Fastly

Fastly just posted record revenue of 183 million dollars, up 23% from a year ago. Security revenue jumped 43% to nearly 42 million dollars, and the newer compute and observability products grew 69%. Management raised the full-year outlook to as much as 746 million dollars, so the momentum is not a one-quarter fluke.

A year ago Fastly lost nearly 5 million dollars on an adjusted basis. This quarter they made 27 million dollars, with gross margin hitting a record 65.8%. They also pulled in 39 million dollars of cash from operations, up from 26 million, and guide to as much as 96 million dollars of adjusted operating income this year.

Fastly's ten largest customers now account for 37% of revenue, up from 31% a year ago. That concentration is getting worse, not better. If one giant customer trims spending or shifts to a rival, a big chunk of the growth story disappears in a single quarter.

Under standard accounting rules, Fastly still lost 15.6 million dollars this quarter. The flattering profit figures leave out stock paid to employees, which is a real expense. The losses are shrinking fast, down from 37.5 million a year ago, but this is still a company that has not proven it can earn a true bottom-line profit.