Shares of the San Francisco company were down 22.7% to $34.45 on Thursday.
Fastly posted a loss of 15 cents a share, compared with analysts' estimates of a loss of 17 cents. Revenue totaled $85 million, short of expectations of $85.7 million.
"In our second quarter, we managed through a significant outage that impacted our Q2 results and saw several customers delay their launch of new products, which will delay the timing of traffic coming on to our platform," CEO Joshua Bixby during the company's earnings call. "The outage and these delays will also have an impact on our Q3 and full-year outlook."
Fastly said the internet outage in June, which affected high-traffic sites including The New York Times, Reddit and Amazon.com, was triggered when one of its clients changed its settings.
Bixby said the outage resulted from an undiscovered software bug that was triggered by a valid customer configuration change.
"We have a couple of customers, one of them being a top 10 customer, that have yet to return their traffic to the platform," he said. "We also had several customers delay the launch of certain projects, which delayed the timing of traffic coming onto our platform.”
Fastly called for a third-quarter adjusted loss of 21 cents to 18 cents a share on revenue of $82 million to $85 million. The FactSet consensus calls for a loss of 17 cents a share on $85 million in revenue.
For the full year, Fastly forecast an adjusted loss of 65 cents to 57 cents a share on revenue of $340 million to $350 million. The FactSet consensus calls for a loss of 58 cents a share on $349.6 million in revenue.
Several analysts downgraded the stock or slashed their price targets after the results were posted.
DA Davidson analyst Rishi Jaluria downgraded Fastly to neutral from buy with a price target of $33, down from $60, according to the Fly. He cited the revenue miss and reduced guidance and the management's commentary that there have been delays in those same new customer ramps this quarter, unrelated to the June outage.
Citi analyst Tyler Radke said Fastly's "challenging 2021 worsened considerably" with the Q2 results that fell well short of expectations on nearly every metric.
Radke lowered the firm's price target on Fastly to $33 from $46 while keeping a sell rating on the shares.
The company's usage-based model has shown its downside and unpredictability, and with significant fallout from the outage, it could take multiple quarters to correct, the analyst said.