Why tech firm Fastly (FSLY) stock dropped over 30% today?

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Why tech firm Fastly (FSLY) stock dropped over 30% today?

 Why tech firm Fastly (FSLY) stock dropped over 30% today?
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Highlights

  • Fastly revenue jumped 13% YoY in Q4, FY21.

  • For fiscal 2021, the company reported revenue growth of 22% YoY.

  • In fiscal 2022, Fastly expects revenue to be between US$400 million and US$410 million.

Shares of cloud-computing service provider Fastly, Inc. (FSLY) declined more than 30% in premarket on Thursday after its fiscal 2022 revenue guidance fell short of expectations.

The FSLY stock traded at US$20.15 at 8:21 am ET on February 17, down 30.35% from its previous close of US$28.93.

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Why did the FSLY stock tumble?

The investors were disappointed with the company's weak revenue guidance for the current year. The California-based company said it expects revenue to be between US$400 million and US$410 million in fiscal 2022, while its adjusted loss per share to be in the range of US$0.50 to US$0.60. Both the metrics fell short of the average analysts' estimates.

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Fastly (FSLY) reported strong earnings in Q4, FY21, provided weak guidance

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Fourth-quarter earnings

After the company's accelerated growth in the third quarter, investors expected low revenue growth in the incoming quarter. Fastly also had reduced the guidance to just 8% to 12% YoY for the period, compared to its Q3 revenue growth of 23% YoY.

However, the company reported better earnings than anticipated in the fourth quarter. Its revenue surged 13% YoY to US$97.7 million, while its adjusted loss per share came in at US$0.10 per share. Both the metrics were better than the average estimates of the analysts.

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At the end of the fourth quarter, the customer count was 2,804, an addition of 56 from the third quarter. In Q4 of FY2020, its customer count was 2,326.

For full fiscal 2021, the company's revenue soared 22% YoY to US$354 million, while its adjusted loss per share came in at US$0.48.

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Bottomline

The company expects its first-quarter fiscal 2022 revenue to be in the range of US$97 million to US$100 million, a significant jump from its Q4 revenue. The mid-point of the range signifies an increase of 16%, or 3% point up from 13% in the previous quarter.

The guidance was below Wall Street expectations. But CEO Joshua Bixby has sounded optimistic, saying that Fastly’s innovations in the digital sphere will attract more customers.

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