Fastly, Inc. (FSLY): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed assessment of Fastly, Inc.'s product portfolio using the Boston Consulting Group Matrix, and honestly, the Q3 2025 results give us a defintely sharp picture of where the company is placing its bets. We see the Security business shining as a Star, growing at 30% year-over-year to $34.0 million in Q3, while the dependable Core Network Services still act as the Cash Cow, banking $118.8 million and generating a record $18.1 million in free cash flow. Still, commoditized traffic drags down results, contributing to that $29.5 million GAAP Net Loss, even as the high-potential Compute@Edge segment rockets up 51% from a tiny $5.4 million base. Let's break down exactly where Fastly, Inc. needs to invest, hold, or divest right now.

Background of Fastly, Inc. (FSLY)

You're looking at Fastly, Inc. (FSLY), which you know is a leader in global edge cloud platforms. Honestly, their approach to the Content Delivery Network (CDN) space is different; instead of stuffing servers everywhere, Fastly focuses on fewer, but much more network-dense data centers. This architecture is what lets them excel at edge computing and serving dynamic content, which is a big deal for sophisticated, large enterprises. They defintely gear their service toward those bigger players, having generated nearly three-fourths of their revenue in the United States back in 2024.

The company's platform is powerful and programmable, helping top brands deliver online experiences that are fast and secure through offerings spanning edge compute, delivery, security, and observability. This strategic pivot is showing up in the numbers as they push higher-margin services. For instance, in the third quarter of 2025, Fastly, Inc. reported total revenue of $158.2 million, which was a 15% year-over-year jump. That's a strong beat against expectations, and it shows the cross-sell strategy is working.

Drilling into the revenue streams, the focus on protection is clearly paying off. Security revenue hit $34.0 million in Q3 2025, marking a 30% increase compared to the same quarter last year. This growth helped push the non-GAAP gross margin up to 62.8% in that quarter, a significant improvement from prior periods. Plus, the operational discipline is finally yielding results, as they generated record free cash flow of $18.1 million in Q3 2025.

Looking ahead, management raised the full-year 2025 revenue guidance to a range between $610 million and $614 million, implying a solid 13% annual growth at the midpoint. More importantly, they are now projecting a non-GAAP operating profit for the full year between $9 million and $13 million. You should still keep an eye on customer concentration, though; the top ten customers accounted for 32% of Q3 2025 revenue, even as the enterprise customer count grew to 627.

As part of this ongoing transformation strategy, Fastly, Inc. announced plans to transition its stock listing from the New York Stock Exchange to the Nasdaq Global Select Market around December 9, 2025, keeping the FSLY ticker. That's the current landscape you're dealing with: a company finally hitting non-GAAP operating profitability while still managing the cost-intensive nature of its infrastructure-heavy business model.

Fastly, Inc. (FSLY) - BCG Matrix: Stars

You're looking at the engine room of Fastly, Inc.'s current growth story, which, under the Boston Consulting Group framework, clearly sits in the Stars quadrant. These are the business units operating in a high-growth market and commanding a high relative market share. Stars require significant investment to maintain their leadership position and rapid growth rate, often consuming as much cash as they generate, but they are the future Cash Cows if the market growth moderates.

The security business unit is definitely Fastly, Inc.'s Star right now. This segment is showing the kind of top-line acceleration that defines this quadrant. Security revenue hit $34.0 million in the third quarter of 2025, marking a rapid 30% year-over-year growth rate. This momentum is critical because it shows Fastly, Inc. is successfully capturing market share in a dynamic, expanding area of edge cloud services.

This high-growth segment is becoming an increasingly important part of the overall business mix. As of Q3 2025, Security revenue now represents 21% of Fastly, Inc.'s total revenue, which was $158.2 million for the quarter. This shift in mix is what analysts watch closely, as it signals a successful pivot toward higher-value, faster-growing offerings that can sustain premium valuation multiples.

Here's a quick look at the key financial markers defining this Star segment for the third quarter of 2025:

The acceleration in this segment isn't just about market tailwinds; it's about product execution and sales strategy. Strategic cross-selling into the existing customer base is definitely helping Fastly, Inc. lock in market share gains within this niche, meaning they are successfully expanding the wallet share with current users.

The momentum driving this Star performance is directly tied to recent product enhancements and sales focus. You can see the tangible results of this investment in the following areas:

• Next-Gen WAF capabilities are a primary driver of momentum.
• DDoS Precise Defense is contributing significantly to new bookings.
• The launch of features like API Discovery is fueling adoption.
• Strong go-to-market cross-sell execution is accelerating revenue capture.

If Fastly, Inc. can sustain this success until the overall security market growth rate slows, this segment is perfectly positioned to transition into a Cash Cow, generating significant free cash flow to fund other parts of the portfolio. Finance: draft the Q4 2025 security revenue projection based on current NRR trends by Friday.

Fastly, Inc. (FSLY) - BCG Matrix: Cash Cows

You're looking at the core engine of Fastly, Inc.'s current profitability, the segment that reliably funds the rest of the operation. The Core Network Services (CDN) segment, which provides the foundational infrastructure for performance and scale, was the primary revenue driver in the third quarter of 2025, bringing in $118.8 million. That figure represents the bulk of the total revenue reported for the quarter, which hit $158.2 million.

This foundational business is what allows Fastly, Inc. to maintain strong profitability metrics, even while investing heavily elsewhere. The segment supports the overall Non-GAAP Gross Margin, which stood at a very healthy 62.8% for the third quarter of 2025. Honestly, when you see margins like that on the largest revenue component, you know you have a solid base. This high margin, combined with the scale, is the classic sign of a Cash Cow in this space.

The real proof of its 'cow' status is the cash it generates. Fastly, Inc. achieved a record quarterly free cash flow of $18.1 million in Q3 2025, a massive improvement from the negative $7.1 million free cash flow in the same quarter last year. Furthermore, cash from operations was $28.9 million in the quarter. This cash generation is exactly what you want from a mature, high-market-share unit; it consumes less to maintain and pumps out capital.

Here's a quick look at the key financial context for that period:

The stability comes from the customer base that relies on this core service. You don't need massive promotional spending to keep these clients; they need the uptime and performance, period. The characteristics supporting this high-margin cash flow are clear:

• Stable, high-volume traffic from enterprise users.
• 627 enterprise customers as of the end of Q3 2025.
• Top ten customers accounted for 32% of Q3 2025 revenue.
• Net retention rate improved to 106% in the third quarter.
• The core service underpins the entire platform's margin profile.

Fastly, Inc. (FSLY) - BCG Matrix: Dogs

You're looking at the parts of Fastly, Inc. that are stuck in low-growth markets with low relative market share. These are the units that tie up capital without delivering outsized returns, the classic definition of a Dog in the Boston Consulting Group framework. For Fastly, Inc., this quadrant is primarily occupied by the foundational, commoditized elements of its Content Delivery Network (CDN) business.

The core network services, which represent the traditional CDN offering, show growth lagging behind the newer, higher-value segments. In the third quarter of 2025, Network services revenue was $118.8 million, growing 11% year-over-year. Compare that to the Security revenue, which hit $34.0 million and grew 30% year-over-year, or Other revenue at $5.4 million, which surged 51% year-over-year. This divergence in growth rates points directly to the commoditization pressure on the base CDN offering.

The overall financial picture still reflects the drag of these lower-margin activities. Despite achieving non-GAAP profitability, Fastly, Inc. reported a GAAP Net Loss of $29.5 million for the third quarter of 2025. This translated to a GAAP net loss per basic and diluted share of $0.20. To be fair, this is an improvement from the $38.0 million GAAP net loss in Q3 2024, but the bottom line remains negative, which is typical for a Dog that hasn't been successfully divested or turned around.

The GAAP operating loss for the quarter was $28.8 million, though this was a significant narrowing from the $40.6 million GAAP operating loss posted in the third quarter of 2024. The company did manage to post a non-GAAP operating income of $11.6 million, a substantial jump from just $818,000 in the prior year's third quarter. Still, the GAAP figures show where the cash is being consumed.

Customer concentration risk further highlights the vulnerability of this segment. Revenue from the top ten customers, which likely includes large, price-sensitive users of the base CDN, increased only 12% year-over-year in Q3 2025. These top ten customers represented 32% of total revenue. In contrast, revenue from customers outside this top tier grew at a faster rate of 17% year-over-year. This suggests that the largest, most established relationships-the likely holders of legacy, commoditized traffic-are growing more slowly than the rest of the customer base.

The market share position itself is modest, which is a key characteristic of a Dog. Industry analysts estimate Fastly, Inc. holds approximately 2-3% of the global CDN market by revenue. This low share in the overall market, coupled with the lower growth in the core Network Services segment, signals that this part of the business is a candidate for minimization or divestiture, as expensive turn-around plans for such units rarely pay off against hyperscaler pricing power.

The key metrics associated with this low-growth area include:

• Network Services YoY Revenue Growth (Q3 2025): 11%
• Top Ten Customer Revenue YoY Growth (Q3 2025): 12%
• Overall GAAP Net Loss (Q3 2025): $29.5 million
• Estimated Global CDN Market Share: 2-3%

Fastly, Inc. (FSLY) - BCG Matrix: Question Marks

You're looking at the segment of Fastly, Inc. that embodies the classic Question Mark profile: high growth but a small piece of the overall revenue pie. This is where the future potential-and the current cash drain-resides.

The business unit fitting this description is the Other revenue segment, which bundles the flagship Compute@Edge and Observability products. This segment is the engine for future high-growth revenue streams, but right now, it's consuming cash to gain traction in massive, expanding markets.

Here are the key financial markers for this segment as of the third quarter of 2025:

The 51% year-over-year growth rate for the Other segment in Q3 2025 is the highest across all reported segments, clearly signaling a high-growth market. However, the revenue base is decidedly small, coming in at only $5.4 million for the quarter. This small base relative to the total revenue of $158.2 million confirms the low market share position required for a Question Mark classification, despite the impressive growth velocity.

For the nine-month period ending September 30, 2025, the Other revenue segment grew even faster at 58%, reaching $14.8 million. This sustained, high-percentage growth underscores the potential, but it also highlights the investment required to compete.

The strategy here is clear: Fastly, Inc. must pour capital into these areas to rapidly increase market share before competitors cement their positions. This is why these Question Marks consume cash. The company's overall GAAP operating loss in Q3 2025 was $28.8 million, a figure heavily influenced by the necessary R&D and sales investments in these newer product lines.

You can see the commitment to investment reflected in the full-year 2025 guidance:

• Cash Capital Expenditure (CapEx) guidance for the full year is set in the range of 10% to 11% of revenue.
• The company is focused on winning share against larger cloud competitors in the edge computing space.
• The goal is for this segment to transition from a cash consumer to a Star by capturing significant market share.
• If market adoption stalls, this segment risks becoming a Dog, consuming cash without achieving scale.

Finance: draft the Q4 2025 cash flow projection, explicitly modeling the required R&D spend for the Compute@Edge roadmap by Friday.