Fastly Inc Dossier - Source-backed chat

Fastly Inc

FSLYNASDAQ

SectorInformation Technology

IndustrySoftware - Application

Beta (adjusted)0.58

Intrinsic Value $19.62median of 3 methodsbased on filings through 30 Jun 2026

Market Price $26.39Price as of 1 Oct 2026

OvervaluedIntrinsic value is 26% below the market price

−50% · IV below pricenear fair value ±15%IV above price · +50%

Data confidence Sign in to view data confidence

Market Cap $4.2B

Enterprise Value $4.4B

Shares Outstanding 158M diluted

Moat Rating None

Next Earnings Date4 Nov 2026

All prices and values are periodic snapshots, not live quotes. Source dates are shown for reference.

Thesis

Street consensus, scenarios, merits, risks, and invalidation triggers

AI-assisted

Thesis Summary

Fastly is successfully transitioning from a legacy, low-margin content delivery network (CDN) into a high-value edge cloud platform, driven by rapid expansion in security and compute services. In Q1 2026, Fastly delivered record revenue of $173 million (up 20% YoY) and record non-GAAP gross margins of 65.1%, powered by a 47% YoY surge in security revenue. Key forward-looking indicators are highly positive, with Remaining Performance Obligations (RPO) up 63% YoY to $369 million and LTM Net Retention Rate accelerating to 113%. Despite a sharp stock sell-off following conservative near-term guidance, the underlying business fundamentals, improving operating leverage, and a discounted forward valuation of ~4.0x EV/Revenue present a compelling entry point for long-term investors.

This section is the 12-month view: analyst targets and the probability-weighted scenarios built from them. The intrinsic value at the top of this page answers a different question: what the business is worth today.

Street view · analyst 12-month targets10 analysts · as of 18 Aug 2026

Low · most bearish analyst$20.00

Mean target$27.00

High · most bullish analyst$32.00

Street targets sit above today's price; our intrinsic value sits below it. Different horizons, different questions.

Our research · scenarios, merits, risks, and invalidation triggersResearch as of 18 Sep 2026

Scenarios · 12-month scenario targetsAnchored at research date

Bear CaseDownside scenario

$20.00

Core network services experience severe pricing pressure from legacy CDNs, and enterprise customers optimize IT budgets, slowing overall revenue growth to high single digits. Elevated infrastructure CapEx (12% of revenue) and high stock-based compensation continue to depress GAAP profitability, keeping the company in a GAAP net-loss position and limiting free cash flow generation.

Base CaseCentral scenario

$27.00

Matches the consensus mean

Fastly achieves its raised FY 2026 revenue guidance of $710 million to $725 million (15% growth at the midpoint) and non-GAAP operating profit of $58 million to $68 million. Security revenue stabilizes at ~25% of the mix, and infrastructure CapEx remains within the guided 10% to 12% range, allowing the company to generate $40 million to $50 million in full-year free cash flow. The stock re-rates to a modest 5.5x forward sales multiple.

Bull CaseUpside scenario

$32.00

Security and compute segments continue to compound at >40% annually, driving rapid gross margin expansion toward 70% as high-margin software offerings displace commodity bandwidth delivery. The partnership with Skyfire for agentic AI commerce accelerates enterprise adoption of Fastly's high-performance serverless platform (Workers/Compute), leading to a multiple re-rating closer to high-growth peers like Cloudflare.

Scenarios are anchored to street consensus at the research date, with our probabilities and rationale.

Key Investment Merits

Accelerating security revenue growth (+47% YoY in Q1 2026), which now represents 22% of total revenue and drives structural gross margin expansion.
Strong customer commitment metrics, highlighted by a 63% YoY increase in Remaining Performance Obligations (RPO) to $369 million.
Improving net retention rate (LTM NRR up to 113% from 110% in Q4 2025), indicating successful cross-selling and upselling within the enterprise base.
Significant valuation discount relative to high-growth edge peers, trading at ~4.0x forward sales compared to Cloudflare's >30x.

Key Investment Risks

Delivering profitability in 2026 and navigating evolving threats to growth.
Elevated infrastructure CapEx guidance of 10% to 12% of revenue in 2026, which could constrain free cash flow expansion.
Intense competitive pressure in the edge compute and security space from larger, better-capitalized players like Cloudflare and Akamai.
Persistent GAAP net losses ($20.5 million in Q1 2026) despite strong non-GAAP operating profitability.

Thesis Invalidation Triggers

LTM Net Retention Rate falling below 105%, signaling a failure in the platform cross-sell strategy.
Security revenue growth decelerating below 25% YoY, halting the structural gross margin expansion trajectory.
Infrastructure CapEx exceeding 15% of revenue without a corresponding acceleration in compute/other segment revenues.

All scenarios are estimates and subject to change. Past performance is not indicative of future results.

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Explore this dossier

ValuationIntrinsic value, the six-method breakdown, peer medians, and your assumptions sandbox.Financial SnapshotRevenue, profitability, returns, balance sheet, dividends, and the filing-level detail.Qualitative AnalysisBusiness overview, strategic initiatives, and mergers, acquisitions & partnerships.Outlook & Key DatesForward estimates, reporting calendar, and the monitoring framework.