First linked to by Starrob on the paid board. Here’s my commentary:
Fastly: Still More Potential Ahead
https://seekingalpha.com/article/4370429-fastly-still-potent…
First, revenue growth rates:
2019 Q1: 40%
2019 Q2: 34%
2019 Q3: 35%
2019 Q4: 44%
2020 Q1: 38%
2020 Q2: 62%
and, company mid-point guides for:
2020 Q3: 49%
2020 Q4: 42%
I don’t know the history of Fastly’s guidance, but with a new CEO recently in place, the trend might not matter. It’ll be interesting to see if the company “under promises/over delivers” or what.
Enterprise customers are 85% of Fastly’s business, and their spend has consistently increased:
CY 2017: $507k/customer
CY 2018: $536k/customer
CY 2019: $607k/customer
Fastly also provided a QoQ example for the last quarter:
2019 Q2: $557k/customer
2020 Q2: $716k/customer
As a result, Fastly’s DBNER (Dollar-Based Net Expansion Rate) was 137% in 2020 Q2, up from 133% in Q1.
The SA author, Michael Wiggins De Oliveira, then ranks a number of companies discussed here by their DBNER:
Twilio: 143$
Slack: 132%
Smartsheet: 132%
Fastly: >130%
DataDog: >130%
Zoom: >130%
Elastic: >130%
Alteryx: 128%
Cloudstrike: 124%
Okta: 121%
PagerDuty: 121%
Bill.com: 120%
Pluralsight: 120%
MongoDB: 120%
Zscaler: 119%
Docusign: 119%
Anaplan: 117%
Cloudflare: 117%
…
He compares FSLY’s valuation to DDOG’s, with DDOG growing revenue at under 40% yet is still priced 34 times its 2021 revenue.
He also compares to NET (Cloudflare), and finds the two similarly valued.
Finally, he prefers Fastly over Cloudflare because Cloudflare is burning through significantly more free cash flow than Fastly, despite having more revenues to offset its losses with.
My own opinion is that Fastly has better technology than Cloudflare, which is saying a lot. I know better tech doesn’t always, or even mostly, translate into better business results, but with its new CEO I think Fastly has a good shot at leveraging its technology advantage into a business advantage, especially with the upcoming Compute@Edge, which surprisingly isn’t mentioned in the article at all.