Fastly(FSLY) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Performance Overview Fastly's Q2 2025 saw strong revenue growth, positive free cash flow, product enhancements, key customer wins, and significant leadership appointments Product Innovation and Developments In Q2 2025, Fastly focused on enhancing its security and delivery offerings, launching Attack Insights for DDoS Protection, AI Bot Management, and expanded IPv6 support - Enhanced DDoS Protection with Attack Insights for better visibility into attack mitigation[8] - Released Fastly AI Bot Management to General Availability (GA), giving customers granular control over AI bot interactions[8] - Introduced IPv6 to Origin support in Fastly Delivery, enabling full dual-stack traffic handling[8] - Expanded into Mexico with the first Point of Presence to improve speed and lower latency for customers in the region[8] - Product package deals grew over 50% year-over-year in the second quarter, with deals involving renewals growing over 130% YoY[8] Customer Highlights Fastly secured several significant new customers and cross-selling opportunities in Q2 2025, highlighting the appeal of its integrated network services and security platform - A cloud-native, SaaS core banking platform selected Fastly for its Network Services and Security offerings[8] - A premier programmable financial services company adopted Fastly's DDoS technology in a key cross-selling deal[8] - A leading global omnichannel retailer of sports fashion and a major international warehouse club both selected Fastly's full platform offerings[8] Corporate Highlights The second quarter featured significant leadership changes aimed at strengthening the company's executive team and go-to-market strategy - Appointed Kip Compton as Chief Executive Officer[9] - Appointed Richard Wong as Chief Financial Officer, succeeding Ronald Kisling[9] - Scott Lovett, Chief Revenue Officer, was named President, Go to Market, unifying the revenue and marketing organizations[9] Key Financial & Metrics Highlights Fastly reported strong financial performance in Q2 2025 with 12% year-over-year revenue growth to $148.7 million, driven by a 15% increase in security revenue Q2 2025 Financial & Metrics Summary | Metric | Q2 2025 Value | Year-over-Year Change | | :--- | :--- | :--- | | Total Revenue | $148.7 million | +12% | | Security Revenue | $29.3 million | +15% | | Free Cash Flow | $10.9 million | Positive (vs. -$18.5M in Q2 2024) | | Enterprise Customer Count | 622 | +21 from Q2 2024 | | LTM Net Retention Rate (NRR) | 104% | Up from 100% in Q1 2025 | | Remaining Performance Obligations (RPO) | $315 million | +41% | Third Quarter and Full Year 2025 Guidance Fastly provided its financial outlook for the third quarter and full fiscal year of 2025, projecting Q3 revenue between $149.0 million and $153.0 million Q3 and Full Year 2025 Guidance | Metric | Q3 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Total Revenue | $149.0M - $153.0M | $594.0M - $602.0M | | Non-GAAP Operating Income (Loss) | ($1.0M) - $3.0M | ($9.0M) - ($3.0M) | | Non-GAAP Net Income (Loss) per share | ($0.02) - $0.02 | ($0.10) - ($0.04) | Key Metrics and Definitions This section details Fastly's key performance indicators, including enterprise customer growth, net retention rate, and remaining performance obligations, along with their precise definitions Quarterly Key Metrics In Q2 2025, enterprise customer count increased to 622, with revenue from this segment growing to 94% of total revenue, and RPO showing strong year-over-year growth Key Metrics Trend (Q2 2024 vs Q2 2025) | Metric | Q2 2024 | Q1 2025 | Q2 2025 | | :--- | :--- | :--- | :--- | | Enterprise Customer Count | 601 | 595 | 622 | | Enterprise Customer Revenue % | 91% | 93% | 94% | | Total Customer Count | 3,295 | 3,035 | 3,097 | | LTM Net Retention Rate (NRR) | 110% | 100% | 104% | | Remaining Performance Obligation (RPO) (millions) | $223.1 | $303.0 | $315.1 | Definitions of Key Metrics The company provides specific definitions for its key performance indicators, including enterprise customers, LTM Net Retention Rate, and Remaining Performance Obligations - Enterprise Customers: Defined as customers with annualized current quarter revenue exceeding $100,000[10] - LTM Net Retention Rate (NRR): Calculated by dividing the revenue from a cohort of customers in the last twelve months (including expansion and contraction) by the revenue from the same cohort in the prior twelve-month period[10] - Remaining Performance Obligations (RPO): Includes future committed revenue for periods within current customer contracts, as well as deferred revenue[10] Financial Statements This section presents Fastly's consolidated financial statements, including GAAP and non-GAAP results, balance sheet, and cash flow analysis for the reported periods Consolidated Statements of Operations (GAAP) For the second quarter of 2025, Fastly reported total revenue of $148.7 million, an increase from $132.4 million in the prior year's quarter, with a GAAP net loss of $37.5 million Q2 2025 Statement of Operations Highlights (GAAP, in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $148,709 | $132,371 | | Gross Profit | $81,116 | $72,901 | | Loss from Operations | ($36,943) | ($46,734) | | Net Loss | ($37,541) | ($43,729) | | Net Loss Per Share | ($0.26) | ($0.32) | Reconciliation of GAAP to Non-GAAP Financial Measures Fastly adjusts its GAAP results to provide non-GAAP metrics, primarily by excluding stock-based compensation, amortization of acquired intangibles, and other non-recurring items Q2 2025 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Gross Profit | $81,116 | $6,629 | $87,745 | | Operating Loss | ($36,943) | $32,349 | ($4,594) | | Net Loss | ($37,541) | $32,566 | ($4,975) | | Net Loss per Share | ($0.26) | | ($0.03) | Consolidated Balance Sheets As of June 30, 2025, Fastly's balance sheet showed total assets of $1.46 billion, with cash and equivalents at $321.2 million and total liabilities at $520.5 million Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $82,487 | $286,175 | | Total current assets | $464,663 | $440,195 | | Total assets | $1,463,177 | $1,451,359 | | Liabilities & Equity | | | | Total current liabilities | $312,803 | $104,456 | | Total liabilities | $520,530 | $486,109 | | Total stockholders' equity | $942,647 | $965,250 | Consolidated Statements of Cash Flows In Q2 2025, the company generated $25.8 million in cash from operating activities, resulting in a net decrease in cash of $43.0 million for the quarter Q2 2025 Cash Flow Summary (in thousands) | Cash Flow Category | Q2 2025 | | :--- | :--- | | Net cash provided by operating activities | $25,798 | | Net cash used in investing activities | ($69,954) | | Net cash provided by financing activities | $982 | | Net decrease in cash | ($42,997) | Free Cash Flow Fastly achieved positive free cash flow of $10.9 million in Q2 2025, a significant improvement from the negative $18.5 million reported in Q2 2024 Free Cash Flow Calculation (in thousands) | Component | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $25,798 | ($4,948) | | Capital expenditures | ($14,887) | ($13,617) | | Free Cash Flow | $10,911 | ($18,541) | Disclosures and Non-GAAP Measures This section outlines the company's forward-looking statements and explains the use and reconciliation of non-GAAP financial measures for clearer operational insights Forward-Looking Statements This investor supplement includes forward-looking statements concerning future financial performance, product capabilities, and strategic plans, which are subject to various risks and uncertainties - The report contains forward-looking statements about future financial and operating performance, product enhancements, and business strategies; actual results may differ materially[11] About Non-GAAP Financial Measures Fastly utilizes non-GAAP financial measures to provide a clearer view of its core operational performance by excluding certain non-cash or non-recurring expenses - The company uses non-GAAP measures like non-GAAP gross profit, non-GAAP operating loss, and adjusted EBITDA to supplement GAAP financials[12] - Key exclusions from GAAP measures include stock-based compensation, amortization of acquired intangible assets, executive transition costs, impairment expenses, and restructuring charges[13][14][19] - Starting Q1 2025, the company also excludes amortization of capitalized stock-based compensation from its non-GAAP measures and has recast prior periods for consistency[36]