It's been a rough year for Fastly (FSLY) stock. Year to date, shares of the edge computing company are down nearly 50%. Slowing organic growth, the loss of the company's chief financial officer, and outsize growth at competitor Cloudflare (NET 0.18%) are among some of the concerns likely weighing on the stock.

Can Fastly's second-quarter results reinvigorate investor interest? The company is set to report its second-quarter results after market close today.

Ahead of Fastly's quarterly update, here's a preview of some key items to watch.

I diagram of laptops connected to a cloud.

Image source: Getty Images.

Tough comps

Analysts expect a significant deceleration from Fastly's first-quarter revenue growth rate of 35%. On average, analysts are modeling for revenue to grow 15% year over year to $86 million. This is in line with management's guidance for second-quarter revenue of $84 to $87 million.

These expectations are even more conservative than they appear at first glance, as they include expected revenue from Fastly's recent acquisition of security specialist Signal Sciences.

This expectation for slower growth reflects the company's extremely tough year-ago comparison. In the second quarter of 2020, Fastly's revenue grew 62% year over year. The quarter, management said in its second-quarter shareholder letter, was "supplemented by increased internet usage as social distancing measures continued through Q2 2020." 

A tough competitor

Cloud computing and networking company Cloudflare, which overlaps with Fastly in some areas, has been growing far more rapidly than Fastly recently. In Q1 2021, revenue soared 51% year over year to $138 million.

Investors may be hoping Fastly can report higher-than-anticipated revenue, demonstrating that it holds up well to competitor Cloudflare. Of course, the stock isn't priced for the same top-notch execution as Cloudflare is. Cloudflare has a $37 billion market capitalization and Fastly's market cap is just over $5 billion. The bar for Fastly, therefore, is fortunately much lower.

Nevertheless, analysts may ask Fastly management questions during the earnings call about how the company views its competitive positioning relative to Cloudflare.

Customer growth

Investors should look to see how well Fastly is growing its enterprise customers. The company added 11 new enterprise customers in Q4 2020 and 12 in Q1 2021. To get investors more excited about Fastly's long-term potential, the company will likely need to at least grow its enterprise customer count similarly to growth levels seen in the previous two quarters.

After all, Fastly's enterprise customers are extremely large, with average customer spend of about $800,000 in Q1 2021. In addition, enterprise customers accounted for 90% of Fastly's trailing-12-month revenue during the period. It would be difficult to overstate this customer type's importance to Fastly's business.

Management was certainly bullish ahead of the report, noting in its first-quarter shareholder letter that "the changes we experienced in 2020 appear more permanent than many predicted."

Investors will find out how Fastly performed in Q2 when the company reports its second-quarter results after market close today: Wednesday, Aug. 4.