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Fastly Announces Third Quarter 2022 Financial Results

November, 02, 2022
  • Record quarterly revenue exceeded high-end of quarterly guidance range and grew 25% annually compared to prior quarter
  • GAAP gross margin grew 370 bps sequentially; non-GAAP gross margin grew 320 basis points sequentially
  • Average enterprise customer spend grew 4% sequentially

SAN FRANCISCO--(BUSINESS WIRE)-- Fastly, Inc. (NYSE: FSLY), the world’s fastest edge cloud platform, today announced financial results for its third quarter ended September 30, 2022.

“We are pleased to announce another record quarter, continuing our revenue momentum into 2022 and exceeding the top end of our guidance range while improving our gross margin significantly,” said Todd Nightingale, CEO of Fastly.

“I’m excited that Fastly’s platform and differentiated products are driving both amazing new customer acquisition and increased existing customer usage,” continued Nightingale. “Our portfolio expansion strategy is working and we will be focusing our efforts on accelerating our cross-selling motion to drive growth into 2023.”

Results Summary

Three months ended
September 30,

 

Nine months ended
September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

$

108,504

 

$

86,735

 

$

313,404

 

$

256,613

 

Gross Margin
GAAP gross margin

 

48.6

%

 

52.4

%

 

47.0

%

 

53.6

%

Non-GAAP gross margin

 

53.6

%

 

57.5

%

 

52.2

%

 

58.4

%

Operating loss
GAAP operating loss

$

(65,765

)

$

(54,934

)

$

(197,737

)

$

(162,365

)

Non-GAAP operating loss

$

(19,841

)

$

(12,935

)

$

(64,474

)

$

(43,400

)

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

$

(0.52

)

$

(0.48

)

$

(1.19

)

$

(1.43

)

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

$

(0.14

)

$

(0.11

)

$

(0.52

)

$

(0.38

)

Third Quarter 2022 Financial Summary

  • Total revenue of $108.5 million, representing 6% sequential growth and 25% year-over-year growth.
  • GAAP gross margin of 48.6%, compared to 52.4% in the third quarter of 2021. Non-GAAP gross margin of 53.6%, compared to 57.5% in the third quarter of 2021.
  • GAAP net loss of $63.4 million, compared to $56.2 million in the third quarter of 2021. Non-GAAP net loss of $16.8 million, compared to $13.2 million in the third quarter of 2021.
  • GAAP net loss per basic and diluted shares of $0.52 compared to $0.48 in the third quarter of 2021. Non-GAAP net loss per basic and diluted shares of $0.14, compared to $0.11 in the third quarter of 2021.

Key Metrics

  • Trailing 12-month net retention rate (NRR LTM)1 increased to 118% in the third quarter from 117% in the second quarter 2022.
  • Dollar-Based Net Expansion Rate (DBNER)2 increased to 122% in the third quarter from 120% in the second quarter 2022.
  • Total customer count of 2,925 in the third quarter, of which 482 were enterprise3 customers.
  • Average enterprise customer spend of $759K in the third quarter, up 4% 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.

Third Quarter Business Highlights

  • Todd Nightingale joined Fastly as CEO, bringing his experience from Cisco where he led business strategy and development efforts for its multi-billion dollar networking portfolio as Executive VP and GM of Enterprise Networking and Cloud.
  • Named a Challenger in Gartner® Magic Quadrant™ for Web Application and API Protection (WAAP). Along with our recent recognition as the Customers’ Choice for Web Application and API Protection for a fourth consecutive year, this validates Fastly’s first and only unified solution that protects Internet scale in any environment.
  • Introduced the AWS Lambda agent for the Fastly Next-Gen WAF, further enhancing the ability to deploy Fastly’s Next-Gen WAF in more places and to support serverless and FaaS initiatives with one of the most popular serverless solutions on the market.
  • Released general availability of a frictionless security solution, GraphQL inspection with Next-Gen WAF, supporting popular GraphQL APIs with GraphQL visibility and protection available right out of the box. Several customers in media streaming, financial services, and ecommerce achieve threat protection on their GraphQL with our turnkey solution.
  • Selected by AWS as VIP Marketing Accelerate Partner to expand sales and distribution of Fastly Next-Gen WAF.

Fourth Quarter and Full Year 2022 Guidance

Q4 2022 Full Year 2022
Total Revenue (millions)

$112 - $116

 

$425 - $429

Non-GAAP Operating Loss (millions)

($18.0) - ($14.0)

 

($82) - ($78)

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

($0.15) - ($0.11)

 

($0.67) - ($0.63)

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 2, 2022.

Date:

Wednesday, November 2, 2022

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 2 through November 16, 2022 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, 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, 2021. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 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 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 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.

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 twelve-month period.

4 Assumes weighted average basic shares outstanding of 123.6 million in Q4 2022 and 121.6 million for the full year 2022.

5 Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2022.

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

Three months ended
September 30,

 

Nine months ended
September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

$

108,504

 

$

86,735

 

$

313,404

 

$

256,613

 

Cost of revenue(1)

 

55,825

 

 

41,244

 

 

166,206

 

 

119,058

 

Gross profit

 

52,679

 

 

45,491

 

 

147,198

 

 

137,555

 

Operating expenses:
Research and development(1)

 

38,957

 

 

32,528

 

 

118,111

 

 

91,862

 

Sales and marketing(1)

 

47,006

 

 

39,288

 

 

135,246

 

 

110,494

 

General and administrative(1)

 

32,481

 

 

28,609

 

 

91,578

 

 

97,564

 

Total operating expenses

 

118,444

 

 

100,425

 

 

344,935

 

 

299,920

 

Loss from operations

 

(65,765

)

 

(54,934

)

 

(197,737

)

 

(162,365

)

Net gain on extinguishment of debt

 

 

 

 

 

54,391

 

 

 

Interest income

 

1,967

 

 

280

 

 

4,150

 

 

730

 

Interest expense

 

(1,381

)

 

(1,555

)

 

(4,533

)

 

(3,652

)

Other income (expense)

 

1,877

 

 

41

 

 

(75

)

 

155

 

Loss before income taxes

 

(63,302

)

 

(56,168

)

 

(143,804

)

 

(165,132

)

Income tax expense

 

118

 

 

30

 

 

317

 

 

44

 

Net loss

$

(63,420

)

$

(56,198

)

$

(144,121

)

$

(165,176

)

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

$

(0.52

)

$

(0.48

)

$

(1.19

)

$

(1.43

)

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

 

122,339

 

 

116,475

 

 

121,094

 

 

115,320

 

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

Three months ended
September 30,

 

Nine months ended
September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cost of revenue

$

2,978

 

$

1,897

 

$

9,112

 

$

4,911

 

Research and development

 

14,488

 

 

14,752

 

 

46,966

 

 

31,344

 

Sales and marketing

 

10,920

 

 

9,121

 

 

31,198

 

 

19,760

 

General and administrative

 

10,992

 

 

10,866

 

 

27,102

 

 

44,885

 

Total

$

39,378

 

$

36,636

 

$

114,378

 

$

100,900

 

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

Three months ended
September 30,

 

Nine months ended
September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Gross Profit
GAAP gross profit

$

52,679

 

$

45,491

 

$

147,198

 

$

137,555

 

Stock-based compensation

 

2,978

 

 

1,897

 

 

9,112

 

 

4,911

 

Amortization of acquired intangible assets

 

2,475

 

 

2,475

 

 

7,425

 

 

7,425

 

Non-GAAP gross profit

$

58,132

 

$

49,863

 

$

163,735

 

$

149,891

 

GAAP gross margin

 

48.6

%

 

52.4

%

 

47.0

%

 

53.6

%

Non-GAAP gross margin

 

53.6

%

 

57.5

%

 

52.2

%

 

58.4

%

 
Research and development
GAAP research and development

$

38,957

 

$

32,528

 

$

118,111

 

$

91,862

 

Stock-based compensation

 

(14,488

)

 

(14,752

)

 

(46,966

)

 

(31,344

)

Non-GAAP research and development

$

24,469

 

$

17,776

 

$

71,145

 

$

60,518

 

 
Sales and marketing
GAAP sales and marketing

$

47,006

 

$

39,288

 

$

135,246

 

$

110,494

 

Stock-based compensation

 

(10,920

)

 

(9,121

)

 

(31,198

)

 

(19,760

)

Amortization of acquired intangible assets

 

(2,897

)

 

(2,709

)

 

(8,316

)

 

(8,234

)

Non-GAAP sales and marketing

$

33,189

 

$

27,458

 

$

95,732

 

$

82,500

 

 
General and administrative
GAAP general and administrative

$

32,481

 

$

28,609

 

$

91,578

 

$

97,564

 

Stock-based compensation

 

(7,959

)

 

(10,866

)

 

(24,069

)

 

(44,885

)

Executive transition costs

 

(4,207

)

 

 

 

(4,207

)

 

 

Acquisition-related expenses

 

 

 

(179

)

 

(1,970

)

 

(2,406

)

Non-GAAP general and administrative

$

20,315

 

$

17,564

 

$

61,332

 

$

50,273

 

 
Operating loss
GAAP operating loss

$

(65,765

)

$

(54,934

)

$

(197,737

)

$

(162,365

)

Stock-based compensation

 

36,345

 

 

36,636

 

 

111,345

 

 

100,900

 

Executive transition costs

 

4,207

 

 

 

 

4,207

 

 

 

Amortization of acquired intangible assets

 

5,372

 

 

5,184

 

 

15,741

 

 

15,659

 

Acquisition-related expenses

 

 

 

179

 

 

1,970

 

 

2,406

 

Non-GAAP operating loss

$

(19,841

)

$

(12,935

)

$

(64,474

)

$

(43,400

)

 
Net loss
GAAP net loss

$

(63,420

)

$

(56,198

)

$

(144,121

)

$

(165,176

)

Stock-based compensation

 

36,345

 

 

36,636

 

 

111,345

 

 

100,900

 

Executive transition costs

 

4,207

 

 

 

 

4,207

 

 

 

Amortization of acquired intangible assets

 

5,372

 

 

5,184

 

 

15,741

 

 

15,659

 

Acquisition-related expenses

 

 

 

179

 

 

1,970

 

 

2,406

 

Net gain on extinguishment of debt

 

 

 

 

 

(54,391

)

 

 

Amortization of debt discount and issuance costs

 

714

 

 

967

 

 

2,453

 

 

1,960

 

Non-GAAP loss

$

(16,782

)

$

(13,232

)

$

(62,796

)

$

(44,251

)

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

$

(0.14

)

$

(0.11

)

$

(0.52

)

$

(0.38

)

Weighted average basic and diluted common shares

 

122,339

 

 

116,475

 

 

121,094

 

 

115,320

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Adjusted EBITDA
GAAP net loss

$

(63,420

)

$

(56,198

)

$

(144,121

)

$

(165,176

)

Stock-based compensation

 

36,345

 

 

36,636

 

 

111,345

 

 

100,900

 

Executive transition costs

 

4,207

 

 

 

 

4,207

 

 

 

Depreciation and other amortization

 

10,786

 

 

7,489

 

 

31,621

 

 

20,980

 

Amortization of acquired intangible assets

 

5,372

 

 

5,184

 

 

15,741

 

 

15,659

 

Acquisition-related expenses

 

 

 

179

 

 

1,970

 

 

2,406

 

Interest income

 

(1,967

)

 

(280

)

 

(4,150

)

 

(730

)

Interest expense

 

667

 

 

588

 

 

2,080

 

 

1,692

 

Amortization of debt discount and issuance costs

 

714

 

 

967

 

 

2,453

 

 

1,960

 

Net gain on extinguishment of debt

 

 

 

 

 

(54,391

)

 

 

Other expense (income)

 

(1,877

)

 

(41

)

 

75

 

 

(155

)

Income tax expense (benefit)

 

118

 

 

30

 

 

317

 

 

44

 

Adjusted EBITDA

$

(9,055

)

$

(5,446

)

$

(32,853

)

$

(22,420

)

 
Condensed Consolidated Balance Sheets
(in thousands)
As of
September 30, 2022
As of
December 31, 2021
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents

$

87,897

 

$

166,068

 

Marketable securities, current

 

445,048

 

 

361,795

 

Accounts receivable, net of allowance for credit losses

 

72,914

 

 

64,625

 

Prepaid expenses and other current assets

 

31,321

 

 

32,160

 

Total current assets

 

637,180

 

 

624,648

 

Property and equipment, net

 

179,080

 

 

166,961

 

Operating lease right-of-use assets, net

 

72,374

 

 

69,631

 

Goodwill

 

670,158

 

 

636,805

 

Intangible assets, net

 

88,482

 

 

102,596

 

Marketable securities, non-current

 

186,066

 

 

528,911

 

Other assets

 

73,258

 

 

29,468

 

Total assets

$

1,906,598

 

$

2,159,020

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$

8,265

 

$

9,257

 

Accrued expenses

 

54,186

 

 

36,112

 

Finance lease liabilities, current

 

27,807

 

 

21,125

 

Operating lease liabilities, current

 

20,919

 

 

20,271

 

Other current liabilities

 

33,422

 

 

45,107

 

Total current liabilities

 

144,599

 

 

131,872

 

Long-term debt

 

704,042

 

 

933,205

 

Finance lease liabilities, noncurrent

 

21,027

 

 

22,293

 

Operating lease liabilities, noncurrent

 

62,750

 

 

55,114

 

Other long-term liabilities

 

7,201

 

 

2,583

 

Total liabilities

 

939,619

 

 

1,145,067

 

Stockholders’ equity:
Class A common stock

 

2

 

 

2

 

Additional paid-in capital

 

1,634,666

 

 

1,527,468

 

Accumulated other comprehensive loss

 

(12,678

)

 

(2,627

)

Accumulated deficit

 

(655,011

)

 

(510,890

)

Total stockholders’ equity

 

966,979

 

 

1,013,953

 

Total liabilities and stockholders’ equity

$

1,906,598

 

$

2,159,020

 

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

Three months ended
September 30,

 

Nine months ended
September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:
Net loss

$

(63,420

)

$

(56,198

)

$

(144,121

)

$

(165,176

)

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

 

10,662

 

 

7,364

 

 

31,248

 

 

20,710

 

Amortization of intangible assets

 

5,496

 

 

5,309

 

 

16,114

 

 

15,929

 

Amortization of right-of-use assets and other

 

8,501

 

 

7,158

 

 

21,879

 

 

19,818

 

Amortization of debt discount and issuance costs

 

715

 

 

966

 

 

2,454

 

 

2,235

 

Amortization of deferred contract costs

 

2,031

 

 

1,621

 

 

6,020

 

 

4,567

 

Stock-based compensation

 

39,378

 

 

36,636

 

 

114,378

 

 

100,900

 

Provision for credit losses

 

1,253

 

 

236

 

 

1,782

 

 

41

 

Interest on finance lease

 

(603

)

 

(524

)

 

(1,843

)

 

(1,259

)

Loss on disposals of property and equipment

 

 

 

(204

)

 

854

 

 

(177

)

Amortization and accretion of discounts and premiums on investments

 

771

 

 

 

 

2,622

 

 

 

Net gain on extinguishment of debt

 

 

 

 

 

(54,391

)

 

 

Other adjustments

 

(353

 

683

 

 

(292

 

1,496

 

Changes in operating assets and liabilities:
Accounts receivable

 

(5,949

)

 

1,595

 

 

(10,071

)

 

(4,017

)

Prepaid expenses and other current assets

 

(975

)

 

(8

)

 

(5,787

)

 

(5,502

)

Other assets

 

(13,505

)

 

(2,231

)

 

(19,904

)

 

(7,320

)

Accounts payable

 

(4,301

)

 

(1,815

)

 

(3,457

)

 

(1,653

)

Accrued expenses

 

3,328

 

 

6,548

 

 

4,490

 

 

2,713

 

Operating lease liabilities

 

(7,830

)

 

(6,879

)

 

(20,667

)

 

(19,735

)

Other liabilities

 

(2,833

)

 

(2,948

)

 

1,188

 

 

5,856

 

Net cash used in operating activities

 

(27,634

)

 

(2,691

)

 

(57,504

)

 

(30,574

)

Cash flows from investing activities:
Purchases of marketable securities

 

 

 

(443,701

)

 

(355,479

)

 

(777,569

)

Sales of marketable securities

 

 

 

51,739

 

 

161,853

 

 

64,236

 

Maturities of marketable securities

 

72,857

 

 

15,600

 

 

440,737

 

 

72,853

 

Business acquisitions, net of cash acquired and other related payments

 

(1,746

)

 

 

 

(27,745

)

 

 

Advance payment for purchase of property and equipment

 

(1,964

)

 

 

 

(31,274

)

 

 

Purchases of property and equipment

 

(2,631

)

 

(20,254

)

 

(11,446

)

 

(31,267

)

Proceeds from sale of property and equipment

 

125

 

 

291

 

 

366

 

 

291

 

Capitalized internal-use software

 

(5,120

)

 

(7,619

)

 

(13,856

)

 

(10,299

)

Purchase of intangible assets

 

 

 

1

 

 

 

 

(2,092

)

Net cash provided by (used in) investing activities

 

61,521

 

 

(403,943

)

 

163,156

 

 

(683,847

)

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

 

 

 

 

 

 

 

930,775

 

Payments of other debt issuance costs

 

 

 

 

 

 

 

(1,351

)

Net cash paid for debt extinguishment

 

 

 

 

 

(177,082

)

 

 

Repayments of finance lease liabilities

 

(7,076

)

 

(3,985

)

 

(18,105

)

 

(10,564

)

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

)

 

 

Proceeds from exercise of vested stock options

 

555

 

 

1,430

 

 

5,324

 

 

9,094

 

Proceeds from employee stock purchase plan

 

1,749

 

 

3,489

 

 

5,726

 

 

5,994

 

Net cash provided by (used in) financing activities

 

(8,390

)

 

934

 

 

(184,137

)

 

933,948

 

Effects of exchange rate changes on cash and cash equivalents

 

(110

)

 

(242

)

 

(429

)

 

(383

)

Net increase (decrease) in cash and cash equivalents

 

25,387

 

 

(405,942

)

 

(78,914

)

 

219,144

 

Cash and cash equivalents and restricted cash at beginning of period

 

62,660

 

 

688,966

 

 

166,961

 

 

63,880

 

Cash and cash equivalents and restricted cash at end of period

 

88,047

 

 

283,024

 

 

88,047

 

 

283,024

 

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

 

87,897

 

 

282,131

 

 

87,897

 

 

282,131

 

Restricted cash, current

 

150

 

 

 

 

150

 

 

 

Restricted cash, non-current

 

 

 

893

 

 

 

 

893

 

Total cash, cash equivalents, and restricted cash

$

88,047

 

$

283,024

 

$

88,047

 

$

283,024

 

 
Free Cash Flow
(in thousands, unaudited)

Three months ended
September 30,

Nine months ended
September 30,

 

2022

 

 

 

2021

 

 

2022

 

 

 

2021

 

Cash flow used in operations

$

(27,634

)

$

(2,691

)

$

(57,504

)

$

(30,574

)

Capital expenditures(1)

 

(14,702

)

 

(31,567

)

 

(43,041

)

 

(51,839

)

Advance payment for purchase of property and equipment(2)

 

(1,964

)

 

 

 

(31,274

)

 

 

Free Cash Flow

$

(44,300

)

$

(34,258

)

$

(131,819

)

$

(82,413

)

 
 
__________
(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.

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

Media Contact:
press@fastly.com

Source: Fastly, Inc.

Categories: Press Releases