Good afternoon. My name is Krista, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Fastly Fourth Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. And I would now like to turn the conference over to Vernon Essi, Investor Relations at Fastly. Vern, please go ahead.

Thank you, and welcome everyone to our fourth quarter 2023 earnings conference call. We have Fastly CEO, Todd Nightingale and CFO Ron Kisling with us today. The webcast of this call can be accessed through our website, fastly.com. It will be archived for one year. Also, a replay will be available by dialing 800-770-2030 and referencing conference ID number 754-3239 shortly after the conclusion of today's call. A copy of today's earnings press release, related financial tables, and investor supplement, all of which are furnished in our 8K filing today, can be found in the investor relations portion of Fastly's website. During this call, we will make forward-looking statements, including statements related to the expected performance of our business, future financial results, product sales, strategy, long-term growth, and overall future prospects. These statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected or implied during the call. For further information regarding risk factors for our business, please refer to our filings with the SEC, including our most recent quarterly report filed in Form 10-Q, and our fourth quarter 2023 earnings release and supplement for discussion of the factors that could cause our results to differ. Please refer, in particular, to the section entitled 'Risk Factors'. We encourage you to read these documents. Also note that the forward-looking statements on this call are based on information available to us as of today's date. We undertake no obligation to update any forward-looking statements except as required by law. Also during this call, we will discuss certain non-GAAP financial measures. Unless otherwise noted, all numbers we discuss today, other than revenue, will be on an adjusted non-GAAP basis. Reconciliations with the most directly comparable GAAP financial measures are provided in the earnings release and supplement on our investor relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Before we begin our prepared comments, please note that we will be attending two conferences in the first quarter, the 2024 Raymond James Institutional Investor Conference in Orlando on March 4 and the Morgan Stanley Technology Media and Telecom Conference in San Francisco on March 6. With that, I’ll turn the call over to Todd.

Thanks, Vern. Hi, everyone, and thanks so much for joining us today. First, I will give a quick summary of our financial results and fourth quarter highlights. I will then provide an update on our go-to-market efforts, customer acquisition, and product developments before I hand the call over to Ron to discuss our fourth quarter financial results and guidance in detail. I'm pleased to report that we closed out 2023 with revenue of $506 million, representing 17% year-over-year growth and coming in above the original range of $495 million to $505 million that we guided to one year ago. We reported record fourth quarter revenue of $137.8 million, which grew 15% year-over-year and 8% quarter-over-quarter. This result came in at the lower end of our fourth quarter guidance range, driven by weaker-than-anticipated international traffic, offset by seasonally strong live streaming and gaming activity. Most quarters, we set a new traffic milestone at Fastly, but this quarter was special. For the first time, the Fastly platform handled more than 100 terabits per second on November 8th. As part of the celebration of hitting this milestone, we've decided to retire the live traffic gauge on our website. Its original intent was to showcase the viability of the Fastly platform to prospective customers as Fastly was just starting out. Obviously, we've outgrown the need for this tool and will celebrate its retirement. Our customer retention efforts were stable in the fourth quarter with our LTM NRR at 113%, down slightly from Q3's 114%. Our total customer count in the fourth quarter was 3,243, which increased by 141 customers compared to Q3 and increased by 181 customers year-over-year. Enterprise customers totaled 578 in the quarter, an increase of 31 from Q3, representing the highest level of sequential growth since we acquired Signal Sciences in 2020. Our new packaging channel program and a renewed demand generation focus are driving a change in the velocity of customer acquisition at Fastly, and this is finally starting to show up in these disclosed customer accounts. As these customers grow with Fastly, they will fuel our revenue growth for years to come. This customer growth is also diversifying our revenue among verticals, which helps us optimize traffic across our fleet, yielding higher profitability. Our sales team has been energized by our recent success with large customer wins. Of the 31 new enterprise customers this quarter, 19 were net new to Fastly. In addition, our average enterprise customer spend was $880,000, up 7% on a year-over-year basis. While these results demonstrate success in expanding wallet share with existing customers and driving customer acquisition, our journey toward expanding these efforts with a focus on product, marketing, and go-to-market initiatives has just begun. Our marketing team is elevating Fastly's brand with an eye towards efficient spending. This involved clever marketing campaigns at trade shows as well as digital ad campaigns to drive demand generation. We're closer than ever to delivering complete platform unification for our customers, allowing a far smoother cross-sell and onboarding experience with the simplicity of a single click. This will dramatically improve the customer journey in 2024, and we expect to see gains in our customer retention and expansion efforts. In the fourth quarter, we continued our momentum in landing key new logo wins in strategic expansion verticals. Our sales teams are winning new logos in these expansion verticals with pre-built use cases. One great example of this is in social media, where we serve some of the largest players in the space and have recently won a handful of follow-on logos in this area. This is highlighted most recently by BeReal and their new authentic approach to social media. BeReal chose Fastly due to the power of our platform and its unique ability to quickly scale for low-latency traffic patterns. Members of my senior staff love this platform. We're happy to have them on board. This has also led to the winning of a social media-based shopping application that is rapidly growing, leveraging our expertise in that space as well. Alongside social media, we added to our list of logos with one of the premier dating apps and are excited to pursue other dynamic traffic opportunities in similar mobile applications. We continue to penetrate new sub-verticals in e-commerce. For example, in live auctions, we recently won Phillips Auctioneers, which was a follow-on win to Sotheby's, making us a strong partner for live auctioning and its unique e-commerce website content requirements. In the travel and leisure space, we continue to penetrate the gaming sub-vertical. In addition to Valleys, we added another major player in this space. And these new verticals serve more than just grow our top line. They diversify our traffic load and provide Fastly with smoother network and compute demand. This leads to higher infrastructure utilization and ultimately gross margin improvement. We continue to see a tailwind from vendors who exited the space. MoxiWorks, a tech platform for real estate agents and brokers, is a great example of how we capitalize on this disruptive environment. We recently published our new annual global cybersecurity report, The Race to Adapt, uncovering the impacts of cyber-attacks on leading businesses across the globe and how 76% of businesses surveyed are planning to increase their cybersecurity budgets in 2024. We continue to expand our security offerings to help customers counter these new threats and meet this growing demand. Fastly was also named a leader in the Forrester Wave Edge Development Platform's Q4 2023 report, highlighted by Fastly's compute platform receiving the highest possible score of five out of five in 22 criteria, including vision, innovation, roadmap, pricing flexibility, and transparency. It warms my heart that Forrester stated in its report, 'Fastly is an excellent fit for enterprises seeking to extend their capabilities from the public cloud with a highly performant and secure edge platform.' This is exactly what Fastly can deliver. And if any enterprises out there are listening and want to extend their capabilities to the edge, please give us a call. We continue to make strong improvements in our gross margins, which was 56.9% in 2023, up 330 basis points over 2022. In the fourth quarter, our gross margin was 59.2%, a 220 basis point increase year-over-year. And note that we recognized a one-time $2.8 million true-up payment that benefited the quarter. Ron will share more details with you in a minute, but I'm extremely pleased with this result, as our gross margin with or without the true-up payment hasn't been this high in almost three years. And while we were within striking distance of 60% in the quarter, we do hope to produce direct hits above 60% in 2024. Our team executed on controlling our variable cost of revenue, especially with lower bandwidth costs compared to the third quarter on a relatively healthy traffic mix. Our operating loss was $37 million in 2023, less than half of the $76 million operating loss in 2022, and better than the original $53 million to $47 million operating loss guidance provided a year ago. In the fourth quarter, our operating loss was only $2.3 million, coming in better than our guidance of $10 million to $6 million. Additionally, we posted positive net income in the fourth quarter for the first time since Q2 2020. Financial discipline and rigor continue at Fastly, and this quarter showcases what is possible as we stay focused on this. Ron will explain our outlook and guidance in more detail, but as you can tell from our OpEx spend, we are readying our model to leverage revenue growth and improve our cash flow in 2024. At the end of the fourth quarter, we brought on Kip Compton, our new Chief Product Officer. Kip brings to Fastly 25 years of senior leadership experience driving innovation, most recently as the SVP of Strategy at Cisco Networking. In his various roles, Kip has directed strategy, technology, and investment, and has even built a CDN for a large media organization at a prior company. Under Kip's leadership, we will continue to move our product roadmap towards a more complete platform strategy, focusing on unifying, strengthening, simplifying, and always expanding Fastly's edge platform. In the fourth quarter, we introduced multiple new features on our WAF, including agent auto-update, a simulator for debugging and testing, an anomaly signal to detect out-of-band domain requests, and simplified attack signal thresholds. One feature I want to highlight is our plugin for HashiCorp Vault. Specifically, the plugin allows customers to seamlessly access HashiCorp's Vault to store keys for customer sites and rotate or place from Vault when needed. We released our observability page, which allows customers to monitor Fastly delivery and compute services via collections of metrics and logs. All of this can be viewed in customizable dashboards to give our customers more insight into their inventory of products and features with Fastly and those that are available for them to buy. We introduced our bot mitigation solution and limited availability to select customers, and we were very encouraged by the response and the potential. We'll discuss this further with the investment community next quarter. Our new packaging motion gained momentum in 2023 and sets us up well for customer acquisition in 2024. I'm pleased to share with you that more customers purchased packages from Fastly in the fourth quarter than the first nine months of 2023 combined. The success of packages gives customers reliable billing and shows their confidence in Fastly by signing up for longer-term commitments. Moving on to our channel partner development, our growth continues. In 2023, deal registration more than tripled compared to 2022, and we grew our partner engagement by over 65%. These partners include WWT, Presidio, GuidePoint Security, and FHI. I'm very pleased with the 2023 results, but I'm even more excited about the opportunities in 2024. We established our annual guidance of 16% growth to incorporate macro uncertainties that we are, of course, targeting to outperform with continued financial rigor, strong innovation velocity, strategically lowering the friction of our go-to-market efforts, and streamlining both our employee experience and our customer experience. Organizations around the world invest incredible amounts of time and resources building best-in-class digital experiences, only to see the value of them compromised by having to trade-off between performance, safety, and personalization. The solution to this has to be built on the edge, and it has to leverage all of the benefits that a best-in-class edge cloud platform brings. At Fastly, we deliver that platform. We partner with our customers to deliver the best possible end-user experience, fast, safe, and engaging without compromise.

Thank you, Todd. And thanks everyone for joining us today. I'll first discuss some housekeeping items. Then I'll discuss our business metrics and financial results. And lastly, I will review our forward guidance. Note that unless otherwise stated, all financial results in my discussion are non-GAAP based. We are always focused on providing the most useful business metrics that help investors understand the fundamentals of our business and our progress toward our goals. Beginning with the first quarter of 2024, we will discontinue disclosing quarterly NRR and DBNER, as well as our market, countries, and bandwidth statistics. We believe these were used infrequently by the investment community and were not particularly helpful in understanding our business. Finally, we will begin disclosing revenue by product area, split between core, growth, and emerging products. Specifically, the core segment includes our delivery and network services. The growth segment includes our security offering. The emerging segment includes our compute and observability offerings. Again, these will commence with our next quarter earnings release and we'll provide further details at that time. Turning to our financial results, revenue for the fourth quarter increased 15% year-over-year to $137.8 million, coming in at the lower end of our guidance range of $137 million to $141 million. Revenue from Signal Sciences products was 13% of revenue, a 25% year-over-year increase, or 24% increase excluding the impact of purchase price adjustments related to deferred revenue. Also, note that we calculate growth rates off the actual results with the percentage of revenue rounded to the nearest whole percent. In the fourth quarter, we saw traffic expansion at our major customers, coupled with healthy upsell and cross-selling activity. However, we saw weaker international traffic in the fourth quarter, a reversal from the strong international traffic we saw in the third quarter, resulting in lower revenue growth but higher gross margins, which I'll touch on in a moment. Our annual revenue was $506 million, representing 17% growth over 2022, and coming in above our original guidance range of $495 million to $505 million provided one year ago. For the fourth quarter, RPO was $245 million, down 1% from $248 million in the third quarter of 2023, and up 24% from $198 million in the fourth quarter of 2022. As our consumption-based revenue model is now being augmented with predictable revenue packages, we believe that RPO will become a more meaningful indicator of the health of our business in 2024. As Todd shared earlier, we had 3,243 customers at the end of the fourth quarter, of which 578 were classified as enterprise, a net increase of 31 compared to a decrease of 4 in the third quarter, and an increase of 22 in the fourth quarter of 2022. Our trailing 12-month net retention rate was 113%, down from 114% in the prior quarter, and 119% in the year-ago quarter. Our annual revenue retention rate, which we reported fiscal year-end, was 99.2% for 2023, up from 98.9% in 2022. These figures continue to reflect our very low churn and healthy customer retention dynamic. Enterprise customers accounted for 92% of total revenue on an annualized basis in both Q4 and Q3, with average enterprise customer spend of $880,000, up 3% from $858,000 in the previous quarter, and up 7% from $822,000 in Q4 of last year. Our top 10 customers comprised 40% of our total revenues in the fourth quarter of 2023, flat with their contribution in Q3, reflecting in part the impact of vendor consolidation and expansion of traffic in some of our largest customers, which also drove one customer to account for more than 10% of revenue in the fourth quarter. I will now turn to the rest of our financial results for the fourth quarter. Our gross margin was 59.2% in Q4, compared to 55.9% in Q3 of 2023, well above our expectations of a 100 basis point sequential increase. As I noted in my discussion of fourth quarter revenue, we saw weaker international traffic in the fourth quarter, a reversal from the stronger international traffic in the third quarter, which resulted in lower revenue growth, but had a positive impact on our gross margins. Our team also executed on controlling our variable cost of revenue, especially with lower transit costs, due to successful renegotiation of our transit rates in several international markets. As Todd explained, we recognized the one-time $2.8 million true-up payment that benefited gross margins in the quarter. Had this benefit not been reflected, gross margin would have been 58.3% in the fourth quarter. Our 2023 annual gross margin was 56.9%, up 330 basis points over 2022's gross margin of 53.6%. Discounting the benefit of the $2.8 million true-up in the fourth quarter of 2023, and the $3.3 million true-up in the fourth quarter of 2022, the gross margin improvement would have been 350 basis points year-over-year. I'm very pleased with the cross-functional work that took place in aligning our network capacity investments with expected traffic demand, our cost control efforts in bandwidth transit costs, and our progress in pursuing beneficial peering relationships. While we have made significant gains in our cost of sales, there is still room for further improvement as we scale, and we remain committed to demonstrating an 80% incremental gross margin in our financial model going forward. Moreover, the 330 basis point improvement in gross margin year-over-year, coupled with 17% revenue growth, resulted in gross profit growing by $56 million, or 24% over 2022. Operating expenses were $84 million in the fourth quarter, a 5% increase compared to Q4 2022 and sequentially flat with the third quarter. Our operating expenses were lower than expected due to continued cost management efforts and fourth-quarter hiring coming in slightly below our expectations. Recall that our sales and marketing expenses in the third quarter were impacted by one-time marketing expenses related to events and fees, which benefited the sequential comparisons and OpEx. This favorability, combined with gross profit ahead of expectations, resulted in an operating loss of $2.3 million in the fourth quarter, exceeding the high end of our operating loss guidance range of $10 million to $6 million. For 2023, our total operating expenses were $325 million, up 5% from $308 million in 2022. Given our revenue and gross profit growth rates of 17% and 24%, respectively, we were able to leverage our lower OpEx growth to reduce our operating loss margin by more than half, from 17.7% in 2022 to 7.2%. The majority of our OpEx progress was due to company-wide financial rigor we've discussed over the course of the year, including notable larger items such as reducing duplicative or unnecessary SaaS and IT tools in our organization. In the fourth quarter, we reported a net profit of $1.7 million, or $0.01, per diluted share, compared to a net loss of $9.5 million, or an $0.08 loss per basic and diluted share in Q4 2022, demonstrating our ability to drive towards sustainable profit in our business. Our adjusted EBITDA was positive in the fourth quarter, coming in at $11.5 million, compared to negative $0.1 million in Q4 2022. I'm pleased to report that our full-year EBITDA for 2023 was positive at $15.5 million, compared to negative $32.9 million in 2022. Turning to the balance sheet, we ended the quarter with approximately $329 million in cash equivalents, marketable securities, and investments, including those classified as long-term. We continued our repurchase of convertible debt principal in the fourth quarter, resulting in a reduction of our convertible debt principal balance by more than 50% from $713.8 million at the end of 2022 to $346.5 million at the end of 2023. Specifically in the fourth quarter, we repurchased $130.9 million in principal amount of our convertible notes for $113.6 million in cash, or approximately $0.87 on the dollar. Coupled with a larger repurchase back in May, our 2023 repurchases totaled $367.3 million in principal for $310.5 million in cash, or approximately $0.85 on the dollar. Our free cash flow for the fourth quarter was negative $21.9 million, a $2 million sequential decline from negative $19.7 million in the third quarter. This decline was primarily driven by an increase in our capital expenditures compared to the third quarter. Our 2023 free cash flow improved by $113 million over the prior year to negative $59 million from negative $172 million in 2022. This year-over-year improvement was driven by approximately a $70 million increase in cash from operations and a $42 million reduction in advanced payments for equipment. Our cash capital expenditures were approximately 11% of revenue in the fourth quarter and totaled 8% for 2023, coming in at the high end of our guidance of 6% to 8% of revenue. As we shared on our Q3 call, we accelerated certain 2024 deployments into late 2023. As a reminder, our cash capital expenditures include capitalized internal use software. For 2024, we anticipate our cash CapEx will be in the 6% to 8% range, with deployments to be weighted toward the first half of the year. I will now discuss our outlook for the first quarter and full year 2024. I'd like to remind everyone again that the following statements are based on current expectations as of today and include forward-looking statements. Actual results may differ materially, and we undertake no obligation to update these forward-looking statements in the future except as required by law. Our first quarter and full-year 2024 outlook reflect our continued ability to deliver strong top-line growth via improved customer acquisition and upsell and cross-sell expansion in our existing customers, driven in part by new and enhanced products. Our revenue guidance is based on the visibility that we have today. Similar to Q1 2023, we expect revenues to decline sequentially from our seasonally high Q4 results due to lower traffic patterns and the absence of the $2.8 million take-or-pay true-up recognized in the fourth quarter. For the first quarter, we expect revenue in the range of $131 million to $135 million, representing 13% annual growth at the midpoint. We continue to be very disciplined in our network investment and cost of revenues, which contributed to our fourth-quarter gross margins being approximately 200 basis points better than we initially expected. We typically see a seasonal decline in gross margins in the first quarter with improvement in the second half as we build capacity for peak traffic. For the first quarter, we anticipate our gross margins will decrease approximately 100 basis points relative to the fourth quarter, plus or minus 50 basis points. As we mentioned previously, our Q4 operating loss was moderately better than our earlier expectations on continued cost management and slightly slower hiring. Our first quarter operating results will reflect the impact of the seasonal decrease in gross margins and the impact to our operating expenses of first-half payroll tax increases. As a result, for the first quarter, we expect our non-GAAP operating loss to increase to a loss of $14 million to $10 million, and our non-GAAP net loss to be $0.09 to $0.05 per share. For calendar year 2024, we expect revenue in the range of $580 million to $590 million, representing an annual growth rate of 16% at the midpoint. This guidance reflects our expectation for quarter-over-quarter acceleration in revenue growth through the year driven by new customer acquisition and the continued expansion of existing customers. We expect to continue to see gross margin improvement in 2024 and to maintain our spending discipline while increasing our investment in go-to-market and product development. We anticipate our 2024 gross margins will improve by approximately 200 basis points, plus or minus 100 basis points relative to 2023, and to exit the year with gross margins at 60% or better. As a result, we expect our non-GAAP operating loss to improve to a range of $20 million to $14 million, reflecting an operating margin of negative 3% at the midpoint, an improvement of over 50% over 2023's operating loss margin of 7.2%, and by over 80% over 2022's operating loss of 17.7%. We expect our non-GAAP net loss per share to improve to $0.06 to break-even, reflecting the improvement in our operating loss expectation. And we expect free cash flow to be break-even in 2024 compared to negative $59 million in 2023. Before we open the line for questions, we'd like to thank you for your interest and support in Fastly.

Thank you. Your first question comes from the line of Fatima Boolani from Citi. Please go ahead.

Good afternoon. Thank you for taking my question. I wanted to ask about the backlog performance in the quarter. You did have some prepared remarks around it. But it really isn't typical to see a sequential decline in backlog. And certainly, we couldn't find an instance of this in our model going back several years. So I was hoping if you could unpack with a little bit more detail as to that sequential decline. And to the extent some of the package momentum, how is that really going to help blunt some of these impacts? And then I have a quick follow-up as well, please. Thank you.

Yes, on the RPO, what we have seen at the beginning of the year was a pretty big increase. We've been focusing on building multi-year commitments. What that drove was when you do a one or two-year commitment, larger amounts. And so those were with some of our largest customers. And so as those burned down, you're going to see a little more quarter-to-quarter, I guess, fluctuation as they come down. And over time, I think looking at it on a year-over-year basis is probably going to be important, particularly given the Q4 being our highest quarter. You're going to see some of the biggest usage of those commitments during the fourth quarter.

Yes, Fatima, I think it's a great question. I think the point on RPO is right. I think we're going to see some choppiness in that number. But the package momentum has been great. The packaging is just one way that we drive RPO. Large annual contracts with an annual commitment, like the one that we had a true-up payment for in Q4, that's the other way that we see RPO driven up. But on packaging, it really was an amazing result in Q4, which gives us a ton of confidence, not just in the mid-market side of the house, but even in large enterprise accounts. And I think that really demonstrates that there's a desire in the market for reliable pricing and a simpler, all-in construct for Edge Cloud that resonates up and down the market. So we're going to continue to invest there, for sure.

I appreciate that. And Todd, since I have you, can you speak to any succession planning or any updated thought processes in play with regards to the Chief Revenue Officer seat? I understand now Brett had left the company later in the quarter. So just wanted to get a sense of where the management team is at with respect to filling that vacancy. And to the extent that maybe that had an impact on the quarter as well, if you can speak to that. Thank you very much.

I don’t believe it had any impact on the quarter. Brett left the company very late in the quarter, and he left a strong sales team in place both regionally and account-wise, as well as in sales operations. We are pleased with the team’s performance. However, we recognize that the Chief Revenue Officer role is crucial for the company, especially since we operate under a true CRO model at Fastly that encompasses both sales and customer success. We are being very careful in selecting the best candidate for this position, and we are currently working with one of the top recruiting agencies specializing in CRO roles. We have also started discussions with key candidates already.

Thank you.

Hey team, can you hear me?

Yes.

Okay, perfect. Sorry about that. I guess I just want to dig a little bit into expectations and visibility for next year. I think, candidly the guidance came in a little bit late versus a street expectation. So just want to hear, where you're seeing both strength for this coming year. Is it in security, compute, and maybe where is the weakness coming from? Of course, outside of the macro comments and just more specific to Fastly.

Yes, totally. From a portfolio point of view, pretty happy, actually. The way the mix is evolving and the excitement around compute continues to build. So from that point of view, we've been pretty steady. And I think the progress is really good. I think the macro is a big deal for us, for sure. And we want to make sure that we are being conservative and taking into account that uncertainty. We, of course, have a desire to overachieve on that guide, but we know that there is macro risk, just like all of you do. That being said, the new customer acquisition motion and the engine that we've been building here, not just with packaging, but with the efforts in channel, the focus on demand generation, and especially really creative demand generation engine being built right now in the marketing team, we are really happy to see the indicator that that trajectory is changing. And I believe that is the real key to moving the needle and driving up that guidance in future reports. So that's what we'll be focusing on.

And just some follow-up questions for you, Todd. On the macro commentary, did anything get worse in last quarter versus 3Q? I mean 3Q is really kind of the first quarter we heard from you guys, macro, a lot of your competitors and the rest of software started talking about macro much earlier. So just wondering if we should view this as hitting Fastly a little bit behind the ball compared to the industry, or if something has materially changed from your perspective?

No, I think it was pretty much as we saw last quarter. A handful of deals may be taking a little longer than we thought, a little bit of deal elongation. But now that we are seeing some of it, just like we saw last quarter, we saw this quarter again, we wanted to make sure we built it into the guide and not get ahead of our SKUs for 2024.

New firm, be a household name any day. So you've talked about bringing on some products that are more recurring revenue in nature, maybe walk us through those and how that's going to fit into the revenue mix going forward. And then kind of a follow-up, where are you with sort of the converged ability to sell the converged both delivery and signal sciences with the sales team? Thanks.

Yes, great. We should mention all of our portfolio, it's recurring revenue. It's just on a utility billing motion, largely. And, or it has traditionally been on a utility build motion, which is, I think, amazing for large and especially particularly sophisticated users who want to lean in and control their usage bite for bite. But for folks who are looking for a more turnkey solution and perhaps a more holistic strategic partner, it can be a great opportunity just to buy edge solutions like ours as a SaaS product, a straight cash style build with predictable regular recurring revenue and that's what our packages are. So all the discussion mentioned in the report here on the new packaging model, it's built around that model. Predictable billing, monthly commit, regular recurring revenue. It gives our sales team the opportunity to easily cross-sell from one product line to the next to continue to land and expand and grow the customer over time, but it gives the customer the sort of ease of use financially of knowing what their bill will be every month. And so that's been very successful for us so far. They've been in the market for about a year, and we're pretty happy with that result. Sorry, Frank, did I miss the second part of your question? I just want to make sure I got the second part.

I'm just going to add on the RPO, the mix of which of those customers when we sign new enterprise customers that actually have a commit, not all of our customers have a commit to the extent they do a consumption-based deal with no commit, it's not going to show up in the RPO. So that is also something to think about that there's not 100% translation for new customers into the RPO.

Thank you for taking my questions. I have a couple to ask. First, regarding the new customer figures, it's encouraging to see strong enterprise capture numbers. However, I'm curious why that hasn't translated into accelerated RPO. Were the initial sizes of these customers as large as anticipated, or were they possibly smaller deals? Secondly, in terms of the pipeline, have you reached a new, consistent level of enterprise additions on a quarterly basis?

Yes, that's a great question. Regarding the addition of new customers and their average size, I can't provide specific details about the size of our new enterprise customers, but I can say that the average size of our enterprise customers has increased. These new enterprise customers are typical of what we expect.

Yes, got it. And then if I look at the overall guide, just the acceleration that you're looking for throughout the year. The quarter was a bit below Q1 looks a bit below, but the year kind of brackets the consensus on the top line and it implies acceleration. What's the visibility to that? What do you have to assume there? What are you assuming in terms of the international weakness thus far? Does that have to improve materially? Do you assume continued international weakness to hit that back half of the year? Just give us maybe a little more comfort where you're getting your conviction later in the year.

Yes. That's a great question. And we looked at that very carefully because I guess we knew we had this question. We project the revenue down to the account level for a very large number of accounts and look at the trend across the board. And this is the best projection we've got. I feel very, very confident in it. As far as the international traffic goes, if we saw another surge in one of those more high-priced regions, you'd expect that to be a tailwind to revenue in any quarter that had happened. If we saw a particular large strategic new customer come on board, we could again see a tailwind. As far as the Q1 number versus the rest of the year number, our projection is for the full year, and we're trying to track it very, very carefully. The biggest thing you're seeing in Q1, I think, is the step down from the one-time true-up payments from Q4 to Q1, which our model obviously takes into account. And so we see that, but the driver of the continued growth rate through the rest of the year, I think it is, in fact, sort of like the baseline for our projection.

Wonderful. That’s a new way to pronounce my name. This is Rishi Jaluria from RBC. Thanks so much for taking my question. Maybe I want to start with just looking a little bit closer at Signal Sciences, we saw a little bit of a slowdown after a few quarters of acceleration. I know there's obviously comps and scale and everything like that. But just any color on what drove that? And how we should be thinking about that growth going forward? And then I've got a quick follow-up.

Yes, that's a great question. We typically see a slight increase in delivery in the fourth quarter, which can lead to a minor slowdown in security growth. However, I will verify this, but there hasn't been a significant change observed. Overall, performance seems to be steady. It's possible we have some hold-up from customers awaiting the unified experience being released this quarter, which is promising, but we remain optimistic about the security aspect of the business this quarter. Yes. We've had some really solid feedback. In fact, we had a couple of customers actually make purchases in Q4 even though it was just in early availability. That was a nice confidence. I think it showed a maturity in our beta motion. I'll tell you the biggest piece of feedback that I've heard is just a very broad interest in this technology, and that's been great and a ton of interest in expanded feature sets. We are starting to look at privatizing some private access tokens as part of that solution as well because we've gotten just so much interest in that side of the house. I think there's a ton of revenue opportunity here for our security portfolio on the bot side, and we're going to be pushing that. I think even as we go GA this quarter, we're going to continue to add functionality here probably for years to come. There's a ton of interest and a ton of innovation here. Thanks, everyone, for joining us on Valentine's Day. I want to thank our employees, customers, partners, and investors. We remain focused on execution, bringing lasting growth to our business and delivering value to our shareholders. Let me close by saying, I believe digital experiences will drive the mission and define the success of almost every organization everywhere. And Fastly will have a significant impact on the way digital experiences are built and delivered around the world. Our customers have a real passion for Fastly solutions, and our employees have a real enthusiasm for Fastly's mission. To make the Internet a better place where all experiences are fast, safe, and engaging. Thank you so much.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.