What happened

Shares of edge computing specialist Fastly (FSLY 2.02%) fell sharply on Thursday, declining as much as 7.1%. As of 11:15 a.m. EDT, however, the stock was down about 4.2%.

The growth stock's decline came after Fastly reported third-quarter results and fourth-quarter guidance that underwhelmed the Street.

A chart showing a stock price falling

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So what

Fastly's third-quarter revenue increased 42% year over year to $70.6 million. This is in line with the preliminary revenue guidance management provided investors earlier this month but below management's initial guidance for $73.5 million to $75.5 million. 

Fastly's adjusted earnings per share of $0.04 was up from $0.09 in the year-ago period but below a consensus analyst estimate for breakeven. 

Fastly also provided some insight into the saga of TikTok -- whose owner, ByteDance, is Fastly's largest customer -- which has plagued the company recently.

"Our previously disclosed largest customer, which accounts for 10.8% of our revenue for the nine months ended on September 30, 2020, removed a majority of their U.S. and non-U.S. traffic from our platform by the end of the quarter," CEO Joshua Bixby said in a letter to shareholders. "Based on publicly available information, we believe this global traffic reduction was in response to the potential of a prohibition of U.S. companies being able to work with this customer."

Now what

Fastly said its TikTok challenges are likely to continue into the fourth quarter. To this end, management built this hurdle into its Q4 guidance. The company guided for fourth-quarter revenue to be between $80 million and $84 million, though about $8 million of this revenue is expected to come from a recent acquisition. Backing out this incremental revenue, the midpoint of Fastly's guidance range implies 26% year-over-year organic growth.