Fastly, Inc. (FSLY.US) 2025年第三季度业绩电话会
文章语言：
简
繁
EN
Share
Minutes
原文
会议摘要
Fastly reported robust Q3 2025 financials with revenue of $158.2 million, a 62.8% gross margin, and record $18 million in free cash flow. The company attributed its success to scale, engineering investments, and a focus on innovation, including security and AI enhancements. Key initiatives included international expansion, particularly in the Asia Pacific, and successful customer engagements across various regions. Fastly raised its full-year 2025 revenue guidance to $610-$614 million, projecting improved operating margins and free cash flow. The company expressed confidence in its strategic execution, growth potential, and profitability, planning to attend four industry conferences in Q4 2025 to further engage with the market.
会议速览
Fastly's Q3 2025 Earnings Call: CEO and CFO Discuss Results, Risks, and Future OutlookThe call began with Rebecca, the operator, welcoming participants to Fastly's Q3 2025 earnings conference. The CEO and CFO addressed the call, outlining forward-looking statements, risks, and the company's future prospects. They mentioned attending four conferences in Q4 and discussed non-GAAP financial measures, emphasizing the importance of reviewing SEC filings for risk factors. The webcast and replay details were provided for further access.
Record Q3 Results Highlight Fastly's Accelerated Growth and Strategic Platform WinsFastly reports record Q3 revenue, operating income, and free cash flow, driven by strong margin leverage and operational efficiency. The company attributes its success to platform expansion, cross-selling strategies, and strategic wins with major clients. Innovation in security and AI enhancements, along with a robust go-to-market transformation, have positioned Fastly for continued growth and customer acquisition.
Leadership's Commitment to Platform Growth and Financial TargetsA strategic focus on platform expansion, customer value, and international growth, highlighted by confident financial target adjustments and the introduction of a new CFO to lead scaling efforts.
Q3 Financial Highlights and Strategic Growth at Facade Edge CloudThe company celebrates Q3 achievements, including record revenues, gross margins, and profitability, attributing success to strategic customer wins, new acquisitions, and upselling. A rigorous budgeting process and focus on ROI are planned for future growth, supported by additional finance staff and a new accounting officer. Excitement surrounds the potential to unlock value for customers and shareholders through edge cloud technology.
Q3 Financial Highlights: Revenue Growth, Gross Margin Expansion, and Positive Cash FlowRevenue increased by 11% YoY to $118.8M, driven by healthy traffic and successful strategies. Gross margin expanded to 62.8%, surpassing guidance. Cash flow from operations was $28.9M, up from $5M YoY, indicating strong financial health.
2025 Revenue Growth and Profitability Projections Amid Strategic ChangesThe company forecasts robust revenue growth, improved margins, and significant cash flow improvements for 2025, with a focus on strategic adjustments impacting TikTok operations and broader market opportunities.
Analysis of Network Services Growth and Competitor ImpactDiscusses the year-over-year growth in network services, attributing it to retention and expansion strategies, while also considering the potential market impact of a competitor's phase-out.
Q4 Guidance, Seasonal Trends, and Booking Performance in Network ServicesDiscussion covers Q4 guidance, noting a prudent approach despite strong Q3 traffic and bookings, with no unusual seasonal trends observed in network services, leading to a raised guidance by $6.8 million.
Strong Demand for New Security Offerings Across Multiple Product LinesA discussion highlights robust market reception for recent security product launches, including AI bot management and dbos capabilities, contributing to growth in the next gen lab portfolio.
Winning Over Competitors: The Role of Product Performance and Support in Customer AdoptionA company's success in displacing large competitors is attributed to its superior product performance and customer support, with many customers adopting the product after positive experiences at previous employers. This trend highlights the importance of these factors in customer decision-making and presents ongoing opportunities for growth.
International Expansion Strategy: Sales Coverage and Market OpportunitiesDiscusses the strategic focus on increasing sales coverage in international markets, particularly in Asia Pacific, highlighting early positive returns and plans for further investment and growth in the coming year.
Analysis of Security Revenue Growth and Its Impact on Q4 and BeyondThe dialogue discusses the significant increase in security revenue, particularly noting the benefits from a large deal early in the quarter. It reassures that this revenue is recurring and not one-time, expecting it to continue into Q4. Additionally, it highlights the potential for further growth through cross-selling within the top 10 customer cohort, emphasizing the platform strategy's success with major clients.
Analysis of Sequential Growth and Gross Margin TrendsDiscussion on expected Q4 sequential growth contrasts with historical trends, attributing factors to special pickups and security interest. Gross margin improvements highlighted, citing scale and engineering efficiency gains, with Q4 guidance reflecting sustained advantages.
Security Growth and Net Retention Rate TrendsDiscussed stabilization of security market volatility, highlighting accelerated growth despite a large deal. Explored future net retention rate improvements, noting investments in cross-sell and upsell are paying off, with expectations of continued growth beyond current 106% rate.
Strong Q3 Momentum and Commitment to Edge Platform GrowthA call was concluded with remarks on achieving progress in transformation, emphasizing commitment to developing a powerful edge platform, expressing gratitude towards employees, customers, and investors, and focusing on sustainable, profitable growth.
要点回答
Q：What are the key achievements and focus areas of the new CFO Bridge Wong?
A：Bridge Wong, the new CFO, aims to scale the business, maintain strong cost discipline, and has already made a difference as evidenced by the company's key financial results. He is involved in implementing a rigorous budgeting process, enhancing the return on investment, and has added staff in the finance function to support these efforts.
Q：Why did Bridge Wong choose to join the company and what opportunities does he see?
A：Bridge Wong chose to join Facade because he was excited by the potential of fleet technology in securing performance among edge cloud platform companies. He believes the company is well-positioned for Edge Cloud at the right time, sees workloads shifting to the edge to complement central clouds, and believes there is an opportunity to unlock value for customers and shareholders.
Q：What financial strategies and improvements are being implemented by the company?
A：The company is implementing a rigorous budgeting process across the company with a focus on the return on investment and is building discipline around the ROI of their spend with a goal towards growth and scale. They have added staff in the finance function to support these efforts.
Q：What were the financial results and growth drivers for the third quarter?
A：Revenue for the third quarter increased 15% year over year to $158.2 million, exceeding the high end of the guidance range. This was driven by three key factors: successful cross-monetization, competitive share gains through new customer acquisitions, and greater upsell with existing network services customers. Network services revenue grew 11%, security revenue grew 30%, and other price revenue grew 51% year over year.
Q：What is the customer retention and concentration like?
A：In the third quarter, the top 10 customers represented 32% of revenue, while revenue from customers outside the top 10 grew 17% year over year and 5% sequentially. No single customer accounted for more than 10% of revenue. The 12-month net retention rate was 106%, up from 104% in the prior quarter and 105% in the year-over-year quarter.
Q：What error was discovered in the company's RPO reporting and what impact does it have?
A：During the third quarter of 2025, an error in how the company historically captured RPO around the treatment of termination for convenience rights was discovered. This resulted in a recalculation of historical RPO, and the company wants to emphasize that this change will not impact their focus on increasing the number of customers with revenue commitments.
Q：How did the company's gross margin perform in the third quarter?
A：The company's gross margin was 62.8% in the third quarter, coming in 330 basis points above the guidance midpoint at 59.5% and up 410 basis points from 58.6%. Nonrecurring cost of revenue tailwinds and gross margin leverage on the revenue upside contributed to this performance.
Q：What were the highlights of the company's operating expenses and operating income?
A：Operating expenses were $87.7 million in the third quarter, slightly better than expected due to lower discretionary spend and a rigorous cost management process. This resulted in an operating income of $11.6 million, within the expected range of $1 million loss to $3 million profit.
Q：How is the company's cash position and liquidity described?
A：The company ended the quarter with approximately $343 million in cash, cash equivalents, and investments, including those classified as long-term. The March 2020 6.0% 2.0% convertible notes balance of $188 million from the first quarter is also reflected in current liabilities. The company has adequate liquidity to cover working capital, operating requirements, and the March 2026 Convertible Notes liquidation payment.
Q：What was the company's cash flow from operations and free cash flow in the third quarter?
A：The cash flow from operations was positive $28.9 million in the third quarter compared to positive $5 million in the prior year's third quarter. The free cash flow for the third quarter was $18.1 million, a $25.2 million increase from a negative $7.1 million in the prior year's third quarter.
Q：What is the company's outlook for the fourth quarter and full year of 2025?
A：The company's revenue model is based on customer consumption, which can lead to variability in quarterly results. Their revenue guidance for the fourth quarter and full year of 2025 reflects the current visibility they have, and actual results may differ materially. The company undertakes no obligation to update these forward-looking statements except as required by law.
Q：What is the anticipated operating profit and net earnings per share for the fourth quarter?
A：The anticipated non GAAP operating profit for the fourth quarter is between $8 million and $12 million, and the non GAAP net earnings per share is expected to be in the range of 4 cents to 8 cents.
Q：What is the updated revenue guidance for the year 2025?
A：For the year 2025, the revenue guidance is raised to a range of $610 to $614 million, reflecting annual growth of 13% at the midpoint.
Q：How is the delivery business expansion tracking compared to overall company performance?
A：The delivery business is accelerating, but it's not providing much detail on the specifics of the expansion relative to overall company performance. The focus is on the year-over-year growth rate of 11% for network services, which includes the delivery business.
Q：What opportunities are there for customer engagement following discussions around Ael?
A：There has been some discussion around the potential opportunity for customers to adopt a more DIY approach following Ael's actions. However, it is noted that any opportunities resulting from this would be significantly smaller than the tailwind previously experienced.
Q：What should be considered as one-time or noteworthy items in the quarter?
A：The quarter had a confluence of events, including a very good cross-sell, a top 10 customer buying all three products, and very strong bookings from existing customers in the first month, contributing to a swift narrative and positive financial results.
Q：How is the seasonal trend in the delivery business in Q4 trending so far?
A：The seasonal trend in the delivery business for Q4 is tracking well, with continued good traffic from Q3. This is why they are feeling confident in raising the guidance by about $6.8 million from the consensus estimate.
Q：Where is the most strength being seen in the security portfolio and demand generation?
A：The strength in the security portfolio is broad-based, with new offerings such as the AI bot management and DBOS capability receiving very well and being implemented by customers in combination. The newly launched products are contributing to growth in the award-winning leading next gen lab.
Q：What reasons did large competitors choose Vastly and what does the opportunity look like going forward?
A：The transcript does not provide specific reasons why large competitors chose Vastly or how that choice led to them standardizing on the company's products. However, the new product offerings are contributing to growth and the opportunity going forward is implied to be positive as the company continues to enhance its products and maintain a strong competitive position.
Q：What has been the impact of former employees advocating for the company's products at their new workplaces?
A：Former employees have been instrumental in advocating for the company's products at their new workplaces, leading to the company winning accounts where they had previously worked, as a result of reduced product trials against prior employers.
Q：What is the company's international expansion strategy and what recent investments have been made?
A：The company's international expansion strategy is focused on sales coverage and pursuing opportunities in areas outside of the United States, where it is under-indexed. Recent investments include hiring a new leader for the APJ region and increasing focus on Europe due to a smaller number of time zones and the benefits of having a dedicated leader.
Q：What are the expected benefits of recent hires and the focus on specific regions?
A：Recent hires, including a new leader for the APJ region, are expected to increase sales coverage, especially in the APJ region. This is anticipated to result in more opportunities and better positioning of the platform for customers, with potential for significant benefits in the coming year as these investments become more apparent.
Q：What is the projected growth for the security revenue in the upcoming quarters?
A：The company expects the security revenue to grow sequentially in Q4 and into the next year. While there are no one-time, large, non-repeating deals, the recent success is expected to contribute to the growth, with a full quarter of benefit anticipated from the recent increase in security revenue.
Q：What is the expected contribution from the large security deal mentioned in Q3?
A：The large security deal mentioned in Q3 is expected to provide a full quarter of benefit as it is fully ratable revenue and will repeat in Q4.
Q：What trends were observed with the top 10 customers in terms of revenue growth and expansion into security?
A：The top 10 customers have significantly contributed to revenue growth, with one top 10 customer expanding into security. The company has not observed anything out of the ordinary with this cohort, other than the significant security cross-sell mentioned. They expect the business to follow normal seasonality and are excited about the potential for additional upside in applying their platform strategy even with their largest customers.
Q：What was the sequential growth in network services for the quarter mentioned in the speech?
A：The sequential growth in network services for the quarter was about $4 million up.
Q：What is the Q4 guidance regarding gross margins and traffic engineering?
A：The Q4 guidance is to continue the advantage built in Q3 with the traffic engineering that has been done.
Q：What does the speaker indicate about the stabilization of volatility in security growth excluding a one-time deal?
A：The speaker indicates that in their internal analysis, when a one large deal was excluded, there was still accelerated growth in security, suggesting that the volatility is stabilizing and not being driven solely by the one-time deal.
Q：What does the company believe about the future trajectory of the net retention rate?
A：The company is proud of the net retention rate improvement this quarter and believes there is room for further increase. They think it will grow in line with cross-selling efforts. The net retention rate is a last 12 months metric and they expect it to improve in Q4 as they lap some 2024 headwinds.
Fastly, Inc.
Follow
