Peter Offringa has written his deep dive into Fastly’s Q2 performance:
I found it particularly interesting his take on the TikTok risk, as an indication of how strong Fasty’s proposition is in relation to its competitors:
More importantly to me as an investor, though, is consideration for how TikTok became such a large customer and what that says about Fastly’s solution relative to other CDN providers. Granted, TikTok is likely using more than one CDN, but an annual spend of $36M total on a single CDN provider is significant.
His view on Enterprise customer growth (as featured in previous threads):
The increase in enterprise customer count in Q2 represented only 7 customers moving into this category and was the smallest sequential increase in the past 12 months. However, management noted on the earnings call that some customers in impacted verticals, like travel and hospitality, actually dropped below the $100k spending threshold in the quarter. They didn’t provide detailed counts for customers moving up versus moving down.
Fastly has many long-time customers in travel and hospitality, like Kayak, Airbnb, TripAdvisor, Ticketmaster and Hotel Tonight. These companies have reported significant reductions in usage year/year, over 80% in some cases. It is understandable that they would be impacted. Presumably, as macro conditions improve, these customers will return to normal spending. Airbnb, for example, recently announced that they resumed over 1M bookings per day on July 8th, after falling below that count since March 3rd. Also, on the recent Oppenheimer analyst call, Fastly’s CEO mentioned starting to see “green shoots” of new activity with travel customers in June/July.
He maintains a bullish and outsized position, with a ratio of 2:1 to Cloudfare, and implies he is going to upgrade his 4 year price target of $155 which would be ‘easily achievable’.
Just the light touch view here with a couple of personal interest points, I’m sure some of the ‘techies’ on this board can provide some more comprehensive insight