Fastly’s evolution from CDN to edge computing and security platform

Fastly reported $173 million in revenue for the first quarter of 2026. This represents 20% year-over-year growth. The company previously reported $624 million in total revenue for fiscal year 2025. Fastly began in 2011 with seven employees. The company listed on the New York Stock Exchange in 2019. In 2020, Fastly acquired Signal Sciences for $775 million. This acquisition added security capabilities to the edge infrastructure. A software bug in June 2021 caused a global outage for websites like Reddit and Amazon. The company shifted.

The business moved from a content delivery network to an edge cloud platform. In Q4 2025, security revenue reached $35.4 million, which grew 32% year-over-year. This growth helped the company achieve its first profitable fiscal year. Remaining performance obligations hit a record $353.8 million in February, which grew 55% year-over-year. This indicates that contracted future revenue grows faster than current revenue.

Computing at the edge

Fastly uses WebAssembly to run code at the edge. This allows for startup times of 35.4 microseconds. The company provides the AI Accelerator to manage agentic AI workloads. This service uses semantic caching to store the meaning of queries. It reduces AI operational costs for customers by 90%. Fastly serves 634 large customers. These customers spend an average of $1.03 million annually. The company expects its security and compute products to exceed a $200 million annual run rate by late 2026. The platform uses 167 points of presence with 578 terabits per second of capacity.

The tech works. Fastly provides the Fastly Agent Toolkit to give AI coding agents specific skills. This accelerates edge service deployment and security. The company also provides ContentGuard to protect intellectual property from unauthorized AI agents. It provides API Security through automated cataloging for visibility. These tools aim to capture more wallet share from existing clients. In Q1 2026, Fastly secured several large deals. A large social media platform used Fastly for its API and Video-on-Demand operations. A privacy-first browser used the platform for a native in-browser VPN. A digital payment conglomerate expanded its footprint with ten new products and services. Fastly competes against Cloudflare and Akamai. Cloudflare has a broader user base. Akamai has a larger global footprint. Fastly aims to win by providing better programmability for developers.

The 2026 AI surge

Agentic AI drives demand for the platform. AI agents require low latency and security. Fastly provides these through its distributed network. The company expects full-year 2026 revenue to reach between $710 million and $725 million. This represents 15% annual growth at the midpoint. Management expects gross margins to stay at 64%, plus or minus 50 basis points. After the company achieved its first full year of non-GAAP profitability with $19.7 million in net income for 2025, many investors focused on the rapid growth seen across the security and compute segments as they evaluated the long-term path.

Kip Compton took over as CEO in June 2025. He replaced Todd Nightingale. The company reported $19.1 million in non-GAAP operating income for Q1 2026. This is an 11% operating margin. Fastly faces challenges. Stock-based compensation reached $117 million in 2025. You know the impact of dilution on shareholders. The company also monitors memory component prices.

Will the company sustain its momentum?