FSLY

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

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

“We are excited to close out 2022 with another record quarter, exceeding the top end of our guidance range while demonstrating a significant improvement to gross margin,” said Todd Nightingale, CEO of Fastly.

“I've been incredibly impressed with the speed of innovation at Fastly and the focus our teams have demonstrated as we move to a higher velocity go-to-market motion,” continued Nightingale. “Our customers are passionate about our ability to elevate digital experiences at scale and we look forward to continued momentum in 2023.”

Three months ended December 31,

 

Year ended December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

$

119,321

 

$

97,717

 

$

432,725

 

$

354,330

 

Gross Margin GAAP gross margin

 

52.4

%

 

50.9

%

 

48.5

%

 

52.9

%

Non-GAAP gross margin

 

57.0

%

 

55.8

%

 

53.6

%

 

57.7

%

Operating loss GAAP operating loss

$

(48,462

)

$

(56,656

)

$

(246,199

)

$

(219,021

)

Non-GAAP operating loss

$

(11,994

)

$

(11,734

)

$

(76,468

)

$

(55,134

)

Net loss per share GAAP net loss per common share—basic and diluted

$

(0.38

)

$

(0.49

)

$

(1.57

)

$

(1.92

)

Non-GAAP net loss per common share—basic and diluted

$

(0.08

)

$

(0.10

)

$

(0.59

)

$

(0.48

)

Fourth Quarter 2022 Financial Summary

• Total revenue of $119.3 million, representing 22% year-over-year growth and 10% sequential growth.
• GAAP gross margin of 52.4%, compared to 50.9% in the fourth quarter of 2021. Non-GAAP gross margin of 57.0%, compared to 55.8% in the fourth quarter of 2021.
• GAAP net loss of $46.7 million, compared to $57.5 million in the fourth quarter of 2021. Non-GAAP net loss of $9.5 million, compared to $11.7 million in the fourth quarter of 2021.
• GAAP net loss per basic and diluted shares of $0.38 compared to $0.49 in the fourth quarter of 2021. Non-GAAP net loss per basic and diluted shares of $0.08, compared to $0.10 in the fourth quarter of 2021.

Full Year 2022 Financial Summary

• Total revenue of $432.7 million, representing 22% growth year-over-year.
• GAAP gross margin of 48.5%, compared to 52.9% in fiscal 2021. Non-GAAP gross margin of 53.6%, compared to 57.7% in fiscal 2021.
• GAAP net loss of $190.8 million, compared to $222.7 million in fiscal 2021. Non-GAAP net loss of $72.3 million, compared to $55.9 million in fiscal 2021.
• GAAP net loss per basic and diluted shares of $1.57 compared to $1.92 in fiscal 2021. Non-GAAP net loss per basic and diluted shares of $0.59, compared to $0.48 in fiscal 2021.

Key Metrics

• Annual revenue retention rate (ARR)6 was 99.2% in 2022, flat to the 99.2% level in fiscal 2021.
• Trailing 12 month net retention rate (LTM NRR)1 increased to 119% in the fourth quarter from 118% in the third quarter 2022.
• Dollar-Based Net Expansion Rate (DBNER)2 increased to 123% in the fourth quarter from 122% in the third quarter 2022.
• Total customer count was 2,958 in the fourth quarter, up 33 from the third quarter; 493 were enterprise customers3 in the fourth quarter, up 11 from the third quarter.
• Average enterprise customer spend7 of $782 thousand in the fourth quarter, up 3% quarter-over-quarter.

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

Fourth Quarter Business and Product Highlights

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

First Quarter and Full Year 2023 Guidance

Q1 2023

 

Full Year 2023

Total Revenue (millions)

$114 - $117

 

$495 - $505

Non-GAAP Operating Loss (millions)

($18.0) - ($16.0)

 

($53.0) - ($47.0)

Non-GAAP Net Loss per share (4)(5)

($0.12) - ($0.08)

 

($0.27) - ($0.21)

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future and cannot be reasonably determined or predicted at this time, although it is important to note that these factors could be material to Fastly’s future GAAP financial results.

Conference Call Information

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

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

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

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

About Fastly

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

Forward-Looking Statements

This press release contains “forward-looking” statements that are based on our beliefs and assumptions and on information currently available to us on the date of this press release. Forward-looking statements may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, the demand for our platform, 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 Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022. Additional information will also be set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Copies of reports filed with the SEC are posted on Fastly’s website and are available from Fastly without charge.

Use of Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company uses the following non-GAAP measures of financial performance: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, free cash flow and adjusted EBITDA. The presentation of this additional financial information is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In addition, these non-GAAP financial measures may be different from the non-GAAP financial measures used by other companies. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Management compensates for these limitations by reconciling these non-GAAP financial measures to the most comparable GAAP financial measures within our earnings releases.

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss and non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, and non-GAAP general and administrative differ from GAAP in that they exclude stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses, executive transition costs, net gain on extinguishment of debt and amortization of debt discount and issuance costs.

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

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

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

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

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

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

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

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

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

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

Interest Income: consists primarily of interest income related to our marketable securities. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Net Gain on Debt Extinguishment: relates to net gain on the partial repurchase of our outstanding convertible debt. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Other Income (Expense), Net: consists primarily of foreign currency transaction gains and losses. Management considers its operating results without this activity when evaluating its ongoing adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Stock-based Compensation Expense: consists of expenses for stock options, restricted stock units, performance awards, restricted stock awards and Employee Stock Purchase Plan ("ESPP") under our equity incentive plans. Although stock-based compensation is an expense for the Company and is viewed as a form of compensation, management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance, primarily because it is a non-cash expense not believed by management to be reflective of our core business, ongoing operating results, or future outlook. In addition, the value of some stock-based instruments is determined using formulas that incorporate variables, such as market volatility, that are beyond our control.

Management believes these non-GAAP financial measures and adjusted EBITDA serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods and to those of peer companies, and when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors' overall understanding of our current financial performance.

In the financial tables below, the Company provides a reconciliation of the most comparable GAAP financial measure to the historical non-GAAP financial measures used in this press release.

Key Metrics

1 We calculate LTM Net Retention Rate by dividing the total customer revenue for the prior twelve-month period (“prior 12-month period”) ending at the beginning of the last twelve-month period (“LTM period”) minus revenue contraction due to billing decreases or customer churn, plus revenue expansion due to billing increases during the LTM period from the same customers by the total prior 12-month period revenue. We believe the LTM Net Retention Rate is supplemental as it removes some of the volatility that is inherent in a usage-based business model.

2 We calculate Dollar-Based Net Expansion Rate by dividing the revenue for a given period from customers who remained customers as of the last day of the given period (the “current” period) by the revenue from the same customers for the same period measured one year prior (the “base” period). The revenue included in the current period excludes revenue from (i) customers that churned after the end of the base period and (ii) new customers that entered into a customer agreement after the end of the base period.

3 Enterprise customers are defined as those spending $100,000 or more in the trailing 12-month period.

4 Assumes weighted average basic shares outstanding of 125.8 million in Q1 2023 and 129.5 million for the full year 2023.

5 Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2023.

6 Annual revenue retention rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers divided by our annual revenue of the same calendar year from 100%. Our “Annual Revenue Churn” is calculated by multiplying the final full month of revenue from a customer that terminated its contract with us (a “Churned Customer”) by the number of months remaining in the same calendar year.

7 Average enterprise customer spend is calculated by taking the sum of the trailing 12-month revenue contributed by enterprise customers existing as of the current period, and dividing that by the number of enterprise customers as of the current period.

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

Three months ended December 31,

 

Year ended December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

$

119,321

 

$

97,717

 

$

432,725

 

$

354,330

 

Cost of revenue(1)

 

56,738

 

 

47,944

 

 

222,944

 

 

167,002

 

Gross profit

 

62,583

 

 

49,773

 

 

209,781

 

 

187,328

 

Operating expenses: Research and development(1)

 

37,197

 

 

34,997

 

 

155,308

 

 

126,859

 

Sales and marketing(1)

 

44,623

 

 

42,151

 

 

179,869

 

 

152,645

 

General and administrative(1)

 

29,225

 

 

29,281

 

 

120,803

 

 

126,845

 

Total operating expenses

 

111,045

 

 

106,429

 

 

455,980

 

 

406,349

 

Loss from operations

 

(48,462

)

 

(56,656

)

 

(246,199

)

 

(219,021

)

Net gain on extinguishment of debt

 

—

 

 

—

 

 

54,391

 

 

—

 

Interest income

 

2,894

 

 

552

 

 

7,044

 

 

1,282

 

Interest expense

 

(1,354

)

 

(1,593

)

 

(5,887

)

 

(5,245

)

Other income (expense)

 

46

 

 

201

 

 

(29

)

 

356

 

Loss before income taxes

 

(46,876

)

 

(57,496

)

 

(190,680

)

 

(222,628

)

Income tax expense

 

(223

)

 

25

 

 

94

 

 

69

 

Net loss

$

(46,653

)

$

(57,521

)

$

(190,774

)

$

(222,697

)

Net income (loss) per share attributable to common stockholders, basic and diluted

$

(0.38

)

$

(0.49

)

$

(1.57

)

$

(1.92

)

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted

 

123,587

 

 

118,161

 

 

121,723

 

 

116,053

 

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

Three months ended December 31,

 

Year ended December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cost of revenue

$

2,938

 

$

2,316

 

$

12,050

 

$

7,227

 

Research and development

 

11,469

 

 

15,675

 

 

58,435

 

 

47,019

 

Sales and marketing

 

7,885

 

 

11,399

 

 

39,083

 

 

31,159

 

General and administrative

 

9,126

 

 

10,198

 

 

36,228

 

 

55,083

 

Total

$

31,418

 

$

39,588

 

$

145,796

 

$

140,488

 

  Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, unaudited)

Three months ended December 31,

 

Year ended December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Gross Profit GAAP gross profit

$

62,583

 

$

49,773

 

$

209,781

 

$

187,328

 

Stock-based compensation

 

2,938

 

 

2,316

 

 

12,050

 

 

7,227

 

Amortization of acquired intangible assets

 

2,475

 

 

2,475

 

 

9,900

 

 

9,900

 

Non-GAAP gross profit

$

67,996

 

$

54,564

 

$

231,731

 

$

204,455

 

GAAP gross margin

 

52.4

%

 

50.9

%

 

48.5

%

 

52.9

%

Non-GAAP gross margin

 

57.0

%

 

55.8

%

 

53.6

%

 

57.7

%

  Research and development GAAP research and development

$

37,197

 

$

34,997

 

$

155,308

 

$

126,859

 

Stock-based compensation

 

(11,469

)

 

(15,675

)

 

(58,435

)

 

(47,019

)

Non-GAAP research and development

$

25,728

 

$

19,322

 

$

96,873

 

$

79,840

 

  Sales and marketing GAAP sales and marketing

$

44,623

 

$

42,151

 

$

179,869

 

$

152,645

 

Stock-based compensation

 

(7,885

)

 

(11,399

)

 

(39,083

)

 

(31,159

)

Amortization of acquired intangible assets

 

(2,575

)

 

(2,710

)

 

(10,891

)

 

(10,944

)

Non-GAAP sales and marketing

$

34,163

 

$

28,042

 

$

129,895

 

$

110,542

 

  General and administrative GAAP general and administrative

$

29,225

 

$

29,281

 

$

120,803

 

$

126,845

 

Stock-based compensation

 

(9,126

)

 

(10,198

)

 

(33,195

)

 

(55,083

)

Executive transition costs

 

—

 

 

—

 

 

(4,207

)

 

—

 

Acquisition-related expenses

 

—

 

 

(149

)

 

(1,970

)

 

(2,555

)

Non-GAAP general and administrative

$

20,099

 

$

18,934

 

$

81,431

 

$

69,207

 

  Operating loss GAAP operating loss

$

(48,462

)

$

(56,656

)

$

(246,199

)

$

(219,021

)

Stock-based compensation

 

31,418

 

 

39,588

 

 

142,763

 

 

140,488

 

Executive transition costs

 

—

 

 

—

 

 

4,207

 

 

—

 

Amortization of acquired intangible assets

 

5,050

 

 

5,185

 

 

20,791

 

 

20,844

 

Acquisition-related expenses

 

—

 

 

149

 

 

1,970

 

 

2,555

 

Non-GAAP operating loss

$

(11,994

)

$

(11,734

)

$

(76,468

)

$

(55,134

)

  Net loss GAAP net loss

$

(46,653

)

$

(57,521

)

$

(190,774

)

$

(222,697

)

Stock-based compensation

 

31,418

 

 

39,588

 

 

142,763

 

 

140,488

 

Executive transition costs

 

—

 

 

—

 

 

4,207

 

 

—

 

Amortization of acquired intangible assets

 

5,050

 

 

5,185

 

 

20,791

 

 

20,844

 

Acquisition-related expenses

 

—

 

 

149

 

 

1,970

 

 

2,555

 

Net gain on extinguishment of debt

 

—

 

 

—

 

 

(54,391

)

 

—

 

Amortization of debt discount and issuance costs

 

716

 

 

947

 

 

3,169

 

 

2,907

 

Non-GAAP loss

$

(9,469

)

$

(11,652

)

$

(72,265

)

$

(55,903

)

  Non-GAAP net loss per common share—basic and diluted

$

(0.08

)

$

(0.10

)

$

(0.59

)

$

(0.48

)

Weighted average basic and diluted common shares

 

123,587

 

 

118,161

 

 

121,723

 

 

116,053

 

 

Three months ended December 31,

 

Year ended December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Adjusted EBITDA GAAP net loss

$

(46,653

)

$

(57,521

)

$

(190,774

)

$

(222,697

)

Stock-based compensation

 

31,418

 

 

39,588

 

 

142,763

 

 

140,488

 

Executive transition costs

 

—

 

 

—

 

 

4,207

 

 

—

 

Depreciation and other amortization

 

11,903

 

 

8,228

 

 

43,524

 

 

29,208

 

Amortization of acquired intangible assets

 

5,050

 

 

5,185

 

 

20,791

 

 

20,844

 

Acquisition-related expenses

 

—

 

 

149

 

 

1,970

 

 

2,555

 

Interest income

 

(2,894

)

 

(552

)

 

(7,044

)

 

(1,282

)

Interest expense

 

638

 

 

1,593

 

 

2,718

 

 

5,245

 

Amortization of debt discount and issuance costs

 

716

 

 

947

 

 

3,169

 

 

2,907

 

Net gain on extinguishment of debt

 

—

 

 

—

 

 

(54,391

)

 

—

 

Other expense (income)

 

(46

)

 

(201

)

 

29

 

 

(356

)

Income tax expense (benefit)

 

(223

)

 

25

 

 

94

 

 

69

 

Adjusted EBITDA

$

(91

)

$

(2,559

)

$

(32,944

)

$

(23,019

)

  Condensed Consolidated Balance Sheets (in thousands)

As of December 31, 2022

 

As of December 31, 2021

(unaudited)

 

(audited)

ASSETS Current assets: Cash and cash equivalents

$

143,391

 

$

166,068

 

Marketable securities, current

 

374,581

 

 

361,795

 

Accounts receivable, net of allowance for credit losses

 

89,578

 

 

64,625

 

Prepaid expenses and other current assets

 

28,933

 

 

32,160

 

Total current assets

 

636,483

 

 

624,648

 

Property and equipment, net

 

180,378

 

 

166,961

 

Operating lease right-of-use assets, net

 

68,440

 

 

69,631

 

Goodwill

 

670,185

 

 

636,805

 

Intangible assets, net

 

82,900

 

 

102,596

 

Marketable securities, non-current

 

165,105

 

 

528,911

 

Other assets

 

92,622

 

 

29,468

 

Total assets

$

1,896,113

 

$

2,159,020

 

LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable

$

4,786

 

$

9,257

 

Accrued expenses

 

61,161

 

 

36,112

 

Finance lease liabilities, current

 

28,954

 

 

21,125

 

Operating lease liabilities, current

 

23,026

 

 

20,271

 

Other current liabilities

 

34,394

 

 

45,107

 

Total current liabilities

 

152,321

 

 

131,872

 

Long-term debt

 

704,710

 

 

933,205

 

Finance lease liabilities, non-current

 

15,507

 

 

22,293

 

Operating lease liabilities, non-current

 

61,341

 

 

55,114

 

Other long-term liabilities

 

7,076

 

 

2,583

 

Total liabilities

 

940,955

 

 

1,145,067

 

Stockholders’ equity: Class A common stock

 

2

 

 

2

 

Additional paid-in capital

 

1,666,106

 

 

1,527,468

 

Accumulated other comprehensive loss

 

(9,286

)

 

(2,627

)

Accumulated deficit

 

(701,664

)

 

(510,890

)

Total stockholders’ equity

 

955,158

 

 

1,013,953

 

Total liabilities and stockholders’ equity

$

1,896,113

 

$

2,159,020

 

  Condensed Consolidated Statements of Cash Flows (in thousands, unaudited)

Three months ended December 31,

 

Year ended December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities: Net loss

$

(46,653

)

$

(57,521

)

$

(190,774

)

$

(222,697

)

Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense

 

11,371

 

 

8,089

 

 

42,619

 

 

28,799

 

Amortization of intangible assets

 

5,582

 

 

5,309

 

 

21,696

 

 

21,238

 

Non-cash lease expense

 

7,835

 

 

7,065

 

 

29,714

 

 

26,883

 

Amortization of debt discount and issuance costs

 

715

 

 

950

 

 

3,169

 

 

3,185

 

Amortization of deferred contract costs

 

2,896

 

 

1,727

 

 

8,916

 

 

6,294

 

Stock-based compensation

 

31,418

 

 

39,588

 

 

145,796

 

 

140,488

 

Provision for credit losses

 

624

 

 

155

 

 

2,406

 

 

196

 

Interest paid for finance lease

 

(538

)

 

(495

)

 

(2,381

)

 

(1,754

)

(Gain) loss on disposals of property and equipment

 

—

 

 

(123

)

 

854

 

 

(300

)

Amortization and accretion of discounts and premiums on investments

 

515

 

 

987

 

 

3,137

 

 

2,221

 

Impairment of operating ROU assets

 

2,083

 

 

—

 

 

2,083

 

 

—

 

Net gain on extinguishment of debt

 

—

 

 

—

 

 

(54,391

)

 

—

 

Other adjustments

 

3,980

 

 

(258

)

 

3,688

 

 

4

 

Changes in operating assets and liabilities: Accounts receivable

 

(17,288

)

 

(10,546

)

 

(27,359

)

 

(14,563

)

Prepaid expenses and other current assets

 

(971

)

 

725

 

 

(6,758

)

 

(4,777

)

Other assets

 

(15,492

)

 

(3,103

)

 

(35,396

)

 

(10,423

)

Accounts payable

 

(1,267

)

 

1,799

 

 

(4,724

)

 

146

 

Accrued expenses

 

3,799

 

 

1,548

 

 

8,289

 

 

4,261

 

Operating lease liabilities

 

(6,377

)

 

(6,712

)

 

(27,044

)

 

(26,447

)

Other liabilities

 

5,640

 

 

2,908

 

 

6,828

 

 

8,764

 

Net cash used in operating activities

 

(12,128

)

 

(7,908

)

 

(69,632

)

 

(38,482

)

Cash flows from investing activities: Purchases of marketable securities

 

—

 

 

(150,586

)

 

(355,479

)

 

(928,155

)

Sales of marketable securities

 

65

 

 

2,291

 

 

161,918

 

 

66,527

 

Maturities of marketable securities

 

94,303

 

 

45,232

 

 

535,040

 

 

118,085

 

Business acquisitions, net of cash acquired

 

1,843

 

 

(1,169

)

 

(25,902

)

 

(1,169

)

Advance payment for purchase of property and equipment

 

(10,923

)

 

—

 

 

(42,197

)

 

—

 

Purchases of property and equipment

 

(8,529

)

 

(3,549

)

 

(19,975

)

 

(34,816

)

Proceeds from sale of property and equipment

 

126

 

 

297

 

 

492

 

 

588

 

Capitalized internal-use software

 

(4,290

)

 

(3,180

)

 

(18,146

)

 

(13,479

)

Purchases of intangible assets

 

—

 

 

—

 

 

—

 

 

(2,092

)

Net cash (used in) provided by investing activities

 

72,595

 

 

(110,664

)

 

235,751

 

 

(794,511

)

Cash flows from financing activities: Issuance of convertible note, net of issuance costs

 

—

 

 

—

 

 

—

 

 

930,775

 

Payments of debt issuance costs

 

—

 

 

—

 

 

—

 

 

(1,351

)

Repayments of notes payable

 

—

 

 

—

 

 

(177,082

)

 

—

 

Repayments of finance lease liabilities

 

(4,427

)

 

(3,004

)

 

(22,532

)

 

(13,568

)

Cash received for restricted stock sold in advance of vesting conditions

 

—

 

 

—

 

 

10,655

 

 

—

 

Cash paid for early sale of restricted shares

 

—

 

 

—

 

 

(10,655

)

 

—

 

Proceeds from employee stock purchase plan

 

(949

)

 

2,075

 

 

4,777

 

 

8,069

 

Proceeds from exercise of vested stock options

 

364

 

 

3,532

 

 

5,688

 

 

12,626

 

Net cash (used in) provided by financing activities

 

(5,012

)

 

2,603

 

 

(189,149

)

 

936,551

 

Effects of exchange rate changes on cash, cash equivalents, and restricted cash

 

39

 

 

(94

)

 

(390

)

 

(477

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

55,494

 

 

(116,063

)

 

(23,420

)

 

103,081

 

Cash, cash equivalents, and restricted cash at beginning of period

 

88,047

 

 

283,024

 

 

166,961

 

 

63,880

 

Cash, cash equivalents, and restricted cash at end of period

 

143,541

 

 

166,961

 

 

143,541

 

 

166,961

 

Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows: Cash and cash equivalents

 

143,391

 

 

166,068

 

 

143,391

 

 

166,068

 

Restricted cash, current

 

150

 

 

—

 

 

150

 

 

—

 

Restricted cash, non-current

 

—

 

 

893

 

 

—

 

 

893

 

Total cash, cash equivalents, and restricted cash

$

143,541

 

$

166,961

 

$

143,541

 

$

166,961

 

  Free Cash Flow (in thousands, unaudited)

Three months ended December 31,

 

Year ended December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cash flow used in operations

$

(12,128

)

$

(7,908

)

$

(69,632

)

$

(38,482

)

Capital expenditures(1)

 

(17,120

)

 

(9,436

)

 

(60,161

)

 

(61,275

)

Advance payment for purchase of property and equipment(2)

 

(10,923

)

 

—

 

 

(42,197

)

 

—

 

Free Cash Flow

$

(40,171

)

$

(17,344

)

$

(171,990

)

$

(99,757

)

__________

(1)

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

 (2)

  Advance payments for purchase of property and equipment relate to prepayments made for our capital expenditures in advance of receiving the asset, as reflected in our statement of cash flows.

Source: Fastly, Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230215005605/en/

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

Media Contact: press@fastly.com