Stock is 30% DOWN from its ALL TIME HIGH

BUT it grew 62% YoY and had a 137% DBNER

It was at the centre of Beijing Washington tensions

It’s business is HARD to UNDERSTAND But sounds like a TEN BAGGER

Here is an EASY thread

$FSLY, a US Cloud Computing Services provider, processes, serves and secures its customer’s apps very close to the end users

This happens through $FSLY Edge Platform it provides a content delivery network, internet security, load balancing and video & streaming services

This is PURE TECHNICAL JARGON Let’s break down what this means

The internet was designed according to the End-to-End Principle

This means that the core network’s KEY PRIORITY is to move the information to the network end-points (hosts and clients) as much as possible

The downside of this E2E principle is that the core network is rather “dumb” - It just forwards data packets to end-points without optimisation

The upside is that it prevents Internet Service Providers (they supply the core network) from choosing what content to prioritise

E.g. AT&T cannot choose to prioritise content from Youtube over other websites, meaning that the internet stays a fair place for every one (Net Neutrality)

Ok, so here we have an network that just forward data packets as much as possible to the end-points of the network

How could we improve that without altering the functioning of the whole network and compromising Net Neutrality?

Hint CDN

CDNs augment the network by intelligently distributing & storing data

A CDN is a geographically distributed network of proxy servers & their data centres

By distributing the information geograph. relative to the end-users, a CDN provides high availability & perf.

A CDN is able to increase a networks’ performance (speed, reliability and availability) thanks to web caching, server load balancing, request routing and content services

Web caches store popular content on servers that have the greatest demand for the content requested

Server load balancing shares the network traffic across different severs or web caches

Request routing directs clients requests to the content source best able to serve the request

Content Services Protocols provide a standard for accessing different servers

So, Content Delivery Networks store information in a smart and optimised way closer to the end user - Improving performance

Is there anything else they could do? Well, one of the main cyber threats are DDoS Distributed Denial of Service attack

This happens when a server is simply flooded with requests anyone with basic coding skills could orchestrate one

Other common cyber threats

Malicious bots are tasked to scrape web pages, create fake accounts, spread malware…

Man-In-The-Middle attacks happen on a network that was compromised (E.g. Wi-Fi at airports are sometimes hacked by a malicious third party) and on which two parties exchange private information

How is that linked to CDN’s?

DDoS attacks can be filtered and stopped by the CDN - in the worst case, the proxy server dies off while the origin server stays intact

Suspected bot activity can be identified and stopped with CDNs

Data sent over networks can be encrypted using Transport Layer Security on a CDN - mitigating the risk of unsecured connections

By know you should see the performance and security benefits of CDNs Some key questions remain

What is $FSLY offering?

What is the size of the market?

What is $FSLY moat?

What is $FSLY offering?

CDN and load balancing solutions optimised for speed of delivery with a query speed in the USA of 33ms (versus 43ms for $NET)

Solutions specially made for image and video delivery and streaming

Cloud security solutions for mitigating DDoS, malicious bots and a web application firewall (WAF)

What is the size of the market?

CDN market stood at $ 12B in 2019 and is expected to reach $ 50B in 2024 - CAGR of 27%

Growth is driven by the increase in mobile #data consumption, rise of #video entertainment live #streaming #ecommerce online #media #telemedecine

What is $FSLY moat?

First of all, $FSLY is fast - really fast. It is able to provide a query speed of 33ms in the USA (AWS Cloudfront 33ms, Google Cloud CDN 31.5ms)

$FSLY offers an uptime of 97% (AWS Cloudfront 96%, Google Cloud CDN 93%)

Despite being a bit more complex than $NET, $FSLY solutions are hugely configurable and offers numerous low levels controls

$FSLY is operating in a market growing at 27% over the next 5 years and is positioning itself as a leader for image and video delivery and streaming

It offers a solution that is more configurable while offering astonishing speed and excellent uptime

Financials

Revenue grew 62% YoY and reached $ 75m with a DBNER of 137% (up from 133% in prev Q.)

Net Retention Rate at 138% up from 130% in prev Q.

GMs of 60% up from 55% in prev Y.

Current assets of $ 525m vs. Current Liab. of $ 38m

$FSLY financials do not offer too much cause for concern

Operating expenses represent 80% of revenues (stable YoY) - Causing short term losses

62% growth and outstanding Net Retention Rate - Creating a compelling long term story

Let’s look into $FSLY last acquisition

$FSLY bought Signal Sciences for $ 200m in cash and $ 575m in stock on Aug 27

This completes $FSLY Secure@Edge offering with improved API Protection, Rate Limiting, Bot Mitigation, ATO Protection

Maintaining $FSLY cyber security offering while acquiring a $ 28mm business with 85% GMs and 42 new $ 100k/year+ customers

The Bottom Line

$FSLY is positioned in a FAST growing market - 27% over the next 5 YEARS

$FSLY is growing at 62% YoY - meaning it is stealing market share from its competitors (Akamai’s CDN business is growing at 13%)

$FSLY speed, reliability, solutions for image, video and streaming are unique and its huge configurability gives it an edge

With the acquisition of Signal Sciences, $FSLY is consolidating its security offering

Its no a coincidence that $PINS #SHOP #TWTR #ETSY rely on $FSLY

We enter $FSLY with a full stake (100% of full potential position)

$MELI is on our watchlist Coming WEDNESDAY

Following the TikTok feud, we are gathering pieces on the political risks of tech stocks - Hint us!

Please note that this is not a recommendation to buy - You are responsible for conducting your own research

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Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.

Sources

✑ Investor presentation

✑ Company website

✑ CDNComparison

✑ CDNPlanet

✑ MarketsAndMarkets

✑ MordoIntelligence

✑ GlobalDots

✑ Devopedia