$FSLY reported earnings today AH and beat analyst estimates across the board while lifting 2026 revenue guidance to $710m (+6% vs. estimates). Q4'25 revenue growth accelerated to 23% YoY while RPO increased 55% YoY.
That RPO backlog growth implies that management is sandbagging their 2026 revenue guide, which was further implied by the CFO during the earnings call where he commented that they are maintaining a conservative outlook for the back half of 2026 to account for potential macro volatility.
Gross margin also improved to a record 61.4% compared to 53.4% in Q4'24. Driving an 8 point margin improvement with revenue growth accelerating is absurd and really shows that the company's fundamentals are inflecting.
Similar to Cloudflare, Fastly is benefitting from (i) a surge in automated scrapers and bots, (ii) semantic edge caching (recognizing intent of prompts and retrieving an already cached answer), and (iii) AI agent security and API traffic.
$FSLY has basically traded sideways for the last \~2 years driven by revenue deceleration that troughed in 2024. Hence why the company has traded at absolute bottom of the bucket shitco valuations (\~<2x NTM Revenue).
https://preview.redd.it/48ndt5e1wzig1.png?width=730&format=png&auto=webp&s=eb3f20846866bad47c232671d949c38e7c831395
Look, I know some of you idiots are going to say "priced in" or "you're too late", but even though $FSLY's stock already pumped \~35% in afterhours today, even at that valuation it's still trading at a \~2.7x EV / NTM Revenue multiple while Cloudflare is trading at a \~25x EV / NTM Revenue multiple. It's not exactly an apples to apples comparison (Cloudflare is the market leader, has \~4x the revenue, better margins, wider product offering, etc.), but the point I'm trying to make here is that even if FSLY rerates to a mid-single-digits multiple, you get to a >40% return.
https://preview.redd.it/u2dp2863yzig1.png?width=417&format=png&auto=webp&s=6e01481f7e198e19d36daaeb2d938fb4cffc5979
With demand inflecting for Fastly, the gap between Cloudflare's revenue growth pace and Fastly's is starting to close.
https://preview.redd.it/v3r97f5800jg1.png?width=498&format=png&auto=webp&s=5feea337b6804493bef56d41ce4eb00dbdb569cf
As the market starts to realize $FSLY is a true AI beneficiary and will continue to capture revenue from AI Agent adoption accelerating, a rerating to mid-single-digit multiples doesn't seem farfetched at all. Especially if $FSLY can prove out that they can deliver >20% revenue growth (current guide implies a 14% YoY growth rate, but is sandbagged) while continuing to improve on margin and profitability.
Qualitatively too, there's been positive feedback on Fastly's product experience, see below:
[https://www.reddit.com/r/fastly/comments/1pp63hz/is\_it\_just\_me\_or\_has\_fastly\_become\_actually\_easy/](https://www.reddit.com/r/fastly/comments/1pp63hz/is_it_just_me_or_has_fastly_become_actually_easy/)
TLDR: $FSLY fundamentals are inflecting while trading at \~2.7x EV / NTM Revenue compared to $NET trading at a \~25x EV/ NTM Revenue. $FSLY priced like a SaaS shitco and AI loser when it is actually an AI beneficiary.
Screenshot of position below:
https://preview.redd.it/jccoqas320jg1.png?width=1546&format=png&auto=webp&s=b29102d345d657e8850926cf40616e6a445c8f87