Fastly
shares have cratered on Thursday after the internet infrastructure provider posted mixed results for the fourth quarter, issuing slightly disappointing guidance for both the first quarter and all of 2024.
Expectations were clearly high. Fastly shares had rallied 32% for the year through the close of Wednesday’s regular trading session, leaving them up 70% over the past 12 months.
Fastly stock was off 29% on Thursday afternoon.
For the quarter, Fastly reported revenue of $137.8 million, below the Street consensus call of $139.5 million. Revenue increased 15.5% from a year earlier and 8% sequentially, but fell a little short of the consensus call for $139.5 million among analysts tracked by FactSet. On an adjusted basis, the company posted a profit of a penny a share, compared with the Street’s consensus forecast for a loss of two cents.
Non-GAAP gross margin in the quarter improved to 59.2%, from 57% a year earlier.
For the full year, Fastly posted revenue of $506 million, up 17% from a year earlier, with an adjusted loss of 17 cents a share.
For the first quarter, Fastly sees revenue ranging from $131 million to $135 million, with a non-GAAP loss of between five cents and nine cents a share. The Street consensus had called for $135.5 million in revenue and a loss of three cents.
Fastly’s full-year guidance calls for revenue of between $580 million and $590 million, a range whose midpoint would represent an increase of 15.6%. The Street consensus call had been $586 million.
Fastly sees full-year net income ranging between break-even and a loss of six cents, while the Street had been expecting a loss of three cents a share.
Analysts note that Fastly blamed the softer quarterly results on lower-than-anticipated revenue traffic from one particular customer in one international market. CEO Todd Nightingale tried to explain the issue on the company’s conference call with investors.
“There’s a handful of countries in the world where delivery services are just very expensive because of the way Internet service providers and technology vendors operate in that country and the rate is very high, and we don’t pass all of that cost onto our customers,” Nightingale said on the call. “So because of that, the margins tend to be very low. When we see a spike of traffic in a region like that, we see an increase in the top line, but a headwind to gross margin. And we saw that in Q3 and we saw it come down in Q4, which was the headwind on the top line and the tailwind on gross margin.”
Write to Eric J. Savitz at [email protected]
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