Research Reports

Key takeaways

Revenue of $173.0 million, up 20% year-over-year, driven by 47% YoY growth in Security revenue to $38.8 million — signals accelerating platform adoption in high-margin segments.

GAAP gross margin expanded to 62.5% from 53.2% in Q1 2025, reflecting improved cost structure and product mix shift toward higher-margin security and compute offerings.

Remaining Performance Obligations (RPO) reached $369 million, up 63% YoY, indicating robust contracted future revenue and strong customer retention and expansion.

Non-GAAP net income was $22.9 million versus a $6.6 million loss in Q1 2025, marking first profitable quarter on non-GAAP basis since at least Q1 2025 — validates path to sustained profitability.

Raised full-year 2026 revenue guidance to $710.0–$725.0 million and non-GAAP operating income guidance to $58.0–$68.0 million, signaling confidence in execution and demand momentum.

LTM Net Retention Rate increased to 113% from 110% in Q4 2025, confirming continued expansion within the existing customer base despite usage-based model volatility.

Full analysis

Fastly’s Q1 2026 results reflect a material inflection point: the company achieved its first non-GAAP profitable quarter ($22.9M net income) while delivering record revenue ($173.0M, +20% YoY) and gross margin (62.5% GAAP, +930 bps YoY). This performance was underpinned by outsized 47% YoY growth in Security revenue — now 22% of total revenue — and strong cross-sell into existing customers, evidenced by a 113% LTM Net Retention Rate and $369M RPO (+63% YoY). Management attributed the strength to accelerated innovation, including Bot Management with Content Guard, enhanced API Security, and the Fastly Agent Toolkit, all targeting AI-driven developer and enterprise demand. The raised full-year guidance — particularly the $58–68M non-GAAP operating income range — signals confidence in sustaining this momentum through product-led expansion and operational discipline. Notably, free cash flow turned positive ($4.1M) despite higher investment, and top-10 customer revenue grew 25% YoY — faster than the broader base — suggesting concentration is becoming a tailwind, not a risk. These results materially de-risk the path to profitability and validate Fastly’s strategic pivot toward higher-margin, platform-integrated security and compute solutions.

FSLY · Fastly, Inc.

Summary

Key takeaways

Full analysis