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Cloud computing company Fastly reports 40% revenue gain amid pandemic

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Yahoo Finance’s Alexis Christoforous and Joshua Bixby, Fastly CEO, discuss the company’s latest earnings report and growth amid the pandemic.

Video Transcript

ALEXIS CHRISTOFOROUS: The cloud computing services provider Fastly released earnings this week that beat on both the top and bottom line. But it was Fastly's guidance that left some investors a little disappointed. Joining me now is Fastly's CEO, Joshua Bixby. Joshua, good to see you again. Let's start with last quarter here. Pretty impressive revenue spike, up 40% year over year. Tell us what drove those results.

JOSHUA BIXBY: Yeah, thank you for having me here. It's an honor. Those results were driven by the trends that we're all seeing. The internet continues to grow. Security is critical for those who are serving on the internet. And the gains that the industry saw in March, April, May, they continue. Habits have changed, and people continue to use the internet more and more. It was a great quarter. I'm very proud of the team.

ALEXIS CHRISTOFOROUS: You say things have-- behaviors have changed. Do you see this continuing even post the pandemic, even after we get back to business as usual, and things open up? Are we still going to see the same kind of demand for all of these cloud computing and online services?

JOSHUA BIXBY: Yeah, we certainly feel that way. One of the beauties of being global is we get to see openings happening at different stages. So when you go look at Israel, you look at some of the countries which are already starting to open up, you can see that the trends that we saw have continued. One of the great advantages we have is, we serve those who have digitally transformed and those who care deeply about that process. They're kind of the innovators, the most innovative.

And so, when you look at the Shopifys or you look at the Slacks and folks who are really at the forefront of innovation, we see that trend continuing. And we have already seen, as the world gets back to normal, we have seen it continue. So we're very optimistic about that.

ALEXIS CHRISTOFOROUS: Now, having said all that, you're still issuing some weaker than expected guidance for the year ahead. Why are you not as optimistic as Wall Street was hoping you would be?

JOSHUA BIXBY: Yeah, it's a great question. I think that we have always guided the same way. The principle for us is, we start the year. We're a usage-based business, so we see what we have, and we commit to that. And as the year goes by, as we see more usage and our hypothesis becomes true, we are able to readjust. And so, we've taken the same approach as a public company and every year that we have been in, you know, in this seat. And that hasn't changed this year.

ALEXIS CHRISTOFOROUS: What about what you're expecting to see in terms of Fastly's new edge computing services?

JOSHUA BIXBY: That's a very large growth area. We are fundamentally at a turning point in how the internet is designed. For those of us who have been in this market for a long time, it really started with this sort of notion that everything would sit in a data center. And you would design to a web server, an application server, and a database server. What we now see is primitives, these new blueprints for how organizations are building websites and web applications and how they're doing security. And that involves the edge.

So when you go to something like "The New York Times," the edge, a set of servers really close to you, probably in the city that you live in, are actually responding to your request. It's figuring out if you're a paid customer. It's figuring out personalization. And all of the things that make the web this incredibly unique platform, all of that is now being done at the edge. So we are at the start of a revolution where developers are in control. They understand that speed and scale are important.

We all know that if we encounter a website and it's slow, we go somewhere else. So when people understand the value of speed and the closer we can get all of those critical processes to you, the faster it is, but more importantly, or as importantly, the more secure it is. The farther we can keep the bad folks away from the crown jewels of organizations, the better.

ALEXIS CHRISTOFOROUS: You mentioned being global a moment ago. I know that you just brought on a new chief revenue officer, Brett Shirk, who has an extensive background, I guess, in cloud computing. And one of the things he's going to be focusing on is expanding your overseas operations. Can you talk to us a little bit about what the goals are there?

JOSHUA BIXBY: Sure, the market for the internet is global. And security is as important an issue outside of North America and Europe as it is inside. In fact, in some areas, even more so. So, our goal is to continue to expand globally. We have a very strong presence. But we continue to see tremendous demand. So what you will see from Brett and from the whole organization is continued commitment to those global regions, where we have users who are-- you look at a country like India, for example, onboarding onto the internet, getting more connectivity.

The 5G revolution is very important in all of this. And what we know from history is the more connectivity we have down into our phones or into our homes, the more internet we consume. There's just a strong ratio that we've seen over 25 years. So we are looking for an explosion, which we've already seen, but we'll continue to see in the consumption of internet all over the world.

ALEXIS CHRISTOFOROUS: And I want to talk to you for a moment about the stock. And I know that as the CEO, you can't be fixated on the stock price. I mean, it is up 250% or roughly that over the past year. But some analysts are mixed on the company. They actually point out that you've underperformed, actually, some of your peers.

And at least an Oppenheimer analyst, who was bullish on the stock, we should say, who says it is a buy, says that this stock is relatively inexpensive versus its peers. Do you think that there's something that investors are just missing with the Fastly story that you would like to communicate to them?

JOSHUA BIXBY: I mean, as you know, I don't control the stock price. What I do control is how much our customers use and love us and the happiness of our employees. And I think on both fronts, we are extremely strong. You know, we came out last quarter with 40% growth. If you look at last year, it was 45% growth. If you think about the growth in the greater market, those numbers are incredible.

I would point to 99% revenue retention rate. Our dollar base net expansion in the 140%-- I mean plus. So what we see is an engine where customers love what we do. We have the most innovative customers in the world. And they continue to use more and more of our product. We long-term think that's a recipe for success.

ALEXIS CHRISTOFOROUS: All right, we're going to leave it on that upbeat note. Joshua Bixby, CEO of Fastly, good to see you.