8-K - FSLY - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 4, 2022

FASTLY, INC.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-38897	27-5411834
(State or other jurisdiction of<br>incorporation or organization)	(Commission File Number)	(I.R.S. Employer<br>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 or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading<br>Symbol(s)	Name of each exchange<br>on which registered
Class A Common Stock, $0.00002 par value	“FSLY”	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 2.02 Results of Operations and Financial Condition.

On May 4, 2022, Fastly, Inc. (the "Company") announced its financial results for the quarter ended March 31, 2022 by issuing a press release. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Attached hereto as Exhibit 99.2 and incorporated by reference herein is the Company’s investor supplement, regarding results of the quarter ended March 31, 2022 (the “Investor Supplement”). The Investor Supplement will be posted to http://investors.fastly.com immediately after the filing of this Form 8-K.

The information furnished on this Form 8-K, including the exhibits attached, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits

Exhibit<br>No.	Exhibit Description
99.1	Press Release dated May 4, 2022
99.2	Investor Supplement for First Quarter 2022 Results

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			FASTLY, INC.
Dated:	May 4, 2022	By:	/s/ Ronald W. Kisling
			Ronald W. Kisling
			Chief Financial Officer

Document

Exhibit 99.1

Fastly Announces First Quarter 2022 Financial Results

•Record quarterly revenue exceeds quarterly guidance range

•First quarter revenue of $102.4 million, up 5% quarter-over-quarter

•First quarter revenue Net Retention Rate (LTM) of 115%

SAN FRANCISCO, May 4, 2022 — Fastly, Inc. (NYSE: FSLY), the world’s fastest global edge cloud network provider, today announced financial results for its first quarter ended March 31, 2022.

“We are pleased to kick off 2022 with strong revenue growth that exceeded guidance and a record-breaking quarter for Fastly as we passed the $100M milestone for the first time,” said Joshua Bixby, CEO of Fastly.

“The first quarter also brought strong analyst and customer validation for our product portfolio. These accolades showcase our customers' ongoing satisfaction and usage of Fastly’s products as we accelerate the delivery of our product roadmap,” continued Bixby. “We look forward to sharing further details on our differentiation, product roadmap, customer acquisition, and financial growth strategy at our Investor Day on May 12.”

Fastly today separately announced that the Board has initiated a search to identify the next CEO to lead the company through its next phase of growth. Once a successor is appointed, current CEO Joshua Bixby will step down as CEO and from the Fastly Board of Directors.

	Three months ended<br><br>March 31,
	2022			2021
Revenue	$	102,382		$	84,852
Gross Margin
GAAP gross margin	47.3		%	55.8		%
Non-GAAP gross margin	52.6		%	60.1		%
Operating loss
GAAP operating loss	$	(63,004)		$	(49,963)
Non-GAAP operating loss	$	(17,740)		$	(12,905)
Net loss per share
GAAP net loss per common share—basic and diluted	$	(0.54)		$	(0.44)
Non-GAAP net loss per common share—basic and diluted	$	(0.15)		$	(0.12)

First Quarter 2022 Financial Summary

•Total revenue of $102.4 million, representing 5% sequential growth and 21% year-over-year growth.

•GAAP gross margin of 47.3%, compared to 55.8% in the first quarter of 2021. Non-GAAP gross margin of 52.6%, compared to 60.1% in the first quarter of 2021.

•GAAP net loss of $64.3 million, compared to $50.7 million in the first quarter of 2021. Non-GAAP net loss of $18.0 million, compared to $13.6 million in the first quarter of 2021.

•GAAP net loss per basic and diluted shares of $0.54 compared to $0.44 in the first quarter of 2021. Non-GAAP net loss per basic and diluted shares of $0.15, compared to $0.12 in the first quarter of 2021.

Key Metrics

•Trailing 12 month net retention rate (NRR LTM)1 decreased to 115% in the first quarter from 118% in the fourth quarter 2021.

•Dollar-Based Net Expansion Rate (DBNER)2 decreased to 118% in the first quarter from 121% in the fourth quarter 2021.

•Total customer count of 2,880 in the first quarter, of which 457 were enterprise3 customers.

•Average enterprise customer spend of $722K in the first quarter, up 3% quarter-over-quarter.

For a reconciliation of non-GAAP financial measures to their corresponding GAAP measures, please refer to the reconciliation table at the end of this press release.

Recent Business Highlights

•Recognized as the only vendor named as Gartner Peer Insights Customers’ Choice for web application and API protection for four consecutive years with the highest customer rating.

•Acquired Fanout to unlock real-time app development at the edge with reduced time-to-market, reduced friction, and unprecedented scale.

•Recognized as a leader by IDC MarketScape in the Worldwide Commercial CDN 2022 Vendor Assessment.

•Launched a new Observability dashboard that brings end-to-end security, delivery, application and performance metrics into a unified view.

•Accelerated edge adoption with a new Compute@Edge Partner Ecosystem, designed to help customers build a variety of edge computing use cases utilizing major cloud service provider integrations.

Second Quarter and Full Year 2022 Guidance:

	Q2 2022	Full Year 2022
Total Revenue (millions)	$99.0 - $102.0	$405.0 - $415.0
Non-GAAP Operating Loss (millions)	($21.5) - ($18.5)	($70.0) - ($60.0)
Non-GAAP Net Loss per share (4)(5)	($0.18) - ($0.15)	($0.60) - ($0.50)

Conference Call Information

Fastly will host an investor conference call to discuss its results at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, May 4, 2022.

Date: Wednesday, May 4, 2022

Time: 2:00 p.m. PT / 5:00 p.m. ET

Webcast: https://investors.fastly.com

Dial-in: 888-330-2022 (US/CA) or 646-960-0690 (Intl.)

Conf. ID#: 7543239

Please dial in at least 10 minutes prior to the 2:00 p.m. PT start time. A live webcast of the call will be available at https://investors.fastly.com where listeners may log on to the event by selecting the webcast link under the “Quarterly Results” section.

A telephone replay of the conference call will be available at approximately 5:00 p.m. PT, May 4 through May 18, 2022 by dialing 800-770-2030 or 647-362-9199 and entering the passcode 7543239.

About Fastly

Fastly is upgrading the internet experience to give people and organizations more control, faster content, and more dynamic applications. By combining the world’s fastest global edge cloud network with powerful software, Fastly helps customers develop, deliver, and secure modern distributed applications and compelling digital experiences. Fastly’s customers include many of the world’s most prominent companies, including Pinterest, The New York Times, and GitHub. For more information on our mission and products, visit https://investors.fastly.com.

Forward Looking Statements

This press release contains “forward-looking” statements that are based on our beliefs and assumptions and on information currently available to us on the date of this press release. Forward-looking statements may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, the demand for our platform, and our ability to deliver on our long-term strategy. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. Important factors that could cause our actual results to differ materially are detailed from time to time in the reports Fastly files with the Securities and Exchange Commission (“SEC”), including in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2022. Copies of reports filed with the SEC are posted on Fastly’s website and are available from Fastly without charge.

Use of Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company uses the following non-GAAP measures of financial performance: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, free cash flow and adjusted EBITDA. The presentation of this additional financial information is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In addition, these non-GAAP financial measures may be different from the non-GAAP financial measures used by other companies. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Management compensates for these limitations by reconciling these non-GAAP financial measures to the most comparable GAAP financial measures within our earnings releases.

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, Non-GAAP net loss and non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, and non-GAAP general and administrative differ from GAAP in that they exclude stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses and amortization of debt discount and issuance costs.

Adjusted EBITDA: excludes stock-based compensation expense, depreciation and other amortization expenses, amortization of acquired intangible assets, acquisition-related expenses, interest income, interest expense (including amortization of debt discount and issuance costs) other income (expense), (net), and income taxes.

Acquisition-related Expenses: consists of acquisition-related charges that are not related to ongoing operations. Management considers its operating results without the acquisition-related expenses when evaluating its ongoing non-GAAP performance and its ongoing adjusted EBITDA performance because these charges may not be reflective of our core business, ongoing operating results, or future outlook.

Amortization of Acquired Intangible Assets: consists of non-cash charges that can be affected by the timing and magnitude of asset purchases and acquisitions. Amortization of acquired intangible assets is included in the following cost and expense line items of our GAAP presentation: cost of revenue and sales and marketing. Management considers its operating results without the amortization expense of our acquired intangible assets when evaluating its ongoing non-GAAP performance and its ongoing adjusted EBITDA performance because these charges are non-cash expenses that can be affected by the timing and magnitude of asset purchases and acquisitions and may not be reflective of our core business, ongoing operating results, or future outlook.

Amortization of Debt Discount and Issuance Costs: consists primarily of amortization expenses related to our debt obligations. Management considers its non-GAAP net loss and adjusted EBITDA results without this activity when evaluating its ongoing performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook. These are included in our total interest expense.

Capital Expenditures: cash used for purchases of property and equipment and capitalized internal-use software, as reflected in our statement of cash flows.

Depreciation and Other Amortization Expense: consists of non-cash charges that can be affected by the timing and magnitude of asset purchases. Depreciation and amortization expense is included in the following cost and expense line items of our GAAP presentation: cost of revenue, research and development, sales and marketing, and general and administrative. Management considers its operating results without the depreciation and other amortization expense when evaluating its ongoing adjusted EBITDA performance because these charges are non-cash expenses that can be affected by the timing and magnitude of asset purchases and may not be reflective of our core business, ongoing operating results, or future outlook.

Free Cash Flow: calculated as net cash used in operating activities less capital expenditures.

Income Taxes: consists primarily of expenses recognized related to state and foreign income taxes. Management considers its adjusted EBITDA results without these charges when evaluating its ongoing performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Interest Expense: consists primarily of interest expense related to our debt instruments, including amortization of debt discount and issuance costs. Management considers its operating results without total interest expense when evaluating its non-GAAP net loss and its ongoing adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Interest Income: consists primarily of interest income related to our marketable securities. Management considers its adjusted EBITDA results without this activity when evaluating its ongoing performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Non-GAAP Operating Loss: calculated as GAAP revenue less non-GAAP cost of revenue and non-GAAP operating expenses.

Other Income (Expense), Net: consists primarily of foreign currency transaction gains and losses. Management considers its operating results without other income (expense), net when evaluating its ongoing adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Stock-based Compensation Expense: consists of expenses for stock options, restricted stock units, performance awards, restricted stock awards and Employee Stock Purchase Plan ("ESPP") under our equity incentive plans. Stock-based compensation is included in the following cost and expense line items of our GAAP presentation: cost of revenue, research and development, sales and marketing, and general and administrative.

Although stock-based compensation is an expense for the Company and is viewed as a form of compensation, management excludes stock-based compensation from our non-GAAP measures and adjusted EBITDA results for purposes of evaluating our continuing operating performance primarily because it is a non-cash expense not believed by management to be reflective of our core business, ongoing operating results, or future outlook. In addition, the value of some stock-based instruments is determined using formulas that incorporate variables, such as market volatility, that are beyond our control.

Management believes these non-GAAP financial measures and adjusted EBITDA serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods and to those of peer companies, and when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors' overall understanding of our current financial performance.

Key Metrics

1 We calculate LTM Net Retention Rate by dividing the total customer revenue for the prior twelve-month period (“prior 12-month period”) ending at the beginning of the last twelve-month period (“LTM period”) minus revenue contraction due to billing decreases or customer churn, plus revenue expansion due to billing increases during the LTM period from the same customers by the total prior 12-month period revenue. We believe the LTM Net Retention Rate is supplemental as it removes some of the volatility that is inherent in a usage-based business model.

2 We calculate Dollar-Based Net Expansion Rate by dividing the revenue for a given period from customers who remained customers as of the last day of the given period (the “current” period) by the revenue from the same customers for the same period measured one year prior (the “base” period). The revenue included in the current period excludes revenue from (i) customers that churned after the end of the base period and (ii) new customers that entered into a customer agreement after the end of the base period.

3 Enterprise customers are defined as those spending $100,000 or more in a twelve-month period.

4 Assumes weighted average basic shares outstanding of 121.4 million in Q2 2022 and 121.8 million for the full year 2022.

5 Non-GAAP Net Loss per share is calculated as full-year Non-GAAP Net Loss divided by weighted average basic shares for the full year 2022.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts, unaudited)

	Three months ended<br><br>March 31,
	2022		2021
Revenue	$	102,382	$	84,852
Cost of revenue(1)	53,915		37,494
Gross profit	48,467		47,358
Operating expenses:
Research and development(1)	40,437		28,988
Sales and marketing(1)	41,480		34,872
General and administrative(1)	29,554		33,461
Total operating expenses	111,471		97,321
Loss from operations	(63,004)		(49,963)
Interest income	681		174
Interest expense	(1,622)		(661)
Other expense	(279)		(64)
Loss before income taxes	(64,224)		(50,514)
Income tax expense	40		169
Net loss	$	(64,264)	$	(50,683)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.54)	$	(0.44)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	119,673		114,134

__________

(1)Includes stock-based compensation expense as follows:

	Three months ended<br><br>March 31,
	2022		2021
Cost of revenue	$	2,946	$	1,186
Research and development	18,589		7,958
Sales and marketing	10,094		5,008
General and administrative	8,393		16,686
Total	$	40,022	$	30,838

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, unaudited)

	Three months ended<br><br>March 31,
	2022			2021
Gross Profit
GAAP gross profit	$	48,467		$	47,358
Stock-based compensation	2,946			1,186
Amortization of acquired intangible assets	2,475			2,475
Non-GAAP gross profit	$	53,888		$	51,019
GAAP gross margin	47.3		%	55.8		%
Non-GAAP gross margin	52.6		%	60.1		%
Research and development
GAAP research and development	$	40,437		$	28,988
Stock-based compensation	(18,589)			(7,958)
Non-GAAP research and development	$	21,848		$	21,030
Sales and marketing
GAAP sales and marketing	$	41,480		$	34,872
Stock-based compensation	(10,094)			(5,008)
Amortization of acquired intangible assets	(2,709)			(2,816)
Non-GAAP sales and marketing	$	28,677		$	27,048
General and administrative
GAAP general and administrative	$	29,554		$	33,461
Stock-based compensation	(8,393)			(16,686)
Acquisition-related expenses	(58)			(929)
Non-GAAP general and administrative	$	21,103		$	15,846
Operating loss
GAAP operating loss	$	(63,004)		$	(49,963)
Stock-based compensation	40,022			30,838
Amortization of acquired intangible assets	5,184			5,291
Acquisition-related expenses	58			929
Non-GAAP operating loss	$	(17,740)		$	(12,905)
Net loss
GAAP net loss	$	(64,264)		$	(50,683)
Stock-based compensation	40,022			30,838
Amortization of acquired intangible assets	5,184			5,291
Amortization of debt discount and issuance costs	963			—
Acquisition-related expenses	58			929
Non-GAAP loss	$	(18,037)		$	(13,625)
Non-GAAP net loss per common share—basic and diluted	$	(0.15)		$	(0.12)
Weighted average basic and diluted common shares	119,673			114,134			Three months ended<br><br>March 31,
---	---	---	---	---
	2022		2021
Adjusted EBITDA
GAAP net loss	$	(64,264)	$	(50,683)
Stock-based compensation	40,022		30,838
Depreciation and other amortization	9,975		6,491
Amortization of acquired intangible assets	5,184		5,291
Interest income	(681)		(174)
Interest expense	1,622		661
Other expense	279		64
Income tax expense	40		169
Acquisition-related expenses	58		929
Adjusted EBITDA	$	(7,765)	$	(6,414)

Condensed Consolidated Balance Sheets

(in thousands)

	As of<br><br>March 31, 2022		As of<br><br>December 31, 2021
	(unaudited)		(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	245,794	$	166,068
Marketable securities, current	393,950		361,795
Accounts receivable, net of allowance for credit losses	73,717		64,625
Prepaid expenses and other current assets	23,616		32,160
Total current assets	737,077		624,648
Property and equipment, net	174,550		166,961
Operating lease right-of-use assets, net	63,455		69,631
Goodwill	637,570		636,805
Intangible assets, net	97,287		102,596
Marketable securities, non-current	394,464		528,911
Other assets	30,020		29,468
Total assets	$	2,134,423	$	2,159,020
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,248	$	9,257
Accrued expenses	49,902		36,112
Finance lease liabilities, current	26,766		21,125
Operating lease liabilities, current	18,688		20,271
Other current liabilities	36,569		45,107
Total current liabilities	140,173		131,872
Long-term debt	934,121		933,205
Finance lease liabilities, noncurrent	28,867		22,293
Operating lease liabilities, noncurrent	52,334		55,114
Other long-term liabilities	2,205		2,583
Total liabilities	1,157,700		1,145,067
Stockholders’ equity:
Class A common stock	2		2
Additional paid-in capital	1,561,371		1,527,468
Accumulated other comprehensive loss	(9,496)		(2,627)
Accumulated deficit	(575,154)		(510,890)
Total stockholders’ equity	976,723		1,013,953
Total liabilities and stockholders’ equity	$	2,134,423	$	2,159,020

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Three months ended<br><br>March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(64,264)	$	(50,683)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	9,850		6,419
Amortization of intangible assets	5,309		5,363
Amortization of right-of-use assets and other	6,839		6,357
Amortization of debt discount and issuance costs	964		332
Amortization of deferred contract costs	1,851		1,411
Stock-based compensation	40,022		30,838
Provision for credit losses	127		(420)
Interest on finance lease	(591)		(330)
Loss on disposals of property and equipment	268		27
Amortization and accretion of discounts and premiums on investments	957		—
Other adjustments	128		64
Changes in operating assets and liabilities:
Accounts receivable	(9,219)		(1,685)
Prepaid expenses and other current assets	(2,111)		(1,680)
Other assets	(2,451)		(2,952)
Accounts payable	(2,492)		2,119
Accrued expenses	4,891		(755)
Operating lease liabilities	(6,557)		(6,365)
Other liabilities	3,289		1,071
Net cash used in operating activities	(13,190)		(10,869)
Cash flows from investing activities:
Purchases of marketable securities	(148,193)		(64,331)
Sales of marketable securities	2,301		12,497
Maturities of marketable securities	240,547		25,503
Business acquisitions, net of cash acquired	(775)		—
Purchases of property and equipment	(2,387)		(8,079)
Capitalized internal-use software	(3,810)		(989)
Net cash provided by (used in) investing activities	87,683		(35,399)
Cash flows from financing activities:
Issuance of convertible note, net of issuance costs	—		930,775
Payments of other debt issuance costs	—		(1,351)
Repayments of finance lease liabilities	(7,159)		(2,951)
Cash received for restricted stock sold in advance of vesting conditions	10,655		—
Cash paid for early sale of restricted shares	(3,498)		—
Proceeds from exercise of vested stock options	3,048		2,719
Proceeds from employee stock purchase plan	2,406		3,071
Net cash provided by financing activities	5,452		932,263
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(219)		(112)
Net increase in cash, cash equivalents, and restricted cash	79,726		885,883
Cash, cash equivalents, and restricted cash at beginning of period	166,961		63,880
Cash, cash equivalents, and restricted cash at end of period	246,687		949,763
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents	245,794		948,783
Restricted cash, current	—		87
Restricted cash, non-current	893		893
Total cash, cash equivalents, and restricted cash	$	246,687	$	949,763

Free Cash Flow

(in thousands, unaudited)

	Three months ended<br><br>March 31,
	2022		2021
Cash flow provided by (used in) operations	$	(13,190)	$	(10,869)
Capital expenditures(1)	(6,197)		(9,068)
Free Cash Flow	$	(19,387)	$	(19,937)

__________

(1)Capital Expenditures are defined as cash used for purchases of property and equipment and capitalized internal-use software, as reflected in our statement of cash flows.

Investor Contact:

Vernon Essi, Jr.

ir@fastly.com

Media Contact:

press@fastly.com

Source: Fastly, Inc.

Document

Exhibit 99.2

First Quarter 2022 Investor Supplement

Product Developments

Security:

•Recognized as the only vendor named as Gartner Peer Insights Customers’ Choice for web application and API protection for four consecutive years.

•Continued to innovate our Next-Gen WAF with new custom response codes and our GraphQL Inspection feature, and we became the first and only WAF to support Arm®-based environments at scale.

Leading Innovation:

•Recognized as a leader by IDC MarketScape in the Worldwide Commercial CDN 2022 Vendor Assessment.

•Announced a new Observability dashboard that is bringing end-to-end security, delivery, application and performance metrics into a unified view.

•Deployed HTTP/3 and QUIC platform-wide, enabling customers with faster response times, better network performance, and built-in encryption with TLS 1.3.

Developer Relations:

•Fastly acquired Fanout to unlock real-time, frictionless app development at the edge with unprecedented scale.

•Fastly 101 launched on docs.fastly.com, a new project-based, hands-on tutorial showing how to set up Fastly’s CDN with a real website.

Key Metrics Highlights

•Trailing 12 month net retention rate (NRR LTM)1 decreased to 115% in the first quarter from 118% in the fourth quarter 2021.

•Dollar-Based Net Expansion Rate (DBNER)2 decreased to 118% in the first quarter from 121% in the fourth quarter 2021.

•Total customer count was 2,880, of which 457 were enterprise customers4

•Average enterprise customer spend of $722K in the first quarter, up 3% quarter-over-quarter.

Corporate Development

•Announced that the Board has initiated a search to identify the next CEO to lead the company through its next phase of growth. Once a successor is appointed, current CEO Joshua Bixby will step down as CEO and from the Fastly Board of Directors.

Customer and Partner Developments

•Accelerated edge adoption with a new Compute@Edge Partner Ecosystem designed to help customers build a variety of edge computing use cases utilizing major cloud service provider integrations.

•A top Fortune 100 global financial platform chose Fastly’s unlimited RPS & Workspaces WAF package for its flexibility and scalability.

•A top Fortune 100 ecommerce platform renewed and further expanded their partnership with Fastly to include Media Shield protection of critical infrastructure during live events.

•A leading Spanish-language broadcaster sourced through Fastly’s Google Cloud Marketplace partnership, a leading Spanish-language broadcaster adopted Fastly’s Streaming for Live and VOD capabilities and token authentication to improve delivery performance.

•A Fortune 500 apparel company expanding their digital footprint added Next-Gen WAF to their delivery, TLS, and image optimization products from Fastly.

First Quarter 2022 Financial Highlights

•Record revenue of $102.4 million exceeded quarterly guidance range and grew 5% quarter-over-quarter.

•GAAP net loss per basic and diluted shares of $0.54, compared to $0.44 in the first quarter of 2021.

•Non-GAAP net loss5 per basic and diluted shares of $0.15, compared to $0.12 in the first quarter of 2021.

Second Quarter and Full Year 2022 Guidance:

	Q2 2022	Full Year 2022
Total Revenue (millions)	$99.0 - $102.0	$405.0 - $415.0
Non-GAAP Operating Loss (millions)(5)	($21.5) - ($18.5)	($70.0) - ($60.0)
Non-GAAP Net Loss per share (6) (7)	($0.18) - ($0.15)	($0.60) - ($0.50)

Calculations of Key and Other Selected Metrics – Quarterly

(unaudited)

	Q2 2020			Q3 2020			Q4 2020			Q1 2021			Q2 2021			Q3 2021			Q4 2021			Q1 2022
Total Customer Count	1,951			2,047			2,326			2,458			2,581			2,748			2,804			2,880
Enterprise Customer Count(4)	304			313			378			395			408			430			445			457
Enterprise Revenue % Total LTM	88		%	88		%	88		%	89		%	89		%	88		%	88		%	89		%
Enterprise Customer Average Spend LTM (in thousands)(8)	$	716		$	753		$	681		$	705		$	702		$	698		$	704		$	722
Net Retention Rate (NRR) Quarter(9)	138		%	122		%	116		%	110		%	93		%	112		%	107		%	114		%
Net Retention Rate (NRR) LTM(1)	136		%	141		%	137		%	135		%	121		%	114		%	118		%	115		%
Dollar-Based Net Expansion Rate (DBNER)(2)	137		%	147		%	144		%	141		%	126		%	118		%	121		%	118		%
Annual Revenue Retention Rate (ARR)(3)	—			—			99.3		%	—			—			—			99.2		%	—
Global Network Capacity	100 TB/sec			106 TB/sec			117 TB/sec			130 TB/sec			145 TB/sec			167 TB/sec			184 TB/sec			198 TB/sec
Countries	26			26			26			26			28			31			32			34
Markets	55			55			56			58			61			68			71			75

3 Annual revenue retention rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers divided by our annual revenue of the same calendar year from 100%. Our “Annual Revenue Churn” is calculated by multiplying the final full month of revenue from a customer that terminated its contract with us (a “Churned Customer”) by the number of months remaining in the same calendar year.

4 Enterprise customers are defined as those spending $100,000 or more in a twelve-month period.

5 For a reconciliation of non-GAAP financial measures to their corresponding GAAP measures, please refer to the reconciliation table at the end of this letter.

6 Assumes weighted average basic shares outstanding of 121.4 million in Q2 2022 and 121.8 million for the full year 2022.

7 Non-GAAP Net Loss per share is calculated as full-year Non-GAAP Net Loss divided by weighted average basic shares for the full year 2022.

8 Calculated based on trailing twelve-months.

9 Net Retention Rate measures the net change in monthly revenue from existing customers in the last month of the period (the “current" period month) compared to the last month of the same period one year prior (the “prior" period month). The revenue included in the current period month includes revenue from (i) revenue contraction due to billing decreases or customer churn, (ii) revenue expansion due to billing increases, but excludes revenue from new customers. We calculate Net Retention Rate by dividing the revenue from the current period month by the revenue in the prior period month.

Forward-Looking Statements

This investor supplement 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, about us and our industry that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or Fastly's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "continue," “would,” or the negative of these words or other similar terms or expressions that concern Fastly's expectations, goals, strategy, priorities, plans, projections, or intentions. Forward-looking statements in this investor supplement include, but are not limited to, statements regarding Fastly’s future financial and operating performance, including its outlook and guidance; Fastly's strategies, product and business plans; and continued demand for future products from the combined Signal Sciences’ portfolio. Fastly's expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the possibility that: Fastly is unable to attract and retain customers; Fastly's existing customers and partners do not maintain or increase usage of Fastly's platform; Fastly's platform and product features do not meet expectations, including due to defects, interruptions, security breaches, delays in performance or other similar problems; Fastly is unable to adapt to meet evolving market and customer demands and rapid technological change; Fastly is unable to comply with modified or new industry standards, laws and regulations; Fastly is unable to generate sufficient revenues to achieve or sustain profitability; Fastly’s limited operating history makes it difficult to evaluate its prospects and future operating results; Fastly is unable to effectively manage its growth; and Fastly is unable to compete effectively. The forward-looking statements contained in this investor supplement are also subject to other risks and uncertainties, including those more fully described in Fastly’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and additional information that will be set forth in Fastly’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and other filings and reports that we may file from time to time with the SEC. The forward-looking statements in this investor supplement are based on information available to Fastly as of the date hereof, and Fastly disclaims any obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Measures

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss and non-GAAP basic and diluted net loss per common share, non-GAAP research and development, non-GAAP sales and marketing, and non-GAAP general and administrative differ from GAAP in that they exclude stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses and amortization of debt discount and issuance costs.

Acquisition-related Expenses: consists of acquisition-related charges that are not related to ongoing operations. Management considers its operating results without the acquisition-related expense when evaluating its ongoing non-GAAP performance and its ongoing adjusted EBITDA performance because these charges may not be reflective of our core business, ongoing operating results, or future outlook.

Amortization of Debt Discount and Issuance Costs: consists primarily of amortization expense related to our debt obligations. Management considers its non-GAAP net loss and adjusted EBITDA results without this activity when evaluating its ongoing performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook. These are included in our total interest expense.

Capital Expenditures: cash used for purchases of property and equipment and capitalized internal-use software, as reflected in our statement of cash flows.

Free Cash Flow: calculated as net cash used in operating activities less capital expenditures.

Interest Expense: consists primarily of interest expense related to our debt instruments, including amortization of debt discount and issuance costs. Management considers its operating results without total interest expense when evaluating its non-GAAP net loss and and ongoing adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Non-GAAP Operating Loss: calculated as GAAP revenue less non-GAAP cost of revenue and non-GAAP operating expenses.

In the financial tables below, the Company provides a reconciliation of the most comparable GAAP financial measure to the historical non-GAAP financial measures used in this investor supplement.

Consolidated Statements of Operations – Quarterly

(unaudited, in thousands, except per share amounts)

	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022
Revenue	$	74,663	$	70,638	$	82,649	$	84,852	$	85,026	$	86,735	$	97,717	$	102,382
Cost of revenue(1)	29,697		29,292		33,753		37,494		40,320		41,244		47,944		53,915
Gross profit	44,966		41,346		48,896		47,358		44,706		45,491		49,773		48,467
Operating expenses:
Research and development(1)	16,655		18,271		25,590		28,988		30,346		32,528		34,997		40,437
Sales and marketing(1)	24,680		22,568		34,765		34,872		36,334		39,288		42,151		41,480
General and administrative (1)	18,069		23,961		45,885		33,461		35,494		28,609		29,281		29,554
Total operating expenses	59,404		64,800		106,240		97,321		102,174		100,425		106,429		111,471
Loss from operations	(14,438)		(23,454)		(57,344)		(49,963)		(57,468)		(54,934)		(56,656)		(63,004)
Interest income	378		353		178		174		276		280		552		681
Interest expense, net	(371)		(410)		(452)		(661)		(1,436)		(1,555)		(1,593)		(1,622)
Other (income) expense, net	(53)		69		(697)		(64)		178		41		201		(279)
Loss before income tax expense (benefit)	(14,484)		(23,442)		(58,315)		(50,514)		(58,450)		(56,168)		(57,496)		(64,224)
Income tax expense (benefit)	(24)		336		(12,611)		169		(155)		30		25		40
Net loss	$	(14,460)	$	(23,778)	$	(45,704)	$	(50,683)	$	(58,295)	$	(56,198)	$	(57,521)	$	(64,264)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.14)	$	(0.22)	$	(0.40)	$	(0.44)	$	(0.51)	$	(0.48)	$	(0.49)	$	(0.54)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	99,835		105,942		112,902		114,134		115,326		116,475		118,161		119,673

__________

(1)Includes stock-based compensation expense as follows:

	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022
Cost of revenue	$	1,090	$	929	$	1,255	$	1,186	$	1,828	$	1,897	$	2,316	$	2,946
Research and development	4,053		4,371		7,017		7,958		8,634		14,752		15,675		18,589
Sales and marketing	7,076		3,194		5,275		5,008		5,631		9,121		11,399		10,094
General and administrative	4,062		3,648		16,134		16,686		17,333		10,866		10,198		8,393
Total	$	16,281	$	12,142	$	29,681	$	30,838	$	33,426	$	36,636	$	39,588	$	40,022

Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly

(unaudited, in thousands, except per share amounts)

	Q2 2020			Q3 2020			Q4 2020			Q1 2021			Q2 2021			Q3 2021			Q4 2021			Q1 2022
Gross Profit
GAAP gross Profit	$	44,966		$	41,346		$	48,896		$	47,358		$	44,706		$	45,491		$	49,773		$	48,467
Stock-based compensation	1,090			929			1,255			1,186			1,828			1,897			2,316			2,946
Amortization of acquired intangible assets	—			—			2,475			2,475			2,475			2,475			2,475			2,475
Non-GAAP gross profit	46,056			42,275			52,626			51,019			49,009			49,863			54,564			53,888
GAAP gross margin	60.2		%	58.5		%	59.2		%	55.8		%	52.6		%	52.4		%	50.9		%	47.3		%
Non-GAAP gross margin	61.7		%	59.8		%	63.7		%	60.1		%	57.6		%	57.5		%	55.8		%	52.6		%
Research and development
GAAP research and development	16,655			18,271			25,590			28,988			30,346			32,528			34,997			40,437
Stock-based compensation	(4,053)			(4,371)			(7,017)			(7,958)			(8,634)			(14,752)			(15,675)			(18,589)
Non-GAAP research and development	12,602			13,900			18,573			21,030			21,712			17,776			19,322			21,848
Sales and marketing
GAAP sales and marketing	24,680			22,568			34,765			34,872			36,334			39,288			42,151			41,480
Stock-based compensation	(7,076)			(3,194)			(5,275)			(5,008)			(5,631)			(9,121)			(11,399)			(10,094)
Amortization of acquired intangible assets	—			—			(2,603)			(2,816)			(2,709)			(2,709)			(2,710)			(2,709)
Non-GAAP sales and marketing	17,604			19,374			26,887			27,048			27,994			27,458			28,042			28,677
General and administrative
GAAP general and administrative	18,069			23,961			45,885			33,461			35,494			28,609			29,281			29,554
Stock-based compensation	(4,062)			(3,648)			(16,134)			(16,686)			(17,333)			(10,866)			(10,198)			(8,393)
Acquisition-related expenses	—			(7,158)			(13,625)			(929)			(1,298)			(179)			(149)			(58)
Non-GAAP general and administrative	14,007			13,155			16,126			15,846			16,863			17,564			18,934			21,103
Operating income (loss)
GAAP operating loss	(14,438)			(23,454)			(57,344)			(49,963)			(57,468)			(54,934)			(56,656)			(63,004)
Stock-based compensation	16,281			12,142			29,681			30,838			33,426			36,636			39,588			40,022
Amortization of acquired intangible assets	—			—			5,078			5,291			5,184			5,184			5,185			5,184
Acquisition-related expenses	—			7,158			13,625			929			1,298			179			149			58
Non-GAAP operating income (loss)	1,843			(4,154)			(8,960)			(12,905)			(17,560)			(12,935)			(11,734)			(17,740)
Net income (loss)
GAAP net loss	(14,460)			(23,778)			(45,704)			(50,683)			(58,295)			(56,198)			(57,521)			(64,264)
Stock-based compensation	16,281			12,142			29,681			30,838			33,426			36,636			39,588			40,022
Amortization of acquired intangible assets	—			—			5,078			5,291			5,184			5,184			5,185			5,184
Acquisition-related expenses	—			7,158			13,625			929			1,298			179			149			58
Acquisition-related tax benefit	—			—			(13,154)			—			—			—			—			—
Amortization of debt issuance costs	—			—			—			—			993			967			947			963
Non-GAAP net income (loss)	$	1,821		$	(4,478)		$	(10,474)		$	(13,625)		$	(17,394)		$	(13,232)		$	(11,652)		$	(18,037)
GAAP net income (loss) per common share—basic and diluted	$	(0.14)		$	(0.22)		$	(0.40)		$	(0.44)		$	(0.51)		$	(0.48)		$	(0.49)		$	(0.54)
Non-GAAP net income (loss) per common share—basic and diluted	$	0.02		$	(0.04)		$	(0.09)		$	(0.12)		$	(0.15)		$	(0.11)		$	(0.10)		$	(0.15)
GAAP Weighted average basic common shares	99,835			105,942			112,902			114,134			115,326			116,475			118,161			119,673
Effect of dilutive securities(1)	10,054			—			—			—			—			—			—			—
Non-GAAP Weighted average diluted common shares	109,889			105,942			112,902			114,134			115,326			116,475			118,161			119,673

(1) For periods presented with a net loss, the effect of the dilutive securities have been excluded from the calculation because their effect would have been anti-dilutive.

Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly (Continued)

(unaudited, in thousands, except per share amounts)

	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022
Adjusted EBITDA
GAAP net loss	$	(14,460)	$	(23,778)	$	(45,704)	$	(50,683)	$	(58,295)	$	(56,198)	$	(57,521)	$	(64,264)
Stock-based compensation	16,281		12,142		29,681		30,838		33,426		36,636		39,588		40,022
Depreciation and other amortization	4,729		4,967		5,568		6,491		7,000		7,489		8,228		9,975
Amortization of acquired intangible assets	—		—		5,078		5,291		5,184		5,184		5,185		5,184
Interest income	(378)		(353)		(178)		(174)		(276)		(280)		(552)		(681)
Interest expense	371		410		452		661		1,436		1,555		1,593		1,622
Other (income) expense, net	53		(69)		697		64		(178)		(41)		(201)		279
Income taxes	(24)		336		543		169		(155)		30		25		40
Acquisition-related expenses	—		7,158		13,625		929		1,298		179		149		58
Acquisition-related tax benefit	—		—		(13,154)		—		—		—		—		—
Adjusted EBITDA	$	6,572	$	813	$	(3,392)	$	(6,414)	$	(10,560)	$	(5,446)	$	(3,506)	$	(7,765)

Non-GAAP Consolidated Statements of Operations - Quarterly

(unaudited, in thousands, except per share amounts)

	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022
Revenue	$	74,663	$	70,638	$	82,649	$	84,852	$	85,026	$	86,735	$	97,717	$	102,382
Cost of revenue (1)(2)	28,607		28,363		30,023		33,833		36,017		36,872		43,153		48,494
Gross profit	46,056		42,275		52,626		51,019		49,009		49,863		54,564		53,888
Operating expenses:
Research and development(1)	12,602		13,900		18,573		21,030		21,712		17,776		19,322		21,848
Sales and marketing(1)(2)	17,604		19,374		26,887		27,048		27,994		27,458		28,042		28,677
General and administrative (1)(3)	14,007		13,155		16,126		15,846		16,863		17,564		18,934		21,103
Total operating expenses	44,213		46,429		61,586		63,924		66,569		62,798		66,298		71,628
Income (loss) from operations(1)(2)(3)	1,843		(4,154)		(8,960)		(12,905)		(17,560)		(12,935)		(11,734)		(17,740)
Interest income	378		353		178		174		276		280		552		681
Interest expense(4)	(371)		(410)		(452)		(661)		(443)		(588)		(646)		(659)
Other income (expense), net	(53)		69		(697)		(64)		178		41		201		(279)
Income (loss) before income tax expense (benefit)	1,797		(4,142)		(9,931)		(13,456)		(17,549)		(13,202)		(11,627)		(17,997)
Income tax expense (benefit)(5)	(24)		336		543		169		(155)		30		25		40
Net income (loss)(1)(2)(3)(4)(5)	$	1,821	$	(4,478)	$	(10,474)	$	(13,625)	$	(17,394)	$	(13,232)	$	(11,652)	$	(18,037)
Net income (loss) per share attributable to common stockholders, basic (6)	$	0.02	$	(0.04)	$	(0.09)	$	(0.12)	$	(0.15)	$	(0.11)	$	(0.10)	$	(0.15)
Net income (loss) per share attributable to common stockholders, diluted(6)	$	0.02	$	(0.04)	$	(0.09)	$	(0.12)	$	(0.15)	$	(0.11)	$	(0.10)	$	(0.15)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic	99,835		105,942		112,902		114,134		115,326		116,475		118,161		119,673
Effect of dilutive securities(6)	10,054		—		—		—		—		—		—		—
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted(6)	109,889		105,942		112,902		114,134		115,326		116,475		118,161		119,673

(1) Excludes stock-based compensation. See GAAP to Non-GAAP reconciliations.

(2) Excludes amortization of acquired intangible assets. See GAAP to Non-GAAP reconciliations.

(3) Excludes acquisition-related and other expenses. See GAAP to Non-GAAP reconciliations.

(4) Excludes amortization of debt discount and issuance costs. See GAAP to Non-GAAP reconciliations.

(5) Excludes acquisition-related tax benefit. See GAAP to Non-GAAP reconciliations.

(6) For the period in which we had non-GAAP net income, diluted non-GAAP net income per share is calculated using weighted-average shares, adjusted for dilutive potential shares that were assumed outstanding during period.

Consolidated Balance Sheets - Quarterly

(unaudited, in thousands)

	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022
Assets
Current assets:
Cash and cash equivalents	$	257,418	$	309,968	$	62,900	$	948,783	$	687,986	$	282,131	$	166,068	$	245,794
Marketable securities	126,607		92,302		131,283		147,793		241,744		361,290		361,795		393,950
Accounts receivable, net	58,331		42,593		50,258		52,363		56,065		54,234		64,625		73,717
Restricted cash	70,087		70,087		87		87		87		—		—		—
Prepaid expenses and other current assets	12,974		14,769		16,728		18,408		22,222		22,230		32,160		23,616
Total current assets	525,417		529,719		261,256		1,167,434		1,008,104		719,885		624,648		737,077
Property and equipment, net	65,836		83,498		95,979		98,608		116,471		147,729		166,961		174,550
Operating lease right-of-use assets, net	—		—		60,019		63,305		62,630		70,149		69,631		63,455
Goodwill	347		362		635,590		635,645		635,646		635,635		636,805		637,570
Intangible assets, net	2,864		2,792		121,742		116,379		113,215		107,905		102,596		97,287
Marketable securities, non-current	—		—		20,448		29,930		173,227		429,489		528,911		394,464
Other assets	13,400		15,147		24,917		26,993		27,578		28,142		29,468		30,020
Total assets	$	607,864	$	631,518	$	1,219,951	$	2,138,294	$	2,136,871	$	2,138,934	$	2,159,020	$	2,134,423
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,087	$	12,273	$	9,150	$	12,019	$	10,202	$	7,766	$	9,257	$	8,248
Accrued expenses	22,631		38,559		34,334		36,320		28,609		36,063		36,112		49,902
Current portion of long term debt	5,188		6,060		—		—		—		—		—		—
Finance lease liabilities	—		—		11,033		10,910		14,773		18,675		21,125		26,766
Operating lease liabilities	—		—		19,895		20,011		19,713		20,007		20,271		18,688
Other current liabilities	4,402		9,555		19,677		19,036		29,735		24,758		45,107		36,569
Total current liabilities	38,308		66,447		94,089		98,296		103,032		107,269		131,872		140,173
Long-term debt, less current portion	24,858		26,007		—		930,291		931,385		932,305		933,205		934,121
Finance lease liabilities, noncurrent	—		—		14,707		13,648		19,685		24,659		22,293		28,867
Operating lease liabilities, noncurrent	—		—		44,890		47,505		47,177		54,066		55,114		52,334
Other long-term liabilities	2,533		3,944		4,400		3,520		6,502		5,056		2,583		2,205
Total liabilities	65,699		96,398		158,086		1,093,260		1,107,781		1,123,355		1,145,067		1,157,700
Stockholders’ equity:
Class A and Class B common stock	2		2		2		2		2		2		2		2
Additional paid-in capital	760,237		777,231		1,350,050		1,384,045		1,426,520		1,469,366		1,527,468		1,561,371
Accumulated other comprehensive income (loss)	385		124		6		(137)		(261)		(420)		(2,627)		(9,496)
Accumulated deficit	(218,459)		(242,237)		(288,193)		(338,876)		(397,171)		(453,369)		(510,890)		(575,154)
Total stockholders’ equity	542,165		535,120		1,061,865		1,045,034		1,029,090		1,015,579		1,013,953		976,723
Total liabilities and stockholders’ equity	$	607,864	$	631,518	$	1,219,951	$	2,138,294	$	2,136,871	$	2,138,934	$	2,159,020	$	2,134,423

Consolidated Statements of Cash Flows – Quarterly

(unaudited, in thousands)

	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022
Cash flows from operating activities:
Net loss	$	(14,460)	$	(23,778)	$	(45,704)	$	(50,683)	$	(58,295)	$	(56,198)	$	(57,521)	$	(64,264)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,693		4,894		5,713		6,419		6,927		7,364		8,089		9,850
Amortization of acquired intangibles	36		73		4,933		5,363		5,257		5,309		5,309		5,309
Amortization of right-of-use assets and other	5,239		5,636		5,941		6,357		6,303		7,158		7,065		6,839
Amortization of debt issuance costs	19		20		161		332		937		966		950		964
Amortization of deferred contract costs	788		894		1,141		1,411		1,535		1,621		1,727		1,851
Stock-based compensation	16,281		12,142		29,681		30,838		33,426		36,636		39,588		40,022
Provision for doubtful accounts and credit losses	866		196		507		(420)		225		236		155		127
Interest paid on capital leases	(149)		(186)		(234)		(330)		(405)		(524)		(495)		(591)
(Gain) loss on disposal of property and equipment	—		(133)		786		27		—		(204)		(123)		268
Tax benefit related to release of valuation allowance	—		—		(12,950)		—		—		—		—		—
Amortization and accretion of discounts and premiums on investments	—		—		—		—		—		—		—		957
Other adjustments	208		480		448		64		749		683		729		128
Changes in operating assets and liabilities:
Accounts receivable	(16,180)		15,542		(2,595)		(1,685)		(3,927)		1,595		(10,546)		(9,219)
Prepaid expenses and other current assets	(835)		(1,795)		(1,772)		(1,680)		(3,814)		(8)		725		(2,111)
Other assets	(2,676)		(2,641)		(9,752)		(2,952)		(2,137)		(2,231)		(3,103)		(2,451)
Accounts payable	(1,748)		5,682		(2,987)		2,119		(1,957)		(1,815)		1,799		(2,492)
Accrued expenses	4,121		14,598		(4,232)		(755)		(3,080)		6,548		1,548		4,891
Operating lease liabilities	(4,141)		(4,439)		(5,412)		(6,365)		(6,491)		(6,879)		(6,712)		(6,557)
Other liabilities	(843)		15		5,178		1,071		7,733		(2,948)		2,908		3,289
Net cash provided by (used in) operating activities	(8,781)		27,200		(31,149)		(10,869)		(17,014)		(2,691)		(7,908)		(13,190)
Cash flows from investing activities:
Purchase of marketable securities	(56,187)		(148,174)		(64,698)		(64,331)		(269,537)		(443,701)		(150,586)		(148,193)
Sale of marketable securities	—		143,241		—		12,497		—		51,739		2,291		2,301
Maturities of marketable securities	23,501		38,817		5,001		25,503		31,750		15,600		45,232		240,547
Business acquisitions, net of cash acquired	—		—		(200,988)		—		—		—		(1,169)		(775)
Proceeds from sale of property and equipment	—		150		425		—		—		291		297		—
Purchases of property and equipment	(2,072)		(11,361)		(5,126)		(8,079)		(2,934)		(20,254)		(3,549)		(2,387)
Capitalized internal-use software	(744)		(1,901)		(2,049)		(989)		(1,691)		(7,619)		(3,180)		(3,810)
Purchases of intangible assets	(1,811)		—		—		—		(2,093)		1		—		—
Net cash provided by (used in) investing activities	(37,313)		20,772		(267,435)		(35,399)		(244,505)		(403,943)		(110,664)		87,683
Cash flows from financing activities:
Proceeds from follow-on public offering, net of underwriting fees	274,896		—		—		—		—		—		—		—
Payments of costs related to follow-on public offering	(173)		(502)		—		—		—				—		—
Issuance of convertible note, net of issuance costs	—				—		930,775		—		—		—		—
Payments of debt issuance costs	—		—		—		(1,351)		—		—		—		—
Repayments of notes payable	—		—		(20,300)		—		—		—		—		—
Repayments of finance lease liabilities	(1,307)		(1,001)		(2,713)		(2,951)		(3,628)		(3,985)		(3,004)		(7,159)
Cash received for restricted stock sold in advance of vesting conditions	—		—		—		—		—		—		—		10,655
Cash paid for early sale of restricted shares	—		—		—		—		—		—		—		(3,498)
Proceeds from exercise of vested stock options	5,657		4,122		2,320		2,719		2,886		3,489		3,532		3,048
Proceeds from Employee Stock Purchase Plan	2,031		2,042		3,112		3,071		1,493		1,430		2,075		2,406
Net cash provided by (used in) financing activities	281,104		4,661		(17,581)		932,263		751		934		2,603		5,452
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(93)		(83)		(10)		(112)		(29)		(242)		(94)		(219)
Net increase (decrease) in cash, cash equivalents, and restricted cash	234,917		52,550		(316,175)		885,883		(260,797)		(405,942)		(116,063)		79,726
Cash, cash equivalents, and restricted cash at beginning of period	92,588		327,505		380,055		63,880		949,763		688,966		283,024		166,961
Cash, cash equivalents, and restricted cash at end of period	$	327,505	$	380,055	$	63,880	$	949,763	$	688,966	$	283,024	$	166,961	$	246,687

Free Cash Flow

(in thousands, unaudited)


	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022
Cash flow provided by (used in) operations	$	(8,781)	$	27,200	$	(31,149)	$	(10,869)	$	(17,014)	$	(2,691)	$	(7,908)	$	(13,190)
Capital expenditures(1)	(2,816)		(13,262)		(8,016)		(9,068)		(4,625)		(27,873)		(6,729)		(6,197)
Free Cash Flow	$	(11,597)	$	13,938	$	(39,165)	$	(19,937)	$	(21,639)	$	(30,564)	$	(14,637)	$	(19,387)

__________

(1)Capital Expenditures are defined as cash used for purchases of property and equipment and capitalized internal-use software, as reflected in our statement of cash flows.