Fastly stock drops 24% after a record quarter, because its guide implies growth slowing to about 16%

Fastly (Nasdaq: FSLY) reported a record third quarter after the close on Wednesday and the stock fell anyway. Shares traded at $15.89 at 12:26 PM ET Thursday, down $5.15 or 24.5% from Wednesday's $21.04 close, per Nasdaq, on volume of about 9.4 million shares against an average near 6.3 million. The reason is not in the headline numbers. It is in the forecast, the customer mix and a leadership change, all disclosed in the company's earnings release on SEC EDGAR.

The quarter was good

CEO Kip Compton called it "record third quarter results." On a GAAP basis the company still lost $11.3 million, or $0.07 a share. Its non-GAAP income from operations was $31.2 million, a 16.4% margin, a measure that strips out items such as stock compensation.

The number behind the number: the guide

Fastly guided fourth-quarter revenue to $198.0 million to $202.0 million. Its investor supplement shows fourth-quarter 2025 revenue of $172.6 million. That makes the guide 14.7% to 17.0% growth, about 15.9% at the midpoint, against 20% in the quarter just reported. That is our arithmetic, not the company's language.

Two things soften it. Fourth-quarter 2025 was a big step up from the third quarter (from $158.2 million to $172.6 million, with Network Services jumping from $118.8 million to $130.8 million), so the comparison is hard. And the midpoint still implies a 5.2% sequential gain over Q3's $190.2 million, faster than the 3.8% Q3 gained on Q2. Companies often guide conservatively. But the market is paying for the slower year-over-year print, and the stock was already volatile: it has a 52-week range of $7.87 to $34.82 and, by our chart, closed about 52.6% below its April 2 peak.

Two other numbers in the supplement

First, concentration. Fastly's top ten customers made up 39% of third-quarter revenue, up from 32% a year earlier and 34% in the fourth quarter of 2025. That averages about 3.9% of revenue per top-ten customer, roughly $7.4 million a quarter each, though the actual split is not disclosed. Meanwhile the count of large customers was 634, against 627 a year ago and 634 in the first quarter. Growth is coming from existing large accounts spending more, not from many new ones. Net retention rose to 119%, the highest since 2022, which is the same fact seen from the other side.

Second, remaining performance obligations, the contracted revenue not yet recognized, were $333.5 million. That is up 24% from $268.0 million a year ago, but down from $353.8 million at year-end 2025 and $368.7 million at the end of the first quarter. Current RPO (the share due within 12 months) rose to 81%, so more of the backlog is near-term, but the total has fallen for two straight quarters.

The sales chief is leaving

In a separate release the same day, Fastly said Scott Lovett, President of Go To Market, plans to retire in 2027 and that it is searching for a Chief Revenue Officer. Lovett will lead the sales organization through the transition. A change at the head of sales, announced alongside a slower guide, gives the market a reason to ask about the pipeline, though the company points to four straight quarters of growth of 20% or more.

Read it in context

Thursday was a rough session for technology broadly, and our report on the Nasdaq correction covers it. Some of Fastly's fall is that tape, and we cannot separate the two. What is Fastly-specific is the gap between a strong print and a guide that implies slower growth. Its customers range from a large US restaurant chain to a global marketplace, according to its supplement. Management said it launched AI Runtime Control and AI Firewall products this quarter. The release gives no revenue figure for them.

Fastly's next scheduled report, covering the fourth quarter, has not been announced in the filings we read.

Sources: Fastly earnings release, investor supplement and leadership release (SEC EDGAR, Nov. 4, 2026); quote data via Nasdaq at 12:26 PM ET, Nov. 5, 2026, and may be delayed; price history via Yahoo Finance. Percent changes and implied growth rates are our calculations. This is market information, not investment advice.