Fastly Inc., the cloud-based edge infrastructure and content delivery network provider, delivered mixed fourth-quarter earnings results and weak guidance today, and its stock plummeted like a stone in extended trading.

The company reported a loss before certain costs such as stock compensation of three cents per share, falling short of Wall Street’s target of break-even results. On the other hand, revenue inched up 2% from a year earlier, to $140.6 million, surpassing the Street’s consensus forecast of $138.29 million.

However, the growing revenue didn’t bring the company any closer to profitability. Rather, it went backwards, posting a net loss of $32.8 million in the quarter, up from a loss of $23.3 million one year earlier.

Fastly offers a global content delivery network or CDN platform that’s used by businesses 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, the company provides cloud-hosted edge computing services and cybersecurity tools.

Fastly Chief Executive Todd Nightingale (pictured) hailed the company’s performance, saying its revenue was a new record for the fourth quarter.

“Our platform strategy is delivering an accelerated innovation velocity and faster time to value for anyone building web experiences,” he insisted. “We enter 2025 with a strengthened balance sheet, a motivated go-to-market team and an intense focus on efficient customer acquisition and long-term revenue growth.”

Bullish words, maybe, but Fastly failed to match that optimism with its guidance for the current quarter. It said it’s looking at a first-quarter loss of between five and nine cents per share, well below the Street’s forecast of a penny loss. For revenue, the company is guiding for between $136 million and $140 million, which compares more favorably with the $137 million analyst target.

For fiscal 2025 as a whole, Fastly is looking at a loss of between nine and 15 cents per share, falling well short of the Street’s hoped-for profit of three cents per share. It’s looking at total revenue of $575 million to $585 million, ahead of the $576 million consensus.

Investors didn’t like those numbers, and many of them bailed on the company in the hours after the report, sending its stock down more than 21% in extended trading.

Breaking down its latest results, it’s easy to see where Fastly is struggling. The company said network services, its core business, accounted for $110.1 million in sales, flat from the same period one year earlier.

Security revenue fared a little better, rising 4%, to $26.9 million, but the only real bright spot was the company’s nascent cloud infrastructure business, which includes its compute and observability services. Sales there jumped 63% from a year earlier, to $3.6 million, but investors are well aware that the segment remains tiny.

Constellation Research Inc. analyst said Fastly appears to be stuck between a rock and a hard place, and investors have not only noticed this, but decided they no longer want to risk their money while its management contemplates what to do next. “Its business is standing still, with revenue growth basically flat,” he said. “It’s clear that its cost structure does not fit with its current revenue structure.”

Looking ahead, Mueller said the management faces a tough decision over whether to focus on reigniting growth so as to match its cost structure, or adjusting its cost base in line with the reality that its core business has stagnated.

“The not-so-positive forecast suggests that the latter option, cost-cutting, is looming,” he continued. “But in the fast-growing and investment-hungry world of CDNs, that is not a good scenario, as the only way to grow is to build. The next quarter will show if Fastly is capable of turning this around.”

Photo: SiliconANGLE