According to a MarketsAndMarkets report, the global Content Delivery Network (CDN) market is expected to grow from $14.4 billion in 2020 to $27.9 billion in 2025 at a CAGR of 14%. Fastly (NYSE: FSLY), a leading player in the segment, recently reported its fourth quarter results that surpassed the market’s expectations.
Fastly’s fourth quarter revenues grew 40% to $82.65 million, far ahead of the market’s estimates of $82.03 billion. Adjusted EPS surpassed the expectations at a loss of $0.09 against the market’s forecast of a loss of $0.10.
For the fiscal year, Fastly announced revenues of $291 million, growing 45%, and a net loss of $0.18 per share.
Fastly forecast its first quarter revenues to be $83-$86 million, against the market’s estimate of $82.62 million. It expects to end the year with revenues of $375-$385 million and a loss of $0.44-$0.35 per share, against the market’s estimates of revenues of $374.78 million and a loss of $0.19 per share.
Fastly’s Video Focus
Last year, Fastly also announced significant advancements to its collection of live-event and video-on-demand services. The features will allow developers to respond to the increase in live streaming events, which have increased on account of the continued pandemic conditions. The enhancements include a media shield with origin insights that will allow technologists to optimize multi-CDN deployments to reduce streaming costs and live event monitoring so that organizations can rely on a team of Fastly experts to monitor, alert, and troubleshoot issues. It will also offer capacity reservations to reserve additional bandwidth to prepare for high-traffic events and real-time observability capabilities that will let technologists gain real-time insights into how their users are consuming streaming content.
Fastly’s Signal Sciences Acquisition
Last year, Fastly announced the acquisition of California-based Signal Sciences for $775 million. Founded in 2014 by Andrew Peterson, Nick Galbreath, and Zane Lackey, Signal Sciences provides organizations with comprehensive and scalable threat protection capabilities. Prior to the acquisition, Signal Sciences had raised $61.7 million in 4 rounds of funding from investors including CRV, Harrison Metal, Index Ventures, Oreilly AlphaTech Ventures, and Lead Edge Capital.
Signal Sciences is among the fastest growing web application security companies in the market. Its solutions help protect more than 40,000 applications and over a trillion production requests per month. It provides a developer-friendly and programmable solution that helps businesses make accurate and automated security decisions.
Fastly plans to leverage the acquisition to create a new security offering called Secure@Edge. It will be a unified web application and API protection solution that will power and protect companies to accelerate their digital transformation.
Fastly still faces stiff competition from several players within the CDN market. There are tech giants like Amazon, Microsoft, and Google in the race with their CDN offerings coupled with others like Cloudflare and Akamai. Fastly has an edge on a few of its competitors on account of its highly configurable offering. For instance, it offers diverse support for different types of video caching and several low-level controls for even those who want to manipulate HTTP headers to customize how content is served. According to Gartner, Signal Sciences was rated a visionary in the Magic Quadrant for Web Application Firewalls. Its acquisition will help Fastly make its offering stronger in the market.
Its stock is trading at $68.85 with a market capitalization of $7.98 billion. It had climbed to a 52-week high of $136.50 in October. It hit a year low of $19.45 in March last year when most stocks fell.
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