Fastly — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue reached $190.2 million, a 20% year-over-year increase from $158.2 million in the third quarter of 2025.
• Nine-month revenue totaled $546.5 million, up from $451.4 million in the same period of 2025.
• GAAP gross margin was 63.3% compared to 58.4% in the prior year quarter; Non-GAAP gross margin was 65.8% compared to 62.8%.
• Nine-month GAAP gross margin was 63.0% versus 55.4% in 2025; Nine-month Non-GAAP gross margin was 65.6% versus 59.8%.
• GAAP loss from operations was $11.3 million (5.9% of revenue) compared to a $28.8 million loss (18.2% of revenue) in the prior year quarter.
• Non-GAAP income from operations was $31.2 million (16.4% of revenue) compared to $11.6 million (7.3% of revenue) in the prior year quarter.
• Nine-month GAAP loss from operations was $49.6 million compared to $103.9 million in 2025; Non-GAAP income from operations was $77.3 million compared to $1.2 million.
• GAAP net loss was $11.3 million compared to $29.5 million in the prior year quarter; Non-GAAP net income was $31.6 million compared to $11.1 million.
• GAAP net loss per share (basic and diluted) was $0.07 compared to $0.20 in the prior year quarter.
• Non-GAAP net income per share (basic) was $0.20 compared to $0.08; Non-GAAP net income per share (diluted) was $0.17 compared to $0.07.
• Operating cash flow was $40.0 million compared to $28.9 million in the prior year quarter.
• Free cash flow was $25.2 million compared to $18.1 million in the prior year quarter.
• Cash and cash equivalents were $113.5 million as of September 30, 2026, down from $180.6 million as of December 31, 2025.
• Total assets were $1.54 billion as of September 30, 2026, compared to $1.50 billion as of December 31, 2025.
• Total liabilities were $540.4 million as of September 30, 2026, compared to $569.9 million as of December 31, 2025.
• Long-term debt, net, was $324.3 million as of September 30, 2026, compared to $323.3 million as of December 31, 2025.
• Deferred revenue was $33.3 million as of September 30, 2026, compared to $35.2 million as of December 31, 2025.

Guidance and Future Outlook:

• Full year 2026 total revenue guidance is $744.0 million to $748.0 million.
• Full year 2026 Non-GAAP income from operations guidance is $107.0 million to $111.0 million.
• Full year 2026 Non-GAAP net income per share guidance is $0.61 to $0.63.
• Fourth quarter 2026 total revenue guidance is $198.0 million to $202.0 million.
• Fourth quarter 2026 Non-GAAP income from operations guidance is $30.0 million to $34.0 million.
• Fourth quarter 2026 Non-GAAP net income per share guidance is $0.16 to $0.18.
• Management noted that a reconciliation of non-GAAP guidance to GAAP measures is not available due to the uncertainty of future expenses such as stock-based compensation, litigation, and impairment.

Business Segments and Product Lines:

• Network Services revenue was $138.0 million, up 16% year-over-year.
• Security revenue was $44.7 million, up 32% year-over-year.
• Other revenue (Compute and Observability solutions) was $7.4 million, up 37% year-over-year.
• Launched AI Runtime Control, AI Firewall, and new API Security capabilities to expand the Fastly for AI portfolio.
• Partnered with Comcast to integrate Fastly software into Comcast's nationwide network for hyper-local content delivery and edge AI services.
• Partnered with Ingram Micro in Singapore to enable enterprises to build and scale AI-ready applications.
• Appointed Tricia Yankovich as Chief People Officer.

Market and Competitive Landscape:

• Last 12-month net retention rate (LTM NRR) increased to 119% in the third quarter, the highest level since 2022, up from 117% in the second quarter.
• Remaining Performance Obligations (RPO) were $334 million, up 24% from $268 million in the third quarter of 2025.
• Multiproduct adoption among large customers reached 74% for two or more product suites (up 7 percentage points year-over-year) and 34% for four or more product suites (up 15 percentage points year-over-year).
• The top ten customers accounted for 39% of revenue in the third quarter of 2026, compared to 32% in the third quarter of 2025.
• Recognized as a 2026 Gartner Peer Insights Customers' Choice for Edge Distribution Platforms with a 4.8 out of 5 stars rating and 95% Willingness to Recommend score.
• Joined DIMPACT as the first edge cloud platform provider to help media and publishing companies measure and optimize digital carbon footprints.

Risks and Challenges:

• The press release includes standard forward-looking statement warnings regarding risks, uncertainties, and factors that could cause actual results to differ materially from expectations, including market share growth, product performance, and partnership benefits.
• Specific risks mentioned include stock-based compensation expense, shareholder litigation expenses, impairment expenses, and other items that could be material to future GAAP financial results.
• Actual results may be affected by the timing and magnitude of asset purchases and acquisitions impacting amortization of acquired intangible assets.

Management Commentary and Tone:

• CEO Kip Compton stated that record results reflect strong execution as customers adopted more products and deepened platform usage.
• Management highlighted that delivering record revenue and free cash flow demonstrates the value proposition in helping customers achieve critical business outcomes and build for AI scale.
• The tone was confident, emphasizing the achievement of record financial metrics and the successful expansion of the AI portfolio.

Analyst Questions and Answers:

• No specific analyst questions and answers were included in the provided press release text.

Other Key Points:

• Conference call scheduled for November 4, 2026, at 1:30 p.m. PT / 4:30 p.m. ET.
• Webcast replay available on the investor website starting approximately two hours after the event.
• Adjusted EBITDA for the third quarter of 2026 was $43.5 million, compared to $25.7 million in the prior year quarter.
• Nine-month Adjusted EBITDA was $111.1 million, compared to $42.4 million in the prior year period.
• Stock-based compensation expense for the quarter was $34.9 million.
• Impairment expense for the quarter was $1.0 million.
• Shareholder litigation related expenses for the quarter were $0.2 million.