Cloud-based edge infrastructure and content delivery network provider Fastly Inc. saw its stock lose almost a third of its value in late trading today following an outlook that shocked investors, coming well below most analysts’ expectations.

For the current quarter, Fastly says it’s expecting revenue of between $130 million and $134 million, and the midpoint of that range is well below the analysts’ consensus estimate of $140.4 million. The company is also forecasting a loss before certain costs such as stock compensation of six to 10 cents per share, lower than the Street’s forecast of a two-cent-per-share loss.

Fastly also revised its full-year guidance for fiscal 2024, saying it’s now looking for total revenue of between $555 million and $565 million, with the loss expected to be between six and 12 cents per share. That compares to its earlier guidance of sales ranging from $580 million to $590 million, and earnings of between breakeven and a six-cent loss. Wall Street is looking for full-year revenue of $585 million and a loss of three cents per share.

The market reacted badly, and Fastly’s stock was down more than 30% in extended trading, obliterating a gain of 2% in the regular trading session and representing a 52-week low for the company if it holds in Thursday trading. No doubt investors’ fears were heightened by the lack of transparency in the company’s press release or accompanying slide deck, which did little to illuminate the problems it faces.

In an unusually frank statement, Fastly Chief Executive Todd Nightingale (pictured) said he was pleased with the company’s first-quarter operating performance, but admitted that “we’re not satisfied with our revenue growth outlook.”

Fastly is the provider of a global content delivery network or CDN that businesses can use to speed up the delivery of their websites and reduce the latency of their applications by hosting them closer to end users. Its CDN stores copies of its customers’ websites and their content in thousands of servers located across the world. So when a user visits the customer’s website, the content is loaded from the closest server, reducing load times.

In addition to its CDN, Fastly also sells cloud-hosted edge computing services and cybersecurity tools.

For the first quarter ending in March, the company delivered a loss before certain costs such as stock compensation of five cents per share, coming in just ahead of the Street’s forecast of a loss of six cents per share. Revenue rose 14% from a year earlier, to $133.5 million, edging past the Street’s target of $133.1 million.

All told, the company delivered a net loss of $43.4 million during the quarter, improving ever so slightly on the $44.6 million loss it recorded in the same period one year earlier.

Holger Mueller of Constellation Research Inc. said Fastly’s most recent quarter wasn’t that great either, with growth of less than 20% year-over-year meaning that its net loss remained more or less constant. The problem, he said, is that Fastly appears to be burning through its existing cash pile.

“The company does not have the cash on hand to repeat this quarter more than three times, and so it either has to find a way to attract new money, or work hard to reduce its cost base while growing its revenue,” Mueller said. “The good news is that Fastly keeps innovating, but the question is whether or not Fastly can find a way to make its customers pay for those new innovations and help it deliver the necessary growth in the next quarters.”

Photo: SiliconANGLE