Fastly(US:FSLY)2025-08-06 20:23Part I - Financial Information Financial Statements The company presents its unaudited condensed consolidated financial statements for the period ended June 30, 2025 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $82,487 | $286,175 | | Total current assets | $464,663 | $440,195 | | Goodwill | $670,356 | $670,356 | | Total assets | $1,463,177 | $1,451,359 | | Liabilities & Equity | | | | Total current liabilities | $312,803 | $104,456 | | Long-term debt | $149,883 | $337,614 | | Total liabilities | $520,530 | $486,109 | | Total stockholders' equity | $942,647 | $965,250 | Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $148,709 | $132,371 | $293,183 | $265,891 | | Gross Profit | $81,116 | $72,901 | $157,914 | $146,135 | | Loss from Operations | $(36,943) | $(46,734) | $(75,122) | $(92,994) | | Net Loss | $(37,541) | $(43,729) | $(76,689) | $(87,156) | | Net Loss Per Share | $(0.26) | $(0.32) | $(0.53) | $(0.64) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $43,086 | $6,184 | | Net cash provided by (used in) investing activities | $(248,839) | $41,675 | | Net cash provided by (used in) financing activities | $1,810 | $(8,673) | | Net (decrease) increase in cash | $(203,688) | $39,125 | Notes to Condensed Consolidated Financial Statements Revenue by Product Line (in thousands) | Product Line | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Network Services | $114,877 | $104,158 | $228,106 | $210,154 | | Security | $29,267 | $25,368 | $55,702 | $49,968 | | Other | $4,565 | $2,845 | $9,375 | $5,769 | | Total Revenue | $148,709 | $132,371 | $293,183 | $265,891 | - As of June 30, 2025, the company had remaining performance obligations of $315.1 million, with approximately 72% expected to be recognized as revenue over the next 12 months49 Debt Instruments Carrying Value (in thousands) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Principal amount | $338,594 | $338,594 | | Less: unamortized debt issuance costs | $(659) | $(980) | | Less: current portion of long-term debt | $(188,052) | — | | Long-term debt, less current portion | $149,883 | $337,614 | - The company is involved in a securities class action lawsuit and related stockholder derivative actions, but no significant accruals for loss contingencies have been recorded as a loss is not considered probable109110113 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial performance, highlighting 12% YoY revenue growth and discussing key metrics, operations, and liquidity Overview and Key Business Metrics - Fastly's edge cloud platform enables developers to build, secure, and deliver digital experiences for a diverse customer base161162163 Key Business Metrics as of June 30 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Customer Count | 3,097 | 3,295 | | Enterprise Customer Count | 622 | 601 | | Last-Twelve Months Net Retention Rate (LTM NRR) | 104.4% | 109.6% | - Enterprise customers generated 94% of total annualized revenue in Q2 2025, an increase from 91% in Q2 2024191 Results of Operations Revenue Growth (Q2 2025 vs Q2 2024) | Product Line | Q2 2025 Revenue (M) | Q2 2024 Revenue (M) | YoY Growth | | :--- | :--- | :--- | :--- | | Network Services | $114.9 | $104.2 | 10% | | Security | $29.3 | $25.4 | 15% | | Other | $4.5 | $2.8 | 60% | | Total | $148.7 | $132.4 | 12% | - Gross margin remained flat at 55% for Q2 2025 compared to Q2 2024, as revenue growth was matched by increased network-related costs221223 - Operating expenses decreased by 1% YoY in Q2 2025, driven by: - Sales and Marketing: Decreased by 4% due to lower personnel-related costs225 - General and Administrative: Decreased by 14% due to lower stock-based compensation226 - Research and Development: Increased by 20% due to higher stock-based compensation and lower capitalized software costs228 Liquidity and Capital Resources - As of June 30, 2025, the company had $321.2 million in cash, cash equivalents, and marketable securities, which is considered sufficient for the next twelve months242244 - Net cash from operating activities increased significantly to $43.1 million for the first six months of 2025, compared to $6.2 million in the prior year period252253254 - The company amended its Senior Secured Credit Facilities Agreement, reducing the commitment to $60.0 million and extending the maturity date to April 30, 2027245 Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are interest rate and currency exchange fluctuations, which are not considered material - The company's primary market risks are interest rate fluctuations affecting its $321.2 million in cash and investments, and foreign currency exchange rate changes267268 - The company does not currently use derivative financial instruments to manage interest rate or currency risk exposure267268 Controls and Procedures Disclosure controls were deemed ineffective due to a material weakness in the revenue process, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness270 - The material weakness relates to deficiencies in the revenue process, caused by a lack of qualified personnel and insufficient controls over its third-party billing system272 - Despite the material weakness, management concluded that the financial statements are fairly presented in all material respects in conformity with GAAP271 Part II - Other Information Legal Proceedings The company faces a securities class action lawsuit and related derivative actions with an uncertain outcome - A securities class action lawsuit was filed against the company and certain officers on May 24, 2024, with a motion to dismiss filed on January 15, 2025109279 - Several stockholder derivative actions with substantially similar allegations have also been filed and are currently stayed pending the resolution of the motion to dismiss110 Risk Factors Key business risks include customer concentration, a material weakness in internal controls, and a history of operating losses - The company has significant revenue concentration from a limited number of customers, and a potential U.S. ban on TikTok could negatively impact business298299 - A material weakness in internal control over financial reporting has been identified in the revenue process, which could lead to a loss of investor confidence if not remediated394395 - The company has a history of operating losses, with an accumulated deficit of $1,069.5 million as of June 30, 2025, and expects to continue incurring losses303 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - None484 Other Information Several executives, including the current and former CEO, adopted Rule 10b5-1 trading plans during the quarter Executive Rule 10b5-1 Trading Plan Adoptions (Q2 2025) | Name and Position | Adoption Date | Total Shares to be Sold | | :--- | :--- | :--- | | Todd Nightingale (Former CEO) | 6/3/2025 | 441,000 | | Charles Compton (CEO) | 6/3/2025 | 181,634 | | Artur Bergman (CTO) | 6/3/2025 | 2,917,357 | Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements and officer certifications