Fastly shares are trading modestly lower in late trading Wednesday, after the content delivery network company announced second-quarter results that showed better-than-expected revenue growth, but narrowing gross margins.
Fastly also announced the appointment of Todd Nightingale as the company's new CEO, effective Sept. 1. He succeeds Joshua Bixby, who announced a quarter earlier that he is stepping down as an officer and director of the company. Bixby will remain an advisor, the company said.
Nightingale joins Fastly (ticker: FSLY) from Cisco Systems $(CSCO)$, where he has been leading business strategy and development for the company's networking business, as GM and EVP of Enterprise Networking and Cloud. In a statement, Cisco said that Jonathan Davidson, who already leads Cisco's mass-scale infrastructure group, will also take on Nightingale's current role running the networking and cloud business.
In the June quarter, Fastly posted revenue of $102.5 million, up 21% from a year ago, flat sequentially, and ahead of both the company's guidance range of $99 million to $102 million, and Street consensus at $101.3 million.
However, the company lost 23 cents a share on a non-GAAP basis, widening from a year-ago loss of 15 cents a share, and missing the Street consensus estimate for a loss of 17 cents. Non-GAAP gross margin was 50.4%, falling from 57.6% in the comparable year-ago quarter. GAAP gross margin was 44.9%, down from 52.6%.
Fastly noted that it repurchased $235 million of convertible debt in the quarter at a 25% discount to par, resulting in a $54.4 million gain.
The margin pressure is also evident in guidance. For the September quarter, Fastly sees revenue of $102 million to $105 million, with a loss of 15 to 18 cents a share on an adjusted basis; Street consensus had called for $100.4 million and a loss of 14 cents.
For the full year, Fastly now sees revenue of $415 million to $425 million, with an adjusted loss of 63 to 68 cent a share; Street consensus had called for $411 million in revenue and a loss of 56 cents a share.
Fastly shares are down 6.51%, to $12.35.
Write to Eric J. Savitz at eric.savitz@barrons.com
$(END)$ Dow Jones Newswires
August 03, 2022 18:07 ET (22:07 GMT)
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