Good afternoon. My name is Tiffany, and I will be your conference operator today. I would like to welcome everyone to the Fastly Fourth Quarter 2025 Earnings Conference Call. I will now turn the conference over to Vern Essi, Investor Relations at Basle. Please go ahead.

Thank you, and welcome, everyone, to our fourth quarter 2025 earnings conference call. We have Fastly's CEO, Kip Compton, and CFO, Rich Wong with us today. The webcast of this call can be accessed through our website, fastly.com, and will be archived for 1 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 supplements, all of which are furnished in our 8-K filing today, can be found in the Investor Relations portion of Fastly's website along with the investor presentation. 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 annual report filed on Form 10-K and quarterly reports filed on Form 10-Q filed with the SEC and our fourth quarter 2025 earnings release and supplement for a discussion of the factors that could cause our results to differ. Please refer, in particular, to the sections 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. 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 to 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 during the first quarter, we will be attending the Raymond James 47th Annual Institutional Investors Conference in Orlando on March 2. Now I'll turn the call over to Kip.

Thanks, Vern. Hi, everyone, and thank you for joining us. When I became CEO 7 months ago, I shared a vision to accelerate our growth and drive towards profitability through disciplined execution. Thanks to our team's strong performance, that vision is becoming a reality. Our exceptional Q4 results reflect this reality as we exceeded expectations across the board. We delivered our fourth consecutive quarter of revenue acceleration, closing out the year with record revenue of $173 million in the fourth quarter. This represented 23% annual growth, the highest in over 3 years and exceeded the top end of our guidance. Our stronger-than-expected top-line results drove strong incremental flow-through. This resulted in record gross margins of 64%, demonstrating the operating leverage and efficiency in our business. This enabled our operating margin and operating income to both reach all-time highs in absolute dollars and as a percentage of revenue, leading to our fourth straight quarter of positive free cash flow. Our stellar Q4 results also capped off a strong 2025, marking our first profitable fiscal year. Our teams drove this success with discipline, focus and execution and we are excited to carry this momentum into 2026. In the fourth quarter, Network Services grew 19% year-over-year, outpacing market growth. This is attributable to stronger-than-expected event performance and larger customers directing traffic to our platform due to their prioritization of network stability, performance and resilience. Our go-to-market motion is operating with increased rigor and clarity. At the same time, our new product launches, especially in security, have allowed us to deliver more business outcomes for our customers, enabling us to grow faster than the market. Security revenue growth accelerated to 32% year-over-year, up from 30% in the third quarter and notching another record high. As we discussed on previous calls, we are focused on building a more comprehensive and ever-growing suite of security products aligned with customer requirements. This enables a stronger security-led sales motion, supplementing our well-established differentiation and performance and better positioning Fastly to engage with customers on their critical security needs, all while providing an additional entry point into high-value, long-term customer relationships. In Q4, we continued investment in our platform strategy to drive multi-product adoption and build upon our cross-sell momentum. We're investing heavily in security and resilience with the latter becoming top of mind for customers in recent months. These efforts drove meaningful feature launch momentum highlighted by several fourth quarter releases, including API inventory, enabling customers to review, catalog, and manage APIs to identify ownership, prioritize proactive optimization and accelerate incident response. API inventory builds upon API discovery launched in Q3 of 2025 to expand Fastly's API security and management offerings. We're proud of the remarkable progress in building out our API suite. And in the fourth quarter, Gartner Peer Insights recognized Fastly with a 2025 Customer's Choice Award for cloud web application and API protection. We are the only company to have earned this recognition 7 straight years. Also now available are custom dashboards and alerts; all customers across the Fastly platform can tailor at-a-glance insights that they need for intelligent execution and access the actual alerts that they need to accelerate incident response. We also launched an AI assistant in beta, this context-aware console agent feature accelerates faster platform adoption by enterprise software engineering teams with step-by-step guidance and personalized recommendations. Our go-to-market team has focused on customers and verticals best aligned to our platform strength, particularly performance and resiliency. These efforts were reflected in balanced revenue growth across product lines, geographic regions, and customer segments in 2025, positioning us to drive continued growth in 2026. Given this momentum, our go-to-market teams are focused on accelerating customer acquisition to further support our future growth. Our go-to-market focus also enabled us to accelerate upsell and cross-sell engagement, maximizing value with our largest customers. This is evidenced by several recent expansions and new customers where the Fastly platform addresses mission-critical performance and security requirements for our customers. For example, a Fortune 500 restaurant chain recently selected the Fastly platform to secure and deliver their application traffic by displacing a legacy provider; they simplified their architecture and reduced management overhead. This is also a case where performance mattered. After switching to Fastly, the customer experienced their best Digital Day on record. A Fortune 500 home retailer expanded their use of the Fastly platform, displacing their security incumbent after a rigorous review of our next-gen WAF and managed security service. In addition to a stronger security posture, because we offloaded complex traffic control management to the Fastly platform, freeing their teams to focus on innovation. A leading cloud observability and security provider expanded their use of the Fastly platform to include Fast Compute as well as Fast Security portfolio. Our platform enables them to execute complex workloads and rapid product iterations while maintaining granular data protection. A leading print-on-demand marketplace recently expanded its use of the Fastly platform to include Fastly Bot Management and Fastly Compute. They required the high granularity visibility and control that our platform provides to manage complex traffic and security requirements. As the Internet moves into the age of agentic AI, it's clear that the edge will play a pivotal role. Our infrastructure is designed to power this edge intelligent layer, optimizing authorized AI agents and blocking abuse. As one of the leading edge cloud providers, Fastly is well-positioned to capitalize on this transition. We see AI increasingly as a tailwind for our business with increasing agentic AI traffic, AI bot management opportunities, and AI workloads running on our platform. As we look to our 2026 guidance, we are leaning into our momentum and see continued upside in the business. Our first-quarter and 2026 revenue growth guidance of 18% and 14%, respectively, reflect confidence that our business will outpace market growth while maintaining a prudent approach to longer-term visibility, especially amid greater macroeconomic and geopolitical uncertainty. Rich will now walk through our financial results and 2026 guidance in more detail. Rich, over to you.

Thank you, Kip, and thank you, everyone, for joining us today. Before diving into the financials, I want to say that I'm really excited to wrap up my second quarter at Fastly and build on our results. We continue to accelerate our revenue growth momentum while demonstrating strong incremental revenue flow-through to drive profitability. This is driven by our strong focus on our go-to-market execution, our broader product portfolio, especially in security, and our fiscal discipline. In addition, we recapitalized our balance sheet to specifically improve our liquidity and prepare us for our next phase of growth. Now on to our Q4 and year-end results. I'd like to remind you that, unless otherwise stated, all financial results of my discussion are non-GAAP based. Revenue for the fourth quarter increased 23% year-over-year to $172.6 million, coming in above the high end of our guidance range of $159 million to $163 million. This result was a record high for Fastly and also represented the largest sequential dollar growth in the company's history. These results were driven by balanced performance across our customer mix and expanded product platform, along with continued success in our go-to-market upsell and cross-sell motions. These drivers also contributed to accelerated revenue performance throughout 2025, and we are now at an inflection point where we believe we are a strong share gainer in our markets and demonstrating consistent profit expansion of scale. Our annual revenue was $624 million, representing 15% growth over 2024. Coming in above our original guidance range of $575 million to $585 million provided 1 year ago. In the fourth quarter, Network Services revenue of $130.8 million grew 19% year-over-year. We saw healthy traffic levels in the fourth quarter due to stronger market conditions and the success of our upsell motion. Security revenue of $35.4 million grew 32% year-over-year, comprising 21% of our total revenue. This was due to the expansion of our security portfolio over the past year, coupled with the success of our cross-sell motion. Our other products revenue of $6.4 million grew 78% year-over-year, driven primarily by sales of our compute products. In the fourth quarter, our top 10 customers represented 34% of revenue, a modest increase from 32% in the prior quarter. Revenue from customers outside of 10 grew 20% year-over-year, an acceleration from 17% annual growth from our prior quarter. We were pleased to see that both cohorts accelerated their annual growth compared to the third quarter, providing balanced outperformance in the quarter. Also, no single customer accounted for more than 10% of revenue in the fourth quarter. Affiliated customers that are business units of a single company generated an aggregate of 11% of the company's revenue for the quarter. Our fourth quarter total customer count was 3,092 customers. Our enterprise customer count, which represents customers with more than $100,000 in annualized revenue in the quarter, was 1,269 customers. Given that typically over 90% of our revenue has historically been generated by our enterprise customers, we believe it is a much more meaningful metric to track our customer acquisition. For this revamp, starting next quarter when we begin reporting our Q1 2026 results, we will no longer disclose our total customer count metric on a go-forward basis. Our trailing 12-month net retention rate was 110%, up from 106% in the prior quarter and up from 102% in the year-ago quarter. The quarter-over-quarter and year-over-year increases were primarily due to revenue increases from our larger customers in prior quarters. Our last 12-month NRR closely follows our overall revenue growth rate trend. Our annual revenue retention rate, which we reported at fiscal year-end was 98.7% for 2025, a slight decline from 99.0% in 2024. We believe this metric is not as meaningful as an indicator of the health of our business as LTM NRR, and its once-a-year disclosure limits its value. As such, we will no longer report this annual revenue retention rate metric on a go-forward basis. We exited the fourth quarter with record RPO of $353.8 million, growing 55% year-over-year. The current portion of RPO was 70% of total RPO, and that balance grew 37% year-over-year. Our improved RPO is benefiting from improved go-to-market discipline with our customer onboarding, which resulted in larger upfront commitments. I will now turn to the rest of our financial results for the fourth quarter. Our gross margin was 64% in the fourth quarter, a record high for Fastly. Gross margin was 250 basis points above our guidance midpoint of 61.5% and up 650 basis points from 57.5% in Q4 2024. This outperformance was primarily due to gross margin flow-through on higher revenue due to a stronger balanced traffic mix with customers in delivery and security. Underscoring this impact, our incremental gross margin on a trailing basis calculation increased to 76% in the fourth quarter, up from 58% in the third quarter. Our gross margin for the 2025 full year was 60.9%, up from 58.8% in 2024 and also coming in 210 basis points above our original 2025 implied gross margin guidance of flat to 2024. This increase was due to better cost discipline and strategy in our cost of revenue, coupled with gross margin flow-through on higher revenue levels. Operating expenses were $89.2 million in the fourth quarter, coming in line with our guidance expectations. We are continuing our sharp focus on managing our OpEx spend while balancing our growth investments. We had an operating income of $21.2 million in the fourth quarter, coming in better than the $10 million midpoint of our operating guidance range of $8 million to $12 million. We intend to continue to drive greater leverage in our operating results as we scale our revenue. This is demonstrated by our operating margin expanding 500 basis points sequentially from 7.3% in the third quarter to 12.3% in the fourth quarter. In the fourth quarter, we reported a net profit of $20.1 million or $0.12 per diluted share compared to a net loss of $2.4 million or $0.02 per diluted share in Q4 2024. For the full year 2025, we reported a net profit of $19.7 million or $0.13 per diluted share compared to a net loss of $12.1 million or $0.09 per basic and diluted share in 2024. Our adjusted EBITDA was $35 million in the fourth quarter compared to $11.1 million in the fourth quarter of 2024. For the full year 2025, adjusted EBITDA was $77.4 million compared to $32.6 million in 2024. Turning to the balance sheet, we ended the quarter with approximately $362 million in cash, cash equivalents, marketable securities, and investments, including those classified as long term. A sequential increase of $19 million over Q3 2025. In the fourth quarter, we raised $180 million in 0% notes due in 2030 that carry a 32.5% conversion premium. We also privately negotiated cap call transactions totaling $18 million, which represent a 100% conversion premium or a share price of $23.4. We believe these capital strategy measures significantly improve our liquidity and offer greater flexibility to manage our growth and bolster confidence in our customers and shareholders. Our cash flow from operations was positive $22.4 million in the fourth quarter compared to positive $5.2 million in Q4 2024. Our free cash flow for the fourth quarter was positive $8.6 million, representing a $16.5 million increase from negative $7.9 million in the Q4 2024 quarter. For full year 2025, cash flow from operations was $94.4 million compared to $16.4 million in 2024. Our free cash flow in 2025 was positive $45.8 million compared to negative $35.7 million in 2024, coming in materially higher than our original guidance midpoint of negative $15 million established 1 year ago. Also, this represents an $81.6 million increase in free cash flow in 2025, underscoring our revenue outperformance and cost discipline, expanding our bottom line. As one of the world's leading distributed edge platforms, we continue to scale our global network to support Fastly's growth. We are closely monitoring supply chain dynamics, particularly regarding memory components, and have taken strategic actions to mitigate potential impacts. Our software-defined infrastructure is continuously improving, typically with lower capital requirements for expansion than legacy providers. This structural efficiency underpins our expanding gross margins, positioning us to stay ahead of global traffic trends while maintaining strict capital discipline. Our cash capital expenditures were approximately 8% of revenue in the fourth quarter and 9% for full year 2025. This annual spend was below our 10% to 11% expectation due to the timing of approximately $10 million in CapEx anticipated in the fourth quarter, which will now incur in 2026. Let me take a moment to update you on our CapEx plans and strategy. For starters, two quick housekeeping points. First, in the fourth quarter, we did not deploy any prepaid capital equipment as we work down the remaining balance. Also, our repayment and financial leases for equipment have terminated; we anticipate no further payments will occur for either of these categories for the foreseeable future. As a result, we wrapped up 2025 with a cleaner, simplified CapEx profile. Second, as a reminder, our cash capital expenditures include capitalized internal use software. To recap 2025, we spent 9% of revenue on cash CapEx, which represented approximately 3% in capitalized internally used software purchases, 5% in infrastructure capital equipment, and 1% was in prepaid plans. Going forward, we will focus only on the infrastructure capital expenditures with investors and remove capitalized internal use software, which is not a meaningful indicator of our capital spend. We believe this change will more accurately represent the inherent capital costs in growing our business and aligns our reporting with our peers. Note that our infrastructure CapEx is reported in our free cash flow bridge in our press release and supplement as property and equipment. For 2026, we anticipate our infrastructure capital spend will be in the range of 10% to 12% of revenue compared to 5% in 2025. As I said a moment ago, approximately $10 million of infrastructure CapEx will now occur in 2026 instead of the fourth quarter 2025, which equates to roughly 1.5% of annual revenue, impacting 2026 instead of 2025. Normalizing this timing impact, we anticipate our 2026 infrastructure CapEx will increase approximately 65% over 2025 as we run our capacity to meet our growth objectives and perform upgrades to our fleet. This spend will be front-loaded to ensure we have adequate equipment given recent supply chain constraints. I will now discuss our outlook for the first quarter and full year 2026. 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 revenue model is primarily based on customer consumption, which can lead to variability in our quarterly results. Our revenue guidance reflects these dynamics in our business and is based on the visibility that we have today. Note that in January, we finalized the deal to restructure our U.S. business, and the platform can continue operating in the United States. Our guidance going forward will incorporate our previously mentioned revenue unless specified otherwise. As Kip discussed, we saw revenue strength from successful upsell motions and share gains broadly across our customer base. A portion of this business was also driven by traffic strength that came in stronger than anticipated, and we are not anticipating seasonal strength in the first quarter. As a result, we expect revenue in the range of $168 million to $174 million in the first quarter, representing 18% annual growth at the midpoint. We anticipate our gross margins for the first quarter will be 64%, plus or minus 50 basis points. As a reminder, our gross margin performance is dependent upon incremental revenue increases or declines, as demonstrated by our improving gross margin through 2025 on accelerating revenue growth. For the first quarter, we expect a non-GAAP operating profit of $14 million to $18 million. We expect a non-GAAP net earnings per diluted share of $0.07 to $0.10. Note that for the first quarter, fully diluted share count for positive EPS will be approximately 175 million shares. As Kip mentioned, our 2026 guidance reflects confidence that our business will outpace market growth while maintaining prudence on our longer-term visibility amid greater macroeconomic and geopolitical uncertainty. For calendar year 2026, we expect our revenue to be in the range of $700 million to $720 million, reflecting annual growth of 14% at the midpoint. We anticipate our 2026 gross margins will be 63%, plus or minus 50 basis points. We expect our non-GAAP operating profit to be in the range of $50 million to $60 million, reflecting an operating margin of 8% at the midpoint, a doubling in our profitability compared to 2025's operating margin of 4%. We expect our non-GAAP net earnings per diluted share to be in the range of $0.23 to $0.29, and we expect free cash flow to be in the range of $40 million to $50 million. And finally, as I mentioned earlier, we anticipate our infrastructure CapEx to be in the range of 10% to 12% of revenue for the full year.

Your first question comes from Jeffrey Van Rhee with Craig Hallum.

Congrats on the great numbers. Just a couple of questions. First, maybe you talked about the agentic AI. Can you just expand on that a bit? What are you seeing at the edge right now with agentic AI? I mean I don't know, put some numbers on it, but just what are you seeing so far?

Thanks. We're observing significant activity related to AI on our platform, which can be categorized in several ways. Firstly, there has been an increase in traffic associated with agents, which were previously referred to as machine-to-machine. If you've used AI tools, you might notice that they tend to check more websites compared to typical usage, resulting in more traffic that is all processed through the Fastly network for our customers. We've seen a notable uptick in this area. A couple of quarters ago, we published a report detailing the statistics on this, including insights into which models are generating the most traffic—a comprehensive report is available on our website with extensive data. Additionally, we're seeing AI workloads on our platform, which manifest in various forms. We've discussed how some use cases involve very large training datasets. Our customers are also utilizing our compute edge for inference and other AI-related functions. Another example of AI benefiting our business is through AI-specific offerings, such as our AI bot mitigation. By processing all this traffic for our customers, we can assist in managing crawlers and other AI bots to allow legitimate ones through while blocking those that could be harmful. Overall, we are witnessing a strong influence of AI across multiple fronts that is positively impacting our business, and we believe the edge will play a critical role for AI in the future.

And on the traffic routing, I think you called out you saw some very strong traffic flows as customers optimized or are optimizing their traffic and selected you based on performance. Just what drove the widening of the gap in respect of performance between you and the peers to attract more traffic this quarter versus maybe in the past?

Yes, it's a great question. I mean, we've maintained a performance edge. It's the namesake of our company. It's something our teams take very seriously. I think recent events in the industry have called more attention to the value of resiliency in an edge platform. And we're very serious about that and have taken a number of architectural steps that we think enable us to deliver a more resilient platform. I think some customers have directed traffic our way because of that.

Last one for me, and I'll let somebody else jump on. The just obviously exclusive. I think last quarter, you called out an 8-figure customer. But I'm just curious, if I look at the 12-month RPOs, to what degree is that concentrated? So if I looked at the absolute dollars of 12-month ARPU increase, from Q3 to Q4, how much of that is driven by say, maybe your 3 largest customers that were signed or expanded in the quarter?

Yes. With RPO, it's kind of broad-based across a number of our customers. What we do is focus on the variety of customers; our largest enterprise, of course, historically, had not wanted to make some commitments to us. I think that what you're seeing here is a change in mentality and a shift. So now the RPO that you see is broad-based across our entire customer base, which is much smaller.

Yes. I'll just add, it's been a very deliberate and intentional part of our market strategy and in the way that we framed negotiations with all of our customers and the way that we thought about pricing and discounting across our entire customer base to encourage more revenue commitments to us. To help manage or mitigate the volatility that comes from a purely utility-based pricing model. Of course, we also, in the security side, have a lot of subscription revenue, which helps with that as well. But driving RPO growth and really just committed revenue overall is a major part of our strategy in terms of managing and mitigating volatility on the top line.

Can you give us an idea of what's giving you the confidence with the nice increase in the guidance there? Is it a combination of some new customers or just some better commitments from them? And what kind of gives you the confidence in the guide going into next year?

Sure. I mean, I'll comment and then Rich has obviously put a tremendous amount of detailed thought into the guidance. You may have some additional things. I mean, I think if we look at the momentum that we've established in 2025, the customer contracts and relationships that we've established, and obviously, the RPO number that we just discussed as well as the overall market trends and what we're seeing coming into the new year, we're very confident in terms of how we're positioned. We were able to issue guidance that reflects growth substantially above market growth. As we continue to take more share—caution, and I think Rich mentioned this and I alluded to it, too, in my commentary was we are in an era of what I would consider elevated geopolitical and macroeconomic dynamics. And there could be, for example, situations with our international customers around the world where their purchasing patterns are affected by that. And we're also very wary of supply chain dynamics, although we believe we have a very capital-efficient infrastructure. It's too early to tell, but that could play out in our favor. So we try to take a balanced approach on that guidance, but we were able to get to those numbers, and Rich can provide more detail.

Yes, Frank. It's a really good question just because if you look at the midpoint of our guidance, that's a year-over-year increase of $86 million at the midpoint, and that would be the largest kind of year-over-year increase that we would ever have. The reason we feel more comfortable and confident in the guidance is because we—as you know, we went through a go-to-market transformation over the past kind of 12 to 18 months. Part of that go-to-market transformation has been around getting to know our customers better, really aligning our sales team to the customer accounts and really being more diligent in watching kind of the traffic and what they're buying and what they're doing. So I think it's really the closeness of the—with the customers and that go-to-market transformation that gives us that confidence.

Is there anything about the mix of that traffic that's maybe shifted a bit, maybe away from traditional media and towards AI-type traffic or something like that? How should we think about that?

I think one development that I would point to that we discussed at some length on our last quarter call is we have seen material cross-sell activity in our large accounts. And that cross-sell activity brings in portfolios like security and compute. And that starts to transform the relationship in many ways, we believe, with those customers to one that's more strategic for them, covering more use cases. And that does give us some confidence. So we see different mixtures of growth, and there's a seasonal factor there as well. I think you appreciate in terms of media versus non-media. But I think one bigger trend is an increasing consumption of multiple services from us by those large customers.

Let me congratulate you on quite an impressive quarter. Just wanted to maybe just build on sort of the AI question again. Can you help us understand—and just given how early we are in agentic adoption—what are some of the indications that you're getting from your customers in terms of that rate of growth and what that could look like in 2026?

Sure. Appreciate the question. We can see the rate of growth in the telemetry coming off of our infrastructure. And we can tell generally speaking when it's an agentic request versus a traditional user on a browser, for instance. So we can see that traffic growing each quarter. And that is driving volume on our platform. We can also see it in the conversations we have with our customers, particularly with our media customers. We have some of the most sophisticated media companies in the world as our customers. And this is a very top-of-mind topic for them. What I can share is that discussion has shifted from perhaps last summer, how do you block it, to a much more nuanced and sophisticated conversation now about how do you optimize for it? We want to be relevant, but we want to manage how this works. We want to be able to enforce agreements with people that the media companies have agreed with. So we've adapted our approach there, and we have, as I mentioned earlier, our AI bot mitigation technology, but we also have the—we were the first in the industry to support a new protocol called RSL—a really simple licensing that was an industry-developed protocol to essentially enforce content rights agreements related to AI models. And so we're taking an industry-wide approach with our largest customers to manage this complex problem. And I appreciate your point that it's very early. We see it that way as well. And we're staying close to our customers and understanding how we can solve their problems, in many cases, working with them as what we call design partners for our new products in this area.

Yes. I would say that the increase in CapEx is going to be both—right? It's going to be—we do need CapEx because of the growth that we're seeing. We saw this in Q4. And so at the last Q3 earnings call, we did talk about raising our CapEx spend to 10% to 11%. What you're seeing here is a function of both component prices going up.

I would note the 25% to 75%, Rich, you can correct me if I'm wrong, is on the memory component itself—not the overall unit cost of infrastructure for us, for instance.

Yes. So the infrastructure CapEx, we talked about, which was 10% to 12% of 2026 revenue, I would say the majority of that CapEx is going to be for growth CapEx and not for the maintenance and replacement side. I would say that we are continuing to invest. I think one of the areas that we are investing is going to be in the APJ area. And so we are opening up additional POPs out there to support the business. And so I would say the vast majority of that infrastructure CapEx is not necessarily for the maintenance side but more for the kind of growth.

Congrats on the great results. As we look to the 2026 guidance, top 10 customer as a percentage of revenue—where is that estimated to fall for the year within that revenue guide?

Yes. Right now, just as a background for those who are on the call. Right now, our top 10 customers are 34% of revenues. It was up from 32%. The good news here is that we have been investing in our top 10 as well as outside of our top 10. So the top 10 customers grew their revenues by 30% year-over-year while the non-top 10 grew 20%. Both of those were accelerating. And so we're still making big investments on both cores to make sure that we are looking at all of our customers in aggregate. I would say that as we go further, we are doing a few things on our go-to-market transformation. One is that we're focusing our efforts on customers that really get the value that we want from our platform. And some of that happens to be the top 10. And I could see the top 10 staying at 34%. I can see it going up just because they are. But I would say that the non-top 10 growth is still going to be high and should continue to grow as well. So it's hard for me to say it's going to be 34% to 32%—but I would say that we are very happy with the performance and the additional 2 percentage points in the top 10 just because those top 10 customers are still super valuable to us and very profitable to us.

Yes. I would just add two things. If you see that we grew last quarter, our top 10 faster than our non-top 10, you saw the behavior of the business in terms of profitability, gross margin, etc. You can see that those top 10 customers are profitable business for us. We recognize the revenue concentration risk that they represent, but they are a significant part of our business. I think the second thing I'd add is we've historically talked about that percentage of top 10 being in the low 30s to mid-30s and thinking that that was likely to remain the case for some period of time. We don't provide that formally as part of our guidance, but I don't think our view on that has changed at this time. And as I mentioned earlier, we're excited about the cross-sell opportunities as well as the contribution to RPO that those top 10 customers can make. So we continue to drive profitable, higher quality revenue in that cohort.

And then on gross margins, obviously, a very impressive trend here over the last year, getting up to 64%. But 6% to 4% in Q1, you've got the guide at 63% for the year. I understand that with some of this CapEx coming online and some that pushed out from last year. But just how should that trend seasonally? I mean should we see a big step down in Q2? And then recovery throughout the year? Or just how should that trend on a quarter-to-quarter basis?

Yes, Rudy, actually, really good call out. I do think that we did give the guide for Q1 gross margins to be up about 6%; we will see a drop into Q2 and Q3 as we have additional costs coming online. And then we would again see a bump up again in Q4. And so kind of that's the trend where Q1 and Q4 will be a bit higher, and Q2 and Q3 should be a little bit of a drop.

Thank you. We believe this quarter demonstrates tangible progress in our ongoing transformation. We are committed to building the world's most powerful and flexible edge platform. We're pleased with the strong momentum we saw this quarter and are focused on building sustainable, profitable growth. I want to thank our Fastly employees for all their contributions, our customers for their trust and partnership, and investors for their continued support. Thank you for your interest in Fastly, and thank you for joining us today.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.