Fastly Q3 2026 Revenue Rises 20% as Margins Expand

Fastly Inc. reported 20% year-over-year revenue growth for the third quarter of fiscal 2026, while wider margins and tighter expense control lifted non-GAAP operating income and free cash flow. The edge-cloud provider also projected full-year revenue of $744 million to $748 million, representing 20% growth at the midpoint.

Revenue reached approximately $190 million in the quarter ended September 30, up from $158 million a year earlier. Last-12-month revenue totaled $719 million, and remaining performance obligations increased 24% year over year to $334 million, indicating growth in contracted future revenue.

Non-GAAP gross margin rose to 65.8% from 62.8% in the prior-year quarter and was unchanged from the second quarter. GAAP gross margin increased to 63.3% from 58.4% a year earlier.

Fastly generated non-GAAP operating income of $31.2 million, compared with $11.6 million in the year-earlier period. The corresponding non-GAAP operating margin expanded to 16.4% from 7.3%, as total non-GAAP operating expenses declined to 49% of revenue from 55%.

The company remained unprofitable under GAAP, but its operating loss narrowed to $11.3 million from $28.8 million a year earlier. GAAP net loss improved to $11.3 million, or $0.07 per diluted share, from $29.5 million, or $0.20 per share. Non-GAAP net income was $31.6 million, or $0.17 per diluted share.

Free cash flow increased to $25.2 million from $18.1 million in the third quarter of 2025. Fastly reported $41 million of free cash flow over the latest 12 months.

Multiproduct adoption expands

Fastly highlighted broader adoption of its delivery, security, compute and observability products among large customers, which it defines as accounts generating more than $100,000 in annualized current-quarter revenue. The company had more than 600 large customers at quarter-end.

The proportion of large customers using at least two product suites rose to 74% from 67% a year earlier. Adoption of four or more suites increased to 34% from 19%. Fastly said its platform strategy is intended to deepen customer relationships, increase retention and make more efficient use of its common network infrastructure. Last-12-month net retention was 119%.

The company plans to change its financial reporting structure beginning in 2027. Existing disclosures for network services, security and other revenue will continue through the fourth quarter of 2026, after which Fastly will report a single revenue line and provide adoption metrics for customers using at least two or four product suites.

Fastly also pointed to rising artificial-intelligence-related activity on its network, including selected customer cohorts in code generation, content authenticity, model distribution and Model Context Protocol traffic. The company cautioned that these figures measure network requests rather than unique users or revenue, and some comparisons include both increased use of existing services and newly launched services.

At September 30, Fastly operated 178 points of presence with 655 terabits per second of edge-network capacity. Its portfolio includes six product suites spanning network services, web application firewall, bot management, DDoS protection, compute, and observability and other products.

Fourth-quarter and full-year outlook

For the fourth quarter, Fastly expects revenue of $198 million to $202 million, implying 16% year-over-year growth at the midpoint. The company forecast a non-GAAP gross margin of 65.5%, plus or minus 50 basis points, non-GAAP operating income of $30 million to $34 million, and non-GAAP diluted earnings of $0.16 to $0.18 per share.

For fiscal 2026, management expects revenue of $744 million to $748 million, non-GAAP operating income of $107 million to $111 million and non-GAAP diluted earnings of $0.61 to $0.63 per share. Full-year free cash flow is projected at $50 million to $60 million, while non-GAAP gross margin is expected to be 65.5%, plus or minus 50 basis points.

Fastly said its outlook remains subject to risks including its ability to attract and retain customers, sustain or increase platform usage, maintain product performance and security, respond to technological and regulatory changes, compete effectively, manage growth and generate enough revenue to achieve or sustain profitability.