What Happened?
Shares of edge cloud platform Fastly (NYSE:FSLY) jumped 26.7% in the morning session after the company reported third-quarter financial results that surpassed expectations and provided a strong outlook.
The edge cloud platform provider announced total revenue of $158.2 million, an increase of 15.3% from the previous year and ahead of analysts' estimates. Earnings were also a bright spot, with the company posting an adjusted profit of $0.07 per share, significantly beating forecasts that had anticipated it would break even. Furthermore, the company's cash flow improved significantly, reaching $18.1 million, a notable turnaround from a loss in the same period last year. Looking ahead, Fastly issued upbeat guidance, projecting fourth-quarter revenue above market expectations and raising its full-year forecast for adjusted earnings per share.
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What Is The Market Telling Us
Fastly’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. But moves this big are rare even for Fastly and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 2.8% on the news that blockbuster quarterly results from tech titans Apple and Amazon boosted investor confidence, supported by impressive earnings from key cloud and crypto leaders, Cloudflare and Coinbase.
Amazon's shares surged after reporting that its cloud computing division, Amazon Web Services (AWS), saw revenue jump 20% year-over-year to $33 billion. This accelerated growth is largely attributed to the high demand for computing power required for artificial intelligence applications. Apple also contributed to the positive sentiment, topping its own quarterly estimates and forecasting a record-breaking holiday quarter. The strong performance from these industry leaders has lifted the broader market.
Impressive results from key cloud and crypto leaders, Cloudflare and Coinbase strongly supported the broader tech momentum. Cloudflare reported a "beat and raise" quarter with revenue soaring 30.7% year-over-year to $562 million and billings jumping nearly 40%, signaling strong future growth. Its non-GAAP operating margin expanded to 15.3%, and Free Cash Flow grew by nearly 60%, confirming management's efficient execution, leading the company to raise its full-year EPS guidance. Concurrently, Coinbase's third-quarter results also significantly topped estimates, driven by better-than-expected trading revenue and the increasing adoption of its stablecoin, USDC. The company reported $1.87 billion in revenue and an adjusted EPS of $1.44, while its strategic acquisition of Deribit advanced its "Everything Exchange" vision, resulting in over $840 billion in derivatives trading volume and aggressive expansion across the crypto market.
Fastly is up 11.6% since the beginning of the year, but at $10.28 per share, it is still trading 9.4% below its 52-week high of $11.34 from December 2024. Investors who bought $1,000 worth of Fastly’s shares 5 years ago would now be looking at an investment worth $139.93.
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