Edge computing company Fastly (FSLY -1.96%) kept up its rapid growth, the company revealed in its first quarter earnings report last week. Posted after market close on Wednesday, May 6, the results highlighted how the company is tapping into the massive potential of cloud computing as companies all over the world accelerate their digital transformations. Furthermore, Fastly's usage-based business model benefited during the tail end of the quarter as traffic on its platform jumped amid social-distancing orders across the world.
Investors were impressed. The stock soared following the update, jumping more than 40% at one point on Thursday.
Here's a closer look at the tech company's strong first quarter results and management's impressive guidance for the second quarter and the full year.
Fastly first-quarter earnings: Key takeaways
First-quarter revenue jumped 38% year over year to $62.9 million, easily beating analysts' average forecast for $59.4 million. The adjusted loss per share for the period was $0.06, narrower than analysts' average forecast for a loss per share of $0.12.
Fastly's enterprise customers (those that spend $100,000 or more over a 12-month period) were a key driver for the period. The company finished the quarter with 297 of these customers, up from 243 in the year-ago period and 288 at the end of 2019. Average enterprise customer spend for the trailing-12-month period ending March 31 rose to $642,000, up from $607,000 at the end of 2019. Enterprise customers accounted for 88% of overall revenue, up from 85% in the year-ago period.
"These results were primarily driven by continued strong business fundamentals and further adoption of our edge cloud platform by enterprise organizations across multiple verticals and geographies," management said in Fastly's first-quarter update, "including high-margin verticals such as FinTech and e-commerce."
Fastly also said its performance was "supplemented by increased internet usage as social distancing measures were implemented in the second half of March."
An optimistic outlook
Fastly's outlook was particularly impressive. For the company's second quarter, management expects revenue between $70 million and $72 million, far ahead of the consensus analyst estimate of $60 million. The company's guidance for second-quarter adjusted earnings per share between a loss of $0.02 and breakeven was also substantially better than an average forecast for a loss per share of $0.11.
And Fastly lifted its full-year outlook. The company now expects full-year revenue between $280 million and $290 million, well above a previous forecast for a range of $255 million to $265 million. Also important, it expects this higher revenue will help it move closer to breakeven on an adjusted basis. Before Fastly's first-quarter results, management was expecting its full-year adjusted loss per share to be between $0.32 and $0.43. Now, Fastly is forecasting its 2020 adjusted loss per share to be between $0.08 and $0.15.
"We are beginning to witness a digital transformation acceleration across various industries due to secular trends and impacts from events such as COVID-19," management said in its first-quarter shareholder letter. "Our superior, modern cloud platform plays an even more important role than before as companies look to transform their business models for growth and viability."
As Craig-Hallum analyst Jeff Van Rhee said about the results after Fastly's earnings report. It was a "wow" quarter and outlook.