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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, 2022

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 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 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 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 filerAccelerated filer
Non-accelerated filerSmaller 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 28, 2022, 123.0 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," 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.
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.
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, our corporate Twitter account (@Fastly), our blog (www.fastly.com/blog), 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, 2022As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$87,897 $166,068 
Marketable securities, current445,048 361,795 
Accounts receivable, net of allowance for credit losses of $4,949 and $3,311 as of September 30, 2022 and December 31, 2021, respectively
72,914 64,625 
Prepaid expenses and other current assets31,321 32,160 
Total current assets637,180 624,648 
Property and equipment, net179,080 166,961 
Operating lease right-of-use assets, net72,374 69,631 
Goodwill670,158 636,805 
Intangible assets, net88,482 102,596 
Marketable securities, non-current186,066 528,911 
Other assets73,258 29,468 
Total assets$1,906,598 $2,159,020 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$8,265 $9,257 
Accrued expenses54,186 36,112 
Finance lease liabilities, current27,807 21,125 
Operating lease liabilities, current20,919 20,271 
Other current liabilities33,422 45,107 
Total current liabilities144,599 131,872 
Long-term debt704,042 933,205 
Finance lease liabilities, noncurrent21,027 22,293 
Operating lease liabilities, noncurrent62,750 55,114 
Other long-term liabilities7,201 2,583 
Total liabilities939,619 1,145,067 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Class A common stock2 2 
Additional paid-in capital1,634,666 1,527,468 
Accumulated other comprehensive loss(12,678)(2,627)
Accumulated deficit(655,011)(510,890)
Total stockholders’ equity 966,979 1,013,953 
Total liabilities and stockholders’ equity $1,906,598 $2,159,020 


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,
2022202120222021
Revenue$108,504 $86,735 $313,404 $256,613 
Cost of revenue55,825 41,244 166,206 119,058 
Gross profit52,679 45,491 147,198 137,555 
Operating expenses:
Research and development38,957 32,528 118,111 91,862 
Sales and marketing47,006 39,288 135,246 110,494 
General and administrative32,481 28,609 91,578 97,564 
Total operating expenses118,444 100,425 344,935 299,920 
Loss from operations(65,765)(54,934)(197,737)(162,365)
Net gain on extinguishment of debt  54,391  
Interest income1,967 280 4,150 730 
Interest expense(1,381)(1,555)(4,533)(3,652)
Other income (expense)1,877 41 (75)155 
Loss before income taxes(63,302)(56,168)(143,804)(165,132)
Income tax expense118 30 317 44 
Net loss$(63,420)$(56,198)$(144,121)$(165,176)
Net loss per share attributable to common stockholders, basic and diluted$(0.52)$(0.48)$(1.19)$(1.43)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted122,339 116,475 121,094 115,320 

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,
2022202120222021
Net loss$(63,420)$(56,198)$(144,121)$(165,176)
Other comprehensive loss:
Foreign currency translation loss(22)(186)(192)(228)
Loss on investments in available-for-sale-securities(114)27 (9,859)(198)
Total other comprehensive loss$(136)$(159)$(10,051)$(426)
Comprehensive loss$(63,556)$(56,357)$(154,172)$(165,602)

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, 2022
Common Stock—Class AAdditional Paid-in
Capital
Accumulated Other Comprehensive LossAccumulated
Deficit
Total Stockholders’ Equity
SharesAmount
Balance at June 30, 2022121,885 $2 $1,597,869 $(12,542)$(591,591)$993,738 
Exercise of vested stock options88 — 555 — — 555 
Vesting of restricted stock units835 — — — — — 
Vesting of restricted stock awards37 — — — — — 
Stock-based compensation— — 36,242 — — 36,242 
Net loss— — — — (63,420)(63,420)
Other comprehensive loss— — — (136)— (136)
Balance at September 30, 2022122,845 $2 $1,634,666 $(12,678)$(655,011)$966,979 

Three months ended September 30, 2021
Common Stock—Class ACommon Stock—Class BAdditional Paid-in
Capital
Accumulated Other Comprehensive LossAccumulated
Deficit
Total Stockholders’ Equity
SharesAmountSharesAmount
Balance as of June 30, 2021106,259 $1 9,708 $1 $1,426,520 $(261)$(397,171)$1,029,090 
Exercise of vested stock options498 — — — 3,489 — — 3,489 
Vesting of early exercised stock options— — 14 — 64 — — 64 
Vesting of restricted stock units611 — — — — — — — 
Vesting of restricted stock awards112 — — — — — — — 
Stock-based compensation— — — — 39,293 — — 39,293 
Conversion of Class B to Class A Stock9,723 1 (9,723)(1)— — — — 
Net loss— — — — — — (56,198)(56,198)
Other comprehensive loss— — — — — (159)— (159)
Balance as of September 30, 2021117,203 $2  $ $1,469,366 $(420)$(453,369)$1,015,579 


8


Nine months ended September 30, 2022
Common Stock—Class AAdditional Paid-in
Capital
Accumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total Stockholders’ Equity
SharesAmount
Balance at December 31, 2021118,811 $2 $1,527,468 $(2,627)$(510,890)$1,013,953 
Exercise of vested stock options1,712 — 5,324 — — 5,324 
Vesting of restricted stock units1,918 — — — — — 
Vesting of restricted stock awards112 — — — — — 
Shares issued under ESPP292 — 2,962 — — 2,962 
Stock-based compensation— — 98,912 — — 98,912 
Net loss— — — — (144,121)(144,121)
Other comprehensive loss— — — (10,051)— (10,051)
Balance at September 30, 2022122,845 $2 $1,634,666 $(12,678)$(655,011)$966,979 
Nine months ended September 30, 2021
Common Stock—Class ACommon Stock—Class BAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance as of December 31, 2020103,394 $1 10,229 $1 $1,350,050 $6 $(288,193)$1,061,865 
Exercise of vested stock options1,527 — — — 9,094 — — 9,094 
Vesting of early exercised stock options— — 43 — 192 — — 192 
Vesting of restricted stock units1,520 — — — — — — — 
Vesting of restricted stock awards336 — — — — — — — 
Shares issued under ESPP154 — — — 5,719 — — 5,719 
Stock-based compensation— — — — 104,311 — — 104,311 
Conversion of Class B to Class A Stock10,272 1 (10,272)(1)— — — — 
Net loss— — — — — — (165,176)(165,176)
Other comprehensive income— — — — — (426)— (426)
Balance as of September 30, 2021117,203 $2  $ $1,469,366 $(420)$(453,369)$1,015,579 



The accompanying notes are an integral part of the condensed consolidated financial statements.
9


FASTLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
Nine months ended September 30,
20222021
Cash flows from operating activities:
Net loss$(144,121)$(165,176)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense31,248 20,710 
Amortization of intangible assets16,114 15,929 
Amortization of right-of-use assets and other21,879 19,818 
Amortization of debt discount and issuance costs2,454 2,235 
Amortization of deferred contract costs6,020 4,567 
Stock-based compensation114,378 100,900 
Provision for credit losses1,782 41 
Interest on finance lease(1,843)(1,259)
Loss on disposals of property and equipment854 (177)
Amortization and accretion of discounts and premiums on investments2,622  
Net gain on extinguishment of debt(54,391) 
Other adjustments(292)1,496 
Changes in operating assets and liabilities:
Accounts receivable(10,071)(4,017)
Prepaid expenses and other current assets(5,787)(5,502)
Other assets(19,904)(7,320)
Accounts payable(3,457)(1,653)
Accrued expenses4,490 2,713 
Operating lease liabilities(20,667)(19,735)
Other liabilities1,188 5,856 
Net cash used in operating activities(57,504)(30,574)
Cash flows from investing activities:
Purchases of marketable securities(355,479)(777,569)
Sales of marketable securities161,853 64,236 
Maturities of marketable securities440,737 72,853 
Business acquisitions, net of cash acquired and other related payments(27,745) 
Advance payment for purchase of property and equipment(31,274) 
Purchases of property and equipment(11,446)(31,267)
Proceeds from sale of property and equipment366 291 
Capitalized internal-use software(13,856)(10,299)
Purchase of intangible assets (2,092)
Net cash provided by (used in) investing activities163,156 (683,847)
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(18,105)(10,564)
Cash received for restricted stock sold in advance of vesting conditions10,655  
Cash paid for early sale of restricted shares(10,655) 
Proceeds from exercise of vested stock options5,324 9,094 
Proceeds from employee stock purchase plan5,726 5,994 
Net cash provided by (used in) financing activities(184,137)933,948 
Effects of exchange rate changes on cash, cash equivalents, and restricted cash(429)(383)
Net increase (decrease) in cash, cash equivalents, and restricted cash(78,914)219,144 
Cash, cash equivalents, and restricted cash at beginning of period166,961 63,880 
Cash, cash equivalents, and restricted cash at end of period$88,047 $283,024 

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,
20222021
Supplemental disclosure of cash flow information:
Cash paid for interest$1,969 $1,379 
Cash paid for income taxes, net of refunds received$225 $240 
Property and equipment additions not yet paid in cash$8,497 $443 
Stock-based compensation capitalized to internal-use software$6,034 $3,411 
Assets obtained in exchange for operating lease obligations$28,788 $25,745 
Assets obtained in exchange for finance lease obligations$23,521 $28,399 
Net non-cash change in operating lease assets and liabilities associated with modifications and terminations$3,132 $ 
Purchase consideration associated with business combination, accrued but not paid$8,000 $ 
Costs associated with business combination, accrued but not paid$30 $ 
Deployments of prepaid capital equipment$926 $ 
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents$87,897 $282,131 
Restricted cash, current150  
Restricted cash, non-current 893 
Total cash, cash equivalents, and restricted cash$88,047 $283,024 



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


11



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 September 30, 2022, the Company's edge network spans across 79 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 September 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.
12


Recently Adopted and Issued Accounting Pronouncements
The Company has not adopted any new accounting pronouncements in the three and nine months ended September 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 nine months ended September 30, 2022 and September 30, 2021, no customer accounted for more than 10% of revenue. As of September 30, 2022, one customer accounted for more than 10% of the total accounts receivable balance. As of 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 nine months ended September 30, 2022 and September 30, 2021. The following table presents the Company's net revenue by geographic region:
Three months ended September 30,Nine months ended September 30,
2022202120222021
(in thousands)
United States$80,173 $62,287 $231,838 $179,860 
Asia Pacific14,365 9,804 38,954 27,969 
Europe9,536 8,550 28,131 25,969 
All other4,430 6,094 14,481 22,815 
Total revenue$108,504 $86,735 $313,404 $256,613 
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 September 30,Nine months ended September 30,
2022202120222021
(in thousands)
Enterprise customers$97,265 $76,006 $279,619 $226,622 
Non-enterprise customers11,239 10,729 33,785 29,991 
Total revenue$108,504 $86,735 $313,404 $256,613 
13


Contract balances
The following table presents the Company's contract assets and contract liabilities as of September 30, 2022 and as of December 31, 2021:
As of September 30, 2022As of December 31, 2021
(in thousands)
Contract assets$26 $89 
Contract liabilities$25,940 $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 nine months ended September 30, 2022 and 2021 from amounts included in the contract liability at the beginning of the period:
Three months ended September 30,Nine months ended September 30,
2022202120222021
(in thousands)
Revenue recognized in the period from amounts included in contract liability at the beginning of the period$10,627 $8,815 $23,231 $13,942 
Remaining performance obligations
As of September 30, 2022, the Company had $173.0 million of remaining performance obligations, which includes deferred revenue and amounts that will be invoiced and recognized in future periods. As of September 30, 2022, the Company expects to recognize approximately 78% 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 September 30, 2022 and December 31, 2021, the Company's costs to obtain contracts were as follows:
As of September 30,As of December 31,
20222021
(in thousands)
Deferred contract costs, net$35,524 $23,830 
During the three months ended September 30, 2022 and 2021, the Company recognized $2.0 million and $1.6 million of amortization related to deferred contract costs, respectively. During the nine months ended September 30, 2022 and 2021, the Company recognized $6.0 million and $4.6 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.
14


4.     Investments and Fair Value Measurements
The Company's total cash, cash equivalents and marketable securities as of September 30, 2022 and December 31, 2021 consisted of the following:
As of September 30,As of December 31,
20222021
(in thousands)
Cash and cash equivalents:
Cash$42,673 $134,774 
Money market funds45,224 31,294 
Total cash and cash equivalents (1)
$87,897 $166,068 
Marketable securities:
U.S. Treasury securities$327,868 $184,946 
Corporate notes and bonds84,342 11,327 
Commercial paper6,498 124,089 
Asset-backed securities6,464 21,576 
Municipal securities 2,250 
Foreign government and supranational securities19,876 17,607 
Total marketable securities, current (2)
$445,048 $361,795 
U.S. Treasury securities 239,528 
Corporate notes and bonds152,773 197,298 
Asset-backed securities31,077 77,142 
Municipal securities2,216 2,312 
Foreign government and supranational securities 12,631 
Total marketable securities, non-current (3)
$186,066 $528,911 
Total marketable securities$631,114 $890,706 
Total cash, cash equivalents and marketable securities$719,011 $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.
15


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 September 30, 2022 and December 31, 2021:
As of September 30, 2022
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair
Value
(in thousands)
U.S. Treasury securities$333,851 $ $(5,983)$327,868 
Corporate notes and bonds242,536  (5,421)237,115 
Commercial paper6,498   6,498 
Asset-backed securities37,938  (397)37,541 
Municipal securities2,323  (107)2,216 
Foreign government and supranational securities20,070  (194)19,876 
Total available-for-sale investments$643,216 $ $(12,102)$631,114 
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 bonds209,550  (925)208,625 
Commercial paper124,098  (9)124,089 
Asset-backed securities98,857  (140)98,717 
Municipal securities4,577  (15)4,562 
Foreign government and supranational securities30,306  (68)30,238 
Total available-for-sale investments$892,948 $1 $(2,243)$890,706 
There were no material realized gains or losses from sales of marketable securities that were reclassified out of accumulated other comprehensive (loss) income into investment income during the three and nine months ended September 30, 2022 and 2021.
There were 19 securities in a continuous loss position for 12 months or longer as of September 30, 2022. No securities were in a continuous loss position for 12 months or longer as of December 31, 2021. Investments are reviewed periodically to identify possible other-than-temporary impairments. No impairment loss has been recorded on the securities included in either of the periods as the Company believes that the decrease in fair value of these securities is temporary. The Company does not intend to sell the impaired securities, nor is it more likely than not that the Company would be