Fastly (NYSE:FSLY) reported a fourth-quarter and full-year 2025 performance that management said marked a turning point for the company, highlighted by accelerating revenue growth, record profitability metrics, and its first profitable fiscal year. CEO Kip Compton, who has been in the role for seven months, said the company is focused on “disciplined execution” to drive growth and profitability, and said the fourth quarter reflected that progress with results “exceeding expectations across the board.”
Fourth-quarter results: record revenue and margin expansion
Fastly posted fourth-quarter revenue of $172.6 million, up 23% year over year, exceeding the company’s guidance range of $159 million to $163 million. CFO Rich Wong said the quarter represented a record high for Fastly and the largest sequential dollar revenue growth in company history. Fastly also reported record gross margin of 64%, which Wong said was driven largely by gross margin flow-through on higher revenue and a “stronger, balanced traffic mix” across delivery and security customers.
- Operating income: $21.2 million (non-GAAP), above the company’s $8 million to $12 million guidance range
- Operating margin: 12.3%, up sequentially from 7.3%
- Net profit: $20.1 million, or $0.12 per diluted share, versus a net loss of $2.4 million in Q4 2024
- Adjusted EBITDA: $35.0 million versus $11.1 million in Q4 2024
- Free cash flow: positive $8.6 million versus negative $7.9 million in Q4 2024
Compton said the quarter also marked Fastly’s fourth straight quarter of positive free cash flow, while Wong said 2025 was Fastly’s first profitable year.
Business mix: network services strength and security acceleration
Fastly’s network services revenue was $130.8 million, up 19% year over year. Compton attributed strength to stronger-than-expected event performance and large customers sending more traffic to Fastly due to prioritization of network stability, performance, and resilience. During Q&A, he added that industry events have “called more attention to the value of resiliency,” and said Fastly has taken architectural steps it believes enable a more resilient platform.
Security revenue was $35.4 million, up 32% year over year and representing 21% of total revenue. Management emphasized product expansion and cross-sell as key drivers. Wong said the majority of security revenue still comes from Fastly’s web application firewall (WAF), while noting traction in bot management and API security. Compton added that some of Fastly’s largest new deals are tied to API use cases.
Fastly’s “other products” revenue grew 78% year over year to $6.4 million, driven primarily by compute product sales.
Customer metrics, RPO growth, and reporting changes
Fastly ended the quarter with 3,092 total customers and 628 enterprise customers (those generating more than $100,000 in annualized revenue in the quarter). Wong said enterprise customers historically account for over 90% of revenue; as a result, Fastly plans to stop disclosing total customer count beginning next quarter.
Trailing twelve-month net retention rate (NRR) rose to 110%, up from 106% in the prior quarter. Meanwhile, Fastly reported full-year annual revenue retention of 98.7% (down slightly from 99.0% in 2024) and said it will no longer report the annual revenue retention rate going forward, arguing the metric is less useful than LTM NRR and is only disclosed once per year.
Fastly’s remaining performance obligations (RPO) increased to $353.8 million, up 55% year over year; 70% was classified as current RPO, which grew 37% year over year. Management attributed the RPO growth to improved go-to-market discipline, including efforts to secure larger upfront commitments and reduce volatility from consumption-based revenue dynamics. In response to investor questions about concentration, management said the RPO increase was “broad-based” across the customer base and reflected a shift among larger customers toward making commitments.
AI, product launches, and platform positioning
Management repeatedly described AI as a tailwind. Compton said Fastly is seeing increased agentic traffic (which he compared to machine-to-machine activity), more AI workloads running on Fastly’s platform (including storage of large datasets and inference workloads using Compute at Edge), and opportunities to help customers manage crawlers and AI bots through AI-specific offerings such as AI bot mitigation.
Compton also highlighted product releases including:
- API Inventory, which builds on API Discovery (launched in Q3 2025)
- Custom dashboards and alerts for platform-wide customers
- AI Assistant in beta, an in-console feature aimed at accelerating adoption
Fastly also noted recognition from Gartner Peer Insights, stating it received a 2025 Customers’ Choice Award for Cloud Web Application and API Protection and that it is the only company to earn the recognition seven straight years.
Balance sheet actions, CapEx outlook, and 2026 guidance
Fastly ended the quarter with approximately $362 million in cash, cash equivalents, marketable securities, and investments. Wong said the company raised $180 million in 0% convertible notes due 2030 with a 32.5% conversion premium and entered into $18 million of privately negotiated cap call transactions representing a 100% conversion premium (share price of $23.04).
On capital spending, Wong said 2025 cash CapEx was 9% of revenue, below prior expectations due to timing of about $10 million that shifted into 2026. He outlined changes to reporting, including a plan to focus investor discussions on infrastructure capital expenditures (property and equipment) and remove capitalized internal-use software from the headline CapEx discussion. For 2026, Fastly expects infrastructure CapEx of 10% to 12% of revenue, and said spending will be front-end loaded amid supply chain constraints. Wong cited memory component pricing that could rise 25% to 75% year over year, while noting the increase relates to the memory component itself, not the overall infrastructure unit cost. He also said most of the higher infrastructure CapEx is expected to support growth rather than maintenance, including investment in additional POPs in the APJ region.
For guidance, Fastly said it is incorporating ByteDance revenue going forward unless otherwise specified, noting that ByteDance finalized a deal in January to restructure its U.S. business so the platform can continue operating in the United States.
For Q1 2026, Fastly guided to:
- Revenue: $168 million to $174 million (18% year-over-year growth at the midpoint)
- Gross margin: 64% ± 50 basis points
- Non-GAAP operating profit: $14 million to $18 million
- Non-GAAP EPS: $0.07 to $0.10 (with ~175 million fully diluted shares for positive EPS)
For full-year 2026, Fastly guided to:
- Revenue: $700 million to $720 million (14% growth at the midpoint)
- Gross margin: 63% ± 50 basis points
- Non-GAAP operating profit: $50 million to $60 million (8% operating margin at the midpoint)
- Non-GAAP EPS: $0.23 to $0.29
- Free cash flow: $40 million to $50 million
Wong also addressed seasonality expectations for gross margin, stating Q1 and Q4 should be higher, with a drop expected in Q2 and Q3 as additional colocation sites and POPs come online.
In closing remarks, Compton said the quarter demonstrated “tangible progress” in Fastly’s transformation and reiterated a commitment to building “sustainable, profitable growth.”
About Fastly (NYSE:FSLY)
Fastly, Inc operates an edge cloud platform designed to accelerate, secure and enable modern digital experiences. The company offers a suite of services including a content delivery network (CDN), edge compute, load balancing, web application firewall (WAF) and DDoS protection. Fastly’s real-time architecture allows customers to seamlessly deploy software logic at the network edge, reducing latency by bringing applications and content closer to end users.
Founded in 2011 by Artur Bergman, Fastly has evolved from a pure-play CDN provider into a comprehensive edge cloud platform.
