•Released Fastly Bot Management Solution to help organizations combat automated “bot” attacks at the edge and minimize the business impact of fraud, DDoS attacks, account takeovers, and other abuse.
•Simplified our product bundles, making it easier for customers to choose Fastly by offering a predictable billing experience across our product portfolio.
•Enabled self-service adoption with Universal Login and the addition of Fastly product trials and upgrades to our Control Panel.
•Deepened protection for modern APIs and services with the addition of gRPC Inspection and Advanced Rate Limiting in our Next-Gen WAF.
•Expanded our Compute platform with the Secret Store, a secrets management service, allowing organizations to run more of their services entirely on the edge.
•Released Edge Rate Limiting to protect Compute services from Layer 7 DDoS attacks and automated abuse.
•Released Edge Observability, a unified dashboard with real-time and historic metrics, and Alerts, which automatically notifies customers of service-related performance metrics and impending outages.
Customer and Partner Highlights
•New deal registrations and related revenue contribution more than doubled year-over-year in the first quarter.
•Closed more Fastly product package deals in the first quarter of 2024 than the first half of 2023.
•MWM, a leading app publisher in France, selected Fastly’s content delivery and image optimization services.
•Bending Spoons, a leading mobile app development company, selected Fastly for its Network Services offering.
Calculations of Key and Other Selected Metrics – Quarterly (unaudited)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Customer Metrics:
LTM Net Retention Rate (NRR)(1)
117
%
118
%
119
%
116
%
116
%
114
%
113
%
114
%
Enterprise Customer Count(2)
499
511
533
540
551
547
578
577
Enterprise Customer Revenue %
90
%
91
%
92
%
91
%
92
%
92
%
92
%
91
%
Total Customer Count(2)
3,025
3,039
3,062
3,100
3,072
3,102
3,243
3,290
Annual Revenue Retention Rate (ARR)(7)
—
%
—
%
98.9
%
—
%
—
%
—
%
99.2
%
—
%
Revenue Metrics (in millions):
Network Services Revenue
$
81.8
$
87.1
$
96.8
$
94.3
$
98.5
$
102.5
$
109.8
$
106.0
Security Revenue
$
19.1
$
19.8
$
20.7
$
21.2
$
22.5
$
23.3
$
25.8
$
24.6
Other Revenue
$
1.5
$
1.6
$
1.8
$
2.0
$
1.8
$
1.9
$
2.2
$
2.9
Remaining Performance Obligation (RPO)3
$
173.2
$
173.0
$
198.3
$
242.4
$
230.9
$
247.6
$
235.7
$
227.0
Exhibit 99.2
Corporate Highlights
•Published “API Security Study 2024," an assessment of Europe-based companies' API security concerns based on insights from cybersecurity decision makers, experts, and practitioners.
•Launched Xcelerate, a series of in-person global events to help Fastly’s network of developers, security professionals and business leaders deliver superior digital experiences at the edge.
•Fastly’s OHTTP Relay won the 2024 DEVIES award for best innovation in services: application development.
Key Metrics Highlights
•Last 12-month net retention rate (LTM NRR)1 increased to 114% in the first quarter from 113% in the fourth quarter of 2023.
•Total customer count2 was 3,290 in the first quarter, up 47 from the fourth quarter of 2023; 577 were enterprise customers2 in the first quarter, down 1 from the fourth quarter of 2023.
•Remaining performance obligations (RPO)3 were $227 million, down 4% from $236 million in the fourth quarter of 2023.
•Total revenue of $133.5 million, representing 14% year-over-year growth. Network services revenue of $106.0 million, representing 12% year-over-year growth. Security revenue of $24.6 million, representing 16% year-over-year growth.
Second Quarter and Full Year 2024 Guidance
Q2 2024
Full Year 2024
Total Revenue (millions)
$130.0 - $134.0
$555.0 - $565.0
Non-GAAP Operating Loss (millions)(4)
($16.0) - ($12.0)
($28.0) - ($22.0)
Non-GAAP Net Loss per share (5)(6)
($0.10) - ($0.06)
($0.12) - ($0.06)
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.Our number of customers is calculated based on the number of separate identifiable operating entities with which we have a billing relationship in good standing, from which we recognized revenue during the current quarter. Our enterprise customers are defined as those with annualized current quarter revenue in excess of $100,000. This is calculated by taking the revenue for each customer within the quarter and multiplying it by four.
3.Remaining performance obligations include future committed revenue for periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied.
4.For a reconciliation of non-GAAP financial measures to their corresponding GAAP measures, please refer to the reconciliation table at the end of this supplement.
5.Assumes weighted average basic shares outstanding of 137.7 million in Q2 2024 and 137.9 million for the full year 2024.
6.Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2024.
7.Annual revenue retention rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers divided by our annual revenue of the same calendar year from 100%. Our “Annual Revenue Churn” is calculated by multiplying the final full month of revenue from a customer that terminated its contract with us (a “Churned Customer”) by the number of months remaining in the same calendar year.
Forward-Looking Statements
This investor supplement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, about us and our industry that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or Fastly's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "continue," “would,” or the negative of these words or other similar terms or expressions that concern Fastly's expectations, goals, strategy, priorities, plans, projections, or intentions. Forward-looking statements in this investor supplement include, but are not limited to, statements regarding Fastly’s future financial and operating performance, including its outlook and guidance; the performance of our existing and new products and product enhancements; the growth and success of Fastly's partner program; and Fastly's strategies, product and business plans. Fastly's expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the possibility that: Fastly is unable to attract and retain customers; Fastly's existing customers and partners do not maintain or increase usage of Fastly's platform; Fastly's platform and product features do not meet expectations, including due to defects, interruptions, security breaches, delays in performance or other similar problems; Fastly is unable to adapt to meet evolving market and customer demands and rapid technological change; Fastly is unable to comply with modified or new industry standards, laws and regulations; Fastly is unable to generate sufficient revenues to achieve or sustain profitability; Fastly’s limited operating history makes it difficult to evaluate its prospects and future operating results; Fastly is unable to effectively manage its growth; and Fastly is unable to compete effectively. The forward-looking statements contained in this investor supplement are also subject to other risks and uncertainties, including those more fully described in Fastly’s Annual Report on Form 10-K for the year ended December 31, 2023. Additional information will also be set forth in Fastly’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and other filings and reports that Fastly may file from time to time with the SEC. The forward-looking statements in this investor supplement are based on information available to Fastly as of the date hereof, and Fastly disclaims any obligation to update any forward-looking statements, except as required by law.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company uses the following non-GAAP measures of financial performance: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, free cash flow and adjusted EBITDA. The presentation of this additional financial information is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In addition, these non-GAAP financial measures may be different from the non-GAAP financial measures used by other companies. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Management compensates for these limitations by reconciling these non-GAAP financial measures to the most comparable GAAP financial measures within our earnings releases.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net income (loss) and non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, and non-GAAP general and administrative differ from GAAP in that they exclude stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses, executive transition costs, net gain on extinguishment of debt, impairment expense and amortization of debt discount and issuance costs.
Adjusted EBITDA: excludes stock-based compensation expense, depreciation and other amortization expenses, amortization of acquired intangible assets, acquisition-related expenses, executive transition costs, interest income, interest expense, including amortization of debt discount and issuance costs, net gain on extinguishment of debt, impairment expense, other income (expense), net, and income taxes.
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 executive’s employment status. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net income (loss) performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
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 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 investor supplement.
Consolidated Statements of Operations – Quarterly
(unaudited, in thousands, except per share amounts)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Revenue
$
102,518
$
108,504
$
119,321
$
117,564
$
122,831
$
127,816
$
137,777
$
133,520
Cost of revenue(1)
56,466
55,825
56,738
57,310
58,617
61,730
62,003
60,286
Gross profit
46,052
52,679
62,583
60,254
64,214
66,086
75,774
73,234
Operating expenses:
Research and development(1)
38,717
38,957
37,197
37,431
37,421
39,068
38,270
38,248
Sales and marketing(1)
46,760
47,006
44,623
44,271
47,797
51,043
48,662
49,607
General and administrative (1)
29,543
32,481
29,225
25,827
28,823
30,001
31,426
31,639
Impairment expense
—
—
—
—
—
4,316
—
—
Total operating expenses
115,020
118,444
111,045
107,529
114,041
124,428
118,358
119,494
Loss from operations
(68,968)
(65,765)
(48,462)
(47,275)
(49,827)
(58,342)
(42,584)
(46,260)
Net gain on extinguishment of debt
54,391
—
—
—
36,760
—
15,656
—
Interest income
1,502
1,967
2,894
4,186
4,508
4,908
4,584
3,848
Interest expense
(1,530)
(1,381)
(1,354)
(1,213)
(1,232)
(862)
(744)
(579)
Other income (expense), net
(1,673)
1,877
46
(250)
(803)
(16)
(763)
(89)
Loss before income taxes
(16,278)
(63,302)
(46,876)
(44,552)
(10,594)
(54,312)
(23,851)
(43,080)
Income tax expense (benefit)
159
118
(223)
135
110
(1)
(465)
347
Net loss
$
(16,437)
$
(63,420)
$
(46,653)
$
(44,687)
$
(10,704)
$
(54,311)
$
(23,386)
$
(43,427)
Net loss per share attributable to common stockholders, basic and diluted
$
(0.14)
$
(0.52)
$
(0.38)
$
(0.36)
$
(0.08)
$
(0.42)
$
(0.18)
$
(0.32)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
121,242
122,339
123,587
125,418
127,863
129,873
131,843
134,587
__________
(1)Includes stock-based compensation expense as follows:
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Cost of revenue
$
3,188
$
2,978
$
2,938
$
2,681
$
2,837
$
2,860
$
3,278
$
2,779
Research and development
13,889
14,488
11,469
11,481
12,205
12,122
12,019
10,323
Sales and marketing
10,184
10,920
7,885
6,705
9,877
9,061
8,060
7,843
General and administrative
7,717
10,992
9,126
7,284
12,073
11,670
12,090
10,876
Total
$
34,978
$
39,378
$
31,418
$
28,151
$
36,992
$
35,713
$
35,447
$
31,821
Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly
(unaudited, in thousands, except per share amounts)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Gross Profit
GAAP gross Profit
$
46,052
$
52,679
$
62,583
$
60,254
$
64,214
$
66,086
$
75,774
$
73,234
Stock-based compensation
3,188
2,978
2,938
2,681
2,837
2,860
3,278
2,779
Amortization of acquired intangible assets
2,475
2,475
2,475
2,475
2,475
2,475
2,475
2,475
Non-GAAP gross profit
51,715
58,132
67,996
65,410
69,526
71,421
81,527
78,488
GAAP gross margin
44.9
%
48.6
%
52.4
%
51.3
%
52.3
%
51.7
%
55.0
%
54.8
%
Non-GAAP gross margin
50.4
%
53.6
%
57.0
%
55.6
%
56.6
%
55.9
%
59.2
%
58.8
%
Research and development
GAAP research and development
38,717
38,957
37,197
37,431
37,421
39,068
38,270
38,248
Stock-based compensation
(13,889)
(14,488)
(11,469)
(11,481)
(12,205)
(10,426)
(11,728)
(10,323)
Executive transition costs
—
—
—
—
—
(2,406)
(385)
—
Non-GAAP research and development
24,828
24,469
25,728
25,950
25,216
26,236
26,157
27,925
Sales and marketing
GAAP sales and marketing
46,760
47,006
44,623
44,271
47,797
51,043
48,662
49,607
Stock-based compensation
(10,184)
(10,920)
(7,885)
(6,705)
(9,877)
(9,061)
(8,060)
(7,843)
Amortization of acquired intangible assets
(2,710)
(2,897)
(2,575)
(2,575)
(2,575)
(2,576)
(2,300)
(2,300)
Non-GAAP sales and marketing
33,866
33,189
34,163
34,991
35,345
39,406
38,302
39,464
General and administrative
GAAP general and administrative
29,543
32,481
29,225
25,827
28,823
30,001
31,426
31,639
Stock-based compensation
(7,717)
(7,959)
(9,126)
(7,284)
(12,073)
(11,670)
(12,090)
(10,876)
Executive transition costs
—
(4,207)
—
—
—
—
—
—
Acquisition-related expenses
(1,912)
—
—
—
—
—
—
—
Non-GAAP general and administrative
19,914
20,315
20,099
18,543
16,750
18,331
19,336
20,763
Operating loss
GAAP operating loss
(68,968)
(65,765)
(48,462)
(47,275)
(49,827)
(58,342)
(42,584)
(46,260)
Stock-based compensation
34,978
36,345
31,418
28,151
36,992
34,017
35,156
31,821
Executive transition costs
—
4,207
—
—
—
2,406
385
—
Amortization of acquired intangible assets
5,185
5,372
5,050
5,050
5,050
5,051
4,775
4,775
Impairment expense
—
—
—
—
—
4,316
—
—
Acquisition-related expenses
1,912
—
—
—
—
—
—
—
Non-GAAP operating loss
(26,893)
(19,841)
(11,994)
(14,074)
(7,785)
(12,552)
(2,268)
(9,664)
Net loss
GAAP net loss
(16,437)
(63,420)
(46,653)
(44,687)
(10,704)
(54,311)
(23,386)
(43,427)
Stock-based compensation
34,978
36,345
31,418
28,151
36,992
34,017
35,156
31,821
Executive transition costs
—
4,207
—
—
—
2,406
385
—
Amortization of acquired intangible assets
5,185
5,372
5,050
5,050
5,050
5,051
4,775
4,775
Acquisition-related expenses
1,912
—
—
—
—
—
—
—
Net gain on extinguishment of debt
(54,391)
—
—
—
(36,760)
—
(15,656)
—
Impairment expense
—
—
—
—
—
4,316
—
—
Amortization of debt issuance costs
776
714
716
716
803
502
456
354
Non-GAAP net income (loss)
$
(27,977)
$
(16,782)
$
(9,469)
$
(10,770)
$
(4,619)
$
(8,019)
$
1,730
$
(6,477)
GAAP net loss per common share—basic and diluted
$
(0.14)
$
(0.52)
$
(0.38)
$
(0.36)
$
(0.08)
$
(0.42)
$
(0.18)
$
(0.32)
Non-GAAP net income (loss) per common share—basic and diluted
$
(0.23)
$
(0.14)
$
(0.08)
$
(0.09)
$
(0.04)
$
(0.06)
$
0.01
$
(0.05)
Weighted average basic common shares
121,242
122,339
123,587
125,418
127,863
129,873
131,843
134,587
Weighted average diluted common shares
121,242
122,339
123,587
125,418
127,863
129,873
141,162
134,587
Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly (Continued)
(unaudited, in thousands, except per share amounts)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Reconciliation of GAAP to Non-GAAP diluted shares:
GAAP diluted shares
121,242
122,339
123,587
125,418
127,863
129,873
131,843
134,587
Other dilutive equity awards
—
—
—
—
—
—
9,319
—
Non-GAAP diluted shares
121,242
122,339
123,587
125,418
127,863
129,873
141,162
134,587
Non-GAAP diluted net income (loss) per share
(0.23)
(0.14)
(0.08)
(0.09)
(0.04)
(0.06)
0.01
(0.05)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Adjusted EBITDA
GAAP net loss
$
(16,437)
$
(63,420)
$
(46,653)
$
(44,687)
$
(10,704)
$
(54,311)
$
(23,386)
$
(43,427)
Stock-based compensation
34,978
36,345
31,418
28,151
36,992
34,017
35,156
31,821
Depreciation and other amortization
10,860
10,786
11,903
12,179
13,030
13,202
13,727
13,400
Amortization of acquired intangible assets
5,185
5,372
5,050
5,050
5,050
5,051
4,775
4,775
Amortization of debt discount and issuance costs
776
714
716
716
803
502
456
354
Executive transition costs
—
4,207
—
—
—
2,406
385
—
Net gain on extinguishment of debt
(54,391)
—
—
—
(36,760)
—
(15,656)
—
Impairment expense
—
—
—
—
—
4,316
—
—
Acquisition-related expenses
1,912
—
—
—
—
—
—
—
Interest income
(1,502)
(1,967)
(2,894)
(4,186)
(4,508)
(4,908)
(4,584)
(3,848)
Interest expense
754
667
638
497
429
360
288
225
Other (income) expense, net
1,673
(1,877)
(46)
250
803
16
763
89
Income tax (benefit) expense
159
118
(223)
135
110
(1)
(465)
347
Adjusted EBITDA
$
(16,033)
$
(9,055)
$
(91)
$
(1,895)
$
5,245
$
650
$
11,459
$
3,736
Non-GAAP Consolidated Statements of Operations - Quarterly
(unaudited, in thousands, except per share amounts)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Revenue
$
102,518
$
108,504
$
119,321
$
117,564
$
122,831
$
127,816
$
137,777
$
133,520
Cost of revenue (1)(2)
50,803
50,372
51,325
52,154
53,305
56,395
56,250
55,032
Gross profit
51,715
58,132
67,996
65,410
69,526
71,421
81,527
78,488
Operating expenses:
Research and development(1)(3)
24,828
24,469
25,728
25,950
25,216
26,236
26,157
27,925
Sales and marketing(1)(2)
33,866
33,189
34,163
34,991
35,345
39,406
38,302
39,464
General and administrative (1)(3)(4)
19,914
20,315
20,099
18,543
16,750
18,331
19,336
20,763
Total operating expenses(5)
78,608
77,973
79,990
79,484
77,311
83,973
83,795
88,152
Loss from operations(1)(2)(3)(4)
(26,893)
(19,841)
(11,994)
(14,074)
(7,785)
(12,552)
(2,268)
(9,664)
Interest income
1,502
1,967
2,894
4,186
4,508
4,908
4,584
3,848
Interest expense(6)
(754)
(667)
(638)
(497)
(429)
(360)
(288)
(225)
Other income (expense), net
(1,673)
1,877
46
(250)
(803)
(16)
(763)
(89)
Income (loss) before income tax expense (benefit)(7)
(27,818)
(16,664)
(9,692)
(10,635)
(4,509)
(8,020)
1,265
(6,130)
Income tax expense (benefit)(8)
159
118
(223)
135
110
(1)
(465)
347
Net income (loss)(1)(2)(3)(4)(5)(6)(7)(8)
$
(27,977)
$
(16,782)
$
(9,469)
$
(10,770)
$
(4,619)
$
(8,019)
$
1,730
$
(6,477)
Net income (loss) per share attributable to common stockholders, basic and diluted
$
(0.23)
$
(0.14)
$
(0.08)
$
(0.09)
$
(0.04)
$
(0.06)
$
0.01
$
(0.05)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic
121,242
122,339
123,587
125,418
127,863
129,873
131,843
134,587
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted
121,242
122,339
123,587
125,418
127,863
129,873
141,162
134,587
(1) Excludes stock-based compensation. See GAAP to Non-GAAP reconciliations.
(2) Excludes amortization of acquired intangible assets. See GAAP to Non-GAAP reconciliations.
(3) Excludes executive transition costs. See GAAP to Non-GAAP reconciliations.
(4) Excludes acquisition-related and other expenses. See GAAP to Non-GAAP reconciliations.
(5) Excludes impairment expense. See GAAP to Non-GAAP reconciliations.
(6) Excludes amortization of debt discount and issuance costs. See GAAP to Non-GAAP reconciliations.
(7) Excludes net gain on extinguishment of debt. See GAAP to Non-GAAP reconciliations.
(8) Excludes acquisition-related tax benefit. See GAAP to Non-GAAP reconciliations.
Consolidated Balance Sheets - Quarterly
(unaudited, in thousands)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Assets
Current assets:
Cash and cash equivalents
$
62,510
$
87,897
$
143,391
$
348,463
$
273,742
$
270,300
$
107,921
$
150,809
Marketable securities
419,905
445,048
374,581
198,116
123,605
158,055
214,799
178,677
Accounts receivable, net
68,218
72,914
89,578
85,344
78,295
98,622
120,498
107,517
Prepaid expenses and other current assets
29,037
31,321
28,933
29,717
29,500
24,481
20,455
23,207
Total current assets
579,670
637,180
636,483
661,640
505,142
551,458
463,673
460,210
Property and equipment, net
173,950
179,080
180,378
179,922
179,045
171,914
176,608
177,574
Operating lease right-of-use assets, net
69,861
72,374
68,440
60,615
56,733
52,927
55,212
54,420
Goodwill
670,186
670,158
670,185
670,192
670,356
670,356
670,356
670,356
Intangible assets, net
93,978
88,482
82,900
77,725
72,550
67,375
62,475
57,576
Marketable securities, non-current
284,951
186,066
165,105
117,518
78,042
32,280
6,088
1,743
Other assets
60,199
73,258
92,622
94,798
95,550
94,353
90,779
84,044
Total assets
$
1,932,795
$
1,906,598
$
1,896,113
$
1,862,410
$
1,657,418
$
1,640,663
$
1,525,191
$
1,505,923
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
10,011
$
8,265
$
4,786
$
4,668
$
5,561
$
5,723
$
5,611
$
5,485
Accrued expenses
49,943
54,186
61,161
42,311
47,001
56,595
61,818
35,555
Finance lease liabilities
28,088
27,807
28,954
24,763
22,233
19,250
15,684
11,974
Operating lease liabilities
19,243
20,919
23,026
20,516
20,575
21,533
24,042
22,580
Other current liabilities
33,705
33,422
34,394
32,942
36,234
40,234
40,539
44,633
Total current liabilities
140,990
144,599
152,321
125,200
131,604
143,335
147,694
120,227
Long-term debt, less current portion
703,375
704,042
704,710
705,378
472,369
472,823
343,507
343,837
Finance lease liabilities, noncurrent
26,479
21,027
15,507
10,858
7,026
3,860
1,602
440
Operating lease liabilities, noncurrent
60,657
62,750
61,341
56,275
51,448
47,775
48,484
46,857
Other long-term liabilities
7,556
7,201
7,076
6,144
7,217
4,298
4,416
2,756
Total liabilities
939,057
939,619
940,955
903,855
669,664
672,091
545,703
514,117
Stockholders’ equity:
Common stock
2
2
2
2
2
2
3
3
Additional paid-in capital
1,597,869
1,634,666
1,666,106
1,710,498
1,747,959
1,781,870
1,815,245
1,870,503
Accumulated other comprehensive loss
(12,542)
(12,678)
(9,286)
(5,594)
(3,152)
(1,934)
(1,008)
(521)
Accumulated deficit
(591,591)
(655,011)
(701,664)
(746,351)
(757,055)
(811,366)
(834,752)
(878,179)
Total stockholders’ equity
993,738
966,979
955,158
958,555
987,754
968,572
979,488
991,806
Total liabilities and stockholders’ equity
$
1,932,795
$
1,906,598
$
1,896,113
$
1,862,410
$
1,657,418
$
1,640,663
$
1,525,191
$
1,505,923
Consolidated Statements of Cash Flows – Quarterly
(unaudited, in thousands)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Cash flows from operating activities:
Net loss
$
(16,437)
$
(63,420)
$
(46,653)
$
(44,687)
$
(10,704)
$
(54,311)
$
(23,386)
$
(43,427)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense
10,736
10,662
11,371
12,040
12,920
13,055
13,587
13,277
Amortization of intangible assets
5,309
5,496
5,582
5,175
5,175
5,175
4,899
4,899
Non-cash lease expense
5,608
8,133
5,793
6,115
5,648
5,464
5,451
5,556
Amortization of debt discount and issuance costs
775
715
715
716
803
501
456
354
Amortization of deferred contract costs
2,138
2,031
2,896
3,425
3,746
4,082
4,295
4,573
Stock-based compensation
34,978
39,378
31,418
28,151
36,992
35,713
35,447
31,821
Deferred income taxes
—
—
—
—
—
—
(900)
228
Provision for credit losses
402
1,253
624
533
567
211
714
953
(Gain) loss on disposals of property and equipment
586
—
—
251
296
(42)
—
399
Amortization and accretion of discounts and premiums on investments
894
771
515
449
298
(403)
(990)
(1,158)
Impairment of operating lease right-of-use assets
—
—
2,083
—
187
401
156
—
Impairment expense
—
—
—
—
—
4,316
—
—
Net gain on extinguishment of debt
(54,391)
—
—
—
(36,760)
—
(15,656)
—
Other adjustments
(67)
(353)
3,980
(243)
(85)
71
905
(259)
Changes in operating assets and liabilities:
Accounts receivable
5,097
(5,949)
(17,288)
3,701
6,482
(20,538)
(22,590)
12,028
Prepaid expenses and other current assets
(2,701)
(975)
(971)
(634)
217
5,019
4,107
(2,700)
Other assets
(3,948)
(13,505)
(15,492)
(7,212)
(4,771)
(4,286)
(6,868)
(1,814)
Accounts payable
3,336
(4,301)
(1,267)
(175)
1,119
314
(876)
101
Accrued expenses
(3,729)
3,328
3,799
(6,827)
234
340
(1,603)
(8,760)
Operating lease liabilities
(5,349)
(7,462)
(4,335)
(5,750)
(6,682)
(4,505)
(5,137)
(7,606)
Other liabilities
83
(3,436)
5,102
(3,889)
9,308
1,033
612
2,667
Net cash provided by (used in) operating activities
(16,680)
(27,634)
(12,128)
(8,861)
24,990
(8,390)
(7,377)
11,132
Cash flows from investing activities:
Purchases of marketable securities
(207,286)
—
—
—
—
(73,091)
(59,142)
(56,948)
Sales of marketable securities
159,552
—
65
—
774
1
24,850
—
Maturities of marketable securities
127,333
72,857
94,303
227,211
114,884
86,030
5,642
99,080
Business acquisitions, net of cash acquired
(25,224)
(1,746)
1,843
—
—
—
—
—
Advance payment for purchase of property and equipment
(29,310)
(1,964)
(10,923)
—
—
—
—
—
Purchases of property and equipment(1)
(6,428)
(2,631)
(8,529)
(3,494)
(4,464)
(325)
(2,693)
(1,603)
Proceeds from sale of property and equipment
241
125
126
22
14
13
—
—
Capitalized internal-use software
(4,926)
(5,120)
(4,290)
(4,209)
(6,230)
(4,951)
(5,902)
(6,845)
Net cash provided by (used in) investing activities(1)
13,952
61,521
72,595
219,530
104,978
7,677
(37,245)
33,684
Cash flows from financing activities:
Cash paid for debt extinguishment
(177,082)
—
—
—
(196,934)
—
(113,606)
—
Repayments of finance lease liabilities(1)
(3,870)
(7,076)
(4,427)
(8,645)
(6,557)
(6,041)
(5,932)
(4,872)
Cash received for restricted stock sold in advance of vesting conditions
—
—
—
—
—
—
—
—
Cash paid for early sale of restricted shares
(3,539)
(3,618)
—
—
—
—
—
—
Payment of deferred consideration for business acquisitions
—
—
—
—
(4,393)
—
—
—
Proceeds from exercise of vested stock options
1,721
555
364
336
535
1,137
161
111
Proceeds from employee stock purchase plan
1,571
1,749
(949)
2,596
2,191
2,222
1,550
2,881
Net cash used in financing activities(1)
(181,199)
(8,390)
(5,012)
(5,713)
(205,158)
(2,682)
(117,827)
(1,880)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
(100)
(110)
39
116
469
(47)
70
(48)
Net increase (decrease) in cash, cash equivalents, and restricted cash
(184,027)
25,387
55,494
205,072
(74,721)
(3,442)
(162,379)
42,888
Cash, cash equivalents, and restricted cash at beginning of period
246,687
62,660
88,047
143,541
348,613
273,892
270,450
108,071
Cash, cash equivalents, and restricted cash at end of period
$
62,660
$
88,047
$
143,541
$
348,613
$
273,892
$
270,450
$
108,071
$
150,959
__________
(1)Amounts disclosed for Q2 2022 have been revised from the amounts disclosed in our previous investor supplements to match amounts reported in the applicable Quarterly Reports on Form 10-Q.
Free Cash Flow
(in thousands, unaudited)
Quarter ended
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Cash flow provided by (used in) operations
$
(16,680)
$
(27,634)
$
(12,128)
$
(8,861)
$
24,990
$
(8,390)
$
(7,377)
$
11,132
Capital expenditures(1):
Purchases of property and equipment
(6,428)
(2,631)
(8,529)
(3,494)
(4,464)
(325)
(2,693)
(1,603)
Proceeds from sale of property and equipment
241
125
126
22
14
13
—
—
Capitalized internal-use software
(4,926)
(5,120)
(4,290)
(4,209)
(6,230)
(4,951)
(5,902)
(6,845)
Repayments of finance lease liabilities
(3,870)
(7,076)
(4,427)
(8,645)
(6,557)
(6,041)
(5,932)
(4,872)
Advance payment for purchase of property and equipment (2)
(29,310)
(1,964)
(10,923)
—
—
—
—
—
Free Cash Flow
$
(60,973)
$
(44,300)
$
(40,171)
$
(25,187)
$
7,753
$
(19,694)
$
(21,904)
$
(2,188)
__________
(1)Capital expenditures are defined as cash used for purchases of property and equipment, net of proceeds from sale of property and equipment, capitalized internal-use software and payments on finance lease obligations, as reflected in our statement of cash flows.
(2)In the three months ended March 31, 2024, we received $3.7 million of capital equipment that was prepaid prior to the current quarter, as reflected in the supplemental disclosure of our statement of cash flows.
