Fastly Warns Third-Quarter Revenue Will Miss as TikTok Usage Comes up Short - TheStreet

Fastly Warns Third-Quarter Revenue Will Miss as TikTok Usage Comes up Short

High-flying cloud services company says its largest customer’s usage failed to meet expectations.
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Fastly, Inc.  (FSLY) - Get Report warned Tuesday that its third-quarter revenue will miss previous guidance because its largest customer, TikTok, made less use of its cloud services than previously expected.

The company said it now expects third-quarter revenue of $70 million to $71 million vs. earlier guidance of $73.5 million to $75.5 million.

“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,” the company said in a statement.

In August, CEO Joshua Bixby disclosed in a Barron’s interview that TikTok, owned by China's ByteDance, was its largest customer in the first half of the year, accounting for 12% of revenue.

TikTok’s fate has been up in the air since the company came under attack in early August from President Donald Trump, who called for its sale to a U.S. company or shutdown, because of national security risks. Oracle  (ORCL) - Get Report eventually reached an agreement to take a minority stake in TikTok, which will run on its Oracle Cloud service. 

Shares of Fastly fell $33.50, or 27%, to $89.69, in after-hours trading.

Shares of other cloud services companies also fell.

Cloudflare  (NET) - Get Report shares fell $5, or 8%, to $56.50 in after-hours trading. Akamai  (AKAM) - Get Report fell $3.65, or 3%, to $109.77.

Prior to Wednesday’s warning, Fastly had been expected to break even for the quarter on sales of $74.6 million, based on a FactSet survey of 12 analysts.

In the same period a year ago, the company posted a loss of 9 cents a share on sales of $49.8 million. It reported a loss of 15.6 million.