Fastly Earnings: Cost Controls Make Significant Progress While Growth Stays High

Fastly continues to make fantastic progress on its margins after costs seemingly spiraled out of control last year. The firm’s second-quarter sales and operating loss both came in well ahead of previous guidance, leading the firm to raise its full-year outlook. The firm also generated positive free cash flow for the first time since the middle of 2020, when the pandemic was supercharging Fastly’s business. These types of results are already embedded in our forecast, and we are maintaining our $20 fair value estimate. We now think the stock is only mildly undervalued, as Fastly remains a Very High Uncertainty stock in our view.