Fastly (FSLY Quick QuoteFSLY - Free Report) runs an edge cloud platform that helps developers build, secure, and deliver digital experiences closer to end users. That proximity matters for latency-sensitive workloads like streaming, e-commerce, and emerging artificial intelligence applications. 

The story is about convergence. Fastly sits between traditional content delivery networks and modern cloud infrastructure, pairing delivery performance with a growing security stack and edge compute capabilities. While execution is improving, volatility remains part of Fastly’s setup.

FSLY at a Glance: What the Edge Cloud Platform Does

Fastly’s platform processes traffic at the edge, reducing latency and improving performance for real-time digital experiences. The company positions itself as a bridge between classic content delivery networks and cloud-based infrastructure services. 

That positioning expands the addressable opportunity. Fastly combines content delivery network functionality with security and application delivery capabilities that have historically been handled by appliances, while also extending into AI-driven workloads. 
 

Fastly, Inc. Price and Consensus

Fastly, Inc. price-consensus-chart | Fastly, Inc. Quote

However, competition is intense for Fastly. The landscape includes legacy content delivery network providers such as Akamai (AKAM Quick QuoteAKAM - Free Report) and large cloud platforms like Alphabet (GOOGL Quick QuoteGOOGL - Free Report) via Google Cloud and Amazon (AMZN Quick QuoteAMZN - Free Report) through Amazon Web Services, which sets a high bar for differentiation on performance, resiliency, and security outcomes. 

Year to date (YTD), Fastly shares have outperformed the broader Zacks Computer and Technology sector as well as Akamai, Alphabet and Amazon. While the broader sector returned 9.1% YTD, shares of Akamai, Alphabet and Amazon have climbed 9.4%, 11.6% and 12.6%, respectively.

Fastly Revenue Mix: Where Growth is Coming From

Fastly generates revenue primarily through usage-based pricing tied to bandwidth consumption and platform utilization. In 2025, total revenues were $624 million, up 15% year over year. Usage-based revenue represented about 96% of total revenue in 2025 versus 95% in 2024. Growth has been driven mostly by existing customers increasing consumption. New customer revenue contributed under 10% in both 2024 and 2025, reinforcing that expansion inside the installed base is the main engine. However, the trailing 12-month net retention rate exited 2025 was at 110%, pointing to stronger expansion dynamics.

Large accounts are becoming more influential. In the fourth quarter of 2025, the top 10 customers accounted for 34% of revenue, and revenue from the top 10 customers increased 28% year over year versus 20% growth from customers outside the top 10. Enterprise customer count was 628 in the quarter, up 32 from a year earlier. Commitments also moved higher. Remaining Performance Obligations were $354 million in the fourth quarter of 2025, up 55% year over year, improving visibility even as usage patterns can still shift quarter to quarter.

Security, which contributed 20% of Fastly’s revenue, is positioned as a “land” motion that can expand into delivery and compute, increasing customer attachment and committed revenue as customers adopt more features across the platform. In the fourth quarter of 2025, Security accelerated, led by strength in API Security and Bot Management. Fastly also pointed to increasing AI-related activity as a tailwind, including rising “agentic” traffic, opportunities in AI bot mitigation, and AI workloads running on the platform. 

Product updates support that momentum. Fastly expanded API Security capabilities with API Inventory, released a beta version of AI Assistant inside the console, broadened availability of Custom Dashboards and Alerts, and enhanced the Adaptive Threat Engine to improve detection and mitigation of short-lived distributed denial-of-service attacks.

Here is Why Volatility Remains a Core Part of FSLY’s Story

Fastly’s usage-based model creates inherent variability. Seasonality can drive quarter-to-quarter swings in revenue and margins, and guidance pointed to first-quarter 2026 revenue that could be slightly below the fourth quarter of 2025 level.  Margins can also move with infrastructure timing. The second and third quarters are expected to be lower-margin periods as new points of presence come online, adding fixed costs before seasonal recovery later in the year. 

Cost and pricing pressures remain key watch-outs. Infrastructure capital expenditure is expected to step up, with component pricing, notably memory, expected to be higher than in 2025. Delivery price erosion tightened to mid-single digits in the fourth quarter of 2025, but competitive dynamics and large-enterprise negotiations could reintroduce yield pressure. Concentration is another factor, with top-10 customers in the low-to-mid 30% range and ByteDance included in guidance, underscoring reliance on large accounts.

Fastly Offers Positive Guidance

Fastly’s 2026 outlook frames the next checkpoints. Guidance calls for 2026 revenue of $700 million to $720 million, non-GAAP earnings of 23 cents to 29 cents, non-GAAP operating income of $50 million to $60 million, and free cash flow of $40 million to $50 million. 

Infrastructure investment is a central execution lever. This Zacks Rank #3 (Hold) company expects infrastructure capital expenditure at 10% to 12% of revenue in 2026. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

FSLY plans to front-load spending to add points of presence and expand capacity, including in Asia-Pacific and Japan. This bodes well for growth prospects over the long term.