The stock market was having a generally negative day on Thursday, with all three major averages down by more than 1% at 10 a.m. ET. However, edge computing company Fastly (NYSE: FSLY) was having an awful day, with shares down by more than 30% to a new 52-week low.
The big news dragging down FSLY stock isn’t its most recent earnings. The company’s adjusted losses per share of -10 cents and revenue of $97.72 million beat out estimates. Wall Street was expecting -15 cents per share on revenue of $92.48 million.
Instead, it’s Fast’s outlook for the upcoming year that has its stock slipping today. That includes adjusted per-share losses ranging from 13 cents to 15 cents on revenue of $97 million to $100 million for Q1. Unfortunately, that doesn’t look too good next to analysts’ estimates of -13 cents per share on revenue of $97.98 million.
Fastly Q4 earnings
After it delivered accelerated growth in the third quarter, investors knew Q4 would be a challenge for the company. Going into the period, Fastly management guided for revenue to grow just 8% to 12% year over year — down from 23% growth in Q3. The company faced two major growth headwinds in Q4: A tough year-ago revenue comparison. The lapping of its acquisition of Signal Sciences in the fourth quarter of 2020.
Customer count at the end of the quarter was 2,804 — up from 2,748 in the third quarter of 2021 and 2,326 in the year-ago period. But the year-over-year growth in customers was helped by the company’s new customers from its acquisition of security specialist Signal Sciences.
Despite reporting solid fourth-quarter results relative to expectations. The company’s guidance for 2020 revenue to be between $400 million and $410 million was below analysts’ average forecast for revenue of $419 million. In addition, the company’s expectations for its profitability in 2022 disappointed. Fastly said it expects its adjusted loss per share to be between $0.50 and $0.60 this year — wider than a consensus forecast for $0.48.
Fastly’s forecast is about $405 million of revenue (at the midpoint of Fastly’s guidance range) in 2022 and a non-GAAP loss per share of approximately $0.55, compared to 2021 revenue and adjusted earnings per share of $354 million and a loss of $0.48, respectively.
Management Word
Joshua Bixby, CEO of Fastly, doesn’t seem worried about its weak 2022 guidance. He said the following in the most recent earnings report.
“Coupled with a strong roadmap of new products, including our recent launch of Fastly’s Next-Gen WAF, the industry’s first and only unified WAF. We are excited about our opportunities in 2022 as we expand our network and capture the future growth potential of our edge cloud network.”
Trading of Fastly stock is on the rise today as investors react to today’s news. As a result, some 16 million shares have traded hands as of this writing. For the record, that’s well above the company’s daily average trading volume of about 2.8 million shares
