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According to a recent report, the content delivery network (CDN) market was estimated at $11.76 billion in 2020 and is expected to grow 27% annually to reach $49.61 billion by 2026. Fastly (NYSE: FSLY) recently reported its quarterly results that surpassed the market’s expectations.

Fastly’s Financials

Fastly recently announced its fourth-quarter results. Revenues for the quarter grew 13% over the year to $97.7 million, ahead of the market’s estimates of $93.22 billion. Adjusted EPS surpassed the expectations and came in at a loss of $0.10 against the market’s forecast of a loss of $0.16.

For the fiscal year, Fastly announced revenues of $291 million, growing 22%, and a net loss of $0.48 per share.

Fastly ended the quarter with over 2,800 customers of which 445 were enterprise customers. Among other key metrics, trailing 12-month net retention rate increased to 118% in the quarter compared with 114% a quarter ago. Dollar-Based Net Expansion Rate increased to 121% from 118% a quarter ago and Annual Revenue Retention came in at 99.2% in 2021 compared with 99.3% in 2020.

Fastly forecast its current quarter revenues to be $97-$100 million with a loss per share of $0.15-$0.13, against the market’s estimate of $97.76 million with a loss of $0.14 per share. It expects to end the year with revenues of $400-$410 million and a loss of $0.60-$0.50 per share, against the market’s estimates of revenues of $419.06 million and a loss of $0.52 per share.

Fastly’s Acquisition

Recently, Fastly announced its acquisition of California-based push platform, Fanout, for an undisclosed sum. Fanout’s platform simplifies the process of building and scaling real-time and streaming APIs such as live chat support, gaming, video stream, and eCommerce, The acquisition will allow Fastly to integrate Fanout’s technology into its own network, enabling real-time app development in addition to improved time-to-market, reduced friction, and unprecedented scale.

Fanout will allow Fastly to deliver real-time development that is transport agnostic. Fan-out’s solution does not have constraints on the number of connected clients in addition to true 1-to-many messages. Customers will also be able to use their existing HTTP origin instead of maintaining a complicated and expensive push protocol messaging infrastructure dedicated only to real-time app development. Workflows will also be streamlined efficiently, freeing developers to build improved experiences for their users without worrying about the intricacies of real-time protocols. Prior to the acquisition, Fanout raised $30,000 in a round of funding led by SeedSumo. Fanout did not disclose its pre-acquisition valuation or financials.

Fastly continues to expand its market presence by launching several new products. It recently announced the edge deployment of its Next-Gen Web Application Firewall (WAF), which is the industry’s only unified firewall. The solution is helpful in web-app and API protection at the network edge. It also announced a new integration with Glitch and Compute@Edge. The integration enables developers of sophisticated Glitch apps to deploy to the edge with 100x faster code execution startup time than other serverless solutions. The solution already saw more than 2,000 enterprise developer sign-ups in the first week of its beta release.

Fastly’s ability to execute has earned it the recognition of being a Challenger in the 2021 Gartner Magic Quadrant for Web Application and API Protection. It is a busy quadrant with players like Cloudflare, AWS, and Barracuda flanking Fastly. Fastly was also rumored to be an acquisition target by Google for its CDN and edge computing capabilities. Speculation about it being acquired by big tech giants are not new for Fastly. In 2020, the market was abuzz with news that Cisco was looking at acquiring Fastly.

Fastly’s stock is trading at $19.06 with a market capitalization of $2.3 billion. It had climbed to a 52-week high of $72.08 in April last year. It hit a year low of $13.01 in March.