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Fastly (FSLY) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

Fastly FSLY is set to release third-quarter 2019 results on Nov 7.

For the quarter, the company anticipates revenues between $47 million and $49 million. The Zacks Consensus Estimate for revenues currently stands at $48.3 million.

The company expects the bottom line to be in the range of a loss of 12 cents to 15 cents per share. The consensus mark remained unchanged at a loss of 14 cents over the past 30 days.

In the second quarter, Fastly reported non-GAAP loss of 16 cents per share that was wider than the Zacks Consensus Estimate of a loss of 13 cents. Revenues of $46 million however surpassed the consensus mark of $45 million.

Fastly, Inc. Price and EPS Surprise

Fastly, Inc. Price and EPS Surprise
Fastly, Inc. Price and EPS Surprise

Fastly, Inc. price-eps-surprise | Fastly, Inc. Quote

Factors to Watch

Fastly’s third-quarter results are expected to benefit from increased demand for its edge computing platform.

Moreover, the company’s expanding Points of Preference (POP) around the world is expected to have boosted its customer base in the to-be-reported quarter.

Notably, POPs are placed between a customer’s end users and computing and data storage solutions on-premise, in the cloud or a mixture of both. Since POPs are at the network edge, these help in providing faster (due to low latency) and secure services, thereby improving end-user experience.

Fastly at the end of the second-quarter had 64 POPs online, up from 60 POPs as of Mar 31, 2019.

The company’s customer base includes the likes of Major League Soccer (MLS), Bustle Digital Group, Nav, and Grubhub. Notably, at the end of second-quarter 2019, total customer count was roughly 1627, up from 1529 at the end of the year-ago quarter. Enterprise customer base was 262 at the end of the quarter, up from 190 at the end of the year-ago quarter.

The company’s dollar-based net expansion rate was healthy at 132%, up from 130% in first-quarter 2019. The upside is likely to have continued in the third quarter due to strong adoption of the company’s services and solutions.

Further, strong demand for Fastly’s edge cloud platform among developers is expected to have aided the top line. During the quarter, the company launched a new collection of 60 code-based solutions for developers.

Additionally, the growing popularity of Fastly’s open sourced Web Assembly compiler and runtime, Lucet among developers is expected to have been a key catalyst. Notably, Lucet allowed Web Assembly developers to securely develop and execute high performance applications at the edge without having to port code to each individual platform.

Furthermore, expansion of the company’s footprint across e-commerce, high tech, digital publishing, financial services, SaaS, and media and entertainment verticals is expected to have driven the top line in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP increases the odds of an earnings beat.

Fastly has a Zacks Rank #3 and an Earnings ESP of +12.73%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

Here are a few stocks you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat.

Cogent Communications CCOI has an Earnings ESP of +4.11% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Turtle Beach HEAR has an Earnings ESP of +26.32% and a Zacks Rank #3.

Zillow Group ZG has an Earnings ESP of +5.09% and a Zacks Rank #3.

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