Key Highlights

  • Shares fell 13.53% pre-market today to $18.19, versus Wednesday's close of $21.04.
  • Third-quarter Revenue hit a record $190.2 million, up 20% year over year.
  • Adjusted EPS of $0.17 beat the $0.12 estimate.
  • Net retention was 119%, and the top 10 customers rose to 39% of revenue.
  • Raymond James cut its price target to $24 from $29.

Fastly (NASDAQ:FSLY) shares fell 13.53% in pre-market today to $18.19 despite a third-quarter beat-and-raise, as investors focused on customer concentration, a fourth-quarter outlook implying slower growth and the planned 2027 retirement of go-to-market president Scott Lovett. The stock closed Wednesday at $21.04.

Based in San Francisco, Fastly provides an edge cloud platform that helps developers build, secure and deliver web and application experiences close to end users. Its offerings span content delivery, serverless compute, streaming and security products such as DDoS protection and bot management, and the company has about 1,140 employees.

Record Revenue and 119% Net Retention Meet a Higher Full-Year Guide

Third-quarter revenue rose 20% to a record $190.2 million, and adjusted EPS was $0.17 versus $0.12 expected. Net retention reached 119%. Management raised its full-year revenue and free Cash Flow guidance.

Customer Concentration Climbs as the Fourth-Quarter Guide Slows

The top 10 customers rose to 39% of revenue, which raised concentration concerns. The fourth-quarter outlook implies revenue growth of about 16%, versus about 20% in the third quarter, and the guidance leans on a variable assumption for large video game downloads.

Raymond James cut its price target to $24 from $29 while keeping an Outperform rating. Fastly has a market Capitalization of about $3.35 billion, a forward P/E of 35.59 and a 52-week range of $7.87 to $34.82.

Slower Fourth-Quarter Growth and a Leadership Change Set the Next Test

Investors will watch whether revenue growth reaccelerates after the fourth quarter, how customer concentration evolves, and how the go-to-market organization is handled ahead of the president's planned 2027 retirement.