15% revenue growth + first profitable turnaround + 110% Net Retention recovery. An inflection point where the Edge Cloud discount, which had been tied for 2 years, is being resolved. However, after the +42% February rally, the consensus is still Hold, and insider selling and the May Q1 earnings are the next turning point.
Fastly (NYSE: FSLY) announced in its Q4 2025 earnings release on February 11, 2026, that it exceeded the top of its guidance ($163M) by 9.6% with revenue of $172.6M (+23% YoY), recording the largest quarterly absolute amount growth in the company's history [FACT · Fastly IR · 2026-02-11]. At the same time, it turned profitable for the first time in FY2025 (Non-GAAP net income of $19.7M), and GAAP gross profit margin hit an all-time high of 64%. The 2026 guidance was raised to revenue of $700–720M (+12–15%) and Non-GAAP EPS of $0.23–0.29 [FACT · Q4'25 Earnings · 2026-02-11].
This result is not just a quarterly surprise. It is the first quantitative signal that the 3-year derating cycle that led to the June 2021 global outage → customer concentration risk in 2022~2024 → DBNER stagnation at the bottom of 100% has ended. Trailing 12-month Net Retention rebounded from 106% in the previous quarter to 110%, and the number of enterprise customers increased by 32 YoY [FACT · Q4'25 Call · 2026-02-12]. Single customer dependency (top 10) was dispersed to less than 10% based on the company's announcement [INFERENCE · Fastly IR + Software Stack Investing · 2026-02].
The second axis is the positioning of Compute@Edge as an Agentic AI infrastructure. Network World (2026-02) reported that "AI agent traffic drove Fastly's first profitable year," and the company stated that the number of cases where customers are running inference directly on edge nodes and caching some of the learning datasets is increasing [NARRATIVE · Network World · 2026-02-12]. Compute revenue itself is not yet separately disclosed by the company, but the pattern of Security revenue accelerating to $35.4M (+32%, 21% of total revenue) suggests that the new product line has begun to offset the price pressure on the core CDN.
Nevertheless, the consensus is conservative. The average target price of 6 analysts is $14.83–16, with an extreme distribution of $7~$32 [FACT · MarketBeat · 2026-04]. After the +42% monthly rally in February 2026, it is a section where profit-taking pressure and a short position of 17.8M shares (12.7% of outstanding shares) collide, and cumulative selling by CTO Artur Bergman (56 times, approximately $40M) and insider selling of approximately $7.3M within 90 days are burdensome [FACT · Defense World · 2026-03-22].
Conclusion: OW · Tier 2 Growth. The dual engine of Network Services (+19%) and Security (+32%) has been proven, and the first profitable turnaround has created a justification for resolving the multiple discount. However, 1) the Q1'26 earnings in early May must verify the sustainability of 110% NRR, 2) it must withstand Cloudflare's price aggressiveness and Akamai's security bundle pressure, and 3) the current P/S of 5.8x is undervalued compared to NET (20x range) but at a premium compared to AKAM (~2x), so position sizing that can withstand short-term volatility is essential.
The global CDN market is estimated to be approximately $26B in 2026, and in the United States, it is expected to grow from $6.91B in 2025 to $9.77B in 2030 (CAGR 7.2%) [FACT · MarketsAndMarkets · 2026-Q1]. The Big 3, Akamai (AKAM), Cloudflare (NET), and Fastly (FSLY), occupy approximately 40~50% of the market, but their growth trajectories are extremely differentiated.
Akamai is still the No. 1 player with 365,000+ servers globally and coverage in 135 countries, but Delivery segment revenue has been declining for 17 consecutive quarters [FACT · Yahoo Finance · 2026-Q1]. Cloudflare dominates the developer ecosystem with its integrated security + edge compute + Workers platform and maintains a growth rate of 30% in the SMB and mid-market. Fastly focuses on high-performance, low-latency enterprise workloads such as media/streaming/e-commerce and differentiates itself with specialized technologies such as 150ms instant-purge [NARRATIVE · IT-Server-Room CDN Compare · 2026-03].
In the Agentic AI era that began in earnest in 2024, inference workloads diverge into two branches. (a) Large multimodal models are processed in GPU data centers, and (b) 'low-latency decision' workloads such as SLM (Small Language Model) under 1B, routing, tool calling, and session caching are processed at the edge. Fastly Compute@Edge provides responses at a cold start level of 35μs based on WebAssembly, which is 100 to 1000 times faster than traditional serverless [FACT · Fastly Engineering Blog · 2025].
According to a Network World report (2026-02-12), Fastly management stated on the earnings call that "AI agent traffic has begun to make a meaningful revenue contribution." However, the company does not yet disclose a separate 'AI revenue' KPI, which is a weakness in terms of IR compared to NET, which has begun to separately disclose Workers AI revenue [INFERENCE · Cross-check FSLY vs NET 10-Q].
The core of FSLY Security revenue of $35.4M (+32%) is that WAF is still the majority, but Bot Management and API Security have accelerated since the second half of 2025. NET's security revenue growth rate in the same quarter is estimated to be ~25%, and this is the first time that FSLY has recorded the highest security growth rate among the Big 3 [INFERENCE · NET Q4'25 8-K + FSLY Q4'25 Press Release · 2026-02]. This is a structural change that can increase the gross profit margin by an additional 100~150bp as the revenue mix shifts to 25%+ security in the next 12 months.
Big 3 comparison as of the fourth quarter of 2025. Fastly is in the middle in terms of growth rate, but the GM improvement (+650bp YoY) is the largest.