Fastly Earnings: Sales and Profits Rebound Nicely Amid Continuing Pressure From Large Customers

In its third quarter, Fastly easily beat the dire guidance that management offered last quarter and appeared to make significant strides with customers outside of its 10 biggest, which continue to weigh on results. While the improvement is encouraging, our biggest concern with regard to future growth is Fastly’s overreliance on content delivery revenue, which we see as a largely commoditized product with deflationary pricing characteristics; hence our no-moat rating. We’re maintaining our $5 fair value estimate.