8-K: Fastly Reports Record Q1 2026 Results, Raises Guidance

Fastly, Inc. announced record first quarter 2026 financial results, including revenue of $173 million, up 20% year-over-year, and raised its full-year 2026 guidance.

Summary

• Fastly reported record first quarter 2026 revenue of $173.0 million, a 20% increase year-over-year.
• Gross margin reached a record 62.5% on a GAAP basis and 65.1% on a non-GAAP basis.
• Remaining Performance Obligations (RPO) grew 63% year-over-year to $369 million.
• Security revenue saw significant growth of 47% year-over-year, reaching $38.8 million.
• The company generated $28.9 million in operating cash flow and $4.1 million in free cash flow.
• Fastly raised its full-year 2026 guidance for total revenue and non-GAAP operating income.
• New product enhancements in Bot Management, API Security, and Compute & Security were highlighted.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report with record financial metrics, significant growth in key areas like security, and raised guidance, indicating robust business performance and positive future prospects.

Positives

• Record first quarter revenue of $173.0 million, up 20% year-over-year.
• Record GAAP gross margin of 62.5% and non-GAAP gross margin of 65.1%.
• Security revenue grew 47% year-over-year to $38.8 million.
• Remaining Performance Obligations (RPO) increased 63% year-over-year to $369 million.
• Operating cash flow increased to $28.9 million from $17.3 million in Q1 2025.
• Non-GAAP net income turned positive at $22.9 million, compared to a loss of $6.6 million in Q1 2025.
• Last 12-month net retention rate (LTM NRR) improved to 113%.
• Named a Leader in The Forrester Wave: Edge Development Platforms, Q1 2026 Report.

Negatives

• Free cash flow decreased to $4.1 million in Q1 2026 from $8.2 million in Q1 2025.
• GAAP net loss was $20.5 million, although improved from $39.1 million in Q1 2025.
• Top ten customers accounted for 34% of revenue, a slight increase from 33% in Q1 2025, indicating continued concentration.

Risks

• The company's future financial and operating performance could be materially different from forward-looking statements due to known and unknown risks and uncertainties.
• Factors detailed in Fastly's SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2025, could cause actual results to differ.
• The company assumes no obligation to update forward-looking statements publicly, even if new information becomes available.

Future Outlook

For the second quarter of 2026, Fastly expects total revenue between $170.0 million and $176.0 million, and non-GAAP operating income between $12.0 million and $16.0 million. For the full year 2026, total revenue is projected to be between $710.0 million and $725.0 million, with non-GAAP operating income between $58.0 million and $68.0 million.

Management Comments

• "Our first quarter performance demonstrates continued discipline and velocity as we delivered record revenue, gross margin, and RPO," said Kip Compton, CEO at Fastly.
• "Driven by an accelerated innovation roadmap, we delivered 47% year-over-year security revenue growth. This performance reflects expansion within our installed base and robust new business wins, enabling us to raise our 2026 guidance."

Industry Context

StockSavvy.ai notes that Fastly's strong performance in security revenue growth aligns with the increasing industry-wide demand for robust cybersecurity solutions at the edge, driven by the proliferation of AI and sophisticated bot threats.

Comparison to Industry Standards

• Fastly's reported GAAP gross margin of 62.5% for Q1 2026 is significantly higher than the typical gross margins seen in the broader cloud infrastructure and CDN market, which often range from 40-55%.
• The 47% year-over-year growth in security revenue outpaces the average growth rates for security services within many edge and cloud platforms, indicating strong product-market fit and competitive positioning.
• The LTM Net Retention Rate of 113% suggests effective customer expansion and retention, which is a key benchmark for Software-as-a-Service (SaaS) companies and generally considered strong when above 100%.

Stakeholder Impact

• Shareholders: Positive impact due to record financial results, improved profitability metrics (non-GAAP), and raised full-year guidance, suggesting potential for increased shareholder value.
• Employees: Positive impact from company growth and recognition (e.g., Forrester Wave Leader), potentially leading to increased opportunities and job security.
• Customers: Benefit from enhanced product offerings in security and edge computing, leading to improved performance, security, and innovation.
• Suppliers/Creditors: Positive outlook due to improved financial health and cash flow generation, suggesting continued ability to meet obligations.

Next Steps

• Continue to execute on the accelerated innovation roadmap.
• Focus on expanding within the installed base and winning new business.
• Leverage new product enhancements in Bot Management, API Security, and Compute & Security.
• Monitor and manage risks and uncertainties detailed in SEC filings.

Key Dates

Recommendation

The company delivered record financial results, significantly exceeded expectations across key metrics including revenue and gross margin, demonstrated strong growth in its security segment, and raised its full-year guidance. The positive momentum, product innovation, and improved profitability (on a non-GAAP basis) present a compelling investment case.

Keywords

Fastly, Edge Cloud, CDN, Security, API Security, Compute, Financial Results, Q1 2026