•Enhanced Fastly Next-Gen WAF with new capabilities that reduced the time to activate the product, enriched detection signals, and provided additional context to data with Country and IP Corp/Site lists.
•Updated Fastly Bot Management with new bot analysis capability to provide customers with visibility and control of their bot management expenses, while also enabling customers to provide logos for bot challenges.
•Enhanced the Fastly trials experience with access to combined trials for full product lines, helping customers discover new tools and unlock the full value of the Fastly Edge Cloud Platform.
•Added the Fastly Support Portal to the Fastly single sign-on experience, allowing customers to seamlessly navigate across the Fastly Control Panel, Next-Gen WAF Console and Support Portal.
Customer and Partner Highlights
•Product package deals in the third quarter more than doubled year-over-year, and new logo packages tripled, representing 43% of packages sold compared to 16% in the third quarter of 2023.
•New deal registrations grew 33% year-over-year in the third quarter, and year-to-date bookings grew 46% year-over-year.
•Cineverse, an entertainment company encompassing digital cinema, streaming channels, content marketing, and distribution, selected Fastly’s Media Video Delivery offering.
•Connected Television Group, a video distribution solutions and services provider, selected Fastly’s CDN and Support services.
Calculations of Key and Other Selected Metrics – Quarterly (unaudited)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Revenue by Product (in millions):
Network Services Revenue
$
96.8
$
94.3
$
98.5
$
102.5
$
109.8
$
106.0
$
104.2
$
107.4
Security Revenue
$
20.7
$
21.2
$
22.5
$
23.3
$
25.8
$
24.6
$
25.4
$
26.2
Other Revenue
$
1.8
$
2.0
$
1.8
$
1.9
$
2.2
$
2.9
$
2.8
$
3.6
Total Revenue
$
119.3
$
117.6
$
122.8
$
127.8
$
137.8
$
133.5
$
132.4
$
137.2
Key Metrics:
Enterprise Customer Count(1)
533
540
551
547
578
577
601
576
Enterprise Customer Revenue %
92
%
91
%
92
%
92
%
92
%
91
%
91
%
92
%
Total Customer Count(1)
3,062
3,100
3,072
3,102
3,243
3,290
3,295
3,638
Top Ten Customer Revenue %
37
%
35
%
37
%
40
%
40
%
38
%
34
%
33
%
LTM Net Retention Rate (NRR)(2)
119
%
116
%
116
%
114
%
113
%
114
%
110
%
105
%
Annual Revenue Retention Rate (ARR)(7)
98.9
%
—
%
—
%
—
%
99.2
%
—
%
—
%
—
%
Remaining Performance Obligation (RPO)(3)
$
198.3
$
242.4
$
230.9
$
247.6
$
235.7
$
227.0
$
223.1
$
235.4
Corporate Highlights
•Fastly Threat Insights Report revealed 91% of cyberattacks now target multiple organizations using mass scanning.
•Fastly’s “Bots Wars: How Bad Bots are Hurting Businesses” research revealed 59% of organizations reported an increase in bot attacks over the past year, with significant attacks costing organizations $2.9 million on average.
•Hosted Xcelerate Sydney, a curated customer event bringing together thought leaders and industry pioneers for a jam-packed day of innovation.
Key Metrics Highlights
•Enterprise customer1 count was 576 in the third quarter, down 25 from the second quarter of 2024. Total customer count1 was 3,638 in the third quarter, up 343 from the second quarter of 2024.
•Fastly's top ten customers accounted for 33% of revenue in the third quarter compared to 40% in the third quarter of 2023. Revenue from the top ten customers declined 11% year-over-year compared to revenue growth of 20% year-over-year from customers outside the top ten.
•Last 12-month net retention rate (LTM NRR)2 decreased to 105% in the third quarter from 110% in the second quarter of 2024.
•Remaining performance obligations (RPO)3 were $235 million, up 6% from $223 million in the second quarter of 2024.
Fourth Quarter and Full Year 2024 Guidance
Q4 2024
Full Year 2024
Total Revenue (millions)
$136.0 - $140.0
$539.0 - $543.0
Non-GAAP Operating Loss (millions)(4)
($5.0) - ($1.0)
($28.0) - ($24.0)
Non-GAAP Net Income (Loss) per share (5)(6)
($0.02) - $0.02
($0.12) - ($0.08)
Key Metrics
1.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.
2.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.
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 141.0 million in Q4 2024 and 137.5 million for the full year 2024.
6.Non-GAAP Net Income (Loss) per share is calculated as Non-GAAP Net Income (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 capabilities of Fastly Next-Gen WAF and Fastly Bot Management; expectations regarding customer experiences with the Fastly trials experience and Support Portal; expectations regarding customer mix; 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, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. Additional information will also be set forth in Fastly’s Quarterly Report on Form 10-Q for the quarter ended September 30, 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 income (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 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.
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 charges related to our long-lived assets. 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.
Restructuring Charges: consists primarily of employee-related severance and termination benefits related to management's restructuring plan that resulted in a reduction in our workforce. 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.
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)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Revenue
$
119,321
$
117,564
$
122,831
$
127,816
$
137,777
$
133,520
$
132,371
$
137,206
Cost of revenue(1)
56,738
57,310
58,617
61,730
62,003
60,286
59,470
62,466
Gross profit
62,583
60,254
64,214
66,086
75,774
73,234
72,901
74,740
Operating expenses:
Research and development(1)
37,197
37,431
37,421
39,068
38,270
38,248
35,106
31,884
Sales and marketing(1)
44,623
44,271
47,797
51,043
48,662
49,607
52,959
45,994
General and administrative (1)
29,225
25,827
28,823
30,001
31,426
31,639
28,433
27,173
Impairment expense
—
—
—
4,316
—
—
3,137
559
Restructuring charges
—
—
—
—
—
—
—
9,720
Total operating expenses
111,045
107,529
114,041
124,428
118,358
119,494
119,635
115,330
Loss from operations
(48,462)
(47,275)
(49,827)
(58,342)
(42,584)
(46,260)
(46,734)
(40,590)
Net gain on extinguishment of debt
—
—
36,760
—
15,656
—
—
—
Interest income
2,894
4,186
4,508
4,908
4,584
3,848
3,937
3,819
Interest expense
(1,354)
(1,213)
(1,232)
(862)
(744)
(579)
(464)
(473)
Other income (expense), net
46
(250)
(803)
(16)
(763)
(89)
193
(317)
Loss before income taxes
(46,876)
(44,552)
(10,594)
(54,312)
(23,851)
(43,080)
(43,068)
(37,561)
Income tax expense (benefit)
(223)
135
110
(1)
(465)
347
661
455
Net loss
$
(46,653)
$
(44,687)
$
(10,704)
$
(54,311)
$
(23,386)
$
(43,427)
$
(43,729)
$
(38,016)
Net loss per share attributable to common stockholders, basic and diluted
$
(0.38)
$
(0.36)
$
(0.08)
$
(0.42)
$
(0.18)
$
(0.32)
$
(0.32)
$
(0.27)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
123,587
125,418
127,863
129,873
131,843
134,587
137,444
139,237
__________
(1)Includes stock-based compensation expense as follows:
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Cost of revenue
$
2,938
$
2,681
$
2,837
$
2,860
$
3,278
$
2,779
$
2,044
$
1,911
Research and development
11,469
11,481
12,205
12,122
12,019
10,323
7,983
7,378
Sales and marketing
7,885
6,705
9,877
9,061
8,060
7,843
7,058
7,113
General and administrative
9,126
7,284
12,073
11,670
12,090
10,876
9,063
8,614
Total
$
31,418
$
28,151
$
36,992
$
35,713
$
35,447
$
31,821
$
26,148
$
25,016
Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly
(unaudited, in thousands, except per share amounts)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Gross Profit
GAAP gross Profit
$
62,583
$
60,254
$
64,214
$
66,086
$
75,774
$
73,234
$
72,901
$
74,740
Stock-based compensation
2,938
2,681
2,837
2,860
3,278
2,779
2,044
1,911
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
67,996
65,410
69,526
71,421
81,527
78,488
77,420
79,126
GAAP gross margin
52.4
%
51.3
%
52.3
%
51.7
%
55.0
%
54.8
%
55.1
%
54.5
%
Non-GAAP gross margin
57.0
%
55.6
%
56.6
%
55.9
%
59.2
%
58.8
%
58.5
%
57.7
%
Research and development
GAAP research and development
37,197
37,431
37,421
39,068
38,270
38,248
35,106
31,884
Stock-based compensation
(11,469)
(11,481)
(12,205)
(10,426)
(11,728)
(10,323)
(7,983)
(7,378)
Executive transition costs
—
—
—
(2,406)
(385)
—
—
—
Non-GAAP research and development
25,728
25,950
25,216
26,236
26,157
27,925
27,123
24,506
Sales and marketing
GAAP sales and marketing
44,623
44,271
47,797
51,043
48,662
49,607
52,959
45,994
Stock-based compensation
(7,885)
(6,705)
(9,877)
(9,061)
(8,060)
(7,843)
(7,058)
(7,113)
Amortization of acquired intangible assets
(2,575)
(2,575)
(2,575)
(2,576)
(2,300)
(2,300)
(2,301)
(2,300)
Non-GAAP sales and marketing
34,163
34,991
35,345
39,406
38,302
39,464
43,600
36,581
General and administrative
GAAP general and administrative
29,225
25,827
28,823
30,001
31,426
31,639
28,433
27,173
Stock-based compensation
(9,126)
(7,284)
(12,073)
(11,670)
(12,090)
(10,876)
(9,063)
(8,614)
Non-GAAP general and administrative
20,099
18,543
16,750
18,331
19,336
20,763
19,370
18,559
Operating loss
GAAP operating loss
(48,462)
(47,275)
(49,827)
(58,342)
(42,584)
(46,260)
(46,734)
(40,590)
Stock-based compensation
31,418
28,151
36,992
34,017
35,156
31,821
26,148
25,016
Restructuring charges
—
—
—
—
—
—
—
9,720
Executive transition costs
—
—
—
2,406
385
—
—
—
Amortization of acquired intangible assets
5,050
5,050
5,050
5,051
4,775
4,775
4,776
4,775
Impairment expense
—
—
—
4,316
—
—
3,137
559
Non-GAAP operating loss
(11,994)
(14,074)
(7,785)
(12,552)
(2,268)
(9,664)
(12,673)
(520)
Net loss
GAAP net loss
(46,653)
(44,687)
(10,704)
(54,311)
(23,386)
(43,427)
(43,729)
(38,016)
Stock-based compensation
31,418
28,151
36,992
34,017
35,156
31,821
26,148
25,016
Restructuring charges
—
—
—
—
—
—
—
9,720
Executive transition costs
—
—
—
2,406
385
—
—
—
Amortization of acquired intangible assets
5,050
5,050
5,050
5,051
4,775
4,775
4,776
4,775
Net gain on extinguishment of debt
—
—
(36,760)
—
(15,656)
—
—
—
Impairment expense
—
—
—
4,316
—
—
3,137
559
Amortization of debt issuance costs
716
716
803
502
456
354
349
358
Non-GAAP net income (loss)
$
(9,469)
$
(10,770)
$
(4,619)
$
(8,019)
$
1,730
$
(6,477)
$
(9,319)
$
2,412
GAAP net loss per common share — basic and diluted
$
(0.38)
$
(0.36)
$
(0.08)
$
(0.42)
$
(0.18)
$
(0.32)
$
(0.32)
$
(0.27)
Non-GAAP net income (loss) per common share — basic and diluted
$
(0.08)
$
(0.09)
$
(0.04)
$
(0.06)
$
0.01
$
(0.05)
$
(0.07)
$
0.02
Weighted average basic common shares
123,587
125,418
127,863
129,873
131,843
134,587
137,444
139,237
Weighted average diluted common shares
123,587
125,418
127,863
129,873
141,162
134,587
137,444
143,415
Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly (Continued)
(unaudited, in thousands, except per share amounts)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Reconciliation of GAAP to Non-GAAP diluted shares:
GAAP diluted shares
123,587
125,418
127,863
129,873
131,843
134,587
137,444
139,237
Other dilutive equity awards
—
—
—
—
9,319
—
—
4,178
Non-GAAP diluted shares
123,587
125,418
127,863
129,873
141,162
134,587
137,444
143,415
Non-GAAP diluted net income (loss) per share
(0.08)
(0.09)
(0.04)
(0.06)
0.01
(0.05)
(0.07)
0.02
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Adjusted EBITDA
GAAP net loss
$
(46,653)
$
(44,687)
$
(10,704)
$
(54,311)
$
(23,386)
$
(43,427)
$
(43,729)
$
(38,016)
Stock-based compensation
31,418
28,151
36,992
34,017
35,156
31,821
26,148
25,016
Depreciation and other amortization
11,903
12,179
13,030
13,202
13,727
13,400
13,443
13,781
Amortization of acquired intangible assets
5,050
5,050
5,050
5,051
4,775
4,775
4,776
4,775
Amortization of debt discount and issuance costs
716
716
803
502
456
354
349
358
Restructuring charges
—
—
—
—
—
—
—
9,720
Executive transition costs
—
—
—
2,406
385
—
—
—
Net gain on extinguishment of debt
—
—
(36,760)
—
(15,656)
—
—
—
Impairment expense
—
—
—
4,316
—
—
3,137
559
Interest income
(2,894)
(4,186)
(4,508)
(4,908)
(4,584)
(3,848)
(3,937)
(3,819)
Interest expense
638
497
429
360
288
225
115
115
Other (income) expense, net
(46)
250
803
16
763
89
(193)
317
Income tax (benefit) expense
(223)
135
110
(1)
(465)
347
661
455
Adjusted EBITDA
$
(91)
$
(1,895)
$
5,245
$
650
$
11,459
$
3,736
$
770
$
13,261
Non-GAAP Consolidated Statements of Operations - Quarterly
(unaudited, in thousands, except per share amounts)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Revenue
$
119,321
$
117,564
$
122,831
$
127,816
$
137,777
$
133,520
$
132,371
$
137,206
Cost of revenue (1)(2)
51,325
52,154
53,305
56,395
56,250
55,032
54,951
58,080
Gross profit (1)(2)
67,996
65,410
69,526
71,421
81,527
78,488
77,420
79,126
Operating expenses:
Research and development(1)(3)
25,728
25,950
25,216
26,236
26,157
27,925
27,123
24,506
Sales and marketing(1)(2)
34,163
34,991
35,345
39,406
38,302
39,464
43,600
36,581
General and administrative (1)
20,099
18,543
16,750
18,331
19,336
20,763
19,370
18,559
Total operating expenses(1)(2)(3)(4)(5)
79,990
79,484
77,311
83,973
83,795
88,152
90,093
79,646
Loss from operations(1)(2)(3)(4)(5)
(11,994)
(14,074)
(7,785)
(12,552)
(2,268)
(9,664)
(12,673)
(520)
Interest income
2,894
4,186
4,508
4,908
4,584
3,848
3,937
3,819
Interest expense(6)
(638)
(497)
(429)
(360)
(288)
(225)
(115)
(115)
Other income (expense), net
46
(250)
(803)
(16)
(763)
(89)
193
(317)
Income (loss) before income tax expense (benefit)(1)(2)(3)(4)(5)(6)(7)
(9,692)
(10,635)
(4,509)
(8,020)
1,265
(6,130)
(8,658)
2,867
Income tax expense (benefit)
(223)
135
110
(1)
(465)
347
661
455
Net income (loss)(1)(2)(3)(4)(5)(6)(7)
$
(9,469)
$
(10,770)
$
(4,619)
$
(8,019)
$
1,730
$
(6,477)
$
(9,319)
$
2,412
Net income (loss) per share attributable to common stockholders, basic and diluted
$
(0.08)
$
(0.09)
$
(0.04)
$
(0.06)
$
0.01
$
(0.05)
$
(0.07)
$
0.02
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic
123,587
125,418
127,863
129,873
131,843
134,587
137,444
139,237
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted
123,587
125,418
127,863
129,873
141,162
134,587
137,444
143,415
(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 impairment expense. See GAAP to Non-GAAP reconciliations.
(5) Excludes restructuring charges. 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.
Consolidated Balance Sheets - Quarterly
(unaudited, in thousands)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Assets
Current assets:
Cash and cash equivalents
$
143,391
$
348,463
$
273,742
$
270,300
$
107,921
$
150,809
$
147,196
$
217,514
Marketable securities
374,581
198,116
123,605
158,055
214,799
178,677
164,569
90,733
Accounts receivable, net
89,578
85,344
78,295
98,622
120,498
107,517
113,878
116,800
Prepaid expenses and other current assets
28,933
29,717
29,500
24,481
20,455
23,207
25,312
28,011
Total current assets
636,483
661,640
505,142
551,458
463,673
460,210
450,955
453,058
Property and equipment, net
180,378
179,922
179,045
171,914
176,608
177,574
177,058
180,288
Operating lease right-of-use assets, net
68,440
60,615
56,733
52,927
55,212
54,420
52,451
47,700
Goodwill
670,185
670,192
670,356
670,356
670,356
670,356
670,356
670,356
Intangible assets, net
82,900
77,725
72,550
67,375
62,475
57,576
52,676
47,776
Marketable securities, non-current
165,105
117,518
78,042
32,280
6,088
1,743
—
—
Other assets
92,622
94,798
95,550
94,353
90,779
84,044
79,176
72,576
Total assets
$
1,896,113
$
1,862,410
$
1,657,418
$
1,640,663
$
1,525,191
$
1,505,923
$
1,482,672
$
1,471,754
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
4,786
$
4,668
$
5,561
$
5,723
$
5,611
$
5,485
$
5,532
$
11,354
Accrued expenses
61,161
42,311
47,001
56,595
61,818
35,555
34,445
40,854
Finance lease liabilities
28,954
24,763
22,233
19,250
15,684
11,974
8,178
4,882
Operating lease liabilities
23,026
20,516
20,575
21,533
24,042
22,580
25,399
23,857
Other current liabilities
34,394
32,942
36,234
40,234
40,539
44,633
35,748
33,261
Total current liabilities
152,321
125,200
131,604
143,335
147,694
120,227
109,302
114,208
Long-term debt, less current portion
704,710
705,378
472,369
472,823
343,507
343,837
344,167
344,498
Finance lease liabilities, noncurrent
15,507
10,858
7,026
3,860
1,602
440
—
—
Operating lease liabilities, noncurrent
61,341
56,275
51,448
47,775
48,484
46,857
44,634
40,565
Other long-term liabilities
7,076
6,144
7,217
4,298
4,416
2,756
3,382
3,029
Total liabilities
940,955
903,855
669,664
672,091
545,703
514,117
501,485
502,300
Stockholders’ equity:
Common stock
2
2
2
2
3
3
3
3
Additional paid-in capital
1,666,106
1,710,498
1,747,959
1,781,870
1,815,245
1,870,503
1,903,374
1,929,397
Accumulated other comprehensive loss
(9,286)
(5,594)
(3,152)
(1,934)
(1,008)
(521)
(282)
(22)
Accumulated deficit
(701,664)
(746,351)
(757,055)
(811,366)
(834,752)
(878,179)
(921,908)
(959,924)
Total stockholders’ equity
955,158
958,555
987,754
968,572
979,488
991,806
981,187
969,454
Total liabilities and stockholders’ equity
$
1,896,113
$
1,862,410
$
1,657,418
$
1,640,663
$
1,525,191
$
1,505,923
$
1,482,672
$
1,471,754
Consolidated Statements of Cash Flows – Quarterly
(unaudited, in thousands)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Cash flows from operating activities:
Net loss
$
(46,653)
$
(44,687)
$
(10,704)
$
(54,311)
$
(23,386)
$
(43,427)
$
(43,729)
$
(38,016)
Adjustments to reconcile net loss to net cash used in operating activities:
—
—
—
—
—
—
—
Depreciation expense
11,371
12,040
12,920
13,055
13,587
13,277
13,318
13,656
Amortization of intangible assets
5,582
5,175
5,175
5,175
4,899
4,899
4,900
4,900
Non-cash lease expense
5,793
6,115
5,648
5,464
5,451
5,556
5,800
5,463
Amortization of debt discount and issuance costs
715
716
803
501
456
354
349
358
Amortization of deferred contract costs
2,896
3,425
3,746
4,082
4,295
4,573
4,531
4,773
Stock-based compensation
31,418
28,151
36,992
35,713
35,447
31,821
26,148
25,016
Deferred income taxes
—
—
—
—
(900)
228
333
339
Provision for credit losses
624
533
567
211
714
953
393
1,054
(Gain) loss on disposals of property and equipment
—
251
296
(42)
—
399
45
—
Amortization of premiums (discounts) on investments
515
449
298
(403)
(990)
(1,158)
(1,244)
(1,064)
Impairment of operating lease right-of-use assets
2,083
—
187
401
156
—
—
371
Impairment expense
—
—
—
4,316
—
—
3,137
559
Net gain on extinguishment of debt
—
—
(36,760)
—
(15,656)
—
—
—
Other adjustments
3,980
(243)
(85)
71
905
(259)
(178)
520
Changes in operating assets and liabilities:
—
—
—
—
—
—
—
Accounts receivable
(17,288)
3,701
6,482
(20,538)
(22,590)
12,028
(6,754)
(3,976)
Prepaid expenses and other current assets
(971)
(634)
217
5,019
4,107
(2,700)
(2,131)
(2,589)
Other assets
(15,492)
(7,212)
(4,771)
(4,286)
(6,868)
(1,814)
(3,210)
(2,705)
Accounts payable
(1,267)
(175)
1,119
314
(876)
101
(341)
4,754
Accrued expenses
3,799
(6,827)
234
340
(1,603)
(8,760)
1,911
2,707
Operating lease liabilities
(4,335)
(5,750)
(6,682)
(4,505)
(5,137)
(7,606)
(4,406)
(7,329)
Other liabilities
5,102
(3,889)
9,308
1,033
612
2,667
(3,820)
(3,789)
Net cash provided by (used in) operating activities
(12,128)
(8,861)
24,990
(8,390)
(7,377)
11,132
(4,948)
5,002
Cash flows from investing activities:
Purchases of marketable securities
—
—
—
(73,091)
(59,142)
(56,948)
(60,249)
(37,902)
Sales of marketable securities
65
—
774
1
24,850
—
—
—
Maturities of marketable securities
94,303
227,211
114,884
86,030
5,642
99,080
77,597
113,032
Business acquisitions, net of cash acquired
1,843
—
—
—
—
—
—
—
Advance payment for purchase of property and equipment
(10,923)
—
—
—
—
—
(790)
—
Purchases of property and equipment
(8,529)
(3,494)
(4,464)
(325)
(2,693)
(1,603)
(1,762)
(1,996)
Proceeds from sale of property and equipment
126
22
14
13
—
—
24
—
Capitalized internal-use software
(4,290)
(4,209)
(6,230)
(4,951)
(5,902)
(6,845)
(6,829)
(6,818)
Net cash provided by (used in) investing activities
72,595
219,530
104,978
7,677
(37,245)
33,684
7,991
66,316
Cash flows from financing activities:
Cash paid for debt extinguishment
—
—
(196,934)
—
(113,606)
—
—
—
Repayments of finance lease liabilities
(4,427)
(8,645)
(6,557)
(6,041)
(5,932)
(4,872)
(4,236)
(3,296)
Payment of deferred consideration for business acquisitions
—
—
(4,393)
—
—
—
(3,771)
—
Proceeds from exercise of vested stock options
364
336
535
1,137
161
111
180
19
Proceeds from employee stock purchase plan
(949)
2,596
2,191
2,222
1,550
2,881
1,034
2,168
Net cash used in financing activities
(5,012)
(5,713)
(205,158)
(2,682)
(117,827)
(1,880)
(6,793)
(1,109)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
39
116
469
(47)
70
(48)
(13)
109
Net increase (decrease) in cash, cash equivalents, and restricted cash
55,494
205,072
(74,721)
(3,442)
(162,379)
42,888
(3,763)
70,318
Cash, cash equivalents, and restricted cash at beginning of period
88,047
143,541
348,613
273,892
270,450
108,071
150,959
147,196
Cash, cash equivalents, and restricted cash at end of period
$
143,541
$
348,613
$
273,892
$
270,450
$
108,071
$
150,959
$
147,196
$
217,514
Free Cash Flow
(in thousands, unaudited)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Net cash provided by (used in) operating activities
$
(12,128)
$
(8,861)
$
24,990
$
(8,390)
$
(7,377)
$
11,132
$
(4,948)
$
5,002
Capital expenditures(1):
Purchases of property and equipment
(8,529)
(3,494)
(4,464)
(325)
(2,693)
(1,603)
(1,762)
(1,996)
Proceeds from sale of property and equipment
126
22
14
13
—
—
24
—
Capitalized internal-use software
(4,290)
(4,209)
(6,230)
(4,951)
(5,902)
(6,845)
(6,829)
(6,818)
Repayments of finance lease liabilities
(4,427)
(8,645)
(6,557)
(6,041)
(5,932)
(4,872)
(4,236)
(3,296)
Advance payment for purchase of property and equipment (2)
(10,923)
—
—
—
—
—
(790)
—
Free Cash Flow
$
(40,171)
$
(25,187)
$
7,753
$
(19,694)
$
(21,904)
$
(2,188)
$
(18,541)
$
(7,108)
__________
(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 nine months ended September 30, 2024, we received $11.9 million of capital equipment that was prepaid prior to the current quarter, as reflected in the supplemental disclosure of our statement of cash flows.
Exhibit 99.2
