Alexis Christoforous of Yahoo Finance and Joshua Bixby, CEO of Fastly, discuss the company’s latest earnings and growth report amid the pandemic.
Video transcription
ALEXIS CHRISTOFOROUS: Cloud computing service provider Fastly reported earnings this week that outpaced both financial results and earnings. But it was Fastly’s guidance that left some investors a little disappointed. Joining me now is Fastly CEO Joshua Bixby. Joshua, it’s good to see you again. Let’s start with the last quarter here. Spike in revenue quite impressive, an increase of 40% year after year. Tell us what generated these results.
JOSHUA BIXBY: Yes, thank you for having me here. It’s an honor. These results were driven by the trends that we are all seeing. The internet continues to grow. Security is critical for those who are serving on the Internet. And the gains that the industry saw in March, April, May, continue. Habits have changed and people continue to use the internet more and more. It was a great quarter. I am very proud of the team.
ALEXIS CHRISTOFOROUS: You say things have changed – behaviors have changed. Do you see it continue even after the pandemic, even after we go back to business as usual and things open up? Will we still see the same kind of demand for all these online and cloud computing services?
JOSHUA BIXBY: Yes, we certainly feel that way. One of the beauties of being global is to see openings happening at different stages. So, when you look at Israel, look at some of the countries that are already starting to open up, you can see that the trends that we have seen have continued. One of the great advantages we have is that we serve those who have been digitally transformed and those who care deeply about this process. They are kind of innovative, the most innovative.
And so, when you look at the Shopifys or the pants and people who are really at the forefront of innovation, we see that this trend continues. And we have seen, as the world returns to normal, we have seen this continue. Therefore, we are very optimistic about this.
ALEXIS CHRISTOFOROUS: Now, having said all that, you are still issuing some weaker-than-expected guidance for next year. Why aren’t you as optimistic as Wall Street expected you to be?
JOSHUA BIXBY: Yes, it’s a great question. I think we always guide in the same way. The principle for us is to start the year. We are a usage based company, so we see what we have and commit to it. And as the year goes on, as we see more use and our hypothesis becomes true, we are able to readjust ourselves. And so, we take the same approach as a public company and every year we’ve been, you know, in this chair. And that hasn’t changed this year.
ALEXIS CHRISTOFOROUS: And what do you expect to see in terms of Fastly’s new cutting-edge computing services?
JOSHUA BIXBY: This is a very large growth area. We are fundamentally at an inflection point in the design of the Internet. For those of us who have been in this market for a long time, it really started with that kind of notion that everything would be in a data center. And you would design for a web server, an application server and a database server. What we see now are primitive, these new projects of how organizations are building websites and web applications and how they are doing security. And that involves the limit.
So, when you go to something like “The New York Times”, the limit, a set of servers very close to you, probably in the city where you live, is actually responding to your request. It’s finding out if you’re a paid customer. It’s about discovering personalization. And all the things that make the web this platform incredibly unique, all of this is now being done to the limit. Therefore, we are 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 find a site and it is slow, we will go elsewhere. So when people understand the value of speed and the closer we can take all of these critical processes to you, the faster it is, but the most important, or just as important, the more secure it is. The farther we can keep bad people away from the crown jewels of organizations, the better.
ALEXIS CHRISTOFOROUS: You mentioned being global a moment ago. I know you just hired a new chief revenue officer, Brett Shirk, who has extensive experience, I think, in cloud computing. And one of the things he will be focusing on is expanding his operations abroad. Can you tell 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 North America and Europe as it is inside. In fact, in some areas, even more. Therefore, our goal is to continue to expand globally. We have a very strong presence. But we continue to see tremendous demand. So, what you will see from Brett and the entire organization is an ongoing commitment to these global regions, where we have users who are – you look at a country like India, for example, integrating into the Internet, getting more connectivity.
The 5G revolution is very important in all of this. And what we know from the story is that the more connectivity we have on our phones or in our homes, the more internet we consume. There is only a strong proportion that we have seen over 25 years. So, we are looking for an explosion, which we have already seen, but we will continue to see Internet consumption worldwide.
ALEXIS CHRISTOFOROUS: And I want to talk to you a little bit about the stock. And I know that as a CEO, you can’t fix yourself on the stock price. I mean, it increased 250% or so over the past year. But some analysts are mixed about the company. In fact, they point out that you underperformed, in fact, some of your colleagues.
And at least one Oppenheimer analyst, who was optimistic about the stock, say, who says it is a buy, says that this stock is relatively cheap compared to its competitors. Do you think there is something that investors are missing out on in Fastly’s history and that you would like to communicate to them?
JOSHUA BIXBY: I mean, as you know, I don’t control the stock price. What I control is how much our customers use and love us and the happiness of our employees. And I think that on both fronts we are extremely strong. You know, we left in the last quarter with a 40% growth. If you look at last year, it was a 45% growth. If you think about the growth of the bigger market, these numbers are incredible.
I would aim for a 99% revenue retention rate. Our net expansion of the dollar base by 140% – I mean more. So what we see is a mechanism where customers love what we do. We have the most innovative customers in the world. And they continue to use our product more and more. We, in the long run, think this is a recipe for success.
ALEXIS CHRISTOFOROUS: Okay, let’s leave you on that optimistic note. Joshua Bixby, CEO of Fastly, good to see you.