Why Did Fastly Shares Fall 20% After Earnings?

Cloud platform company Fastly Inc FSLY reported second-quarter financial results including a discussion on an outage in June and what's to come for the company.

What Happened: Revenue of $85 million for Fastly was up 14% year-over-year. The company’s gross margin fell from 61.7% to 57.6% in the second quarter.

The company reported 2,581 customers at the end of the second quarter and 408 enterprise customers, up from 2,458 and 395 in the first quarter, respectively.

Enterprise customers made up 89% of trailing 12-month revenue. The average enterprise customer represented annual revenue of $702,000, down from $705,000 in the first quarter.

One of the key points discussed by the company was an outage experienced in June. The global outage affected almost all of Fastly’s customers and lasted around 49 minutes for most customers. Credits were issued to customers after the outage.

“During the second quarter, we also managed through a significant outage that impacted our Q2 results and will have an impact on our Q3 and full-year outlook, CEO Joshua Bixby said.

Related Link: Unusual Options Activity Insights: Fastly

What’s Next: Fastly has several customers, including a top 10 customer, that have not seen the return of traffic on their platform. The company also reported several customers delaying the launch of projects, which will impact third and fourth-quarter financial results.

Fastly estimated third-quarter revenue in a range of $82 million to $85 million. This figure came in shy of analyst’s estimates of $98 million.

The company guided for third-quarter earnings per share to be a loss of 21 cents to a loss of 18 cents versus a street estimate of a 9 cent loss per share.

Full-year guidance from Fastly is revenue of $340 million to $350 million versus street estimates of $382.3 million.

See also: How to Buy Fastly (FSLY) Stock Right Now

FSLY Price Action: Fastly shares are down 18.75% to $36.19 in after-hours trading Wednesday.

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