Fastly Highlights 43% Security Growth as AI Traffic Fuels Edge Opportunity

Key Points

• Fastly’s revenue rose 23% year over year to $183 million, led by 43% growth in security revenue and 17% growth in delivery services. Remaining performance obligations also increased sharply, signaling stronger customer commitments.
• AI-driven machine traffic is creating a near-term opportunity for Fastly’s bot management and DDoS protection products, while the company expects edge computing to become more important as agentic workloads expand.
• Fastly attributed its security momentum to an expanded portfolio and improved sales execution, with bot management and DDoS each delivering triple-digit growth and net retention reaching a four-year high of 117%.

Fastly NASDAQ: FSLY executives said demand remained healthy across the company’s delivery, security and compute offerings, with CFO Rich Wong pointing to broad-based growth and increasing customer commitments.

Speaking at a Piper Sandler conference, Wong said Fastly generated $183 million in revenue in the most recent quarter, up 23% year over year. Delivery services revenue increased 17%, security revenue rose 43%, and the company’s “other” category, primarily Compute, also contributed to growth.

Wong said customers have shown a greater willingness to enter commitments amid component shortages. Remaining performance obligations increased 38% year over year during the quarter, while the current portion of RPO increased 44%.

Delivery demand spans media and full-site customers

Fastly has historically been strong in live events and streaming, where reliability and performance are important, Wong said. However, he said demand has also expanded across what the company calls full-site delivery, including e-commerce, hospitality and other web properties.

“We tend to win where performance matters,” Wong said of the company’s position in live-event delivery. He added that Fastly continues to see demand for full-site delivery as customers contend with more complicated traffic patterns, including bots and distributed denial-of-service attacks.

Wong said the company has continued pursuing competitive customer takeouts following the disruption in the content-delivery-network market associated with Edgio. He said Fastly had already experienced customer wins before Edgio’s business issues and has now lapped the related 2024 headwinds.

According to Wong, Fastly’s broader product portfolio has aided those efforts, particularly as customers increasingly evaluate delivery and security capabilities together.

AI traffic supports security opportunity

Wong said machine-to-machine traffic is growing faster than human traffic on a request basis. Fastly has published research indicating that machine traffic is moving at 6.5 times the pace of human traffic, he said, and such traffic represents nearly half of total requests on the company’s network. However, it remains a relatively small part of transferred gigabytes compared with bandwidth-intensive uses such as high-definition video.

Fastly sees the nearer-term benefit from AI and agentic activity in security, particularly its bot management and DDoS offerings. Customers are increasingly seeking tools to determine whether machine traffic is legitimate or malicious and to protect their services from automated activity, Wong said.

Over the longer term, he said Fastly expects edge computing to play a larger role as agents and machine-to-machine interactions expand. Frontier AI models are currently concentrated in centralized cloud environments, but Wong said more agentic workloads could ultimately move closer to the edge.

Security growth tied to product expansion and sales execution

Wong attributed Fastly’s 43% security revenue growth to both a broadened product suite and changes in go-to-market execution. He said Scott Lovett, who joined as head of sales in mid-2024, introduced greater sales discipline and security-selling expertise. Lovett previously worked at Akamai and Imperva, according to Wong.

At the same time, Fastly expanded from one primary security offering, its web application firewall, to five security products. Wong said the combination of products and sales execution was necessary to drive the business forward.

Vernon Essi, Fastly’s vice president of investor relations, said bot management has been a particularly strong offering. He also highlighted ContentGuard, a feature intended to help customers mitigate website scraping and establish monetization streams around content access.

Wong said Fastly’s bot management and DDoS products each posted triple-digit year-over-year growth in the latest quarter, while the company’s web application firewall remains its largest security product.

Fastly reported net retention of 117% in the quarter, which Wong described as a four-year high. He said the result reflected a combination of delivery-service upsells, security and compute cross-selling, and continued focus on existing customers.

Compute strategy emphasizes edge software and existing network capacity

Essi said Fastly does not currently see a compelling value proposition in building large, centralized GPU inference capacity for specific customer applications. Instead, the company is focusing on its software-defined edge network, which uses broadly available hardware and supports a multi-cloud, model-neutral approach.

He said Fastly aims to attract developers through open standards and development tools, including support for MCP Server and Real Simple Licensing. The company believes its edge positioning could be useful for agentic workloads and orchestration layers over time.

Wong said Compute uses CPU capacity that may otherwise be underutilized within Fastly’s existing network. He said that network efficiency contributed to 96% gross-margin flow-through over the last 12 months, meaning 96 cents of every incremental revenue dollar became gross profit.

Company flags potential episodic demand drivers

Looking ahead, Wong cited several potential episodic demand events, including the expected release of Grand Theft Auto VI and U.S. midterm elections. Gaming downloads are a portion of Fastly’s revenue, and Wong said record gaming downloads contributed to the company’s fourth-quarter outperformance last year.

He also identified holiday shopping and NFL activity as recurring fourth-quarter events. Fastly factors known seasonal activity into its planning, he said, while taking a prudent approach to less predictable events such as a major game release and election-related traffic.

Fastly plans to hold an investor day at Nasdaq MarketSite in New York, where executives expect to discuss a longer-term operating model, multi-product adoption and the company’s outlook over the next three years. Wong said the company does not plan to provide fiscal 2027 guidance at the event.

About Fastly (NASDAQ:FSLY)

Fastly, Inc is a cloud computing company that provides an edge cloud platform for delivering, securing and accelerating digital experiences. Its platform processes and serves applications, websites, APIs, streaming media and other internet content closer to end users, helping organizations improve performance, reliability and control.

Fastly's product portfolio includes content delivery and application performance services, application programming interface (API) security, web application and bot protection, distributed denial-of-service (DDoS) mitigation, and edge compute capabilities.

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