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Fastly Misses EPS Estimate by 300% in Q3 2020 Due to Low TikTok Traffic

Nica San Juan
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Infrastructure-as-a-service (IaaS) provider Fastly posted a net loss during the third quarter of 2020. Based on its earnings report for the period, it had a non-GAAP loss of 4 cents per share. As such, it missed the Zacks Consensus Estimate by a stunning 300%.

Its revenue for Q3 2020 matched the consensus estimate, reaching $70.6 million. Compared to a similar period in 2019, this was a 41.9% increase year-over-year (YoY).

In its report, Fastly stated that the loss was as a result of low traffic from TikTok, its largest customer.

According to the research data analyzed and gathered by Stock Apps, TikTok accounted for 10.8% of the company’s total revenue for the nine-month period which ended on September 30, 2020. For the three- and six-month period which ended on June 30, 2020, it accounted for 13% and 12% of revenue, respectively. The reduction in traffic came about because of the threatened ban of TikTok in the US. It pointed out that it expects the reduction in traffic to extend into Q4 2020.

Fastly announced in mid-October 2020 that it would miss its revenue projections for the third quarter. From a previous forecast of $73.5 to $75.5 million, it revised its revenue projection to $70 to $71 million. Following the announcement, the company’s shares plunged by 37% or $33.18 to $90.

However, Fastly had an increase in customer count, from 1,951 in Q2 2020 to 2,047 in the reported quarter. Enterprise customer count also grew to 313 from 304 in the previous quarter.

The average enterprise customer spending during the period was $753,000, up from $716,000 in Q2 2020. Notably, the enterprise customer segment accounted for 88% of the company’s trailing 12-month revenue totals.

For Q4 2020, Fastly projects $80 to $84 million in revenue with adjusted loss ranging between 8 cents and 12 cents per share. The Zacks consensus estimate is $83.1 million for revenue and a loss of 2 cents per share.

Fastly also adjusted its non-GAAP operating loss from $2 – $12 million all the way to $19.1 – $23.1 million for fiscal 2020.


ByteDance to Generate $27.2 Billion in Ad Revenue in 2020

The outlook is not as grim for TikTok parent company ByteDance according to a report published by Reuters. ByteDance is on track to generate $27.2 billion from advertising revenue in China in 2020.

Considering that its total revenue goal for the year is $30 billion, its performance seems to be attuned to the plan.

Even though ByteDance is best known globally for TikTok, this app makes a minute contribution to its overall revenue. Rather, the company relies on the Chinese version of the TikTok app, Douyin, for 60% of its ad revenue. Moreover, 20% comes from Jinri Toutiao, its news aggregator while Xigua, its long-form video site, contributes less than 3%.

In China, ByteDance sits in second place behind Alibaba on the list of the top digital ad companies. It overtook Baidu in H1 2019, accounting for 23% of total digital ad spend in China, equivalent to $7.6 billion according to R3. Alibaba, on the other hand, accounted for 33% or $10.9 billion.

ByteDance also has a significant share of the Chinese mobile market. According to China Internet Watch, Tencent was the top player in this space in September 2020, with a 96.3% reach.

Alibaba was second with a 95.3% reach while Baidu sat in the third spot with 91.0%. ByteDance was fourth with a 67.2% reach.

While Tencent and Alibaba registered a growth rate of 1.6% YoY and 2.4% YoY respectively in mobile penetration during the month, ByteDance grew by 6.7%.


Douyin Projected to Generate $22.78 Billion GMV in 2020

ByteDance reached a valuation of $100 billion in May 2020, solidifying its status as the highest value startup in private markets. In 2019, it generated $17.2 billion in revenue.

Moreover, TikTok and Douyin were the highest grossing mobile apps globally in April 2020 according to Sensor Tower. With over $78 million in user spending, the apps posted tenfold growth compared to April 2019.

Around 86.6% of the total user spending came from China, courtesy of Douyin, while TikTok contributed 8.2% from the US market. It is worth noting that this revenue only takes into account in-app purchases and does not include ad or affiliation revenue.

According to Reuters, Douyin is one of ByteDance’s fastest growing segments, projected to generate 150 billion yuan ($22.78 billion) in gross merchandise value (GMV) in 2020.

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Nica San Juan

Nica San Juan

Nica is a BA Political Science graduate, startup founder and financial expert. She has an entrepreneurial spirit and started several startups from a young age, eventually becoming fascinated with stocks, cryptocurrencies and the blockchain economy. She specializes in financial tech and her expertise is in writing detailed tutorials and guides on how to invest in stocks and cryptocurrencies. Nica has written for many other websites, including Crypto Browser, Coin Review, LearnBonds, and Inside Bitcoins.