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Fastly stock in late trading had tumbled 18.8%, to $36.18.



shares are down sharply in late trading Wednesday after the content-delivery network operator provided disappointing guidance for the rest of the year, reflecting the fallout from a recent network outage that triggered at least a few customers to cut ties with the company.

Fastly stock (ticker: FSLY) in late trading had tumbled 18.8%, to $36.18.

For the quarter, Fastly posted revenue of $85 million, up 14% from a year ago, after a $1.2 million write-down of deferred revenue tied to the company’s acquisition last year of the edge-security software provider Signal Sciences, and slightly below the Street consensus at $85.7 million. A non-GAAP loss of 15 cents a share was a bit better than the Street projection of a loss of 17 cents. Non-GAAP gross margin fell to 57.6% from 61.7% a year ago.

The real issue with the quarter was the outage, and how it will impact results from here. “We have a couple of customers, one of them being a top 10 customer, that have yet to return their traffic to the platform,” CEO Joshua Bixby said in a letter to shareholders. “We also had several customers delay their launch of new projects, which will delay the timing of traffic coming onto our platform. The outage and these delays will have an impact on our Q3 and full year outlook.”

Bixby notes that the June 8 outage affected nearly all customers. 

“The outage resulted from an undiscovered software bug that was triggered by a valid customer configuration change,” he explains. “We detected the bug within one minute and returned 95% of our network to normal within 49 minutes, but our customers were negatively impacted. As a result, we saw traffic volumes decrease and issued credits to customers following the incident.

“Given the usage-based nature of our business model, this resulted in an impact to our Q2 results, and we expect to see a downstream impact on revenue from the outage in the near- to medium-term as we work with our customers to bring back their traffic to normal levels.”

For the September quarter, Fastly sees revenue of $82 million to $85 million and a loss on a non-GAAP basis of between 18 cents and 21 cents a share. Previous Street consensus called for $98 million in revenue and a loss of 9 cents a share.

For the full year, Fastly now sees revenue ranging from $340 million to $350 million, with a non-GAAP loss of 57 to 65 cents a share; consensus had called for $382 million in revenue and a loss of 43 cents a share.

Write to Eric J. Savitz at [email protected]


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