Fastly Inc. stock plunged after its earnings report Wednesday, which is getting to be a habit.
shares dove nearly 20% in after-hours trading Wednesday, after the cloud software company that assists companies in posting content online reported that an outage in the second quarter harmed its business.
The June outage “impacted our Q2 results and will have an impact on our Q3 and full year outlook,” Chief Executive Joshua Bixby said in a statement. “We have a couple of customers, one of them being a top 10 customer, that have yet to return their traffic to the platform. We also had several customers delay the launch of certain projects, which delayed the timing of traffic coming onto our platform.”
In a letter to shareholders, Bixby explained that the software bug that caused the outage was found within a minute of the outage, and 95% of customers were back online in less than 50 minutes. The negative effects, however, have lasted much longer.
“We saw traffic volumes decrease and issued credits to customers following the incident,” Bixby explained in the letter. “Given the usage-based nature of our business model, this resulted in an impact to our Q2 results, and we expect to see a downstream impact on revenue from the outage in the near-to medium-term as we work with our customers to bring back their traffic to normal levels.”
Fastly shares have declined in the trading session after earnings in each of the past four quarters, with declines topping 15% in three of those sessions. Last quarter, the stock plunged 27.1% after the company’s second-quarter outlook disappointed.
The forecast was again an issue Wednesday, due to the outage. Executives now expect full-year adjusted losses of 57 cents to 65 cents a share, after previously predicting losses of 35 cents to 44 cents, and annual revenue is now expected to total $340 million to $350 million instead of an earlier projection for $380 million to $390 million.
Fastly reported a second-quarter loss of $58.3 million, or 51 cents a share, on sales of $85 million, up from $74.7 million in revenue a year ago. After adjusting for stock-based compensation and other factors, Fastly reported a loss of 15 cents a share, after posting adjusted earnings of 2 cents a share last year. Analysts on average were expecting an adjusted loss of 17 cents a share on sales of $85.7 million.
For the third quarter, Fastly guided for adjusted losses of 18 cents to 21 cents a share and sales of $82 million to $85 million. Analysts on average were predicting adjusted losses of 9 cents a share on sales of $98 million.
Fastly went public at $16 a share in May 2019 and quickly flew higher, but the past year has brought the stock back to earth. Shares have declined 61.7% in the past year, as the S&P 500 index
has gained 33.8%. The stock closed with a 3.7% decline at $44.54 Wednesday, before falling to less than $36 in after-hours trading.