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FSLY Q1 Earnings Beat Estimates on Security and Compute Growth
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Key Takeaways
FSLY posted Q1 2026 non-GAAP EPS of 13 on $173M revenue, up 19.8% year over year.
FSLY security revenues rose 47% to $38.8M; RPO jumped 63% to $369M, signaling stronger commitments.
FSLY lifted 2026 guidance to $710-$725M revenue, citing AI tailwinds in security & compute.
Fastly (FSLY - Free Report) reported first-quarter 2026 non-GAAP earnings of 13 cents per share, beating the Zacks Consensus Estimate by 62.5%. The company reported a loss of 5 cents per share in the year-ago quarter.
Revenues were $173 million, up 19.8% year over year, and edged past the consensus mark by 0.76%. The quarterly results reflected strong execution across the platform, highlighted by accelerating security momentum and rising compute demand tied to increasingly complex edge workloads. Remaining performance obligations (RPO) ended the quarter at $369 million, up 63% year over year, pointing to improved upfront customer commitments.
FSLY Revenue Mix Highlights Platform Breadth
FSLY’s first-quarter growth leaned on continued share gains in core delivery, alongside faster expansion in newer products. Network Services revenues rose 11% year over year to $126.2 million, supported by performance-driven wins in use cases where speed and reliability matter.
Security remained the standout, growing 47% year over year to $38.8 million and reaching record levels in both dollars and mix. The “Other” category, which includes Compute and Observability, jumped 67% year over year to $8 million, reflecting a meaningful step-up in compute adoption versus the year-ago quarter.
Fastly ended the quarter with 634 large customers, defined as those producing more than $100,000 in annualized revenues in the quarter. Management noted it is placing greater emphasis on large customer acquisition as a more meaningful gauge of go-to-market progress.
Retention also improved, with trailing 12-month net retention rising to 113% from 110% in the prior quarter. The company highlighted that retention gains are extending beyond the very largest accounts into a broader range of customers, aligning with a platform approach that supports upsell and cross-sell across network, security and compute.
FSLY Lifts Margins on Efficiency and Accounting Shift
Profitability improved sharply in the quarter as the company continued to emphasize traffic engineering and platform efficiency. Non-GAAP gross margin reached 65.1%, up from 57.3% reported in the year-ago quarter.
Operating expenses increased 15% year over year to $132.1 million.
FSLY’s non-GAAP operating income came in at $19.1 million against an operating loss of $5.85 million.
FSLY ended the quarter with approximately $330 million in cash, cash equivalents and investments. Management highlighted a $31 million sequential decline in cash, primarily driven by the retirement of $39 million of long-term debt that came due in March 2026.
Fastly produced $28.9 million of cash flow from operations in the reported quarter, up from $17.3 million in the year-ago period.
Free cash flow was $4.1 million, though down from $8.2 million a year earlier as infrastructure spending increased year over year.
FSLY Raises 2026 Outlook, Sees AI as Tailwind
For the second quarter of 2026, FSLY guided revenues to $170-$176 million and non-GAAP earnings to 5-8 cents per share.
The company also raised 2026 revenue guidance to $710-$725 million and expects non-GAAP earnings of 27-33 cents per share, reflecting improved profitability expectations as the business scales.
Management framed AI-driven demand as a meaningful tailwind, citing stronger interest in security and compute as customers work to secure and scale automated and agent-driven traffic.
Fastly is seeing agentic-related volume tailwinds in network services and more pronounced security attach as customers protect AI workloads. The company also noted that pricing dynamics in Network Services remain similar to recent quarters as customers unlock volume discounts under existing contracts.
Cisco, Applied Materials and Keysight Technologies are set to report their respective quarterly results on May 13, May 14 and May 19. Year to date, shares of Cisco, Applied Materials and Keysight Technologies have returned 19.7%, 59.9% and 74.8%, respectively.
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FSLY Q1 Earnings Beat Estimates on Security and Compute Growth
Key Takeaways
Fastly (FSLY - Free Report) reported first-quarter 2026 non-GAAP earnings of 13 cents per share, beating the Zacks Consensus Estimate by 62.5%. The company reported a loss of 5 cents per share in the year-ago quarter.
Revenues were $173 million, up 19.8% year over year, and edged past the consensus mark by 0.76%. The quarterly results reflected strong execution across the platform, highlighted by accelerating security momentum and rising compute demand tied to increasingly complex edge workloads. Remaining performance obligations (RPO) ended the quarter at $369 million, up 63% year over year, pointing to improved upfront customer commitments.
FSLY Revenue Mix Highlights Platform Breadth
FSLY’s first-quarter growth leaned on continued share gains in core delivery, alongside faster expansion in newer products. Network Services revenues rose 11% year over year to $126.2 million, supported by performance-driven wins in use cases where speed and reliability matter.
Security remained the standout, growing 47% year over year to $38.8 million and reaching record levels in both dollars and mix. The “Other” category, which includes Compute and Observability, jumped 67% year over year to $8 million, reflecting a meaningful step-up in compute adoption versus the year-ago quarter.
Fastly, Inc. Price, Consensus and EPS Surprise
Fastly, Inc. price-consensus-eps-surprise-chart | Fastly, Inc. Quote
Fastly Expands Customer Base and Commitments
Fastly ended the quarter with 634 large customers, defined as those producing more than $100,000 in annualized revenues in the quarter. Management noted it is placing greater emphasis on large customer acquisition as a more meaningful gauge of go-to-market progress.
Retention also improved, with trailing 12-month net retention rising to 113% from 110% in the prior quarter. The company highlighted that retention gains are extending beyond the very largest accounts into a broader range of customers, aligning with a platform approach that supports upsell and cross-sell across network, security and compute.
FSLY Lifts Margins on Efficiency and Accounting Shift
Profitability improved sharply in the quarter as the company continued to emphasize traffic engineering and platform efficiency. Non-GAAP gross margin reached 65.1%, up from 57.3% reported in the year-ago quarter.
Operating expenses increased 15% year over year to $132.1 million.
FSLY’s non-GAAP operating income came in at $19.1 million against an operating loss of $5.85 million.
Fastly Generates Cash Despite Higher Infrastructure Spend
FSLY ended the quarter with approximately $330 million in cash, cash equivalents and investments. Management highlighted a $31 million sequential decline in cash, primarily driven by the retirement of $39 million of long-term debt that came due in March 2026.
Fastly produced $28.9 million of cash flow from operations in the reported quarter, up from $17.3 million in the year-ago period.
Free cash flow was $4.1 million, though down from $8.2 million a year earlier as infrastructure spending increased year over year.
FSLY Raises 2026 Outlook, Sees AI as Tailwind
For the second quarter of 2026, FSLY guided revenues to $170-$176 million and non-GAAP earnings to 5-8 cents per share.
The company also raised 2026 revenue guidance to $710-$725 million and expects non-GAAP earnings of 27-33 cents per share, reflecting improved profitability expectations as the business scales.
Management framed AI-driven demand as a meaningful tailwind, citing stronger interest in security and compute as customers work to secure and scale automated and agent-driven traffic.
Fastly is seeing agentic-related volume tailwinds in network services and more pronounced security attach as customers protect AI workloads. The company also noted that pricing dynamics in Network Services remain similar to recent quarters as customers unlock volume discounts under existing contracts.
Zacks Rank & Upcoming Earnings to Consider
Fastly currently carries a Zacks Rank #3 (Hold)
Some better-ranked stocks in the broader Zacks Computer and Technology sector that are set to report their quarterly results are Cisco Systems (CSCO - Free Report) , Applied Materials (AMAT - Free Report) and Keysight Technologies (KEYS - Free Report) . Keysight Technologies sports a Zacks Rank #1 (Strong Buy) at present, while Cisco and Applied Materials carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cisco, Applied Materials and Keysight Technologies are set to report their respective quarterly results on May 13, May 14 and May 19. Year to date, shares of Cisco, Applied Materials and Keysight Technologies have returned 19.7%, 59.9% and 74.8%, respectively.