The most bullish outcome would be a successful defense of $75, followed by a rally higher. Following the news, analysts at Stifel downgraded Fastly to hold from buy, and lowered its price target to $77 from $98, representing potential downside of 15% from current levels. Analyst Jeff Van Rhee provided the following commentary. However, FSLY shares fell 9% immediately following the announcement. Fastly is already experiencing accelerating growth in 2020 and Compute@Edge is still in beta. I do see a slight acceleration in the smaller customer count.
Fastly delivered another quarter of solid execution. Enterprise customers drove the majority of revenue growth and accounted for 88% of trailing 12-month total revenue. Chose Fastly due to unique capabilities in edge compute. This makes sense for two reasons. Regarding sustained growth after COVID, that is certainly a risk. For a stock to gain so much so quickly, the narrative pretty much has to be something along the lines of, "Everything is going right, and nothing can possibly go wrong." Late in the third quarter, Fastly started to see lower-than-expected platform usage from a few customers. For 30+% growth and positive operating margin, a reasonable EV/Rev ratio range is 12-16. I am not saying that Fastly is a better investment than Cloudflare, as I am sure investors have differing views. I also like software stack companies where a technical founder/CEO runs the company for a long period (DDOG, AMZN, TWLO, ESTC, OKTA). Piper Sandler also issued estimates for Fastly's Q4 2020 earnings at ($0.18) EPS, Q1 2021 earnings at ($0.20) EPS, Q2 2021 earnings at ($0.19) EPS, Q3 2021 earnings at ($0.19) EPS, Q4 2021 earnings at ($0.16) EPS, FY2021 earnings at ($0.73) EPS, Q1 2022 earnings at ($0.18) EPS, Q3 2022 earnings at ($0.15) EPS and FY2022 earnings at ($0.59) EPS. Looking forward to listening to management/ analyst comments on Q2 results? Q1 2020 Revenue was $63.0M, up 38% year/year. This would represent 50% annualized growth. Fastly (FSLY) came out with quarterly earnings of $0.02 per share, beating the Zacks Consensus Estimate of a loss of $0.01 per share. Replacing him was Joshua Bixby. On the other hand, Cloudflare’s target audience appears to be primarily CIOs/CISOs who want to make their corporate network and enterprise apps more secure. While our preliminary third-quarter results reflect the challenges of a usage-based model, we believe the fundamentals of Fastly's business remain strong, as does demand for our platform," said Fastly CEO Joshua Bixby. Fastly plummeted 31% on Thursday after it reported preliminary third quarter earnings results that missed analyst estimates. Hi Peter, would like to hear your views on the capabilities of Fastly Compute@Edge and Cloudflare Workers. GAAP net income dropped 27% to $698 million while, © 2020 AlphaStreet Inc. All Rights Reserved, Pandemic will drive rapid adoption of new network architectures: Fastly CFO Adriel Lares, BNY Mellon (BK) Earnings: Key financials and quarterly highlights, Earnings: Intuitive Surgical (ISRG) Q3 results exceed estimates, How Charles Schwab (SCHW) performed in Q3 financial results. Also, in the same discussion, he gave an update on Compute@Edge and highlighted a number of use cases from actual beta customers.
In Artur’s words, he would “focus more of my attention on our customers and to work more with the product and technology part of our business to build out our edge cloud platform.”. In their most recent conference (June 4), the CEO said that their full year guidance includes a fall-off after Q2 that assumes a return to somewhat normal demand; however, they have not yet seen that drop-off, as of June, so there may be upside in their guidance. The average price target for these updates is $32.66, representing a 3% reduction from the closing price of $33.58 on May 7th. Despite the current economic uncertainty, we remain optimistic about the demand for our mission-critical services and the underlying growth of our business for the remainder of 2020 and years to come.”. Q1 Non-GAAP operating loss was $6.0M, representing an operating margin of -9%. © 2020, Nasdaq, Inc. All Rights Reserved. Nasdaq As an example from the Q1 earnings call, the CEO stated “the core of what we have always brought is to allow developers to innovate, and Compute@Edge is the next step in maintaining our significant advantage in that market.”. wow thanks for pointing that out. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Fastly is also able to run each request/response in a completely isolated manner, which is a security benefit. At the same time, this question was raised on the earnings call. These all bode well for a new revenue stream in 2021. https://medium.com/swlh/looking-back-on-four-years-at-the-times-e158ec3a5936, Lucet: Safe WebAssembly Outside the Browser, Rust, WebAssembly and the Future of Serverless, Beyond the Browser with Serverless WebAssembly, Independent Software Providers and the Cloud Vendors, Smartsheet (SMAR) Stock Q1 FY2021 Earnings Results Review, MongoDB (MDB) Stock Q1 FY2021 Earnings Results Review, DocuSign (DOCU) Stock Q1 FY2021 Earnings Results Review, Elastic (ESTC) Stock Q4 FY2020 Earnings Results Review, Okta (OKTA) Stock Q1 FY2021 Earnings Results Review, Datadog (DDOG) Stock Q1 2020 Earnings Results Review, Fastly (FSLY) Q1 2020 Earnings Results Review, Alteryx (AYX) Q1 2020 Earnings Results Review, Twilio (TWLO) Q1 2020 Earnings Results Review, Zendesk (ZEN) Q1 2020 Earnings Results Review.
The Man Who Recommended 23 1,000% Winners Is Revealing His #1 Stock for 2020. At a high level, based on my observations, Fastly’s target audience is mainly developers, certainly evidenced as we look forward to Compute@Edge. Being able to address synchronous use cases at the edge opens up a whole new realm of compute solutions, versus asynchronous job processing. Total revenue of $3.8 billion dipped less than 1% versus last year. My strategy of choice would be buying Oct bull call spreads, such as the $90/$100. Fastly Second Quarter 2020 Q&A Session
This could be seasonality, or a large concentration of customers just under the $100k threshold. In terms of setting a price target, FSLY is currently trading at about $38. I provided a more detailed comparison of competitive edge compute solutions in my original Fastly post. This compares …
In the shareholder letter and on the earnings call, leadership talked about progress with the new Compute@Edge offering. At the midpoint, Q2 annualized revenue growth was increased over 20%. I have been happy with his communications, both on the earnings call and in the shareholder letter. What Apple (AAPL) Investors Can Expect Following Tomorrow's Event, Fidelity Report Says Bitcoin’s Market Cap is ‘Drop in the Bucket’ of Potential, Weekly Preview: Stocks To Watch Ahead Of Third Quarter Earnings, TradeTalks: Opportunities in the Market for Investors and Traders, Markets Undergoing a Reality Check: Fidelity’s Richards. Servers don’t need to sit in a running state waiting for incoming requests. Fastly released their Q1 2020 earnings report on May 6. – Yes, the Q2 revenue guidance raise to nearly 54% was significant. Important factors that could cause our actual results to differ materially are detailed from time to time in the reports Fastly files with the Securities and Exchange Commission (SEC), including in Fastly’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and our Quarterly Reports on Form 10-Q. Was 32% enough of a haircut to eliminate the excess, or do we need to further plumb the depths before equilibrium and a more reasonable valuation is found? Thanks. Thanks for the post, very detailed and informative. Yes! With my coverage of FSLY’s Q4 earnings results, I tried to provide some apples-to-apples financial metrics from both companies. FCF was ($19)M for Q1, representing a FCF margin of -30%. It wouldn’t make sense to cache data locally on Fastly’s edge and then ship it to another edge compute solution to process it. The analyst keeps a Buy rating on the shares. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. Net income, Intuitive Surgical Inc. (NASDAQ: ISRG) reported lower earnings and revenues for the third quarter of 2020, hurt by the coronavirus-related disruption. If you haven’t read that, might be helpful. Q1 EPS was ($0.06) vs. ($0.12) expected, representing a beat of $0.06. Incredibly, all the drop has done is return Fastly to its otherwise rising 50-day moving average. Q2 EPS estimate of ($0.02) to ($0.00) vs. ($0.11) expected, representing a raise of $0.10 at the midpoint. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*. Cash used in operations was $7M in Q1. Fastly management will host a live Q&A session today at 2:00 p.m. PT / 5:00 p.m. ET I don’t want to waste readers’ time or worse, misrepresent a technology underpinning in evaluating Cloudflare. We will need to watch this metric for Q2 and beyond, along with overall customer growth. They see the risks of encroachment on centralized server compute and are investing in extending their dominance to the edge as well. Ended the quarter with cash, cash equivalents and marketable securities of $187M. Discussed increased usage from some customers who are considered technical innovators. First, usage of its platform by its largest customer fell short of expectations.
Instead, we can wait for the price chart to provide evidence that buyers are returning, and that the uptrend is taking root. You must click the activation link in order to complete your subscription.
At the midpoint of the new guidance range, revenue will grow by 41% year over year, a substantial slowdown from the second quarter. Coinciding with the Q1 earnings report, Fastly also announced the transition of its EVP Sales, Wolfgang Maasberg, out of the company. Fastly considered V8, but decided to build their own solution in Lucet. Nice article!
Price-to-sales. Second, once authentication is performed at the edge, it is straightforward to throw in some personalization logic, using cached data about user preferences. Today’s EV/Rev ratio is about 16. While Fastly benefited from surges in usage by some of their customers, like the example with Khan Academy, we have to consider what might happen after the COVID-19 situation clears. Disclaimer | The CEO feels that COVID-19 accelerated various digital transformation initiatives and upgrades to a more modern architectural stack, off of legacy CDN solutions. If the TikTok issue was Fastly's only problem, the guidance cut wouldn't be a big deal.
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