Company reports record fourth quarter revenue
of $137.8 million
Fastly, Inc. (NYSE: FSLY), one of the world’s fastest edge cloud
platforms, today announced financial results for its fourth quarter
and full year ended December 31, 2023.
“This quarter demonstrated the progress we’ve made in
operational and financial rigor resulting in strong gross margins
and non-GAAP net income,” said Todd Nightingale, CEO of Fastly.
“Our go-to-market, packaging and channel efforts through 2023
delivered an inflection in our customer acquisition as we closed
out the year,” continued Nightingale. “This positions us well for
2024, driving our mission to make every user experience fast, safe,
and engaging.”
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Revenue
$
137,777
$
119,321
$
505,988
$
432,725
Gross margin
GAAP gross margin
55.0
%
52.4
%
52.6
%
48.5
%
Non-GAAP gross margin
59.2
%
57.0
%
56.9
%
53.6
%
Operating loss
GAAP operating loss
$
(42,584
)
$
(48,462
)
$
(198,028
)
$
(246,199
)
Non-GAAP operating loss
$
(2,268
)
$
(11,994
)
$
(36,679
)
$
(76,468
)
Net loss per share
GAAP net loss per common share—basic and
diluted
$
(0.18
)
$
(0.38
)
$
(1.03
)
$
(1.57
)
Non-GAAP net income (loss) per common
share—basic and diluted
$
0.01
$
(0.08
)
$
(0.17
)
$
(0.59
)
For a reconciliation of non-GAAP financial measures to their
corresponding GAAP measures, please refer to the reconciliation
table at the end of this press release.
Fourth Quarter 2023 Financial Summary
- Total revenue of $137.8 million, representing 15%
year-over-year growth and 8% sequential increase.
- GAAP gross margin of 55.0%, compared to 52.4% in the fourth
quarter of 2022. Non-GAAP gross margin of 59.2%, compared to 57.0%
in the fourth quarter of 2022.
- GAAP net loss of $23.4 million, compared to $46.7 million in
the fourth quarter of 2022. Non-GAAP net income of $1.7 million,
compared to non-GAAP net loss of $9.5 million in the fourth quarter
of 2022.
- GAAP net loss per basic and diluted shares of $0.18 compared to
$0.38 in the fourth quarter of 2022. Non-GAAP net income per basic
and diluted shares of $0.01, compared to non-GAAP net loss per
basic and diluted shares of $0.08 in the fourth quarter of
2022.
Full Year 2023 Financial Summary
- Total revenue of $506.0 million, representing 17% growth
year-over-year.
- GAAP gross margin of 52.6%, compared to 48.5% in fiscal 2022.
Non-GAAP gross margin of 56.9%, compared to 53.6% in fiscal
2022.
- GAAP net loss of $133.1 million, compared to $190.8 million in
fiscal 2022. Non-GAAP net loss of $21.7 million, compared to $72.3
million in fiscal 2022.
- GAAP net loss per basic and diluted shares of $1.03 compared to
$1.57 in fiscal 2022. Non-GAAP net loss per basic and diluted
shares of $0.17, compared to $0.59 in fiscal 2022.
Key Metrics
- 12-month net retention rate (LTM NRR)1 decreased to 113% in the
fourth quarter from 114% in the third quarter.
- Total customer count2 was 3,243 in the fourth quarter, up 141
from the third quarter; 578 were enterprise customers2 in the
fourth quarter, up 31 from the third quarter.
- Average enterprise customer spend3 of $880 thousand in the
fourth quarter, up 3% quarter-over-quarter.
- Annual revenue retention rate (ARR)7 was 99.2% in 2023,
increasing from 98.9% in 2022.
- Remaining performance obligations (RPO)4 were $245 million,
down 1% from $248 million in the third quarter of 2023 and up 24%
from $198 million in the fourth quarter of 2022.
Fourth Quarter Business and Product Highlights
- Fastly was named a Leader in The Forrester Wave™: Edge
Development Platforms, Q4 2023 report, highlighted by Fastly’s
Compute platform receiving the highest rating possible (5/5) in 22
criteria.
- Kip Compton joined Fastly as Chief Product Officer, bringing
over 25 years of senior leadership experience driving innovation,
most recently as SVP of Strategy at Cisco Networking where he led
teams responsible for strategy, portfolio management, investments
and acquisitions.
- Repurchased $130.9 million of our convertible notes’ principal
balance in the fourth quarter for $113.6 million in cash or
approximately 87 cents on the dollar.
- Channel partner deal registration continues to expand as our
2023 deal registration more than tripled 2022 levels and we grew
our partner engagement by over 65%.
- Our packaging motion is accelerating as more customers
purchased package deals in the fourth quarter of 2023 than the
first nine months of 2023 combined.
- Launched our new annual global cybersecurity report, The Race
to Adapt, uncovering the impacts of cyber attacks on leading
businesses across the globe and how 76% of the businesses surveyed
plan to increase their cybersecurity budgets in the next year.
- Released multiple new features to Fastly’s Next-Gen WAF
solution to improve performance and simplify the user experience,
including Hashicorp Vault Integration, Agent Auto-Update, WAF
Simulator, New Anomaly Signal: Out-of-Band Domain, and Simplified
Attack Signal Thresholds.
- Released our new observability page, allowing customers to
monitor their Fastly Delivery and Compute services via metrics and
logs within customizable dashboards.
- Released our Bot Mitigation solution in limited availability to
select customers.
First Quarter and Full Year 2024 Guidance
Q1 2024
Full Year 2024
Total Revenue (millions)
$131 - $135
$580 - $590
Non-GAAP Operating Loss
(millions)
($14.0) - ($10.0)
($20.0) - ($14.0)
Non-GAAP Net Income (Loss) per share
(5)(6)
($0.09) - ($0.05)
($0.06) - $0.00
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 14,
2024.
Date: Wednesday, February 14, 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, February 14 through February 28, 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 some of the best online experiences
possible through edge compute, delivery, security, and
observability offerings improving site performance, enhancing
security, and empowering innovation at global scale. Compared to
legacy providers, Fastly’s powerful and modern network architecture
is one of the fastest on the planet, empowering developers to
deliver secure websites and apps with rapid time-to-market and
industry-leading cost savings. Organizations around the world trust
Fastly to help them upgrade the internet experience, including
Reddit, Wendy’s, Stripe, Neiman Marcus, Universal Music Group,
SeatGeek, and Advance Publications. Learn more about Fastly at
https://www.fastly.com, and follow us @fastly.
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 customer acquisition and go-to-market efforts, our
ability to monetize, and our ability to deliver on our long-term
strategy. Except as required by law, we assume no obligation to
update these forward-looking statements publicly or to update the
reasons actual results could differ materially from those
anticipated in the forward-looking statements, even if new
information becomes available in the future. Important factors that
could cause our actual results to differ materially are detailed
from time to time in the reports Fastly files with the Securities
and Exchange Commission (“SEC”), including in our Quarterly Report
on Form 10-Q for the fiscal quarter ended September 30, 2023.
Additional information will also be set forth in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2023. Copies of
reports filed with the SEC are posted on Fastly’s website and are
available from Fastly without charge.
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 income (loss), non-GAAP basic and
diluted net income (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
income (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 income (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 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.
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
executives' employment status. Management considers its operating
results without this activity when evaluating its ongoing non-GAAP
net income (loss) performance and its adjusted EBITDA performance
because it is not believed by management to be reflective of our
core business, ongoing operating results or future outlook.
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
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.
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 income (loss) performance and its adjusted EBITDA
performance because it is not believed by management to be
reflective of our core business, ongoing operating results or
future outlook.
Interest Income: consists primarily of interest
income related to our marketable securities. Management considers
its operating results without this activity when evaluating its
ongoing non-GAAP net income (loss) performance and its adjusted
EBITDA performance because it is not believed by management to be
reflective of our core business, ongoing operating results or
future outlook.
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.
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 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.
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 is
calculated based on the number of separate identifiable operating
entities with which we have a billing relationship in good
standing, from which we recognized revenue during the current
quarter. Under our prior methodology, our number of customers is
calculated based on the number of separate identifiable operating
entities with which we have a billing relationship in good
standing, from which we recognized revenue during the last month of
the quarter. Under our new methodology, our enterprise customers
are defined as those with annualized current quarter revenue in
excess of $100,000. This is calculated by taking the revenue for
each customer within the quarter and multiplying it by four. Under
our prior methodology, our enterprise customers are defined as
those with revenue in excess of $100,000 in the trailing 12-month
period. Under our prior methodology, our total customer count was
3,097 in the fourth quarter, up 78 from the third quarter of 2023;
532 were enterprise customers in the fourth quarter, up 2 from the
third quarter of 2023.
3 Under our new methodology, our average enterprise customer
spend is calculated by taking the annualized current quarter
revenue contributed by enterprise customers existing as of the
current period, and dividing that by the number of enterprise
customers as of the current period. Under our prior methodology,
our average enterprise customer spend is calculated by taking the
sum of the trailing 12-month revenue contributed by enterprise
customers existing as of the current period, and dividing that by
the number of enterprise customers as of the current period. Under
our prior methodology, our average enterprise customer spend was
$859 thousand in the fourth quarter, up 3%
quarter-over-quarter.
4 Remaining performance obligations include future committed
revenue for periods within current contracts with customers, as
well as deferred revenue arising from consideration invoiced for
which the related performance obligations have not been
satisfied.
5 Non-GAAP net income (loss) per basic share is calculated as
Non-GAAP net income (loss) divided by weighted average basic shares
for 2024.
6 Assumes weighted average basic shares outstanding of 134.3
million in Q1 2024 and 137.5 million for the full year 2024.
7 Annual Revenue Retention rate is calculated by first
calculating "Annual Revenue Churn", which is calculated by
multiplying the final full month of revenue from a customer that
terminated its contract with us, (a "Churned Customer") by the
number of months remaining in the same calendar year. Our ARR rate
is calculated by subtracting the quotient of the Annual Revenue
Churn from all of our Churned Customers from which we recognized
revenue during the last quarter of the prior year divided by our
annual revenue of the same calendar year from 100%. Under the prior
methodology, our ARR rate is calculated by subtracting the quotient
of the Annual Revenue Churn from all of our Churned Customers from
which we recognized revenue during the last month of the prior year
divided by our annual revenue of the same calendar year from 100%.
Under our prior methodology, our ARR was 99.1%, down 0.1%
year-over-year.
Condensed Consolidated Statements of
Operations
(in thousands, except per share
amounts, unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Revenue
$
137,777
$
119,321
$
505,988
$
432,725
Cost of revenue(1)
62,003
56,738
239,660
222,944
Gross profit
75,774
62,583
266,328
209,781
Operating expenses:
Research and development(1)
38,270
37,197
152,190
155,308
Sales and marketing(1)
48,662
44,623
191,773
179,869
General and administrative(1)
31,426
29,225
116,077
120,803
Impairment expense
—
—
4,316
—
Total operating expenses
118,358
111,045
464,356
455,980
Loss from operations
(42,584
)
(48,462
)
(198,028
)
(246,199
)
Net gain on extinguishment of debt
15,656
—
52,416
54,391
Interest income
4,584
2,894
18,186
7,044
Interest expense
(744
)
(1,354
)
(4,051
)
(5,887
)
Other income (expense)
(763
)
46
(1,832
)
(29
)
Loss before income taxes
(23,851
)
(46,876
)
(133,309
)
(190,680
)
Income tax expense (benefit)
(465
)
(223
)
(221
)
94
Net loss
$
(23,386
)
$
(46,653
)
$
(133,088
)
$
(190,774
)
Net income (loss) per share
attributable to common stockholders, basic and diluted
$
(0.18
)
$
(0.38
)
$
(1.03
)
$
(1.57
)
Weighted-average shares used in
computing net income (loss) per share attributable to common
stockholders, basic and diluted
131,843
123,587
128,770
121,723
(1)
Includes stock-based compensation expense
as follows:
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Cost of revenue
$
3,278
$
2,938
$
11,656
$
12,050
Research and development
12,019
11,469
47,827
58,435
Sales and marketing
8,060
7,885
33,703
39,083
General and administrative
12,090
9,126
43,117
36,228
Total
$
35,447
$
31,418
$
136,303
$
145,796
Reconciliation of GAAP to Non-GAAP
Financial Measures
(in thousands, unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Gross Profit
GAAP gross profit
$
75,774
$
62,583
$
266,328
$
209,781
Stock-based compensation
3,278
2,938
11,656
12,050
Amortization of acquired intangible
assets
2,475
2,475
9,900
9,900
Non-GAAP gross profit
$
81,527
$
67,996
$
287,884
$
231,731
GAAP gross margin
55.0
%
52.4
%
52.6
%
48.5
%
Non-GAAP gross margin
59.2
%
57.0
%
56.9
%
53.6
%
Research and development
GAAP research and development
$
38,270
$
37,197
$
152,190
$
155,308
Stock-based compensation
(11,728
)
(11,469
)
(45,840
)
(58,435
)
Executive transition costs
(385
)
—
(2,791
)
—
Non-GAAP research and
development
$
26,157
$
25,728
$
103,559
$
96,873
Sales and marketing
GAAP sales and marketing
$
48,662
$
44,623
$
191,773
$
179,869
Stock-based compensation
(8,060
)
(7,885
)
(33,703
)
(39,083
)
Amortization of acquired intangible
assets
(2,300
)
(2,575
)
(10,026
)
(10,891
)
Non-GAAP sales and marketing
$
38,302
$
34,163
$
148,044
$
129,895
General and administrative
GAAP general and administrative
$
31,426
$
29,225
$
116,077
$
120,803
Stock-based compensation
(12,090
)
(9,126
)
(43,117
)
(33,195
)
Executive transition costs
—
—
—
(4,207
)
Acquisition-related expenses
—
—
—
(1,970
)
Non-GAAP general and
administrative
$
19,336
$
20,099
$
72,960
$
81,431
Operating loss
GAAP operating loss
$
(42,584
)
$
(48,462
)
$
(198,028
)
$
(246,199
)
Stock-based compensation
35,156
31,418
134,316
142,763
Executive transition costs
385
—
2,791
4,207
Amortization of acquired intangible
assets
4,775
5,050
19,926
20,791
Impairment expense
—
—
4,316
—
Acquisition-related expenses
—
—
—
1,970
Non-GAAP operating loss
$
(2,268
)
$
(11,994
)
$
(36,679
)
$
(76,468
)
Net loss
GAAP net loss
$
(23,386
)
$
(46,653
)
$
(133,088
)
$
(190,774
)
Stock-based compensation
35,156
31,418
134,316
142,763
Executive transition costs
385
—
2,791
4,207
Amortization of acquired intangible
assets
4,775
5,050
19,926
20,791
Acquisition-related expenses
—
—
—
1,970
Net gain on extinguishment of debt
(15,656
)
—
(52,416
)
(54,391
)
Impairment expense
—
—
4,316
—
Amortization of debt discount and issuance
costs
456
716
2,477
3,169
Non-GAAP income (loss)
$
1,730
$
(9,469
)
$
(21,678
)
$
(72,265
)
Non-GAAP net income (loss) per common
share—basic and diluted
$
0.01
$
(0.08
)
$
(0.17
)
$
(0.59
)
Weighted average basic common
shares
131,843
123,587
128,770
121,723
Weighted average diluted common
shares
141,162
123,587
128,770
121,723
Reconciliation of GAAP to Non-GAAP
Financial Measures
(in thousands, unaudited)
(continued)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Reconciliation of GAAP to Non-GAAP
diluted shares
GAAP diluted shares
131,843
123,587
128,770
121,723
Other dilutive equity awards
9,319
—
—
—
Non-GAAP diluted shares
141,162
123,587
128,770
121,723
Non-GAAP diluted net income (loss) per
share
0.01
(0.08
)
(0.17
)
(0.59
)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Adjusted EBITDA
GAAP net loss
$
(23,386
)
$
(46,653
)
$
(133,088
)
$
(190,774
)
Stock-based compensation
35,156
31,418
134,316
142,763
Executive transition costs
385
—
2,791
4,207
Net gain on extinguishment of debt
(15,656
)
—
(52,416
)
(54,391
)
Impairment expense
—
—
4,316
—
Acquisition-related expenses
—
—
—
1,970
Depreciation and other amortization
13,727
11,903
52,139
43,524
Amortization of acquired intangible
assets
4,775
5,050
19,926
20,791
Amortization of debt discount and issuance
costs
456
716
2,477
3,169
Interest income
(4,584
)
(2,894
)
(18,186
)
(7,044
)
Interest expense
288
638
1,574
2,718
Other expense (income)
763
(46
)
1,832
29
Income tax expense (benefit)
(465
)
(223
)
(221
)
94
Adjusted EBITDA
$
11,459
$
(91
)
$
15,460
$
(32,944
)
Condensed Consolidated Balance
Sheets
(in thousands)
As of
December 31, 2023
As of
December 31, 2022
(unaudited)
(audited)
ASSETS
Current assets:
Cash and cash equivalents
$
107,921
$
143,391
Marketable securities, current
214,799
374,581
Accounts receivable, net of allowance for
credit losses
120,498
89,578
Prepaid expenses and other current
assets
20,455
28,933
Total current assets
463,673
636,483
Property and equipment, net
176,608
180,378
Operating lease right-of-use assets,
net
55,212
68,440
Goodwill
670,356
670,185
Intangible assets, net
62,475
82,900
Marketable securities, non-current
6,088
165,105
Other assets
90,779
92,622
Total assets
$
1,525,191
$
1,896,113
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
5,611
$
4,786
Accrued expenses
61,818
61,161
Finance lease liabilities, current
15,684
28,954
Operating lease liabilities, current
24,042
23,026
Other current liabilities
40,539
34,394
Total current liabilities
147,694
152,321
Long-term debt
343,507
704,710
Finance lease liabilities, non-current
1,602
15,507
Operating lease liabilities,
non-current
48,484
61,341
Other long-term liabilities
4,416
7,076
Total liabilities
545,703
940,955
Stockholders’ equity:
Common stock
3
2
Additional paid-in capital
1,815,245
1,666,106
Accumulated other comprehensive loss
(1,008
)
(9,286
)
Accumulated deficit
(834,752
)
(701,664
)
Total stockholders’ equity
979,488
955,158
Total liabilities and stockholders’
equity
$
1,525,191
$
1,896,113
Condensed Consolidated Statements of
Cash Flows
(in thousands, unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Cash flows from operating
activities:
Net loss
$
(23,386
)
$
(46,653
)
$
(133,088
)
$
(190,774
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation expense
13,587
11,371
51,602
42,619
Amortization of intangible assets
4,899
5,582
20,424
21,696
Non-cash lease expense
5,451
7,835
22,678
25,448
Amortization of debt discount and issuance
costs
456
715
2,476
3,169
Amortization of deferred contract
costs
4,295
2,896
15,548
8,916
Stock-based compensation
35,447
31,418
136,303
145,796
Deferred income taxes
(900
)
—
(900
)
—
Provision for credit losses
714
624
2,025
2,406
Loss on disposals of property and
equipment
—
—
505
854
Amortization and accretion of discounts
and premiums on investments
(990
)
515
(646
)
3,137
Impairment of operating lease right-of-use
assets
156
2,083
744
2,083
Impairment expense
—
—
4,316
—
Net gain on extinguishment of debt
(15,656
)
—
(52,416
)
(54,391
)
Other adjustments
905
3,980
648
3,688
Changes in operating assets and
liabilities:
Accounts receivable
(22,590
)
(17,288
)
(32,945
)
(27,359
)
Prepaid expenses and other current
assets
4,107
(971
)
8,709
(6,758
)
Other assets
(6,868
)
(15,492
)
(23,137
)
(35,396
)
Accounts payable
(876
)
(1,267
)
382
(4,724
)
Accrued expenses
(1,603
)
3,799
(7,856
)
8,289
Operating lease liabilities
(5,137
)
(6,377
)
(22,074
)
(22,778
)
Other liabilities
612
5,102
7,064
4,447
Net cash provided by (used in)
operating activities
(7,377
)
(12,128
)
362
(69,632
)
Cash flows from investing
activities:
Purchases of marketable securities
(59,142
)
—
(132,233
)
(355,479
)
Sales of marketable securities
24,850
65
25,625
161,918
Maturities of marketable securities
5,642
94,303
433,767
535,040
Business acquisitions, net of cash
acquired
—
1,843
—
(25,902
)
Advance payment for purchase of property
and equipment
—
(10,923
)
—
(42,197
)
Purchases of property and equipment
(2,693
)
(8,529
)
(10,976
)
(19,975
)
Proceeds from sale of property and
equipment
—
126
49
492
Capitalized internal-use software
(5,902
)
(4,290
)
(21,292
)
(18,146
)
Net cash provided by (used in)
investing activities
(37,245
)
72,595
294,940
235,751
Cash flows from financing
activities:
Cash paid for debt extinguishment
(113,606
)
—
(310,540
)
(177,082
)
Repayments of finance lease
liabilities
(5,932
)
(4,427
)
(27,175
)
(22,532
)
Cash received for restricted stock sold in
advance of vesting conditions
—
—
—
10,655
Cash paid for early sale of restricted
shares
—
—
—
(10,655
)
Payment of deferred consideration for
business acquisitions
—
—
(4,393
)
—
Proceeds from exercise of vested stock
options
161
364
2,169
5,688
Proceeds from employee stock purchase
plan
1,550
(949
)
8,559
4,777
Net cash used in financing
activities
(117,827
)
(5,012
)
(331,380
)
(189,149
)
Effects of exchange rate changes on cash,
cash equivalents, and restricted cash
70
39
608
(390
)
Net increase in cash, cash equivalents,
and restricted cash
(162,379
)
55,494
(35,470
)
(23,420
)
Cash, cash equivalents, and restricted
cash at beginning of period
270,450
88,047
143,541
166,961
Cash, cash equivalents, and restricted
cash at end of period
108,071
143,541
108,071
143,541
Reconciliation of cash, cash
equivalents, and restricted cash as shown in the statements of cash
flows:
Cash and cash equivalents
107,921
143,391
107,921
143,391
Restricted cash, current
150
150
150
150
Total cash, cash equivalents, and
restricted cash
$
108,071
$
143,541
$
108,071
$
143,541
Free Cash Flow
(in thousands, unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Cash flow provided by (used in)
operations
$
(7,377
)
$
(12,128
)
$
362
$
(69,632
)
Capital expenditures(1)
(14,527
)
(17,120
)
(59,394
)
(60,161
)
Advance payment for purchase of property
and equipment(2)
—
(10,923
)
—
(42,197
)
Free Cash Flow
$
(21,904
)
$
(40,171
)
$
(59,032
)
$
(171,990
)
(1)
Capital expenditures are defined as cash
used for purchases of property and equipment, net of proceeds from
sale of property and equipment, capitalized internal-use software
and payments on finance lease obligations, as reflected in our
statement of cash flows.
(2)
As reflected in our statement of cash
flows. In the year ended December 31, 2023, we received $8.7
million of capital equipment that was prepaid prior to the current
year.
Source: Fastly, Inc.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240214145158/en/
Investor Contact: Vernon Essi, Jr. ir@fastly.com
Media Contact: Spring Harris press@fastly.com
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