Shares of edge computing company Fastly (FSLY 2.55%) tumbled sharply in after-hours trading on Wednesday, following the tech company's fourth-quarter earnings report. Though the company's fourth-quarter revenue and adjusted loss per share were both better than analysts' consensus forecasts for the two metrics, management's disappointing outlook may have spooked some investors.
Here's a closer look at the edge computing company's earnings report -- and what management is saying about its expectations for 2022.
Fastly Q4 earnings: What investors should know
After it delivered accelerated growth in the third quarter, investors knew Q4 would be a challenge for the company. Going into the period, Fastly management guided for revenue to grow just 8% to 12% year over year -- down from 23% growth in Q3. The company faced two major growth headwinds in Q4: A tough year-ago revenue comparison, and the lapping of its acquisition of Signal Sciences in the fourth quarter of 2020.
Fortunately, fourth-quarter growth was better than expected, with Fastly's top line rising 13% year over year to $97.7 million, beating analysts' average forecast for revenue of $92.5 million. The company's adjusted loss per share of $0.10 was also notably narrower than analysts' average estimate for a loss per share of $0.16.
Customer count at the end of the quarter was 2,804 -- up from 2,748 in the third quarter of 2021 and 2,326 in the year-ago period. But the year-over-year growth in customers was helped by the company's new customers from its acquisition of security specialist Signal Sciences.
Despite reporting solid fourth-quarter results relative to expectations, the company's guidance for 2020 revenue to be between $400 million and $410 million was below analysts' average forecast for revenue of $419 million. In addition, the company's expectations for its profitability in 2022 disappointed. Fastly said it expects its adjusted loss per share to be between $0.50 and $0.60 this year -- wider than a consensus forecast for $0.48.
Fastly's forecast is about $405 million of revenue (at the midpoint of Fastly's guidance range) in 2022 and a non-GAAP loss per share of approximately $0.55, compared to 2021 revenue and adjusted earnings per share of $354 million and a loss of $0.48, respectively.
What management said
Though the quarter's results may have disappointed the Street, management was optimistic.
"Our foundational technology, differentiated by the scale and efficiency of our network, continues to attract and empower enterprise developers in their moments of inspiration," said Fastly CEO Joshua Bixby in the company's earnings release. "We continue to uniquely unlock programmable ways for our customers to build modern digital experiences for billions of people every day on our technology."
It's worth noting that Fastly's guidance for first-quarter revenue to be between $97 million and $100 million represents an acceleration over fourth-quarter growth. The midpoint of this guidance range implies 16% growth -- a three-percentage-point acceleration over the 13% growth the company achieved in Q4.
Though some investors don't seem to like the quarter's results based on the negative market move in after hours, the company's first-quarter guidance suggests Fastly is turning things around after facing an outage that negatively affected its business last year.