Fastly (FSLY) Q2 2024 earnings summary

Executive summary

• Revenue for Q2 2024 was $132.4 million, up 8% year-over-year and above the midpoint of guidance; six-month revenue was $265.9 million, up 11% year-over-year.

• Net loss widened to $43.7 million in Q2 2024 from $10.7 million in Q2 2023; non-GAAP net loss was $9.3 million.

• Enterprise customer count grew to 601, up 4% sequentially and 9% year-over-year, accounting for 91% of total revenue.

• Company is restructuring to align costs with revised growth outlook, invest in innovation, and address demand challenges with large customers.

• Scott R. Lovett appointed Chief Revenue Officer; recognized as Gartner Peer Insights Customers' Choice for WAAP for sixth year.

Financial highlights

• Network services revenue grew 6% year-over-year to $104.2 million; security revenue grew 13% to $25.4 million.

• Gross margin improved to 55.1% GAAP (up from 52.3%); non-GAAP gross margin was 58.5%.

• Adjusted EBITDA was $0.8 million, down from $5.2 million in Q2 2023.

• Free cash flow was negative $18.5 million, a sequential decrease from negative $2.2 million in Q1.

• Operating expenses rose 5% year-over-year in Q2, with R&D down 6%, sales/marketing up 11%, and G&A down 1%.

Outlook and guidance

• Q3 2024 revenue guidance: $130–$134 million; non-GAAP net loss per share: $(0.08)–$(0.03).

• Full-year 2024 revenue guidance: $530–$540 million; non-GAAP net loss per share: $(0.16)–$(0.11).

• Gross margin for 2024 expected to improve by ~100 basis points over 2023.

• Non-GAAP operating loss for 2024 expected at $33–$27 million; free cash flow expected between -$20 million and -$10 million.

• Targeting operating income and free cash flow breakeven in 2025.