Fastly, Inc. [FSLY] Filings

10-Q 1 fsly-20220630.htm 10-Q fsly-20220630

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 June 30, 2022

☐ 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 July 29, 2022, 122.0 million shares of the registrants’ Class A common stock were outstanding.

TABLE OF CONTENTS


		Page
	Part I - Financial Information
Item 1.	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets as of June 30 , 2022 and December 31, 2021	5
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021	6
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021	7
	Condensed Consolidated Statements of Stockholders' Equity for the Three a nd Six Months Ended June 30, 2022 and 2021	8
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	10
	Notes to Condensed Consolidated Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 4.	Controls and Procedures	49
	Part II - Other Information	52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
Item 3.	Defaults Upon Senior Securities	90
Item 4.	Mine Safety Disclosures	90
Item 5.	Other Information	90
Item 6.	Exhibits	91
	Signatures	92

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," 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:

•defects, interruptions, outages, delays in performance, or similar problems with our platform, including the impact of our global platform outage on June 8, 2021;

•our ability to attract new enterprise customers and to have existing enterprise customers continue and increase their use of our platform;

•our ability to forecast our revenue accurately and manage our expenditures;

•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;

•our ability to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements, or preferences;

•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;

•security measures, or those maintained on our behalf, 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 attract and retain qualified employees and key personnel;

•our potential involvement in class-action lawsuits and other litigation matters;

•the impact of the ongoing COVID-19 pandemic on our business, operations, and the markets and communities in which we, our partners, and our customers operate;

•our ability to remediate material weaknesses and maintain effective internal control over financial reporting; and

•our stock price may be volatile, and the value of our Class A common stock may decline.

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.

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 us, 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 us to review the information that we make available on our website.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FASTLY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)


	As of June 30, 2022		As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	62,510	$	166,068
Marketable securities, current	419,905		361,795
Accounts receivable, net of allowance for credit losses of $3,696 and $3,311 as of June 30, 2022 and December 31, 2021, respectively	68,218		64,625
Prepaid expenses and other current assets	29,037		32,160
Total current assets	579,670		624,648
Property and equipment, net	173,950		166,961
Operating lease right-of-use assets, net	69,861		69,631
Goodwill	670,186		636,805
Intangible assets, net	93,978		102,596
Marketable securities, non-current	284,951		528,911
Other assets	60,199		29,468
Total assets	$	1,932,795	$	2,159,020
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,011	$	9,257
Accrued expenses	49,943		36,112
Finance lease liabilities, current	28,088		21,125
Operating lease liabilities, current	19,243		20,271
Other current liabilities	33,705		45,107
Total current liabilities	140,990		131,872
Long-term debt	703,375		933,205
Finance lease liabilities, noncurrent	26,479		22,293
Operating lease liabilities, noncurrent	60,657		55,114
Other long-term liabilities	7,556		2,583
Total liabilities	939,057		1,145,067
Commitments and contingencies (Note 10)
Stockholders’ equity:
Class A common stock	2		2
Additional paid-in capital	1,597,869		1,527,468
Accumulated other comprehensive loss	(12,542)		(2,627)
Accumulated deficit	(591,591)		(510,890)
Total stockholders’ equity	993,738		1,013,953
Total liabilities and stockholders’ equity	$	1,932,795	$	2,159,020

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

FASTLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Revenue	$	102,518	$	85,026	$	204,900	$	169,878
Cost of revenue	56,466		40,320		110,381		77,814
Gross profit	46,052		44,706		94,519		92,064
Operating expenses:
Research and development	38,717		30,346		79,154		59,334
Sales and marketing	46,760		36,334		88,240		71,206
General and administrative	29,543		35,494		59,097		68,955
Total operating expenses	115,020		102,174		226,491		199,495
Loss from operations	(68,968)		(57,468)		(131,972)		(107,431)
Net gain on extinguishment of debt	54,391		—		54,391		—
Interest income	1,502		276		2,183		450
Interest expense	(1,530)		(1,436)		(3,152)		(2,097)
Other income (expense)	(1,673)		178		(1,952)		114
Loss before income taxes	(16,278)		(58,450)		(80,502)		(108,964)
Income tax expense (benefit)	159		(155)		199		14
Net loss	$	(16,437)	$	(58,295)	$	(80,701)	$	(108,978)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.14)	$	(0.51)	$	(0.67)	$	(0.95)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	121,242		115,326		120,295		114,733

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

FASTLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Net loss	$	(16,437)	$	(58,295)	$	(80,701)	$	(108,978)
Other comprehensive loss:
Foreign currency translation loss	17		23		(170)		(42)
Loss on investments in available-for-sale-securities	(3,063)		(147)		(9,745)		(225)
Total other comprehensive loss	$	(3,046)	$	(124)	$	(9,915)	$	(267)
Comprehensive loss	$	(19,483)	$	(58,419)	$	(90,616)	$	(109,245)

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

FASTLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands; unaudited)


	Three months ended June 30, 2022
	Common Stock—Class A			Additional Paid-in Capital	Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at March 31, 2022	120,777	$	2		$	1,561,371	$	(9,496)	$	(575,154)	$	976,723
Exercise of vested stock options	273	—			1,721		—		—		1,721
Vesting of restricted stock units	506	—			—		—		—		—
Vesting of restricted stock awards	37	—			—		—		—		—
Shares issued under ESPP	292	—			2,962		—		—		2,962
Stock-based compensation	—	—			31,815		—		—		31,815
Net loss	—	—			—		—		(16,437)		(16,437)
Other comprehensive loss	—	—			—		(3,046)		—		(3,046)
Balance at June 30, 2022	121,885	$	2		$	1,597,869	$	(12,542)	$	(591,591)	$	993,738



	Three months ended June 30, 2021
	Common Stock—Class A			Common Stock—Class B			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance as of March 31, 2021	104,950	$	1	9,891	$	1	$	1,384,045	$	(137)	$	(338,876)	$	1,045,034
Exercise of vested stock options	428	—		—	—		2,886		—		—		2,886
Vesting of early exercised stock options	—	—		14	—		64		—		—		64
Vesting of restricted stock units	419	—		—	—		—		—		—		—
Vesting of restricted stock awards	112	—		—	—		—		—		—		—
Shares issued under ESPP	153	—		—	—		5,719		—		—		5,719
Stock-based compensation	—	—		—	—		33,806		—		—		33,806
Conversion of Class B to Class A Stock	197	—		(197)	—		—		—		—		—
Net loss	—	—		—	—		—		—		(58,295)		(58,295)
Other comprehensive loss	—	—		—	—		—		(124)		—		(124)
Balance as of June 30, 2021	106,259	$	1	9,708	$	1	$	1,426,520	$	(261)	$	(397,171)	$	1,029,090



	Six months ended June 30, 2022
	Common Stock—Class A			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2021	118,811	$	2	$	1,527,468	$	(2,627)	$	(510,890)	$	1,013,953
Exercise of vested stock options	1,624	—		4,769		—		—		4,769
Vesting of restricted stock units	1,083	—		—		—		—		—
Vesting of restricted stock awards	75	—		—		—		—		—
Shares issued under ESPP	292	—		2,962		—		—		2,962
Stock-based compensation	—	—		62,670		—		—		62,670
Net loss	—	—		—		—		(80,701)		(80,701)
Other comprehensive loss	—	—		—		(9,915)		—		(9,915)
Balance at June 30, 2022	121,885	$	2	$	1,597,869	$	(12,542)	$	(591,591)	$	993,738



	Six months ended June 30, 2021
	Common Stock—Class A			Common Stock—Class B			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2020	103,394	$	1	10,229	$	1	$	1,350,050	$	6	$	(288,193)	$	1,061,865
Exercise of vested stock options	1,029	—		—	—		5,605		—		—		5,605
Vesting of early exercised stock options	—	—		29	—		128		—		—		128
Vesting of restricted stock units	909	—		—	—		—		—		—		—
Vesting of restricted stock awards	224						—						—
Shares issued under ESPP	154	—		—	—		5,719		—		—		5,719
Stock-based compensation	—	—		—	—		65,018		—		—		65,018
Conversion of Class B to Class A Stock	549	—		(549)	—		—		—		—		—
Net loss	—	—		—	—		—		—		(108,978)		(108,978)
Other comprehensive income	—	—		—	—		—		(267)		—		(267)
Balance as of June 30, 2021	106,259	$	1	9,708	$	1	$	1,426,520	$	(261)	$	(397,171)	$	1,029,090

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

FASTLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands; unaudited)


	Six months ended June 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(80,701)	$	(108,978)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	20,586		13,346
Amortization of intangible assets	10,618		10,620
Amortization of right-of-use assets and other	13,378		12,660
Amortization of debt discount and issuance costs	1,739		1,269
Amortization of deferred contract costs	3,989		2,946
Stock-based compensation	75,000		64,264
Provision for credit losses	529		(195)
Interest on finance lease	(1,240)		(735)
Loss on disposals of property and equipment	854		27
Amortization and accretion of discounts and premiums on investments	1,851		—
Net gain on extinguishment of debt	(54,391)		—
Other adjustments	61		813
Changes in operating assets and liabilities:
Accounts receivable	(4,122)		(5,612)
Prepaid expenses and other current assets	(4,812)		(5,494)
Other assets	(6,399)		(5,089)
Accounts payable	844		162
Accrued expenses	1,162		(3,835)
Operating lease liabilities	(12,837)		(12,856)
Other liabilities	4,021		8,804
Net cash used in operating activities	(29,870)		(27,883)
Cash flows from investing activities:
Purchases of marketable securities	(355,479)		(333,868)
Sales of marketable securities	161,853		12,497
Maturities of marketable securities	367,880		57,253
Business acquisitions, net of cash acquired and other related payments	(25,999)		—
Advance payment for purchase of property and equipment	(29,310)		—
Purchases of property and equipment	(8,815)		(11,013)
Proceeds from sale of property and equipment	241		—
Capitalized internal-use software	(8,736)		(2,680)
Purchase of intangible assets	—		(2,093)
Net cash provided by (used in) investing activities	101,635		(279,904)
Cash flows from financing activities:
Issuance of convertible note, net of issuance costs	—		930,775
Payments of other debt issuance costs	—		(1,351)
Net cash paid for debt extinguishment	(177,082)		—
Repayments of finance lease liabilities	(11,029)		(6,579)
Cash received for restricted stock sold in advance of vesting conditions	10,655		—
Cash paid for early sale of restricted shares	(7,037)		—
Proceeds from exercise of vested stock options	4,769		5,605
Proceeds from employee stock purchase plan	3,977		4,564
Net cash provided by (used in) financing activities	(175,747)		933,014
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(319)		(141)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(104,301)		625,086
Cash, cash equivalents, and restricted cash at beginning of period	166,961		63,880
Cash, cash equivalents, and restricted cash at end of period	$	62,660	$	688,966

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

FASTLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—Continued

(in thousands)

(unaudited)


	Six months ended June 30,
	2022		2021
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,304	$	759
Cash paid for income taxes, net of refunds received	$	180	$	175
Property and equipment additions not yet paid in cash	$	3,636	$	1,814
Stock-based compensation capitalized to internal-use software	$	3,522	$	754
Assets obtained in exchange for operating lease obligations	$	15,676	$	13,481
Assets obtained in exchange for finance lease obligations	$	22,178	$	15,538
Net non-cash change in operating lease assets and liabilities associated with modifications and terminations	$	2,960	$	—
Purchase consideration associated with business combination, accrued but not paid	$	8,126	$	—
Costs associated with business combination, accrued but not paid	$	1,873	$	—

Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents	$	62,510	$	687,986
Restricted cash, current	150		87
Restricted cash, non-current	—		893
Total cash, cash equivalents, and restricted cash	$	62,660	$	688,966

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

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 June 30, 2022, the Company's edge network spans across 78 markets around the world. The Company was incorporated in Delaware in 2011 and is 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.

Conversion of dual class common stock structure

On July 12, 2021, all outstanding shares of Class B common stock automatically converted into the same number of shares of Class A common stock (the "Conversion") pursuant to the terms of the Company's amended and restated certificate of incorporation (the "Certificate"). Upon the Conversion, outstanding options denominated in shares of Class B common stock issued under any of the Company's equity incentive plans remained unchanged, except that such options now represent the right to receive shares of Class A common stock on exercise. In accordance with the Certificate, the shares of Class B common stock that converted to Class A common stock were retired and will not be reissued by the Company.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements 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, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2022. 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, 2021.

Certain changes to presentation have been made to conform the prior period presentation to the current period reporting. Such reclassifications did not affect the condensed consolidated balance sheets, total revenues, operating income, or net income.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and also on assumptions that it believes are reasonable.

Due to the Coronavirus (“COVID-19”) pandemic there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of June 30, 2022. These estimates may change, as new events occur and additional information is obtained, as well as other factors related to COVID-19 that could result in material impacts to the Company's consolidated financial statements in future reporting periods.

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, 2021.

Recently Adopted and Issued Accounting Pronouncements

The Company has not adopted any new accounting pronouncements in the three and six months ended June 30, 2022. Other recently issued accounting pronouncements are not expected to have a material impact on its condensed consolidated financial statements.

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. 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.

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. In the three and six months ended June 30, 2022 and June 30, 2021, no customer accounted for more than 10% of revenue. As of June 30, 2022 and December 31, 2021, no customer accounted for more than 10% of the total accounts receivable balance.

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 six months ended June 30, 2022 and June 30, 2021. The following table presents the Company's net revenue by geographic region:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
	(in thousands)
United States	$	76,052	$	59,674	$	151,666	$	122,408
Asia Pacific	12,869		9,077		24,589		18,231
Europe	9,242		8,232		18,595		17,872
All other	4,355		8,043		10,050		11,367
Total revenue	$	102,518	$	85,026	$	204,900	$	169,878

The majority of the Company's 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 the Company's net revenue for enterprise and non-enterprise customers:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
	(in thousands)
Enterprise customers	$	91,253	$	74,372	$	182,354	$	149,837
Non-enterprise customers	11,265		10,654		22,546		20,041
Total revenue	$	102,518	$	85,026	$	204,900	$	169,878

Contract balances

The following table presents the Company's contract assets and contract liabilities as of June 30, 2022 and as of December 31, 2021:


	As of June 30, 2022		As of December 31, 2021
	(in thousands)
Contract assets	$	33	$	89
Contract liabilities	$	29,052	$	28,907

The Company's payment terms and conditions vary by contract type. Payment terms on invoiced amounts are at a weighted average of 40 days.

The following table presents the revenue recognized during the three and six months ended June 30, 2022 and 2021 from amounts included in the contract liability at the beginning of the period:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
	(in thousands)
Revenue recognized in the period from amounts included in contract liability at the beginning of the period	$	10,674	$	6,840	$	19,164	$	11,136

Remaining performance obligations

As of June 30, 2022, the Company had $173.2 million of remaining performance obligations, which includes deferred revenue and amounts that will be invoiced and recognized in future periods, respectively. As of June 30, 2022, the Company expects to recognize approximately 85% of this balance over the next 12 months in the Company's condensed consolidated statement of operations and comprehensive loss. The typical contract term with the Company's customers is one year, although terms may vary by contract.

Costs to obtain a contract

As of June 30, 2022 and December 31, 2021, the Company's costs to obtain contracts were as follows:


	As of June 30, 2022		As of December 31, 2021
	(in thousands)
Deferred contract costs, net	$	26,595	$	23,830

During the three months ended June 30, 2022 and 2021, the Company recognized $2.1 million and $1.5 million of amortization related to deferred contract costs, respectively. During the six months ended June 30, 2022 and 2021, the Company recognized $4.0 million and $2.9 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.

4. Investments and Fair Value Measurements

The Company's total cash, cash equivalents and marketable securities as of June 30, 2022 and December 31, 2021 consisted of the following:


	As of June 30,		As of December 31,
	2022		2021
	(in thousands)
Cash and cash equivalents:
Cash	$	48,864	$	134,774
Money market funds	9,665		31,294
Commercial paper	3,981		—
Total cash and cash equivalents (1)	$	62,510	$	166,068
Marketable securities:
U.S. Treasury securities	$	274,449	$	184,946
Corporate notes and bonds	77,241		11,327
Commercial paper	16,489		124,089
Asset-backed securities	31,840		21,576
Municipal securities	—		2,250
Foreign government and supranational securities	19,886		17,607
Total marketable securities, current (2)	$	419,905	$	361,795
U.S. Treasury securities	53,555		239,528
Corporate notes and bonds	173,509		197,298
Asset-backed securities	55,648		77,142
Municipal securities	2,239		2,312
Foreign government and supranational securities	—		12,631
Total marketable securities, non-current (3)	$	284,951	$	528,911
Total marketable securities	$	704,856	$	890,706
Total cash, cash equivalents and marketable securities	$	767,366	$	1,056,774

(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.

Available-for-Sale Investments

The Company’s marketable securities are classified as available-for-sale as of the balance sheet date and are reported at fair value with unrealized gains and losses reported, net of tax, as a separate component of accumulated other comprehensive income (loss) in stockholders’ equity.

The following table summarizes adjusted cost, gross unrealized gains and losses, and fair value related to available-for-sale securities classified as marketable securities as of June 30, 2022 and December 31, 2021:


	As of June 30, 2022
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(in thousands)
U.S. Treasury securities	$	333,938	$	—	$	(5,934)	$	328,004
Corporate notes and bonds	255,927		—		(5,177)		250,750
Commercial paper	16,489		—		—		16,489
Asset-backed securities	88,020		—		(532)		87,488
Municipal securities	2,325		—		(86)		2,239
Foreign government and supranational securities	20,145		—		(259)		19,886
Total available-for-sale investments	$	716,844	$	—	$	(11,988)	$	704,856

	As of December 31, 2021
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(in thousands)
U.S. Treasury securities	$	425,560	$	1	$	(1,086)	$	424,475
Corporate notes and bonds	209,550		—		(925)		208,625
Commercial paper	124,098		—		(9)		124,089
Asset-backed securities	98,857		—		(140)		98,717
Municipal securities	4,577		—		(15)		4,562
Foreign government and supranational securities	30,306		—		(68)		30,238
Total available-for-sale investments	$	892,948	$	1	$	(2,243)	$

Fastly, Inc. [FSLY] Filings
10-Q	[2022-08-05]
10-Q	[2022-05-05]
10-K	[2022-03-01]
10-Q	[2021-11-08]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-01]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
S-1	[2020-05-18]
10-Q	[2020-05-08]
10-K	[2020-03-04]
10-Q	[2019-11-08]
10-Q	[2019-08-09]
S-1	[2019-04-19]