Fastly (FSLY -2.77%) provides a range of cloud services that make the Internet faster and safer. Unfortunately, disappointing financial results and a network outage in June have weighed heavily on the company, and the share price currently sits 57% below its all-time high. Can Fastly turn things around?

In this Backstage Pass video, which was recorded on Nov. 5, 2021, Motley Fool contributor Trevor Jennewine and Fool analyst Tim Beyers discuss Fastly's third-quarter earnings report while highlighting the metrics investors should watch in the coming quarters.

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Trevor Jennewine: Fastly is another cloud computing company, similar to Cloudflare. Their platform is really built around speed and security, delivering content quickly, safely. They've also got a web development platform, Compute@Edge.

So, looking at Q3 earnings, revenue was $87 million. That was up 23% -- a beat on the top line. And the GAAP loss was $0.48 per diluted share. A beat on the bottom line, but wider than the loss in the third quarter of 2020.

Then customer growth: They have 2,748 customers, that's up 34%. And of those, enterprise customers comprised 430, and that was up 37%. So if you recall Cloudflare, Fastly is growing its customers at about the same rate, but it's growing its enterprise customers much more slowly, and it has far fewer.

Some concerns and highlights: The revenue retention rate was 114%. That is down from 141% in the same quarter last year. And average enterprise customer spend is down to $689 thousand. That's down from $753 thousand last year. It's also down sequentially from $702 thousand in the previous quarter. However, some of that is due to headwinds from the outage.

In the second quarter, there was an outage that affected a lot of Fastly's customers. Sites like Amazon and Reddit were down for a period of the day, and so Fastly lost some of its top customers. When that happened, they moved their traffic off of the platform. Management did note that they have returned traffic to the platform, so that's a positive sign. Perhaps we'll see the retention and enterprise customer spend tick up in the coming quarters.

Then, the last thing I wanted to touch on is that management did mention they're seeing some traction with their developer platform Compute@Edge. That essentially allows customers to build applications or deploy code directly onto Fastly's network. It's good to see them, it's good to see traction with that product. Tim, I'd love to get your thoughts here.

Tim Beyers: You can look at this one or two ways. Either Fastly has been massively underrated, and so the last couple of quarters, where things got bad and the stock got whacked, that was unfair. You can look at it that way. You could also look at it and say, they have some really big ambitions, and I know you touched on it briefly, Trevor, but there are four things during the call that the CEO Joshua Bixby said: $1 billion dollars in revenue by end of 2025 -- that's a 30% compound annual growth rate. They grew 23% in the quarter. If you believe them, growth is going to accelerate. That's number one.

Number two: They're going to see a 50x -- 50x over the next year -- in usage of Compute@Edge. That's what they believe; that's what they're saying. Number three: There's going to be 100 thousand enterprise developers by the end of 2023. And then by 2025, when they hit that billion dollar mark, by that point, they will 10x the security business that they are building around that acquisition of Signal Sciences. And my math says that makes Signal Sciences roughly 40% of the business, or about $400 million. If they execute on all those things, amazing.

What we don't know is, where are they starting from? We have no idea. We just don't know that, but let me give the hopeful stat here. You should definitely read the shareholder letter if you haven't. There are some good descriptions of companies that are using Compute@Edge right now, some of the use cases. And some of them are kind of interesting. The more important thing, don't take that as face value, but what's interesting  and what you want to measure if you are an investor in Fastly, is this program they've got in place, which is they're giving developers a million dollars in credit. Basically, a free tier. Start building stuff in Compute@Edge. And we have a usage-based business model, that first million bucks is essentially free. Go ahead and build it, just do it and then once you get to a million and one dollars then we can talk about how we need to start invoicing you.

We don't know how big of an impact that's going to have. But we know from history that's potentially brilliant. So I do think there is a case to be made that they're making the right moves. I wish we could measure it, Trevor, we can't measure it yet. Next quarter, let's see what they report on, on these three big things that they said or these four big things that they said. We need to see the measurement. But I mean, those are big goals, so we may find that Fastly's deeply underrated. The sell-off today probably speaks to this idea that others are just blowing smoke and this is a nothing burger. That's probably an overreaction. I wouldn't call it a nothing burger. I would say they have to prove it.