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Q3 Earnings Preview for Fastly (NYSE:FSLY)

in EARNINGS/INVESTING IDEAS by

Fastly, Inc. (NYSE:FSLY) is scheduled to report Q3 earnings results on October 28, 2020.

The company is expected to report earnings of -$0.01/share on revenue of $71.351 million. The consensus earnings per share (EPS) of -$0.01/share is based on a poll of 12 analysts and represents a growth in eps of 87.5% over the same quarter last year, when the company reported earnings of -$0.09/share.

The revenue forecast of $71.351 million based on a poll of 11 analysts implies a year-over-year (YoY) growth in revenue of 43.3%. Last year the company reported $49.797 million in revenue for the quarter.

Expected to report EPS of -$0.01/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $71.35 $49.80 43.3%
EPS -$0.01 -$0.09 87.5%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 5 tracked quarters of exceeding earnings guidance.

What are your expectations from Fastly, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.01 $0.02 250.4% Beat
Q1, 2020 -$0.12 -$0.06 50.7% Beat
Q4, 2019 -$0.11 -$0.10 12.5% Beat
Q3, 2019 -$0.13 -$0.09 33.2% Beat
Q2, 2019 -$0.13 -$0.11 14.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −22.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $116.18 $89.64 −22.8% Decline
May 6, 2020 $22.74 $33.58 47.7% Increase
February 20, 2020 $24.20 $23.11 −4.5% Decline
November 7, 2019 $19.42 $18.68 −3.8% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −1.78, the model suggests that the company is likely an earnings manipulator. A value of −1.78 implies a 3.8% chance of earnings manipulation.

Fundamentals And Technical Analysis

Fastly, Inc. is currently trading at $74.02/share, down −3.1% for the day. The company is trading at approximately 54.2% of its 52-week high of $136.50/share. The company’s stock price is down −17.4% since the last earnings report and down −11.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 37.20 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:FSLY Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −159.27 and a forward P/E multiple of −1,236.47.

Fastly, Inc.’s current share price also implies a price-to-book (P/B) multiple of 15.48. The following table summarizes some other key fundamental ratios:

Data as of October 26, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $74.02
P/E Ratio −159.3x
P/E Ratio (Fwd) −1,236.5x
PEG Ratio −3.0
Total Debt / Total Capital 0.3%
Levered Free Cash Flow -$51.259 million
EV / EBITDA −218.8x

Finbox

Fastly, Inc. is a mid-cap stock with a market capitalization of $8.391 billion and a total enterprise value of $8.037 billion. The company operates in the Information Technology sector and the IT Services industry.

Fastly, Inc. operates an edge cloud platform for processing, serving, and securing its customer’s applications. The edge cloud is a category of Infrastructure as a Service that enables developers to build, secure, and deliver digital experiences at the edge of the Internet. It is a programmable platform designed for Web and application delivery. As of December 31, 2019, the company’s edge network spans 68 points-of-presence worldwide. It serves customers operating in digital publishing, media and entertainment, technology, online retail, travel and hospitality, and financial technology services industries. The company was formerly known as SkyCache, Inc. and changed its name to Fastly, Inc. in May 2012. Fastly, Inc. was founded in 2011 and is headquartered in San Francisco, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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