Many of you are interested to know the business model of Fastly and how it makes money. So here we are with all the details you need to know.
Fastly is an edge cloud platform that delivers cloud computing services to thousands of customers worldwide. The company serves diverse industries, spanning from online education to digital publishing.
Top brands like The New York Times relies on Fastly’s content delivery network to improve their page loading speeds and manage traffic surge. Since 2020, the company has been offering security services on APIs and applications as well.
To know more about the company and its business model, you should read this article till the end.
Before moving deep into the topic, let us first learn what Fastly is all about. This information will be helpful for those who are not very familiar with this company.
Fastly was introduced in 2011 by developer Artur Bergman. The company was made public after 8 years of establishment. This was the time when Joshua Bixby replaced CEO Artur Bergman.
The company specializes in an edge cloud content delivery network (CDN). It does this with Points of Presence (POP), in important regions around the world.
This in return helps to improve performance and reduce latency, so that there’s no buffering while streaming online. Not just that, but it also promotes instant transactions for businesses using Stripe.
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Fastly’s Business Model
Currently, the company is serving 2,047 customers as per the company’s last quarterly reports. Out of all the customers, 313 of them are enterprises. The company also has 72 POPs in over 55 markets around the world.
The majority of Fastly’s revenue comes from its sale of services. The company executes non-cancellable contracts for one full year.
According to the company’s reports, 90% of the company’s revenue is generated from its customers. However, customer acquisition is not the only way the company generates its income.
How does Fastly Make Money?
Fastly is known to expand offerings to its customers and it shows in its Dollar Based Net Expansion Rate (DBNER), which currently stands at 147.4% for the last 12 months. These figures reflect how much an existing customer’s revenue expands year-over-year.
The company’s Net Revenue Retention (NRR) stands at 121.5%. This number shows the amount of recurring revenue coming from the existing customers.
Fastly is known to charge different flat rates per gigabyte of data. However, the rates will vary from one region to another. It offers a premium level, secure product, which is even used by Amazon on its CloudFront platform.
However, TikTok reduced its usage of Fastly services during Trump’s reign. Now that Biden is in power, TikTok might get back to its previous levels of usage.
Fastly is one of the rapidly growing companies. It maintains itself ahead of its rivals such as Cloudflare and Akamai. It proves to be more efficient and faster than other providers. Also, Fastly’s platform is built for large enterprises.
The company is soon going to launch the [email protected] platform, which is targeted at developers. It will help them create advanced edge applications with high-level security.
Not just that, but the platform will also have support for more programming languages, instead of just being limited to Varnish Configuration Language. The company’s new forthcoming launch is surely going to boost their sales.
Does Fastly Make a Good Investment?
Fastly’s stocks are seeing great gains because investors are aware of the company’s true potential. At this point, less than 10% of the data is processed and created at the edge.
However, it is predicted that the number will go up to 75% by 2025. It is expected that enterprises will spend at least 30% of their total IT budget on cloud computing in the coming years.
The market opportunity of Fastly is predicted to reach $35 billion by the next year. The company offers a product that holds significant importance in today’s digital world. Being a competitive company Fastly is surely going to benefit from this.
Fastly’s Value Proposition
Fastly is based on an enterprise business model, which provides edge cloud platform services. The company’s business model relies on the developer’s community.
Being an enterprise business, a good percentage of the company’s revenue is invested to meet its sales and marketing needs.
Currently, the company has a total of 56 sales managers and representatives across the company. Enterprise customers are given access to the platform in exchange for a monthly fee. They are also provided with customer support and account managers.
The basis of edge cloud computing lies in decentralization. It is useful in bringing the data where it is needed.
The edge cloud platform comprises three primary premises:
- Developers are empowered to be innovative.
- Vendors must ensure support and flexibility.
- Platforms must be innovative, while still being secure, scalable, and reliable.
The purpose of edge computing is to help enterprises build more efficient infrastructure. They can take advantage of central cloud services and thus, eliminate the need to move traffic back and forth.
This in return helps an enterprise to get closer to its consumers. It gives them more control over their data so that they can work more efficiently and securely.
This edge cloud platform allows developers to work on certain critical elements like reusable modules, agile development, full programmability, real-time control and visibility, and safety at the edge.
That means developers make an important part of Fastly’s business model. This is what helps the company to be successful.
Fastly prefers an open-source model, so developers can take full advantage of it. It also makes it easier for its sales force to close deals easily.
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Fastly Is Based On an Enterprise Business Model
Fastly serves customers operating in diverse fields including media, digital publishing, technology, travel, entertainment, and more. Currently, the company has 2,804 customers, out of which 445 are enterprise customers.
These customers purchase multiple products on a one-time or monthly basis, depending on the type of product they have chosen.
The product comes with customer support and different levels of account management for a monthly fee. The contract is made valid for a year, with monthly minimum billing.
For your information, Fastly’s customers are divided into six main groups:
- High tech
- Digital publishing
Fastly provides custom solutions for each customer and makes sure that their needs are satisfied. Back in 2016 Fastly helped The New York Times by reducing its costs by handling a huge traffic surge during the US presidential elections.
In comparison to other CDNs, Fastly runs more powerful data servers with strategically located POPs. Larger servers ensure more advanced computing and are closer to end-users.
Besides the powerful servers, Fastly happens to be the only CDN that is built from scratch for developers to innovate and create at the edge. This is what makes the platform more user-friendly. It offers tutorials and documentation for developers.
Not just that, but it also offers ready-to-use code, so that they can implement it into the applications they create. This put the developers in full control of their app and makes things easier for them.
Another big advantage of Fastly is the excellent speed at which its servers processes and handle data.
The start-up time of the servers is 35 microseconds, which is 100 times faster than the rival companies like Cloudflare.
This might sound unimportant, but it makes a big difference. With the introduction of 5G in the market, users might want even faster experiences. This puts Fastly at an advantage.
One of the best things about Fastly is that makes users pay for how often they use their services. The company aims to support developers, to boost their revenue.
Fastly has made massive changes in the traditional CDNs. This will help more devices to get connected to the internet. Not just that, but it will also draw more companies to use their services.
Fastly CDN Benefits
Fastly has established its content delivery network to please customers moving their apps to cloud and scaling their development practices.
This platform promises to support digital transformation by offering faster content delivery. The following benefits make it one of the best content delivery networks in the world!
Fastly has established a safe and scalable global network. It provides smart solutions to meet growing digital transformation needs of companies across the globe.
This platform relies on highly performant, strategically distributed, and extremely safe POPs. That arrangement supports safer movement of data and apps.
You can quickly update content, provide the latest features through the app, and gain more users. This quick and modern content delivery network is extremely beneficial for businesses demanding streaming needs.
Fastly products are designed to operate flawlessly with the client’s technology stack. Service providers offer comprehensive support for out-of-the-box integration.
Users get common CI/CD toolchains, code repo systems, and configuration management tools.
Fastly ensures that clients gain fine-grained control over the way their information is cached. Users can resent Times to Live, purge stale content, and include new features whenever required.
Other content delivery networks may significantly increase the cost if you ask for customization support. Fastly provides cost-effective and reliable solutions for all your needs.
Fastly’s next-gen WAF, DDoS, and TLS offerings deliver unparalleled protection and control without affecting the performance.
This platform consistently monitors all the movements to ensure there is no breach. It maintains optimum performance while offering the support and security features developers demand.
Complete Control Over Configuration
Fastly provides real-time logs to help users assess the performance and identify security issues. You have complete control over configuration and you can rectify issues in real time.
Introduce security and threat-management instructions within a few seconds to deal with new threats.
The demand for edge computing is increasing. The IoT is expanding at a fast rate as more devices are getting connected. Other important markets like security solutions, e-sports, and augmented reality also need huge amounts of computing data and power. As a result,
they are all dependent on edge computing to run their operations smoothly. This has increased the importance of Fastly and put it in an advantageous situation.
While the company is currently not profitable, it has huge potential for the future market. It will continue to grow into a high-quality business in the long run.