Fastly Targets Up to $1.3 Billion Revenue by 2029 on AI Traffic

Fastly (NASDAQ:FSLY) told investors it is targeting revenue of $1.1 billion to $1.3 billion by 2029, alongside gross margins of 67% to 71%, operating margins of 20% to 22% and free-cash-flow margins of 12% to 15%. The company laid out the targets at its Investor Day, where management anchored the plan to a unified edge cloud platform, multi-product adoption and a surge in AI-driven traffic.

Chief Executive Officer Kip Compton said Fastly sees a $22 billion total addressable market for products it already offers. He described the edge as a complementary layer to hyperscale cloud infrastructure rather than a replacement, with Fastly's distributed network designed for applications that require lower latency, high throughput, security and resiliency.

The numbers behind the pitch are concrete. Fastly processes more than 5 trillion requests on an average day, Compton said, and reports a 97% average customer satisfaction score. The company has posted three consecutive quarters of at least 20% year-over-year growth, five straight quarters of improving net revenue retention and six consecutive quarters of positive free cash flow.

Platform Over Products

Fastly is shifting from selling discrete products toward selling platform-based solutions across delivery, security, compute and observability. The company runs a single global network with 166 points of presence, a design Compton said allows resources to be shared across different workloads and product suites.

Adoption metrics are moving in the company's favor. Fastly said 72% of customers now use at least two product suites, while 30% use four or more. The four-or-more figure has climbed from 7% two years ago and 14% one year ago, according to management.

Security has become the wedge. Chief Product Officer Kelly Shortridge said half of Fastly's new business deals over the past four quarters included security products. The security business grew 43% year over year in the latest reported quarter, while Bot Management and DDoS Protection each posted triple-digit growth, she said.

Fastly recently introduced AI Runtime Control, AI Firewall and API Enforcement as part of its Fastly for AI offerings. Shortridge said the products help enterprises govern AI-related activity across cloud, private infrastructure and multiple AI models. She described Fastly's architecture as cloud-neutral and model-neutral, so customers are not tied to a single infrastructure or AI vendor.

AI as a Traffic Engine

Founder and Chief Technology Officer Artur Bergman said AI and agentic software are creating new types of traffic and increasing the complexity of internet infrastructure. He cited public Python Package Index data showing a sharp increase in software package downloads following the release of AI coding tools — activity he said reflects automated agent behavior rather than solely human usage.

Compton said AI traffic is growing 6.5 times faster than human traffic on Fastly's platform. In the past month, the company reported a sevenfold increase in AI model distribution, 11 times growth in Model Context Protocol traffic and services so far this year, and 34 times growth in code-generation activity in recent months.

Management sees three ways AI benefits Fastly: increased traffic volumes, security and control products for AI-driven applications, and potentially edge inference for smaller models. Bergman said large language models may remain better suited to centralized infrastructure in the near term, while smaller models could run closer to users at the edge.

Selling Where Performance Matters

President of Go-to-Market Scott Lovett said Fastly is concentrating sales resources on customers and industries where performance is mission-critical — streaming, e-commerce, financial services, gaming and other always-on businesses. Customers increasingly prioritize uptime, cache-clearing speed, security and operational response over the lowest-cost delivery option, he said.

Fastly is adding technical field resources and expanding internationally, with additional points of presence planned in India, the Middle East, Thailand, Southeast Asia and Latin America. The company also plans to work with service-provider partners that can extend its software and network capabilities in local markets.

Reporting Change and 2029 Targets

Chief Financial Officer Rich Wong said Fastly will change its revenue reporting beginning in 2027, moving from separate Network Services, security and other revenue lines to a single revenue figure accompanied by multi-product adoption metrics. The company plans to report both the current and revised formats for the next two earnings releases to ease the transition.

The 2029 targets break down as follows: revenue of $1.1 billion to $1.3 billion, a 14% to 21% compound annual growth rate from 2026; gross margin of 67% to 71%; operating margin of 20% to 22%; free-cash-flow margin of 12% to 15%; and capital expenditures of roughly 10% to 12% of revenue, subject to adjustment based on growth.

Wong said the company's single-network architecture, product expansion, customer cross-selling, international growth and operating discipline will support the targets. Fastly maintained its 2026 free cash flow guidance of $40 million to $50 million.

The plan now faces a simple test: converting AI-driven traffic growth and multi-product adoption into the 14% to 21% annual revenue growth the 2029 targets require.