株探米国株
日本語 英語
エドガーで原本を確認する
0001517413false00015174132023-08-022023-08-02

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): August 2, 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 August 2, 2023, Fastly, Inc. (the "Company") announced its financial results for the quarter ended June 30, 2023 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 ended June 30, 2023 (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    
 




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: August 2, 2023   By:   /s/ Ronald W. Kisling
      Ronald W. Kisling
      Chief Financial Officer


EX-99.1 2 ex991-fslypressrelease63023.htm EX-99.1 Document

Exhibit 99.1
Fastly Announces Second Quarter 2023 Financial Results

•Record second quarter revenue of $122.8 million grew 20% year-over-year and exceeded the high end of our guidance range.
•Expanded market reach with new packaging and pricing for our core services, making it easy for companies of all sizes to try, buy, and use the powerful Fastly platform.
•Repurchased $236.4 million in aggregate principal amount of convertible debt for $195.7 million, reflecting a 17% discount to par, and resulted in a $36.8 million net gain.

SAN FRANCISCO, August 2, 2023 — Fastly, Inc. (NYSE: FSLY), one of the world’s fastest edge cloud platforms, today announced financial results for its second quarter ended June 30, 2023.
“I am pleased with the enormous progress the team has made and we’re proud of the revenue and operating performance of the second quarter, exceeding the top end of our guidance,” said Todd Nightingale, CEO of Fastly.
“We continue to execute on our strategic initiatives to simplify our go-to-market, increase our innovation velocity, and drive a new operational rigor and cost control throughout our business,” continued Nightingale. “All of this progress helps us drive our mission to make every user experience fast, safe, and engaging…fueling growth and delivering a strong financial result.”

Three months ended
June 30,		 Six months ended
June 30,
2023 2022 2023 2022
Revenue $ 122,831  $ 102,518  $ 240,395  $ 204,900 
Gross margin
GAAP gross margin 52.3  % 44.9  % 51.8  % 46.1  %
Non-GAAP gross margin 56.6  % 50.4  % 56.1  % 51.5  %
Operating loss
GAAP operating loss $ (49,827) $ (68,968) $ (97,102) $ (131,972)
Non-GAAP operating loss $ (7,785) $ (26,893) $ (21,859) $ (44,633)
Net loss per share
GAAP net loss per common share—basic and diluted $ (0.08) $ (0.14) $ (0.44) $ (0.67)
Non-GAAP net loss per common share—basic and diluted $ (0.04) $ (0.23) $ (0.12) $ (0.38)
Second Quarter 2023 Financial Summary
•Total revenue of $122.8 million, representing 20% year-over-year growth and 4% sequential increase.
•GAAP gross margin of 52.3%, compared to 44.9% in the second quarter of 2022. Non-GAAP gross margin of 56.6%, compared to 50.4% in the second quarter of 2022.
•GAAP net loss of $10.7 million, compared to $16.4 million in the second quarter of 2022. Non-GAAP net loss of $4.6 million, compared to $28.0 million in the second quarter of 2022.
•GAAP net loss per basic and diluted shares of $0.08 compared to $0.14 in the second quarter of 2022. Non-GAAP net loss per basic and diluted shares of $0.04, compared to $0.23 in the second quarter of 2022.
Key Metrics
•Trailing 12 month net retention rate (LTM NRR)1 remained flat at 116% in the second quarter compared to the first quarter.
•Dollar-Based Net Expansion Rate (DBNER)2 increased to 123% in the second quarter from 121% in the first quarter.
•Total customer count was 3,072 in the second quarter, down 28 from the first quarter; 551 were enterprise customers3 in the second quarter, up 11 from the first quarter.
•Average enterprise customer spend4 of $818 thousand in the second 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.




Second Quarter Business and Product Highlights
•Expanded market reach with new packaging and pricing for our core services, including flat-rate pricing and tiered packages, making it easy for companies of all sizes to try, buy, and use the powerful Fastly platform.
•Repurchased $236.4 million in aggregate principal amount of convertible debt for $195.7 million, reflecting a 17% discount to par, and resulted in a $36.8 million net gain.
•Peter Alexander joined Fastly as Chief Marketing Officer, bringing his experience from Check Point as CMO in addition to CMO of Harmonic and marketing roles at Cisco.
•Marshal Erwin joined Fastly as Chief Information Security Officer, bringing his experience from Mozilla as Chief Security Officer in addition to roles in the US intelligence community.
•Karen Greenstein was promoted to General Counsel, joining Fastly in 2019 and serving as interim GC in addition to legal roles in digital media and entertainment.
•Support for Mutual TLS two-way authentication released, providing a higher security posture requiring both the client and server to present trusted digital certificates, saving time and resources for our customers.
•Released Dynamic Backends, enabling customers to create new backend server definitions seamlessly.
•Introduced Core Cache API, a powerful set of API Primitives, enabling developers building on our Edge Compute platform to have access to our powerful, globally distributed cache network.
•Premier Edge Deployment of our Next-Gen WAF released, bringing Advanced Rate Limiting and the Site Flagged IP signal for the Next-Gen WAF to the edge.
•Limited availability of Certainly released, providing domain validated TLS certificates that are fully automated in our Fastly managed TLS services and enabling trusted identification of websites, improving security and reliability.

Third Quarter and Full Year 2023 Guidance

Q3 2023 Full Year 2023
Total Revenue (millions) $125 - $128 $500 - $510
Non-GAAP Operating Loss (millions) ($15.0) - ($13.0) ($49.0) - ($43.0)
Non-GAAP Net Loss per share (5)(6)
 ($0.09) - ($0.07) ($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, August 2, 2023.

Date: Wednesday, August 2, 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, August 2 through August 16, 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 one of 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, our operation and cost management, our ability to innovate, our go-to-market efforts 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023. 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 purchases of property and equipment, net of proceeds from sale of property and equipment, principal payments of finance lease liabilities, capitalized internal-use software costs and advance payments made related to capital expenditures. Management specifically identifies adjusting items in the reconciliation of GAAP to non-GAAP financial measures. Management considers non-GAAP free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in Fastly's business and strengthening its balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. The presentation of non-GAAP free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.

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 Under our new methodology, our number of customers are calculated based on the number of separate identifiable operating entities with which we have a billing relationship in good standing, from which we recognized revenue during the current quarter. Under our prior methodology, our number of customers are calculated based on the number of separate identifiable operating entities with which we have a billing relationship in good standing, from which we recognized revenue during the last month of the quarter. Under our new methodology, our enterprise customers are defined as those with annualized current quarter revenue in excess of $100,000. This is calculated by taking the revenue for each customer within the quarter and multiplying it by four. Under our prior methodology, our enterprise customers are defined as those with revenue in excess of $100,000 in the trailing 12-month period. Under our prior methodology, our total customer count was 2,965 in the second quarter, down 36 from the first quarter of 2023; 520 were enterprise customers in the second quarter, up 6 from the first quarter of 2023.
4 Under our new methodology, our average enterprise customer spend is calculated by taking the annualized current quarter 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. Under our prior methodology, our 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. Under our prior methodology, our average enterprise customer spend was $809 thousand in the second quarter, up 4% quarter-over-quarter.
5 Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2023.
6 Assumes weighted average basic shares outstanding of 129.9 million in Q3 2023 and 128.6 million for the full year 2023.





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

Three months ended
June 30,		 Six months ended
June 30,
2023 2022 2023 2022
Revenue $ 122,831  $ 102,518  $ 240,395  $ 204,900 
Cost of revenue(1)
 58,617  56,466  115,927  110,381 
Gross profit 64,214  46,052  124,468  94,519 
Operating expenses:
Research and development(1)
 37,421  38,717  74,852  79,154 
Sales and marketing(1)
 47,797  46,760  92,068  88,240 
General and administrative(1)
 28,823  29,543  54,650  59,097 
Total operating expenses 114,041  115,020  221,570  226,491 
Loss from operations (49,827) (68,968) (97,102) (131,972)
Net gain on extinguishment of debt 36,760  54,391  36,760  54,391 
Interest income 4,508  1,502  8,694  2,183 
Interest expense (1,232) (1,530) (2,445) (3,152)
Other income (expense) (803) (1,673) (1,053) (1,952)
Loss before income taxes (10,594) (16,278) (55,146) (80,502)
Income tax expense 110  159  245  199 
Net loss $ (10,704) $ (16,437) $ (55,391) $ (80,701)
Net income (loss) per share attributable to common stockholders, basic and diluted $ (0.08) $ (0.14) $ (0.44) $ (0.67)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted 127,863  121,242  126,648  120,295 

__________

(1)Includes stock-based compensation expense as follows:
Three months ended
June 30,		 Six months ended
June 30,
2023 2022 2023 2022
Cost of revenue $ 2,837  $ 3,188  $ 5,518  $ 6,134 
Research and development 12,205  13,889  23,686  32,478 
Sales and marketing 9,877  10,184  16,582  20,278 
General and administrative 12,073  7,717  19,357  16,110 
Total $ 36,992  $ 34,978  $ 65,143  $ 75,000 







Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, unaudited)
Three months ended
June 30,		 Six months ended
June 30,
2023 2022 2023 2022
Gross Profit
GAAP gross profit $ 64,214  $ 46,052  $ 124,468  $ 94,519 
Stock-based compensation 2,837  3,188  5,518  6,134 
Amortization of acquired intangible assets 2,475  2,475  4,950  4,950 
Non-GAAP gross profit $ 69,526  $ 51,715  $ 134,936  $ 105,603 
GAAP gross margin 52.3  % 44.9  % 51.8  % 46.1  %
Non-GAAP gross margin 56.6  % 50.4  % 56.1  % 51.5  %
Research and development
GAAP research and development $ 37,421  $ 38,717  $ 74,852  $ 79,154 
Stock-based compensation (12,205) (13,889) (23,686) (32,478)
Non-GAAP research and development $ 25,216  $ 24,828  $ 51,166  $ 46,676 
Sales and marketing
GAAP sales and marketing $ 47,797  $ 46,760  $ 92,068  $ 88,240 
Stock-based compensation (9,877) (10,184) (16,582) (20,278)
Amortization of acquired intangible assets (2,575) (2,710) (5,150) (5,419)
Non-GAAP sales and marketing $ 35,345  $ 33,866  $ 70,336  $ 62,543 
General and administrative
GAAP general and administrative $ 28,823  $ 29,543  $ 54,650  $ 59,097 
Stock-based compensation (12,073) (7,717) (19,357) (16,110)
Acquisition-related expenses —  (1,912) —  (1,970)
Non-GAAP general and administrative $ 16,750  $ 19,914  $ 35,293  $ 41,017 
Operating loss
GAAP operating loss $ (49,827) $ (68,968) $ (97,102) $ (131,972)
Stock-based compensation 36,992  34,978  65,143  75,000 
Amortization of acquired intangible assets 5,050  5,185  10,100  10,369 
Acquisition-related expenses —  1,912  —  1,970 
Non-GAAP operating loss $ (7,785) $ (26,893) $ (21,859) $ (44,633)
Net loss
GAAP net loss $ (10,704) $ (16,437) $ (55,391) $ (80,701)
Stock-based compensation 36,992  34,978  65,143  75,000 
Amortization of acquired intangible assets 5,050  5,185  10,100  10,369 
Acquisition-related expenses —  1,912  —  1,970 
Net gain on extinguishment of debt (36,760) (54,391) (36,760) (54,391)
Amortization of debt discount and issuance costs 803  776  1,519  1,739 
Non-GAAP loss $ (4,619) $ (27,977) $ (15,389) $ (46,014)
Non-GAAP net loss per common share—basic and diluted $ (0.04) $ (0.23) $ (0.12) $ (0.38)
Weighted average basic and diluted common shares 127,863 121,242 126,648 120,295




Three months ended
June 30,		 Six months ended
June 30,
2023 2022 2023 2022
Adjusted EBITDA
GAAP net loss $ (10,704) $ (16,437) $ (55,391) $ (80,701)
Stock-based compensation 36,992  34,978  65,143  75,000 
Depreciation and other amortization 13,030  10,860  25,210  20,835 
Amortization of acquired intangible assets 5,050  5,185  10,100  10,369 
Acquisition-related expenses —  1,912  —  1,970 
Interest income (4,508) (1,502) (8,694) (2,183)
Interest expense 429  754  926  1,413 
Amortization of debt discount and issuance costs 803  776  1,519  1,739 
Net gain on extinguishment of debt (36,760) (54,391) (36,760) (54,391)
Other expense 803  1,673  1,053  1,952 
Income tax expense 110  159  245  199 
Adjusted EBITDA $ 5,245  $ (16,033) $ 3,351  $ (23,798)




Condensed Consolidated Balance Sheets
(in thousands)
As of
June 30, 2023		 As of
December 31, 2022
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 273,742  $ 143,391 
Marketable securities, current 123,605  374,581 
Accounts receivable, net of allowance for credit losses 78,295  89,578 
Prepaid expenses and other current assets 29,500  28,933 
Total current assets 505,142  636,483 
Property and equipment, net 179,045  180,378 
Operating lease right-of-use assets, net 56,733  68,440 
Goodwill 670,356  670,185 
Intangible assets, net 72,550  82,900 
Marketable securities, non-current 78,042  165,105 
Other assets 95,550  92,622 
Total assets $ 1,657,418  $ 1,896,113 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 5,561  $ 4,786 
Accrued expenses 47,001  61,161 
Finance lease liabilities, current 22,233  28,954 
Operating lease liabilities, current 20,575  23,026 
Other current liabilities 36,234  34,394 
Total current liabilities 131,604  152,321 
Long-term debt 472,369  704,710 
Finance lease liabilities, non-current 7,026  15,507 
Operating lease liabilities, non-current 51,448  61,341 
Other long-term liabilities 7,217  7,076 
Total liabilities 669,664  940,955 
Stockholders’ equity:
Common stock 2  2 
Additional paid-in capital 1,747,959  1,666,106 
Accumulated other comprehensive loss (3,152) (9,286)
Accumulated deficit (757,055) (701,664)
Total stockholders’ equity 987,754  955,158 
Total liabilities and stockholders’ equity $ 1,657,418  $ 1,896,113 







Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
Three months ended
June 30,		 Six months ended
June 30,
2023 2022 2023 2022
Cash flows from operating activities:
Net loss $ (10,704) $ (16,437) $ (55,391) $ (80,701)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense 12,920  10,736  24,960  20,586 
Amortization of intangible assets 5,175  5,309  10,350  10,618 
Non-cash lease expense 5,648  5,608  11,763  11,522 
Amortization of debt discount and issuance costs 803  775  1,519  1,739 
Amortization of deferred contract costs 3,746  2,138  7,171  3,989 
Stock-based compensation 36,992  34,978  65,143  75,000 
Provision for credit losses 567  402  1,100  529 
Loss on disposals of property and equipment 296  586  547  854 
Amortization and accretion of discounts and premiums on investments 298  894  747  1,851 
Impairment of operating lease right-of-use assets 187  —  187  — 
Net gain on extinguishment of debt (36,760) (54,391) (36,760) (54,391)
Other adjustments (85) (67) (328) 61 
Changes in operating assets and liabilities:
Accounts receivable 6,482  5,097  10,183  (4,122)
Prepaid expenses and other current assets 217  (2,701) (417) (4,812)
Other assets (4,771) (3,948) (11,983) (6,399)
Accounts payable 1,119  3,336  944  844 
Accrued expenses 234  (3,729) (6,593) 1,162 
Operating lease liabilities (6,682) (5,349) (12,432) (10,981)
Other liabilities 9,308  83  5,419  2,781 
Net cash provided by (used in) operating activities 24,990  (16,680) 16,129  (29,870)
Cash flows from investing activities:
Purchases of marketable securities —  (207,286) —  (355,479)
Sales of marketable securities 774  159,552  774  161,853 
Maturities of marketable securities 114,884  127,333  342,095  367,880 
Business acquisitions, net of cash acquired —  (25,224) —  (25,999)
Advance payment for purchase of property and equipment —  (29,310) —  (29,310)
Purchases of property and equipment (4,464) (4,151) (7,958) (8,815)
Proceeds from sale of property and equipment 14  241  36  241 
Capitalized internal-use software (6,230) (4,926) (10,439) (8,736)
Net cash provided by investing activities 104,978  16,229  324,508  101,635 
Cash flows from financing activities:
Cash paid for debt extinguishment (196,934) (177,082) (196,934) (177,082)
Repayments of finance lease liabilities (6,557) (6,147) (15,202) (11,029)
Cash received for restricted stock sold in advance of vesting conditions —  —  —  10,655 
Cash paid for early sale of restricted shares —  (3,539) —  (7,037)
Payment of deferred consideration for business acquisitions (4,393) —  (4,393) — 
Proceeds from exercise of vested stock options 535  1,721  871  4,769 
Proceeds from employee stock purchase plan 2,191  1,571  4,787  3,977 
Net cash used in financing activities (205,158) (183,476) (210,871) (175,747)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash 469  (100) 585  (319)
Net increase in cash, cash equivalents, and restricted cash (74,721) (184,027) 130,351  (104,301)
Cash, cash equivalents, and restricted cash at beginning of period 348,613  246,687  143,541  166,961 
Cash, cash equivalents, and restricted cash at end of period 273,892  62,660  273,892  62,660 
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents 273,742  62,510  273,742  62,510 
Restricted cash, current 150  150  150  150 
Total cash, cash equivalents, and restricted cash $ 273,892  $ 62,660  $ 273,892  $ 62,660 






Free Cash Flow
(in thousands, unaudited)
Three months ended
June 30,		 Six months ended
June 30,
2023 2022 2023 2022
Cash flow provided by (used in) operations $ 24,990  $ (16,680) $ 16,129  $ (29,870)
Capital expenditures(1)
 (17,237) (14,983) (33,563) (28,339)
Advance payment for purchase of property and equipment(2)
 —  (29,310) —  (29,310)
Free Cash Flow $ 7,753  $ (60,973) $ (17,434) $ (87,519)
__________
(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)As reflected in our statement of cash flows. In the six months ended June 30, 2023, we received $1.6 million of capital equipment that was prepaid prior to the current quarter.













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

Media Contact:
press@fastly.com

Source: Fastly, Inc.

EX-99.2 3 ex992-investorsupplement63.htm EX-99.2 Document
fastlylogo-redxjpega.jpg

Second Quarter 2023 Investor Supplement
Product Developments
•Support for Mutual TLS two-way authentication released providing a higher security posture, requiring both the client and server to present trusted digital certificates, saving time and resources for our customers.
•Released Dynamic Backends, enabling customers to create new backend server definitions seamlessly.
•Introduced Core Cache API, enabling developers building on our Edge Compute platform to have access to our powerful, globally distributed cache network.
•Premier Edge Deployment of our Next-Gen WAF released, bringing Advanced Rate Limiting and the Site Flagged IP signal for the Next-Gen WAF to the edge.
•Limited availability of Certainly released, providing domain validated TLS certificates that are fully automated in our Fastly managed TLS services and enabling trusted identification of websites, improving security and reliability.
Customer and Partner Highlights
•Expanded market reach with new packaging and pricing for our core services, including flat-rate pricing and tiered packages, making it easy for companies of all sizes to try, buy, and use the powerful Fastly platform.
•Bonnier News, Sweden’s leading news provider and the Nordic region’s largest media conglomerate, selected Fastly’s full solution suite over an incumbent competitor.
•Tango, a leading global live streaming platform that empowers content creation, social connections, and fan monetization in real-time selected Fastly’s network services over an incumbent cloud provider.
•Bugcrowd, a multi-solution crowdsourced cybersecurity platform, selected Fastly’s delivery and security, including our edge rate limiting functionality for DDoS mitigation, over an incumbent competitor.
•Rockler, a world-renowned woodworking & hardware branded retailer selected Fastly’s delivery and NGWAF to improve website speed and security.


Calculations of Key and Other Selected Metrics – Quarterly (unaudited)
Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Total Customer Count(3)
 2,848  2,929  2,965  3,025  3,039  3,062  3,100  3,072 
Enterprise Customer Count(3)
 457  467  488  499  511  533  540  551 
Average Enterprise Customer Spend (in thousands)(7)
 $ 676  $ 751  $ 758  $ 742  $ 771  $ 822  $ 795  $ 818 
Enterprise Customer Revenue % 89  % 90  % 90  % 90  % 91  % 92  % 91  % 92  %
Total Customer Count (prior methodology)(3)
 2,748  2,804  2,880  2,894  2,925  2,958  3,001  2,965 
Enterprise Customer Count (prior methodology)(3)
 430  445  457  471  482  493  514  520 
Average Enterprise Customer Spend (in thousands; prior methodology)(7)
 $ 698  $ 704  $ 722  $ 730  $ 759  $ 782  $ 778  $ 809 
Enterprise Customer Revenue % (prior methodology) 88  % 88  % 89  % 88  % 89  % 89  % 89  % 90  %
Net Retention Rate (NRR) Quarter(8)
 112  % 107  % 114  % 128  % 115  % 111  % 105  % 106  %
Net Retention Rate (NRR) LTM(1)
 114  % 118  % 115  % 117  % 118  % 119  % 116  % 116  %
Dollar-Based Net Expansion Rate (DBNER)(2)
 118  % 121  % 118  % 120  % 122  % 123  % 121  % 123  %
Annual Revenue Retention Rate (ARR)(9)
 —  % 99.2  % —  % —  % —  % 99.2  % —  % —  %
Global Network Capacity 167 TB/sec 184 TB/sec 198 TB/sec 215 TB/sec 233 TB/sec 252 TB/sec 265 TB/sec 277 TB/sec
Countries 31 32 34 34 35 35 35 35
Markets 68 71 75 78 79 79 79 79
*Note: The reporting of the dual key metrics with respect to Total Customer and Enterprise Customer counts and associated key metrics will be disclosed through the fourth quarter of fiscal year 2023, ending December 31, 2023.
Exhibit 99.2
Corporate Highlights
•Expanded market reach with new packaging and pricing for our core services, including flat-rate pricing and tiered packages, making it easy for companies of all sizes to try, buy, and use the powerful Fastly platform.
•Repurchased $236.4 million in aggregate principal amount of convertible debt for $195.7 million, reflecting a 17% discount to par, and resulted in a $36.8 million net gain.
•Peter Alexander joined Fastly as CMO, bringing his experience from Check Point as CMO in addition to CMO of Harmonic and marketing roles at Cisco.
•Marshal Erwin joined Fastly as CISO, bringing his experience from Mozilla as Chief Security Officer in addition to roles in the US intelligence community.
•Karen Greenstein was promoted to General Counsel, joining Fastly in 2019 and serving as interim GC in addition to legal roles in digital media and entertainment.
Key Metrics Highlights
•Trailing 12 month net retention rate (LTM NRR)1 remained flat at 116% in the second quarter compared to the first quarter.
•Dollar-Based Net Expansion Rate (DBNER)2 increased to 123% in the second quarter from 121% in the first quarter.
•Total customer count was 3,072 in the second quarter, down 28 from the first quarter; 551 were enterprise customers3 in the second quarter, up 11 from the first quarter.
•Average enterprise customer spend7 of $818 thousand in the second quarter, up 3% quarter-over-quarter.
Third Quarter and Full Year 2023 Guidance:
Q3 2023 Full Year 2023
Total Revenue (millions) $125 - $128 $500 - $510
Non-GAAP Operating Loss (millions)(4)
 ($15.0) - ($13.0) ($49.0) - ($43.0)
Non-GAAP Net Loss per share (5) (6)
 ($0.09) - ($0.07) ($0.27) - ($0.21)





fastlylogo-redxjpega.jpg
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.Under our new methodology, our number of customers are calculated based on the number of separate identifiable operating entities with which we have a billing relationship in good standing, from which we recognized revenue during the current quarter. Under our prior methodology, our number of customers are calculated based on the number of separate identifiable operating entities with which we have a billing relationship in good standing, from which we recognized revenue during the last month of the quarter. Under our new methodology, our enterprise customers are defined as those with annualized current quarter revenue in excess of $100,000. This is calculated by taking the revenue for each customer within the quarter and multiplying it by four. Under our prior methodology, our enterprise customers are defined as those with revenue in excess of $100,000 in the trailing 12-month period. Under our prior methodology, our total customer count was 2,965 in the second quarter, down 36 from the first quarter of 2023; 520 were enterprise customers in the second quarter, up 6 from the first quarter of 2023.
4.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.
5.Assumes weighted average basic shares outstanding of 129.9 million in Q3 2023 and 128.6 million for the full year 2023.
6.Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2023.
7.Under our new methodology, our average enterprise customer spend is calculated by taking the annualized current quarter 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. Under our prior methodology, our 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. Under our prior methodology, our average enterprise customer spend was $809 thousand in the second quarter, up 4% quarter-over-quarter.
8.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.
9.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.












fastlylogo-redxjpega.jpg
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; the performance of our products; the growth and success of Fastly's partner program; 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 Annual Report on Form 10-K for the year ended December 31, 2022, and Fastly’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, 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.

fastlylogo-redxjpega.jpg
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 purchases of property and equipment, net of proceeds from sale of property and equipment, principal payments of finance lease liabilities, capitalized internal-use software costs and advance payments made related to capital expenditures. Management specifically identifies adjusting items in the reconciliation of GAAP to non-GAAP financial measures. Management considers non-GAAP free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in Fastly's business and strengthening its balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. The presentation of non-GAAP free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.
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.


fastlylogo-redxjpega.jpg
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.









fastlylogo-redxjpega.jpg
Consolidated Statements of Operations – Quarterly
(unaudited, in thousands, except per share amounts)

Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Revenue $ 86,735  $ 97,717  $ 102,382  $ 102,518  $ 108,504  $ 119,321  $ 117,564  $ 122,831 
Cost of revenue(1)
 41,244  47,944  53,915  56,466  55,825  56,738  57,310  58,617 
Gross profit 45,491  49,773  48,467  46,052  52,679  62,583  60,254  64,214 
Operating expenses:
Research and development(1)
 32,528  34,997  40,437  38,717  38,957  37,197  37,431  37,421 
Sales and marketing(1)
 39,288  42,151  41,480  46,760  47,006  44,623  44,271  47,797 
General and administrative (1)
 28,609  29,281  29,554  29,543  32,481  29,225  25,827  28,823 
Total operating expenses 100,425  106,429  111,471  115,020  118,444  111,045  107,529  114,041 
Loss from operations (54,934) (56,656) (63,004) (68,968) (65,765) (48,462) (47,275) (49,827)
Net gain on extinguishment of debt —  —  —  54,391  —  —  —  36,760 
Interest income 280  552  681  1,502  1,967  2,894  4,186  4,508 
Interest expense (1,555) (1,593) (1,622) (1,530) (1,381) (1,354) (1,213) (1,232)
Other income (expense) 41  201  (279) (1,673) 1,877  46  (250) (803)
Loss before income taxes (56,168) (57,496) (64,224) (16,278) (63,302) (46,876) (44,552) (10,594)
Income tax expense (benefit) 30  25  40  159  118  (223) 135  110 
Net loss $ (56,198) $ (57,521) $ (64,264) $ (16,437) $ (63,420) $ (46,653) $ (44,687) $ (10,704)
Net loss per share attributable to common stockholders, basic and diluted $ (0.48) $ (0.49) $ (0.54) $ (0.14) $ (0.52) $ (0.38) $ (0.36) $ (0.08)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 116,475  118,161  119,673  121,242  122,339  123,587  125,418  127,863 
__________
(1)Includes stock-based compensation expense as follows:
Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Cost of revenue $ 1,897  $ 2,316  $ 2,946  $ 3,188  $ 2,978  $ 2,938  $ 2,681  $ 2,837 
Research and development 14,752  15,675  18,589  13,889  14,488  11,469  11,481  12,205 
Sales and marketing 9,121  11,399  10,094  10,184  10,920  7,885  6,705  9,877 
General and administrative 10,866  10,198  8,393  7,717  10,992  9,126  7,284  12,073 
Total $ 36,636  $ 39,588  $ 40,022  $ 34,978  $ 39,378  $ 31,418  $ 28,151  $ 36,992 












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

Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Gross Profit
GAAP gross Profit $ 45,491  $ 49,773  $ 48,467  $ 46,052  $ 52,679  $ 62,583  $ 60,254  $ 64,214 
Stock-based compensation 1,897  2,316  2,946  3,188  2,978  2,938  2,681  2,837 
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 49,863  54,564  53,888  51,715  58,132  67,996  65,410  69,526 
GAAP gross margin 52.4  % 50.9  % 47.3  % 44.9  % 48.6  % 52.4  % 51.3  % 52.3  %
Non-GAAP gross margin 57.5  % 55.8  % 52.6  % 50.4  % 53.6  % 57.0  % 55.6  % 56.6  %
Research and development
GAAP research and development 32,528  34,997  40,437  38,717  38,957  37,197  37,431  37,421 
Stock-based compensation (14,752) (15,675) (18,589) (13,889) (14,488) (11,469) (11,481) (12,205)
Non-GAAP research and development 17,776  19,322  21,848  24,828  24,469  25,728  25,950  25,216 
Sales and marketing
GAAP sales and marketing 39,288  42,151  41,480  46,760  47,006  44,623  44,271  47,797 
Stock-based compensation (9,121) (11,399) (10,094) (10,184) (10,920) (7,885) (6,705) (9,877)
Amortization of acquired intangible assets (2,709) (2,710) (2,709) (2,710) (2,897) (2,575) (2,575) (2,575)
Non-GAAP sales and marketing 27,458  28,042  28,677  33,866  33,189  34,163  34,991  35,345 
General and administrative
GAAP general and administrative 28,609  29,281  29,554  29,543  32,481  29,225  25,827  28,823 
Stock-based compensation (10,866) (10,198) (8,393) (7,717) (7,959) (9,126) (7,284) (12,073)
Executive transition costs —  —  —  —  (4,207) —  —  — 
Acquisition-related expenses (179) (149) (58) (1,912) —  —  —  — 
Non-GAAP general and administrative 17,564  18,934  21,103  19,914  20,315  20,099  18,543  16,750 
Operating loss
GAAP operating loss (54,934) (56,656) (63,004) (68,968) (65,765) (48,462) (47,275) (49,827)
Stock-based compensation 36,636  39,588  40,022  34,978  36,345  31,418  28,151  36,992 
Executive transition costs —  —  —  —  4,207  —  —  — 
Amortization of acquired intangible assets 5,184  5,185  5,184  5,185  5,372  5,050  5,050  5,050 
Acquisition-related expenses 179  149  58  1,912  —  —  —  — 
Non-GAAP operating loss (12,935) (11,734) (17,740) (26,893) (19,841) (11,994) (14,074) (7,785)
Net loss
GAAP net loss (56,198) (57,521) (64,264) (16,437) (63,420) (46,653) (44,687) (10,704)
Stock-based compensation 36,636  39,588  40,022  34,978  36,345  31,418  28,151  36,992 
Executive transition costs —  —  —  —  4,207  —  —  — 
Amortization of acquired intangible assets 5,184  5,185  5,184  5,185  5,372  5,050  5,050  5,050 
Acquisition-related expenses 179  149  58  1,912  —  —  —  — 
Net gain on extinguishment of debt —  —  —  (54,391) —  —  —  (36,760)
Amortization of debt issuance costs 967  947  963  776  714  716  716  803 
Non-GAAP net loss $ (13,232) $ (11,652) $ (18,037) $ (27,977) $ (16,782) $ (9,469) $ (10,770) $ (4,619)
GAAP net loss per common share—basic and diluted $ (0.48) $ (0.49) $ (0.54) $ (0.14) $ (0.52) $ (0.38) $ (0.36) $ (0.08)
Non-GAAP net loss per common share—basic and diluted $ (0.11) $ (0.10) $ (0.15) $ (0.23) $ (0.14) $ (0.08) $ (0.09) $ (0.04)
Weighted average basic common shares 116,475  118,161  119,673  121,242  122,339  123,587  125,418  127,863 


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

Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Adjusted EBITDA
GAAP net loss $ (56,198) $ (57,521) $ (64,264) $ (16,437) $ (63,420) $ (46,653) $ (44,687) $ (10,704)
Stock-based compensation 36,636  39,588  40,022  34,978  36,345  31,418  28,151  36,992 
Executive transition costs —  —  —  —  4,207  —  —  — 
Depreciation and other amortization 7,489  8,228  9,975  10,860  10,786  11,903  12,179  13,030 
Amortization of acquired intangible assets 5,184  5,185  5,184  5,185  5,372  5,050  5,050  5,050 
Acquisition-related expenses 179  149  58  1,912  —  —  —  — 
Interest income (280) (552) (681) (1,502) (1,967) (2,894) (4,186) (4,508)
Interest expense 588  646  —  754  667  638  497  429 
Amortization of debt discount and issuance costs 967  947  963  776  714  716  716  803 
Net gain on extinguishment of debt —  —  —  (54,391) —  —  —  (36,760)
Other (income) expense, net (41) (201) 279  1,673  (1,877) (46) 250  803 
Income tax (benefit) expense 30  25  40  159  118  (223) 135  110 
Adjusted EBITDA $ (5,446) $ (3,506) $ (7,765) $ (16,033) $ (9,055) $ (91) $ (1,895) $ 5,245 





































fastlylogo-redxjpega.jpg

Non-GAAP Consolidated Statements of Operations - Quarterly
(unaudited, in thousands, except per share amounts)
Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Revenue $ 86,735  $ 97,717  $ 102,382  $ 102,518  $ 108,504  $ 119,321  $ 117,564  $ 122,831 
Cost of revenue (1)(2)
 36,872  43,153  48,494  50,803  50,372  51,325  52,154  53,305 
Gross profit 49,863  54,564  53,888  51,715  58,132  67,996  65,410  69,526 
Operating expenses:
Research and development(1)
 17,776  19,322  21,848  24,828  24,469  25,728  25,950  25,216 
Sales and marketing(1)(2)
 27,458  28,042  28,677  33,866  33,189  34,163  34,991  35,345 
General and administrative (1)(3)(7)
 17,564  18,934  21,103  19,914  20,315  20,099  18,543  16,750 
Total operating expenses 62,798  66,298  71,628  78,608  77,973  79,990  79,484  77,311 
Loss from operations(1)(2)(3)(7)
 (12,935) (11,734) (17,740) (26,893) (19,841) (11,994) (14,074) (7,785)
Interest income 280  552  681  1,502  1,967  2,894  4,186  4,508 
Interest expense(4)
 (588) (646) (659) (754) (667) (638) (497) (429)
Other income (expense), net 41  201  (279) (1,673) 1,877  46  (250) (803)
Loss before income tax expense (benefit)(5)
 (13,202) (11,627) (17,997) (27,818) (16,664) (9,692) (10,635) (4,509)
Income tax expense (benefit)(6)
 30  25  40  159  118  (223) 135  110 
Net loss(1)(2)(3)(4)(5)(6)(7)
 $ (13,232) $ (11,652) $ (18,037) $ (27,977) $ (16,782) $ (9,469) $ (10,770) $ (4,619)
Net loss per share attributable to common stockholders, basic and diluted $ (0.11) $ (0.10) $ (0.15) $ (0.23) $ (0.14) $ (0.08) $ (0.09) $ (0.04)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 116,475  118,161  119,673  121,242  122,339  123,587  125,418  127,863 
(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.




fastlylogo-redxjpega.jpg
Consolidated Balance Sheets - Quarterly
(unaudited, in thousands)
Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Assets
Current assets:
Cash and cash equivalents $ 282,131  $ 166,068  $ 245,794  $ 62,510  $ 87,897  $ 143,391  $ 348,463  $ 273,742 
Marketable securities 361,290  361,795  393,950  419,905  445,048  374,581  198,116  123,605 
Accounts receivable, net 54,234  64,625  73,717  68,218  72,914  89,578  85,344  78,295 
Prepaid expenses and other current assets 22,230  32,160  23,616  29,037  31,321  28,933  29,717  29,500 
Total current assets 719,885  624,648  737,077  579,670  637,180  636,483  661,640  505,142 
Property and equipment, net 147,729  166,961  174,550  173,950  179,080  180,378  179,922  179,045 
Operating lease right-of-use assets, net 70,149  69,631  63,455  69,861  72,374  68,440  60,615  56,733 
Goodwill 635,635  636,805  637,570  670,186  670,158  670,185  670,192  670,356 
Intangible assets, net 107,905  102,596  97,287  93,978  88,482  82,900  77,725  72,550 
Marketable securities, non-current 429,489  528,911  394,464  284,951  186,066  165,105  117,518  78,042 
Other assets 28,142  29,468  30,020  60,199  73,258  92,622  94,798  95,550 
Total assets $ 2,138,934  $ 2,159,020  $ 2,134,423  $ 1,932,795  $ 1,906,598  $ 1,896,113  $ 1,862,410  $ 1,657,418 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 7,766  $ 9,257  $ 8,248  $ 10,011  $ 8,265  $ 4,786  $ 4,668  $ 5,561 
Accrued expenses 36,063  36,112  49,902  49,943  54,186  61,161  42,311  47,001 
Finance lease liabilities 18,675  21,125  26,766  28,088  27,807  28,954  24,763  22,233 
Operating lease liabilities 20,007  20,271  18,688  19,243  20,919  23,026  20,516  20,575 
Other current liabilities 24,758  45,107  36,569  33,705  33,422  34,394  32,942  36,234 
Total current liabilities 107,269  131,872  140,173  140,990  144,599  152,321  125,200  131,604 
Long-term debt, less current portion 932,305  933,205  934,121  703,375  704,042  704,710  705,378  472,369 
Finance lease liabilities, noncurrent 24,659  22,293  28,867  26,479  21,027  15,507  10,858  7,026 
Operating lease liabilities, noncurrent 54,066  55,114  52,334  60,657  62,750  61,341  56,275  51,448 
Other long-term liabilities 5,056  2,583  2,205  7,556  7,201  7,076  6,144  7,217 
Total liabilities 1,123,355  1,145,067  1,157,700  939,057  939,619  940,955  903,855  669,664 
Stockholders’ equity:
Class A and Class B common stock 2  2  2  2  2  2  2  2 
Additional paid-in capital 1,469,366  1,527,468  1,561,371  1,597,869  1,634,666  1,666,106  1,710,498  1,747,959 
Accumulated other comprehensive loss (420) (2,627) (9,496) (12,542) (12,678) (9,286) (5,594) (3,152)
Accumulated deficit (453,369) (510,890) (575,154) (591,591) (655,011) (701,664) (746,351) (757,055)
Total stockholders’ equity 1,015,579  1,013,953  976,723  993,738  966,979  955,158  958,555  987,754 
Total liabilities and stockholders’ equity $ 2,138,934  $ 2,159,020  $ 2,134,423  $ 1,932,795  $ 1,906,598  $ 1,896,113  $ 1,862,410  $ 1,657,418 







fastlylogo-redxjpega.jpg
Consolidated Statements of Cash Flows – Quarterly
(unaudited, in thousands)

Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Cash flows from operating activities:
Net loss $ (56,198) $ (57,521) $ (64,264) $ (16,437) $ (63,420) $ (46,653) $ (44,687) $ (10,704)
Adjustments to reconcile net loss to net cash used in operating activities: —  — 
Depreciation expense 7,364  8,089  9,850  10,736  10,662  11,371  12,040  12,920 
Amortization of intangible assets 5,309  5,309  5,309  5,309  5,496  5,582  5,175  5,175 
Non-cash lease expense 6,176  6,085  5,914  5,608  8,133  5,793  6,115  5,648 
Amortization of debt discount and issuance costs 966  950  964  775  715  715  716  803 
Amortization of deferred contract costs 1,621  1,727  1,851  2,138  2,031  2,896  3,425  3,746 
Stock-based compensation 36,636  39,588  40,022  34,978  39,378  31,418  28,151  36,992 
Provision for credit losses 236  155  127  402  1,253  624  533  567 
(Gain) loss on disposals of property and equipment (204) (123) 268  586  —  —  251  296 
Amortization and accretion of discounts and premiums on investments —  —  957  894  771  515  449  298 
Impairment of operating lease right-of-use assets —  —  —  —  —  2,083  —  187 
Net gain on extinguishment of debt —  —  —  (54,391) —  —  —  (36,760)
Other adjustments 683  729  128  (67) (353) 3,980  (243) (85)
Changes in operating assets and liabilities: —  — 
Accounts receivable 1,595  (10,546) (9,219) 5,097  (5,949) (17,288) 3,701  6,482 
Prepaid expenses and other current assets (8) 725  (2,111) (2,701) (975) (971) (634) 217 
Other assets (2,231) (3,103) (2,451) (3,948) (13,505) (15,492) (7,212) (4,771)
Accounts payable (1,815) 1,799  (2,492) 3,336  (4,301) (1,267) (175) 1,119 
Accrued expenses 6,548  1,548  4,891  (3,729) 3,328  3,799  (6,827) 234 
Operating lease liabilities (5,897) (5,732) (5,632) (5,349) (7,462) (4,335) (5,750) (6,682)
Other liabilities (3,472) 2,413  2,698  83  (3,436) 5,102  (3,889) 9,308 
Net cash provided by (used in) operating activities (2,691) (7,908) (13,190) (16,680) (27,634) (12,128) (8,861) 24,990 
Cash flows from investing activities:
Purchases of marketable securities (443,701) (150,586) (148,193) (207,286) —  —  —  — 
Sales of marketable securities 51,739  2,291  2,301  159,552  —  65  —  774 
Maturities of marketable securities 15,600  45,232  240,547  127,333  72,857  94,303  227,211  114,884 
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(1)
 (20,254) (3,549) (2,387) (6,428) (2,631) (8,529) (3,494) (4,464)
Proceeds from sale of property and equipment 291  297  —  241  125  126  22  14 
Capitalized internal-use software (7,619) (3,180) (3,810) (4,926) (5,120) (4,290) (4,209) (6,230)
Purchases of intangible assets 1  —  —  —  —  —  —  — 
Net cash provided by (used in) investing activities(1)
 (403,943) (110,664) 87,683  13,952  61,521  72,595  219,530  104,978 
Cash flows from financing activities:
Cash paid for debt extinguishment —  —  —  (177,082) —  —  —  (196,934)
Repayments of finance lease liabilities(1)
 (3,985) (3,004) (7,159) (3,870) (7,076) (4,427) (8,645) (6,557)
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) —  —  — 
Payment of deferred consideration for business acquisitions —  —  —  —  —  —  —  (4,393)
Proceeds from exercise of vested stock options 3,489  3,532  3,048  1,721  555  364  336  535 
Proceeds from employee stock purchase plan 1,430  2,075  2,406  1,571  1,749  (949) 2,596  2,191 
Net cash provided by (used in) financing activities(1)
 934  2,603  5,452  (181,199) (8,390) (5,012) (5,713) (205,158)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash (242) (94) (219) (100) (110) 39  116  469 
Net increase (decrease) in cash, cash equivalents, and restricted cash (405,942) (116,063) 79,726  (184,027) 25,387  55,494  205,072  (74,721)
Cash, cash equivalents, and restricted cash at beginning of period 688,966  283,024  166,961  246,687  62,660  88,047  143,541  348,613 
Cash, cash equivalents, and restricted cash at end of period $ 283,024  $ 166,961  $ 246,687  $ 62,660  $ 88,047  $ 143,541  $ 348,613  $ 273,892 
__________
(1)Amounts disclosed for Q1 2022 and Q2 2022 have been revised from the amounts disclosed in our previous investor supplements to match amounts reported in the applicable Quarterly Reports on Form 10-Q.

fastlylogo-redxjpega.jpg
Free Cash Flow
(in thousands, unaudited)
Quarter ended
Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Cash flow provided by (used in) operations $ (2,691) $ (7,908) $ (13,190) $ (16,680) $ (27,634) $ (12,128) $ (8,861) $ 24,990 
Capital expenditures(1):
Purchases of property and equipment (20,254) (3,549) (2,387) (6,428) (2,631) (8,529) (3,494) (4,464)
Proceeds from sale of property and equipment 291  297  —  241  125  126  22  14 
Capitalized internal-use software (7,619) (3,180) (3,810) (4,926) (5,120) (4,290) (4,209) (6,230)
Repayments of finance lease liabilities (3,985) (3,004) (7,159) (3,870) (7,076) (4,427) (8,645) (6,557)
Advance payment for purchase of property and equipment (2)
 —  —  —  (29,310) (1,964) (10,923) —  — 
Free Cash Flow $ (34,258) $ (17,344) $ (26,546) $ (60,973) $ (44,300) $ (40,171) $ (25,187) $ 7,753 
__________
(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)As reflected in our statement of cash flows. In the six months ended June 30, 2023, we received $1.6 million of capital equipment that was prepaid prior to the current quarter.