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): February 15, 2023

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 February 15, 2023, Fastly, Inc. (the "Company") announced its financial results for the quarter and full year ended December 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 and fiscal year ended December 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 February 15, 2023
99.2	Investor Supplement for Fourth Quarter and Fiscal 2022 Results
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

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:	February 15, 2023
		By:	/s/ Ronald W. Kisling
			Ronald W. Kisling
			Chief Financial Officer

Document

Exhibit 99.1

Fastly Announces Fourth Quarter and Full Year 2022 Financial Results

•Record quarterly revenue exceeded high-end of quarterly guidance range and grew 22% year-over-year

•Record annual revenue of $432.7 million, representing 22% growth year-over-year

•GAAP gross margin grew 380 bps sequentially; non-GAAP gross margin grew 340 basis points sequentially

•Trailing 12 month net retention rate (LTM NRR)1 increased to 119% in the fourth quarter from 118% in the third quarter 2022

SAN FRANCISCO, February 15, 2023 — Fastly, Inc. (NYSE: FSLY), the world’s fastest edge cloud platform, today announced financial results for its fourth quarter and full year ended December 31, 2022.

“We are excited to close out 2022 with another record quarter, exceeding the top end of our guidance range while demonstrating a significant improvement to gross margin,” said Todd Nightingale, CEO of Fastly.

“I've been incredibly impressed with the speed of innovation at Fastly and the focus our teams have demonstrated as we move to a higher velocity go-to-market motion.” continued Nightingale. “Our customers are passionate about our ability to elevate digital experiences at scale and we look forward to continued momentum in 2023.”

	Three months ended<br>December 31,						Year ended<br>December 31,
	2022			2021			2022			2021
Revenue	$	119,321		$	97,717		$	432,725		$	354,330
Gross Margin
GAAP gross margin	52.4		%	50.9		%	48.5		%	52.9		%
Non-GAAP gross margin	57.0		%	55.8		%	53.6		%	57.7		%
Operating loss
GAAP operating loss	$	(48,462)		$	(56,656)		$	(246,199)		$	(219,021)
Non-GAAP operating loss	$	(11,994)		$	(11,734)		$	(76,468)		$	(55,134)
Net loss per share
GAAP net loss per common share—basic and diluted	$	(0.38)		$	(0.49)		$	(1.57)		$	(1.92)
Non-GAAP net loss per common share—basic and diluted	$	(0.08)		$	(0.10)		$	(0.59)		$	(0.48)

Fourth Quarter 2022 Financial Summary

•Total revenue of $119.3 million, representing 22% year-over-year growth and 10% sequential growth.

•GAAP gross margin of 52.4%, compared to 50.9% in the fourth quarter of 2021. Non-GAAP gross margin of 57.0%, compared to 55.8% in the fourth quarter of 2021.

•GAAP net loss of $46.7 million, compared to $57.5 million in the fourth quarter of 2021. Non-GAAP net loss of $9.5 million, compared to $11.7 million in the fourth quarter of 2021.

•GAAP net loss per basic and diluted shares of $0.38 compared to $0.49 in the fourth quarter of 2021. Non-GAAP net loss per basic and diluted shares of $0.08, compared to $0.10 in the fourth quarter of 2021.

Full Year 2022 Financial Summary

•Total revenue of $432.7 million, representing 22% growth year-over-year.

•GAAP gross margin of 48.5%, compared to 52.9% in fiscal 2021. Non-GAAP gross margin of 53.6%, compared to 57.7% in fiscal 2021.

•GAAP net loss of $190.8 million, compared to $222.7 million in fiscal 2021. Non-GAAP net loss of $72.3 million, compared to $55.9 million in fiscal 2021.

•GAAP net loss per basic and diluted shares of $1.57 compared to $1.92 in fiscal 2021. Non-GAAP net loss per basic and diluted shares of $0.59, compared to $0.48 in fiscal 2021.

Key Metrics

•Annual revenue retention rate (ARR)6 was 99.2% in 2022, flat to the 99.2% level in 2021.

•Trailing 12 month net retention rate (LTM NRR)1 increased to 119% in the fourth quarter from 118% in the third quarter 2022.

•Dollar-Based Net Expansion Rate (DBNER)2 increased to 123% in the fourth quarter from 122% in the third quarter 2022.

•Total customer count was 2,958 in the fourth quarter, up 33 from the third quarter; 493 were enterprise customers3 in the fourth quarter, up 11 from the third quarter.

•Average enterprise customer spend7 of $782 thousand in the fourth 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.

Fourth Quarter Business and Product Highlights

•Puja Jaspal joined Fastly as Chief People Officer, bringing her experience from Cisco as SVP of People & Communities, where she drove HR strategy, workplace and talent development.

•Hosted Altitude, our annual user conference in New York featuring almost 400 attendees and 15 keynotes from Fastly’s leadership team and customer partners.

•Relaunched our industry-leading Open Source and Nonprofit Program as “Fast Forward,” with a renewed focus on building community among the builders and maintainers of a faster, safer, and more inclusive internet.

•With the acquisition of Glitch in May 2022, we’ve extended Fastly’s opportunity to potentially convert the ideas of over 2 million developers into globally performant, secure and reliable applications at scale.

•Fastly Next-Gen WAF now supports automated provisioning and management via Terraform for our cloud-based deployment option.

•Achieved Payment Card Industry Data Security Standard (PCI DSS) compliance as a Level 1 Service Provider.

•Expanded our Next-Gen WAFs advanced rate limiting rules to customers of our Professional security package.

•Released into GA our Javascript SDK for Compute@Edge, offering unmatched initialization performance of startup times.

First Quarter and Full Year 2023 Guidance

	Q1 2023	Full Year 2023
Total Revenue (millions)	$114 - $117	$495 - $505
Non-GAAP Operating Loss (millions)	($18.0) - ($16.0)	($53.0) - ($47.0)
Non-GAAP Net Loss per share (4)(5)	($0.12) - ($0.08)	($0.27) - ($0.21)

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future and cannot be reasonably determined or predicted at this time, although it is important to note that these factors could be material to Fastly’s future GAAP financial results.

Conference Call Information

Fastly will host an investor conference call to discuss its results at 1:30 p.m. PT / 4:30 p.m. ET on Wednesday, February 15, 2023.

Date: Wednesday, February 15, 2023

Time: 1:30 p.m. PT / 4:30 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 1:30 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, February 15 through February 28, 2023 by dialing 800-770-2030 or 647-362-9199 and entering the passcode 7543239.

About Fastly

Fastly’s powerful and programmable edge cloud platform helps the world’s top brands deliver the fastest online experiences possible, while improving site performance, enhancing security, and empowering innovation at global scale. With world-class support that achieves 95%+ average annual customer satisfaction ratings, Fastly’s beloved suite of edge compute, delivery, and security offerings has been recognized as a leader by industry analysts such as IDC, Forrester and Gartner. Compared to legacy providers, Fastly’s powerful and modern network architecture is the fastest on the planet, empowering developers to deliver secure websites and apps at global scale with rapid time-to-market and industry-leading cost savings. Thousands of the world’s most prominent organizations trust Fastly to help them upgrade the internet experience, including Reddit, Pinterest, Stripe, Neiman Marcus, The New York Times, Epic Games, and GitHub. Learn more about Fastly at https://www.fastly.com/, and follow us @fastly.

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 Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022. Additional information will also be set forth in our Annual Report on Form 10-K for the fiscal year ended December 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, executive transition costs, net gain on extinguishment of debt 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, executive transition costs, interest income, interest expense, including amortization of debt discount and issuance costs, net gain on extinguishment of debt, other income (expense), net, and income taxes.

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. Management considers its operating results without this activity when evaluating its ongoing non-GAAP performance and its 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 expense related to our debt obligations. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA 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: consists of cash used for purchases of property and equipment, net of proceeds from sale of property and equipment, capitalized internal-use software and payments on finance lease obligations, 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. Management considers its operating results without this activity 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.

Executive Transition costs: consists of one-time cash and non-cash charges recognized with respect to changes in our executive’s employment status. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to 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, including any advance payments made related to capital expenditures.

Income Taxes: consists primarily of expenses recognized related to state and foreign income taxes. Management considers its operating results without this activity 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.

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 this activity when evaluating its ongoing non-GAAP net loss performance and its 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 operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Net Gain on Debt Extinguishment: relates to net gain on the partial repurchase of our outstanding convertible debt. Management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA performance because it is not believed by management to be reflective of our core business, ongoing operating results or future outlook.

Other Income (Expense), Net: consists primarily of foreign currency transaction gains and losses. Management considers its operating results without this activity 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. Although stock-based compensation is an expense for the Company and is viewed as a form of compensation, management considers its operating results without this activity when evaluating its ongoing non-GAAP net loss performance and its adjusted EBITDA 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.

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 press release.

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 the trailing 12-month period.

4 Assumes weighted average basic shares outstanding of 125.8 million in Q1 2023 and 129.5 million for the full year 2023.

5 Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2023.

6 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.

7 Average enterprise customer spend is calculated by taking the sum of the trailing 12-month revenue contributed by enterprise customers existing as of the current period, and dividing that by the number of enterprise customers as of the current period.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts, unaudited)

	Three months ended<br>December 31,				Year ended<br>December 31,
	2022		2021		2022		2021
Revenue	$	119,321	$	97,717	$	432,725	$	354,330
Cost of revenue(1)	56,738		47,944		222,944		167,002
Gross profit	62,583		49,773		209,781		187,328
Operating expenses:
Research and development(1)	37,197		34,997		155,308		126,859
Sales and marketing(1)	44,623		42,151		179,869		152,645
General and administrative(1)	29,225		29,281		120,803		126,845
Total operating expenses	111,045		106,429		455,980		406,349
Loss from operations	(48,462)		(56,656)		(246,199)		(219,021)
Net gain on extinguishment of debt	—		—		54,391		—
Interest income	2,894		552		7,044		1,282
Interest expense	(1,354)		(1,593)		(5,887)		(5,245)
Other income (expense)	46		201		(29)		356
Loss before income taxes	(46,876)		(57,496)		(190,680)		(222,628)
Income tax expense	(223)		25		94		69
Net loss	$	(46,653)	$	(57,521)	$	(190,774)	$	(222,697)
Net income (loss) per share attributable to common stockholders, basic and diluted	$	(0.38)	$	(0.49)	$	(1.57)	$	(1.92)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted	123,587		118,161		121,723		116,053

__________

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

	Three months ended<br>December 31,				Year ended<br>December 31,
	2022		2021		2022		2021
Cost of revenue	$	2,938	$	2,316	$	12,050	$	7,227
Research and development	11,469		15,675		58,435		47,019
Sales and marketing	7,885		11,399		39,083		31,159
General and administrative	9,126		10,198		36,228		55,083
Total	$	31,418	$	39,588	$	145,796	$	140,488

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, unaudited)

	Three months ended<br>December 31,						Year ended<br>December 31,
	2022			2021			2022			2021
Gross Profit
GAAP gross profit	$	62,583		$	49,773		$	209,781		$	187,328
Stock-based compensation	2,938			2,316			12,050			7,227
Amortization of acquired intangible assets	2,475			2,475			9,900			9,900
Non-GAAP gross profit	$	67,996		$	54,564		$	231,731		$	204,455
GAAP gross margin	52.4		%	50.9		%	48.5		%	52.9		%
Non-GAAP gross margin	57.0		%	55.8		%	53.6		%	57.7		%
Research and development
GAAP research and development	$	37,197		$	34,997		$	155,308		$	126,859
Stock-based compensation	(11,469)			(15,675)			(58,435)			(47,019)
Non-GAAP research and development	$	25,728		$	19,322		$	96,873		$	79,840
Sales and marketing
GAAP sales and marketing	$	44,623		$	42,151		$	179,869		$	152,645
Stock-based compensation	(7,885)			(11,399)			(39,083)			(31,159)
Amortization of acquired intangible assets	(2,575)			(2,710)			(10,891)			(10,944)
Non-GAAP sales and marketing	$	34,163		$	28,042		$	129,895		$	110,542
General and administrative
GAAP general and administrative	$	29,225		$	29,281		$	120,803		$	126,845
Stock-based compensation	(9,126)			(10,198)			(33,195)			(55,083)
Executive transition costs	—			—			(4,207)			—
Acquisition-related expenses	—			(149)			(1,970)			(2,555)
Non-GAAP general and administrative	$	20,099		$	18,934		$	81,431		$	69,207
Operating loss
GAAP operating loss	$	(48,462)		$	(56,656)		$	(246,199)		$	(219,021)
Stock-based compensation	31,418			39,588			142,763			140,488
Executive transition costs	—			—			4,207			—
Amortization of acquired intangible assets	5,050			5,185			20,791			20,844
Acquisition-related expenses	—			149			1,970			2,555
Non-GAAP operating loss	$	(11,994)		$	(11,734)		$	(76,468)		$	(55,134)
Net loss
GAAP net loss	$	(46,653)		$	(57,521)		$	(190,774)		$	(222,697)
Stock-based compensation	31,418			39,588			142,763			140,488
Executive transition costs	—			—			4,207			—
Amortization of acquired intangible assets	5,050			5,185			20,791			20,844
Acquisition-related expenses	—			149			1,970			2,555
Net gain on extinguishment of debt	—			—			(54,391)			—
Amortization of debt discount and issuance costs	716			947			3,169			2,907
Non-GAAP loss	$	(9,469)		$	(11,652)		$	(72,265)		$	(55,903)
Non-GAAP net loss per common share—basic and diluted	$	(0.08)		$	(0.10)		$	(0.59)		$	(0.48)
Weighted average basic and diluted common shares	123,587			118,161			121,723			116,053
	Three months ended<br>December 31,				Year ended<br>December 31,
---	---	---	---	---	---	---	---	---
	2022		2021		2022		2021
Adjusted EBITDA
GAAP net loss	$	(46,653)	$	(57,521)	$	(190,774)	$	(222,697)
Stock-based compensation	31,418		39,588		142,763		140,488
Executive transition costs	—		—		4,207		—
Depreciation and other amortization	11,903		8,228		43,524		29,208
Amortization of acquired intangible assets	5,050		5,185		20,791		20,844
Acquisition-related expenses	—		149		1,970		2,555
Interest income	(2,894)		(552)		(7,044)		(1,282)
Interest expense	638		1,593		2,718		5,245
Amortization of debt discount and issuance costs	716		947		3,169		2,907
Net gain on extinguishment of debt	—		—		(54,391)		—
Other expense (income)	(46)		(201)		29		(356)
Income tax expense	(223)		25		94		69
Adjusted EBITDA	$	(91)	$	(2,559)	$	(32,944)	$	(23,019)

Condensed Consolidated Balance Sheets

(in thousands)

	As of <br>December 31, 2022		As of <br>December 31, 2021
	(unaudited)		(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	143,391	$	166,068
Marketable securities, current	374,581		361,795
Accounts receivable, net of allowance for credit losses	89,578		64,625
Prepaid expenses and other current assets	28,933		32,160
Total current assets	636,483		624,648
Property and equipment, net	180,378		166,961
Operating lease right-of-use assets, net	68,440		69,631
Goodwill	670,185		636,805
Intangible assets, net	82,900		102,596
Marketable securities, non-current	165,105		528,911
Other assets	92,622		29,468
Total assets	$	1,896,113	$	2,159,020
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,786	$	9,257
Accrued expenses	61,161		36,112
Finance lease liabilities, current	28,954		21,125
Operating lease liabilities, current	23,026		20,271
Other current liabilities	34,394		45,107
Total current liabilities	152,321		131,872
Long-term debt	704,710		933,205
Finance lease liabilities, noncurrent	15,507		22,293
Operating lease liabilities, noncurrent	61,341		55,114
Other long-term liabilities	7,076		2,583
Total liabilities	940,955		1,145,067
Stockholders’ equity:
Class A common stock	2		2
Additional paid-in capital	1,666,106		1,527,468
Accumulated other comprehensive loss	(9,286)		(2,627)
Accumulated deficit	(701,664)		(510,890)
Total stockholders’ equity	955,158		1,013,953
Total liabilities and stockholders’ equity	$	1,896,113	$	2,159,020

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Three months ended<br>December 31,				Year ended<br>December 31,
	2022		2021		2022		2021
Cash flows from operating activities:
Net loss	$	(46,653)	$	(57,521)	$	(190,774)	$	(222,697)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	11,371		8,089		42,619		28,799
Amortization of intangible assets	5,582		5,309		21,696		21,238
Non-cash lease expense	7,835		7,065		29,714		26,883
Amortization of debt discount and issuance costs	715		950		3,169		3,185
Amortization of deferred contract costs	2,896		1,727		8,916		6,294
Stock-based compensation	31,418		39,588		145,796		140,488
Provision for credit losses	624		155		2,406		196
Interest paid for finance lease	(538)		(495)		(2,381)		(1,754)
(Gain) loss on disposals of property and equipment	—		(123)		854		(300)
Amortization and accretion of discounts and premiums on investments	515		987		3,137		2,221
Impairment of operating ROU assets	2,083		—		2,083		—
Net gain on extinguishment of debt	—		—		(54,391)		—
Other adjustments	3,980		(258)		3,688		4
Changes in operating assets and liabilities:
Accounts receivable	(17,288)		(10,546)		(27,359)		(14,563)
Prepaid expenses and other current assets	(971)		725		(6,758)		(4,777)
Other assets	(15,492)		(3,103)		(35,396)		(10,423)
Accounts payable	(1,267)		1,799		(4,724)		146
Accrued expenses	3,799		1,548		8,289		4,261
Operating lease liabilities	(6,377)		(6,712)		(27,044)		(26,447)
Other liabilities	5,640		2,908		6,828		8,764
Net cash used in operating activities	(12,128)		(7,908)		(69,632)		(38,482)
Cash flows from investing activities:
Purchases of marketable securities	—		(150,586)		(355,479)		(928,155)
Sales of marketable securities	65		2,291		161,918		66,527
Maturities of marketable securities	94,303		45,232		535,040		118,085
Business acquisitions, net of cash acquired	1,843		(1,169)		(25,902)		(1,169)
Advance payment for purchase of property and equipment	(10,923)		—		(42,197)		—
Purchases of property and equipment	(8,529)		(3,549)		(19,975)		(34,816)
Proceeds from sale of property and equipment	126		297		492		588
Capitalized internal-use software	(4,290)		(3,180)		(18,146)		(13,479)
Purchases of intangible assets	—		—		—		(2,092)
Net cash (used in) provided by investing activities	72,595		(110,664)		235,751		(794,511)
Cash flows from financing activities:
Issuance of convertible note, net of issuance costs	—		—		—		930,775
Payments of debt issuance costs	—		—		—		(1,351)
Repayments of notes payable	—		—		(177,082)		—
Repayments of finance lease liabilities	(4,427)		(3,004)		(22,532)		(13,568)
Cash received for restricted stock sold in advance of vesting conditions	—		—		10,655		—
Cash paid for early sale of restricted shares	—		—		(10,655)		—
Proceeds from employee stock purchase plan	(949)		2,075		4,777		8,069
Proceeds from exercise of vested stock options	364		3,532		5,688		12,626
Net cash (used in) provided by financing activities	(5,012)		2,603		(189,149)		936,551
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	39		(94)		(390)		(477)
Net increase (decrease) in cash, cash equivalents, and restricted cash	55,494		(116,063)		(23,420)		103,081
Cash, cash equivalents, and restricted cash at beginning of period	88,047		283,024		166,961		63,880
Cash, cash equivalents, and restricted cash at end of period	143,541		166,961		143,541		166,961
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents	143,391		166,068		143,391		166,068
Restricted cash, current	150		—		150		—
Restricted cash, non-current	—		893		—		893
Total cash, cash equivalents, and restricted cash	$	143,541	$	166,961	$	143,541	$	166,961

Free Cash Flow

(in thousands, unaudited)

	Three months ended<br>December 31,				Year ended<br>December 31,
	2022		2021		2022		2021
Cash flow used in operations	$	(12,128)	$	(7,908)	$	(69,632)	$	(38,482)
Capital expenditures(1)	(17,120)		(9,436)		(60,161)		(61,275)
Advance payment for purchase of property and equipment(2)	$	(10,923)	$	—	$	(42,197)	$	—
Free Cash Flow	$	(40,171)	$	(17,344)	$	(171,990)	$	(99,757)

__________

(1)Capital expenditures are defined as cash used for purchases of property and equipment, net of proceeds from sale of property and equipment, and capitalized internal-use software and payments on finance lease obligations, as reflected in our statement of cash flows.

(2)Advance payments for purchase of property and equipment relate to prepayments made for our capital expenditures in advance of receiving the asset, as reflected in our statement of cash flows.

Contacts:

Investor Contact:

Vernon Essi, Jr.

ir@fastly.com

Media Contact:

press@fastly.com

Source: Fastly, Inc.

Document

Fourth Quarter 2022 Investor Supplement

Product Developments

Security:

•Fastly Next-Gen WAF now supports automated provisioning and management via Terraform for our cloud-based deployment option.

•Achieved Payment Card Industry Data Security Standard (PCI DSS) compliance as a Level 1 Service Provider.

•Expanded our Next-Gen WAFs advanced rate limiting rules to customers of our Professional security package.

Leading Innovation:

•Introduced in beta live log-tailing to our Edge Observer, offering real-time log streaming capabilities and visibility.

•Announced in GA, IAM, secrets-free authentication support for our Google BigQuery, Cloud Storage, and Pub/Sub logging integrations.

•Released into GA our Javascript SDK for Compute@Edge, offering unmatched load time performance.

Developer Relations:

•With the acquisition of Glitch in May 2022, we’ve extended Fastly’s opportunity to a community of over 2 million developers eager to build globally performant, secure and reliable applications at scale on our platform.

Key Metrics Highlights

•Annual revenue retention rate (ARR)3 was 99.2% in 2022, flat to the 99.2% level in 2021.

•Trailing 12 month net retention rate (LTM NRR)1 was 119% in the fourth quarter, up from 118% in the third quarter 2022.

•Dollar-Based Net Expansion Rate (DBNER)2 was 123% in the fourth quarter, up from 122% in the third quarter 2022.

•Total customer count was 2,958 in the fourth quarter, up 33 from the third quarter; 493 were enterprise customers4 in the fourth quarter, up 11 from the third quarter.

•Average enterprise customer spend8 of $782 thousand in the fourth quarter, up 3% quarter-over-quarter.

Calculations of Key and Other Selected Metrics – Quarterly (unaudited)

	Q1 2021			Q2 2021			Q3 2021			Q4 2021			Q1 2022			Q2 2022			Q3 2022			Q4 2022
Total Customer Count	2,458			2,581			2,748			2,804			2,880			2,894			2,925			2,958
Enterprise Customer Count(4)	395			408			430			445			457			471			482			493
Enterprise Revenue % Total LTM	89		%	89		%	88		%	88		%	89		%	88		%	89		%	89		%
Enterprise Customer Average Spend LTM (in thousands)(8)	$	705		$	702		$	698		$	704		$	722		$	730		$	759		$	782
Net Retention Rate (NRR) Quarter(9)	110		%	93		%	112		%	107		%	114		%	128		%	115		%	111		%
Net Retention Rate (NRR) LTM(1)	135		%	121		%	114		%	118		%	115		%	117		%	118		%	119		%
Dollar-Based Net Expansion Rate (DBNER)(2)	141		%	126		%	118		%	121		%	118		%	120		%	122		%	123		%
Annual Revenue Retention Rate (ARR)(3)	—		%	—		%	—		%	99.2		%	—		%	—		%	—		%	99.2		%
Global Network Capacity	130 TB/sec			145 TB/sec			167 TB/sec			184 TB/sec			198 TB/sec			215 TB/sec			233 TB/sec			252 TB/sec
Countries	26			28			31			32			34			34			35			35
Markets	58			61			68			71			75			78			79			79

Exhibit 99.2

Corporate Development

•Puja Jaspal joined Fastly as CPO, bringing her experience from Cisco as SVP of People & Communities, where she drove HR strategy, workplace and talent development.

Customer and Partner Highlights

•Hosted Altitude, our annual user conference in New York featuring almost 400 attendees and 15 keynotes from Fastly’s leadership team and customer partners.

•Duolingo, the most popular language-learning platform and most downloaded education app worldwide, chose Fastly’s Next-Gen WAF to protect their applications.

•McKesson, a Fortune 10 global leader in healthcare, chose Fastly’s network services to improve its website performance and support future roadmap initiatives.

•A leading online grocery delivery service, chose Fastly’s Next-Gen WAF over its incumbent provider due to its ease of use and rate limiting ability at scale.

•Civitatis, a leading online platform for booking travel related activities, chose Fastly’s cloud edge due to its performance and ease of use over competitive offerings.

Fourth Quarter 2022 Financial Highlights

•Record revenue of $119.3 million, representing 10% sequential growth and 22% year-over-year growth.

•GAAP gross margin of 52.4%, compared to 50.9% in the fourth quarter of 2021. Non-GAAP gross margin of 57.0%, compared to 55.8% in the fourth quarter of 2021.

•GAAP net loss per basic and diluted shares of $0.38 compared to $0.49 in the fourth quarter of 2021. Non-GAAP net loss5 per basic and diluted shares of $0.08, compared to $0.10 in the fourth quarter of 2021.

First Quarter and Full Year 2023 Guidance:

	Q1 2023	Full Year 2023
Total Revenue (millions)	$114 - $117	$495 - $505
Non-GAAP Operating Loss (millions)(5)	($18.0) - ($16.0)	($53.0) - ($47.0)
Non-GAAP Net Loss per share (6) (7)	($0.12) - ($0.08)	($0.27) - ($0.21)

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.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 the trailing 12-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 125.8 million in Q1 2023 and 129.5 million for the full year 2023.

7.Non-GAAP Net Loss per share is calculated as Non-GAAP Net Loss divided by weighted average basic shares for 2023.

8.Average enterprise customer spend is calculated by taking the sum of the trailing 12-month revenue contributed by enterprise customers existing as of the current period, and dividing that by the number of enterprise customers as of the current period.

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 and (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; and Fastly's strategies, product and business plans. 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, and additional information that will be set forth in Fastly’s Annual Report on Form 10-K for the fiscal year ended December 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

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

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, including any advance payments made related to capital expenditures.

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

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)

	Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022		Q2 2022		Q3 2022		Q4 2022
Revenue	$	84,852	$	85,026	$	86,735	$	97,717	$	102,382	$	102,518	$	108,504	$	119,321
Cost of revenue(1)	37,494		40,320		41,244		47,944		53,915		56,466		55,825		56,738
Gross profit	47,358		44,706		45,491		49,773		48,467		46,052		52,679		62,583
Operating expenses:
Research and development(1)	28,988		30,346		32,528		34,997		40,437		38,717		38,957		37,197
Sales and marketing(1)	34,872		36,334		39,288		42,151		41,480		46,760		47,006		44,623
General and administrative (1)	33,461		35,494		28,609		29,281		29,554		29,543		32,481		29,225
Total operating expenses	97,321		102,174		100,425		106,429		111,471		115,020		118,444		111,045
Loss from operations	(49,963)		(57,468)		(54,934)		(56,656)		(63,004)		(68,968)		(65,765)		(48,462)
Net gain on extinguishment of debt	—		—		—		—		—		54,391		—		—
Interest income	174		276		280		552		681		1,502		1,967		2,894
Interest expense	(661)		(1,436)		(1,555)		(1,593)		(1,622)		(1,530)		(1,381)		(1,354)
Other income (expense)	(64)		178		41		201		(279)		(1,673)		1,877		46
Loss before income taxes	(50,514)		(58,450)		(56,168)		(57,496)		(64,224)		(16,278)		(63,302)		(46,876)
Income tax expense (benefit)	169		(155)		30		25		40		159		118		(223)
Net loss	$	(50,683)	$	(58,295)	$	(56,198)	$	(57,521)	$	(64,264)	$	(16,437)	$	(63,420)	$	(46,653)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.44)	$	(0.51)	$	(0.48)	$	(0.49)	$	(0.54)	$	(0.14)	$	(0.52)	$	(0.38)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	114,134		115,326		116,475		118,161		119,673		121,242		122,339		123,587

__________

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

	Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022		Q2 2022		Q3 2022		Q4 2022
Cost of revenue	$	1,186	$	1,828	$	1,897	$	2,316	$	2,946	$	3,188	$	2,978	$	2,938
Research and development	7,958		8,634		14,752		15,675		18,589		13,889		14,488		11,469
Sales and marketing	5,008		5,631		9,121		11,399		10,094		10,184		10,920		7,885
General and administrative	16,686		17,333		10,866		10,198		8,393		7,717		10,992		9,126
Total	$	30,838	$	33,426	$	36,636	$	39,588	$	40,022	$	34,978	$	39,378	$	31,418

Reconciliation of GAAP to Non-GAAP Financial Measures - Quarterly

(unaudited, in thousands, except per share amounts)

	Q1 2021			Q2 2021			Q3 2021			Q4 2021			Q1 2022			Q2 2022			Q3 2022			Q4 2022
Gross Profit
GAAP gross Profit	$	47,358		$	44,706		$	45,491		$	49,773		$	48,467		$	46,052		$	52,679		$	62,583
Stock-based compensation	1,186			1,828			1,897			2,316			2,946			3,188			2,978			2,938
Amortization of acquired intangible assets	2,475			2,475			2,475			2,475			2,475			2,475			2,475			2,475
Non-GAAP gross profit	51,019			49,009			49,863			54,564			53,888			51,715			58,132			67,996
GAAP gross margin	55.8		%	52.6		%	52.4		%	50.9		%	47.3		%	44.9		%	48.6		%	52.4		%
Non-GAAP gross margin	60.1		%	57.6		%	57.5		%	55.8		%	52.6		%	50.4		%	53.6		%	57.0		%
Research and development
GAAP research and development	28,988			30,346			32,528			34,997			40,437			38,717			38,957			37,197
Stock-based compensation	(7,958)			(8,634)			(14,752)			(15,675)			(18,589)			(13,889)			(14,488)			(11,469)
Non-GAAP research and development	21,030			21,712			17,776			19,322			21,848			24,828			24,469			25,728
Sales and marketing
GAAP sales and marketing	34,872			36,334			39,288			42,151			41,480			46,760			47,006			44,623
Stock-based compensation	(5,008)			(5,631)			(9,121)			(11,399)			(10,094)			(10,184)			(10,920)			(7,885)
Amortization of acquired intangible assets	(2,816)			(2,709)			(2,709)			(2,710)			(2,709)			(2,710)			(2,897)			(2,575)
Non-GAAP sales and marketing	27,048			27,994			27,458			28,042			28,677			33,866			33,189			34,163
General and administrative
GAAP general and administrative	33,461			35,494			28,609			29,281			29,554			29,543			32,481			29,225
Stock-based compensation	(16,686)			(17,333)			(10,866)			(10,198)			(8,393)			(7,717)			(7,959)			(9,126)
Executive transition costs	—			—			—			—			—			—			(4,207)			—
Acquisition-related expenses	(929)			(1,298)			(179)			(149)			(58)			(1,912)			—			—
Non-GAAP general and administrative	15,846			16,863			17,564			18,934			21,103			19,914			20,315			20,099
Operating loss
GAAP operating loss	(49,963)			(57,468)			(54,934)			(56,656)			(63,004)			(68,968)			(65,765)			(48,462)
Stock-based compensation	30,838			33,426			36,636			39,588			40,022			34,978			36,345			31,418
Executive transition costs	—			—			—			—			—			—			4,207			—
Amortization of acquired intangible assets	5,291			5,184			5,184			5,185			5,184			5,185			5,372			5,050
Acquisition-related expenses	929			1,298			179			149			58			1,912			—			—
Non-GAAP operating loss	(12,905)			(17,560)			(12,935)			(11,734)			(17,740)			(26,893)			(19,841)			(11,994)
Net loss
GAAP net loss	(50,683)			(58,295)			(56,198)			(57,521)			(64,264)			(16,437)			(63,420)			(46,653)
Stock-based compensation	30,838			33,426			36,636			39,588			40,022			34,978			36,345			31,418
Executive transition costs	—			—			—			—			—			—			4,207			—
Amortization of acquired intangible assets	5,291			5,184			5,184			5,185			5,184			5,185			5,372			5,050
Acquisition-related expenses	929			1,298			179			149			58			1,912			—			—
Net gain on extinguishment of debt	—			—			—			—			—			(54,391)			—			—
Amortization of debt issuance costs	—			993			967			947			963			776			714			716
Non-GAAP net loss	$	(13,625)		$	(17,394)		$	(13,232)		$	(11,652)		$	(18,037)		$	(27,977)		$	(16,782)		$	(9,469)
GAAP net loss per common share—basic and diluted	$	(0.44)		$	(0.51)		$	(0.48)		$	(0.49)		$	(0.54)		$	(0.14)		$	(0.52)		$	(0.38)
Non-GAAP net loss per common share—basic and diluted	$	(0.12)		$	(0.15)		$	(0.11)		$	(0.10)		$	(0.15)		$	(0.23)		$	(0.14)		$	(0.08)
Weighted average basic common shares	114,134			115,326			116,475			118,161			119,673			121,242			122,339			123,587

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

(unaudited, in thousands, except per share amounts)

	Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022		Q2 2022		Q3 2022		Q4 2022
Adjusted EBITDA
GAAP net loss	$	(50,683)	$	(58,295)	$	(56,198)	$	(57,521)	$	(64,264)	$	(16,437)	$	(63,420)	$	(46,653)
Stock-based compensation	30,838		33,426		36,636		39,588		40,022		34,978		36,345		31,418
Executive transition costs	—		—		—		—		—		—		4,207		—
Depreciation and other amortization	6,491		7,000		7,489		8,228		9,975		10,860		10,786		11,903
Amortization of acquired intangible assets	5,291		5,184		5,184		5,185		5,184		5,185		5,372		5,050
Acquisition-related expenses	929		1,298		179		149		58		1,912		—		—
Interest income	(174)		(276)		(280)		(552)		(681)		(1,502)		(1,967)		(2,894)
Interest expense	661		443		588		646		659		754		667		638
Amortization of debt discount and issuance costs	—		993		967		947		963		776		714		716
Net gain on extinguishment of debt	—		—		—		—		—		(54,391)		—		—
Other (income) expense, net	64		(178)		(41)		(201)		279		1,673		(1,877)		(46)
Income tax (benefit) expense	169		(155)		30		25		40		159		118		(223)
Adjusted EBITDA	$	(6,414)	$	(10,560)	$	(5,446)	$	(3,506)	$	(7,765)	$	(16,033)	$	(9,055)	$	(91)

Non-GAAP Consolidated Statements of Operations - Quarterly

(unaudited, in thousands, except per share amounts)

	Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022		Q2 2022		Q3 2022		Q4 2022
Revenue	$	84,852	$	85,026	$	86,735	$	97,717	$	102,382	$	102,518	$	108,504	$	119,321
Cost of revenue (1)(2)	33,833		36,017		36,872		43,153		48,494		50,803		50,372		51,325
Gross profit	51,019		49,009		49,863		54,564		53,888		51,715		58,132		67,996
Operating expenses:
Research and development(1)	21,030		21,712		17,776		19,322		21,848		24,828		24,469		25,728
Sales and marketing(1)(2)	27,048		27,994		27,458		28,042		28,677		33,866		33,189		34,163
General and administrative (1)(3)(7)	15,846		16,863		17,564		18,934		21,103		19,914		20,315		20,099
Total operating expenses	63,924		66,569		62,798		66,298		71,628		78,608		77,973		79,990
Income (loss) from operations(1)(2)(3)(7)	(12,905)		(17,560)		(12,935)		(11,734)		(17,740)		(26,893)		(19,841)		(11,994)
Interest income	174		276		280		552		681		1,502		1,967		2,894
Interest expense(4)	(661)		(443)		(588)		(646)		(659)		(754)		(667)		(638)
Other income (expense), net	(64)		178		41		201		(279)		(1,673)		1,877		46
Income (loss) before income tax expense (benefit)(5)	(13,456)		(17,549)		(13,202)		(11,627)		(17,997)		(27,818)		(16,664)		(9,692)
Income tax expense (benefit)(6)	169		(155)		30		25		40		159		118		(223)
Net income (loss)(1)(2)(3)(4)(5)(6)(7)	$	(13,625)	$	(17,394)	$	(13,232)	$	(11,652)	$	(18,037)	$	(27,977)	$	(16,782)	$	(9,469)
Net income (loss) per share attributable to common stockholders, basic and diluted	$	(0.12)	$	(0.15)	$	(0.11)	$	(0.10)	$	(0.15)	$	(0.23)	$	(0.14)	$	(0.08)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted	114,134		115,326		116,475		118,161		119,673		121,242		122,339		123,587

(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 net gain on extinguishment of debt. See GAAP to Non-GAAP reconciliations.

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

(7) Excludes executive transition costs. See GAAP to Non-GAAP reconciliations.

Consolidated Balance Sheets - Quarterly

(unaudited, in thousands)

	Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022		Q2 2022		Q3 2022		Q4 2022
Assets
Current assets:
Cash and cash equivalents	$	948,783	$	687,986	$	282,131	$	166,068	$	245,794	$	62,510	$	87,897	$	143,391
Marketable securities	147,793		241,744		361,290		361,795		393,950		419,905		445,048		374,581
Accounts receivable, net	52,363		56,065		54,234		64,625		73,717		68,218		72,914		89,578
Prepaid expenses and other current assets	18,495		22,309		22,230		32,160		23,616		29,037		31,321		28,933
Total current assets	1,167,434		1,008,104		719,885		624,648		737,077		579,670		637,180		636,483
Property and equipment, net	98,608		116,471		147,729		166,961		174,550		173,950		179,080		180,378
Operating lease right-of-use assets, net	63,305		62,630		70,149		69,631		63,455		69,861		72,374		68,440
Goodwill	635,645		635,646		635,635		636,805		637,570		670,186		670,158		670,185
Intangible assets, net	116,379		113,215		107,905		102,596		97,287		93,978		88,482		82,900
Marketable securities, non-current	29,930		173,227		429,489		528,911		394,464		284,951		186,066		165,105
Other assets	26,993		27,578		28,142		29,468		30,020		60,199		73,258		92,622
Total assets	$	2,138,294	$	2,136,871	$	2,138,934	$	2,159,020	$	2,134,423	$	1,932,795	$	1,906,598	$	1,896,113
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	12,019	$	10,202	$	7,766	$	9,257	$	8,248	$	10,011	$	8,265	$	4,786
Accrued expenses	36,320		28,609		36,063		36,112		49,902		49,943		54,186		61,161
Finance lease liabilities	10,910		14,773		18,675		21,125		26,766		28,088		27,807		28,954
Operating lease liabilities	20,011		19,713		20,007		20,271		18,688		19,243		20,919		23,026
Other current liabilities	19,036		29,735		24,758		45,107		36,569		33,705		33,422		34,394
Total current liabilities	98,296		103,032		107,269		131,872		140,173		140,990		144,599		152,321
Long-term debt, less current portion	930,291		931,385		932,305		933,205		934,121		703,375		704,042		704,710
Finance lease liabilities, noncurrent	13,648		19,685		24,659		22,293		28,867		26,479		21,027		15,507
Operating lease liabilities, noncurrent	47,505		47,177		54,066		55,114		52,334		60,657		62,750		61,341
Other long-term liabilities	3,520		6,502		5,056		2,583		2,205		7,556		7,201		7,076
Total liabilities	1,093,260		1,107,781		1,123,355		1,145,067		1,157,700		939,057		939,619		940,955
Stockholders’ equity:
Class A and Class B common stock	2		2		2		2		2		2		2		2
Additional paid-in capital	1,384,045		1,426,520		1,469,366		1,527,468		1,561,371		1,597,869		1,634,666		1,666,106
Accumulated other comprehensive income (loss)	(137)		(261)		(420)		(2,627)		(9,496)		(12,542)		(12,678)		(9,286)
Accumulated deficit	(338,876)		(397,171)		(453,369)		(510,890)		(575,154)		(591,591)		(655,011)		(701,664)
Total stockholders’ equity	1,045,034		1,029,090		1,015,579		1,013,953		976,723		993,738		966,979		955,158
Total liabilities and stockholders’ equity	$	2,138,294	$	2,136,871	$	2,138,934	$	2,159,020	$	2,134,423	$	1,932,795	$	1,906,598	$	1,896,113

Consolidated Statements of Cash Flows – Quarterly

(unaudited, in thousands)

	Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022		Q2 2022		Q3 2022		Q4 2022
Cash flows from operating activities:
Net loss	$	(50,683)	$	(58,295)	$	(56,198)	$	(57,521)	$	(64,264)	$	(16,437)	$	(63,420)	$	(46,653)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	6,419		6,927		7,364		8,089		9,850		10,736		10,662		11,371
Amortization of intangible assets	5,363		5,257		5,309		5,309		5,309		5,309		5,496		5,582
Non-cash lease expense	6,357		6,303		7,158		7,065		6,839		6,539		8,501		7,835
Amortization of debt discount and issuance costs	332		937		966		950		964		775		715		715
Amortization of deferred contract costs	1,411		1,535		1,621		1,727		1,851		2,138		2,031		2,896
Stock-based compensation	30,838		33,426		36,636		39,588		40,022		34,978		39,378		31,418
Provision for credit losses	(420)		225		236		155		127		402		1,253		624
Interest paid for finance lease	(330)		(405)		(524)		(495)		(591)		(649)		(603)		(538)
(Gain) loss on disposals of property and equipment	27		—		(204)		(123)		268		586		—		—
Amortization and accretion of discounts and premiums on investments	—		—		—		—		957		894		771		515
Impairment of operating ROU assets	—		—		—		—		—		—		—		2,083
Net gain on extinguishment of debt	—		—		—		—		—		(54,391)		—		—
Other adjustments	64		749		683		729		128		(67)		(353)		3,980
Changes in operating assets and liabilities:
Accounts receivable	(1,685)		(3,927)		1,595		(10,546)		(9,219)		5,097		(5,949)		(17,288)
Prepaid expenses and other current assets	(1,680)		(3,814)		(8)		725		(2,111)		(2,701)		(975)		(971)
Other assets	(2,952)		(2,137)		(2,231)		(3,103)		(2,451)		(3,948)		(13,505)		(15,492)
Accounts payable	2,119		(1,957)		(1,815)		1,799		(2,492)		3,336		(4,301)		(1,267)
Accrued expenses	(755)		(3,080)		6,548		1,548		4,891		(3,729)		3,328		3,799
Operating lease liabilities	(6,365)		(6,491)		(6,879)		(6,712)		(6,557)		(6,280)		(7,830)		(6,377)
Other liabilities	1,071		7,733		(2,948)		2,908		3,289		732		(2,833)		5,640
Net cash used in operating activities	(10,869)		(17,014)		(2,691)		(7,908)		(13,190)		(16,680)		(27,634)		(12,128)
Cash flows from investing activities:
Purchases of marketable securities	(64,331)		(269,537)		(443,701)		(150,586)		(148,193)		(207,286)		—		—
Sales of marketable securities	12,497		—		51,739		2,291		2,301		159,552		—		65
Maturities of marketable securities	25,503		31,750		15,600		45,232		240,547		127,333		72,857		94,303
Business acquisitions, net of cash acquired	—		—		—		(1,169)		(775)		(25,224)		(1,746)		1,843
Advance payment for purchase of property and equipment	—		—		—		—		—		(29,310)		(1,964)		(10,923)
Purchases of property and equipment	(8,079)		(2,934)		(20,254)		(3,549)		(4,664)		(4,151)		(2,631)		(8,529)
Proceeds from sale of property and equipment	—		—		291		297		—		241		125		126
Capitalized internal-use software	(989)		(1,691)		(7,619)		(3,180)		(3,810)		(4,926)		(5,120)		(4,290)
Purchases of intangible assets	—		(2,093)		1		—		—		—		—		—
Net cash provided by (used in) investing activities	(35,399)		(244,505)		(403,943)		(110,664)		85,406		16,229		61,521		72,595
Cash flows from financing activities:
Issuance of convertible note, net of issuance costs	930,775		—		—		—		—		—		—		—
Payments of debt issuance costs	(1,351)		—		—		—		—		—		—		—
Net cash paid for debt extinguishment	—		—		—		—		—		(177,082)		—		—
Repayments of finance lease liabilities	(2,951)		(3,628)		(3,985)		(3,004)		(4,882)		(6,147)		(7,076)		(4,427)
Cash received for restricted stock sold in advance of vesting conditions	—		—		—		—		10,655		—		—		—
Cash paid for early sale of restricted shares	—		—		—		—		(3,498)		(3,539)		(3,618)		—
Proceeds from employee stock purchase plan	3,071		1,493		1,430		2,075		2,406		1,571		1,749		(949)
Proceeds from exercise of vested stock options	2,719		2,886		3,489		3,532		3,048		1,721		555		364
Net cash provided by (used in) financing activities	932,263		751		934		2,603		7,729		(183,476)		(8,390)		(5,012)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(112)		(29)		(242)		(94)		(219)		(100)		(110)		39
Net increase (decrease) in cash, cash equivalents, and restricted cash	885,883		(260,797)		(405,942)		(116,063)		79,726		(184,027)		25,387		55,494
Cash, cash equivalents, and restricted cash at beginning of period	63,880		949,763		688,966		283,024		166,961		246,687		62,660		88,047
Cash, cash equivalents, and restricted cash at end of period	$	949,763	$	688,966	$	283,024	$	166,961	$	246,687	$	62,660	$	88,047	$	143,541

Free Cash Flow

(in thousands, unaudited)


	Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022		Q2 2022		Q3 2022		Q4 2022
Cash flow provided by (used in) operations	$	(10,869)	$	(17,014)	$	(2,691)	$	(7,908)	$	(13,190)	$	(16,680)	$	(27,634)	$	(12,128)
Capital expenditures(1)	(12,019)		(8,253)		(31,567)		(9,436)		(13,356)		(14,983)		(14,702)		(17,120)
Advance payment for purchase of property and equipment(2)	—		—		—		—		—		(29,310)		(1,964)		(10,923)
Free Cash Flow	$	(22,888)	$	(25,267)	$	(34,258)	$	(17,344)	$	(26,546)	$	(60,973)	$	(44,300)	$	(40,171)

__________

(2)Advance payments for purchase of property and equipment relate to prepayments made for our capital expenditures in advance of receiving the asset, as reflected in our statement of cash flows.