Part I [Business](index=7&type=section&id=Item%201.%20Business) Fastly, Inc. provides an edge cloud platform for fast, secure digital experiences, reporting $506.0 million revenue and a narrowed net loss in FY2023 - Fastly's mission is to improve the internet by enabling developers to deliver transformative digital experiences on a global scale through its edge cloud platform[28](index=28&type=chunk) - The company's edge cloud platform represents a convergence of CDN with security functionalities (WAF, DDoS, Bot Detection) and the emerging edge computing market, moving compute power closer to the end user[23](index=23&type=chunk) Financial Performance (2021-2023) | Fiscal Year | Revenue (in millions) | Net Loss (in millions) | | :--- | :--- | :--- | | 2023 | $506.0 | $(133.1) | | 2022 | $432.7 | $(190.8) | | 2021 | $354.3 | $(222.7) | [Products & Services](index=9&type=section&id=Products%20%26%20Services) Fastly offers Network, Security, Compute, Observability, and Professional Services on a single, programmable edge platform designed for DevOps-friendly control and real-time visibility - The platform is built on powerful Points of Presence (POPs), a software-defined network, and is fully programmable using Varnish Configuration Language (VCL) and flexible APIs[34](index=34&type=chunk) - Fastly's security solutions include a Next-Gen WAF, DDoS protection, Bot Management, API Protection, and Account Takeover (ATO) Protection, which can be deployed across various infrastructures including cloud, on-premise, or at the edge[50](index=50&type=chunk)[51](index=51&type=chunk)[53](index=53&type=chunk) - The Compute offering provides a serverless execution environment using WebAssembly (WASM), allowing developers to build high-performance applications at the edge; it supports languages like JavaScript, Rust, and Go[54](index=54&type=chunk)[55](index=55&type=chunk) - In May 2022, Fastly acquired Glitch, a web-based development tool with over **2.6 million registered developers**, to expand its product offerings and integrate its Compute environment with Glitch's user-friendly interface[57](index=57&type=chunk) [Our Growth Strategy](index=16&type=section&id=Our%20Growth%20Strategy) Fastly's growth strategy focuses on durable innovation, platform accessibility, product line expansion, simplified pricing, new market entry, and strengthening partner ecosystems - The company plans to build a single, unified platform to simplify customer onboarding and access to all Fastly services[60](index=60&type=chunk) - A key strategy is to expand existing customer relationships by building out new products and features, helping customers recognize the full value of the platform[61](index=61&type=chunk) - Fastly aims to act as a unifying layer for a growing number of cloud services, creating value and growth by partnering with major cloud platforms like AWS, Microsoft Azure, and Google Cloud Platform[61](index=61&type=chunk) [Competition](index=19&type=section&id=Competition) Fastly competes across cloud computing, security, and CDN markets against diverse rivals, emphasizing platform functionality, performance, and programmability despite larger competitors - The competitive landscape includes legacy CDNs, security vendors, cloud hosting providers, and traditional on-premise appliance vendors[67](index=67&type=chunk) - Key competitive factors include platform performance, scalability, reliability, security, global network coverage, and credibility with developers[67](index=67&type=chunk)[68](index=68&type=chunk) [Human Capital Resources](index=21&type=section&id=Human%20Capital%20Resources) Fastly's human capital strategy focuses on attracting and retaining diverse global talent through competitive compensation and a values-driven culture, with 1,207 employees as of December 2023 - The company's hiring strategy is dedicated to building a diverse workforce and leadership team that reflects its values and customer base[70](index=70&type=chunk) Employee Statistics (as of Dec 31, 2023) | Metric | Count | | :--- | :--- | | Total Employees | 1,207 | | Employees outside U.S. | 250 | | Remote Employees | 54% of total | [Intellectual Property](index=23&type=section&id=Intellectual%20Property) Fastly protects its proprietary technology through patents, copyrights, trademarks, and trade secrets, holding 103 issued U.S. patents and 19 registered U.S. trademarks as of December 2023 Intellectual Property Portfolio (as of Dec 31, 2023) | IP Type | Jurisdiction | Status | Count | | :--- | :--- | :--- | :--- | | Patents | U.S. | Issued/Allowed | 103 | | Patents | U.S. | Pending | 19 | | Patents | Foreign | Issued | 24 | | Patents | Foreign | Pending | 10 | | Trademarks | U.S. | Registered | 19 | [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) Fastly faces diverse risks including platform failures, customer concentration, intense competition, cybersecurity threats, and talent retention, impacting its business and financial condition [Risks Related to Our Business, Industry and Technology](index=25&type=section&id=Risks%20Related%20to%20Our%20Business%2C%20Industry%20and%20Technology) Fastly's business risks include platform failures, customer concentration, supply chain issues, cybersecurity threats, intense competition, and the challenge of rapid technological change - A substantial portion of revenue comes from a limited number of customers; the **top 10 customers generated 37% of revenue** in the trailing 12 months ended Dec 31, 2023[108](index=108&type=chunk) - The company faces significant cybersecurity risks, including DDoS attacks, ransomware, and supply-chain attacks, which could lead to regulatory action, litigation, and reputational harm[115](index=115&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - The market is highly competitive, with rivals including legacy CDNs (Akamai), cloud providers (AWS, Google Cloud), and security vendors (Cloudflare, F5), many of whom have substantially greater resources[139](index=139&type=chunk)[142](index=142&type=chunk) - The company has a history of operating losses, with a net loss of **$133.1 million for FY 2023** and an accumulated deficit of **$834.8 million**, making it difficult to evaluate future prospects[112](index=112&type=chunk)[113](index=113&type=chunk) [Risks Related to Employees and Managing Our Growth](index=41&type=section&id=Risks%20Related%20to%20Employees%20and%20Managing%20Our%20Growth) Fastly's growth and success depend on attracting and retaining key talent in a competitive market, while managing the demands of organizational expansion and cultural preservation - Competition for qualified personnel, particularly software developers and sales professionals, is intense, with many competitors able to offer greater compensation[179](index=179&type=chunk) - The business depends on the efforts of senior management and key employees, including Chief Architect Artur Bergman and CEO Todd Nightingale; the loss of such personnel could be disruptive[180](index=180&type=chunk) - Failure to preserve the company's unique culture as it grows could negatively affect its ability to recruit and retain personnel and pursue corporate objectives[185](index=185&type=chunk) [Risks Related to Our Financial Position and Need for Additional Capital](index=43&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) Fastly may need additional capital, faces restrictive debt covenants, experiences seasonality, and encounters risks from international operations including currency fluctuations - The company may need to raise additional capital in the future, and any debt or equity financing could be dilutive to stockholders or involve restrictive covenants[186](index=186&type=chunk)[190](index=190&type=chunk) - The Senior Secured Credit Facilities Agreement contains financial covenants, such as maintaining a consolidated adjusted quick ratio, which could restrict operations if breached[196](index=196&type=chunk) - International operations, which accounted for **27% of revenue in 2023**, expose the company to risks such as currency fluctuations, longer payment cycles, and complex regulatory environments[192](index=192&type=chunk) [Risks Related to Laws, Regulations, and the Global Economy](index=47&type=section&id=Risks%20Related%20to%20Laws%2C%20Regulations%2C%20and%20the%20Global%20Economy) Fastly is subject to complex global privacy and data security laws, content liability risks, and macroeconomic factors including inflation and geopolitical instability - The company is subject to evolving privacy and data security laws globally, such as GDPR and CCPA, which carry substantial fines for non-compliance and create uncertainty around cross-border data transfers[206](index=206&type=chunk)[209](index=209&type=chunk)[213](index=213&type=chunk) - The activities of customers on Fastly's network could violate laws or terms of service, potentially subjecting the company to liability for user-generated content, despite legal protections like the DMCA and CDA Section 230[223](index=223&type=chunk)[225](index=225&type=chunk) - Unfavorable global economic conditions, rising inflation, and geopolitical instability could reduce IT spending, harming the business[254](index=254&type=chunk) [Risks Related to Ownership of Our Class A Common Stock](index=59&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock) Fastly's Class A common stock faces price volatility, potential dilution from convertible notes, debt servicing challenges, and anti-takeover provisions, with no foreseeable dividends - The stock price has been highly volatile, trading between **$7.97 and $24.31 per share** during the year ended December 31, 2023[262](index=262&type=chunk) - As of December 31, 2023, **$346.5 million** in aggregate principal amount of 0% convertible senior notes due 2026 remain outstanding; conversion of these notes could dilute stockholder ownership[268](index=268&type=chunk)[269](index=269&type=chunk) - The company has never paid cash dividends and does not intend to do so in the foreseeable future, meaning investors must rely on stock price appreciation for returns[284](index=284&type=chunk) [Unresolved Staff Comments](index=62&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[292](index=292&type=chunk) [Cybersecurity](index=62&type=section&id=Item%201C.%20Cybersecurity) Fastly maintains a cybersecurity risk management program overseen by its CISO and Board, designed to identify, assess, and manage material threats through various security processes - The company's CISO and security organization are responsible for identifying, assessing, and managing cybersecurity threats, integrating these efforts into the company's overall enterprise risk management program[294](index=294&type=chunk)[296](index=296&type=chunk) - The Board of Directors oversees the cybersecurity risk management process and receives reports from the CISO at least annually[301](index=301&type=chunk)[305](index=305&type=chunk) - The company maintains an incident response plan designed to escalate material cybersecurity incidents to management and the Board's disclosure committee[304](index=304&type=chunk) [Properties](index=63&type=section&id=Item%202.%20Properties) Fastly leases its corporate headquarters in San Francisco and other global office spaces, owning no real property and deeming current facilities sufficient - The corporate headquarters in San Francisco is leased until July 31, 2027[306](index=306&type=chunk) [Legal Proceedings](index=63&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that would materially affect its business, financial condition, or cash flows - The company is not presently a party to any material legal proceedings[89](index=89&type=chunk)[307](index=307&type=chunk) [Mine Safety Disclosures](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[308](index=308&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=65&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Fastly's Class A common stock trades on the NYSE under 'FSLY', with no history or intention of paying cash dividends, retaining earnings for future growth - The company's Class A common stock has traded on the NYSE under the symbol "FSLY" since May 17, 2019[311](index=311&type=chunk) - Fastly has never declared or paid cash dividends and does not expect to in the foreseeable future[313](index=313&type=chunk) [Reserved](index=67&type=section&id=Item%206.%20Reserved) This item is not required - Not required[321](index=321&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=68&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Fastly's FY2023 financial performance, including a 17% revenue increase to $506.0 million, improved gross margin, narrowed net loss, and liquidity overview [Key Business Metrics](index=77&type=section&id=Key%20Business%20Metrics) Fastly evaluates its business using key metrics like customer counts, retention, and expansion rates, with updated methodologies and specific rates reported for December 2023 - In Q1 2023, the company updated its methodology for calculating customer count metrics to be based on revenue recognized during the quarter, rather than the last month of the quarter, to better reflect business trends[359](index=359&type=chunk) - Remaining Performance Obligations (RPO) as of December 31, 2023, were **$235.7 million**[382](index=382&type=chunk) Key Business Metrics (as of Dec 31, 2023 vs 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **New Methodology:** | | | | Total Customer Count | 3,243 | 3,062 | | Enterprise Customer Count | 578 | 533 | | Avg. Enterprise Customer Spend | $880k | $822k | | **Other Metrics:** | | | | DBNER | 119.0% | 122.7% | | NRR | 110.1% | 110.7% | | LTM NRR | 113.4% | 119.1% | [Results of Operations](index=82&type=section&id=Results%20of%20Operations) Fastly's FY2023 results show a 17% revenue increase to $506.0 million, 27% gross profit growth, expanded gross margin to 53%, and a narrowed net loss of $133.1 million - Revenue growth of **$73.3 million** was driven by a **$58.1 million** increase from further adoption of the modern edge platform and a **$14.7 million** increase from products acquired from Signal Sciences[402](index=402&type=chunk) - Gross margin increased to **53% in 2023** from **48% in 2022**, as revenue growth outpaced the increase in cost of revenue[410](index=410&type=chunk) - Research and development expenses decreased by **2% to $152.2 million**, primarily due to lower stock-based compensation and increased capitalized software costs[412](index=412&type=chunk) Consolidated Statement of Operations Highlights (in thousands) | Line Item | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $505,988 | $432,725 | 17% | | Gross Profit | $266,328 | $209,781 | 27% | | Loss from Operations | $(198,028) | $(246,199) | (19.6)% | | Net Loss | $(133,088) | $(190,774) | (30.2)% | [Liquidity and Capital Resources](index=87&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 2023, Fastly held $328.8 million in cash and equivalents, financed operations through equity and debt, and repurchased $367.3 million in convertible notes - During 2023, the company repurchased **$367.3 million** of its convertible senior notes for an aggregate price of **$309.1 million**, resulting in a net gain on extinguishment of **$52.4 million**[427](index=427&type=chunk)[607](index=607&type=chunk) - The company has a **$100.0 million** Senior Secured Credit Facility, which was undrawn as of December 31, 2023; the maturity date was subsequently extended to June 14, 2024[424](index=424&type=chunk)[677](index=677&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash from Operating Activities | $362 | $(69,632) | | Net cash from Investing Activities | $294,940 | $235,751 | | Net cash used in Financing Activities | $(331,380) | $(189,149) | [Quantitative and Qualitative Disclosures about Market Risk](index=88&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Fastly is exposed to interest rate and currency exchange risks, though their impact on financial statements is not considered material due to short-term investments and unhedged foreign operations - The primary market risks are interest rate fluctuations on its investment portfolio and foreign currency exchange rate fluctuations[457](index=457&type=chunk) - A hypothetical **10% change** in interest rates or foreign exchange rates would not have had a material impact on the consolidated financial statements for the period presented[457](index=457&type=chunk)[458](index=458&type=chunk) [Financial Statements and Supplementary Data](index=89&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Fastly's audited consolidated financial statements for fiscal years 2021-2023, including balance sheets, statements of operations, and cash flows, with detailed notes [Report of Independent Registered Public Accounting Firm](index=95&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued unqualified opinions on Fastly's FY2023 financial statements and internal controls, noting manual revenue processing as a critical audit matter - The audit firm issued an unqualified opinion, stating the financial statements are presented fairly in all material respects[464](index=464&type=chunk) - A critical audit matter was identified related to the complex manual procedures required to process and record certain revenue transactions[469](index=469&type=chunk)[470](index=470&type=chunk) [Consolidated Financial Statements](index=97&type=section&id=Consolidated%20Financial%20Statements) Fastly's consolidated financial statements show total assets of $1.53 billion and liabilities of $545.7 million as of December 2023, with revenue of $506.0 million and a net loss of $133.1 million for the year Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash, cash equivalents, and marketable securities | $328,808 | $683,077 | | Total Assets | $1,525,191 | $1,896,113 | | Long-term debt | $343,507 | $704,710 | | Total Liabilities | $545,703 | $940,955 | | Total Stockholders' Equity | $979,488 | $955,158 | [Notes to Consolidated Financial Statements](index=104&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail Fastly's accounting policies, revenue disaggregation, debt instruments, lease obligations, goodwill, and equity incentive plans, providing critical context to the financial statements - During 2023, the company repurchased **$367.3 million** of its convertible notes, resulting in a net gain on debt extinguishment of **$52.4 million**[606](index=606&type=chunk)[607](index=607&type=chunk) - Total stock-based compensation expense was **$136.3 million in 2023**, down from **$145.8 million in 2022**[656](index=656&type=chunk) Revenue by Geographic Region (in thousands) | Region | 2023 | 2022 | | :--- | :--- | :--- | | United States | $370,424 | $316,149 | | Asia Pacific | $72,873 | $58,073 | | Europe | $42,770 | $38,469 | | All other | $19,921 | $20,034 | | **Total** | **$505,988** | **$432,725** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=133&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None[679](index=679&type=chunk) [Controls and Procedures](index=133&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded Fastly's disclosure controls and internal control over financial reporting were effective as of December 2023, with an unqualified auditor opinion - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[681](index=681&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2023, and the independent auditor issued an unqualified opinion on its effectiveness[682](index=682&type=chunk)[686](index=686&type=chunk) [Other Information](index=134&type=section&id=Item%209B.%20Other%20Information) This section discloses Rule 10b5-1 trading plan adoptions by executives and the February 2024 amendment to the Senior Secured Credit Facilities Agreement extending its maturity date - On February 16, 2024, the company amended its Credit Agreement to extend the maturity date to June 14, 2024[697](index=697&type=chunk) - During the fourth quarter of 2023, CFO Ronald Kisling and Director Richard Daniels adopted Rule 10b5-1 trading plans for the potential sale of company stock[694](index=694&type=chunk)[695](index=695&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=135&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[699](index=699&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=136&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2024 Proxy Statement[701](index=701&type=chunk) [Executive Compensation](index=136&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item, concerning executive compensation, is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2024 Proxy Statement[703](index=703&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=136&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item, regarding security ownership by certain beneficial owners and management, is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2024 Proxy Statement[704](index=704&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=136&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) The information required for this item, covering certain relationships, related party transactions, and director independence, is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2024 Proxy Statement[705](index=705&type=chunk) [Principal Accountant Fees and Services](index=136&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The information required for this item, detailing fees paid to and services provided by the principal accountant, is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2024 Proxy Statement[706](index=706&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=137&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K - This section contains the index of exhibits filed with the Form 10-K, including governance documents, material contracts, and certifications[710](index=710&type=chunk)[711](index=711&type=chunk) [Form 10-K Summary](index=139&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates there is no Form 10-K summary - None[715](index=715&type=chunk)

Still stinging from its Feb. 15 post-earnings drop of 30.6%, Fastly Inc (NYSE:FSLY) was last seen starting the holiday-shortened week down 5.5% at $14.92. Only a week removed from its Feb. 12 two-year high of $25.87, the stock is now trading at its lowest levels since October. For those looking to buy in on the dip, however, the recent pullback has FSLY within one standard deviation of its 320-day moving average, a trendline with historically bullish implications. According to Schaeffer's Senior Quantitativ ...

Shares of edge computing company Fastly (FSLY -3.31%) got hammered on Thursday. The stock fell about 30% as the company's fourth revenue and its first-quarter guidance came in below expectations. With shares down so substantially, is now a good time for investors to consider buying this tech stock, or is the company's decelerating top-line growth and management's soft guidance a red flag that should keep investors on the sidelines?To find out, let's examine a few key takeaways from Fastly's fourth-quarter u ...

Shares of Fastly (FSLY -4.19%) were falling again this week, according to data from S&P Global Market Intelligence. The edge computing company posted weak growth and more losses in the fourth quarter of 2023, leading to the stock falling by as much as 36% for the week. Compared to its all-time high set in 2021, Fastly shares are down 88%, meaning for every $100 investors used to buy shares at the top, they would have just $12 left today.Growing revenue but no profitsIn the fourth quarter, Fastly's revenue g ...

The S&P 500 keeps hitting new record highs this year. It dipped the other day as new inflation data all but killed the hopes for a Federal Reserve interest rate cut in March. Yet consumer confidence is growing the economy won’t crash, which suggests the broad-based index will eventually shrug off the sour price news. This backdrop has led to this list of stocks to buy.Last year the index gained 24% on the backs of a small group of stocks known as the Magnificent Seven. In 2024, many more companies are perpe ...

Fastly (FSLY -30.03%) stock is getting crushed in Thursday's trading. The content delivery network company's share price was down 30% as of 3 p.m. ET, according to data from S&P Global Market Intelligence.Fastly published its fourth-quarter report after the market closed Wednesday, posting a beat on earnings but sales that fell significantly short of the market's expectations. Making matters worse, the company's guidance raised red flags -- and its chief architect sold shares.Fastly's earnings beat wasn't e ...

Fastly stock is on track for its worst day in two yearsFastly Inc (NYSE:FSLY) stock is headed for its largest percentage drop since February 2022, down 29.2% to trade at $16.67 at last glance, after the cloud company's disappointing first-quarter forecast and fourth-quarter revenue miss. Craig-Hallum downgraded FSLY to "hold" from "buy," after the earnings event, though no fewer than three other analysts chimed in with small price-target hikes. Considering the 12-month consensus price target of $21.78 is no ...

Financial Data and Key Metrics - Revenue for 2023 was $506 million, representing 17% YoY growth, exceeding the original guidance range of $495 million to $505 million [7] - Q4 2023 revenue was $137.8 million, up 15% YoY and 8% QoQ, at the lower end of the guidance range due to weaker international traffic [7] - Operating loss for 2023 was $37 million, less than half of the $76 million loss in 2022, and better than the original guidance of $53 million to $47 million [12] - Q4 2023 operating loss was $2.3 million, better than the guidance range of $10 million to $6 million [12] - Gross margin for 2023 was 56.9%, up 330 basis points from 2022, with Q4 gross margin at 59.2%, a 220 basis point increase YoY [19] - Net income in Q4 2023 was $1.7 million, marking the first positive net income since Q2 2020 [20] Business Line Data and Key Metrics - Signal Sciences products contributed 13% of Q4 revenue, a 25% YoY increase [28] - The company added 31 new enterprise customers in Q4, with 19 being net new to Fastly [8] - Average enterprise customer spend was $880,000, up 7% YoY [15] - The company introduced a bot mitigation solution in limited availability, with positive early feedback [13][121] Market Data and Key Metrics - International revenue accounted for 27% of total revenue in 2023, up from 26% in 2022 [62] - Weaker international traffic in Q4 resulted in lower revenue growth but higher gross margins [33] - The company saw strong growth in live streaming and gaming activity, offsetting weaker international traffic [7] Company Strategy and Industry Competition - Fastly is focusing on unifying its platform, simplifying customer onboarding, and improving cross-selling opportunities [16] - The company is expanding its security offerings to meet growing demand, with 76% of businesses planning to increase cybersecurity budgets in 2024 [11] - Fastly was named a leader in the Forrester Wave Edge Development Platform's Q4 2023 report, with high scores in vision, innovation, and pricing flexibility [11] - The company is leveraging its edge platform to deliver fast, safe, and engaging digital experiences, positioning itself as a key player in the edge cloud market [24] Management Commentary on Operating Environment and Future Outlook - Management expects 2024 revenue to grow 16% YoY, with gross margins improving by approximately 200 basis points and exiting the year at 60% or better [46] - The company anticipates Q1 2024 revenue to be in the range of $131 million to $135 million, with a seasonal decline in gross margins [44] - Management highlighted the importance of new customer acquisition and product innovation in driving future growth [67] - The company is focused on improving operational efficiency and leveraging revenue growth to improve cash flow in 2024 [20] Other Important Information - Fastly will discontinue disclosing quarterly NRR and DBNER metrics starting in Q1 2024, and will instead provide revenue breakdowns by product area (core, growth, and emerging) [26][27] - The company repurchased $367.3 million in principal amount of convertible notes in 2023, reducing its convertible debt balance by more than 50% [39] - Free cash flow improved by $113 million YoY to negative $59 million in 2023, driven by increased cash from operations and reduced equipment payments [41] Q&A Session Summary Question: Backlog Performance and Package Momentum - The sequential decline in RPO was due to the burn-down of multi-year commitments with large customers, with package momentum expected to help stabilize RPO in the future [51][52] Question: Succession Planning for Chief Revenue Officer - The departure of the Chief Revenue Officer late in Q4 did not impact the quarter, and the company is actively seeking a replacement [55] Question: International Traffic Weakness - Weaker international traffic in Q4 was due to a slowdown in one high-cost country, which shifted traffic to other regions, impacting revenue but improving gross margins [62][97] Question: Net Retention and DBNER Trends - New enterprise customers are expected to contribute to improved net retention rates over time, as customers typically ramp up their spend in the first 2.5 to 3 years [77] Question: Gross Margin Improvement and 60% Target - The company has a clear plan to achieve 60% gross margins by the end of 2024, driven by network efficiency, cost control, and improved peering relationships [100] Question: Signal Sciences Growth and Bot Management Feedback - Signal Sciences growth slowed slightly in Q4, but the company remains confident in its security offerings, with positive early feedback on the new bot management product [115][121] Question: Revenue Acceleration and International Assumptions - The company expects revenue growth to accelerate throughout 2024, with international traffic assumptions based on baseline projections and potential tailwinds from new customers or traffic surges [106]

Fastly Inc.’s stock dropped nearly 20% in the extended session Wednesday after the cloud-computing company showed Wall Street a mixed fourth quarter, with revenue coming in below expectations. Fastly FSLY lost $23.4 million, or 18 cents a share, in the quarter, compared with a loss of $46.7 million, or 38 cents a share, in the fourth quarter of 2022. Adjusted... Master your money. Subscribe to MarketWatch. Get this article and all of MarketWatch. Access from any device. Anywhere. Anytime. Subs ...

Analysts on Wall Street project that Fastly (FSLY) will announce quarterly loss of $0.02 per share in its forthcoming report, representing an increase of 75% year over year. Revenues are projected to reach $139.25 million, increasing 16.7% from the same quarter last year.The consensus EPS estimate for the quarter has undergone a downward revision of 1.3% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial estimates durin ...