollars, pointing to the need for clearer evidence of how agentic AI traffic translates into revenue and margin expansion. RBC Capital reiterated a Sector Perform stance with a 25 US dollar target, highlighting management’s longer-term revenue ambitions while noting that monetization of the AI opportunity remains in its early stages and that management intends to consolidate segment reporting after fiscal 2026. Citi and Piper Sandler each reiterated Hold ratings during the period, underscoring a wait-and-see posture toward sustained growth and profitability, especially as the company transitions toward broader platform offerings while balancing delivery economics.
These cautious perspectives share three common themes. The first is a request for granular disclosure on AI-related volumes and monetization mechanics. Institutions are warming to the concept that agentic workflows can drive traffic growth, but they want to see a reliable conversion of those workloads into recurring, high-margin revenue. Without clearer quantification, they prefer to model AI contributions conservatively. The second theme is the emphasis on sustained execution. Revenue growth has accelerated over the last year, and adjusted EPS improved to 0.15 US dollars last quarter; however, GAAP net margin remained negative at -8.50%, and analysts want to see a path to consistent profitability while the company onboards large customers, invests in capacity, and protects gross margin. Any sign that gross margin cannot hold near last quarter’s 63.25%, or that operating costs must rise faster than revenue to support AI or security rollouts, would temper optimism.
The third theme concerns guidance credibility and the bridge to longer-term targets. Some firms acknowledged progress on platform adoption and multi-product penetration, but they also stressed that guidance increases should align with observed billings strength, net retention, and tangible RPO growth. A cautious majority believes guidance increments should be earned rather than anticipated, particularly given the variability of delivery workloads and the nascent state of AI product revenue. In this context, investors are likely to reward a clean beat-and-raise with explicit detail on AI and security momentum, while they may penalize ambiguous commentary that lacks quantitative guardrails.
Even within this cautious consensus, analysts recognized positive signposts into this quarter. Several noted larger contract sizes and improved cross-sell of security as supportive of revenue near the high end of guidance, and they indicated that the company’s high-teens to low-20% growth potential over the next few years could be underappreciated if operating leverage improves. Still, the prevailing institutional stance leans guarded until the company demonstrates durable gross margin stability around the recent 63.25% level, a clearer inflection toward GAAP profitability, and direct monetization proof points for AI-anchored capabilities.
In sum, the majority view holds that the setup is balanced into this print: a revenue beat and a modestly stronger outlook could be enough to improve sentiment, especially if management offers measurable progress on security attach and AI monetization, but ambiguity on these drivers or a step down in gross margin would validate the cautious posture. The near-term evaluation hinges on whether reported results confirm that last quarter’s beats and profitability gains are repeatable while advancing the monetization of new workloads and security offerings.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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