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Sep 30, 2020
Fastly Q3 2020 Earnings Report
Fastly's platform experienced continued demand driven by strong business fundamentals.
Key Takeaways
Fastly's Q3 2020 results were impacted by customer-specific factors, but despite these challenges, the company generated 42% year-over-year top-line growth. The company's underlying business remains strong, supported by demand from customers and expansion of customer relationships.
Revenue of $71 million, up 42% year-over-year.
Dollar-Based Net Expansion Rate (DBNER) of 147%, up from 137% in Q2 2020.
Net Retention Rate (NRR) of 122%.
Total customer count increased to 2,047 up from 1,951 in Q2 2020.
Forward Guidance
Fastly expects an impact in Q4 from regulatory uncertainty and existing customer timing issues, but remains optimistic about the demand for its services and the underlying growth of its business.
Positive Outlook
- The Q4 and FY2020 guidance includes the revenue contribution from Signal Sciences, which we expect to be approximately $8 million.
- Gross margin will continue to be affected by the timing of personnel and infrastructure investments, along with the seasonal fluctuations of platform usage by our customers.
- We remain confident in our ability to deliver incremental annual gross margin expansion as we continue to scale and deliver innovative security and edge computing solutions.
- We continue to expect annual capital expenditures as a percentage of revenue to be approximately 13% to 14% of revenue ⏤ similar to full-year 2018.
- Long-term, we expect capital expenditures to approach 10% of revenue on a calendar year basis.
Challenges Ahead
- Our previously disclosed largest customer’s traffic on our network has been reduced.
- Due to the ongoing fluidity and regulatory uncertainty related to this customer, we only assumed revenue from this customer that we expect to bill in October 2020 in the low end of Q4 and FY2020 guidance ranges.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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