TLDR
- Fastly (FSLY) shares surged 40% Thursday after Q4 earnings of $0.12 per share doubled the $0.06 estimate on revenue of $172.61 million.
- Security revenue jumped 32% to $35.4 million while network services revenue grew 19% to $130.8 million in Q4.
- Net retention rate improved to 110% from 106% in Q3 2025 as enterprise customer count reached 628.
- Fiscal 2026 guidance projects revenue of $700-720 million versus $667.83 million consensus and EPS of $0.23-0.29 versus $0.14 estimate.
- Analysts raised price targets with RBC Capital lifting to $12 and Piper Sandler increasing to $14.
Fastly stock skyrocketed Thursday after the edge cloud company crushed fourth-quarter expectations and issued guidance that topped Wall Street forecasts by a wide margin.
Shares jumped as much as 40% in morning trading following Wednesday’s after-hours earnings release. The stock traded around $12.98, marking one of the biggest single-day gains for the company.
The rally came after Fastly reported adjusted earnings of $0.12 per share, doubling analyst estimates of $0.06. Revenue reached $172.61 million, beating the $161.36 million consensus by nearly 7%.
Total revenue climbed 23% year-over-year. Network services revenue rose 19% to $130.8 million while security revenue surged 32% to $35.4 million.
Other revenue jumped 78% to $6.4 million. The company’s remaining performance obligations hit $354 million, up 55% from the prior year.
Customer Growth Accelerates
Enterprise customers totaled 628 in the quarter, adding 32 from Q4 2024. More importantly, existing customers increased their spending.
The last 12-month net retention rate improved to 110% from 106% in the third quarter. This metric shows customers are expanding their use of Fastly’s platform over time.
Top-ten customer revenue accelerated 28% year-over-year according to RBC Capital. The firm cited “early signs of durable acceleration” in its research note.
Fastly generated positive free cash flow for the fourth straight quarter. This marks a full year of cash generation after previous periods of negative cash flow.
2026 Guidance Drives Rally
The company’s outlook for 2026 exceeded expectations across the board. Fastly projects full-year adjusted EPS between $0.23 and $0.29 versus the $0.14 consensus estimate.
Revenue guidance came in at $700-720 million compared to analyst estimates of $667.83 million. That represents growth of roughly 20% at the midpoint.
First-quarter guidance also beat forecasts. The company expects Q1 adjusted EPS of $0.07-0.10 versus the $0.01 consensus.
Q1 revenue is projected at $168-174 million against estimates of $159.62 million. Both ranges sit well above Wall Street’s expectations.
Analyst Price Targets Rise
Wall Street analysts responded quickly to the results. RBC Capital raised its price target to $12 from $10 while keeping a Sector Perform rating.
Piper Sandler lifted its target to $14 from $11, maintaining a Neutral rating. The firm highlighted market share gains and strong execution.
William Blair upgraded Fastly from Market Perform to Outperform. The firm pointed to the company’s positioning in AI traffic growth as a key driver.
The stock remains down 7.5% over the past 12 months despite Thursday’s surge. Shares are trading closer to 52-week highs than lows following the earnings beat.
Fastly posted Q4 revenue of $172.61 million with security revenue climbing 32% to $35.4 million and net retention rate improving to 110%.
