Company reports record third quarter revenue of
$127.8 million
Fastly, Inc. (NYSE: FSLY), one of the world’s fastest edge cloud
platforms, today announced financial results for its third quarter
ended September 30, 2023.
“I am pleased with the team’s progress and we’re proud of the
operating performance this quarter, posting record revenue and
positive adjusted EBITDA,” said Todd Nightingale, CEO of
Fastly.
“The team is rapidly executing on our strategic initiatives in
packaging, channel development and platform unification,” continued
Nightingale. “Our focus on customer acquisition and industry
vertical expansion positions us well for 2024, driving our mission
to make every user experience fast, safe, and engaging.”
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Revenue
$
127,816
$
108,504
$
368,211
$
313,404
Gross margin
GAAP gross margin
51.7
%
48.6
%
51.8
%
47.0
%
Non-GAAP gross margin
55.9
%
53.6
%
56.0
%
52.2
%
Operating loss
GAAP operating loss
$
(58,342
)
$
(65,765
)
$
(155,444
)
$
(197,737
)
Non-GAAP operating loss
$
(12,552
)
$
(19,841
)
$
(34,411
)
$
(64,474
)
Net loss per share
GAAP net loss per common share—basic and
diluted
$
(0.42
)
$
(0.52
)
$
(0.86
)
$
(1.19
)
Non-GAAP net loss per common share—basic
and diluted
$
(0.06
)
$
(0.14
)
$
(0.18
)
$
(0.52
)
Third Quarter 2023 Financial Summary
- Total revenue of $127.8 million, representing 18%
year-over-year growth and 4% sequential increase.
- GAAP gross margin of 51.7%, compared to 48.6% in the third
quarter of 2022. Non-GAAP gross margin of 55.9%, compared to 53.6%
in the third quarter of 2022.
- GAAP net loss of $54.3 million, compared to $63.4 million in
the third quarter of 2022. Non-GAAP net loss of $8.0 million,
compared to $16.8 million in the third quarter of 2022.
- GAAP net loss per basic and diluted shares of $0.42 compared to
$0.52 in the third quarter of 2022. Non-GAAP net loss per basic and
diluted shares of $0.06, compared to $0.14 in the third quarter of
2022.
Key Metrics
- Trailing 12 month net retention rate (LTM NRR)1 decreased to
114% in the third quarter from 116% in the second quarter.
- Total customer count2 was 3,102 in the third quarter, up 30
from the second quarter; 547 were enterprise customers2 in the
third quarter, down 4 from the second quarter.
- Average enterprise customer spend3 of $858 thousand in the
third quarter, up 5% quarter-over-quarter.
- Remaining performance obligations (RPO)4 was $248 million, up
7% from $231 million in the second quarter of 2023 and up 43% from
$173 million in the third quarter of 2022.
- Dollar-Based Net Expansion Rate (DBNER)5 decreased to 120% in
the third quarter from 123% in the second 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.
Third Quarter Business and Product Highlights
- Expanded domain API capabilities with Domainr acquisition to
enhance simplification and security; coupled with the GA of
Certainly, Fastly’s TLS Certification Authority, Fastly
significantly advanced its edge cloud platform.
- Channel partner deal registration has more than tripled in 2023
year-to-date compared to all of 2022, with almost 90% growth in
partner engagement and channel revenue growth of more than
50%.
- Transacted packaging deals with twice as many customers
quarter-over-quarter, almost half of those deals since program
inception included Compute.
- Hosted Altitude, our user conference in New York, and demoed
Simplified Service Creation showcasing the ability to provision a
global website in less than 90 seconds; a new level of simplicity
for the CDN market.
- Publication of Fastly's first threat intelligence report, the
“Network Effect Threat Report,” featuring data and insights from
Fastly’s Network Learning Exchange (NLX).
- KV Store which enables more powerful edge applications through
high performance reads and writes from both the edge and API across
Fastly’s network.
- GraphQL Inspection which expands Fastly’s API protections to
the NGWAF product to support GraphQL.
- Established a Fastly-owned certificate authority with the GA of
Certainly, providing domain-validated TLS certificates in our
managed TLS services and helping enable trusted identification of
websites to improve security and reliability.
- Released Go compiler SDK which provides developers with key
capabilities for their application development.
- Deployed Fastly Fanout at the edge, enabling developers to
build and scale real-time applications that push data instantly to
end user app environments.
Fourth Quarter and Full Year 2023
Guidance
Q4 2023
Full Year 2023
Total Revenue (millions)
$137 - $141
$505 - $509
Non-GAAP Operating Loss
(millions)
($10.0) - ($6.0)
($44.0) - ($40.0)
Non-GAAP Net Loss per share
(6)(7)
($0.05) - ($0.01)
($0.23) - ($0.19)
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, November 1,
2023.
Date:
Wednesday, November 1, 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, November 1 through November 15, 2023 by
dialing 800-770-2030 or 647-362-9199 and entering the passcode
7543239.
About Fastly
Fastly’s powerful and programmable edge cloud platform helps the
world’s top brands deliver the fastest online experiences possible,
while improving site performance, enhancing security, and
empowering innovation at global scale. With world-class support
that achieves 95%+ average annual customer satisfaction ratings,
Fastly’s beloved suite of edge compute, delivery, and security
offerings has been recognized as a leader by industry analysts such
as IDC, Forrester and Gartner. Compared to legacy providers,
Fastly’s powerful and modern network architecture is one of the
fastest on the planet, empowering developers to deliver secure
websites and apps at global scale with rapid time-to-market and
industry-leading cost savings. Thousands of the world’s most
prominent organizations trust Fastly to help them upgrade the
internet experience, including Reddit, Pinterest, Stripe, Neiman
Marcus, The New York Times, Epic Games, and GitHub. Learn more
about Fastly at https://www.fastly.com/ and follow us @fastly.
Forward-Looking Statements
This press release contains “forward-looking” statements that
are based on our beliefs and assumptions and on information
currently available to us on the date of this press release.
Forward-looking statements may involve known and unknown risks,
uncertainties, and other factors that may cause our actual results,
performance, or achievements to be materially different from those
expressed or implied by the forward-looking statements. These
statements include, but are not limited to, statements regarding
our future financial and operating performance, including our
outlook and guidance, our operating performance, our ability to
innovate, our go-to-market efforts, our ability to monetize, and
our ability to deliver on our long-term strategy. Except as
required by law, we assume no obligation to update these
forward-looking statements publicly or to update the reasons actual
results could differ materially from those anticipated in the
forward-looking statements, even if new information becomes
available in the future. Important factors that could cause our
actual results to differ materially are detailed from time to time
in the reports Fastly files with the Securities and Exchange
Commission (“SEC”), including in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2022. Additional information
will also be set forth in our Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2023. Copies of reports filed
with the SEC are posted on Fastly’s website and are available from
Fastly without charge.
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements,
which are prepared and presented in accordance with accounting
principles generally accepted in the United States ("GAAP"), the
Company uses the following non-GAAP measures of financial
performance: non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating loss, non-GAAP net loss, non-GAAP basic and diluted net
loss per common share, non-GAAP research and development, non-GAAP
sales and marketing, non-GAAP general and administrative, free cash
flow and adjusted EBITDA. The presentation of this additional
financial information is not intended to be considered in isolation
from, as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP. These
non-GAAP measures have limitations in that they do not reflect all
of the amounts associated with our results of operations as
determined in accordance with GAAP. In addition, these non-GAAP
financial measures may be different from the non-GAAP financial
measures used by other companies. These non-GAAP measures should
only be used to evaluate our results of operations in conjunction
with the corresponding GAAP measures. Management compensates for
these limitations by reconciling these non-GAAP financial measures
to the most comparable GAAP financial measures within our earnings
releases.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
loss, non-GAAP net loss and non-GAAP basic and diluted net loss per
common share, non-GAAP research and development, non-GAAP sales and
marketing, and non-GAAP general and administrative differ from GAAP
in that they exclude stock-based compensation expense, amortization
of acquired intangible assets, acquisition-related expenses,
executive transition costs, net gain on extinguishment of debt,
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.
Acquisition-related Expenses: consists of
acquisition-related charges that are not related to ongoing
operations. Management considers its operating results without this
activity when evaluating its ongoing non-GAAP net loss performance
and its adjusted EBITDA performance because these charges may not
be reflective of our core business, ongoing operating results, or
future outlook.
Amortization of Acquired Intangible Assets: consists of
non-cash charges that can be affected by the timing and magnitude
of asset purchases and acquisitions. Management considers its
operating results without this activity when evaluating its ongoing
non-GAAP performance and its adjusted EBITDA performance because
these charges are non-cash expenses that can be affected by the
timing and magnitude of asset purchases and acquisitions and may
not be reflective of our core business, ongoing operating results,
or future outlook.
Amortization of Debt Discount and Issuance Costs:
consists primarily of amortization expense related to our debt
obligations. Management considers its operating results without
this activity when evaluating its ongoing non-GAAP net loss
performance and its adjusted EBITDA performance because it is not
believed by management to be reflective of our core business,
ongoing operating results or future outlook. These are included in
our total interest expense.
Capital Expenditures: consists of cash used for purchases
of property and equipment, net of proceeds from sale of property
and equipment, capitalized internal-use software and payments on
finance lease obligations, as reflected in our statement of cash
flows.
Depreciation and Other Amortization Expense: consists of
non-cash charges that can be affected by the timing and magnitude
of asset purchases. Management considers its operating results
without this activity when evaluating its ongoing adjusted EBITDA
performance because these charges are non-cash expenses that can be
affected by the timing and magnitude of asset purchases and may not
be reflective of our core business, ongoing operating results, or
future outlook.
Executive Transition Costs: consists of one-time cash and
non-cash charges recognized with respect to changes in our
executive’s employment status. Management considers its operating
results without this activity when evaluating its ongoing non-GAAP
net loss performance and its adjusted EBITDA performance because it
is not believed by management to be reflective of our core
business, ongoing operating results or future outlook.
Free Cash Flow: calculated as net cash used in operating
activities less purchases of property and equipment, net of
proceeds from sale of property and equipment, principal payments of
finance lease liabilities, capitalized internal-use software costs
and advance payments made related to capital expenditures.
Management specifically identifies adjusting items in the
reconciliation of GAAP to non-GAAP financial measures. Management
considers non-GAAP free cash flow to be a profitability and
liquidity measure that provides useful information to management
and investors about the amount of cash generated by the business
that can possibly be used for investing in Fastly's business and
strengthening its balance sheet, but it is not intended to
represent the residual cash flow available for discretionary
expenditures. The presentation of non-GAAP free cash flow is also
not meant to be considered in isolation or as an alternative to
cash flows from operating activities as a measure of liquidity.
Impairment Expense: consists of impairment charge related
to our computer and networking equipment, including software, we
expect to not be used. 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 We calculate LTM Net Retention Rate by dividing the total
customer revenue for the prior twelve-month period (“prior 12-month
period”) ending at the beginning of the last twelve-month period
(“LTM period”) minus revenue contraction due to billing decreases
or customer churn, plus revenue expansion due to billing increases
during the LTM period from the same customers by the total prior
12-month period revenue. We believe the LTM Net Retention Rate is
supplemental as it removes some of the volatility that is inherent
in a usage-based business model.
2 Under our new methodology, our number of customers are
calculated based on the number of separate identifiable operating
entities with which we have a billing relationship in good
standing, from which we recognized revenue during the current
quarter. Under our prior methodology, our number of customers are
calculated based on the number of separate identifiable operating
entities with which we have a billing relationship in good
standing, from which we recognized revenue during the last month of
the quarter. Under our new methodology, our enterprise customers
are defined as those with annualized current quarter revenue in
excess of $100,000. This is calculated by taking the revenue for
each customer within the quarter and multiplying it by four. Under
our prior methodology, our enterprise customers are defined as
those with revenue in excess of $100,000 in the trailing 12-month
period. Under our prior methodology, our total customer count was
3,019 in the third quarter, up 54 from the second quarter of 2023;
530 were enterprise customers in the third quarter, up 10 from the
second quarter of 2023.
3 Under our new methodology, our average enterprise customer
spend is calculated by taking the annualized current quarter
revenue contributed by enterprise customers existing as of the
current period, and dividing that by the number of enterprise
customers as of the current period. Under our prior methodology,
our average enterprise customer spend is calculated by taking the
sum of the trailing 12-month revenue contributed by enterprise
customers existing as of the current period, and dividing that by
the number of enterprise customers as of the current period. Under
our prior methodology, our average enterprise customer spend was
$832 thousand in the second quarter, up 3%
quarter-over-quarter.
4 Remaining performance obligations include future committed
revenue for periods within current contracts with customers, as
well as deferred revenue arising from consideration invoiced for
which the related performance obligations have not been
satisfied.
5 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.
6 Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss
divided by weighted average basic shares for 2023.
7 Assumes weighted average basic shares outstanding of 132.0
million in Q4 2023 and 128.8 million for the full year 2023.
Condensed Consolidated Statements of
Operations
(in thousands, except per share
amounts, unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Revenue
127,816
$
108,504
$
368,211
$
313,404
Cost of revenue(1)
61,730
55,825
177,657
166,206
Gross profit
66,086
52,679
190,554
147,198
Operating expenses:
Research and development(1)
39,068
38,957
113,920
118,111
Sales and marketing(1)
51,043
47,006
143,111
135,246
General and administrative(1)
30,001
32,481
84,651
91,578
Impairment expense
4,316
—
4,316
—
Total operating expenses
124,428
118,444
345,998
344,935
Loss from operations
(58,342
)
(65,765
)
(155,444
)
(197,737
)
Net gain on extinguishment of debt
—
—
36,760
54,391
Interest income
4,908
1,967
13,602
4,150
Interest expense
(862
)
(1,381
)
(3,307
)
(4,533
)
Other income (expense)
(16
)
1,877
(1,069
)
(75
)
Loss before income taxes
(54,312
)
(63,302
)
(109,458
)
(143,804
)
Income tax expense
(1
)
118
244
317
Net loss
(54,311
)
$
(63,420
)
$
(109,702
)
$
(144,121
)
Net income (loss) per share
attributable to common stockholders, basic and diluted
(0.42
)
$
(0.52
)
$
(0.86
)
$
(1.19
)
Weighted-average shares used in
computing net income (loss) per share attributable to common
stockholders, basic and diluted
129,873
122,339
127,735
121,094
_____________
(1) Includes stock-based compensation
expense as follows:
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Cost of revenue
$
2,860
$
2,978
$
8,378
$
9,112
Research and development
12,122
14,488
35,808
46,966
Sales and marketing
9,061
10,920
25,643
31,198
General and administrative
11,670
10,992
31,027
27,102
Total
$
35,713
$
39,378
$
100,856
$
114,378
Reconciliation of GAAP to Non-GAAP
Financial Measures
(in thousands, unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Gross Profit
GAAP gross profit
$
66,086
$
52,679
$
190,554
$
147,198
Stock-based compensation
2,860
2,978
8,378
9,112
Amortization of acquired intangible
assets
2,475
2,475
7,425
7,425
Non-GAAP gross profit
$
71,421
$
58,132
$
206,357
$
163,735
GAAP gross margin
51.7
%
48.6
%
51.8
%
47.0
%
Non-GAAP gross margin
55.9
%
53.6
%
56.0
%
52.2
%
Research and development
GAAP research and development
$
39,068
$
38,957
$
113,920
$
118,111
Stock-based compensation
(10,426
)
(14,488
)
(34,112
)
(46,966
)
Executive transition costs
(2,406
)
—
(2,406
)
—
Non-GAAP research and
development
$
26,236
$
24,469
$
77,402
$
71,145
Sales and marketing
GAAP sales and marketing
$
51,043
$
47,006
$
143,111
$
135,246
Stock-based compensation
(9,061
)
(10,920
)
(25,643
)
(31,198
)
Amortization of acquired intangible
assets
(2,576
)
(2,897
)
(7,726
)
(8,316
)
Non-GAAP sales and marketing
$
39,406
$
33,189
$
109,742
$
95,732
General and administrative
GAAP general and administrative
$
30,001
$
32,481
$
84,651
$
91,578
Stock-based compensation
(11,670
)
(7,959
)
(31,027
)
(24,069
)
Executive transition costs
—
(4,207
)
—
(4,207
)
Acquisition-related expenses
—
—
—
(1,970
)
Non-GAAP general and
administrative
$
18,331
$
20,315
$
53,624
$
61,332
Operating loss
GAAP operating loss
$
(58,342
)
$
(65,765
)
$
(155,444
)
$
(197,737
)
Stock-based compensation
34,017
36,345
99,160
111,345
Executive transition costs
2,406
4,207
2,406
4,207
Amortization of acquired intangible
assets
5,051
5,372
15,151
15,741
Impairment expense
4,316
—
4,316
—
Acquisition-related expenses
—
—
—
1,970
Non-GAAP operating loss
$
(12,552
)
$
(19,841
)
$
(34,411
)
$
(64,474
)
Net loss
GAAP net loss
$
(54,311
)
$
(63,420
)
$
(109,702
)
$
(144,121
)
Stock-based compensation
34,017
36,345
99,160
111,345
Executive transition costs
2,406
4,207
2,406
4,207
Amortization of acquired intangible
assets
5,051
5,372
15,151
15,741
Acquisition-related expenses
—
—
—
1,970
Net gain on extinguishment of debt
—
—
(36,760
)
(54,391
)
Impairment expense
4,316
—
4,316
—
Amortization of debt discount and issuance
costs
502
714
2,021
2,453
Non-GAAP loss
$
(8,019
)
$
(16,782
)
$
(23,408
)
$
(62,796
)
Non-GAAP net loss per common
share—basic and diluted
$
(0.06
)
$
(0.14
)
$
(0.18
)
$
(0.52
)
Weighted average basic and diluted
common shares
129,873
122,339
127,735
121,094
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Adjusted EBITDA
GAAP net loss
$
(54,311
)
$
(63,420
)
$
(109,702
)
$
(144,121
)
Stock-based compensation
34,017
36,345
99,160
111,345
Executive transition costs
2,406
4,207
2,406
4,207
Net gain on extinguishment of debt
—
—
(36,760
)
(54,391
)
Impairment expense
4,316
—
4,316
—
Acquisition-related expenses
—
—
—
1,970
Depreciation and other amortization
13,202
10,786
38,412
31,621
Amortization of acquired intangible
assets
5,051
5,372
15,151
15,741
Amortization of debt discount and issuance
costs
502
714
2,021
2,453
Interest income
(4,908
)
(1,967
)
(13,602
)
(4,150
)
Interest expense
360
667
1,286
2,080
Other expense (income)
16
(1,877
)
1,069
75
Income tax expense (benefit)
(1
)
118
244
317
Adjusted EBITDA
$
650
$
(9,055
)
$
4,001
$
(32,853
)
Condensed Consolidated Balance
Sheets
(in thousands)
As of September 30,
2023
As of December 31,
2022
(unaudited)
(audited)
ASSETS
Current assets:
Cash and cash equivalents
$
270,300
$
143,391
Marketable securities, current
158,055
374,581
Accounts receivable, net of allowance for
credit losses
98,622
89,578
Prepaid expenses and other current
assets
24,481
28,933
Total current assets
551,458
636,483
Property and equipment, net
171,914
180,378
Operating lease right-of-use assets,
net
52,927
68,440
Goodwill
670,356
670,185
Intangible assets, net
67,375
82,900
Marketable securities, non-current
32,280
165,105
Other assets
94,353
92,622
Total assets
$
1,640,663
$
1,896,113
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
5,723
$
4,786
Accrued expenses
56,595
61,161
Finance lease liabilities, current
19,250
28,954
Operating lease liabilities, current
21,533
23,026
Other current liabilities
40,234
34,394
Total current liabilities
143,335
152,321
Long-term debt
472,823
704,710
Finance lease liabilities, non-current
3,860
15,507
Operating lease liabilities,
non-current
47,775
61,341
Other long-term liabilities
4,298
7,076
Total liabilities
672,091
940,955
Stockholders’ equity:
Common stock
2
2
Additional paid-in capital
1,781,870
1,666,106
Accumulated other comprehensive loss
(1,934
)
(9,286
)
Accumulated deficit
(811,366
)
(701,664
)
Total stockholders’ equity
968,572
955,158
Total liabilities and stockholders’
equity
$
1,640,663
$
1,896,113
Condensed Consolidated Statements of
Cash Flows
(in thousands, unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Cash flows from operating
activities:
Net loss
$
(54,311
)
$
(63,420
)
$
(109,702
)
$
(144,121
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation expense
13,055
10,662
38,015
31,248
Amortization of intangible assets
5,175
5,496
15,525
16,114
Non-cash lease expense
5,464
8,133
17,227
19,655
Amortization of debt discount and issuance
costs
501
715
2,020
2,454
Amortization of deferred contract
costs
4,082
2,031
11,253
6,020
Stock-based compensation
35,713
39,378
100,856
114,378
Provision for credit losses
211
1,253
1,311
1,782
(Gain) loss on disposals of property and
equipment
(42
)
—
505
854
Amortization and accretion of discounts
and premiums on investments
(403
)
771
344
2,622
Impairment of operating lease right-of-use
assets
401
—
588
—
Impairment expense
4,316
—
4,316
—
Net gain on extinguishment of debt
—
—
(36,760
)
(54,391
)
Other adjustments
71
(353
)
(257
)
(292
)
Changes in operating assets and
liabilities:
Accounts receivable
(20,538
)
(5,949
)
(10,355
)
(10,071
)
Prepaid expenses and other current
assets
5,019
(975
)
4,602
(5,787
)
Other assets
(4,286
)
(13,505
)
(16,269
)
(19,904
)
Accounts payable
314
(4,301
)
1,258
(3,457
)
Accrued expenses
340
3,328
(6,253
)
4,490
Operating lease liabilities
(4,505
)
(7,462
)
(16,937
)
(18,443
)
Other liabilities
1,033
(3,436
)
6,452
(655
)
Net cash provided by (used in)
operating activities
(8,390
)
(27,634
)
7,739
(57,504
)
Cash flows from investing
activities:
Purchases of marketable securities
(73,091
)
—
(73,091
)
(355,479
)
Sales of marketable securities
1
—
775
161,853
Maturities of marketable securities
86,030
72,857
428,125
440,737
Business acquisitions, net of cash
acquired
—
(1,746
)
—
(27,745
)
Advance payment for purchase of property
and equipment
—
(1,964
)
—
(31,274
)
Purchases of property and equipment
(325
)
(2,631
)
(8,283
)
(11,446
)
Proceeds from sale of property and
equipment
13
125
49
366
Capitalized internal-use software
(4,951
)
(5,120
)
(15,390
)
(13,856
)
Net cash provided by investing
activities
7,677
61,521
332,185
163,156
Cash flows from financing
activities:
Cash paid for debt extinguishment
—
—
(196,934
)
(177,082
)
Repayments of finance lease
liabilities
(6,041
)
(7,076
)
(21,243
)
(18,105
)
Cash received for restricted stock sold in
advance of vesting conditions
—
—
—
10,655
Cash paid for early sale of restricted
shares
—
(3,618
)
—
(10,655
)
Payment of deferred consideration for
business acquisitions
—
—
(4,393
)
—
Proceeds from exercise of vested stock
options
1,137
555
2,008
5,324
Proceeds from employee stock purchase
plan
2,222
1,749
7,009
5,726
Net cash used in financing
activities
(2,682
)
(8,390
)
(213,553
)
(184,137
)
Effects of exchange rate changes on cash,
cash equivalents, and restricted cash
(47
)
(110
)
538
(429
)
Net increase in cash, cash equivalents,
and restricted cash
(3,442
)
25,387
126,909
(78,914
)
Cash, cash equivalents, and restricted
cash at beginning of period
273,892
62,660
143,541
166,961
Cash, cash equivalents, and restricted
cash at end of period
270,450
88,047
270,450
88,047
Reconciliation of cash, cash
equivalents, and restricted cash as shown in the statements of cash
flows:
Cash and cash equivalents
270,300
87,897
270,300
87,897
Restricted cash, current
150
150
150
150
Total cash, cash equivalents, and
restricted cash
$
270,450
$
88,047
$
270,450
$
88,047
Free Cash Flow
(in thousands, unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Cash flow provided by (used in)
operations
$
(8,390
)
$
(27,634
)
$
7,739
$
(57,504
)
Capital expenditures(1)
(11,304
)
(14,702
)
(44,867
)
(43,041
)
Advance payment for purchase of property
and equipment(2)
—
(1,964
)
—
(31,274
)
Free Cash Flow
$
(19,694
)
$
(44,300
)
$
(37,128
)
$
(131,819
)
_____________
(1)
Capital expenditures are defined as cash
used for purchases of property and equipment, net of proceeds from
sale of property and equipment, and capitalized internal-use
software and payments on finance lease obligations, as reflected in
our statement of cash flows.
(2)
As reflected in our statement of cash
flows. In the nine months ended September 30, 2023, we received
$1.7 million of capital equipment that was prepaid prior to the
current quarter.
Source: Fastly, Inc.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101546705/en/
Investor Contact: Vernon Essi, Jr. ir@fastly.com
Media Contact: Spring Harris press@fastly.com
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