Edge cloud platform Fastly (NYSE:FSLY) announced better-than-expected revenue in Q4 CY2025, with sales up 22.8% year on year to $172.6 million. On top of that, next quarter’s revenue guidance ($171 million at the midpoint) was surprisingly good and 6.9% above what analysts were expecting. Its non-GAAP profit of $0.12 per share was significantly above analysts’ consensus estimates.
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Fastly (FSLY) Q4 CY2025 Highlights:
- Revenue: $172.6 million vs analyst estimates of $161.4 million (22.8% year-on-year growth, 6.9% beat)
- Adjusted EPS: $0.12 vs analyst estimates of $0.06 (significant beat)
- Adjusted Operating Income: $21.23 million vs analyst estimates of $10.16 million (12.3% margin, significant beat)
- Revenue Guidance for Q1 CY2026 is $171 million at the midpoint, above analyst estimates of $160 million
- Adjusted EPS guidance for the upcoming financial year 2026 is $0.26 at the midpoint, beating analyst estimates by 98.6%
- Operating Margin: -8.7%, up from -24.4% in the same quarter last year
- Free Cash Flow Margin: 5%, down from 11.4% in the previous quarter
- Net Revenue Retention Rate: 110%, up from 106% in the previous quarter
- Market Capitalization: $1.36 billion
Company Overview
Taking its name from the core advantage it delivers to customers, Fastly (NYSE:FSLY) operates an edge cloud platform that processes, secures, and delivers web content as close to end users as possible, enabling faster digital experiences.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Fastly grew its sales at a 16.5% annual rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the software sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Fastly’s recent performance shows its demand has slowed as its annualized revenue growth of 11.1% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, Fastly reported robust year-on-year revenue growth of 22.8%, and its $172.6 million of revenue topped Wall Street estimates by 6.9%. Company management is currently guiding for a 18.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 6.9% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will face some demand challenges.
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Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Fastly’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 105% in Q4. This means Fastly would’ve grown its revenue by 5% even if it didn’t win any new customers over the last 12 months.
Trending up over the last year, Fastly has an adequate net retention rate, showing us that it generally keeps customers but lags behind the best SaaS businesses, which routinely post net retention rates of 120%+.
Key Takeaways from Fastly’s Q4 Results
We were impressed by Fastly’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 13.6% to $10.59 immediately following the results.
Sure, Fastly had a solid quarter, but if we look at the bigger picture, is this stock a buy? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
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