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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 September 30, 2024

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)
____________________________
Delaware27-5411834
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
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 and former fiscal year, if changed since last report)
____________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.00002 par valueFSLYThe 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 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 October 31, 2024, 140.3 million shares of the registrants’ Class A 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,” “would,” “target,” 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, amongst other things:
•defects, interruptions, outages, delays in performance, or similar problems with our platform;
•our ability to attract new enterprise customers and to have existing enterprise customers continue and increase their use of our platform;
•the potential loss or significant reduction in usage by one or more of our major customers;
•component delays, shortages, and price increases;
•our limited operating history and history of operating losses;
•the potential that security measures, or those of third parties upon which we rely, are compromised, or the security, confidentiality, integrity or availability of our information technology, software, services, networks, communications or data is compromised, limited or fails;
•our ability to efficiently develop and sell new products and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements, or preferences;
•our ability to forecast our revenue accurately and manage our expenditures;
•our ability to effectively develop and expand our marketing and sales capabilities;
•our ability to compete effectively with existing competitors and new market entrants;
•our ability to maintain and enhance our brand;
•our ability to identify and integrate acquisitions, strategic investments, partnerships, or alliances;
•our ability to attract and retain qualified employees and key personnel;
•our reliance on the performance of highly skilled personnel, including our senior management and other key employees, and the loss or transition of one or more of such personnel, or of a significant number of our team members;
•our involvement in class-action lawsuits and other litigation matters;
•our estimates or judgments relating to our critical accounting estimates may prove to be incorrect or impaired; and
•stock price volatility, and the potential decline in the value of our Class A common stock.
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.
3

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.
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.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the filing date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (www.fastly.com/investors), our filings with the Securities and Exchange Commission, our corporate X (formerly known as Twitter) account (@Fastly), our blog (www.fastly.com/blog), our corporate LinkedIn account (www.linkedin.com/company/fastly), webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with investors and the general public about us, our products, and other issues. It is possible that the information that we make available on these mediums may be deemed to be material information. We therefore encourage investors and others interested in us to review the information that we make available through these channels.
4


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
FASTLY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
As of September 30, 2024As of December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents$217,514 $107,921 
Marketable securities, current90,733 214,799 
Accounts receivable, net of allowance for credit losses of $6,847 and $7,054 as of September 30, 2024 and December 31, 2023, respectively
116,800 120,498 
Prepaid expenses and other current assets28,011 20,455 
Total current assets453,058 463,673 
Property and equipment, net180,288 176,608 
Operating lease right-of-use assets, net47,700 55,212 
Goodwill670,356 670,356 
Intangible assets, net47,776 62,475 
Marketable securities, non-current— 6,088 
Other assets72,576 90,779 
Total assets$1,471,754 $1,525,191 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$11,354 $5,611 
Accrued expenses40,854 61,818 
Finance lease liabilities, current4,882 15,684 
Operating lease liabilities, current23,857 24,042 
Other current liabilities33,261 40,539 
Total current liabilities114,208 147,694 
Long-term debt344,498 343,507 
Finance lease liabilities, non-current— 1,602 
Operating lease liabilities, non-current40,565 48,484 
Other long-term liabilities3,029 4,416 
Total liabilities502,300 545,703 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock3 3 
Additional paid-in capital1,929,397 1,815,245 
Accumulated other comprehensive loss(22)(1,008)
Accumulated deficit(959,924)(834,752)
Total stockholders’ equity 969,454 979,488 
Total liabilities and stockholders’ equity $1,471,754 $1,525,191 


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
September 30,		Nine months ended
September 30,
2024202320242023
Revenue$137,206 $127,816 $403,097 $368,211 
Cost of revenue62,466 61,730 182,222 177,657 
Gross profit74,740 66,086 220,875 190,554 
Operating expenses:
Research and development31,884 39,068 105,238 113,920 
Sales and marketing45,994 51,043 148,560 143,111 
General and administrative27,173 30,001 87,245 84,651 
Impairment expense559 4,316 3,696 4,316 
Restructuring charges9,720 — 9,720 — 
Total operating expenses115,330 124,428 354,459 345,998 
Loss from operations(40,590)(58,342)(133,584)(155,444)
Net gain on extinguishment of debt— — — 36,760 
Interest income3,819 4,908 11,604 13,602 
Interest expense(473)(862)(1,516)(3,307)
Other expense, net
(317)(16)(213)(1,069)
Loss before income tax expense(37,561)(54,312)(123,709)(109,458)
Income tax expense (benefit)
455 (1)1,463 244 
Net loss$(38,016)$(54,311)$(125,172)$(109,702)
Net loss per share attributable to common stockholders, basic and diluted$(0.27)$(0.42)$(0.91)$(0.86)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted139,237 129,873 137,097 127,735 

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
September 30,		Nine months ended
September 30,
2024202320242023
Net loss$(38,016)$(54,311)$(125,172)$(109,702)
Other comprehensive income:
Foreign currency translation adjustment— (8)— 550 
Unrealized gain on investments in available-for-sale-securities
260 1,226 986 6,802 
Total other comprehensive income
$260 $1,218 $986 $7,352 
Comprehensive loss$(37,756)$(53,093)$(124,186)$(102,350)

The accompanying notes are an integral part of the condensed consolidated financial statements.
7

FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands; unaudited)
Three months ended September 30, 2024
Common StockAdditional Paid-in
Capital		Accumulated Other Comprehensive LossAccumulated
Deficit		Total Stockholders’ Equity
SharesAmount
Balance at June 30, 2024138,396 $3 $1,903,374 $(282)$(921,908)$981,187 
Exercise of vested stock options7 — 19 — — 19 
Vesting of restricted stock units1,677 — — — — — 
Stock-based compensation— 26,004 — — 26,004 
Net loss— — — — (38,016)(38,016)
Other comprehensive income— — — 260 — 260 
Balance at September 30, 2024140,080 $3 $1,929,397 $(22)$(959,924)$969,454 

Three months ended September 30, 2023
Common StockAdditional Paid-in
Capital		Accumulated Other Comprehensive LossAccumulated
Deficit		Total Stockholders’ Equity
SharesAmount
Balance at June 30, 2023129,027 $2 $1,747,959 $(3,152)$(757,055)$987,754 
Exercise of vested stock options144 — 1,137 — — 1,137 
Vesting of restricted stock units1,511 — — — — — 
Stock-based compensation— — 32,774 — — 32,774 
Net loss— — — — (54,311)(54,311)
Other comprehensive income— — — 1,218 — 1,218 
Balance at September 30, 2023130,682 $2 $1,781,870 $(1,934)$(811,366)$968,572 

8

Nine months ended September 30, 2024
Common StockAdditional Paid-in
Capital		Accumulated Other Comprehensive LossAccumulated
Deficit		Total Stockholders’ Equity
SharesAmount
Balance at December 31, 2023132,992 $3 $1,815,245 $(1,008)$(834,752)$979,488 
Exercise of vested stock options125 — 310 — — 310 
Vesting of restricted stock units4,530 — — — — — 
Issuance of restricted stock units related to bonus program1,889 — 26,849 — — 26,849 
Shares issued under ESPP544 — 4,053 — — 4,053 
Stock-based compensation— — 82,940 — — 82,940 
Net loss— — — — (125,172)(125,172)
Other comprehensive income— — — 986 — 986 
Balance at September 30, 2024140,080 $3 $1,929,397 $(22)$(959,924)$969,454 
Nine months ended September 30, 2023
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance at December 31, 2022124,336 $2 $1,666,106 $(9,286)$(701,664)$955,158 
Exercise of vested stock options265 — 2,008 — — 2,008 
Vesting of restricted stock units4,191 — — — — — 
Issuance of restricted stock units related to bonus program1,193 — 16,599 — — 16,599 
Shares issued under ESPP697 — 4,977 — — 4,977 
Stock-based compensation— — 92,180 — — 92,180 
Net loss— — — — (109,702)(109,702)
Other comprehensive income— — — 7,352 — 7,352 
Balance at September 30, 2023130,682 $2 $1,781,870 $(1,934)$(811,366)$968,572 



The accompanying notes are an integral part of the condensed consolidated financial statements.
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FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
Nine months ended September 30,
20242023
Cash flows from operating activities:
Net loss$(125,172)$(109,702)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense40,251 38,015 
Amortization of intangible assets14,699 15,525 
Non-cash lease expense16,819 17,227 
Amortization of debt discount and issuance costs1,061 2,020 
Amortization of deferred contract costs13,877 11,253 
Stock-based compensation82,985 100,856 
Deferred income taxes
900 — 
Provision for credit losses2,400 1,311 
Loss on disposals of property and equipment444 505 
Amortization of premiums (discounts) on investments
(3,466)344 
Impairment of operating lease right-of-use assets
371 588 
Impairment expense3,696 4,316 
Net gain on extinguishment of debt— (36,760)
Other adjustments83 (257)
Changes in operating assets and liabilities:
Accounts receivable1,298 (10,355)
Prepaid expenses and other current assets(7,420)4,602 
Other assets(7,729)(16,269)
Accounts payable4,514 1,258 
Accrued expenses(4,142)(6,253)
Operating lease liabilities(19,341)(16,937)
Other liabilities(4,942)6,452 
Net cash provided by operating activities11,186 7,739 
Cash flows from investing activities:
Purchases of marketable securities(155,099)(73,091)
Sales of marketable securities— 775 
Maturities of marketable securities289,709 428,125 
Advance payment for purchase of property and equipment(790)— 
Purchases of property and equipment(5,361)(8,283)
Proceeds from sale of property and equipment24 49 
Capitalized internal-use software(20,492)(15,390)
Net cash provided by investing activities107,991 332,185 
Cash flows from financing activities:
Cash paid for debt extinguishment— (196,934)
Repayments of finance lease liabilities(12,404)(21,243)
Payment of deferred consideration for business acquisitions(3,771)(4,393)
Proceeds from exercise of vested stock options310 2,008 
Proceeds from employee stock purchase plan6,083 7,009 
Net cash used in financing activities(9,782)(213,553)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash48 538 
Net increase in cash, cash equivalents, and restricted cash109,443 126,909 
Cash, cash equivalents, and restricted cash at beginning of period108,071 143,541 
Cash, cash equivalents, and restricted cash at end of period$217,514 $270,450 

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



10








FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—Continued
(in thousands)
(unaudited)
Nine months ended September 30,
20242023
Supplemental disclosure of cash flow information:
Cash paid for interest$453 $1,286 
Cash paid for income taxes, net of refunds received$739 $369 
Cash paid for finance lease interest $342 $1,103 
Noncash investing and financing activities:
Net increase in property and equipment included in accounts payable and accrued expenses
$1,278 $519 
Capitalized stock-based compensation$7,952 $6,912 
Assets obtained in exchange for operating lease obligations$5,827 $1,324 
Net non-cash change in operating lease assets and liabilities associated with modifications and terminations$4,762 $(978)
Deployments of prepaid capital equipment$11,912 $1,664 
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents$217,514 $270,300 
Restricted cash, current— 150 
Total cash, cash equivalents, and restricted cash$217,514 $270,450 



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


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1.     Nature of Business
Fastly, Inc. has built an edge cloud platform that can process, serve, and secure its customers' applications as close to their end users as possible. The Company was incorporated in Delaware in 2011 and is headquartered in San Francisco, California.
As used herein, “Fastly,” “the Company,” “its” and similar terms include Fastly, Inc. and its subsidiaries, unless the context indicates otherwise.
2.     Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements and footnotes have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on February 21, 2024. The Company’s condensed consolidated financial statements include its accounts and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company’s condensed consolidated financial statements are unaudited but include all adjustments of a normal recurring nature necessary for a fair presentation of its quarterly results. The Company’s condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management 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 the Company’s 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, internal-use software development costs, the incremental borrowing rate related to the Company’s lease liabilities, fair value of assets acquired and liabilities assumed during business combinations, useful lives of acquired intangible assets and property and equipment, fair value of the Company’s long-lived assets as well as goodwill, 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 consolidated financial statements in the period of change and prospectively from the date of the change in estimate.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies as compared to those described in “Note 2 – Summary of Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Recently Adopted and Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting - Improvements to Reportable Segment Disclosures,” which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The guidance is effective for the Company's annual periods beginning in 2024 and interim periods beginning in the first quarter of fiscal year 2025. The Company is currently evaluating the impact of the new guidance.
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The guidance is effective for the Company's annual periods beginning in 2025. The Company
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is currently evaluating the impact of the new guidance and intends to adopt the guidance prospectively when it becomes effective in 2025.
In November 2024, the FASB issued ASU 2024-03 “Disaggregation of Income Statement Expenses,” which aims to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The guidance is effective for the Company's annual periods beginning in 2027 and interim periods beginning in the first quarter of fiscal year 2028. The Company is currently evaluating the impact of the new guidance.
Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities and accounts receivable.
The Company’s cash, cash equivalents, and marketable securities primarily consisted of bank deposits, money market funds, investment-grade commercial paper, corporate notes and bonds, U.S. treasury securities, municipal securities, foreign government and supranational securities and asset-backed securities held at major financial institutions that the Company believes to be of high credit standing. The primary focus of its investment strategy is to preserve capital and meet liquidity requirements. The Company’s investment policy limits the amount of credit exposure with any one financial institution or commercial issuer. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents to the extent recorded in the balance sheets. While the Company has not experienced any losses in such accounts and the Company has historically maintained its cash in multiple financial institutions, the failure of Silicon Valley Bank (“SVB”) in March 2023, at which the Company held cash and cash equivalents in multiple accounts, exposed the Company to limited credit risk prior to the completion by the Federal Deposit Insurance Corporation (“FDIC”) of the resolution of SVB in a manner that fully protected all depositors.
Concentrations of credit risk with respect to accounts receivable are primarily limited to certain customers to which the Company makes substantial sales. The Company’s customer base consists of a large number of geographically dispersed customers diversified across several industries. No single customer accounted for more than 10% of revenue for the three months ended September 30, 2024, whereas one customer accounted for more than 10% of revenue for the three months ended September 30, 2023. No single customer accounted for more than 10% of revenue for each of the nine months ended September 30, 2024 and 2023. Affiliated customers that are business units of a single company in the streaming entertainment space generated an aggregate of less than 10% and 14% of the Company’s revenue for the three months ended September 30, 2024 and 2023, respectively, and 10% and 11% for the nine months ended September 30, 2024 and 2023, respectively. The same affiliated customers accounted for an aggregate of 23% of the Company’s accounts receivable balance as of December 31, 2023. As of September 30, 2024, no customer accounted for more than 10% of accounts receivable. As of December 31, 2023, one customer accounted for more than 10% of accounts receivable. Affiliated customers that are business units of a different single company accounted for 11% of the total accounts receivable balance as of September 30, 2024.
3.     Revenue
Revenue by geography is based on the billing address of the customer. Aside from the United States, no other single country accounted for more than 10% of revenue for both the three and nine months ended September 30, 2024 and 2023. The following table presents the Company’s net revenue by geographic region:
Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)
United States$104,454 $93,422 $300,921 $268,660 
Asia Pacific14,609 18,935 51,030 52,633 
Europe13,015 10,493 36,364 31,877 
All other5,128 4,966 14,782 15,041 
Total revenue$137,206 $127,816 $403,097 $368,211 
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The majority of the Company’s revenue is derived from enterprise customers, which are defined as customers with annualized current quarter revenue in excess of $100,000. This is calculated by taking the sum of revenue for each customer within the quarter and multiplying it by four. The following table presents the Company's net revenue for enterprise and non-enterprise customers:
Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)
Enterprise customers$126,660 $117,327 $369,451 $337,359 
Non-enterprise customers10,546 10,489 33,646 30,852 
Total revenue$137,206 $127,816 $403,097 $368,211 
The Company reports its revenue by three product lines: Network Services, Security and Other. Network Services include solutions designed to improve performance of websites, apps, application programming interfaces (“APIs”) and digital media. Security includes products designed to protect websites, apps, APIs and users. Other includes Compute solutions that allow developers to build and deploy modern web applications on Fastly's edge cloud platform, and Observability solutions that provide real-time logs, data and metrics streamed from Fastly's edge platform for actionable insights. The following table presents the Company’s revenue by product line:
Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)
Network Services
$107,431 $102,526 $317,585 $295,320 
Security26,184 23,345 76,152 67,082 
Other3,591 1,945 9,360 5,809 
Total revenue
$137,206 $127,816 $403,097 $368,211 
Contract balances
The timing of revenue recognition may differ from the timing of invoicing to customers. The Company has an unconditional right to consideration when it invoices its customers and records a receivable. The Company records a contract asset, or unbilled receivable, when revenue is recognized prior to invoicing. The Company records a contract liability, or deferred revenue, when a contract is billed in advance of revenue being recognized.
Deferred revenue pertains to amounts billed to customers for which revenue has not been recognized, which primarily consists of the unearned portions of billings for the Company’s security subscription services and the unearned portion of edge cloud platform usage. Amounts that have been invoiced for annual subscriptions, but not collected, are recorded in accounts receivable and in unearned revenue or in revenue depending on whether services have been delivered to the customer. The Company’s payment terms and conditions vary by contract type, and generally range from 30 to 90 days.
The following table presents the Company’s contract assets and contract liabilities as of September 30, 2024 and as of December 31, 2023:
As of September 30, 2024As of December 31, 2023
(in thousands)
Contract assets
$1,121 $621 
Contract liabilities$32,496 $38,150 
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The following table presents revenue recognized during the three and nine months ended September 30, 2024 and 2023 from amounts included in the contract liability at the beginning of the period:
Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)
Revenue recognized in the period from amounts included in contract liability at the beginning of the period$14,748 $12,279 $30,149 $27,616 
Remaining performance obligations
As of September 30, 2024, the aggregate amount of the transaction price in our contracts allocated to remaining performance obligations that are unsatisfied or partially unsatisfied was $235.4 million. This amount includes future committed revenue for periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied. The Company has elected to not provide certain information about its remaining performance obligations for service contracts with an original contract duration of one year or less. As of September 30, 2024, the Company expects to recognize approximately 77% of its remaining performance obligations over the next 12 months. The Company’s typical contractual term with its customers is one year, although terms may vary by contract.
Costs to obtain a contract
As of September 30, 2024 and December 31, 2023, the Company's costs to obtain contracts were as follows:
As of September 30, 2024As of December 31, 2023
(in thousands)
Deferred contract costs, net$53,842 $61,981 
During the three months ended September 30, 2024 and 2023, the Company recognized $4.8 million and $4.1 million of amortization related to deferred contract costs, respectively. During the nine months ended September 30, 2024 and 2023, the Company recognized $13.9 million and $11.3 million of amortization related to deferred contract costs, respectively. These costs are recorded within sales and marketing expenses on the accompanying condensed consolidated statements of operations.
15

4.     Investments and Fair Value Measurements
The Company's total cash, cash equivalents and marketable securities consisted of the following:
As of September 30, 2024As of December 31, 2023
(in thousands)
Cash and cash equivalents:
Cash$18,245 $21,269 
U.S. Treasury securities49,789 52,830 
Money market funds149,480 21,166 
Commercial paper— 12,656 
Total cash and cash equivalents(1)
$217,514 $107,921 
Marketable securities:
U.S. Treasury securities$37,557 $73,448 
Corporate notes and bonds26,451 105,566 
Commercial paper26,725 25,934 
Agency bonds— 9,851 
Total marketable securities, current(2)
$90,733 $214,799 
Corporate notes and bonds— 5,999 
Asset-backed securities— 89 
Total marketable securities, non-current(3)
$— $6,088 
Total marketable securities$90,733 $220,887 
Total cash and cash equivalents and marketable securities$308,247 $328,808 
(1) The Company’s cash equivalents include investments with an original maturity date of three months or less.
(2) The Company classifies its marketable securities as current, where it intends to hold the securities for less than 12 months.
(3) The Company classifies its marketable securities are non-current, where it intends to hold the securities for longer than 12 months.

16

The following table summarizes adjusted cost, gross unrealized gains and losses, and fair value related to cash equivalents and available-for-sale securities on the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023:
As of September 30, 2024
Amortized
Cost		Gross
Unrealized
Gain		Gross
Unrealized
Loss		Fair
Value
(in thousands)
Cash equivalents:
Money market funds$149,480 $— $— $149,480 
U.S. Treasury securities49,773 16 — 49,789 
Marketable securities:
U.S. Treasury securities37,530 27 — 37,557 
Corporate notes and bonds26,450 9 (8)26,451 
Commercial paper26,712 14 (1)26,725 
Total$289,945 $66 $(9)$290,002 
As of December 31, 2023
Amortized
Cost		Gross
Unrealized
Gain		Gross
Unrealized
Loss		Fair
Value
(in thousands)
Cash equivalents:
U.S. Treasury securities$52,824 $6 $— $52,830 
Commercial paper12,663 — (7)12,656 
Marketable securities:
U.S. Treasury securities73,444 8 (4)73,448 
Corporate notes and bonds112,487 9 (931)111,565 
Commercial paper25,946 — (12)25,934 
Asset-backed securities89 — — 89 
Agency bonds9,854 — (3)9,851 
Total $287,307 $23 $(957)$286,373 
There were no material realized gains or losses from sales of marketable securities that were reclassified out of accumulated other comprehensive loss into other income during the three and nine months ended September 30, 2024 and 2023. Investments are reviewed periodically to identify possible other-than-temporary impairments. For the three and nine months ended September 30, 2024 and 2023, the Company did not record any impairment charges for its marketable debt securities in its condensed consolidated statements of operations. No impairment loss has been recorded on the securities as the Company does not intend to sell any impaired securities, nor is it more likely than not that the Company would be required to sell impaired securities before recovery of amortized cost basis. Furthermore, the Company has determined that the decline in fair value of the investment is not due to credit related factors.
Fair Value of Financial Instruments
For certain of the Company's 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:
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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.
The Company measures its cash equivalents, marketable securities, and restricted cash at fair value. The Company classifies its cash equivalents, marketable securities and restricted cash within Level 1 or Level 2 because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
The Company classifies its investments, which are comprised of corporate notes and bonds, U.S. treasury securities, foreign government and supranational securities and asset-backed securities within Level 2 of the fair value hierarchy because the fair value of these securities is priced by using inputs based on non-binding market consensus prices that are primarily corroborated by observable market data or quoted market prices for similar instruments.
Financial assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following types of instruments:
As of September 30, 2024
Level 1Level 2Level 3Total
(in thousands)
Cash equivalents:
Money market funds$149,480 $— $— $149,480 
U.S. Treasury securities— 49,789 — 49,789 
Total cash equivalents149,480 49,789 — 199,269 
Marketable securities:
U.S. Treasury securities— 37,557 — 37,557 
Corporate notes and bonds— 26,451 — 26,451 
Commercial paper— 26,725 — 26,725 
Total marketable securities— 90,733 — 90,733 
Total financial assets$149,480 $140,522 $— $290,002 
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As of December 31, 2023
Level 1Level 2Level 3Total
(in thousands)
Cash equivalents:
Money market funds$21,166 $— $— $21,166 
U.S. Treasury securities— 52,830 — 52,830 
Commercial paper— 12,656 — 12,656 
Total cash equivalents21,166 65,486 — 86,652 
Marketable securities:
U.S. Treasury securities— 73,448 — 73,448 
Corporate notes and bonds— 111,565 — 111,565 
Commercial paper— 25,934 — 25,934 
Asset-backed securities— 89 — 89 
Agency bonds— 9,851 — 9,851 
Total marketable securities— 220,887 — 220,887 
Restricted cash:
Restricted cash, current150 — — 150 
Total restricted cash150 — — 150 
Total financial assets$21,316 $286,373 $— $307,689 
The Company had no restricted cash as of September 30, 2024. The restricted cash balance as of December 31, 2023 was $0.2 million and consisted of letters of credit related to lease arrangements that were collateralized by the Company’s cash. The amount was classified as current on the Company’s balance sheets.
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 and nine months ended September 30, 2024 and 2023.
5.     Balance Sheet Information
Property and Equipment, Net
Property and equipment, net consisted of the following:
As of September 30, 2024As of December 31, 2023
(in thousands)
Computer and networking equipment$233,412 $224,313 
Leasehold improvements8,139 8,605 
Furniture and fixtures2,153 2,142 
Office equipment1,218 1,228 
Internal-use software116,073 97,623 
Property and equipment, gross$360,995 $333,911 
Accumulated depreciation and amortization(180,707)(157,303)
Property and equipment, net$180,288 $176,608 
During the three months ended September 30, 2024, the Company recognized a impairment charge of $0.6 million related to equipment deemed no longer usable in its planned future network. During the nine months ended September 30, 2024, the Company recognized an impairment charge of $2.4 million related to equipment and an internal-use software project that the Company does not plan to continue with and therefore abandoned.
During the three months ended September 30, 2023, the Company recognized an impairment charge of $4.3 million, of which $3.0 million related to property and equipment, net and $1.3 million related to advance payments for the purchase of
19

property and equipment. The write-off was primarily related to excess computer and networking equipment including software the Company does not expect to use and therefore abandoned. There were no impairments during the nine months ended September 30, 2023.
Impairment charges are included within the impairment expense line in the Company's condensed consolidated statements of operations.
Depreciation on property and equipment for the three months ended September 30, 2024 and 2023 was approximately $13.7 million and $13.1 million, respectively. Included in these amounts was amortization expense for capitalized internal-use software costs of approximately $4.5 million and $3.8 million for the three months ended September 30, 2024 and 2023, respectively.
Depreciation on property and equipment for the nine months ended September 30, 2024 and 2023 was approximately $40.3 million and $38.0 million, respectively. Included in these amounts was amortization expense for capitalized internal-use software costs of approximately $12.3 million and $9.9 million for the nine months ended September 30, 2024 and 2023, respectively.
As of September 30, 2024 and December 31, 2023, the unamortized balance of capitalized internal-use software costs on the Company’s condensed consolidated balance sheets was approximately $76.3 million and $62.6 million, respectively.
The Company leases certain networking equipment from various third parties through equipment finance leases. The Company’s networking equipment assets as of September 30, 2024 and December 31, 2023, included a total of $73.2 million and $74.7 million acquired under finance lease agreements, respectively. These leases are capitalized in property and equipment, and the related amortization of assets under finance leases is included in depreciation and amortization expense. The accumulated depreciation of the associated networking equipment assets under finance leases totaled $49.1 million and $40.1 million as of September 30, 2024 and December 31, 2023, respectively.
Other Assets
Other assets consisted of the following:
As of September 30, 2024As of December 31, 2023
(in thousands)
Deferred contract costs, net$53,842 $61,981 
Advance payment for purchase of property and equipment13,456 24,509 
Other assets5,278 4,289 
Total other assets$72,576 $90,779 
Accrued Expenses
Accrued expenses consisted of the following:
As of September 30, 2024As of December 31, 2023
(in thousands)
Accrued compensation and related benefits$14,572 $14,918 
Accrued bonus4,364 24,614 
Accrued colocation and bandwidth costs14,684 14,362 
Other tax liabilities
4,003 4,344 
Other accrued expenses
3,231 3,580 
Total accrued expenses$40,854 $61,818 
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Other Current Liabilities
Other current liabilities consisted of the following:
As of September 30, 2024As of December 31, 2023
(in thousands)
Deferred revenue$29,716 $33,824 
Accrued computer and networking equipment1,741 1,673 
Holdback payable— 3,771 
Other current liabilities1,804 1,271 
Total other current liabilities$33,261 $40,539 
Accumulated Other Comprehensive Loss
For the three and nine months ended September 30, 2024 and 2023, components of accumulated other comprehensive loss, net of taxes, were as follows (in thousands):

Foreign Currency Translation Available-for-sale investmentsAccumulated Other Comprehensive Income (Loss)
Balance, June 30, 2024$(12)$(270)$(282)
Other comprehensive income — 260 260 
Balance, September 30, 2024$(12)$(10)$(22)
Foreign Currency Translation Available-for-sale investmentsAccumulated Other Comprehensive Income (Loss)
Balance, June 30, 2023$(19)$(3,133)$(3,152)
Other comprehensive income (loss)(8)1,226 1,218 
Balance, September 30, 2023$(27)$(1,907)$(1,934)
Foreign Currency Translation Available-for-sale investmentsAccumulated Other Comprehensive Income (Loss)
Balance, December 31, 2023$(12)$(996)$(1,008)
Other comprehensive income— 986 986 
Balance, September 30, 2024$(12)$(10)$(22)
Foreign Currency Translation Available-for-sale investmentsAccumulated Other Comprehensive Income (Loss)
Balance, December 31, 2022$(577)$(8,709)$(9,286)
Other comprehensive income550 6,802 7,352 
Balance, September 30, 2023$(27)$(1,907)$(1,934)
There was no material tax impact on the amounts presented.
21

6.     Leases
The Company has operating leases for corporate offices and data centers (“colocation” leases), and finance leases for networking equipment. The Company’s operating leases have remaining lease terms ranging from less than 1 year to 6 years, some of which include options to extend the leases. The Company’s finance leases have remaining lease terms up to 1 year. The Company also subleases a portion of its corporate office spaces. The Company’s subleases have remaining lease terms ranging from less than 1 year to 6 years. The Company’s sublease income was $0.4 million for each of the three months ended September 30, 2024 and 2023. The Company’s sublease income was $1.1 million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively.
The components of lease cost were as follows:
Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)
Operating lease costs:
Operating lease cost$6,466 $6,466 $19,904 $20,499 
Variable lease cost4,183 4,024 12,411 11,391 
Total operating lease costs$10,649 $10,490 $32,315 $31,890 
Finance lease costs:
Amortization of assets under finance lease$3,294 $3,544 $10,329 $10,786 
Interest70 297 342 1,103 
Total finance lease costs$3,364 $3,841 $10,671 $11,889 
The short-term lease costs were not material for either of the three and nine months ended September 30, 2024 and 2023.
During the three months ended September 30, 2024 the Company recognized an impairment charge of $0.4 million related to right-of-use assets upon the termination of a sublease. During the nine months ended September 30, 2024, the Company recognized an impairment charge of $1.7 million related to right-of-use assets, of which $1.3 million was related to the Company exiting a certain office facility and is included within the impairment expense line in the Company's condensed consolidated statements of operations. The Company did not recognize any material impairment on its operating lease right-of-use assets for either of the three and nine months ended September 30, 2023.
As of September 30, 2024As of December 31, 2023
Weighted Average Remaining Lease Term (in years):
Operating leases3.013.48
Finance leases0.491.00
Weighted Average Discount Rate:
Operating leases6.32 %6.03 %
Finance leases4.66 %4.67 %
22

Future minimum lease payments under non-cancellable leases as of September 30, 2024 were as follows:
Operating LeasesFinance Leases
(in thousands)
Remaining 2024$8,516 $3,319 
202524,990 1,618 
202621,806 — 
202712,502 — 
20283,128 — 
Thereafter1,971 — 
Total future minimum lease payments$72,913 $4,937 
Less: imputed interest(6,297)(51)
Total liability$66,616 $4,886 
As of September 30, 2024, the Company has undiscounted commitments of $2.2 million for operating leases that have not yet commenced, and therefore are not included in the right-of-use asset or operating lease liability. These operating leases will commence in the fourth quarter of 2024 with lease terms of 3 years.
7.     Goodwill and Intangible Assets
Goodwill
As of each of September 30, 2024 and December 31, 2023, the Company’s goodwill was $670.4 million. The Company did not record an impairment charge on goodwill during each of the three and nine months ended September 30, 2024 and 2023.
As of September 30, 2024 and December 31, 2023, the Company’s intangible assets consisted of the following:
As of September 30, 2024As of December 31, 2023
Gross carrying valueAccumulated amortizationNet carrying valueGross carrying valueAccumulated amortizationNet carrying value
(in thousands)
Intangible assets:
Customer relationships$69,860 $(35,141)$34,719 $69,860 $(28,473)$41,387 
Developed technology50,130 (39,968)10,162 50,130 (32,424)17,706 
Trade names3,910 (3,656)254 3,910 (3,542)368 
Internet protocol addresses4,984 (2,343)2,641 4,984 (1,970)3,014 
Total intangible assets$128,884 $(81,108)$47,776 $128,884 $(66,409)$62,475 
The Company’s customer relationships, developed technology, trade names and internet protocol addresses represent intangible assets subject to amortization. Amortization expense was $4.9 million and $5.2 million for the three months ended September 30, 2024 and 2023, respectively. Amortization expense was $14.7 million and $15.5 million for the nine months ended September 30, 2024 and 2023, respectively.
The Company did not purchase any intangible assets during both the three and nine months ended September 30, 2024 and 2023. The Company did not record an impairment charge on its intangible assets during both the three and nine months ended September 30, 2024 and 2023.
23

The expected amortization expense of intangible assets subject to amortization as of September 30, 2024 is as follows:
As of September 30, 2024
(in thousands)
Remainder of 2024$4,900 
202516,976 
20269,193 
20279,051 
20286,891 
Thereafter765 
Total$47,776 
8.     Debt Instruments
Senior Secured Credit Facilities Agreement
On February 16, 2021, the Company entered into a Senior Secured Credit Facilities Agreement (“Credit Agreement”) with the lenders from time to time party thereto (the “Lenders”) and Silicon Valley Bank, as a lender and as administrative agent and collateral agent for the Lenders, for an aggregate commitment amount of $100.0 million with a maturity date of February 16, 2024. The Company recorded $0.6 million of debt issuance costs associated with the Credit Agreement in other assets on the Company’s condensed consolidated balance sheet.

The Credit Agreement originally bore interest at a rate per annum equal to the sum of LIBOR for the applicable interest period plus 1.75% to 2.00%, depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement. On June 28, 2023, the Company entered into the First Amendment to Credit Agreement with the Lenders and First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank)), as a lender and as administrative agent and collateral agent for the Lenders, which, among other things, amended the interest rate provisions of the Credit Agreement to replace LIBOR with the Secured Overnight Finance Rate (“SOFR”) as the interest rate benchmark. On February 16, 2024, the Company entered into the Second Amendment to Credit Agreement with the Lenders and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as a lender and as administrative agent and collateral agent for the Lenders, which, among other things, extended the maturity date of the loans under the Credit Agreement to June 14, 2024. On April 30, 2024, the Company entered into the Third Amendment to Credit Agreement with the Lenders and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as a lender and as administrative agent and collateral agent for the Lenders, which, among other things, extended the maturity date of the loans under the Credit Agreement to April 30, 2027 and decreased the commitment amount from $100.0 million to $60.0 million, including a $10.0 million sublimit for the issuance of letters of credit, and a swingline subfacility of up to $20.0 million. As amended, the revolving loans bear interest, at the Company’s election, at an annual rate based on SOFR or a base rate. Loans based on SOFR bear interest at a rate per annum equal to SOFR, plus an adjustment of 0.10%, plus 1.75% to 2.00%, depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement. Loans based on the base rate bear interest at a rate per annum equal to the base rate plus 0.75% to 1.00%, depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement.
Interest payments on outstanding borrowings are due on the last day of each interest period. The Credit Agreement has a commitment fee on the unused portion of the borrowing commitment, which is payable on the last day of each calendar quarter at a rate per annum of 0.20% to 0.25% depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement. In addition, the Company’s Credit Agreement contains a financial covenant that requires the Company to maintain a consolidated adjusted quick ratio of at least 1:25 to 1:00 tested on a quarterly basis as well as a springing revenue growth covenant for certain periods if the Company’s consolidated adjusted quick ratio falls below 1.75 to 1:00 on the last day of any fiscal quarter. The Credit Agreement requires the Company to comply with various affirmative and negative covenants, and contains customary events of default.
As of September 30, 2024, the Company was in compliance with all of the Credit Agreement’s covenants. During the three and nine months ended September 30, 2024 and 2023, no amounts were drawn down on the Credit Agreement. As of September 30, 2024 and December 31, 2023, no amounts were outstanding under the Credit Agreement.
24

Convertible Senior Notes
On March 5, 2021, the Company issued approximately $948.8 million aggregate principal amount of 0% convertible senior notes due 2026 (the “Notes”), including the exercise in full by the initial purchasers of their option to purchase up to an additional approximately $123.8 million principal amount of the Notes. The Notes were issued in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Notes will mature on March 15, 2026, unless earlier converted, redeemed or repurchased. The net proceeds from the issuance of the Notes were approximately $930.0 million after deducting the initial purchasers’ discounts and transaction costs.
The Company may not redeem the Notes prior to March 20, 2024. On or after March 20, 2024, the Company may redeem for cash, all or any portion of the Notes, at the Company’s option, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, if the last reported sale price of the Company’s Class A common stock (“common stock”) has been at least 130% of the conversion price for the Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. No sinking fund is provided for the Notes.