SAN FRANCISCO — February 14, 2024 — Fastly, Inc. (NYSE: FSLY), one of the world’s fastest edge cloud platforms, today announced financial results for its fourth quarter and full year ended December 31, 2023.

“This quarter demonstrated the progress we’ve made in operational and financial rigor resulting in strong gross margins and non-GAAP net income,” said Todd Nightingale, CEO of Fastly.

“Our go-to-market, packaging and channel efforts through 2023 delivered an inflection in our customer acquisition as we closed out the year,” continued Nightingale. “This positions us well for 2024, driving our mission to make every user experience fast, safe, and engaging.”

						Three months ended December 31,												Year ended December 31,
						2023						2022						2023						2022
Revenue						$	137,777					$	119,321					$	505,988					$	432,725
Gross margin
GAAP gross margin						55.0		%				52.4		%				52.6		%				48.5		%
Non-GAAP gross margin						59.2		%				57.0		%				56.9		%				53.6		%
Operating loss
GAAP operating loss						$	(42,584)					$	(48,462)					$	(198,028)					$	(246,199)
Non-GAAP operating loss						$	(2,268)					$	(11,994)					$	(36,679)					$	(76,468)
Net loss per share
GAAP net loss per common share—basic and diluted						$	(0.18)					$	(0.38)					$	(1.03)					$	(1.57)
Non-GAAP net income (loss) per common share—basic and diluted						$	0.01					$	(0.08)					$	(0.17)					$	(0.59)

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 2023 Financial Summary

•Total revenue of $137.8 million, representing 15% year-over-year growth and 8% sequential increase.

•GAAP gross margin of 55.0%, compared to 52.4% in the fourth quarter of 2022. Non-GAAP gross margin of 59.2%, compared to 57.0% in the fourth quarter of 2022.

•GAAP net loss of $23.4 million, compared to $46.7 million in the fourth quarter of 2022. Non-GAAP net income of $1.7 million, compared to non-GAAP net loss of $9.5 million in the fourth quarter of 2022.

•GAAP net loss per basic and diluted shares of $0.18 compared to $0.38 in the fourth quarter of 2022. Non-GAAP net income per basic and diluted shares of $0.01, compared to non-GAAP net loss per basic and diluted shares of $0.08 in the fourth quarter of 2022.

Full Year 2023 Financial Summary

•Total revenue of $506.0 million, representing 17% growth year-over-year.

•GAAP gross margin of 52.6%, compared to 48.5% in fiscal 2022. Non-GAAP gross margin of 56.9%, compared to 53.6% in fiscal 2022.

•GAAP net loss of $133.1 million, compared to $190.8 million in fiscal 2022. Non-GAAP net loss of $21.7 million, compared to $72.3 million in fiscal 2022.

•GAAP net loss per basic and diluted shares of $1.03 compared to $1.57 in fiscal 2022. Non-GAAP net loss per basic and diluted shares of $0.17, compared to $0.59 in fiscal 2022.

•12-month net retention rate (LTM NRR)1 decreased to 113% in the fourth quarter from 114% in the third quarter.

•Total customer count2 was 3,243 in the fourth quarter, up 141 from the third quarter; 578 were enterprise customers2 in the fourth quarter, up 31 from the third quarter.

•Average enterprise customer spend3 of $880 thousand in the fourth quarter, up 3% quarter-over-quarter.

•Annual revenue retention rate (ARR)7 was 99.2% in 2023, increasing from 98.9% in 2022.

•Remaining performance obligations (RPO)4 were $245 million, down 1% from $248 million in the third quarter of 2023 and up 24% from $198 million in the fourth quarter of 2022.

•Fastly was named a Leader in The Forrester Wave™: Edge Development Platforms, Q4 2023 report, highlighted by Fastly’s Compute platform receiving the highest rating possible (5/5) in 22 criteria.

•Kip Compton joined Fastly as Chief Product Officer, bringing over 25 years of senior leadership experience driving innovation, most recently as SVP of Strategy at Cisco Networking where he led teams responsible for strategy, portfolio management, investments and acquisitions.

•Repurchased $130.9 million of our convertible notes’ principal balance in the fourth quarter for $113.6 million in cash or approximately 87 cents on the dollar.

•Channel partner deal registration continues to expand as our 2023 deal registration more than tripled 2022 levels and we grew our partner engagement by over 65%.

•Our packaging motion is accelerating as more customers purchased package deals in the fourth quarter of 2023 than the first nine months of 2023 combined.

•Launched our new annual global cybersecurity report, The Race to Adapt, uncovering the impacts of cyber attacks on leading businesses across the globe and how 76% of the businesses surveyed plan to increase their cybersecurity budgets in the next year.

•Released multiple new features to Fastly’s Next-Gen WAF solution to improve performance and simplify the user experience, including Hashicorp Vault Integration, Agent Auto-Update, WAF Simulator, New Anomaly Signal: Out-of-Band Domain, and Simplified Attack Signal Thresholds.

•Released our new observability page, allowing customers to monitor their Fastly Delivery and Compute services via metrics and logs within customizable dashboards.

•Released our Bot Mitigation solution in limited availability to select customers.

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.

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 14, 2024.

Date: Wednesday, February 14, 2024

Time: 1:30 p.m. PT / 4:30 p.m. ET Dial-in: 888-330-2022 (US/CA) or 646-960-0690 (Intl.)

Webcast: https://investors.fastly.com

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 14 through February 28, 2024 by dialing 800-770-2030 or 647-362-9199 and entering the passcode 7543239.

Fastly’s powerful and programmable edge cloud platform helps the world’s top brands deliver some of the best online experiences possible through edge compute, delivery, security, and observability offerings improving site performance, enhancing security, and empowering innovation at global scale. 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 with rapid time-to-market and industry-leading cost savings. Organizations around the world trust Fastly to help them upgrade the internet experience, including Reddit, Wendy’s, Stripe, Neiman Marcus, Universal Music Group, SeatGeek, and Advance Publications. Learn more about Fastly at https://www.fastly.com, and follow us @fastly.

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 operating performance, our ability to innovate, our customer acquisition and go-to-market efforts, our ability to monetize, 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, 2023. Additional information will also be set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Copies of reports filed with the SEC are posted on Fastly’s website and are available from Fastly without charge.

Executive Transition Costs: consists of one-time cash and non-cash charges recognized with respect to changes in our executives' employment status. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net income (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 income (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.

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.

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 Under our new methodology, our number of customers is 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 is 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 3,097 in the fourth quarter, up 78 from the third quarter of 2023; 532 were enterprise customers in the fourth quarter, up 2 from the third quarter of 2023.

3 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 $859 thousand in the fourth quarter, up 3% quarter-over-quarter.

4 Remaining performance obligations include future committed revenue for periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied.

5 Non-GAAP net income (loss) per basic share is calculated as Non-GAAP net income (loss) divided by weighted average basic shares for 2024.

6 Assumes weighted average basic shares outstanding of 134.3 million in Q1 2024 and 137.5 million for the full year 2024.

7 Annual Revenue Retention rate is calculated by first calculating "Annual Revenue Churn", which 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. Our ARR rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers from which we recognized revenue during the last quarter of the prior year divided by our annual revenue of the same calendar year from 100%. Under the prior methodology, our ARR rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers from which we recognized revenue during the last month of the prior year divided by our annual revenue of the same calendar year from 100%. Under our prior methodology, our ARR was 99.1%, down 0.1% year-over-year.

__________

(1)Includes stock-based compensation expense as follows:

__________

(1)Capital expenditures are defined as 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.

(2)As reflected in our statement of cash flows. In the year ended December 31, 2023, we received $8.7 million of capital equipment that was prepaid prior to the current year.

Vernon Essi, Jr.

ir@fastly.com

Spring Harris

press@fastly.com

Source: Fastly, Inc.

1.We calculate LTM Net Retention Rate by dividing the total customer revenue for the prior 12-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.Under our new methodology, our number of customers is 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 is 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 3,097 in the fourth quarter, up 78 from the third quarter of 2023; 532 were enterprise customers in the fourth quarter, up 2 from the third quarter of 2023.

3.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 $859 thousand in the fourth quarter, up 3% quarter-over-quarter.

4.Remaining performance obligations include future committed revenue for periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied.

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 supplement.

6.Assumes weighted average basic shares outstanding of 134.3 million in Q1 2024 and 137.5 million for the full year 2024.

7.Non-GAAP Net Income (Loss) per basic share is calculated as Non-GAAP Net Income (Loss) divided by weighted average basic shares for 2024.

8.Annual Revenue Retention rate is calculated by first calculating "Annual Revenue Churn", which 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. Our ARR rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers from which we recognized revenue during the last quarter of the prior year divided by our annual revenue of the same calendar year from 100%. Under the prior methodology, our ARR rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers from which we recognized revenue during the last month of the prior year divided by our annual revenue of the same calendar year from 100%. Under our prior methodology, our ARR was 99.1%, down 0.1% year-over-year.

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.

10.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.

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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and additional information set forth in Fastly's Annual Report on Form 10-K for the year ended December 31, 2023 and other filings and reports that Fastly 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.

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 income (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 income (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.

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.

__________

(1)Includes stock-based compensation expense as follows:

(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.

(8) Excludes impairment expense. See GAAP to Non-GAAP reconciliations.