Form 8-K - Current report

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 7, 2024

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 7, 2024, Fastly, Inc. (the "Company") announced its financial results for the quarter ended June 30, 2024 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, 2024 (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						Press Release dated August 7, 2024
99.2						Investor Supplement for Second Quarter 2024 Results

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 7, 2024

By:

/s/ Ronald W. Kisling

Ronald W. Kisling

Chief Financial Officer

Exhibit 99.1

Fastly Announces Second Quarter 2024 Financial Results

SAN FRANCISCO — August 7, 2024 — Fastly, Inc. (NYSE: FSLY), a leader in global edge cloud platforms, today announced financial results for its second quarter ended June 30, 2024.

“We continued to drive customer acquisition in the second quarter, achieving 4% sequential growth in Enterprise customer count,” said Todd Nightingale, CEO of Fastly. “This, along with the acceleration of our go-to-market motions, contributed to revenue growth above the midpoint of our guidance.”

“However, we are experiencing demand challenges with some of our largest customers, and we are taking measures to align our cost structure accordingly,” continued Nightingale. “This change will enable focused investment in edge cloud innovation and continued go-to-market transformation.”


	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Revenue	$	132,371		$	122,831		$	265,891		$	240,395
Gross margin
GAAP gross margin	55.1		%	52.3		%	55.0		%	51.8		%
Non-GAAP gross margin	58.5		%	56.6		%	58.6		%	56.1		%
Operating loss
GAAP operating loss	$	(46,734)		$	(49,827)		$	(92,994)		$	(97,102)
Non-GAAP operating loss	$	(12,673)		$	(7,785)		$	(22,337)		$	(21,859)
Net loss per share
GAAP net loss per common share—basic and diluted	$	(0.32)		$	(0.08)		$	(0.64)		$	(0.44)
Non-GAAP net loss per common share—basic and diluted	$	(0.07)		$	(0.04)		$	(0.12)		$	(0.12)

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 2024 Financial Summary

•Total revenue of $132.4 million, representing 8% year-over-year growth. Network services revenue of $104.2 million, representing 6% year-over-year growth. Security revenue of $25.4 million, representing 13% year-over-year growth. Network Services include solutions designed to improve performance of websites, apps, APIs, and digital media. Security includes products designed to protect websites, apps, APIs, and users.

•GAAP gross margin of 55.1%, compared to 52.3% in the second quarter of 2023. Non-GAAP gross margin of 58.5%, compared to 56.6% in the second quarter of 2023.

•GAAP net loss of $43.7 million, compared to $10.7 million in the second quarter of 2023. Non-GAAP net loss of $9.3 million, compared to $4.6 million in the second quarter of 2023.

•GAAP net loss per basic and diluted shares of $0.32, compared to $0.08 in the second quarter of 2023. Non-GAAP net loss per basic and diluted shares of $0.07, compared to $0.04 in the second quarter of 2023.

Key Metrics

•Enterprise customer1 count was 601 in the second quarter, up 24 from the first quarter of 2024. Total customer count1 was 3,295 in the second quarter, up 5 from the first quarter of 2024.

•Last 12-month net retention rate (LTM NRR)2 decreased to 110% in the second quarter from 114% in the first quarter of 2024.

•Remaining performance obligations (RPO)3 were $223 million, down 2% from $227 million in the first quarter of 2024.

Second Quarter Business and Product Highlights

•Scott R. Lovett joined Fastly as Chief Revenue Officer, bringing more than 30 years of experience in the network services and cybersecurity industries.

•Fastly recognized as a 2024 Gartner® Peer Insights™ Customers’ Choice for Cloud Web Application and API Protection (WAAP) for the sixth consecutive year – and the only vendor to be recognized for six years running.

•Fastly Security Research Team identified the active exploitation of unauthenticated stored XSS vulnerabilities in WordPress Plugins.

•Fastly named to the U.S. News & World Report's 2024-2025 Best Companies to Work For.

•Product package deals doubled compared to the first quarter of 2024, driven by the successful introduction of Observability packages in addition to Compute, Security, and Delivery.

•New deal registrations grew 33% quarter-over-quarter in the second quarter, and year-to-date revenue contribution more than doubled year-over-year.

•Released beta version of Fastly AI Accelerator, the company’s first AI solution to help developers speed up the performance of their ChatGPT-powered apps and reduce the costs of using OpenAI’s large language model API.

•Redesigned our pricing page to provide clarification around our new self-serve checkout plan (Usage), mix-and-match packages, and our free tier offerings.

•Launched free developer accounts alongside Simplified Compute Service Creation, which allows developers to set up, configure, and sync a new Compute service to their local machine using a single command.

•Enhanced Fastly Managed Security Service offering with Fastly Bot Management, and an industry-leading 30-minute time-to-notify service level agreement (SLA).

Third Quarter and Full Year 2024 Guidance


	Q3 2024	Full Year 2024
Total Revenue (millions)	$130.0 - $134.0	$530.0 - $540.0
Non-GAAP Operating Loss (millions)	($12.0) - ($8.0)	($33.0) - ($27.0)
Non-GAAP Net Loss per share (4)(5)	($0.08) - ($0.03)	($0.16) - ($0.11)

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 7, 2024.

Date: Wednesday, August 7, 2024

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 7 through August 21, 2024 by dialing 800-770-2030 or 647-362-9199 and entering the passcode 7543239.

About Fastly, Inc.

Fastly’s powerful and programmable edge cloud platform helps the world’s top brands deliver online experiences that are fast, safe, and engaging through edge compute, delivery, security, and observability offerings that improve site performance, enhance security, and empower innovation at global scale. Compared to other providers, Fastly’s powerful, high-

performance, and modern platform architecture empowers developers to deliver secure websites and apps with rapid time-to-market and demonstrated, industry-leading cost savings. Organizations around the world trust Fastly to help them upgrade the internet experience, including Reddit, Wendy’s, Neiman Marcus, Universal Music Group, and SeatGeek. 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 operating performance, our ability to innovate, the success of our products and product enhancements, the capabilities of Fastly’s AI Accelerator, 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 those more fully described in Fastly’s Annual Report on Form 10-K for the year ended December 31, 2023 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024. 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, net gain on extinguishment of debt, impairment expense 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, executive transition costs, interest income, interest expense, including amortization of debt discount and issuance costs, net gain on extinguishment of debt, impairment expense, other income (expense), net, and income taxes.

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.

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.

Impairment Expense: consists of non-recurring charges related to our long-lived assets. 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.

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 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. 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.

2 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.

3 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.

4 Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2024.

5 Assumes weighted average basic shares outstanding of 139.3 million in Q3 2024 and 137.5 million for the full year 2024.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts, unaudited)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Revenue	$	132,371	$	122,831	$	265,891	$	240,395
Cost of revenue(1)	59,470		58,617		119,756		115,927
Gross profit	72,901		64,214		146,135		124,468
Operating expenses:
Research and development(1)	35,106		37,421		73,354		74,852
Sales and marketing(1)	52,959		47,797		102,566		92,068
General and administrative(1)	28,433		28,823		60,072		54,650
Impairment expense	3,137		—		3,137		—
Total operating expenses	119,635		114,041		239,129		221,570
Loss from operations	(46,734)		(49,827)		(92,994)		(97,102)
Net gain on extinguishment of debt	—		36,760		—		36,760
Interest income	3,937		4,508		7,785		8,694
Interest expense	(464)		(1,232)		(1,043)		(2,445)
Other income (expense), net	193		(803)		104		(1,053)
Loss before income tax expense	(43,068)		(10,594)		(86,148)		(55,146)
Income tax expense	661		110		1,008		245
Net loss	$	(43,729)	$	(10,704)	$	(87,156)	$	(55,391)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.32)	$	(0.08)	$	(0.64)	$	(0.44)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	137,444		127,863		136,015		126,648

__________

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


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Cost of revenue	$	2,044	$	2,837	$	4,823	$	5,518
Research and development	7,983		12,205		18,306		23,686
Sales and marketing	7,058		9,877		14,901		16,582
General and administrative	9,063		12,073		19,939		19,357
Total	$	26,148	$	36,992	$	57,969	$	65,143

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, unaudited)


	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Gross profit
GAAP gross profit	$	72,901		$	64,214		$	146,135		$	124,468
Stock-based compensation	2,044			2,837			4,823			5,518
Amortization of acquired intangible assets	2,475			2,475			4,950			4,950
Non-GAAP gross profit	$	77,420		$	69,526		$	155,908		$	134,936
GAAP gross margin	55.1		%	52.3		%	55.0		%	51.8		%
Non-GAAP gross margin	58.5		%	56.6		%	58.6		%	56.1		%

Research and development
GAAP research and development	$	35,106		$	37,421		$	73,354		$	74,852
Stock-based compensation	(7,983)			(12,205)			(18,306)			(23,686)
Non-GAAP research and development	$	27,123		$	25,216		$	55,048		$	51,166

Sales and marketing
GAAP sales and marketing	$	52,959		$	47,797		$	102,566		$	92,068
Stock-based compensation	(7,058)			(9,877)			(14,901)			(16,582)
Amortization of acquired intangible assets	(2,301)			(2,575)			(4,601)			(5,150)
Non-GAAP sales and marketing	$	43,600		$	35,345		$	83,064		$	70,336

General and administrative
GAAP general and administrative	$	28,433		$	28,823		$	60,072		$	54,650
Stock-based compensation	(9,063)			(12,073)			(19,939)			(19,357)
Non-GAAP general and administrative	$	19,370		$	16,750		$	40,133		$	35,293

Operating loss
GAAP operating loss	$	(46,734)		$	(49,827)		$	(92,994)		$	(97,102)
Stock-based compensation	26,148			36,992			57,969			65,143
Amortization of acquired intangible assets	4,776			5,050			9,551			10,100
Impairment expense	3,137			—			3,137			—
Non-GAAP operating loss	$	(12,673)		$	(7,785)		$	(22,337)		$	(21,859)

Net loss
GAAP net loss	$	(43,729)		$	(10,704)		$	(87,156)		$	(55,391)
Stock-based compensation	26,148			36,992			57,969			65,143
Amortization of acquired intangible assets	4,776			5,050			9,551			10,100
Net gain on extinguishment of debt	—			(36,760)			—			(36,760)
Impairment expense	3,137			—			3,137			—
Amortization of debt discount and issuance costs	349			803			703			1,519
Non-GAAP net loss	$	(9,319)		$	(4,619)		$	(15,796)		$	(15,389)

Non-GAAP net loss per common share—basic and diluted	$	(0.07)		$	(0.04)		$	(0.12)		$	(0.12)
Weighted average basic and diluted common shares	137,444			127,863			136,015			126,648

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, unaudited) (continued)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Adjusted EBITDA
GAAP net loss	$	(43,729)	$	(10,704)	$	(87,156)	$	(55,391)
Stock-based compensation	26,148		36,992		57,969		65,143
Net gain on extinguishment of debt	—		(36,760)		—		(36,760)
Impairment expense	3,137		—		3,137		—
Depreciation and other amortization	13,443		13,030		26,843		25,210
Amortization of acquired intangible assets	4,776		5,050		9,551		10,100
Amortization of debt discount and issuance costs	349		803		703		1,519
Interest income	(3,937)		(4,508)		(7,785)		(8,694)
Interest expense	115		429		340		926
Other income (expense), net	(193)		803		(104)		1,053
Income tax expense	661		110		1,008		245
Adjusted EBITDA	$	770	$	5,245	$	4,506	$	3,351

Condensed Consolidated Balance Sheets

(in thousands, unaudited)


	As of June 30, 2024		As of December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	147,196	$	107,921
Marketable securities, current	164,569		214,799
Accounts receivable, net of allowance for credit losses	113,878		120,498
Prepaid expenses and other current assets	25,312		20,455
Total current assets	450,955		463,673
Property and equipment, net	177,058		176,608
Operating lease right-of-use assets, net	52,451		55,212
Goodwill	670,356		670,356
Intangible assets, net	52,676		62,475
Marketable securities, non-current	—		6,088
Other assets	79,176		90,779
Total assets	$	1,482,672	$	1,525,191
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,532	$	5,611
Accrued expenses	34,445		61,818
Finance lease liabilities, current	8,178		15,684
Operating lease liabilities, current	25,399		24,042
Other current liabilities	35,748		40,539
Total current liabilities	109,302		147,694
Long-term debt	344,167		343,507
Finance lease liabilities, non-current	—		1,602
Operating lease liabilities, non-current	44,634		48,484
Other long-term liabilities	3,382		4,416
Total liabilities	501,485		545,703
Stockholders’ equity:
Common stock	3		3
Additional paid-in capital	1,903,374		1,815,245
Accumulated other comprehensive loss	(282)		(1,008)
Accumulated deficit	(921,908)		(834,752)
Total stockholders’ equity	981,187		979,488
Total liabilities and stockholders’ equity	$	1,482,672	$	1,525,191

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Cash flows from operating activities:
Net loss	$	(43,729)	$	(10,704)	$	(87,156)	$	(55,391)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense	13,318		12,920		26,595		24,960
Amortization of intangible assets	4,900		5,175		9,799		10,350
Non-cash lease expense	5,800		5,648		11,356		11,763
Amortization of debt discount and issuance costs	349		803		703		1,519
Amortization of deferred contract costs	4,531		3,746		9,104		7,171
Stock-based compensation	26,148		36,992		57,969		65,143
Deferred income taxes	333		—		561		—
Provision for credit losses	393		567		1,346		1,100
Loss on disposals of property and equipment	45		296		444		547
Amortization of premiums (discounts) on investments	(1,244)		298		(2,402)		747
Impairment of operating lease right-of-use assets	—		187		—		187
Impairment expense	3,137		—		3,137		—
Net gain on extinguishment of debt	—		(36,760)		—		(36,760)
Other adjustments	(178)		(85)		(437)		(328)
Changes in operating assets and liabilities:
Accounts receivable	(6,754)		6,482		5,274		10,183
Prepaid expenses and other current assets	(2,131)		217		(4,831)		(417)
Other assets	(3,210)		(4,771)		(5,024)		(11,983)
Accounts payable	(341)		1,119		(240)		944
Accrued expenses	1,911		234		(6,849)		(6,593)
Operating lease liabilities	(4,406)		(6,682)		(12,012)		(12,432)
Other liabilities	(3,820)		9,308		(1,153)		5,419
Net cash provided by (used in) operating activities	(4,948)		24,990		6,184		16,129
Cash flows from investing activities:
Purchases of marketable securities	(60,249)		—		(117,197)		—
Sales of marketable securities	—		774		—		774
Maturities of marketable securities	77,597		114,884		176,677		342,095
Advance payment for purchase of property and equipment	(790)		—		(790)		—
Purchases of property and equipment	(1,762)		(4,464)		(3,365)		(7,958)
Proceeds from sale of property and equipment	24		14		24		36
Capitalized internal-use software	(6,829)		(6,230)		(13,674)		(10,439)
Net cash provided by investing activities	7,991		104,978		41,675		324,508
Cash flows from financing activities:
Cash paid for debt extinguishment	—		(196,934)		—		(196,934)
Repayments of finance lease liabilities	(4,236)		(6,557)		(9,108)		(15,202)
Payment of deferred consideration for business acquisitions	(3,771)		(4,393)		(3,771)		(4,393)
Proceeds from exercise of vested stock options	180		535		291		871
Proceeds from employee stock purchase plan	1,034		2,191		3,915		4,787
Net cash used in financing activities	(6,793)		(205,158)		(8,673)		(210,871)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(13)		469		(61)		585
Net increase (decrease) in cash, cash equivalents, and restricted cash	(3,763)		(74,721)		39,125		130,351
Cash, cash equivalents, and restricted cash at beginning of period	150,959		348,613		108,071		143,541
Cash, cash equivalents, and restricted cash at end of period	147,196		273,892		147,196		273,892
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents	147,196		273,742		147,196		273,742
Restricted cash, current	—		150		—		150
Total cash, cash equivalents, and restricted cash	$	147,196	$	273,892	$	147,196	$	273,892

Free Cash Flow

(in thousands, unaudited)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Net cash provided by (used in) operating activities	$	(4,948)	$	24,990	$	6,184	$	16,129
Capital expenditures(1)	(12,803)		(17,237)		(26,123)		(33,563)
Advance payment for purchase of property and equipment(2)	(790)		—		(790)		—
Free Cash Flow	$	(18,541)	$	7,753	$	(20,729)	$	(17,434)

__________

(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)In the six months ended June 30, 2024, we received $7.8 million of capital equipment that was prepaid prior to the current quarter, as reflected in the supplemental disclosure of our statement of cash flows.

Contacts

Investor Contact

Vernon Essi, Jr.

ir@fastly.com

Media Contact

Spring Harris

press@fastly.com

Source: Fastly, Inc.

Second Quarter 2024 Investor Supplement

Product Innovation and Developments

•Redesigned our pricing page to provide clarification around our new self-serve checkout plan (Usage), mix-and-match packages, and our free tier offerings.

•Enhanced Fastly Managed Security Service offering with Fastly Bot Management, and an industry-leading 30-minute time-to-notify service level agreement (SLA).

Customer and Partner Highlights

•Product package deals doubled compared to the first quarter of 2024, driven by the successful introduction of Observability packages in addition to Compute, Security, and Delivery.

•New deal registrations grew 33% quarter-over-quarter in the second quarter, and year-to-date revenue contribution more than doubled year-over-year.

•Valve Corporation, a video game developer and digital distribution company, selected Fastly’s Delivery services to support its Steam platform.

•Epicor, a leading enterprise resource planning software developer, selected Fastly’s Network Services, Next-Gen WAF, DDoS Mitigation, Observability, Bot Management and Professional Services.

•Yottaa, a leader in website optimization and performance solutions, became a Fastly managed services provider.


Calculations of Key and Other Selected Metrics – Quarterly (unaudited)
		Q3 2022			Q4 2022			Q1 2023			Q2 2023			Q3 2023			Q4 2023			Q1 2024			Q2 2024
	Customer Metrics:
	Enterprise Customer Count(1)	511			533			540			551			547			578			577			601
	Enterprise Customer Revenue %	91		%	92		%	91		%	92		%	92		%	92		%	91		%	91		%
	Total Customer Count(1)	3,039			3,062			3,100			3,072			3,102			3,243			3,290			3,295
	LTM Net Retention Rate (NRR)(2)	118		%	119		%	116		%	116		%	114		%	113		%	114		%	110		%
	Annual Revenue Retention Rate (ARR)(7)	—		%	98.9		%	—		%	—		%	—		%	99.2		%	—		%	—		%
	Revenue Metrics (in millions):
	Network Services Revenue	$	87.1		$	96.8		$	94.3		$	98.5		$	102.5		$	109.8		$	106.0		$	104.2
	Security Revenue	$	19.8		$	20.7		$	21.2		$	22.5		$	23.3		$	25.8		$	24.6		$	25.4
	Other Revenue	$	1.6		$	1.8		$	2.0		$	1.8		$	1.9		$	2.2		$	2.9		$	2.8
	Remaining Performance Obligation (RPO)3	$	173.0		$	198.3		$	242.4		$	230.9		$	247.6		$	235.7		$	227.0		$	223.1

Exhibit 99.2

Corporate Highlights

•Scott R. Lovett joined Fastly as Chief Revenue Officer, bringing more than 30 years of experience in the network services and cybersecurity industries.

•Fastly Security Research Team identified the active exploitation of unauthenticated stored XSS vulnerabilities in WordPress Plugins.

•Fastly named to U.S. News & World Report's 2024-2025 Best Companies to Work For.

Key Metrics Highlights

•Enterprise customer1 count was 601 in the second quarter, up 24 from the first quarter of 2024. Total customer count1 was 3,295 in the second quarter, up 5 from the first quarter of 2024.

•Last 12-month net retention rate (LTM NRR)2 decreased to 110% in the second quarter from 114% in the first quarter of 2024.

•Remaining performance obligations (RPO)3 were $223 million, down 2% from $227 million in the first quarter of 2024.

Third Quarter and Full Year 2024 Guidance


	Q3 2024	Full Year 2024
Total Revenue (millions)	$130.0 - $134.0	$530.0 - $540.0
Non-GAAP Operating Loss (millions)(4)	($12.0) - ($8.0)	($33.0) - ($27.0)
Non-GAAP Net Loss per share (5)(6)	($0.08) - ($0.03)	($0.16) - ($0.11)

Key Metrics

1.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. 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.

2.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.

3.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.

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 supplement.

5.Assumes weighted average basic shares outstanding of 139.3 million in Q3 2024 and 137.5 million for the full year 2024.

6.Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2024.

7.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.

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 existing and new products and product enhancements; the capabilities of the Fastly AI Accelerator; 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, 2023 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. Additional information will also be set forth in Fastly’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, 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.

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 income (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, impairment expense 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, impairment expense, other income (expense), net, and income taxes.

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 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. These are included in our total interest expense.

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 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 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.

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 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.

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 income (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.

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.

Consolidated Statements of Operations – Quarterly

(unaudited, in thousands, except per share amounts)


	Q3 2022		Q4 2022		Q1 2023		Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
Revenue	$	108,504	$	119,321	$	117,564	$	122,831	$	127,816	$	137,777	$	133,520	$	132,371
Cost of revenue(1)	55,825		56,738		57,310		58,617		61,730		62,003		60,286		59,470
Gross profit	52,679		62,583		60,254		64,214		66,086		75,774		73,234		72,901
Operating expenses:
Research and development(1)	38,957		37,197		37,431		37,421		39,068		38,270		38,248		35,106
Sales and marketing(1)	47,006		44,623		44,271		47,797		51,043		48,662		49,607		52,959
General and administrative (1)	32,481		29,225		25,827		28,823		30,001		31,426		31,639		28,433
Impairment expense	—		—		—		—		4,316		—		—		3,137
Total operating expenses	118,444		111,045		107,529		114,041		124,428		118,358		119,494		119,635
Loss from operations	(65,765)		(48,462)		(47,275)		(49,827)		(58,342)		(42,584)		(46,260)		(46,734)
Net gain on extinguishment of debt	—		—		—		36,760		—		15,656		—		—
Interest income	1,967		2,894		4,186		4,508		4,908		4,584		3,848		3,937
Interest expense	(1,381)		(1,354)		(1,213)		(1,232)		(862)		(744)		(579)		(464)
Other income (expense), net	1,877		46		(250)		(803)		(16)		(763)		(89)		193
Loss before income taxes	(63,302)		(46,876)		(44,552)		(10,594)		(54,312)		(23,851)		(43,080)		(43,068)
Income tax expense (benefit)	118		(223)		135		110		(1)		(465)		347		661
Net loss	$	(63,420)	$	(46,653)	$	(44,687)	$	(10,704)	$	(54,311)	$	(23,386)	$	(43,427)	$	(43,729)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.52)	$	(0.38)	$	(0.36)	$	(0.08)	$	(0.42)	$	(0.18)	$	(0.32)	$	(0.32)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	122,339		123,587		125,418		127,863		129,873		131,843		134,587		137,444

__________

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


	Q3 2022		Q4 2022		Q1 2023		Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
Cost of revenue	$	2,978	$	2,938	$	2,681	$	2,837	$	2,860	$	3,278	$	2,779	$	2,044
Research and development	14,488		11,469		11,481		12,205		12,122		12,019		10,323		7,983
Sales and marketing	10,920		7,885		6,705		9,877		9,061		8,060		7,843		7,058
General and administrative	10,992		9,126		7,284		12,073		11,670		12,090		10,876		9,063
Total	$	39,378	$	31,418	$	28,151	$	36,992	$	35,713	$	35,447	$	31,821	$	26,148

Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly

(unaudited, in thousands, except per share amounts)


	Q3 2022			Q4 2022			Q1 2023			Q2 2023			Q3 2023			Q4 2023			Q1 2024			Q2 2024
Gross Profit
GAAP gross Profit	$	52,679		$	62,583		$	60,254		$	64,214		$	66,086		$	75,774		$	73,234		$	72,901
Stock-based compensation	2,978			2,938			2,681			2,837			2,860			3,278			2,779			2,044
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	58,132			67,996			65,410			69,526			71,421			81,527			78,488			77,420
GAAP gross margin	48.6		%	52.4		%	51.3		%	52.3		%	51.7		%	55.0		%	54.8		%	55.1		%
Non-GAAP gross margin	53.6		%	57.0		%	55.6		%	56.6		%	55.9		%	59.2		%	58.8		%	58.5		%

Research and development
GAAP research and development	38,957			37,197			37,431			37,421			39,068			38,270			38,248			35,106
Stock-based compensation	(14,488)			(11,469)			(11,481)			(12,205)			(10,426)			(11,728)			(10,323)			(7,983)
Executive transition costs	—			—			—			—			(2,406)			(385)			—			—
Non-GAAP research and development	24,469			25,728			25,950			25,216			26,236			26,157			27,925			27,123

Sales and marketing
GAAP sales and marketing	47,006			44,623			44,271			47,797			51,043			48,662			49,607			52,959
Stock-based compensation	(10,920)			(7,885)			(6,705)			(9,877)			(9,061)			(8,060)			(7,843)			(7,058)
Amortization of acquired intangible assets	(2,897)			(2,575)			(2,575)			(2,575)			(2,576)			(2,300)			(2,300)			(2,301)
Non-GAAP sales and marketing	33,189			34,163			34,991			35,345			39,406			38,302			39,464			43,600

General and administrative
GAAP general and administrative	32,481			29,225			25,827			28,823			30,001			31,426			31,639			28,433
Stock-based compensation	(7,959)			(9,126)			(7,284)			(12,073)			(11,670)			(12,090)			(10,876)			(9,063)
Executive transition costs	(4,207)			—			—			—			—			—			—			—
Non-GAAP general and administrative	20,315			20,099			18,543			16,750			18,331			19,336			20,763			19,370

Operating loss
GAAP operating loss	(65,765)			(48,462)			(47,275)			(49,827)			(58,342)			(42,584)			(46,260)			(46,734)
Stock-based compensation	36,345			31,418			28,151			36,992			34,017			35,156			31,821			26,148
Executive transition costs	4,207			—			—			—			2,406			385			—			—
Amortization of acquired intangible assets	5,372			5,050			5,050			5,050			5,051			4,775			4,775			4,776
Impairment expense	—			—			—			—			4,316			—			—			3,137
Non-GAAP operating loss	(19,841)			(11,994)			(14,074)			(7,785)			(12,552)			(2,268)			(9,664)			(12,673)

Net loss
GAAP net loss	(63,420)			(46,653)			(44,687)			(10,704)			(54,311)			(23,386)			(43,427)			(43,729)
Stock-based compensation	36,345			31,418			28,151			36,992			34,017			35,156			31,821			26,148
Executive transition costs	4,207			—			—			—			2,406			385			—			—
Amortization of acquired intangible assets	5,372			5,050			5,050			5,050			5,051			4,775			4,775			4,776
Net gain on extinguishment of debt	—			—			—			(36,760)			—			(15,656)			—			—
Impairment expense	—			—			—			—			4,316			—			—			3,137
Amortization of debt issuance costs	714			716			716			803			502			456			354			349
Non-GAAP net income (loss)	$	(16,782)		$	(9,469)		$	(10,770)		$	(4,619)		$	(8,019)		$	1,730		$	(6,477)		$	(9,319)

GAAP net loss per common share—basic and diluted	$	(0.52)		$	(0.38)		$	(0.36)		$	(0.08)		$	(0.42)		$	(0.18)		$	(0.32)		$	(0.32)
Non-GAAP net income (loss) per common share—basic and diluted	$	(0.14)		$	(0.08)		$	(0.09)		$	(0.04)		$	(0.06)		$	0.01		$	(0.05)		$	(0.07)
Weighted average basic common shares	122,339			123,587			125,418			127,863			129,873			131,843			134,587			137,444
Weighted average diluted common shares	122,339			123,587			125,418			127,863			129,873			141,162			134,587			137,444

Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly (Continued)

(unaudited, in thousands, except per share amounts)


	Q3 2022	Q4 2022	Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024
Reconciliation of GAAP to Non-GAAP diluted shares:
GAAP diluted shares	122,339	123,587	125,418	127,863	129,873	131,843	134,587	137,444
Other dilutive equity awards	—	—	—	—	—	9,319	—	—
Non-GAAP diluted shares	122,339	123,587	125,418	127,863	129,873	141,162	134,587	137,444
Non-GAAP diluted net income (loss) per share	(0.14)	(0.08)	(0.09)	(0.04)	(0.06)	0.01	(0.05)	(0.07)


	Q3 2022		Q4 2022		Q1 2023		Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
Adjusted EBITDA
GAAP net loss	$	(63,420)	$	(46,653)	$	(44,687)	$	(10,704)	$	(54,311)	$	(23,386)	$	(43,427)	$	(43,729)
Stock-based compensation	36,345		31,418		28,151		36,992		34,017		35,156		31,821		26,148
Depreciation and other amortization	10,786		11,903		12,179		13,030		13,202		13,727		13,400		13,443
Amortization of acquired intangible assets	5,372		5,050		5,050		5,050		5,051		4,775		4,775		4,776
Amortization of debt discount and issuance costs	714		716		716		803		502		456		354		349
Executive transition costs	4,207		—		—		—		2,406		385		—		—
Net gain on extinguishment of debt	—		—		—		(36,760)		—		(15,656)		—		—
Impairment expense	—		—		—		—		4,316		—		—		3,137
Interest income	(1,967)		(2,894)		(4,186)		(4,508)		(4,908)		(4,584)		(3,848)		(3,937)
Interest expense	667		638		497		429		360		288		225		115
Other (income) expense, net	(1,877)		(46)		250		803		16		763		89		(193)
Income tax (benefit) expense	118		(223)		135		110		(1)		(465)		347		661
Adjusted EBITDA	$	(9,055)	$	(91)	$	(1,895)	$	5,245	$	650	$	11,459	$	3,736	$	770

Non-GAAP Consolidated Statements of Operations - Quarterly

(unaudited, in thousands, except per share amounts)


	Q3 2022		Q4 2022		Q1 2023		Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
Revenue	$	108,504	$	119,321	$	117,564	$	122,831	$	127,816	$	137,777	$	133,520	$	132,371
Cost of revenue (1)(2)	50,372		51,325		52,154		53,305		56,395		56,250		55,032		54,951
Gross profit (1)(2)	58,132		67,996		65,410		69,526		71,421		81,527		78,488		77,420
Operating expenses:
Research and development(1)(3)	24,469		25,728		25,950		25,216		26,236		26,157		27,925		27,123
Sales and marketing(1)(2)	33,189		34,163		34,991		35,345		39,406		38,302		39,464		43,600
General and administrative (1)(3)	20,315		20,099		18,543		16,750		18,331		19,336		20,763		19,370
Total operating expenses(1)(2)(3)(4)	77,973		79,990		79,484		77,311		83,973		83,795		88,152		90,093
Loss from operations(1)(2)(3)(4)	(19,841)		(11,994)		(14,074)		(7,785)		(12,552)		(2,268)		(9,664)		(12,673)
Interest income	1,967		2,894		4,186		4,508		4,908		4,584		3,848		3,937
Interest expense(5)	(667)		(638)		(497)		(429)		(360)		(288)		(225)		(115)
Other income (expense), net	1,877		46		(250)		(803)		(16)		(763)		(89)		193
Income (loss) before income tax expense (benefit)(1)(2)(3)(4)(5)(6)	(16,664)		(9,692)		(10,635)		(4,509)		(8,020)		1,265		(6,130)		(8,658)
Income tax expense (benefit)	118		(223)		135		110		(1)		(465)		347		661
Net income (loss)(1)(2)(3)(4)(5)(6)	$	(16,782)	$	(9,469)	$	(10,770)	$	(4,619)	$	(8,019)	$	1,730	$	(6,477)	$	(9,319)
Net income (loss) per share attributable to common stockholders, basic and diluted	$	(0.14)	$	(0.08)	$	(0.09)	$	(0.04)	$	(0.06)	$	0.01	$	(0.05)	$	(0.07)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic	122,339		123,587		125,418		127,863		129,873		131,843		134,587		137,444
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted	122,339		123,587		125,418		127,863		129,873		141,162		134,587		137,444

(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 executive transition costs. See GAAP to Non-GAAP reconciliations.

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

(5) Excludes amortization of debt discount and issuance costs. See GAAP to Non-GAAP reconciliations.

(6) Excludes net gain on extinguishment of debt. See GAAP to Non-GAAP reconciliations.

Consolidated Balance Sheets - Quarterly

(unaudited, in thousands)


	Q3 2022		Q4 2022		Q1 2023		Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
Assets
Current assets:
Cash and cash equivalents	$	87,897	$	143,391	$	348,463	$	273,742	$	270,300	$	107,921	$	150,809	$	147,196
Marketable securities	445,048		374,581		198,116		123,605		158,055		214,799		178,677		164,569
Accounts receivable, net	72,914		89,578		85,344		78,295		98,622		120,498		107,517		113,878
Prepaid expenses and other current assets	31,321		28,933		29,717		29,500		24,481		20,455		23,207		25,312
Total current assets	637,180		636,483		661,640		505,142		551,458		463,673		460,210		450,955
Property and equipment, net	179,080		180,378		179,922		179,045		171,914		176,608		177,574		177,058
Operating lease right-of-use assets, net	72,374		68,440		60,615		56,733		52,927		55,212		54,420		52,451
Goodwill	670,158		670,185		670,192		670,356		670,356		670,356		670,356		670,356
Intangible assets, net	88,482		82,900		77,725		72,550		67,375		62,475		57,576		52,676
Marketable securities, non-current	186,066		165,105		117,518		78,042		32,280		6,088		1,743		—
Other assets	73,258		92,622		94,798		95,550		94,353		90,779		84,044		79,176
Total assets	$	1,906,598	$	1,896,113	$	1,862,410	$	1,657,418	$	1,640,663	$	1,525,191	$	1,505,923	$	1,482,672
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	8,265	$	4,786	$	4,668	$	5,561	$	5,723	$	5,611	$	5,485	$	5,532
Accrued expenses	54,186		61,161		42,311		47,001		56,595		61,818		35,555		34,445
Finance lease liabilities	27,807		28,954		24,763		22,233		19,250		15,684		11,974		8,178
Operating lease liabilities	20,919		23,026		20,516		20,575		21,533		24,042		22,580		25,399
Other current liabilities	33,422		34,394		32,942		36,234		40,234		40,539		44,633		35,748
Total current liabilities	144,599		152,321		125,200		131,604		143,335		147,694		120,227		109,302
Long-term debt, less current portion	704,042		704,710		705,378		472,369		472,823		343,507		343,837		344,167
Finance lease liabilities, noncurrent	21,027		15,507		10,858		7,026		3,860		1,602		440		—
Operating lease liabilities, noncurrent	62,750		61,341		56,275		51,448		47,775		48,484		46,857		44,634
Other long-term liabilities	7,201		7,076		6,144		7,217		4,298		4,416		2,756		3,382
Total liabilities	939,619		940,955		903,855		669,664		672,091		545,703		514,117		501,485
Stockholders’ equity:
Common stock	2		2		2		2		2		3		3		3
Additional paid-in capital	1,634,666		1,666,106		1,710,498		1,747,959		1,781,870		1,815,245		1,870,503		1,903,374
Accumulated other comprehensive loss	(12,678)		(9,286)		(5,594)		(3,152)		(1,934)		(1,008)		(521)		(282)
Accumulated deficit	(655,011)		(701,664)		(746,351)		(757,055)		(811,366)		(834,752)		(878,179)		(921,908)
Total stockholders’ equity	966,979		955,158		958,555		987,754		968,572		979,488		991,806		981,187
Total liabilities and stockholders’ equity	$	1,906,598	$	1,896,113	$	1,862,410	$	1,657,418	$	1,640,663	$	1,525,191	$	1,505,923	$	1,482,672

Consolidated Statements of Cash Flows – Quarterly

(unaudited, in thousands)


	Q3 2022		Q4 2022		Q1 2023		Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
Cash flows from operating activities:
Net loss	$	(63,420)	$	(46,653)	$	(44,687)	$	(10,704)	$	(54,311)	$	(23,386)	$	(43,427)	$	(43,729)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	10,662		11,371		12,040		12,920		13,055		13,587		13,277		13,318
Amortization of intangible assets	5,496		5,582		5,175		5,175		5,175		4,899		4,899		4,900
Non-cash lease expense	8,133		5,793		6,115		5,648		5,464		5,451		5,556		5,800
Amortization of debt discount and issuance costs	715		715		716		803		501		456		354		349
Amortization of deferred contract costs	2,031		2,896		3,425		3,746		4,082		4,295		4,573		4,531
Stock-based compensation	39,378		31,418		28,151		36,992		35,713		35,447		31,821		26,148
Deferred income taxes	—		—		—		—		—		(900)		228		333
Provision for credit losses	1,253		624		533		567		211		714		953		393
(Gain) loss on disposals of property and equipment	—		—		251		296		(42)		—		399		45
Amortization and accretion of discounts and premiums on investments	771		515		449		298		(403)		(990)		(1,158)		(1,244)
Impairment of operating lease right-of-use assets	—		2,083		—		187		401		156		—		—
Impairment expense	—		—		—		—		4,316		—		—		3,137
Net gain on extinguishment of debt	—		—		—		(36,760)		—		(15,656)		—		—
Other adjustments	(353)		3,980		(243)		(85)		71		905		(259)		(178)
Changes in operating assets and liabilities:	—		—		—		—		—		—		—
Accounts receivable	(5,949)		(17,288)		3,701		6,482		(20,538)		(22,590)		12,028		(6,754)
Prepaid expenses and other current assets	(975)		(971)		(634)		217		5,019		4,107		(2,700)		(2,131)
Other assets	(13,505)		(15,492)		(7,212)		(4,771)		(4,286)		(6,868)		(1,814)		(3,210)
Accounts payable	(4,301)		(1,267)		(175)		1,119		314		(876)		101		(341)
Accrued expenses	3,328		3,799		(6,827)		234		340		(1,603)		(8,760)		1,911
Operating lease liabilities	(7,462)		(4,335)		(5,750)		(6,682)		(4,505)		(5,137)		(7,606)		(4,406)
Other liabilities	(3,436)		5,102		(3,889)		9,308		1,033		612		2,667		(3,820)
Net cash provided by (used in) operating activities	(27,634)		(12,128)		(8,861)		24,990		(8,390)		(7,377)		11,132		(4,948)
Cash flows from investing activities:
Purchases of marketable securities	—		—		—		—		(73,091)		(59,142)		(56,948)		(60,249)
Sales of marketable securities	—		65		—		774		1		24,850		—		—
Maturities of marketable securities	72,857		94,303		227,211		114,884		86,030		5,642		99,080		77,597
Business acquisitions, net of cash acquired	(1,746)		1,843		—		—		—		—		—		—
Advance payment for purchase of property and equipment	(1,964)		(10,923)		—		—		—		—		—		(790)
Purchases of property and equipment	(2,631)		(8,529)		(3,494)		(4,464)		(325)		(2,693)		(1,603)		(1,762)
Proceeds from sale of property and equipment	125		126		22		14		13		—		—		24
Capitalized internal-use software	(5,120)		(4,290)		(4,209)		(6,230)		(4,951)		(5,902)		(6,845)		(6,829)
Net cash provided by (used in) investing activities	61,521		72,595		219,530		104,978		7,677		(37,245)		33,684		7,991
Cash flows from financing activities:
Cash paid for debt extinguishment	—		—		—		(196,934)		—		(113,606)		—		—
Repayments of finance lease liabilities	(7,076)		(4,427)		(8,645)		(6,557)		(6,041)		(5,932)		(4,872)		(4,236)
Cash paid for early sale of restricted shares	(3,618)		—		—		—		—		—		—		—
Payment of deferred consideration for business acquisitions	—		—		—		(4,393)		—		—		—		(3,771)
Proceeds from exercise of vested stock options	555		364		336		535		1,137		161		111		180
Proceeds from employee stock purchase plan	1,749		(949)		2,596		2,191		2,222		1,550		2,881		1,034
Net cash used in financing activities	(8,390)		(5,012)		(5,713)		(205,158)		(2,682)		(117,827)		(1,880)		(6,793)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(110)		39		116		469		(47)		70		(48)		(13)
Net increase (decrease) in cash, cash equivalents, and restricted cash	25,387		55,494		205,072		(74,721)		(3,442)		(162,379)		42,888		(3,763)
Cash, cash equivalents, and restricted cash at beginning of period	62,660		88,047		143,541		348,613		273,892		270,450		108,071		150,959
Cash, cash equivalents, and restricted cash at end of period	$	88,047	$	143,541	$	348,613	$	273,892	$	270,450	$	108,071	$	150,959	$	147,196

Free Cash Flow

(in thousands, unaudited)


	Q3 2022		Q4 2022		Q1 2023		Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
Net cash provided by (used in) operating activities	$	(27,634)	$	(12,128)	$	(8,861)	$	24,990	$	(8,390)	$	(7,377)	$	11,132	$	(4,948)
Capital expenditures(1):
Purchases of property and equipment	(2,631)		(8,529)		(3,494)		(4,464)		(325)		(2,693)		(1,603)		(1,762)
Proceeds from sale of property and equipment	125		126		22		14		13		—		—		24
Capitalized internal-use software	(5,120)		(4,290)		(4,209)		(6,230)		(4,951)		(5,902)		(6,845)		(6,829)
Repayments of finance lease liabilities	(7,076)		(4,427)		(8,645)		(6,557)		(6,041)		(5,932)		(4,872)		(4,236)
Advance payment for purchase of property and equipment (2)	(1,964)		(10,923)		—		—		—		—		—		(790)
Free Cash Flow	$	(44,300)	$	(40,171)	$	(25,187)	$	7,753	$	(19,694)	$	(21,904)	$	(2,188)	$	(18,541)

__________

Cover Page	Aug. 07, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Aug. 07, 2024
Entity Registrant Name	FASTLY, INC.
Entity Central Index Key	0001517413
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity File Number	001-38897
Entity Tax Identification Number	27-5411834
Entity Address, Address Line One	475 Brannan Street, Suite 300
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94107
City Area Code	844
Local Phone Number	432-7859
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock, $0.00002 par value
Trading Symbol	“FSLY”
Security Exchange Name	NYSE
Entity Emerging Growth Company	false