•Introduced Fastly Security Labs, a new program that empowers customers to be the first to test new detection and security features directly to the Security Product team, bolstering the quality of our Next-Gen WAF.
•Released in beta Fastly’s Observability Dashboard bringing end-to-end security, delivery, application and performance metrics into a unified view.
•Excited and proud to be a part of Apple’s new iCloud Private Relay service that’s designed to protect users’ privacy on the internet.
•Collaborated with Apple, Google and others to develop and standardize the technology behind Private Access Tokens to provide secure anonymity to end-users.
•Availability of HTTP/3 and QUIC deployments to customers at no additional charge, enabling faster response times, better performance, and built-in encryption with TLS 1.3.
Leading Innovation:
•Introduced Fastly’s new Object Store offering global, durable storage for compute functions at the edge.
•Unveiled our POP in New Zealand, building on our strategy of deploying fewer, more performant POPs worldwide.
Developer Relations:
•Acquired Glitch, a platform of 1.8 million developers, bringing together two of the world’s best ecosystems into a single, seamless developer experience to deliver globally performant, secure and reliable applications at scale.
Key Metrics Highlights
•Trailing 12 month net retention rate (NRR LTM)1 was 117% in the second quarter, up from 115% in the first quarter 2022.
•Dollar-Based Net Expansion Rate (DBNER)2 was 120% in the second quarter, up from 118% in the first quarter 2022.
•Total customer count was 2,894, of which 471 were enterprise customers.4
•Average enterprise customer spend of $730K in the second quarter, up 1% quarter-over-quarter.
Corporate Development
•Announced that the Board has named Todd Nightingale as CEO effective September 1, 2022. As previously announced, he will succeed Joshua Bixby, who will remain with the Company as an advisor. Nightingale joins Fastly from Cisco, where he currently serves as EVP and GM of Enterprise Networking & Cloud.
Customer and Partner Developments
•Peer-recognized as a Customers’ Choice in the 2022 Gartner Peer Insights “Voice of the Customer”: Global CDN; Fastly received the highest customer rating of 4.8 out of 5 stars and highest customer willingness to recommend (97%), as of February 2022
•A top Fortune 500 CRM company expanded its delivery requirements with Fastly for its enterprise customers.
•Parrot Analytics, the leader in helping companies value their entertainment content on a global scale, was drawn to Fastly’s solution stack from delivery to WAF, specifically with its GraphQL Inspection.
•Taboola, an online discovery platform serving over 300 billion content recommendations monthly, extended its Fastly edge delivery needs with Next-Gen WAF.
•E-commerce API platform Commerce Layer added Edge Rate Limiting product on top of its Fastly WAF install to improve its B2B offering.
Second Quarter 2022 Financial Highlights
•Total revenue of $102.5 million, representing flat sequential growth and 21% year-over-year growth.
•GAAP gross margin of 44.9%, compared to 52.6% in the second quarter of 2021. Non-GAAP gross margin of 50.4%, compared to 57.6% in the second quarter of 2021.
•GAAP net loss per basic and diluted shares of $0.14 compared to $0.51 in the second quarter of 2021. Non-GAAP net loss5 per basic and diluted shares of $0.23, compared to $0.15 in the second quarter of 2021.
•Repurchased $235.0 million in aggregate principal amount of convertible debt for $176.4 million, a 25% discount to par, resulting in recording a $54.4 million net gain.
Third Quarter and Full Year 2022 Guidance:
Q3 2022
Full Year 2022
Total Revenue (millions)
$102 - $105
$415 - $425
Non-GAAP Operating Loss (millions)(5)
($21.5) - ($18.5)
($78) - ($72)
Non-GAAP Net Loss per share (6) (7)
($0.18) - ($0.15)
($0.68) - ($0.63)
Calculations of Key and Other Selected Metrics – Quarterly
(unaudited)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Total Customer Count
2,047
2,326
2,458
2,581
2,748
2,804
2,880
2,894
Enterprise Customer Count(4)
313
378
395
408
430
445
457
471
Enterprise Revenue % Total LTM
88
%
88
%
89
%
89
%
88
%
88
%
89
%
88
%
Enterprise Customer Average Spend LTM (in thousands)(8)
$
753
$
681
$
705
$
702
$
698
$
704
$
722
$
730
Net Retention Rate (NRR) Quarter(9)
122
%
116
%
110
%
93
%
112
%
107
%
114
%
128
%
Net Retention Rate (NRR) LTM(1)
141
%
137
%
135
%
121
%
114
%
118
%
115
%
117
%
Dollar-Based Net Expansion Rate (DBNER)(2)
147
%
144
%
141
%
126
%
118
%
121
%
118
%
120
%
Annual Revenue Retention Rate (ARR)(3)
—
99.3
%
—
%
—
—
99.2
%
—
%
—
Global Network Capacity
106 TB/sec
117 TB/sec
130 TB/sec
145 TB/sec
167 TB/sec
184 TB/sec
198 TB/sec
215 TB/sec
Countries
26
26
26
28
31
32
34
34
Markets
55
56
58
61
68
71
75
78
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 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.
4 Enterprise customers are defined as those spending $100,000 or more in a twelve-month period.
5 For a reconciliation of non-GAAP financial measures to their corresponding GAAP measures, please refer to the reconciliation table at the end of this letter.
6 Assumes weighted average basic shares outstanding of 122.4 million in Q3 2022 and 121.8 million for the full year 2022.
7 Non-GAAP Net Loss per share is calculated as full-year Non-GAAP Net Loss divided by weighted average basic shares for the full year 2022.
8 Calculated based on trailing twelve-months.
9 Net Retention Rate measures the net change in monthly revenue from existing customers in the last month of the period (the “current" period month) compared to the last month of the same period one year prior (the “prior" period month). The revenue included in the current period month includes revenue from (i) revenue contraction due to billing decreases or customer churn, (ii) revenue expansion due to billing increases, but excludes revenue from new customers. We calculate Net Retention Rate by dividing the revenue from the current period month by the revenue in the prior period month.
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; Fastly's strategies, product and business plans; and continued demand for future products from the combined Signal Sciences’ portfolio. 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 fiscal year ended December 31, 2021, and additional information that will be set forth in Fastly’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, and other filings and reports that we 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 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, 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, 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 the acquisition-related expenses when evaluating its ongoing non-GAAP 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. Amortization of acquired intangible assets is included in the following cost and expense line items of our GAAP presentation: cost of revenue and sales and marketing. Management considers its operating results without the amortization expense of our acquired intangible assets when evaluating its 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 non-GAAP net loss and its adjusted EBITDA results without this activity when evaluating its ongoing 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. Depreciation and amortization expense is included in the following cost and expense line items of our GAAP presentation: cost of revenue, research and development, sales and marketing, and general and administrative. Management considers its operating results without the depreciation and other amortization expense when evaluating its 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.
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 adjusted EBITDA results without these charges when evaluating its ongoing 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 total interest expense when evaluating its non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.
Interest Income: consists primarily of interest income related to our marketable securities. Management considers its non-GAAP net loss and adjusted EBITDA results without this activity when evaluating its ongoing 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 non-GAAP net loss and its adjusted EBITDA results without this activity when evaluating its ongoing 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 other income (expense), net when evaluating 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. Stock-based compensation is included in the following cost and expense line items of our GAAP presentation: cost of revenue, research and development, sales and marketing, and general and administrative.
Although stock-based compensation is an expense for the Company and is viewed as a form of compensation, management excludes stock-based compensation from our non-GAAP measures and adjusted EBITDA results for purposes of evaluating our continuing operating 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)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Revenue
$
70,638
$
82,649
$
84,852
$
85,026
$
86,735
$
97,717
$
102,382
$
102,518
Cost of revenue(1)
29,292
33,753
37,494
40,320
41,244
47,944
53,915
56,466
Gross profit
41,346
48,896
47,358
44,706
45,491
49,773
48,467
46,052
Operating expenses:
Research and development(1)
18,271
25,590
28,988
30,346
32,528
34,997
40,437
38,717
Sales and marketing(1)
22,568
34,765
34,872
36,334
39,288
42,151
41,480
46,760
General and administrative (1)
23,961
45,885
33,461
35,494
28,609
29,281
29,554
29,543
Total operating expenses
64,800
106,240
97,321
102,174
100,425
106,429
111,471
115,020
Loss from operations
(23,454)
(57,344)
(49,963)
(57,468)
(54,934)
(56,656)
(63,004)
(68,968)
Net gain on extinguishment of debt
—
—
—
—
—
—
—
54,391
Interest income
353
178
174
276
280
552
681
1,502
Interest expense
(410)
(452)
(661)
(1,436)
(1,555)
(1,593)
(1,622)
(1,530)
Other income (expense)
69
(697)
(64)
178
41
201
(279)
(1,673)
Loss before income taxes
(23,442)
(58,315)
(50,514)
(58,450)
(56,168)
(57,496)
(64,224)
(16,278)
Income tax expense (benefit)
336
(12,611)
169
(155)
30
25
40
159
Net loss
$
(23,778)
$
(45,704)
$
(50,683)
$
(58,295)
$
(56,198)
$
(57,521)
$
(64,264)
$
(16,437)
Net loss per share attributable to common stockholders, basic and diluted
$
(0.22)
$
(0.40)
$
(0.44)
$
(0.51)
$
(0.48)
$
(0.49)
$
(0.54)
$
(0.14)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
105,942
112,902
114,134
115,326
116,475
118,161
119,673
121,242
__________
(1)Includes stock-based compensation expense as follows:
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Cost of revenue
$
929
$
1,255
$
1,186
$
1,828
$
1,897
$
2,316
$
2,946
$
3,188
Research and development
4,371
7,017
7,958
8,634
14,752
15,675
18,589
13,889
Sales and marketing
3,194
5,275
5,008
5,631
9,121
11,399
10,094
10,184
General and administrative
3,648
16,134
16,686
17,333
10,866
10,198
8,393
7,717
Total
$
12,142
$
29,681
$
30,838
$
33,426
$
36,636
$
39,588
$
40,022
$
34,978
Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly
(unaudited, in thousands, except per share amounts)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Gross Profit
.
GAAP gross Profit
$
41,346
$
48,896
$
47,358
$
44,706
$
45,491
$
49,773
$
48,467
$
46,052
Stock-based compensation
929
1,255
1,186
1,828
1,897
2,316
2,946
3,188
Amortization of acquired intangible assets
—
2,475
2,475
2,475
2,475
2,475
2,475
2,475
Non-GAAP gross profit
42,275
52,626
51,019
49,009
49,863
54,564
53,888
51,715
GAAP gross margin
58.5
%
59.2
%
55.8
%
52.6
%
52.4
%
50.9
%
47.3
%
44.9
%
Non-GAAP gross margin
59.8
%
63.7
%
60.1
%
57.6
%
57.5
%
55.8
%
52.6
%
50.4
%
Research and development
GAAP research and development
18,271
25,590
28,988
30,346
32,528
34,997
40,437
38,717
Stock-based compensation
(4,371)
(7,017)
(7,958)
(8,634)
(14,752)
(15,675)
(18,589)
(13,889)
Non-GAAP research and development
13,900
18,573
21,030
21,712
17,776
19,322
21,848
24,828
Sales and marketing
GAAP sales and marketing
22,568
34,765
34,872
36,334
39,288
42,151
41,480
46,760
Stock-based compensation
(3,194)
(5,275)
(5,008)
(5,631)
(9,121)
(11,399)
(10,094)
(10,184)
Amortization of acquired intangible assets
—
(2,603)
(2,816)
(2,709)
(2,709)
(2,710)
(2,709)
(2,710)
Non-GAAP sales and marketing
19,374
26,887
27,048
27,994
27,458
28,042
28,677
33,866
General and administrative
GAAP general and administrative
23,961
45,885
33,461
35,494
28,609
29,281
29,554
29,543
Stock-based compensation
(3,648)
(16,134)
(16,686)
(17,333)
(10,866)
(10,198)
(8,393)
(7,717)
Acquisition-related expenses
(7,158)
(13,625)
(929)
(1,298)
(179)
(149)
(58)
(1,912)
Non-GAAP general and administrative
13,155
16,126
15,846
16,863
17,564
18,934
21,103
19,914
Operating loss
GAAP operating loss
(23,454)
(57,344)
(49,963)
(57,468)
(54,934)
(56,656)
(63,004)
(68,968)
Stock-based compensation
12,142
29,681
30,838
33,426
36,636
39,588
40,022
34,978
Amortization of acquired intangible assets
—
5,078
5,291
5,184
5,184
5,185
5,184
5,185
Acquisition-related expenses
7,158
13,625
929
1,298
179
149
58
1,912
Non-GAAP operating loss
(4,154)
(8,960)
(12,905)
(17,560)
(12,935)
(11,734)
(17,740)
(26,893)
Net loss
GAAP net loss
(23,778)
(45,704)
(50,683)
(58,295)
(56,198)
(57,521)
(64,264)
(16,437)
Stock-based compensation
12,142
29,681
30,838
33,426
36,636
39,588
40,022
34,978
Amortization of acquired intangible assets
—
5,078
5,291
5,184
5,184
5,185
5,184
5,185
Acquisition-related expenses
7,158
13,625
929
1,298
179
149
58
1,912
Acquisition-related tax benefit
—
(13,154)
—
—
—
—
—
—
Net gain on extinguishment of debt
—
—
—
—
—
—
—
(54,391)
Amortization of debt issuance costs
—
—
—
993
967
947
963
776
Non-GAAP net loss
$
(4,478)
$
(10,474)
$
(13,625)
$
(17,394)
$
(13,232)
$
(11,652)
$
(18,037)
$
(27,977)
GAAP net loss per common share—basic and diluted
$
(0.22)
$
(0.40)
$
(0.44)
$
(0.51)
$
(0.48)
$
(0.49)
$
(0.54)
$
(0.14)
Non-GAAP net loss per common share—basic and diluted
$
(0.04)
$
(0.09)
$
(0.12)
$
(0.15)
$
(0.11)
$
(0.10)
$
(0.15)
$
(0.23)
Weighted average basic common shares
105,942
112,902
114,134
115,326
116,475
118,161
119,673
121,242
Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly (Continued)
(unaudited, in thousands, except per share amounts)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Adjusted EBITDA
GAAP net loss
$
(23,778)
$
(45,704)
$
(50,683)
$
(58,295)
$
(56,198)
$
(57,521)
$
(64,264)
$
(16,437)
Stock-based compensation
12,142
29,681
30,838
33,426
36,636
39,588
40,022
34,978
Depreciation and other amortization
4,967
5,568
6,491
7,000
7,489
8,228
9,975
10,860
Amortization of acquired intangible assets
—
5,078
5,291
5,184
5,184
5,185
5,184
5,185
Acquisition-related expenses
7,158
13,625
929
1,298
179
149
58
1,912
Acquisition-related tax benefit
—
(13,154)
—
—
—
—
—
—
Interest income
(353)
(178)
(174)
(276)
(280)
(552)
(681)
(1,502)
Interest expense
410
452
661
443
588
646
659
754
Amortization of debt discount and issuance costs
—
—
—
993
967
947
963
776
Net gain on extinguishment of debt
—
—
—
—
—
—
—
(54,391)
Other (income) expense, net
(69)
697
64
(178)
(41)
(201)
279
1,673
Income tax (benefit) expense
336
543
169
(155)
30
25
40
159
Adjusted EBITDA
$
813
$
(3,392)
$
(6,414)
$
(10,560)
$
(5,446)
$
(3,506)
$
(7,765)
$
(16,033)
Non-GAAP Consolidated Statements of Operations - Quarterly
(unaudited, in thousands, except per share amounts)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Revenue
$
70,638
$
82,649
$
84,852
$
85,026
$
86,735
$
97,717
$
102,382
$
102,518
Cost of revenue (1)(2)
28,363
30,023
33,833
36,017
36,872
43,153
48,494
50,803
Gross profit
42,275
52,626
51,019
49,009
49,863
54,564
53,888
51,715
Operating expenses:
Research and development(1)
13,900
18,573
21,030
21,712
17,776
19,322
21,848
24,828
Sales and marketing(1)(2)
19,374
26,887
27,048
27,994
27,458
28,042
28,677
33,866
General and administrative (1)(3)
13,155
16,126
15,846
16,863
17,564
18,934
21,103
19,914
Total operating expenses
46,429
61,586
63,924
66,569
62,798
66,298
71,628
78,608
Income (loss) from operations(1)(2)(3)
(4,154)
(8,960)
(12,905)
(17,560)
(12,935)
(11,734)
(17,740)
(26,893)
Interest income
353
178
174
276
280
552
681
1,502
Interest expense(4)
(410)
(452)
(661)
(443)
(588)
(646)
(659)
(754)
Other income (expense), net
69
(697)
(64)
178
41
201
(279)
(1,673)
Income (loss) before income tax expense (benefit)(5)
(4,142)
(9,931)
(13,456)
(17,549)
(13,202)
(11,627)
(17,997)
(27,818)
Income tax expense (benefit)(6)
336
543
169
(155)
30
25
40
159
Net income (loss)(1)(2)(3)(4)(5)(6)(7)
$
(4,478)
$
(10,474)
$
(13,625)
$
(17,394)
$
(13,232)
$
(11,652)
$
(18,037)
$
(27,977)
Net income (loss) per share attributable to common stockholders, basic and diluted
$
(0.04)
$
(0.09)
$
(0.12)
$
(0.15)
$
(0.11)
$
(0.10)
$
(0.15)
$
(0.23)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted
105,942
112,902
114,134
115,326
116,475
118,161
119,673
121,242
(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 acquisition-related and other expenses. See GAAP to Non-GAAP reconciliations.
(4) Excludes amortization of debt discount and issuance costs. See GAAP to Non-GAAP reconciliations.
(5) Excludes net gain on extinguishment of debt. See GAAP to Non-GAAP reconciliations.
(6) Excludes acquisition-related tax benefit. 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)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Assets
Current assets:
Cash and cash equivalents
$
309,968
$
62,900
$
948,783
$
687,986
$
282,131
$
166,068
$
245,794
$
62,510
Marketable securities
92,302
131,283
147,793
241,744
361,290
361,795
393,950
419,905
Accounts receivable, net
42,593
50,258
52,363
56,065
54,234
64,625
73,717
68,218
Prepaid expenses and other current assets
84,856
16,815
18,495
22,309
22,230
32,160
23,616
29,037
Total current assets
529,719
261,256
1,167,434
1,008,104
719,885
624,648
737,077
579,670
Property and equipment, net
83,498
95,979
98,608
116,471
147,729
166,961
174,550
173,950
Operating lease right-of-use assets, net
—
60,019
63,305
62,630
70,149
69,631
63,455
69,861
Goodwill
362
635,590
635,645
635,646
635,635
636,805
637,570
670,186
Intangible assets, net
2,792
121,742
116,379
113,215
107,905
102,596
97,287
93,978
Marketable securities, non-current
—
20,448
29,930
173,227
429,489
528,911
394,464
284,951
Other assets
15,147
24,917
26,993
27,578
28,142
29,468
30,020
60,199
Total assets
$
631,518
$
1,219,951
$
2,138,294
$
2,136,871
$
2,138,934
$
2,159,020
$
2,134,423
$
1,932,795
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
12,273
$
9,150
$
12,019
$
10,202
$
7,766
$
9,257
$
8,248
$
10,011
Accrued expenses
38,559
34,334
36,320
28,609
36,063
36,112
49,902
49,943
Current portion of long term debt
6,060
—
—
—
—
—
—
—
Finance lease liabilities
—
11,033
10,910
14,773
18,675
21,125
26,766
28,088
Operating lease liabilities
—
19,895
20,011
19,713
20,007
20,271
18,688
19,243
Other current liabilities
9,555
19,677
19,036
29,735
24,758
45,107
36,569
33,705
Total current liabilities
66,447
94,089
98,296
103,032
107,269
131,872
140,173
140,990
Long-term debt, less current portion
26,007
—
930,291
931,385
932,305
933,205
934,121
703,375
Finance lease liabilities, noncurrent
—
14,707
13,648
19,685
24,659
22,293
28,867
26,479
Operating lease liabilities, noncurrent
—
44,890
47,505
47,177
54,066
55,114
52,334
60,657
Other long-term liabilities
3,944
4,400
3,520
6,502
5,056
2,583
2,205
7,556
Total liabilities
96,398
158,086
1,093,260
1,107,781
1,123,355
1,145,067
1,157,700
939,057
Stockholders’ equity:
Class A and Class B common stock
2
2
2
2
2
2
2
2
Additional paid-in capital
777,231
1,350,050
1,384,045
1,426,520
1,469,366
1,527,468
1,561,371
1,597,869
Accumulated other comprehensive income (loss)
124
6
(137)
(261)
(420)
(2,627)
(9,496)
(12,542)
Accumulated deficit
(242,237)
(288,193)
(338,876)
(397,171)
(453,369)
(510,890)
(575,154)
(591,591)
Total stockholders’ equity
535,120
1,061,865
1,045,034
1,029,090
1,015,579
1,013,953
976,723
993,738
Total liabilities and stockholders’ equity
$
631,518
$
1,219,951
$
2,138,294
$
2,136,871
$
2,138,934
$
2,159,020
$
2,134,423
$
1,932,795
Consolidated Statements of Cash Flows – Quarterly
(unaudited, in thousands)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Cash flows from operating activities:
Net loss
$
(23,778)
$
(45,704)
$
(50,683)
$
(58,295)
$
(56,198)
$
(57,521)
$
(64,264)
$
(16,437)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
4,894
5,713
6,419
6,927
7,364
8,089
9,850
10,736
Amortization of acquired intangibles
73
4,933
5,363
5,257
5,309
5,309
5,309
5,309
Amortization of right-of-use assets and other
5,636
5,941
6,357
6,303
7,158
7,065
6,839
6,539
Amortization of debt issuance costs
20
161
332
937
966
950
964
775
Amortization of deferred contract costs
894
1,141
1,411
1,535
1,621
1,727
1,851
2,138
Stock-based compensation
12,142
29,681
30,838
33,426
36,636
39,588
40,022
34,978
Provision for doubtful accounts and credit losses
196
507
(420)
225
236
155
127
402
Interest paid on finance leases
(186)
(234)
(330)
(405)
(524)
(495)
(591)
(649)
(Gain) loss on disposal of property and equipment
(133)
786
27
—
(204)
(123)
268
586
Tax benefit related to release of valuation allowance
—
(12,950)
—
—
—
—
—
—
Amortization and accretion of discounts and premiums on investments
—
—
—
—
—
—
957
894
Net gain on extinguishment of debt
—
—
—
—
—
—
—
(54,391)
Other adjustments
480
448
64
749
683
729
128
(67)
Changes in operating assets and liabilities:
Accounts receivable
15,542
(2,595)
(1,685)
(3,927)
1,595
(10,546)
(9,219)
5,097
Prepaid expenses and other current assets
(1,795)
(1,772)
(1,680)
(3,814)
(8)
725
(2,111)
(2,701)
Other assets
(2,641)
(9,752)
(2,952)
(2,137)
(2,231)
(3,103)
(2,451)
(3,948)
Accounts payable
5,682
(2,987)
2,119
(1,957)
(1,815)
1,799
(2,492)
3,336
Accrued expenses
14,598
(4,232)
(755)
(3,080)
6,548
1,548
4,891
(3,729)
Operating lease liabilities
(4,439)
(5,412)
(6,365)
(6,491)
(6,879)
(6,712)
(6,557)
(6,280)
Other liabilities
15
5,178
1,071
7,733
(2,948)
2,908
3,289
732
Net cash provided by (used in) operating activities
27,200
(31,149)
(10,869)
(17,014)
(2,691)
(7,908)
(13,190)
(16,680)
Cash flows from investing activities:
Purchase of marketable securities
(148,174)
(64,698)
(64,331)
(269,537)
(443,701)
(150,586)
(148,193)
(207,286)
Sale of marketable securities
143,241
—
12,497
—
51,739
2,291
2,301
159,552
Maturities of marketable securities
38,817
5,001
25,503
31,750
15,600
45,232
240,547
127,333
Business acquisitions, net of cash acquired
—
(200,988)
—
—
—
(1,169)
(775)
(25,224)
Advance for purchase of property and equipment
—
—
—
—
—
—
—
(29,310)
Purchases of property and equipment
(11,361)
(5,126)
(8,079)
(2,934)
(20,254)
(3,549)
(4,664)
(4,151)
Proceeds from sale of property and equipment
150
425
—
—
291
297
—
241
Capitalized internal-use software
(1,901)
(2,049)
(989)
(1,691)
(7,619)
(3,180)
(3,810)
(4,926)
Purchases of intangible assets
—
—
—
(2,093)
1
—
—
—
Net cash provided by (used in) investing activities
20,772
(267,435)
(35,399)
(244,505)
(403,943)
(110,664)
85,406
16,229
Cash flows from financing activities:
Payments of costs related to follow-on public offering
(502)
—
—
—
—
—
—
Issuance of convertible note, net of issuance costs
—
930,775
—
—
—
—
—
Payments of debt issuance costs
—
—
(1,351)
—
—
—
—
—
Repayments of notes payable
—
(20,300)
—
—
—
—
—
—
Net Cash paid for debt extinguishment
—
—
—
—
—
—
—
(177,082)
Repayments of finance lease liabilities
(1,001)
(2,713)
(2,951)
(3,628)
(3,985)
(3,004)
(4,882)
(6,147)
Cash received for restricted stock sold in advance of vesting conditions
—
—
—
—
—
—
10,655
—
Cash paid for early sale of restricted shares
—
—
—
—
—
—
(3,498)
(3,539)
Proceeds from exercise of vested stock options
4,122
2,320
2,719
2,886
3,489
3,532
3,048
1,721
Proceeds from Employee Stock Purchase Plan
2,042
3,112
3,071
1,493
1,430
2,075
2,406
1,571
Net cash provided by (used in) financing activities
4,661
(17,581)
932,263
751
934
2,603
7,729
(183,476)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
(83)
(10)
(112)
(29)
(242)
(94)
(219)
(100)
Net increase (decrease) in cash, cash equivalents, and restricted cash
52,550
(316,175)
885,883
(260,797)
(405,942)
(116,063)
79,726
(184,027)
Cash, cash equivalents, and restricted cash at beginning of period
327,505
380,055
63,880
949,763
688,966
283,024
166,961
246,687
Cash, cash equivalents, and restricted cash at end of period
$
380,055
$
63,880
$
949,763
$
688,966
$
283,024
$
166,961
$
246,687
$
62,660
Free Cash Flow
(in thousands, unaudited)
Quarter ended
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Cash flow provided by (used in) operations
$
27,200
$
(31,149)
$
(10,869)
$
(17,014)
$
(2,691)
$
(7,908)
$
(13,190)
$
(16,680)
Capital expenditures(1)
(14,113)
(9,463)
(12,019)
(8,253)
(31,567)
(9,436)
(13,356)
(14,983)
Advance payment for purchase of property and equipment(2)
—
—
—
—
—
—
—
(29,310)
Free Cash Flow
$
13,087
$
(40,612)
$
(22,888)
$
(25,267)
$
(34,258)
$
(17,344)
$
(26,546)
$
(60,973)
__________
(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.
