Fastly ( NYSE: FSLY ) shares dropped ~7% pre-market on Thursday after the firm cloud computing services provider reported a mixed set of second quarter results .
Late Wednesday, the California-based firm announced record revenue of $102.5M that grew 21% Y/Y and exceeded the top end of the firm's own guidance range of $99M to $102M. The top line results also surpassed Wall Street's estimates for the quarter.
However, net loss widened from $17.4M in Q2/2021 to $28M, or a -$0.23 per share - missing analysts estimates for the quarter. Gross margin also fell from 57.6% in prior year quarter to 50.4%, driven by a "onetime true-up to cost of revenue." The company expects gross margin improvement in the second half and continues to see "meaningful" increase for the remainder of 2022 towards the low to mid-50s.
For full year 2022, Fastly ( FSLY ) raised its prior revenue guidance by $10M to a range of $415M to $425M (consensus: $415.08M). However, it widened its expectation for adjusted loss, from -$0.60 to -$0.50 per share previously to -$0.68 to -$0.63 per share. This reflects the impact from lower gross margins and higher expenses.
Speaking on the results, KeyBanc analysts said, "The results show better-than-expected revenue, but another miss/guide down operationally as gross margin pressures continue. The firm wants to see stabilizing revenue growth and gross margins before it turns more positive."
Seeking Alpha's Quant system flags Fastly ( FSLY ) at high risk of performing badly.
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Fastly stock slides as margin pressures continue in Q2