Fastly Inc (NYSE:FSLY) shares lost considerable ground Thursday, on word the company lowered its sales guidance for the third quarter due to lower revenue expected from its top client TikTok.
The company announced preliminary revenue results for the third quarter ended September 30. On October 28, Fastly will release full third-quarter 2020 financial results, along with fourth quarter and full-year 2020 guidance, which will include revenue from Signal Sciences.
Fastly now expects third quarter 2020 total revenue of $70.0 to $71.0 million, compared to its previous guidance of $73.5 to $75.5 million. All previously issued third quarter and full-year guidance that Fastly disclosed in its second quarter shareholder letter and related call on August 5 should not be relied upon.
These preliminary results and the withdrawal of the previously-issued third quarter and full-year guidance reflect the following customer-specific factors:
Due to the impacts of the uncertain geopolitical environment, usage of Fastly’s platform by its previously disclosed largest customer did not meet expectations, resulting in a corresponding significant reduction in revenue from this customer.
During the latter part of the third quarter, a few customers had lower usage than Fastly had estimated.
"The current global environment has in some ways fueled our business, but has also created areas of uncertainty. While our preliminary third quarter results reflect the challenges of a usage-based model, we believe the fundamentals of Fastly’s business remain strong, as does demand for our platform," said Fastly CEO Joshua Bixby.
Shares tumbled $31.79, or 25.8%, to $91.39.
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