Key Takeaways
- Shares of Fastly plummeted 37% to $19.94 following Q1 earnings that beat projections but failed to satisfy investor expectations.
- First-quarter earnings per share reached $0.13, surpassing the analyst consensus of $0.09, while revenue climbed 20% to $173.02 million versus expectations of $171.8 million.
- Security segment revenue—a proxy for AI-related traffic—totaled $38.8 million, representing 47% annual growth but barely exceeding the $34.9 million estimate.
- The company increased its fiscal 2026 revenue forecast to $710M–$725M and boosted earnings guidance to $0.27–$0.33 per share.
- Piper Sandler reduced its price target from $30 to $27 with a Neutral stance, expressing concern that the company’s growth trajectory may be topping out.
Fastly (FSLY) delivered its first-quarter fiscal 2026 results following Wednesday’s market close, exceeding consensus forecasts across key metrics—yet the stock tanked regardless.
Shares had rocketed more than 210% year-to-date before the report. With that kind of momentum, the bar for impressing Wall Street had been set exceptionally high—and Fastly fell short.
The company posted earnings of $0.13 per share for the quarter, a sharp reversal from the $0.05 loss recorded in the same period last year and well above the Street’s $0.09 projection. Revenue increased 20% annually to $173.02 million, beating the consensus call of $171.8 million.
On paper, it looked like a strong performance. But the market’s attention was fixated elsewhere.
The critical figure investors were tracking was security revenue—the business line that reflects AI-generated traffic flowing through Fastly’s network. That metric registered $38.8 million, marking 47% year-over-year expansion, yet it only narrowly surpassed the $34.9 million analyst projection.
For a stock trading on the promise of explosive AI-driven expansion, a narrow beat simply didn’t cut it.
FSLY shares collapsed 37% to $19.94 in Thursday’s session.
Evercore ISI analyst Peter Levine noted the downdraft was “exacerbated” by network services revenue coming in softer than anticipated and weaker compute sales, compounding the impact of sky-high expectations heading into earnings.
Breaking Down the Financial Performance
Fastly’s roster of large customers expanded to 634 during the first quarter, representing 39% growth compared to the prior year. Additionally, the company is securing larger minimum commitment agreements from clients, suggesting improving deal economics.
Looking to the second quarter, Fastly projected revenue between $170 million and $176 million, with earnings per share ranging from $0.05 to $0.08—both figures exceeding Wall Street’s previous expectations of $169.8 million in revenue and $0.04 in EPS.
The company also lifted its full-year fiscal 2026 outlook. Fastly now anticipates revenue of $710 million to $725 million, up from its prior range of $700 million to $720 million. Earnings guidance was similarly elevated to $0.27–$0.33 per share, versus the earlier $0.23–$0.29 forecast.
Consensus estimates currently stand at $0.28 EPS on $712 million in revenue for the full year—Fastly’s updated guidance encompasses both figures.
Wall Street’s Take
Piper Sandler trimmed its price objective on FSLY from $30 to $27 while maintaining a Neutral rating. The firm highlighted that Fastly’s core content delivery business experienced sequential volume declines that fell short of expectations, and cautioned that increasingly challenging pricing comparisons loom for the remainder of the year.
Piper Sandler also voiced a more fundamental worry: that the company’s growth may have already peaked, especially considering FSLY commands a premium valuation on an enterprise-value-to-revenue-to-growth basis relative to comparable companies.
Executives emphasized that the company’s Compute@Edge platform is experiencing heightened AI-related usage, and highlighted robust momentum in cross-selling its Security offering.
Fastly has announced it will host an analyst day on September 23, 2026.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
