Company Quick10K Filing
Fastly
Price21.63 EPS-0
Shares93 P/E-73
MCap2,017 P/FCF-160
Net Debt-26 EBIT-24
TEV1,991 TEV/EBIT-83
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-03-04
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-09
S-1 2019-04-19 Public Filing
8-K 2020-05-06 Earnings, Exhibits
8-K 2020-02-20 Earnings, Exhibits
8-K 2020-02-18 Leave Agreement, Officers, Exhibits
8-K 2019-11-07 Earnings, Exhibits
8-K 2019-08-08 Earnings, Exhibits
8-K 2019-08-05 Officers
8-K 2019-05-21 Amend Bylaw, Exhibits

FSLY 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 fsly-33120x10qexhibit311.htm
EX-31.2 fsly-33120x10qexhibit312.htm
EX-32.1 fsly-33120x10qexhibit321.htm
EX-32.2 fsly-33120x10qexhibit322.htm

Fastly Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
0.40.30.20.20.10.02018201820192020
Assets, Equity
0.10.10.0-0.0-0.1-0.12018201820192020
Rev, G Profit, Net Income
0.0-0.0-0.1-0.1-0.2-0.22018201820192020
Ops, Inv, Fin

Document
false--03-31Q120200001517413P6M181600018210001000000.000026100000033900000718000002420000002030000000.0000200000.5000 0001517413 2020-01-01 2020-03-31 0001517413 us-gaap:CommonClassBMember 2020-05-05 0001517413 us-gaap:CommonClassAMember 2020-05-05 0001517413 2019-12-31 0001517413 2020-03-31 0001517413 2019-01-01 2019-03-31 0001517413 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001517413 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2020-03-31 0001517413 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-03-31 0001517413 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001517413 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001517413 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001517413 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001517413 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2019-12-31 0001517413 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2019-12-31 0001517413 us-gaap:RetainedEarningsMember 2019-12-31 0001517413 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001517413 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001517413 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001517413 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001517413 us-gaap:RetainedEarningsMember 2020-03-31 0001517413 us-gaap:CommonStockMember 2018-12-31 0001517413 us-gaap:PreferredStockMember 2019-03-31 0001517413 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001517413 2018-12-31 0001517413 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001517413 us-gaap:PreferredStockMember 2018-12-31 0001517413 us-gaap:RetainedEarningsMember 2018-12-31 0001517413 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001517413 us-gaap:RetainedEarningsMember 2019-03-31 0001517413 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001517413 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001517413 2019-03-31 0001517413 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001517413 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001517413 us-gaap:CommonStockMember 2019-03-31 0001517413 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001517413 us-gaap:TreasuryStockMember 2019-03-31 0001517413 2019-01-01 0001517413 us-gaap:RetainedEarningsMember 2019-01-01 0001517413 us-gaap:TreasuryStockMember 2018-12-31 0001517413 us-gaap:CommonClassAMember us-gaap:IPOMember 2019-05-21 0001517413 us-gaap:CommonClassBMember 2019-05-21 0001517413 us-gaap:CommonClassAMember us-gaap:OverAllotmentOptionMember 2020-01-01 2020-03-31 0001517413 us-gaap:CommonClassAMember us-gaap:IPOMember 2019-05-21 2019-05-21 0001517413 us-gaap:CommonClassAMember us-gaap:OverAllotmentOptionMember 2019-05-21 2019-05-21 0001517413 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2019-05-21 2019-05-21 0001517413 2019-05-03 2019-05-03 0001517413 us-gaap:SalesRevenueNetMember 2020-01-01 2020-03-31 0001517413 us-gaap:AccountsReceivableMember 2020-01-01 2020-03-31 0001517413 2020-04-01 2020-03-31 0001517413 fsly:NonenterpriseCustomersMember 2020-01-01 2020-03-31 0001517413 fsly:EnterpriseCustomersMember 2019-01-01 2019-03-31 0001517413 fsly:EnterpriseCustomersMember 2020-01-01 2020-03-31 0001517413 fsly:NonenterpriseCustomersMember 2019-01-01 2019-03-31 0001517413 us-gaap:NonUsMember 2020-01-01 2020-03-31 0001517413 country:US 2020-01-01 2020-03-31 0001517413 country:US 2019-01-01 2019-03-31 0001517413 us-gaap:NonUsMember 2019-01-01 2019-03-31 0001517413 us-gaap:CommercialPaperMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember 2020-03-31 0001517413 us-gaap:MoneyMarketFundsMember 2020-03-31 0001517413 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2020-03-31 0001517413 us-gaap:FairValueInputsLevel1Member 2020-03-31 0001517413 us-gaap:FairValueInputsLevel3Member us-gaap:AssetBackedSecuritiesMember 2020-03-31 0001517413 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel3Member 2020-03-31 0001517413 us-gaap:FairValueInputsLevel2Member 2020-03-31 0001517413 us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel2Member us-gaap:AssetBackedSecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0001517413 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel2Member 2020-03-31 0001517413 us-gaap:AssetBackedSecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel3Member 2020-03-31 0001517413 us-gaap:FairValueInputsLevel2Member us-gaap:USTreasurySecuritiesMember 2020-03-31 0001517413 us-gaap:USTreasurySecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel1Member us-gaap:AssetBackedSecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel3Member us-gaap:USTreasurySecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel3Member us-gaap:CommercialPaperMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel1Member us-gaap:USTreasurySecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember 2020-03-31 0001517413 us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0001517413 us-gaap:FairValueInputsLevel3Member 2019-12-31 0001517413 us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001517413 us-gaap:USTreasurySecuritiesMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel2Member 2019-12-31 0001517413 us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel1Member 2019-12-31 0001517413 us-gaap:FairValueInputsLevel2Member us-gaap:USTreasurySecuritiesMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel1Member us-gaap:USTreasurySecuritiesMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001517413 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel2Member 2019-12-31 0001517413 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2019-12-31 0001517413 us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel3Member 2019-12-31 0001517413 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel3Member 2019-12-31 0001517413 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel3Member us-gaap:AssetBackedSecuritiesMember 2019-12-31 0001517413 us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel1Member 2019-12-31 0001517413 us-gaap:MoneyMarketFundsMember 2019-12-31 0001517413 us-gaap:USTreasurySecuritiesMember 2019-12-31 0001517413 us-gaap:AssetBackedSecuritiesMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel1Member us-gaap:AssetBackedSecuritiesMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel3Member us-gaap:CommercialPaperMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel2Member us-gaap:AssetBackedSecuritiesMember 2019-12-31 0001517413 us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel2Member 2019-12-31 0001517413 us-gaap:CommercialPaperMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember 2019-12-31 0001517413 us-gaap:FairValueInputsLevel3Member us-gaap:USTreasurySecuritiesMember 2019-12-31 0001517413 us-gaap:CashMember 2019-12-31 0001517413 us-gaap:CommercialPaperMember 2020-03-31 0001517413 us-gaap:CashMember 2020-03-31 0001517413 us-gaap:CommercialPaperMember 2019-12-31 0001517413 us-gaap:LeaseholdImprovementsMember 2019-12-31 0001517413 us-gaap:SoftwareDevelopmentMember 2020-03-31 0001517413 us-gaap:LeaseholdImprovementsMember 2020-03-31 0001517413 us-gaap:FurnitureAndFixturesMember 2020-03-31 0001517413 us-gaap:FurnitureAndFixturesMember 2019-12-31 0001517413 us-gaap:OfficeEquipmentMember 2020-03-31 0001517413 us-gaap:ComputerEquipmentMember 2020-03-31 0001517413 us-gaap:SoftwareDevelopmentMember 2019-12-31 0001517413 us-gaap:ComputerEquipmentMember 2019-12-31 0001517413 us-gaap:OfficeEquipmentMember 2019-12-31 0001517413 us-gaap:SoftwareDevelopmentMember 2019-01-01 2019-03-31 0001517413 us-gaap:SoftwareDevelopmentMember 2020-01-01 2020-03-31 0001517413 fsly:InternetProtocolAddressesMember 2019-12-31 0001517413 us-gaap:InternetDomainNamesMember 2020-03-31 0001517413 us-gaap:InternetDomainNamesMember 2019-12-31 0001517413 fsly:InternetProtocolAddressesMember 2020-03-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2019-11-30 0001517413 us-gaap:CapitalLeaseObligationsMember 2017-06-01 2017-06-30 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2019-12-01 2019-12-31 0001517413 us-gaap:CapitalLeaseObligationsMember 2018-03-01 2018-03-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2019-03-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2018-03-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2019-12-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2020-01-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2019-08-31 0001517413 fsly:SecondLienCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:PrimeRateMember 2020-01-01 2020-03-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2017-06-30 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2018-03-01 2018-03-31 0001517413 fsly:SecondLienCreditFacilityMember us-gaap:LineOfCreditMember 2019-11-30 0001517413 fsly:SecondLienCreditFacilityMember us-gaap:LineOfCreditMember 2020-01-01 2020-03-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2020-03-31 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2019-02-28 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2019-11-01 2019-11-30 0001517413 us-gaap:CapitalLeaseObligationsMember us-gaap:TechnologyEquipmentMember 2019-03-01 2019-03-31 0001517413 2018-01-01 2018-12-31 0001517413 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0001517413 us-gaap:EmployeeStockOptionMember 2019-03-31 0001517413 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0001517413 us-gaap:EmployeeStockOptionMember 2020-03-31 0001517413 us-gaap:EmployeeStockOptionMember 2019-12-31 0001517413 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001517413 us-gaap:RestrictedStockUnitsRSUMember 2019-12-31 0001517413 us-gaap:RestrictedStockUnitsRSUMember 2020-03-31 0001517413 us-gaap:ResearchAndDevelopmentExpenseMember 2019-01-01 2019-03-31 0001517413 us-gaap:CostOfSalesMember 2020-01-01 2020-03-31 0001517413 us-gaap:CostOfSalesMember 2019-01-01 2019-03-31 0001517413 us-gaap:GeneralAndAdministrativeExpenseMember 2019-01-01 2019-03-31 0001517413 us-gaap:SellingAndMarketingExpenseMember 2019-01-01 2019-03-31 0001517413 us-gaap:SellingAndMarketingExpenseMember 2020-01-01 2020-03-31 0001517413 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-03-31 0001517413 us-gaap:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-03-31 0001517413 us-gaap:EmployeeStockMember 2020-01-01 2020-03-31 0001517413 us-gaap:EmployeeStockMember 2020-03-31 0001517413 us-gaap:EmployeeStockOptionMember fsly:A2011EquityIncentivePlanMember 2020-01-01 2020-03-31 0001517413 us-gaap:EmployeeStockMember 2019-12-31 0001517413 us-gaap:EmployeeStockMember 2019-05-31 0001517413 us-gaap:EmployeeStockOptionMember fsly:A2019EquityIncentivePlanMember 2020-01-01 2020-03-31 0001517413 fsly:A2011EquityIncentivePlanMember us-gaap:CommonClassBMember 2020-03-31 0001517413 fsly:A2011EquityIncentivePlanMember us-gaap:CommonClassBMember 2019-12-31 0001517413 us-gaap:CommonClassAMember 2019-05-31 0001517413 us-gaap:EmployeeStockMember 2019-05-01 2019-05-31 0001517413 fsly:A2019EquityIncentivePlanMember us-gaap:CommonClassAMember 2020-03-31 0001517413 us-gaap:CommonClassAMember 2019-12-31 0001517413 us-gaap:EmployeeStockMember 2019-01-01 2019-03-31 0001517413 us-gaap:PerformanceSharesMember 2020-01-01 2020-03-31 0001517413 2019-05-31 0001517413 fsly:A2019EquityIncentivePlanMember us-gaap:CommonClassAMember 2019-12-31 0001517413 us-gaap:CommonClassBMember 2020-03-31 0001517413 us-gaap:CommonClassBMember 2019-05-31 0001517413 us-gaap:CommonClassAMember 2020-03-31 0001517413 us-gaap:CommonClassBMember 2019-12-31 0001517413 us-gaap:CommonClassBMember 2020-01-01 2020-03-31 0001517413 us-gaap:CommonClassAMember 2020-01-01 2020-03-31 0001517413 us-gaap:CommonClassBMember 2019-01-01 2019-03-31 0001517413 fsly:EarlyExerciseOfStockOptionsMember 2019-01-01 2019-03-31 0001517413 us-gaap:PerformanceSharesMember 2020-01-01 2020-03-31 0001517413 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0001517413 fsly:EarlyExerciseOfStockOptionsMember 2020-01-01 2020-03-31 0001517413 us-gaap:WarrantMember 2020-01-01 2020-03-31 0001517413 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-03-31 0001517413 us-gaap:EmployeeStockMember 2020-01-01 2020-03-31 0001517413 us-gaap:ConvertiblePreferredStockMember 2019-01-01 2019-03-31 0001517413 us-gaap:WarrantMember 2019-01-01 2019-03-31 0001517413 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001517413 us-gaap:EmployeeStockMember 2019-01-01 2019-03-31 0001517413 us-gaap:ConvertiblePreferredStockMember 2020-01-01 2020-03-31 0001517413 us-gaap:PerformanceSharesMember 2019-01-01 2019-03-31 0001517413 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0001517413 country:US 2019-12-31 0001517413 us-gaap:NonUsMember 2019-12-31 0001517413 country:US 2020-03-31 0001517413 us-gaap:NonUsMember 2020-03-31 0001517413 fsly:RelatedPartyPromissoryNoteMember srt:AffiliatedEntityMember 2016-07-01 2016-07-31 0001517413 fsly:RelatedPartyPromissoryNoteMember srt:AffiliatedEntityMember 2016-07-31 0001517413 fsly:RelatedPartyPromissoryNoteMember srt:AffiliatedEntityMember 2020-03-31 0001517413 fsly:RelatedPartyPromissoryNoteMember srt:AffiliatedEntityMember 2019-12-31 xbrli:pure fsly:vote fsly:series_of_stock xbrli:shares fsly:location iso4217:USD iso4217:USD xbrli:shares fsly:security fsly:segment

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 10-Q
____________________________

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2020

or
 
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from              to      

Commission File Number: 001-38897
____________________________
FASTLY, INC.
(Exact name of registrant as specified in its charter)
____________________________
Delaware
 
27-5411834
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
475 Brannan Street, Suite 300
San Francisco, CA 94107
(Address of principal executive offices) (Zip code)

(844) 432-7859
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address, or former fiscal year, if changed since last report)
____________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Class A Common Stock, $0.00002 par value
 
FSLY
 
The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

As of May 5, 2020, 72.7 million shares of the registrants’ Class A common stock were outstanding and 23.6 million shares of registrant's Class B common stock were outstanding.


1


TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 


2



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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, (the "Exchange Act"), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "anticipate," "believe," "continue," "could," "design," "estimate," "expect," "intend," "may," "plan," "potentially," "predict," "project," "should," "will," or the negative of these terms or other similar expressions.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q, regarding, among other things:
our ability to attract and retain customers;
our ability to increase the usage of our platform by existing customers;
defects, interruptions, security breaches, delays in performance, or similar problems with our platform;
the potential impact of the COVID-19 pandemic on our business, operations, and the markets and communities in which we, our partners, and our customers operate;
our financial performance, including our revenue, cost of revenue, operating expenses, and our ability to attain and sustain profitability;
our ability to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements, or preferences;
the growth of our relevant markets;
our platform’s functionality, scalability, performance, ease of use, reliability, and cost effectiveness relative to that of our competitors’ products and services;
our ability to compete effectively with existing competitors and new market entrants;
our ability to attract and retain qualified employees and key personnel;
our ability to maintain, protect, and enhance our intellectual property; and
our ability to comply with laws and regulations that currently apply or may become applicable to our business both in the United States and internationally.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
Other sections of this Quarterly Report on Form 10-Q may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.

3


You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance, and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (www.investors.fastly.com), our filings with the Securities and Exchange Commission, webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with investors and the general public about our company, our products, and other issues. It is possible that the information that we make available on our website may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.



4



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FASTLY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
As of
March 31, 2020
 
As of
December 31, 2019
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
22,501

 
$
16,142

Marketable securities
 
94,084

 
114,967

Accounts receivable, net of allowance for doubtful accounts of $1,821 and $1,816 as of March 31, 2020 and December 31, 2019, respectively
 
43,017

 
37,136

Restricted cash
 
70,087

 
70,087

Prepaid expenses and other current assets
 
12,139

 
10,991

Total current assets
 
241,828

 
249,323

Property and equipment, net
 
69,069

 
60,037

Goodwill
 
348

 
372

Intangible assets, net
 
1,089

 
1,125

Other assets
 
11,512

 
10,112

Total assets
 
$
323,846

 
$
320,969

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
9,457

 
$
4,602

Accrued expenses
 
20,218

 
19,878

Current portion of long-term debt
 
5,291

 
4,472

Other current liabilities
 
5,430

 
8,169

Total current liabilities
 
40,396

 
37,121

Long-term debt, less current portion
 
26,043

 
25,158

Other long-term liabilities
 
1,357

 
1,038

Total liabilities
 
67,796

 
63,317

Commitments and contingencies (Note 9)
 

 

Stockholders’ equity:
 
 
 
 
Class A and Class B common stock
 
2

 
2

Additional paid-in capital
 
459,360

 
449,463

Accumulated other comprehensive income
 
687

 
196

Accumulated deficit
 
(203,999
)
 
(192,009
)
Total stockholders’ equity
 
256,050

 
257,652

Total liabilities and stockholders’ equity
 
$
323,846

 
$
320,969



The accompanying notes are an integral part of the condensed consolidated financial statements.


5


FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
Three months ended
March 31,
 
 
2020
 
2019
Revenue
 
$
62,924

 
$
45,556

Cost of revenue
 
27,265

 
19,718

Gross profit
 
35,659

 
25,838

Operating expenses:
 
 
 
 
Research and development
 
14,298

 
10,176

Sales and marketing
 
19,168

 
15,039

General and administrative
 
14,169

 
8,700

Total operating expenses
 
47,635

 
33,915

Loss from operations
 
(11,976
)
 
(8,077
)
Interest income
 
719

 
416

Interest expense
 
(316
)
 
(1,235
)
Other income (expense), net
 
402

 
(776
)
Loss before income taxes
 
(11,171
)
 
(9,672
)
Income taxes
 
819

 
55

Net loss
 
$
(11,990
)
 
$
(9,727
)
Net loss per share attributable to common stockholders, basic and diluted
 
$
(0.13
)
 
$
(0.38
)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
 
95,401

 
25,290


The accompanying notes are an integral part of the condensed consolidated financial statements.



6


FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
 
 
Three months ended
March 31,
 
 
2020
 
2019
Net loss
 
$
(11,990
)
 
$
(9,727
)
Other comprehensive income:
 
 
 
 
 Foreign currency translation adjustment
 
$
13

 
$
27

Income on investments in available-for-sale-securities
 
478

 
29

Total other comprehensive income
 
$
491

 
$
56

Comprehensive loss
 
$
(11,499
)
 
$
(9,671
)

The accompanying notes are an integral part of the condensed consolidated financial statements.

7


FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share amounts)
(unaudited)
 
 
Three months ended March 31, 2020
 
 
Common Stock—Class A
 
Common Stock—Class B
 
Additional Paid-in
Capital
 
Accumulated Other Comprehensive Income
 
Accumulated
Deficit
 
Total Stockholders’ Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance as of December 31, 2019
 
60,954,694

 
$
1

 
33,863,021

 
$
1

 
$
449,463

 
$
196

 
$
(192,009
)
 
$
257,652

Exercise of stock options
 
1,106,688

 

 

 

 
3,174

 

 

 
3,174

Vesting of early exercised stock options
 

 

 
36,590

 

 
146

 

 

 
146

Stock-based compensation
 

 

 

 

 
6,577

 

 


 
6,577

Conversion of Class B to Class A Stock
 
9,727,897

 

 
(9,727,897
)
 

 

 

 

 

Net loss
 

 

 

 

 

 
 
 
(11,990
)
 
(11,990
)
Other comprehensive income
 

 

 

 

 

 
491

 

 
491

Balance as of March 31, 2020
 
71,789,279

 
$
1

 
24,171,714

 
$
1

 
$
459,360

 
$
687

 
$
(203,999
)
 
$
256,050


 
 
Three months ended March 31, 2019
 
 
Convertible Preferred Stock
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Stockholders’
Deficit
 
 
Shares
 
Amount
 
 
Shares
 
Amount
 
Balance at December 31, 2018
 
53,630,213

 
$
219,584

 
 
25,025,836

 
$
1

 
$
16,403

 
$
(2,109
)
 
$
(36
)
 
$
(146,186
)
 
$
(131,927
)
Impact of change in accounting policy
 

 

 
 

 

 

 

 

 
5,727

 
5,727

Exercise of stock options
 

 

 
 
449,751

 

 
639

 

 

 

 
639

Vesting of early exercised stock options
 

 

 
 
40,524

 

 
155

 

 

 

 
155

Stock-based compensation
 

 

 
 

 

 
1,467

 

 

 

 
1,467

Repayment of stockholder note
 

 

 
 
5,297

 

 
12

 

 

 

 
12

Net loss
 

 

 
 

 

 

 

 

 
(9,727
)
 
(9,727
)
Other comprehensive income
 

 

 
 

 

 

 

 
56

 

 
56

Balance as of March 31, 2019
 
53,630,213

 
$
219,584

 
 
25,521,408

 
$
1

 
$
18,676

 
$
(2,109
)
 
$
20

 
$
(150,186
)
 
$
(133,598
)



The accompanying notes are an integral part of the condensed consolidated financial statements.



8


FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
Three months ended
March 31,
 
 
2020
 
2019
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(11,990
)
 
$
(9,727
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
4,715

 
3,738

Amortization of deferred rent
 
204

 
17

Amortization of debt issuance costs
 
19

 
159

Stock-based compensation
 
6,329

 
1,467

Provision for doubtful accounts
 
150

 
602

Change in fair value of preferred stock warrant liabilities
 

 
706

Other adjustments
 
(39
)
 
(224
)
Interest paid on capital leases
 
(119
)
 
(77
)
Loss on disposals of property and equipment
 

 
36

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
(6,031
)
 
(4,586
)
Prepaid expenses and other current assets
 
(1,148
)
 
(931
)
Other assets
 
(1,400
)
 
(1,860
)
Accounts payable
 
3,112

 
1,686

Accrued expenses
 
(1,495
)
 
(507
)
Other liabilities
 
507

 
(582
)
Net cash used in operating activities
 
(7,186
)
 
(10,083
)
Cash flows from investing activities:
 
 
 
 
Purchases of marketable securities
 

 
(20,088
)
Sales of marketable securities
 

 
3,578

Maturities of marketable securities
 
21,400

 
17,700

Purchases of property and equipment
 
(10,221
)
 
(4,025
)
Capitalized internal-use software
 
(1,437
)
 
(759
)
Net cash provided by (used in) investing activities
 
9,742

 
(3,594
)
Cash flows from financing activities:
 
 
 
 
Repayments of notes payable
 

 
(2,488
)
Repayments of capital leases
 
(1,541
)
 
(336
)
Proceeds from employee stock purchase plan
 
2,133

 

Proceeds from exercise of vested stock options
 
3,174

 
639

Proceeds from early exercise of stock options
 

 
250

Proceeds from payment of stockholder note
 

 
12

Net cash provided by (used in) financing activities
 
3,766

 
(1,923
)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
 
37

 
(8
)
Net increase in cash, cash equivalents, and restricted cash
 
6,359

 
(15,608
)
Cash, cash equivalents, and restricted cash at beginning of period
 
86,229

 
36,963

Cash, cash equivalents, and restricted cash at end of period
 
$
92,588

 
$
21,355


The accompanying notes are an integral part of the condensed consolidated financial statements.







9


FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—Continued
(in thousands)
(unaudited)
 
 
Three months ended
March 31,
 
 
2020
 
2019
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
155

 
$
1,446

Cash paid for income taxes, net of refunds received
 
$
814

 
$
2

Property and equipment additions not yet paid in cash
 
$
5,628

 
$
32

Vesting of early-exercised stock options
 
$
146

 
$
155

Capital lease outstanding from current year addition
 
$
3,226

 
$
4,082

Change in other assets from change in accounting principle
 
$

 
$
5,727

Stock-based compensation capitalized to internal-use software
 
$
248

 
$

 
 
 
 
 
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows
 
 
 
 
Cash and cash equivalents
 
$
22,501

 
$
21,355

Restricted cash
 
70,087

 

Total cash, cash equivalents, and restricted cash
 
$
92,588

 
$
21,355




The accompanying notes are an integral part of the condensed consolidated financial statements.



10



1.     Nature of Business
Fastly, Inc. has built an edge cloud platform that can process, serve, and secure its customer’s applications as close to their end users as possible. As of March 31, 2020, our edge network spans 72 Points-of-Presence ("POPs") across 55 markets around the world. We were incorporated in Delaware in 2011 and are headquartered in San Francisco, California.
As used herein, "Fastly," "we," "our," "the Company," and similar terms include Fastly, Inc. and its subsidiaries, unless the context indicates otherwise.
Stock Split
On May 3, 2019, we implemented a 1-for-2 reverse stock split of our stock. All shares of common stock, stock-based instruments, and per-share data included in these financial statements give effect to the stock split and the changes in authorized shares have been adjusted retroactively for all periods presented.
Initial Public Offering ("IPO")
On May 21, 2019 we completed an IPO in which we sold 12,937,500 shares of our newly authorized Class A common stock, which included 1,687,500 shares sold pursuant to the exercise by the underwriters of an option to purchase additional shares, at the public offering price of $16.00 per share. We received net proceeds of $192.5 million, after deducting underwriting discounts and commissions, from sales of our shares in the IPO. The net proceeds include additional proceeds of $25.1 million, net of underwriters' discounts and commissions, from the exercise of the underwriters' option to purchase an additional 1,687,500 shares of our Class A common stock. Prior to the closing of the IPO, all shares of common stock then outstanding were reclassified as Class B common stock. Immediately upon the closing of the IPO, all shares of convertible preferred stock then outstanding were converted into 53,630,213 shares of Class B common stock on a one-to-one basis.
2.     Summary of Significant Accounting Policies
Basis of Presentation
The interim unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") along with instructions to Form 10-Q and Article 10 of Securities and Exchange Commission ("SEC") Regulation S-X.
Certain changes in presentation have been made to conform the prior period presentation to the current period reporting. We have made certain presentation changes to distinguish and disclose as separate line items, the sales proceeds from marketable securities and the sales proceeds from our maturities of marketable securities in the Condensed Consolidated Statements of Cash Flows. We have also made certain presentation changes to distinguish and disclose as separate line items, the cash flows from purchases of property and equipment from the cash flows associated with capitalized internal-use software in the Condensed Consolidated Statements of Cash Flows.

Principles of Consolidation
The accompanying interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Unaudited Interim Financial Statements
The accompanying interim condensed consolidated balance sheet as of March 31, 2020, the related interim condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss, and the condensed consolidated statements of convertible preferred stock and stockholders' equity (deficit) for the three months ended March 31, 2020 and 2019, the condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019, and the related footnote disclosures are unaudited. The unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. In management’s opinion, the unaudited financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments necessary for the fair presentation of our financial position as of March 31, 2020. The results for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full fiscal year or any other periods.

11


Use of Estimates
The preparation of our condensed consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. Actual results and outcomes could differ significantly from our estimates, judgments, and assumptions. Significant estimates, judgments, and assumptions used in these financial statements include, but are not limited to, those related to revenue, accounts receivable and related reserves, useful lives and realizability of long-lived assets, income tax reserves, and accounting for stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates are reflected in the condensed consolidated financial statements in the period of change and prospectively from the date of the change in estimate.The ongoing global COVID-19 pandemic has impacted many operational aspects of our business and may continue to do so in the future. We assessed the impact that COVID-19 had on our results of operations, including, but not limited to an assessment of our allowance for doubtful accounts, the carrying value of short-term and long-term investments, the carrying value of goodwill and other long-lived assets, and the impact to revenue recognition and cost of revenues. While the COVID-19 pandemic has not had a material adverse impact on our financial operations to date, the future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving. We will continue to actively monitor the impact that COVID-19 has on the results of our business operations, and may make decisions required by federal, state or local authorities, or that are determined to be in the best interests of our employees, customers, partners, suppliers and stockholders. As a result our estimates and judgments may change materially as new events occur or additional information becomes available to us.
Concentrations of Credit Risk
Financial instruments that potentially subject us to significant concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. The primary focus of our investment strategy is to preserve capital and meet liquidity requirements. Our investment policy addresses the level of credit exposure by limiting the concentration in any one corporate issuer or sector and establishing a minimum allowable credit rating. To manage the risk exposure, we invest cash equivalents and marketable securities in a variety of fixed income securities, including government and investment-grade debt securities and money market funds. We place our cash primarily in checking and money market accounts with reputable financial institutions. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits, if any.
Concentrations of credit risk with respect to accounts receivable are primarily limited to certain customers to which we make substantial sales. Our customer base consists of a large number of geographically dispersed customers diversified across several industries. To reduce risk, we routinely assess the financial strength of our customers. Based on such assessments, we believe that our accounts receivable credit risk exposure is limited. One customer accounted for 10.5% of revenue for the three months ended March 31, 2020, and 14.6% of the total accounts receivable balance as of March 31, 2020. No customer accounted for more than 10% of revenue for the three months ended March 31, 2019, or more than 10% of the total accounts receivable balance as of December 31, 2019.
Significant Accounting Policies
There have been no material changes to our significant accounting policies as compared to those described in “Note 2 – Summary of Significant Accounting Policies” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
New Accounting Pronouncements to be Adopted
We are an emerging growth company as defined in Jumpstart Our Business Startups Act of 2012 ("JOBS Act"). For as long as we continue to be an emerging growth company, we intend to take advantage of certain exemptions from various public company reporting requirements, including delaying adoption of new or revised accounting standards until those standards apply to private companies. In the event that we no longer qualify as an emerging growth company, we will no longer be permitted to use these reporting exemptions.
In February 2016, the FASB issued new guidance, Accounting Standard Update No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. Accordingly, this new standard introduces a lessee model that brings most operating leases on the balance sheet and also aligns certain of the underlying principles of the new lessor model with those in the new revenue recognition standard. We are currently evaluating the appropriate transition method and impact of this guidance on our

12


condensed consolidated financial statements and related disclosures. We expect the the standard to be effective for our interim and annual periods beginning after December 15, 2020.
In June 2016, FASB issued new guidance, ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a new methodology for accounting for credit losses on financial instruments, including available-for-sale debt securities. The guidance establishes a new “expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. We are currently evaluating the impact of this guidance on our condensed consolidated financial statements and related disclosures. We expect the the standard to be effective for our interim and annual periods beginning after December 15, 2020.

In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (ASC 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement ("ASU 2018-15"). This guidance provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. We are currently evaluating the impact of this guidance on our condensed consolidated financial statements and related disclosures. We expect the the standard to be effective for our interim and annual periods beginning after December 15, 2020.
On December 18, 2019, the FASB released ASU 2019-12 which affects general principles within Topic 740, Income Taxes. The amendments of ASU 2019-12 are meant to simplify and reduce the cost of accounting for income taxes. The FASB has stated that the ASU is being issued as part of its Simplification Initiative, which is meant to reduce complexity in accounting standards by improving certain areas of generally accepted accounting principles (GAAP) without compromising information provided to users of financial statements. We are currently evaluating the impact of this guidance on our condensed consolidated financial statements and related disclosures. We expect the the standard to be effective for our interim and annual periods beginning after December 15, 2020.

3. Revenue

Revenue recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, each of which are distinct and accounted for as separate performance obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. For contracts with multiple performance obligations, we allocate the contract transaction price to each performance obligation using our estimate of the standalone selling price ("SSP") of each distinct good or service in the contract.

Judgment is required to determine the SSP for each distinct performance obligation. We analyze separate sales of our products and services as a basis for estimating the SSP of our products and services. We then use that SSP as the basis for allocating the transaction price when our product and services are sold together in a contract with multiple performance obligations. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs. We typically have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we may use information, such geographic region and distribution channel, in determining the SSP.

The transaction price in a contract is typically equal to the minimum commit price in the contract less any discounts provided. Because our typical contracts represent distinct services delivered over time with the same pattern of transfer to the customer, usage-based consideration primarily related to actual consumption over the minimum commit levels is allocated to the period to which it relates. The amount of consideration recognized for usage above the minimum commit price is limited to the amount we expect to be entitled to receive in exchange for providing services. We have elected to apply the practical

13


expedient for estimating and disclosing the variable consideration when variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation from our remaining performance obligations under these contracts.

Performance obligations represent stand-ready obligations that are satisfied over time as the customer simultaneously receives and consumes the benefits provided by us. These obligations can be content delivery, security, professional services, support, edge cloud platform services, and others. Accordingly, our revenue is recognized over time, consistent with the pattern of benefit provided to the customer over the term of the agreement.

At times, customers may request changes that either amend, replace, or cancel existing contracts. Judgment is required to determine whether the specific facts and circumstances within the contracts should be accounted for as a separate contract or as a modification.

Nature of products and services

We primarily derive revenue from the sale of services to customers executing contracts in which the standard contract term is one year, although terms may vary by contract. Most of our contracts are non-cancelable over the contractual term. These contracts commit the customer to a minimum monthly level of usage and specify the rate at which the customer must pay for actual usage above the monthly minimum.

Revenue by geography is based on the billing address of the customer. The following table presents our net revenue by geographic region:

 
 
Three months ended March 31,
 
 
2020
 
2019
 
 
(in thousands)
United States
 
$
41,008

 
$
33,422

All other countries
 
21,916

 
12,134

Total revenue
 
$
62,924

 
$
45,556



The majority of our revenue is derived from enterprise customers, which are defined as customers with revenue in excess of $100,000 over the previous 12-month period. The following table presents our net revenue for enterprise and non-enterprise customers:

 
 
Three months ended March 31,
 
 
2020
 
2019
 
 
(in thousands)
Enterprise customers
 
$
55,806

 
$
39,044

Non-enterprise customers
 
7,118

 
6,512

Total revenue
 
$
62,924

 
$
45,556



Contract balances

The timing of revenue recognition may differ from the timing of invoicing to customers. We have an unconditional right to consideration when we invoice our customers and record a receivable. We record a contract asset when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue is recognized subsequent to invoicing.

Deferred revenue includes amounts billed to customers for which revenue has not been recognized and consists of the unearned portions of edge cloud platform usage. Our payment terms and conditions vary by contract type, but our standard terms are that payments are due within 15 days from the date of invoice.

The following tables present our contract assets, contract liabilities, and certain information related to these balances as of and for the three months ended March 31, 2020, as of December 31, 2019, and for the three months ended March 31, 2019:


14


 
As of March 31, 2020
 
As of December 31, 2019
 
(in thousands)
Contract assets
$
305

 
$
271

Contract liabilities
$
852

 
$
317


 
Three months ended March 31,
 
2020
 
2019
 
(in thousands)
Revenue recognized in the period from:
 
 
 
Amounts included in contract liability at the beginning of the period
$
178

 
$
936



Remaining performance obligations

As of March 31, 2020, we had $71.0 million of remaining performance obligations, which includes deferred revenue and amounts that will be invoiced and recognized in future periods. We apply the practical expedient of ASC 606, which gives us the optional exemption from disclosing certain information about our remaining performance obligations for our service contracts for which the original contract duration is one year or less, such as the aggregate transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period. The typical contract term is one year, although terms may vary by contract. We expect to recognize 88% of this balance over the next 12 months and the remainder within the following year.

Costs to obtain a contract

We capitalize incremental costs associated with obtaining customer contracts, specifically for sales commissions. These costs are deferred on our Condensed Consolidated Balance Sheets and amortized over the expected period of benefit on a straight-line basis. Based on the nature of our unique technology and services, the rate at which we continually enhance and update our technology, and our historical customer retention, the expected period of benefit is determined to be approximately five years. Amortization is recorded within the sales and marketing line item on the accompanying Condensed Consolidated Statements of Operations. The incremental costs associated with obtaining customer contracts, the majority of which are deferred commissions, are included in other assets on the accompanying Condensed Consolidated Balance Sheets.

As of March 31, 2020 and December 31, 2019, our costs to obtain contracts were as follows:

 
As of March 31, 2020
 
As of December 31, 2019
 
(in thousands)
Deferred commissions
$
7,944

 
$
6,804



During the three months ended March 31, 2020 and 2019, we recognized $0.7 million and $0.5 million of amortization related to deferred commissions. These costs are recorded within the sales and marketing line item on the accompanying Condensed Consolidated Statements of Operations.



15


4.     Investments and Fair Value Measurements
Our total cash, cash equivalents and marketable securities consisted of the following:
 
 
As of March 31,
 
As of December 31,
 
 
2020
 
2019
 
 
(in thousands)
Cash and cash equivalents:
 
 
 
 
Cash
 
$
8,503

 
$
11,623

Money market funds
 
13,998

 
2,020

Commercial paper
 

 
2,499

Total cash and cash equivalents
 
$
22,501

 
$
16,142

Marketable securities:
 
 
 
 
Corporate notes and bonds
 
$
9,024

 
$
17,470

Commercial paper
 
2,498

 
5,481

U.S. Treasury securities
 
68,713

 
78,160

Asset-backed securities
 
13,849

 
13,856

Total marketable securities
 
$
94,084

 
$
114,967


Available-for-Sale Investments
The following table summarizes adjusted cost, gross unrealized gains and losses, and fair value related to available-for-sale securities classified as marketable securities on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019:
 
 
As of March 31, 2020
 
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Fair
Value
 
 
(in thousands)
Corporate notes and bonds
 
$
9,051

 
$

 
$
(27
)
 
$
9,024

Commercial paper
 
2,498

 

 

 
2,498

U.S. Treasury securities
 
68,106

 
607

 

 
68,713

Asset-backed securities
 
13,854

 

 
(5
)
 
13,849

Total available-for-sale investments
 
$
93,509

 
$
607

 
$
(32
)
 
$
94,084

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2019
 
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Fair
Value
 
 
(in thousands)
Corporate notes and bonds
 
$
17,462

 
$
9

 
$
(1
)
 
$
17,470

Commercial paper
 
5,481

 

 

 
5,481

U.S. Treasury securities
 
78,075

 
85

 

 
78,160

Asset-backed securities
 
13,852

 
4

 

 
13,856

Total available-for-sale investments
 
$
114,870

 
$
98

 
$
(1
)
 
$
114,967


The majority of our securities classified as available-for-sale as of March 31, 2020 have contractual maturities of one year or less. Certain securities held and classified as available-for-sale as of March 31, 2020 have contractual maturities greater than one year; however, we do not intend to hold these securities to maturity. Consistent with our intentions to hold the securities for less than 12 months we classify all securities as short-term. As of December 31, 2019, all securities classified as available-for-sale had contractual maturities of one year or less. There were no securities in a continuous loss position for 12

16


months or longer as of March 31, 2020 and December 31, 2019. Investments are reviewed periodically to identify possible other-than-temporary impairments. No impairment loss has been recorded on the securities included in the tables above, as we believe that the decrease in fair value of these securities is temporary.
Fair Value of Financial Instruments
For certain of our financial instruments, including cash held in banks, accounts receivable, and accounts payable, the carrying amounts approximate fair value due to their short maturities, and are therefore excluded from the fair value tables below.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There is a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities;
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3—Unobservable inputs that are supported by little or no market activity, which require management judgment or estimation.
We measure our cash equivalents, marketable securities, and restricted cash at fair value. We classify our cash equivalents, marketable securities and restricted cash within Level 1 or Level 2 because we value these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. The fair value of our Level 1 financial assets is based on quoted market prices of the identical underlying security. The fair value of our Level 2 financial assets is based on inputs that are directly or indirectly observable in the market, including the readily available pricing sources for the identical underlying security that may not be actively traded.

17


Financial assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following types of instruments:
 
 
As of March 31, 2020
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(in thousands)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
13,998

 
$

 
$

 
$
13,998

Total cash equivalents
 
13,998

 

 

 
13,998

Marketable securities:
 
 
 
 
 
 
 
 
Corporate notes and bonds
 

 
9,024

 

 
9,024

Commercial paper
 

 
2,498

 

 
2,498

U.S. Treasury securities
 

 
68,713

 

 
68,713

Asset-backed securities
 

 
13,849

 

 
13,849

Total marketable securities
 

 
94,084

 

 
94,084

Restricted cash:
 
 
 
 
 
 
 
 
Money market funds
 
70,087

 

 

 
70,087

Total restricted cash
 
70,087

 

 

 
70,087

Total financial assets
 
$
84,085

 
$
94,084

 
$

 
$
178,169

 
 
As of December 31, 2019
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(in thousands)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
2,020

 
$

 
$

 
$
2,020

U.S. Treasury securities
 

 
2,499

 

 
2,499

Total cash equivalents
 
2,020

 
2,499

 

 
4,519

Marketable securities:
 
 
 
 
 
 
 
 
Corporate notes and bonds
 

 
17,470

 

 
17,470

Commercial paper
 

 
5,481

 

 
5,481

U.S. Treasury securities
 

 
78,160

 

 
78,160

Asset-backed securities
 

 
13,856

 

 
13,856

Total marketable securities
 

 
114,967

 

 
114,967

Restricted cash:
 
 
 
 
 
 
 
 
Money market funds
 
70,087

 

 

 
70,087

Total restricted cash
 
70,087

 

 

 
70,087

Total financial assets
 
$
72,107

 
$
117,466

 
$

 
$
189,573


There were no transfers of assets and liabilities measured at fair value between Level 1 and Level 2, or between Level 2 and Level 3, during the three months ended March 31, 2020 and 2019.

18


5.     Balance Sheet Information
Property and equipment, net
Property and equipment, net consisted of the following:
 
 
As of March 31,
 
As of December 31,
 
 
2020
 
2019
 
 
(in thousands)
Computer and networking equipment
 
$
101,593

 
$
89,830

Leasehold improvements
 
3,278

 
3,285

Furniture and fixtures
 
679

 
681

Office equipment
 
616

 
579

Internal-use software
 
15,586

 
13,901

Property and equipment, gross
 
$
121,752

 
$
108,276

Accumulated depreciation and amortization
 
(52,683
)
 
(48,239
)
Property and equipment, net
 
$
69,069

 
$
60,037


Depreciation and amortization expense on property and equipment for the three months ended March 31, 2020 and 2019 was approximately $4.7 million and $3.7 million, respectively. Included in these amounts was amortization expense for capitalized internal-use software costs of approximately $0.6 million and $0.8 million for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, the unamortized balance of capitalized internal-use software costs on our Condensed Consolidated Balance Sheets was approximately $9.6 million and $8.5 million, respectively.
Accrued expenses
Accrued expenses consisted of the following:
 
 
As of March 31,
 
As of December 31,
 
 
2020
 
2019
 
 
(in thousands)
Accrued compensation and related benefits
 
$
9,666

 
$
8,734

Sales and use tax payable
 
4,500

 
3,938

Accrued colocation and bandwidth costs
 
2,519

 
3,237

Other accrued liabilities
 
3,533

 
3,969

Total accrued expenses
 
$
20,218

 
$
19,878


Other Current Liabilities
Other current liabilities consisted of the following:
 
 
As of March 31,
 
As of December 31,
 
 
2020
 
2019
 
 
(in thousands)
Liability for early-exercised stock options (see Note 11)
 
$
385

 
$
467

Deferred revenue
 
852

 
317

Accrued computer and networking equipment
 
3,896

 
7,060

Other current liabilities
 
297

 
325

Total other current liabilities
 
$
5,430

 
$
8,169




19


Other Long-Term Liabilities
Other long-term liabilities consisted of the following:
 
 
As of March 31,
 
As of December 31,
 
 
2020
 
2019
 
 
(in thousands)
Deferred rent
 
$
1,016

 
$
634

Other long-term liabilities
 
341

 
404

Total other long-term liabilities
 
$
1,357

 
$
1,038



6.     Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the three months ended March 31, 2020 are as follows:
 
 
Three months ended
March 31, 2020
 
 
(in thousands)
Balance as of December 31, 2019
 
$
372

Foreign currency translation
 
(24
)
Balance as of March 31, 2020
 
$
348


Intangible assets are comprised of internet protocol address costs and domain name costs that are subject to amortization. We did not purchase additional internet protocol addresses and domain names during the three months ended March 31, 2020 and 2019.
As of March 31, 2020 and December 31, 2019, our intangible assets consisted of the following: