Fastly

Fastly's security business just exploded 47% year over year to nearly 39 million dollars last quarter, becoming the engine of the company. Total revenue hit a record 173 million dollars, up 20%, and management raised full-year guidance to as much as 725 million dollars. The committed customer backlog ballooned 63% to 369 million dollars, the strongest signal yet that big customers are locking in long term.

After years of red ink, Fastly is finally turning real profits. Last quarter they swung from a 6 million dollar non-GAAP loss to a 23 million dollar non-GAAP profit, with margins hitting an all-time high of 65%. They also expect up to 68 million dollars in operating income this year, a stunning shift for a company that used to burn cash every quarter.

Fastly's top ten customers now make up 34% of revenue, and that group grew 25% last quarter while everyone else grew just 17%. So the entire growth story leans on a small handful of giants. If even one of them cuts spending or moves to a competitor, the numbers could turn ugly fast.

Despite the turnaround, Fastly still posted a 20 million dollar net loss last quarter under standard accounting rules. The pretty profit numbers mostly come from leaving out stock-based pay to employees, which is a real cost. Until they're profitable on a true bottom-line basis, the stock remains a show-me story in a brutal, price-competitive market.