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0001517413false00015174132023-02-152023-02-15

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 15, 2023 
FASTLY, INC.
(Exact name of Registrant as Specified in Its Charter)
 
Delaware 001-38897 27-5411834
(State or other jurisdiction of
incorporation or organization)		 (Commission File Number) (I.R.S. Employer
Identification Number)

475 Brannan Street, Suite 300
San Francisco, CA 94107
(Address of principal executive offices) (Zip code)
(844) 432-7859
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report) 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class   Trading
Symbol(s)		   Name of each exchange
on which registered
Class A Common Stock, $0.00002 par value   “FSLY”   New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐






Item 2.02                   Results of Operations and Financial Condition.

On February 15, 2023, Fastly, Inc. (the "Company") announced its financial results for the quarter and full year ended December 31, 2022 by issuing a press release. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Attached hereto as Exhibit 99.2 and incorporated by reference herein is the Company’s investor supplement, regarding results of the quarter and fiscal year ended December 31, 2022 (the “Investor Supplement”). The Investor Supplement will be posted to http://investors.fastly.com immediately after the filing of this Form 8-K.

The information furnished on this Form 8-K, including the exhibits attached, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01                   Financial Statements and Exhibits.
 
(d)Exhibits
Exhibit
No.		    Exhibit Description
99.1    
99.2 
104  Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
 




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
    Fastly, Inc.
Dated:
February 15, 2023
  
    By:   /s/ Ronald W. Kisling
      Ronald W. Kisling
      Chief Financial Officer


EX-99.1 2 ex991-fslypressrelease1231.htm EX-99.1 Document

Exhibit 99.1
Fastly Announces Fourth Quarter and Full Year 2022 Financial Results

•Record quarterly revenue exceeded high-end of quarterly guidance range and grew 22% year-over-year
•Record annual revenue of $432.7 million, representing 22% growth year-over-year
•GAAP gross margin grew 380 bps sequentially; non-GAAP gross margin grew 340 basis points sequentially
•Trailing 12 month net retention rate (LTM NRR)1 increased to 119% in the fourth quarter from 118% in the third quarter 2022


SAN FRANCISCO, February 15, 2023 — Fastly, Inc. (NYSE: FSLY), the world’s fastest edge cloud platform, today announced financial results for its fourth quarter and full year ended December 31, 2022.

“We are excited to close out 2022 with another record quarter, exceeding the top end of our guidance range while demonstrating a significant improvement to gross margin,” said Todd Nightingale, CEO of Fastly.
“I've been incredibly impressed with the speed of innovation at Fastly and the focus our teams have demonstrated as we move to a higher velocity go-to-market motion.” continued Nightingale. “Our customers are passionate about our ability to elevate digital experiences at scale and we look forward to continued momentum in 2023.”
Three months ended
December 31,		 Year ended
December 31,
2022 2021 2022 2021
Revenue $ 119,321  $ 97,717  $ 432,725  $ 354,330 
Gross Margin
GAAP gross margin 52.4  % 50.9  % 48.5  % 52.9  %
Non-GAAP gross margin 57.0  % 55.8  % 53.6  % 57.7  %
Operating loss
GAAP operating loss $ (48,462) $ (56,656) $ (246,199) $ (219,021)
Non-GAAP operating loss $ (11,994) $ (11,734) $ (76,468) $ (55,134)
Net loss per share
GAAP net loss per common share—basic and diluted $ (0.38) $ (0.49) $ (1.57) $ (1.92)
Non-GAAP net loss per common share—basic and diluted $ (0.08) $ (0.10) $ (0.59) $ (0.48)
Fourth Quarter 2022 Financial Summary

•Total revenue of $119.3 million, representing 22% year-over-year growth and 10% sequential growth.
•GAAP gross margin of 52.4%, compared to 50.9% in the fourth quarter of 2021. Non-GAAP gross margin of 57.0%, compared to 55.8% in the fourth quarter of 2021.
•GAAP net loss of $46.7 million, compared to $57.5 million in the fourth quarter of 2021. Non-GAAP net loss of $9.5 million, compared to $11.7 million in the fourth quarter of 2021.
•GAAP net loss per basic and diluted shares of $0.38 compared to $0.49 in the fourth quarter of 2021. Non-GAAP net loss per basic and diluted shares of $0.08, compared to $0.10 in the fourth quarter of 2021.
Full Year 2022 Financial Summary
•Total revenue of $432.7 million, representing 22% growth year-over-year.
•GAAP gross margin of 48.5%, compared to 52.9% in fiscal 2021. Non-GAAP gross margin of 53.6%, compared to 57.7% in fiscal 2021.
•GAAP net loss of $190.8 million, compared to $222.7 million in fiscal 2021. Non-GAAP net loss of $72.3 million, compared to $55.9 million in fiscal 2021.
•GAAP net loss per basic and diluted shares of $1.57 compared to $1.92 in fiscal 2021. Non-GAAP net loss per basic and diluted shares of $0.59, compared to $0.48 in fiscal 2021.
Key Metrics
•Annual revenue retention rate (ARR)6 was 99.2% in 2022, flat to the 99.2% level in 2021.
•Trailing 12 month net retention rate (LTM NRR)1 increased to 119% in the fourth quarter from 118% in the third quarter 2022.




•Dollar-Based Net Expansion Rate (DBNER)2 increased to 123% in the fourth quarter from 122% in the third quarter 2022.
•Total customer count was 2,958 in the fourth quarter, up 33 from the third quarter; 493 were enterprise customers3 in the fourth quarter, up 11 from the third quarter.
•Average enterprise customer spend7 of $782 thousand in the fourth quarter, up 3% quarter-over-quarter.

For a reconciliation of non-GAAP financial measures to their corresponding GAAP measures, please refer to the reconciliation table at the end of this press release.

Fourth Quarter Business and Product Highlights

•Puja Jaspal joined Fastly as Chief People Officer, bringing her experience from Cisco as SVP of People & Communities, where she drove HR strategy, workplace and talent development.
•Hosted Altitude, our annual user conference in New York featuring almost 400 attendees and 15 keynotes from Fastly’s leadership team and customer partners.
•Relaunched our industry-leading Open Source and Nonprofit Program as “Fast Forward,” with a renewed focus on building community among the builders and maintainers of a faster, safer, and more inclusive internet.
•With the acquisition of Glitch in May 2022, we’ve extended Fastly’s opportunity to potentially convert the ideas of over 2 million developers into globally performant, secure and reliable applications at scale.
•Fastly Next-Gen WAF now supports automated provisioning and management via Terraform for our cloud-based deployment option.
•Achieved Payment Card Industry Data Security Standard (PCI DSS) compliance as a Level 1 Service Provider.
•Expanded our Next-Gen WAFs advanced rate limiting rules to customers of our Professional security package.
•Released into GA our Javascript SDK for Compute@Edge, offering unmatched initialization performance of startup times.


First Quarter and Full Year 2023 Guidance

Q1 2023 Full Year 2023
Total Revenue (millions) $114 - $117 $495 - $505
Non-GAAP Operating Loss (millions) ($18.0) - ($16.0) ($53.0) - ($47.0)
Non-GAAP Net Loss per share (4)(5)
 ($0.12) - ($0.08) ($0.27) - ($0.21)
A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future and cannot be reasonably determined or predicted at this time, although it is important to note that these factors could be material to Fastly’s future GAAP financial results.

Conference Call Information

Fastly will host an investor conference call to discuss its results at 1:30 p.m. PT / 4:30 p.m. ET on Wednesday, February 15, 2023.

Date: Wednesday, February 15, 2023
Time: 1:30 p.m. PT / 4:30 p.m. ET
Webcast: https://investors.fastly.com
Dial-in: 888-330-2022 (US/CA) or 646-960-0690 (Intl.)
Conf. ID#: 7543239

Please dial in at least 10 minutes prior to the 1:30 p.m. PT start time. A live webcast of the call will be available at https://investors.fastly.com where listeners may log on to the event by selecting the webcast link under the “Quarterly Results” section.

A telephone replay of the conference call will be available at approximately 5:00 p.m. PT, February 15 through February 28, 2023 by dialing 800-770-2030 or 647-362-9199 and entering the passcode 7543239.







About Fastly
Fastly’s powerful and programmable edge cloud platform helps the world’s top brands deliver the fastest online experiences possible, while improving site performance, enhancing security, and empowering innovation at global scale. With world-class support that achieves 95%+ average annual customer satisfaction ratings, Fastly’s beloved suite of edge compute, delivery, and security offerings has been recognized as a leader by industry analysts such as IDC, Forrester and Gartner. Compared to legacy providers, Fastly’s powerful and modern network architecture is the fastest on the planet, empowering developers to deliver secure websites and apps at global scale with rapid time-to-market and industry-leading cost savings. Thousands of the world’s most prominent organizations trust Fastly to help them upgrade the internet experience, including Reddit, Pinterest, Stripe, Neiman Marcus, The New York Times, Epic Games, and GitHub. Learn more about Fastly at https://www.fastly.com/, and follow us @fastly.





Forward-Looking Statements
This press release contains “forward-looking” statements that are based on our beliefs and assumptions and on information currently available to us on the date of this press release. Forward-looking statements may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, the demand for our platform, and our ability to deliver on our long-term strategy. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. Important factors that could cause our actual results to differ materially are detailed from time to time in the reports Fastly files with the Securities and Exchange Commission (“SEC”), including in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022. Additional information will also be set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Copies of reports filed with the SEC are posted on Fastly’s website and are available from Fastly without charge.
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company uses the following non-GAAP measures of financial performance: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, free cash flow and adjusted EBITDA. The presentation of this additional financial information is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In addition, these non-GAAP financial measures may be different from the non-GAAP financial measures used by other companies. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Management compensates for these limitations by reconciling these non-GAAP financial measures to the most comparable GAAP financial measures within our earnings releases.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss and non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, and non-GAAP general and administrative differ from GAAP in that they exclude stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses, executive transition costs, net gain on extinguishment of debt and amortization of debt discount and issuance costs.

Adjusted EBITDA: excludes stock-based compensation expense, depreciation and other amortization expenses, amortization of acquired intangible assets, acquisition-related expenses, executive transition costs, interest income, interest expense, including amortization of debt discount and issuance costs, net gain on extinguishment of debt, other income (expense), net, and income taxes.

Acquisition-related Expenses: consists of acquisition-related charges that are not related to ongoing operations. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because these charges may not be reflective of our core business, ongoing operating results, or future outlook.





Amortization of Acquired Intangible Assets: consists of non-cash charges that can be affected by the timing and magnitude of asset purchases and acquisitions. Management considers its operating results without this activity when evaluating its ongoing non-GAAP performance and its adjusted EBITDA performance because these charges are non-cash expenses that can be affected by the timing and magnitude of asset purchases and acquisitions and may not be reflective of our core business, ongoing operating results, or future outlook.

Amortization of Debt Discount and Issuance Costs: consists primarily of amortization expense related to our debt obligations. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook. These are included in our total interest expense.

Capital Expenditures: consists of cash used for purchases of property and equipment, net of proceeds from sale of property and equipment, capitalized internal-use software and payments on finance lease obligations, as reflected in our statement of cash flows.

Depreciation and Other Amortization Expense: consists of non-cash charges that can be affected by the timing and magnitude of asset purchases. Management considers its operating results without this activity when evaluating its ongoing adjusted EBITDA performance because these charges are non-cash expenses that can be affected by the timing and magnitude of asset purchases and may not be reflective of our core business, ongoing operating results, or future outlook.

Executive Transition costs: consists of one-time cash and non-cash charges recognized with respect to changes in our executive’s employment status. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Free Cash Flow: calculated as net cash used in operating activities less capital expenditures, including any advance payments made related to capital expenditures.

Income Taxes: consists primarily of expenses recognized related to state and foreign income taxes. Management considers its operating results without this activity when evaluating its ongoing adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Interest Expense: consists primarily of interest expense related to our debt instruments, including amortization of debt discount and issuance costs. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Interest Income: consists primarily of interest income related to our marketable securities. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Net Gain on Debt Extinguishment: relates to net gain on the partial repurchase of our outstanding convertible debt. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Other Income (Expense), Net: consists primarily of foreign currency transaction gains and losses. Management considers its operating results without this activity when evaluating its ongoing adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Stock-based Compensation Expense: consists of expenses for stock options, restricted stock units, performance awards, restricted stock awards and Employee Stock Purchase Plan ("ESPP") under our equity incentive plans. Although stock-based compensation is an expense for the Company and is viewed as a form of compensation, management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance, primarily because it is a non-cash expense not believed by management to be reflective of our core business, ongoing operating results, or future outlook.




In addition, the value of some stock-based instruments is determined using formulas that incorporate variables, such as market volatility, that are beyond our control.
Management believes these non-GAAP financial measures and adjusted EBITDA serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods and to those of peer companies, and when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors' overall understanding of our current financial performance.
In the financial tables below, the Company provides a reconciliation of the most comparable GAAP financial measure to the historical non-GAAP financial measures used in this press release.
Key Metrics
1 We calculate LTM Net Retention Rate by dividing the total customer revenue for the prior twelve-month period (“prior 12-month period”) ending at the beginning of the last twelve-month period (“LTM period”) minus revenue contraction due to billing decreases or customer churn, plus revenue expansion due to billing increases during the LTM period from the same customers by the total prior 12-month period revenue. We believe the LTM Net Retention Rate is supplemental as it removes some of the volatility that is inherent in a usage-based business model.
2 We calculate Dollar-Based Net Expansion Rate by dividing the revenue for a given period from customers who remained customers as of the last day of the given period (the “current” period) by the revenue from the same customers for the same period measured one year prior (the “base” period). The revenue included in the current period excludes revenue from (i) customers that churned after the end of the base period and (ii) new customers that entered into a customer agreement after the end of the base period.
3 Enterprise customers are defined as those spending $100,000 or more in the trailing 12-month period.
4 Assumes weighted average basic shares outstanding of 125.8 million in Q1 2023 and 129.5 million for the full year 2023.
5 Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2023.
6 Annual revenue retention rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers divided by our annual revenue of the same calendar year from 100%. Our “Annual Revenue Churn” is calculated by multiplying the final full month of revenue from a customer that terminated its contract with us (a “Churned Customer”) by the number of months remaining in the same calendar year.
7 Average enterprise customer spend is calculated by taking the sum of the trailing 12-month revenue contributed by enterprise customers existing as of the current period, and dividing that by the number of enterprise customers as of the current period.
















Condensed Consolidated Statements of Operations
(in thousands, except per share amounts, unaudited)
Three months ended
December 31, 		Year ended
December 31,
2022 2021 2022 2021
Revenue $ 119,321  $ 97,717  $ 432,725  $ 354,330 
Cost of revenue(1)
 56,738  47,944  222,944  167,002 
Gross profit 62,583  49,773  209,781  187,328 
Operating expenses:
Research and development(1)
 37,197  34,997  155,308  126,859 
Sales and marketing(1)
 44,623  42,151  179,869  152,645 
General and administrative(1)
 29,225  29,281  120,803  126,845 
Total operating expenses 111,045  106,429  455,980  406,349 
Loss from operations (48,462) (56,656) (246,199) (219,021)
Net gain on extinguishment of debt —  —  54,391  — 
Interest income 2,894  552  7,044  1,282 
Interest expense (1,354) (1,593) (5,887) (5,245)
Other income (expense) 46  201  (29) 356 
Loss before income taxes (46,876) (57,496) (190,680) (222,628)
Income tax expense (223) 25  94  69 
Net loss $ (46,653) $ (57,521) $ (190,774) $ (222,697)
Net income (loss) per share attributable to common stockholders, basic and diluted $ (0.38) $ (0.49) $ (1.57) $ (1.92)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted 123,587  118,161  121,723  116,053 

__________

(1)Includes stock-based compensation expense as follows:
Three months ended
December 31,		 Year ended
December 31,
2022 2021 2022 2021
Cost of revenue $ 2,938  $ 2,316  $ 12,050  $ 7,227 
Research and development 11,469  15,675  58,435  47,019 
Sales and marketing 7,885  11,399  39,083  31,159 
General and administrative 9,126  10,198  36,228  55,083 
Total $ 31,418  $ 39,588  $ 145,796  $ 140,488 







Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, unaudited)
Three months ended
December 31, 		Year ended
December 31,
2022 2021 2022 2021
Gross Profit
GAAP gross profit $ 62,583  $ 49,773  $ 209,781  $ 187,328 
Stock-based compensation 2,938  2,316  12,050  7,227 
Amortization of acquired intangible assets 2,475  2,475  9,900  9,900 
Non-GAAP gross profit $ 67,996  $ 54,564  $ 231,731  $ 204,455 
GAAP gross margin 52.4  % 50.9  % 48.5  % 52.9  %
Non-GAAP gross margin 57.0  % 55.8  % 53.6  % 57.7  %
Research and development
GAAP research and development $ 37,197  $ 34,997  $ 155,308  $ 126,859 
Stock-based compensation (11,469) (15,675) (58,435) (47,019)
Non-GAAP research and development $ 25,728  $ 19,322  $ 96,873  $ 79,840 
Sales and marketing
GAAP sales and marketing $ 44,623  $ 42,151  $ 179,869  $ 152,645 
Stock-based compensation (7,885) (11,399) (39,083) (31,159)
Amortization of acquired intangible assets (2,575) (2,710) (10,891) (10,944)
Non-GAAP sales and marketing $ 34,163  $ 28,042  $ 129,895  $ 110,542 
General and administrative
GAAP general and administrative $ 29,225  $ 29,281  $ 120,803  $ 126,845 
Stock-based compensation (9,126) (10,198) (33,195) (55,083)
Executive transition costs —  —  (4,207) — 
Acquisition-related expenses —  (149) (1,970) (2,555)
Non-GAAP general and administrative $ 20,099  $ 18,934  $ 81,431  $ 69,207 
Operating loss
GAAP operating loss $ (48,462) $ (56,656) $ (246,199) $ (219,021)
Stock-based compensation 31,418  39,588  142,763  140,488 
Executive transition costs —  —  4,207  — 
Amortization of acquired intangible assets 5,050  5,185  20,791  20,844 
Acquisition-related expenses —  149  1,970  2,555 
Non-GAAP operating loss $ (11,994) $ (11,734) $ (76,468) $ (55,134)
Net loss
GAAP net loss $ (46,653) $ (57,521) $ (190,774) $ (222,697)
Stock-based compensation 31,418  39,588  142,763  140,488 
Executive transition costs —  —  4,207  — 
Amortization of acquired intangible assets 5,050  5,185  20,791  20,844 
Acquisition-related expenses —  149  1,970  2,555 
Net gain on extinguishment of debt —  —  (54,391) — 
Amortization of debt discount and issuance costs 716  947  3,169  2,907 
Non-GAAP loss $ (9,469) $ (11,652) $ (72,265) $ (55,903)
Non-GAAP net loss per common share—basic and diluted $ (0.08) $ (0.10) $ (0.59) $ (0.48)
Weighted average basic and diluted common shares 123,587 118,161 121,723 116,053




Three months ended
December 31, 		Year ended
December 31,
2022 2021 2022 2021
Adjusted EBITDA
GAAP net loss $ (46,653) $ (57,521) $ (190,774) $ (222,697)
Stock-based compensation 31,418  39,588  142,763  140,488 
Executive transition costs —  —  4,207  — 
Depreciation and other amortization 11,903  8,228  43,524  29,208 
Amortization of acquired intangible assets 5,050  5,185  20,791  20,844 
Acquisition-related expenses —  149  1,970  2,555 
Interest income (2,894) (552) (7,044) (1,282)
Interest expense 638  1,593  2,718  5,245 
Amortization of debt discount and issuance costs 716  947  3,169  2,907 
Net gain on extinguishment of debt —  —  (54,391) — 
Other expense (income) (46) (201) 29  (356)
Income tax expense (223) 25  94  69 
Adjusted EBITDA $ (91) $ (2,559) $ (32,944) $ (23,019)




Condensed Consolidated Balance Sheets
(in thousands)
As of
December 31, 2022		 As of
December 31, 2021
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 143,391  $ 166,068 
Marketable securities, current 374,581  361,795 
Accounts receivable, net of allowance for credit losses 89,578  64,625 
Prepaid expenses and other current assets 28,933  32,160 
Total current assets 636,483  624,648 
Property and equipment, net 180,378  166,961 
Operating lease right-of-use assets, net 68,440  69,631 
Goodwill 670,185  636,805 
Intangible assets, net 82,900  102,596 
Marketable securities, non-current 165,105  528,911 
Other assets 92,622  29,468 
Total assets $ 1,896,113  $ 2,159,020 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 4,786  $ 9,257 
Accrued expenses 61,161  36,112 
Finance lease liabilities, current 28,954  21,125 
Operating lease liabilities, current 23,026  20,271 
Other current liabilities 34,394  45,107 
Total current liabilities 152,321  131,872 
Long-term debt 704,710  933,205 
Finance lease liabilities, noncurrent 15,507  22,293 
Operating lease liabilities, noncurrent 61,341  55,114 
Other long-term liabilities 7,076  2,583 
Total liabilities 940,955  1,145,067 
Stockholders’ equity:
Class A common stock 2  2 
Additional paid-in capital 1,666,106  1,527,468 
Accumulated other comprehensive loss (9,286) (2,627)
Accumulated deficit (701,664) (510,890)
Total stockholders’ equity 955,158  1,013,953 
Total liabilities and stockholders’ equity $ 1,896,113  $ 2,159,020 







Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
Three months ended
December 31, 		Year ended
December 31,
2022 2021 2022 2021
Cash flows from operating activities:
Net loss $ (46,653) $ (57,521) $ (190,774) $ (222,697)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense 11,371  8,089  42,619  28,799 
Amortization of intangible assets 5,582  5,309  21,696  21,238 
Non-cash lease expense 7,835  7,065  29,714  26,883 
Amortization of debt discount and issuance costs 715  950  3,169  3,185 
Amortization of deferred contract costs 2,896  1,727  8,916  6,294 
Stock-based compensation 31,418  39,588  145,796  140,488 
Provision for credit losses 624  155  2,406  196 
Interest paid for finance lease (538) (495) (2,381) (1,754)
(Gain) loss on disposals of property and equipment —  (123) 854  (300)
Amortization and accretion of discounts and premiums on investments 515  987  3,137  2,221 
Impairment of operating ROU assets 2,083  —  2,083  — 
Net gain on extinguishment of debt —  —  (54,391) — 
Other adjustments 3,980  (258) 3,688  4 
Changes in operating assets and liabilities:
Accounts receivable (17,288) (10,546) (27,359) (14,563)
Prepaid expenses and other current assets (971) 725  (6,758) (4,777)
Other assets (15,492) (3,103) (35,396) (10,423)
Accounts payable (1,267) 1,799  (4,724) 146 
Accrued expenses 3,799  1,548  8,289  4,261 
Operating lease liabilities (6,377) (6,712) (27,044) (26,447)
Other liabilities 5,640  2,908  6,828  8,764 
Net cash used in operating activities (12,128) (7,908) (69,632) (38,482)
Cash flows from investing activities:
Purchases of marketable securities —  (150,586) (355,479) (928,155)
Sales of marketable securities 65  2,291  161,918  66,527 
Maturities of marketable securities 94,303  45,232  535,040  118,085 
Business acquisitions, net of cash acquired 1,843  (1,169) (25,902) (1,169)
Advance payment for purchase of property and equipment (10,923) —  (42,197) — 
Purchases of property and equipment (8,529) (3,549) (19,975) (34,816)
Proceeds from sale of property and equipment 126  297  492  588 
Capitalized internal-use software (4,290) (3,180) (18,146) (13,479)
Purchases of intangible assets —  —  —  (2,092)
Net cash (used in) provided by investing activities 72,595  (110,664) 235,751  (794,511)
Cash flows from financing activities:
Issuance of convertible note, net of issuance costs —  —  —  930,775 
Payments of debt issuance costs —  —  —  (1,351)
Repayments of notes payable —  —  (177,082) — 
Repayments of finance lease liabilities (4,427) (3,004) (22,532) (13,568)
Cash received for restricted stock sold in advance of vesting conditions —  —  10,655  — 
Cash paid for early sale of restricted shares —  —  (10,655) — 
Proceeds from employee stock purchase plan (949) 2,075  4,777  8,069 
Proceeds from exercise of vested stock options 364  3,532  5,688  12,626 
Net cash (used in) provided by financing activities (5,012) 2,603  (189,149) 936,551 
Effects of exchange rate changes on cash, cash equivalents, and restricted cash 39  (94) (390) (477)
Net increase (decrease) in cash, cash equivalents, and restricted cash 55,494  (116,063) (23,420) 103,081 
Cash, cash equivalents, and restricted cash at beginning of period 88,047  283,024  166,961  63,880 
Cash, cash equivalents, and restricted cash at end of period 143,541  166,961  143,541  166,961 
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents 143,391  166,068  143,391  166,068 
Restricted cash, current 150  —  150  — 
Restricted cash, non-current —  893  —  893 
Total cash, cash equivalents, and restricted cash $ 143,541  $ 166,961  $ 143,541  $ 166,961 






Free Cash Flow
(in thousands, unaudited)
Three months ended
December 31,		 Year ended
December 31,
2022 2021 2022 2021
Cash flow used in operations $ (12,128) $ (7,908) $ (69,632) $ (38,482)
Capital expenditures(1)
 (17,120) (9,436) (60,161) (61,275)
Advance payment for purchase of property and equipment(2)
 $ (10,923) $ —  $ (42,197) $ — 
Free Cash Flow $ (40,171) $ (17,344) $ (171,990) $ (99,757)
__________
(1)Capital expenditures are defined as cash used for purchases of property and equipment, net of proceeds from sale of property and equipment, and capitalized internal-use software and payments on finance lease obligations, as reflected in our statement of cash flows.
(2)Advance payments for purchase of property and equipment relate to prepayments made for our capital expenditures in advance of receiving the asset, as reflected in our statement of cash flows.




















Contacts:
Investor Contact:
Vernon Essi, Jr.
ir@fastly.com

Media Contact:
press@fastly.com

Source: Fastly, Inc.



EX-99.2 3 ex992-investorsupplement12.htm EX-99.2 Document
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Fourth Quarter 2022 Investor Supplement

Product Developments
Security:
•Fastly Next-Gen WAF now supports automated provisioning and management via Terraform for our cloud-based deployment option.
•Achieved Payment Card Industry Data Security Standard (PCI DSS) compliance as a Level 1 Service Provider.
•Expanded our Next-Gen WAFs advanced rate limiting rules to customers of our Professional security package.
Leading Innovation:
•Introduced in beta live log-tailing to our Edge Observer, offering real-time log streaming capabilities and visibility.
•Announced in GA, IAM, secrets-free authentication support for our Google BigQuery, Cloud Storage, and Pub/Sub logging integrations.
•Released into GA our Javascript SDK for Compute@Edge, offering unmatched load time performance.
Developer Relations:
•Relaunched our industry-leading Open Source and Nonprofit Program as “Fast Forward,” with a renewed focus on building community among the builders and maintainers of a faster, safer, and more inclusive internet.
•With the acquisition of Glitch in May 2022, we’ve extended Fastly’s opportunity to a community of over 2 million developers eager to build globally performant, secure and reliable applications at scale on our platform.
Key Metrics Highlights
•Annual revenue retention rate (ARR)3 was 99.2% in 2022, flat to the 99.2% level in 2021.
•Trailing 12 month net retention rate (LTM NRR)1 was 119% in the fourth quarter, up from 118% in the third quarter 2022.
•Dollar-Based Net Expansion Rate (DBNER)2 was 123% in the fourth quarter, up from 122% in the third quarter 2022.
•Total customer count was 2,958 in the fourth quarter, up 33 from the third quarter; 493 were enterprise customers4 in the fourth quarter, up 11 from the third quarter.
•Average enterprise customer spend8 of $782 thousand in the fourth quarter, up 3% quarter-over-quarter.

Calculations of Key and Other Selected Metrics – Quarterly (unaudited)
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Total Customer Count 2,458  2,581  2,748  2,804  2,880  2,894  2,925  2,958 
Enterprise Customer Count(4)
 395  408  430  445  457  471  482  493 
Enterprise Revenue % Total LTM 89  % 89  % 88  % 88  % 89  % 88  % 89  % 89  %
Enterprise Customer Average Spend LTM (in thousands)(8)
 $ 705  $ 702  $ 698  $ 704  $ 722  $ 730  $ 759  $ 782 
Net Retention Rate (NRR) Quarter(9)
 110  % 93  % 112  % 107  % 114  % 128  % 115  % 111  %
Net Retention Rate (NRR) LTM(1)
 135  % 121  % 114  % 118  % 115  % 117  % 118  % 119  %
Dollar-Based Net Expansion Rate (DBNER)(2)
 141  % 126  % 118  % 121  % 118  % 120  % 122  % 123  %
Annual Revenue Retention Rate (ARR)(3)
 —  % —  % —  % 99.2  % —  % —  % —  % 99.2  %
Global Network Capacity 130 TB/sec 145 TB/sec 167 TB/sec 184 TB/sec 198 TB/sec 215 TB/sec 233 TB/sec 252 TB/sec
Countries 26 28 31 32 34 34 35 35
Markets 58 61 68 71 75 78 79 79

Exhibit 99.2

Corporate Development
•Puja Jaspal joined Fastly as CPO, bringing her experience from Cisco as SVP of People & Communities, where she drove HR strategy, workplace and talent development.
Customer and Partner Highlights
•Hosted Altitude, our annual user conference in New York featuring almost 400 attendees and 15 keynotes from Fastly’s leadership team and customer partners.
•Duolingo, the most popular language-learning platform and most downloaded education app worldwide, chose Fastly’s Next-Gen WAF to protect their applications.
•McKesson, a Fortune 10 global leader in healthcare, chose Fastly’s network services to improve its website performance and support future roadmap initiatives.
•A leading online grocery delivery service, chose Fastly’s Next-Gen WAF over its incumbent provider due to its ease of use and rate limiting ability at scale.
•Civitatis, a leading online platform for booking travel related activities, chose Fastly’s cloud edge due to its performance and ease of use over competitive offerings.
Fourth Quarter 2022 Financial Highlights
•Record revenue of $119.3 million, representing 10% sequential growth and 22% year-over-year growth.
•GAAP gross margin of 52.4%, compared to 50.9% in the fourth quarter of 2021. Non-GAAP gross margin of 57.0%, compared to 55.8% in the fourth quarter of 2021.
•GAAP net loss per basic and diluted shares of $0.38 compared to $0.49 in the fourth quarter of 2021. Non-GAAP net loss5 per basic and diluted shares of $0.08, compared to $0.10 in the fourth quarter of 2021.
First Quarter and Full Year 2023 Guidance:
Q1 2023 Full Year 2023
Total Revenue (millions) $114 - $117 $495 - $505
Non-GAAP Operating Loss (millions)(5)
 ($18.0) - ($16.0) ($53.0) - ($47.0)
Non-GAAP Net Loss per share (6) (7)
 ($0.12) - ($0.08) ($0.27) - ($0.21)




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1.We calculate LTM Net Retention Rate by dividing the total customer revenue for the prior twelve-month period (“prior 12-month period”) ending at the beginning of the last twelve-month period (“LTM period”) minus revenue contraction due to billing decreases or customer churn, plus revenue expansion due to billing increases during the LTM period from the same customers by the total prior 12-month period revenue. We believe the LTM Net Retention Rate is supplemental as it removes some of the volatility that is inherent in a usage-based business model.
2.We calculate Dollar-Based Net Expansion Rate by dividing the revenue for a given period from customers who remained customers as of the last day of the given period (the “current” period) by the revenue from the same customers for the same period measured one year prior (the “base” period). The revenue included in the current period excludes revenue from (i) customers that churned after the end of the base period and (ii) new customers that entered into a customer agreement after the end of the base period.
3.Annual revenue retention rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers divided by our annual revenue of the same calendar year from 100%. Our “Annual Revenue Churn” is calculated by multiplying the final full month of revenue from a customer that terminated its contract with us (a “Churned Customer”) by the number of months remaining in the same calendar year.
4.Enterprise customers are defined as those spending $100,000 or more in the trailing 12-month period.
5.For a reconciliation of non-GAAP financial measures to their corresponding GAAP measures, please refer to the reconciliation table at the end of this letter.
6.Assumes weighted average basic shares outstanding of 125.8 million in Q1 2023 and 129.5 million for the full year 2023.
7.Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2023.
8.Average enterprise customer spend is calculated by taking the sum of the trailing 12-month revenue contributed by enterprise customers existing as of the current period, and dividing that by the number of enterprise customers as of the current period.
9.Net Retention Rate measures the net change in monthly revenue from existing customers in the last month of the period (the “current" period month) compared to the last month of the same period one year prior (the “prior" period month). The revenue included in the current period month includes revenue from (i) revenue contraction due to billing decreases or customer churn and (ii) revenue expansion due to billing increases, but excludes revenue from new customers. We calculate Net Retention Rate by dividing the revenue from the current period month by the revenue in the prior period month.






























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Forward-Looking Statements

This investor supplement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, about us and our industry that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or Fastly's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "continue," “would,” or the negative of these words or other similar terms or expressions that concern Fastly's expectations, goals, strategy, priorities, plans, projections, or intentions. Forward-looking statements in this investor supplement include, but are not limited to, statements regarding Fastly’s future financial and operating performance, including its outlook and guidance; and Fastly's strategies, product and business plans. Fastly's expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the possibility that: Fastly is unable to attract and retain customers; Fastly's existing customers and partners do not maintain or increase usage of Fastly's platform; Fastly's platform and product features do not meet expectations, including due to defects, interruptions, security breaches, delays in performance or other similar problems; Fastly is unable to adapt to meet evolving market and customer demands and rapid technological change; Fastly is unable to comply with modified or new industry standards, laws and regulations; Fastly is unable to generate sufficient revenues to achieve or sustain profitability; Fastly’s limited operating history makes it difficult to evaluate its prospects and future operating results; Fastly is unable to effectively manage its growth; and Fastly is unable to compete effectively. The forward-looking statements contained in this investor supplement are also subject to other risks and uncertainties, including those more fully described in Fastly’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, and additional information that will be set forth in Fastly’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and other filings and reports that we may file from time to time with the SEC. The forward-looking statements in this investor supplement are based on information available to Fastly as of the date hereof, and Fastly disclaims any obligation to update any forward-looking statements, except as required by law.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company uses the following non-GAAP measures of financial performance: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, free cash flow and adjusted EBITDA. The presentation of this additional financial information is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In addition, these non-GAAP financial measures may be different from the non-GAAP financial measures used by other companies. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Management compensates for these limitations by reconciling these non-GAAP financial measures to the most comparable GAAP financial measures within our earnings releases.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss and non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, and non-GAAP general and administrative differ from GAAP in that they exclude stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses, executive transition costs, net gain on extinguishment of debt and amortization of debt discount and issuance costs.
Adjusted EBITDA: excludes stock-based compensation expense, depreciation and other amortization expenses, amortization of acquired intangible assets, acquisition-related expenses, executive transition costs, interest income, interest expense, including amortization of debt discount and issuance costs, net gain on extinguishment of debt, other income (expense), net, and income taxes.
Acquisition-related Expenses: consists of acquisition-related charges that are not related to ongoing operations. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because these charges may not be reflective of our core business, ongoing operating results, or future outlook.
Amortization of Acquired Intangible Assets: consists of non-cash charges that can be affected by the timing and magnitude of asset purchases and acquisitions. Management considers its operating results without this activity when evaluating its ongoing non-GAAP performance and its adjusted EBITDA performance because these charges are non-cash expenses that can be affected by the timing and magnitude of asset purchases and acquisitions and may not be reflective of our core business, ongoing operating results, or future outlook.
Amortization of Debt Discount and Issuance Costs: consists primarily of amortization expense related to our debt obligations. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook. These are included in our total interest expense.
Capital Expenditures: consists of cash used for purchases of property and equipment, net of proceeds from sale of property and equipment, capitalized internal-use software and payments on finance lease obligations, as reflected in our statement of cash flows.
Depreciation and Other Amortization Expense: consists of non-cash charges that can be affected by the timing and magnitude of asset purchases. Management considers its operating results without this activity when evaluating its ongoing adjusted EBITDA performance because these charges are non-cash expenses that can be affected by the timing and magnitude of asset purchases and may not be reflective of our core business, ongoing operating results, or future outlook.

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Executive Transition costs: consists of one-time cash and non-cash charges recognized with respect to changes in our executive’s employment status. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Free Cash Flow: calculated as net cash used in operating activities less capital expenditures, including any advance payments made related to capital expenditures.
Income Taxes: consists primarily of expenses recognized related to state and foreign income taxes. Management considers its operating results without this activity when evaluating its ongoing adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Interest Expense: consists primarily of interest expense related to our debt instruments, including amortization of debt discount and issuance costs. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Interest Income: consists primarily of interest income related to our marketable securities. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Net Gain on Debt Extinguishment: relates to net gain on the partial repurchase of our outstanding convertible debt. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Other Income (Expense), Net: consists primarily of foreign currency transaction gains and losses. Management considers its operating results without this activity when evaluating its ongoing adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Stock-based Compensation Expense: consists of expenses for stock options, restricted stock units, performance awards, restricted stock awards and Employee Stock Purchase Plan ("ESPP") under our equity incentive plans. Although stock-based compensation is an expense for the Company and is viewed as a form of compensation, management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance, primarily because it is a non-cash expense not believed by management to be reflective of our core business, ongoing operating results, or future outlook. In addition, the value of some stock-based instruments is determined using formulas that incorporate variables, such as market volatility, that are beyond our control.
Management believes these non-GAAP financial measures and adjusted EBITDA serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods and to those of peer companies, and when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors' overall understanding of our current financial performance.
In the financial tables below, the Company provides a reconciliation of the most comparable GAAP financial measure to the historical non-GAAP financial measures used in this investor supplement.












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Consolidated Statements of Operations – Quarterly
(unaudited, in thousands, except per share amounts)

Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Revenue $ 84,852  $ 85,026  $ 86,735  $ 97,717  $ 102,382  $ 102,518  $ 108,504  $ 119,321 
Cost of revenue(1)
 37,494  40,320  41,244  47,944  53,915  56,466  55,825  56,738 
Gross profit 47,358  44,706  45,491  49,773  48,467  46,052  52,679  62,583 
Operating expenses:
Research and development(1)
 28,988  30,346  32,528  34,997  40,437  38,717  38,957  37,197 
Sales and marketing(1)
 34,872  36,334  39,288  42,151  41,480  46,760  47,006  44,623 
General and administrative (1)
 33,461  35,494  28,609  29,281  29,554  29,543  32,481  29,225 
Total operating expenses 97,321  102,174  100,425  106,429  111,471  115,020  118,444  111,045 
Loss from operations (49,963) (57,468) (54,934) (56,656) (63,004) (68,968) (65,765) (48,462)
Net gain on extinguishment of debt —  —  —  —  —  54,391  —  — 
Interest income 174  276  280  552  681  1,502  1,967  2,894 
Interest expense (661) (1,436) (1,555) (1,593) (1,622) (1,530) (1,381) (1,354)
Other income (expense) (64) 178  41  201  (279) (1,673) 1,877  46 
Loss before income taxes (50,514) (58,450) (56,168) (57,496) (64,224) (16,278) (63,302) (46,876)
Income tax expense (benefit) 169  (155) 30  25  40  159  118  (223)
Net loss $ (50,683) $ (58,295) $ (56,198) $ (57,521) $ (64,264) $ (16,437) $ (63,420) $ (46,653)
Net loss per share attributable to common stockholders, basic and diluted $ (0.44) $ (0.51) $ (0.48) $ (0.49) $ (0.54) $ (0.14) $ (0.52) $ (0.38)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 114,134  115,326  116,475  118,161  119,673  121,242  122,339  123,587 
__________
(1)Includes stock-based compensation expense as follows:
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Cost of revenue $ 1,186  $ 1,828  $ 1,897  $ 2,316  $ 2,946  $ 3,188  $ 2,978  $ 2,938 
Research and development 7,958  8,634  14,752  15,675  18,589  13,889  14,488  11,469 
Sales and marketing 5,008  5,631  9,121  11,399  10,094  10,184  10,920  7,885 
General and administrative 16,686  17,333  10,866  10,198  8,393  7,717  10,992  9,126 
Total $ 30,838  $ 33,426  $ 36,636  $ 39,588  $ 40,022  $ 34,978  $ 39,378  $ 31,418 












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Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly
(unaudited, in thousands, except per share amounts)

Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Gross Profit
GAAP gross Profit $ 47,358  $ 44,706  $ 45,491  $ 49,773  $ 48,467  $ 46,052  $ 52,679  $ 62,583 
Stock-based compensation 1,186  1,828  1,897  2,316  2,946  3,188  2,978  2,938 
Amortization of acquired intangible assets 2,475  2,475  2,475  2,475  2,475  2,475  2,475  2,475 
Non-GAAP gross profit 51,019  49,009  49,863  54,564  53,888  51,715  58,132  67,996 
GAAP gross margin 55.8  % 52.6  % 52.4  % 50.9  % 47.3  % 44.9  % 48.6  % 52.4  %
Non-GAAP gross margin 60.1  % 57.6  % 57.5  % 55.8  % 52.6  % 50.4  % 53.6  % 57.0  %
Research and development
GAAP research and development 28,988  30,346  32,528  34,997  40,437  38,717  38,957  37,197 
Stock-based compensation (7,958) (8,634) (14,752) (15,675) (18,589) (13,889) (14,488) (11,469)
Non-GAAP research and development 21,030  21,712  17,776  19,322  21,848  24,828  24,469  25,728 
Sales and marketing
GAAP sales and marketing 34,872  36,334  39,288  42,151  41,480  46,760  47,006  44,623 
Stock-based compensation (5,008) (5,631) (9,121) (11,399) (10,094) (10,184) (10,920) (7,885)
Amortization of acquired intangible assets (2,816) (2,709) (2,709) (2,710) (2,709) (2,710) (2,897) (2,575)
Non-GAAP sales and marketing 27,048  27,994  27,458  28,042  28,677  33,866  33,189  34,163 
General and administrative
GAAP general and administrative 33,461  35,494  28,609  29,281  29,554  29,543  32,481  29,225 
Stock-based compensation (16,686) (17,333) (10,866) (10,198) (8,393) (7,717) (7,959) (9,126)
Executive transition costs —  —  —  —  —  —  (4,207) — 
Acquisition-related expenses (929) (1,298) (179) (149) (58) (1,912) —  — 
Non-GAAP general and administrative 15,846  16,863  17,564  18,934  21,103  19,914  20,315  20,099 
Operating loss
GAAP operating loss (49,963) (57,468) (54,934) (56,656) (63,004) (68,968) (65,765) (48,462)
Stock-based compensation 30,838  33,426  36,636  39,588  40,022  34,978  36,345  31,418 
Executive transition costs —  —  —  —  —  —  4,207  — 
Amortization of acquired intangible assets 5,291  5,184  5,184  5,185  5,184  5,185  5,372  5,050 
Acquisition-related expenses 929  1,298  179  149  58  1,912  —  — 
Non-GAAP operating loss (12,905) (17,560) (12,935) (11,734) (17,740) (26,893) (19,841) (11,994)
Net loss
GAAP net loss (50,683) (58,295) (56,198) (57,521) (64,264) (16,437) (63,420) (46,653)
Stock-based compensation 30,838  33,426  36,636  39,588  40,022  34,978  36,345  31,418 
Executive transition costs —  —  —  —  —  —  4,207  — 
Amortization of acquired intangible assets 5,291  5,184  5,184  5,185  5,184  5,185  5,372  5,050 
Acquisition-related expenses 929  1,298  179  149  58  1,912  —  — 
Net gain on extinguishment of debt —  —  —  —  —  (54,391) —  — 
Amortization of debt issuance costs —  993  967  947  963  776  714  716 
Non-GAAP net loss $ (13,625) $ (17,394) $ (13,232) $ (11,652) $ (18,037) $ (27,977) $ (16,782) $ (9,469)
GAAP net loss per common share—basic and diluted $ (0.44) $ (0.51) $ (0.48) $ (0.49) $ (0.54) $ (0.14) $ (0.52) $ (0.38)
Non-GAAP net loss per common share—basic and diluted $ (0.12) $ (0.15) $ (0.11) $ (0.10) $ (0.15) $ (0.23) $ (0.14) $ (0.08)
Weighted average basic common shares 114,134  115,326  116,475  118,161  119,673  121,242  122,339  123,587 


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Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly (Continued)
(unaudited, in thousands, except per share amounts)

Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Adjusted EBITDA
GAAP net loss $ (50,683) $ (58,295) $ (56,198) $ (57,521) $ (64,264) $ (16,437) $ (63,420) $ (46,653)
Stock-based compensation 30,838  33,426  36,636  39,588  40,022  34,978  36,345  31,418 
Executive transition costs —  —  —  —  —  —  4,207  — 
Depreciation and other amortization 6,491  7,000  7,489  8,228  9,975  10,860  10,786  11,903 
Amortization of acquired intangible assets 5,291  5,184  5,184  5,185  5,184  5,185  5,372  5,050 
Acquisition-related expenses 929  1,298  179  149  58  1,912  —  — 
Interest income (174) (276) (280) (552) (681) (1,502) (1,967) (2,894)
Interest expense 661  443  588  646  659  754  667  638 
Amortization of debt discount and issuance costs —  993  967  947  963  776  714  716 
Net gain on extinguishment of debt —  —  —  —  —  (54,391) —  — 
Other (income) expense, net 64  (178) (41) (201) 279  1,673  (1,877) (46)
Income tax (benefit) expense 169  (155) 30  25  40  159  118  (223)
Adjusted EBITDA $ (6,414) $ (10,560) $ (5,446) $ (3,506) $ (7,765) $ (16,033) $ (9,055) $ (91)






































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Non-GAAP Consolidated Statements of Operations - Quarterly
(unaudited, in thousands, except per share amounts)
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Revenue $ 84,852  $ 85,026  $ 86,735  $ 97,717  $ 102,382  $ 102,518  $ 108,504  $ 119,321 
Cost of revenue (1)(2)
 33,833  36,017  36,872  43,153  48,494  50,803  50,372  51,325 
Gross profit 51,019  49,009  49,863  54,564  53,888  51,715  58,132  67,996 
Operating expenses:
Research and development(1)
 21,030  21,712  17,776  19,322  21,848  24,828  24,469  25,728 
Sales and marketing(1)(2)
 27,048  27,994  27,458  28,042  28,677  33,866  33,189  34,163 
General and administrative (1)(3)(7)
 15,846  16,863  17,564  18,934  21,103  19,914  20,315  20,099 
Total operating expenses 63,924  66,569  62,798  66,298  71,628  78,608  77,973  79,990 
Income (loss) from operations(1)(2)(3)(7)
 (12,905) (17,560) (12,935) (11,734) (17,740) (26,893) (19,841) (11,994)
Interest income 174  276  280  552  681  1,502  1,967  2,894 
Interest expense(4)
 (661) (443) (588) (646) (659) (754) (667) (638)
Other income (expense), net (64) 178  41  201  (279) (1,673) 1,877  46 
Income (loss) before income tax expense (benefit)(5)
 (13,456) (17,549) (13,202) (11,627) (17,997) (27,818) (16,664) (9,692)
Income tax expense (benefit)(6)
 169  (155) 30  25  40  159  118  (223)
Net income (loss)(1)(2)(3)(4)(5)(6)(7)
 $ (13,625) $ (17,394) $ (13,232) $ (11,652) $ (18,037) $ (27,977) $ (16,782) $ (9,469)
Net income (loss) per share attributable to common stockholders, basic and diluted $ (0.12) $ (0.15) $ (0.11) $ (0.10) $ (0.15) $ (0.23) $ (0.14) $ (0.08)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted 114,134  115,326  116,475  118,161  119,673  121,242  122,339  123,587 
(1) Excludes stock-based compensation. See GAAP to Non-GAAP reconciliations.
(2) Excludes amortization of acquired intangible assets. See GAAP to Non-GAAP reconciliations.
(3) Excludes acquisition-related and other expenses. See GAAP to Non-GAAP reconciliations.
(4) Excludes amortization of debt discount and issuance costs. See GAAP to Non-GAAP reconciliations.
(5) Excludes net gain on extinguishment of debt. See GAAP to Non-GAAP reconciliations.
(6) Excludes acquisition-related tax benefit. See GAAP to Non-GAAP reconciliations.
(7) Excludes executive transition costs. See GAAP to Non-GAAP reconciliations.




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Consolidated Balance Sheets - Quarterly
(unaudited, in thousands)
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Assets
Current assets:
Cash and cash equivalents $ 948,783  $ 687,986  $ 282,131  $ 166,068  $ 245,794  $ 62,510  $ 87,897  $ 143,391 
Marketable securities 147,793  241,744  361,290  361,795  393,950  419,905  445,048  374,581 
Accounts receivable, net 52,363  56,065  54,234  64,625  73,717  68,218  72,914  89,578 
Prepaid expenses and other current assets 18,495  22,309  22,230  32,160  23,616  29,037  31,321  28,933 
Total current assets 1,167,434  1,008,104  719,885  624,648  737,077  579,670  637,180  636,483 
Property and equipment, net 98,608  116,471  147,729  166,961  174,550  173,950  179,080  180,378 
Operating lease right-of-use assets, net 63,305  62,630  70,149  69,631  63,455  69,861  72,374  68,440 
Goodwill 635,645  635,646  635,635  636,805  637,570  670,186  670,158  670,185 
Intangible assets, net 116,379  113,215  107,905  102,596  97,287  93,978  88,482  82,900 
Marketable securities, non-current 29,930  173,227  429,489  528,911  394,464  284,951  186,066  165,105 
Other assets 26,993  27,578  28,142  29,468  30,020  60,199  73,258  92,622 
Total assets $ 2,138,294  $ 2,136,871  $ 2,138,934  $ 2,159,020  $ 2,134,423  $ 1,932,795  $ 1,906,598  $ 1,896,113 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 12,019  $ 10,202  $ 7,766  $ 9,257  $ 8,248  $ 10,011  $ 8,265  $ 4,786 
Accrued expenses 36,320  28,609  36,063  36,112  49,902  49,943  54,186  61,161 
Finance lease liabilities 10,910  14,773  18,675  21,125  26,766  28,088  27,807  28,954 
Operating lease liabilities 20,011  19,713  20,007  20,271  18,688  19,243  20,919  23,026 
Other current liabilities 19,036  29,735  24,758  45,107  36,569  33,705  33,422  34,394 
Total current liabilities 98,296  103,032  107,269  131,872  140,173  140,990  144,599  152,321 
Long-term debt, less current portion 930,291  931,385  932,305  933,205  934,121  703,375  704,042  704,710 
Finance lease liabilities, noncurrent 13,648  19,685  24,659  22,293  28,867  26,479  21,027  15,507 
Operating lease liabilities, noncurrent 47,505  47,177  54,066  55,114  52,334  60,657  62,750  61,341 
Other long-term liabilities 3,520  6,502  5,056  2,583  2,205  7,556  7,201  7,076 
Total liabilities 1,093,260  1,107,781  1,123,355  1,145,067  1,157,700  939,057  939,619  940,955 
Stockholders’ equity:
Class A and Class B common stock 2  2  2  2  2  2  2  2 
Additional paid-in capital 1,384,045  1,426,520  1,469,366  1,527,468  1,561,371  1,597,869  1,634,666  1,666,106 
Accumulated other comprehensive income (loss) (137) (261) (420) (2,627) (9,496) (12,542) (12,678) (9,286)
Accumulated deficit (338,876) (397,171) (453,369) (510,890) (575,154) (591,591) (655,011) (701,664)
Total stockholders’ equity 1,045,034  1,029,090  1,015,579  1,013,953  976,723  993,738  966,979  955,158 
Total liabilities and stockholders’ equity $ 2,138,294  $ 2,136,871  $ 2,138,934  $ 2,159,020  $ 2,134,423  $ 1,932,795  $ 1,906,598  $ 1,896,113 







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Consolidated Statements of Cash Flows – Quarterly
(unaudited, in thousands)

Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Cash flows from operating activities:
Net loss $ (50,683) $ (58,295) $ (56,198) $ (57,521) $ (64,264) $ (16,437) $ (63,420) $ (46,653)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense 6,419  6,927  7,364  8,089  9,850  10,736  10,662  11,371 
Amortization of intangible assets 5,363  5,257  5,309  5,309  5,309  5,309  5,496  5,582 
Non-cash lease expense 6,357  6,303  7,158  7,065  6,839  6,539  8,501  7,835 
Amortization of debt discount and issuance costs 332  937  966  950  964  775  715  715 
Amortization of deferred contract costs 1,411  1,535  1,621  1,727  1,851  2,138  2,031  2,896 
Stock-based compensation 30,838  33,426  36,636  39,588  40,022  34,978  39,378  31,418 
Provision for credit losses (420) 225  236  155  127  402  1,253  624 
Interest paid for finance lease (330) (405) (524) (495) (591) (649) (603) (538)
(Gain) loss on disposals of property and equipment 27  —  (204) (123) 268  586  —  — 
Amortization and accretion of discounts and premiums on investments —  —  —  —  957  894  771  515 
Impairment of operating ROU assets —  —  —  —  —  —  —  2,083 
Net gain on extinguishment of debt —  —  —  —  —  (54,391) —  — 
Other adjustments 64  749  683  729  128  (67) (353) 3,980 
Changes in operating assets and liabilities:
Accounts receivable (1,685) (3,927) 1,595  (10,546) (9,219) 5,097  (5,949) (17,288)
Prepaid expenses and other current assets (1,680) (3,814) (8) 725  (2,111) (2,701) (975) (971)
Other assets (2,952) (2,137) (2,231) (3,103) (2,451) (3,948) (13,505) (15,492)
Accounts payable 2,119  (1,957) (1,815) 1,799  (2,492) 3,336  (4,301) (1,267)
Accrued expenses (755) (3,080) 6,548  1,548  4,891  (3,729) 3,328  3,799 
Operating lease liabilities (6,365) (6,491) (6,879) (6,712) (6,557) (6,280) (7,830) (6,377)
Other liabilities 1,071  7,733  (2,948) 2,908  3,289  732  (2,833) 5,640 
Net cash used in operating activities (10,869) (17,014) (2,691) (7,908) (13,190) (16,680) (27,634) (12,128)
Cash flows from investing activities:
Purchases of marketable securities (64,331) (269,537) (443,701) (150,586) (148,193) (207,286) —  — 
Sales of marketable securities 12,497  —  51,739  2,291  2,301  159,552  —  65 
Maturities of marketable securities 25,503  31,750  15,600  45,232  240,547  127,333  72,857  94,303 
Business acquisitions, net of cash acquired —  —  —  (1,169) (775) (25,224) (1,746) 1,843 
Advance payment for purchase of property and equipment —  —  —  —  —  (29,310) (1,964) (10,923)
Purchases of property and equipment (8,079) (2,934) (20,254) (3,549) (4,664) (4,151) (2,631) (8,529)
Proceeds from sale of property and equipment —  —  291  297  —  241  125  126 
Capitalized internal-use software (989) (1,691) (7,619) (3,180) (3,810) (4,926) (5,120) (4,290)
Purchases of intangible assets —  (2,093) 1  —  —  —  —  — 
Net cash provided by (used in) investing activities (35,399) (244,505) (403,943) (110,664) 85,406  16,229  61,521  72,595 
Cash flows from financing activities:
Issuance of convertible note, net of issuance costs 930,775  —  —  —  —  —  —  — 
Payments of debt issuance costs (1,351) —  —  —  —  —  —  — 
Net cash paid for debt extinguishment —  —  —  —  —  (177,082) —  — 
Repayments of finance lease liabilities (2,951) (3,628) (3,985) (3,004) (4,882) (6,147) (7,076) (4,427)
Cash received for restricted stock sold in advance of vesting conditions —  —  —  —  10,655  —  —  — 
Cash paid for early sale of restricted shares —  —  —  —  (3,498) (3,539) (3,618) — 
Proceeds from employee stock purchase plan 3,071  1,493  1,430  2,075  2,406  1,571  1,749  (949)
Proceeds from exercise of vested stock options 2,719  2,886  3,489  3,532  3,048  1,721  555  364 
Net cash provided by (used in) financing activities 932,263  751  934  2,603  7,729  (183,476) (8,390) (5,012)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash (112) (29) (242) (94) (219) (100) (110) 39 
Net increase (decrease) in cash, cash equivalents, and restricted cash 885,883  (260,797) (405,942) (116,063) 79,726  (184,027) 25,387  55,494 
Cash, cash equivalents, and restricted cash at beginning of period 63,880  949,763  688,966  283,024  166,961  246,687  62,660  88,047 
Cash, cash equivalents, and restricted cash at end of period $ 949,763  $ 688,966  $ 283,024  $ 166,961  $ 246,687  $ 62,660  $ 88,047  $ 143,541 

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Free Cash Flow
(in thousands, unaudited)
Quarter ended
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Cash flow provided by (used in) operations $ (10,869) $ (17,014) $ (2,691) $ (7,908) $ (13,190) $ (16,680) $ (27,634) $ (12,128)
Capital expenditures(1)
 (12,019) (8,253) (31,567) (9,436) (13,356) (14,983) (14,702) (17,120)
Advance payment for purchase of property and equipment(2)
 —  —  —  —  —  (29,310) (1,964) (10,923)
Free Cash Flow $ (22,888) $ (25,267) $ (34,258) $ (17,344) $ (26,546) $ (60,973) $ (44,300) $ (40,171)
__________
(1)Capital expenditures are defined as cash used for purchases of property and equipment, net of proceeds from sale of property and equipment, and capitalized internal-use software and payments on finance lease obligations, as reflected in our statement of cash flows.
(2)Advance payments for purchase of property and equipment relate to prepayments made for our capital expenditures in advance of receiving the asset, as reflected in our statement of cash flows.