Fastly Shares Drop 8% as Investors Digest Long-Term Targets
Fastly fell 8% after its Investor Day set 2029 revenue targets of $1.1-1.3 billion and non-GAAP operating margins of 20-22%. The company reported quarterly revenue of $183 million, up 23% year over year, with security revenue jumping 43%. Competition from Cloudflare and Akamai remains a key challenge.
Fastly's September 22 Investor Day set 2029 revenue targets of $1.1-1.3 billion and operating margins of 20-22%, prompting an 8% share drop. Recent quarterly results showed $183 million in revenue (up 23%), with security revenue climbing 43%. The company also reported a 117% net retention rate, a four-year high, and a 96% gross margin flow-through on incremental revenue.
Competition is intense, with Akamai generating $2.2 billion in security revenue in 2025, though Fastly's 43% security growth outpaces Akamai's 10%. Analyst models project EBIT rising from about $90 million in 2026 to nearly $300 million by 2030, assuming a 16% revenue CAGR. The stock trades within a $8-$35 range, with consensus targets near $28.
Fastly's performance could influence how investors value high-growth tech firms transitioning from legacy services to AI-driven edge computing. If Fastly fails to meet its ambitious 2029 targets, it may dampen sentiment for similar mid-cap infrastructure companies, affecting their access to capital. Conversely, success could pressure rivals like Cloudflare and Akamai to innovate faster, potentially lowering costs for enterprise customers. The company's net retention and security growth may also signal whether smaller firms can compete effectively against larger incumbents.