Fastly’s third quarter results were highlighted by revenue and non-GAAP profit both coming in well above Wall Street expectations. Management attributed outperformance to the continued expansion of its largest customers and accelerated adoption of security and AI-focused products. CEO Kip Compton highlighted that 74% of large customers now use two or more product suites, and 34% are adopting four or more, up from 30% last quarter. The company credited recent wins in the AI and media sectors, alongside broader success in cross-selling, as central to the quarter’s performance.
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Fastly (FSLY) Q3 2026 highlights:
- Revenue $190.2 million vs S&P analysts’ estimates of $187.9 million (20.2% year-on-year growth, 1.2% beat)
- Adjusted EPS $0.17 vs S&P analysts’ estimates of $0.12 (43.4% beat)
- Adjusted EBITDA $43.54 million vs analyst estimates of $35.05 million (22.9% margin, 24.2% beat)
- Revenue guidance $200 million at the midpoint for Q4 2026, above analyst estimates of $197 million
- Adjusted EPS guidance Management raised its full-year adjusted EPS guidance to $0.62 at the midpoint, a 19.2% increase
- Operating margin -5.9%, up from -18.2% in the same quarter last year
- Net revenue retention rate 119%, up from 117% in the previous quarter
- Market capitalization $2.48 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Fastly’s Q3 earnings call
- Aidan Daniels (KeyBanc Capital Markets) asked how agentic (AI-driven) traffic contributes to revenue and whether the recent seven-figure deal is a template for future wins. CEO Kip Compton explained agentic traffic generates both security and delivery revenue, with more material impact expected in security.
- Param Singh (Oppenheimer & Co.) inquired about the impact of President Scott Lovett’s retirement on go-to-market strategy and leadership succession. Compton confirmed both internal and external candidates are being considered, and that security product cross-sell will remain a priority.
- Fatima Boolani (Citi) questioned how Fastly is positioned to monetize new web security threats and the pipeline for its security portfolio. Compton said rising AI-driven vulnerabilities reinforce demand for the Next-Gen WAF, while CFO Rich Wong acknowledged slower growth outside the top 10 customers, attributing it to timing and underinvestment.
- Frank Louthan (Raymond James & Associates) asked about the AI contract’s drivers and any incremental capital investment. Compton clarified that the unified platform requires no extra CapEx, and agentic traffic is a net positive for security revenue, not a threat to Fastly’s subscription model.
- Peter Levine (Evercore) pressed on the drivers of net revenue retention (NRR) improvement and the risk of disruption from the CRO transition. CFO Rich Wong highlighted broad-based multi-product adoption and emphasized bench strength within the sales organization to mitigate transition risk.
Catalysts in upcoming quarters
Looking ahead, the StockStory team will monitor (1) the pace of multi-product adoption among both large and smaller customers, (2) execution of the go-to-market transformation as the new sales leader is appointed, and (3) the scaling and monetization of new AI-focused security products. The impact of key partnerships, such as with Comcast, and traction in international markets will also be important signposts.
Fastly currently trades at $15.53, down from $21.30 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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