Yahoo Finance’s Alexis Christoforous and Joshua Bixby, Fastly CEO, discuss the company’s latest earnings report and growth amid the pandemic.
Video transcription
ALEXIS CHRISTOFOROUS: The cloud computing service provider this week quickly released the earnings that beat on the top and bottom line. But it was Fastly’s lead that left some investors a little disappointed. Josly Bixby, CEO of Fastly, is now joining me. Joshua, good to see you again. Let’s start with the last term here. Fairly impressive revenue has risen, by 40% higher than a year-on-year. Tell us what the results were.
JOSHUA BIXBY: Yes, thank you for having me here. It’s an honor. The results are driven by the trends we all see. The internet is still growing. Safety is critical for those who serve on the Internet. And the profits the industry saw in March, April, May continue. Habits have changed and people are increasingly using the internet. It was a wonderful term. I am very proud of the team.
ALEXIS CHRISTOFOROUS: You say things have – behavior has changed. Do you see that even the pandemic is happening, even after we are back on track as usual, and things are opening up? Are we still going to see the same kind of demand for all these cloud computing and online services?
JOSHUA BIXBY: Yes, we definitely feel that way. One of the most beautiful things about the fact that we are worldwide is that we see openings happening at different stages. So if you look at Israel, at some countries that are already starting to open up, you can see that the trends that we have seen have continued. One of the biggest benefits we have is that we serve those who have digitally transformed and those who care deeply about the process. They are kind of the innovators, the most innovative.
And if you look at the Shopifys or at the Slacks and people who are really at the forefront of innovation, we see that the trend continues. And we have already seen, as the world returns to normal, we have seen it continue. We are therefore very optimistic about it.
ALEXIS CHRISTOFOROUS: Having said all that, you are still giving a weaker forecast than expected for the coming year. Why are you not as optimistic as Wall Street had hoped?
JOSHUA BIXBY: Yes, that’s a great question. I think we have always led in the same way. The principle for us is that we start the year. We are a use-based business, so we see what we have and commit to it. And as we see more use and our hypothesis comes true, the year may adjust again. And so we followed the same approach as a public company and every year we worked in, you know, in this chair. And that hasn’t changed this year.
ALEXIS CHRISTOFOROUS: What about what do you expect to see in terms of Fastly’s new edge computing services?
JOSHUA BIXBY: This is a very large growth area. We are fundamentally at a turning point in the design of the internet. For those who have been in this market for a long time, it really started with the idea that everything would sit in a data center. And you would design to a web server, an application server and a database server. What we are seeing now is primitive, these new blueprints for how organizations build websites and web applications and how they do security. And that involves the edge.
So when you go to something like ‘The New York Times’, a set of servers that are really close to you, probably in the city where you live, respond to your request. This is to find out if you are a paid customer. This is to invent personalization. And all the things that make the web an incredibly unique platform are all done on the edge. We are therefore at the beginning of a revolution in which developers are in control. They understand that speed and scale are important.
We all know that if we come across a website and it’s slow, we’re going somewhere else. So if people understand the value of speed and the closer we can get to all the critical processes, the faster it is, but more importantly, or more importantly, the safer it is. The further we can keep the bad guys away from the crown jewels of organizations, the better.
ALEXIS CHRISTOFOROUS: You mentioned that it was worldwide a moment ago. I know you just hired a new chief revenue officer, Brett Shirk, who, in my opinion, has an extensive background in cloud computing. And one of the things he’s going to focus on is expanding your overseas operations. Can you talk to us a little bit about what the goals are there?
JOSHUA BIXBY: Of course, the internet market is global. And security is just as important an issue outside of North America and Europe as inside. In fact, in some areas, even more so. So our goal is to continue to expand worldwide. We have a very strong presence. But we still see a huge demand. So what you will see from Brett and from the whole organization is a sustained commitment to the global regions, where our users are – you are looking at a country like India, for example to go on board the internet and more to get connection.
The 5G revolution is very important in all of this. And what we know from history is that the more internet connections we have on our phones or in our homes, the more internet we consume. There’s just a strong relationship we’ve seen over 25 years. So we are looking for an explosion that we have already seen, but we will still see the internet consumption all over the world.
ALEXIS CHRISTOFOROUS: And I want to talk to you for a moment about the stock. And I know that you as CEO can not be fixed on the share price. I mean, it’s increased by about 250% in the last year. But some analysts are common about the company. They are actually pointing out that you have underperformed some of your peers.
And at least, an analyst from Oppenheimer, who was strong on the stock, we must say, who says it’s a buy, says that this stock is relatively cheap compared to its peers. Do you think there is something that investors just miss with the Fastly story you want to tell them?
JOSHUA BIXBY: I mean, as you know, I do not control the share price. What I do control is how much our customers use and love us and the happiness of our employees. And I think on both fronts we are very strong. You know, we came out with 40% growth last quarter. If you look at last year, it was 45% growth. If you think about the growth in the larger market, these numbers are incredible.
I want to point out the income retention rate of 99%. Our dollar base net expansion in the 140% – I mean plus. So what we see is an engine that customers love what we do. We have the most innovative customers in the world. And they are using more and more of our products. We think in the long run is a recipe for success.
ALEXIS CHRISTOFOROUS: Okay, we’ll leave it at that excited note. Joshua Bixby, CEO of Fastly, good to see you.