Fastly Q2 Earnings Call Highlights

Fastly NYSE: FSLY reported record second-quarter revenue and improved profitability as customers expanded their use of its network, security and Compute products. The company also raised its full-year 2026 revenue and operating-profit outlook. Revenue for the second quarter rose 23% year over year to $183.3 million, exceeding Fastly’s guidance range of $170 million to $176 million. Non-GAAP operating income was $27 million, above the company’s forecast of $12 million to $16 million, while non-GAAP operating margin reached 14.7%.

“Fastly delivered another exceptional quarter, demonstrating the success of our platform strategy efforts,” CEO Kip Compton said. He said the company’s results reflected customers adopting more products on its unified platform, alongside operational discipline and investment in higher-value growth opportunities.

Fastly said security revenue increased 43% from a year earlier to $41.7 million, representing 23% of total revenue compared with 20% in the prior-year quarter. Network services revenue grew 17% to $133.9 million, while other products revenue increased 69% to $7.7 million, primarily driven by Compute sales related to AI and associated customer requirements. Compton said Fastly’s security and other revenue combined grew 46% year over year and reached an annual run rate of nearly $200 million. DDoS Protection and Bot Management each recorded triple-digit year-over-year growth, according to the company.

The company cited AI-driven and agentic traffic as a tailwind across its business, particularly in security and Compute. Compton said AI-generated traffic is growing at roughly 6.5 times the rate of human traffic, increasing demand for tools that can determine whether requests should be authorized, cached, throttled, monetized or blocked. During the question-and-answer session, Compton said the company does not separately disclose AI traffic volumes but has identified customers where AI tools appear to be driving traffic growth. He said AI and agentic traffic are producing a larger effect in security and Compute than in network services, in part because AI requests can have high request volumes but lower bandwidth needs than streaming events. Chief Financial Officer Rich Wong said the company’s Next-Gen Web Application Firewall, along with DDoS and Bot Management offerings, were key contributors to security growth. He characterized DDoS and bot-management adoption as still being in the “second inning” and said those products offer substantial cross-selling opportunity.

Fastly’s trailing 12-month net retention rate rose to 117%, compared with 113% in the first quarter and 104% a year earlier. The company said the increase reflected expansion across a broad range of customers using more of its platform. Large customers, defi...