Fastly Inc

Previous wording

For the three months ended June 30, 2024 and 2023, our revenue was $132.4 million and $122.8 million, respectively, an increase of 8%. For the six months ended June 30, 2024 and 2023, our revenue was $265.9 million and $240.4 million, respectively, an increase of 11%.

Current wording

For the three months ended September 30, 2024 and 2023, our revenue was $137.2 million and $127.8 million, respectively, an increase of 7%. For the nine months ended September 30, 2024 and 2023, our revenue was $403.1 million and $368.2 million, respectively, an increase of 9%.

Previous wording

Our 10 largest customers generated an aggregate of 37% and 36% of our revenue in the trailing 12 months ended June 30, 2024 and 2023, respectively. No customer accounted for more than 10% of revenue for both the three and six months ended June 30, 2024 and 2023. Affiliated customers that are business units of a single company in the streaming entertainment space generated an aggregate of 11% and 12% of the Company’s revenue for the three and six months ended June 30, 2024 and 2023, respectively.

Current wording

Our 10 largest customers generated an aggregate of 35% and 37% of our revenue in the trailing 12 months ended September 30, 2024 and 2023, respectively. No single customer accounted for more than 10% of revenue for the three months ended September 30, 2024, whereas one customer accounted for more than 10% of revenue for the three months ended September 30, 2023. No single customer accounted for more than 10% of revenue for each of the nine months ended September 30, 2024 and 2023. Affiliated customers that are business units of a single company in the streaming entertainment space generated an aggregate of less than 10% and 14% of the Company’s revenue for the three months ended September 30, 2024 and 2023, respectively, and 10% and 11% for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

For the three months ended June 30, 2024 and 2023, we incurred a net loss of $43.7 million and $10.7 million, respectively. For the six months ended June 30, 2024 and 2023, we incurred a net loss of $87.2 million and $55.4 million, respectively.

Current wording

For the three months ended September 30, 2024 and 2023, we incurred a net loss of $38.0 million and $54.3 million, respectively. For the nine months ended September 30, 2024 and 2023, we incurred a net loss of $125.2 million and $109.7 million, respectively.

Previous wording

In addition, we cannot be certain what actions the United States or another country’s government may take with respect to certain of our customers that may adversely affect our ability to do business with our customers that operate in China, target China as a market or that have strong business ties to China. And any action they do take could have a negative impact on our business. One of our largest customers during the three and six months ended June 30, 2024 operates in and has strong business ties to China.

Current wording

In addition, we cannot be certain what actions the United States or another country’s government may take with respect to certain of our customers that may adversely affect our ability to do business with our customers that operate in China, target China as a market or that have strong business ties to China. And any action they do take could have a negative impact on our business. One of our largest customers during the three and nine months ended September 30, 2024 operates in and has strong business ties to China.

Previous wording

Our customers operating in Russia, Ukraine, and Israel represented an immaterial portion of our consolidated revenue as of both the three and six months ended June 30, 2024 and 2023.

Current wording

Our customers operating in Russia, Ukraine, and Israel represented an immaterial portion of our consolidated revenue as of both the three and nine months ended September 30, 2024 and 2023.

Previous wording

We must continue to invest in our platform and network infrastructure to maintain our position in the market. We expect our revenue growth to be dependent on an expanding customer base and continued adoption of our edge cloud delivery, security, and other products and services. In anticipation of winning new customers and staying ahead of our customers’ needs, we plan to continue to invest in order to expand the scale and capacity of our software-defined modern network. This could result in increased network service provider fees, which could adversely affect our gross margins if we are unable to offset these costs with revenue from new customers and increase revenue from existing customers. Our customers require constant innovation within their own organizations and expect the same from us. Therefore, we will continue to invest in resources to enhance our development capabilities and introduce new products and features on our platform. We believe that investment in research and development will contribute to our long-term growth but may also negatively impact our short-term profitability. For the three months ended June 30, 2024 and 2023, our research and development expenses as a percentage of revenue were 27% and 30%, respectively. For the six months ended June 30, 2024 and 2023, our research and development expenses as a percentage of revenue were 28% and 31%, respectively. We may also seek to acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities. For example, in May 2022, we acquired Glitch, a software company specializing in developer project management tools to bolster our existing product offerings, by making it easier to innovate at a layer in the Fastly software stack.

Current wording

We must continue to invest in our platform and network infrastructure to maintain our position in the market. We expect our revenue growth to be dependent on an expanding customer base and continued adoption of our edge cloud delivery, security, and other products and services. In anticipation of winning new customers and staying ahead of our customers’ needs, we plan to continue to invest in order to expand the scale and capacity of our software-defined modern network. This could result in increased network service provider fees, which could adversely affect our gross margins if we are unable to offset these costs with revenue from new customers and increase revenue from existing customers. Our customers require constant innovation within their own organizations and expect the same from us. Therefore, we will continue to invest in resources to enhance our development capabilities and introduce new products and features on our platform. We believe that investment in research and development will contribute to our long-term growth but may also negatively impact our short-term profitability. For the three months ended September 30, 2024 and 2023, our research and development expenses as a percentage of revenue were 23% and 31%, respectively. For the nine months ended September 30, 2024 and 2023, our research and development expenses as a percentage of revenue were 26% and 31%, respectively. We may also seek to acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities. For example, in May 2022, we acquired Glitch, a software company specializing in developer project management tools to bolster our existing product offerings, by making it easier to innovate at a layer in the Fastly software stack.

Previous wording

In addition to our paying customers, we also have trial, developer, nonprofit and open source programs, and other non-paying accounts that are excluded from our customer count metric. We operate globally and as a result, the success of our ability to retain our customers is also affected by general economic and market conditions around the world. As of June 30, 2024 and 2023, we had 3,295 and 3,072 customers, respectively.

Current wording

In addition to our paying customers, we also have trial, developer, nonprofit and open source programs, and other non-paying accounts that are excluded from our customer count metric. We operate globally and as a result, the success of our ability to retain our customers is also affected by general economic and market conditions around the world. As of September 30, 2024 and 2023, we had 3,638 and 3,102 customers, respectively.

Previous wording

Historically our revenue has been driven primarily by a subset of our customers, our enterprise customers, who have leveraged our platform substantially from a usage standpoint. We believe that the recruitment and cultivation of enterprise customers is critical to our long-term success. Our enterprise customer count is defined as customers with annualized current quarter revenue in excess of $100,000. This is calculated by taking the revenue we recognized for each customer in the current quarter and multiplying it by four. As of June 30, 2024, we had 601 of such enterprise customers that generated 91% of the total annualized current quarter revenue from our total customers for the period ended June 30, 2024. As of June 30, 2023, we had 551 of such enterprise customers that generated 92% of the total annualized current quarter revenue from our total customers for the period ended June 30, 2023.

Current wording

Historically our revenue has been driven primarily by a subset of our customers, our enterprise customers, who have leveraged our platform substantially from a usage standpoint. We believe that the recruitment and cultivation of enterprise customers is critical to our long-term success. Our enterprise customer count is defined as customers with annualized current quarter revenue in excess of $100,000. This is calculated by taking the revenue we recognized for each customer in the current quarter and multiplying it by four. As of September 30, 2024, we had 576 of such enterprise customers that generated 92% of the total annualized current quarter revenue from our total customers for the period ended September 30, 2024. As of September 30, 2023, we had 547 of such enterprise customers that generated 92% of the total annualized current quarter revenue from our total customers for the period ended September 30, 2023.

Previous wording

Our LTM NRR removes some of the volatility that is inherent in a usage-based business model from the measurement of the NRR metric. We calculate LTM NRR 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. For the trailing twelve months ended June 30, 2024 and 2023 our LTM NRR was 109.6% and 116.1%, respectively.

Current wording

Our LTM NRR removes some of the volatility that is inherent in a usage-based business model from the measurement of the NRR metric. We calculate LTM NRR 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. For the trailing twelve months ended September 30, 2024 and 2023 our LTM NRR was 105.3% and 113.6%, respectively.

Previous wording

Our impairment expense relates to non-recurring charges for our long-lived assets.

Current wording

Our impairment expense relates to write-off charges for certain long-lived assets.

Previous wording

Our income tax expense consists primarily of income taxes in certain foreign jurisdictions where we conduct business and state minimum income taxes in the United States. The Company currently maintains a full valuation allowance on the Company’s U.S. Federal and state net deferred tax assets. We expect to maintain this valuation allowance for the foreseeable future.

Current wording

Our income tax expense consists primarily of income taxes in certain foreign jurisdictions where we conduct business and state minimum income taxes in the United States. We currently maintain a full valuation allowance on our U.S. Federal and state net deferred tax assets. We expect to maintain this valuation allowance for the foreseeable future.

Previous wording

In both the three months ended June 30, 2024 and 2023, approximately 95% of our revenue was driven by usage on our platform. In the six months ended June 30, 2024 and 2023, approximately 95% and 94% of our revenue was driven by usage on our platform, respectively. Revenue was primarily from existing customers, as revenue from new customers contributed less than 10% of our revenue. The proportion of the revenue contribution between new and existing customers is consistent with prior periods and typical customer behavior as customers tend to contribute more revenue over time as their use of the platform increases. The remainder of our revenue was generated by our other products and services, including support and professional services.

Current wording

In both the three months ended September 30, 2024 and 2023, approximately 95% of our revenue was driven by usage on our platform. In the nine months ended September 30, 2024 and 2023, approximately 95% and 94% of our revenue was driven by usage on our platform, respectively. Revenue was primarily from existing customers, as revenue from new customers contributed less than 10% of our revenue. The proportion of the revenue contribution between new and existing customers is consistent with prior periods and typical customer behavior as customers tend to contribute more revenue over time as their use of the platform increases. The remainder of our revenue was generated by our other products and services, including support and professional services.

Previous wording

Network Services revenue was $104.2 million for the three months ended June 30, 2024, compared to $98.5 million for the three months ended June 30, 2023, an increase of $5.7 million, or 6%. The increase in Network Services revenue was primarily driven by growth in usage from existing customers. Security revenue was $25.4 million for the three months ended June 30, 2024, compared to $22.5 million for the three months ended June 30, 2023, an increase of $2.9 million, or 13%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue, partially offset by a decrease in Fastly legacy WAF revenue. Other revenue was $2.8 million for the three months ended June 30, 2024, compared to $1.8 million for the three months ended June 30, 2023, an increase of $1.0 million, or 57%. The increase in Other revenue was primarily driven by further adoption of Compute solutions.

Current wording

Network Services revenue was $107.4 million for the three months ended September 30, 2024, compared to $102.5 million for the three months ended September 30, 2023, an increase of $4.9 million, or 5%. The increase in Network Services revenue was primarily driven by growth in usage from existing customers. Security revenue was $26.2 million for the three months ended September 30, 2024, compared to $23.3 million for the three months ended September 30, 2023, an increase of $2.9 million, or 12%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue, partially offset by a decrease in Fastly legacy WAF revenue. Other revenue was $3.6 million for the three months ended September 30, 2024, compared to $1.9 million for the three months ended September 30, 2023, an increase of $1.7 million, or 85%. The increase in Other revenue was primarily driven by further adoption of Compute solutions.

Previous wording

Network Services revenue was $210.2 million for the six months ended June 30, 2024, compared to $192.8 million for the six months ended June 30, 2023, an increase of $17.4 million, or 9%. The increase in Network Services revenue was primarily driven by growth in usage from existing customers. Security revenue was $50.0 million for the six months ended June 30, 2024, compared to $43.7 million for the six months ended June 30, 2023, an increase of $6.3 million, or 14%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue, partially offset by a decrease in Fastly legacy WAF revenue. Other revenue was $5.8 million for the six months ended June 30, 2024, compared to $3.9 million for the six months ended June 30, 2023, an increase of $1.9 million, or 49%. The increase in Other revenue was primarily driven by further adoption of Compute solutions.

Current wording

Network Services revenue was $317.6 million for the nine months ended September 30, 2024, compared to $295.3 million for the nine months ended September 30, 2023, an increase of $22.3 million, or 8%. The increase in Network Services revenue was primarily driven by growth in usage from existing customers. Security revenue was $76.2 million for the nine months ended September 30, 2024, compared to $67.1 million for the nine months ended September 30, 2023, an increase of $9.1 million, or 14%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue, partially offset by a decrease in Fastly legacy WAF revenue. Other revenue was $9.4 million for the nine months ended September 30, 2024, compared to $5.8 million for the nine months ended September 30, 2023, an increase of $3.6 million, or 61%. The increase in Other revenue was primarily driven by further adoption of Compute solutions.

Previous wording

U.S. revenue was $98.0 million, or 74% of revenue, for the three months ended June 30, 2024, compared to $89.9 million, or 73% of revenue, for the three months ended June 30, 2023. This represents an increase of $8.1 million, or 9%. International revenue was $34.4 million, or 26% of revenue, for the three months ended June 30, 2024, compared to $33.0 million, or 27%, of revenue for the three months ended June 30, 2023. This represents an increase of $1.4 million, or 4%.

Current wording

U.S. revenue was $104.5 million, or 76% of revenue, for the three months ended September 30, 2024, compared to $93.4 million, or 73% of revenue, for the three months ended September 30, 2023. This represents an increase of $11.1 million, or 12%. International revenue was $32.8 million, or 24% of revenue, for the three months ended September 30, 2024, compared to $34.4 million, or 27%, of revenue for the three months ended September 30, 2023. This represents a decrease of $1.6 million, or 5%.

Previous wording

U.S. revenue was $196.5 million, or 74% of revenue, for the six months ended June 30, 2024, compared to $175.2 million, or 73% of revenue, for the six months ended June 30, 2023. This represents an increase of $21.2 million, or 12%. International revenue was $69.4 million, or 26% of revenue, for the six months ended June 30, 2024, compared to $65.2 million, or 27% of revenue, for the six months ended June 30, 2023. This represents an increase of $4.3 million, or 7%.

Current wording

U.S. revenue was $300.9 million, or 75% of revenue, for the nine months ended September 30, 2024, compared to $268.7 million, or 73% of revenue, for the nine months ended September 30, 2023. This represents an increase of $32.2 million, or 12%. International revenue was $102.2 million, or 25% of revenue, for the nine months ended September 30, 2024, compared to $99.6 million, or 27% of revenue, for the nine months ended September 30, 2023. This represents an increase of $2.6 million, or 3%.

Previous wording

Cost of revenue was $59.5 million for the three months ended June 30, 2024 compared to $58.6 million for the three months ended June 30, 2023, an increase of $0.9 million, or 1%. The increase was primarily due to a $1.0 million increase in personnel related costs, a $0.7 million increase in network costs and a $0.4 million increase in depreciation due to increased investments in our platform. The increase was partially offset by a $0.8 million decrease in stock-based compensation expense as well as a $0.6 million decrease in cloud computing costs.

Current wording

Cost of revenue was $62.5 million for the three months ended September 30, 2024 compared to $61.7 million for the three months ended September 30, 2023, an increase of $0.8 million, or 1%. The increase was primarily due to a $0.7 million increase in equipment maintenance costs, a $0.7 million in other network costs, a $0.6 million increase in depreciation due to increased investments in our platform and a $0.4 million increase in equipment purchases. The increase was partially offset by a $0.9 million decrease in stock-based compensation expense as well as a $0.4 million decrease in bandwidth costs.

Previous wording

Cost of revenue was $119.8 million for the six months ended June 30, 2024 compared to $115.9 million for the six months ended June 30, 2023, an increase of $3.9 million, or 3%. The increase was primarily due to a $1.9 million increase in personnel related costs, a $1.6 million increase in depreciation due to increased investments in our platform, a $1.4 million increase in bandwidth costs and a $1.0 million increase in network costs, to support the growth of our business. The increase was partially offset by a $1.1 million decrease in cloud computing costs as well as a $0.6 million decrease in stock-based compensation expense.

Current wording

Cost of revenue was $182.2 million for the nine months ended September 30, 2024 compared to $177.7 million for the nine months ended September 30, 2023, an increase of $4.5 million, or 3%. The increase was primarily due to a $2.2 million increase in depreciation and amortization due to increased investments in our platform, a $1.9 million increase in salaries expenses due to increase in headcount, a $1.0 million increase in bandwidth as well as a $0.6 million increase in other network costs. The increase was also due to a $1.3 million increase in equipment maintenance costs, $0.8 million increase of equipment purchases, as well as a $0.7 million increase in colocation costs. The increase was partially offset by a $1.6 million decrease in stock-based compensation expense, a $1.4 million decrease in cloud computing costs, a $0.4 million decrease in travel and expenses, as well as a $0.4 million decrease on loss on disposal of assets.

Previous wording

Gross profit was$72.9 million for the three months ended June 30, 2024 compared to $64.2 million for the three months ended June 30, 2023, an increase of $8.7 million, or 14%. Gross margin was 55% for the three months ended June 30, 2024 compared to 52% for the three months ended June 30, 2023, an increase of 3%. The increase in gross margin was driven by revenue growth during thethree months ended June 30, 2024 outpacing the increases in the costs incurred to support the growth of our network.

Current wording

Gross profit was$74.7 million for the three months ended September 30, 2024 compared to $66.1 million for the three months ended September 30, 2023, an increase of $8.6 million, or 13%. Gross margin was 54% for the three months ended September 30, 2024 compared to 52% for the three months ended September 30, 2023, an increase of 2%. The increase in gross margin was driven by revenue growth during thethree months ended September 30, 2024 outpacing the increases in the costs incurred to support the growth of our network.

Previous wording

Gross profit was$146.1 million for the six months ended June 30, 2024 compared to $124.5 million for the six months ended June 30, 2023, an increase of $21.6 million, or 17%. Gross margin was 55% for the six months ended June 30, 2024 compared to 52% for the six months ended June 30, 2023, an increase of 3%. The increase in gross margin was driven by revenue growth during the six months ended June 30, 2024 outpacing the increases in the costs incurred to support the growth of our network.

Current wording

Gross profit was$220.9 million for the nine months ended September 30, 2024 compared to $190.6 million for the nine months ended September 30, 2023, an increase of $30.3 million, or 16%. Gross margin was 55% for the nine months ended September 30, 2024 compared to 52% for the nine months ended September 30, 2023, an increase of 3%. The increase in gross margin was driven by revenue growth during the nine months ended September 30, 2024 outpacing the increases in the costs incurred to support the growth of our network.

Previous wording

Research and development expenses were $73.4 million for the six months ended June 30, 2024 compared to $74.9 million for the six months ended June 30, 2023, a decrease of $1.5 million, or 2%. The decrease is primarily due to a $5.5 million decrease in stock-based compensation expenses, as well as a $3.4 million increase in capitalized software expenses, partially offset by a $6.7 million increase in personnel related costs as well as a $0.6 million increase in software costs.

Current wording

Research and development expenses were $105.2 million for the nine months ended September 30, 2024 compared to $113.9 million for the nine months ended September 30, 2023, a decrease of $8.7 million, or 8%. The decrease is primarily due to a $8.4 million decrease in stock-based compensation expenses, a $5.4 million increase in capitalized software expenses, as well as a decrease of $2.4 million of executive transition costs. The decreases were partially offset by a $6.7 million increase in personnel related costs as well as a $0.8 million increase in software costs.

Previous wording

Sales and marketing expenses were $53.0 million for the three months ended June 30, 2024 compared to $47.8 million for the three months ended June 30, 2023, an increase of $5.2 million, or 11%. The increase is primarily due to a $7.5 million increase in personnel related costs including sales commissions and a $0.5 million increase in third party commissions, partially offset by a $2.8 million decrease in stock-based compensation expenses.

Current wording

Sales and marketing expenses were $46.0 million for the three months ended September 30, 2024 compared to $51.0 million for the three months ended September 30, 2023, a decrease of $5.0 million, or 10%. The decrease is primarily due to a $3.0 million decrease in marketing expenses as well as a $2.0 million decrease in stock-based compensation expenses. The decrease was also due to a $0.5 million decrease in personnel related costs including sales commissions. The decrease was partially offset by a $0.8 million increase in third party commissions.

Previous wording

Sales and marketing expenses were $102.6 million for the six months ended June 30, 2024 compared to $92.1 million for the six months ended June 30, 2023, an increase of $10.5 million, or 11%. The increase is primarily due to a $11.5 million increase in personnel related costs including sales commissions and a $1.3 million increase in third party commissions, partially offset by a $1.7 million decrease in stock-based compensation expenses.

Current wording

Sales and marketing expenses were $148.6 million for the nine months ended September 30, 2024 compared to $143.1 million for the nine months ended September 30, 2023, an increase of $5.5 million, or 4%. The increase is primarily due to a $11.0 million increase in personnel related costs including sales commissions and a $2.1 million increase in third party commissions. These increases were partially offset by a $3.0 million decrease in stock-based compensation expenses, a $2.9 million decrease in marketing expenses, a $0.8 million decrease in amortization expense as well as a $0.5 million increase in capitalized cloud computing costs.

Previous wording

General and administrative costs were $60.1 million for the six months ended June 30, 2024 compared to $54.7 million for the six months ended June 30, 2023, an increase of $5.4 million, or 10%. The increase was primarily due to a $3.4 million sales tax refund received in the prior year, a $1.9 million increase in personnel related costs, a $0.5 million increase in travel and entertainment expenses as well as a $0.5 million increase in stock-based compensation expenses. The increase was partially offset by a $0.7 million decrease in insurance related costs as well as a $0.7 million decrease in professional service fees.

Current wording

General and administrative costs were $87.2 million for the nine months ended September 30, 2024 compared to $84.7 million for the nine months ended September 30, 2023, an increase of $2.5 million, or 3%. The increase was primarily due to a $3.6 million sales tax refund received in the prior year, a $2.0 million increase in personnel related costs, a $1.1 million increase in bad debt expense, as well as a $0.3 million increase in travel and entertainment expenses. The increase was partially offset by a $2.5 million decrease in stock-based compensation expenses, a $1.1 million decrease in professional fees, a $0.8 million decrease in insurance expense as well as a $0.5 million increase in capitalized cloud computing costs.

Previous wording

We recognized a net gain on extinguishment of debt of $36.8 million for both the three and six months ended June 30, 2023 relating to our repurchase in May 2023 of approximately $236.4 million aggregate principal amount of our outstanding 0% convertible senior unsecured notes due in 2026 at a discount for an aggregate cash repurchase price of approximately $195.7 million. We did not recognize a net gain on extinguishment of debt for the three and six months ended June 30, 2024.

Current wording

We recognized a net gain on extinguishment of debt of $36.8 million for the nine months ended September 30, 2023 relating to our repurchase in May 2023 of approximately $236.4 million aggregate principal amount of our outstanding 0% convertible senior unsecured notes due in 2026 at a discount for an aggregate cash repurchase price of approximately $195.7 million. We did not recognize a net gain on extinguishment of debt for the three months ended September 30, 2023, nor for the three and nine months ended September 30, 2024.

Previous wording

Interest income was $3.9 million for the three months ended June 30, 2024 compared to $4.5 million for the three months ended June 30, 2023, a decrease of $0.6 million, or 13%. This decrease is due to a decrease in the investment portfolio.

Current wording

Interest income was $3.8 million for the three months ended September 30, 2024 compared to $4.9 million for the three months ended September 30, 2023, a decrease of $1.1 million, or 22%. This decrease is due to a decrease in the investment portfolio.

Previous wording

Interest income was $3.9 million for the six months ended June 30, 2024 compared to $8.7 million for the six months ended June 30, 2023, a decrease of $0.9 million, or 10%. This decrease is due to a decrease in the investment portfolio.

Current wording

Interest income was $11.6 million for the nine months ended September 30, 2024 compared to $13.6 million for the nine months ended September 30, 2023, a decrease of $2.0 million, or 15%. This decrease is due to a decrease in the investment portfolio.

Previous wording

Interest expense was $0.5 million for the three months ended June 30, 2024 compared to $1.2 million for the three months ended June 30, 2023, a decrease of $0.7 million, or 62%. Interest expense decreased primarily due to the repurchases that occurred during the year ended December 31, 2023, which reduced the principal amount of our Notes (as defined below), thereby reducing debt discount and issuance cost amortization.

Current wording

Interest expense was $0.5 million for the three months ended September 30, 2024 compared to $0.9 million for the three months ended September 30, 2023, a decrease of $0.4 million, or 45%. Interest expense decreased primarily due to the repurchases that occurred during the year ended December 31, 2023, which reduced the principal amount of our Notes (as defined below), thereby reducing debt discount and issuance cost amortization.

Previous wording

Interest expense was $1.0 million for the six months ended June 30, 2024 compared to $2.4 million for the six months ended June 30, 2023, a decrease of $1.4 million, or 57%. Interest expense decreased primarily due to the repurchases that occurred during the year ended December 31, 2023, which reduced the principal amount of our Notes (as defined below), thereby reducing debt discount and issuance cost amortization.

Current wording

Interest expense was $1.5 million for the nine months ended September 30, 2024 compared to $3.3 million for the nine months ended September 30, 2023, a decrease of $1.8 million, or 54%. Interest expense decreased primarily due to the repurchases that occurred during the year ended December 31, 2023, which reduced the principal amount of our Notes (as defined below), thereby reducing debt discount and issuance cost amortization.

Previous wording

Other income was $0.2 million for the three months ended June 30, 2024 compared to other expense of $0.8 million for the three months ended June 30, 2023, an increase of $1.0 million, or 124%. The change was mainly driven by our foreign currency transaction gains and losses between the periods.

Current wording

Other expense was $0.3 million for the three months ended September 30, 2024 compared to less than $0.1 million for the three months ended September 30, 2023, an increase of $0.3 million. The change was mainly driven by our foreign currency transaction gains and losses between the periods.

Previous wording

Other income was $0.1 million for the six months ended June 30, 2024 compared to other expense of $1.1 million for the six months ended June 30, 2023, an increase of $1.2 million, or 110%. The change was mainly driven by our foreign currency transaction gains and losses between the periods.

Current wording

Other expense was $0.2 million for the nine months ended September 30, 2024 compared to $1.1 million for the nine months ended September 30, 2023, an increase of $0.9 million, or 80%. The change was mainly driven by our foreign currency transaction gains and losses between the periods.

Previous wording

Income tax expense was $0.7 million for the three months ended June 30, 2024 compared to $0.1 million for the three months ended June 30, 2023, an increase of $0.6 million, or 501%. The Company continues to maintain a full valuation allowance in the U.S. and the tax expense for the periods were primarily due to foreign tax expense.

Current wording

Income tax expense was $0.5 million for the three months ended September 30, 2024 compared to income tax benefit of less than $0.1 million for the three months ended September 30, 2023, an increase of $0.5 million. The Company continues to maintain a full valuation allowance in the U.S. and the tax expense for the periods were primarily due to foreign tax expense.

Previous wording

Income tax expense was $1.0 million for the six months ended June 30, 2024 compared to $0.2 million for the six months ended June 30, 2023, an increase of $0.8 million, or 311%. The Company continues to maintain a full valuation allowance in the U.S. and the tax expense for the periods were primarily due to foreign tax expense.

Current wording

Income tax expense was $1.5 million for the nine months ended September 30, 2024 compared to $0.2 million for the nine months ended September 30, 2023, an increase of $1.3 million. The Company continues to maintain a full valuation allowance in the U.S. and the tax expense for the periods were primarily due to foreign tax expense.

Previous wording

As of June 30, 2024, we had cash, cash equivalents, and marketable securities and restricted cash totaling $311.8 million. Our cash, cash equivalents, and marketable securities primarily consisted of bank deposits, money market funds, investment-grade commercial paper, corporate notes and bonds, U.S. treasury securities, municipal securities, foreign government and supranational securities and asset-backed securities held at major financial institutions. As of June 30, 2024, we did not have any marketable securities classified as non-current.

Current wording

As of September 30, 2024, we had cash, cash equivalents, and marketable securities and restricted cash totaling $308.2 million. Our cash, cash equivalents, and marketable securities primarily consisted of bank deposits, money market funds, investment-grade commercial paper, corporate notes and bonds, U.S. treasury securities, municipal securities, foreign government and supranational securities and asset-backed securities held at major financial institutions. As of September 30, 2024, we did not have any marketable securities classified as non-current.

Previous wording

Interest payments on outstanding borrowings are due on the last day of each interest period. The Credit Agreement has a commitment fee on the unused portion of the borrowing commitment, which is payable on the last day of each calendar quarter at a rate per annum of 0.20% to 0.25% depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement. The Credit Agreement contains a financial covenant that requires us to maintain a consolidated adjusted quick ratio of at least 1:25 to 1:00 tested on a quarterly basis as well as a springing revenue growth covenant for certain periods if our consolidated adjusted quick ratio falls below 1.75 to 1:00 on the last day of any fiscal quarter. As of June 30, 2024, we were in compliance with these covenants and we expect to continue to be in compliance for at least the next 12 months. During the six months ended June 30, 2024 and 2023, no amounts were drawn down on the Credit Agreement.

Current wording

Interest payments on outstanding borrowings are due on the last day of each interest period. The Credit Agreement has a commitment fee on the unused portion of the borrowing commitment, which is payable on the last day of each calendar quarter at a rate per annum of 0.20% to 0.25% depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement. The Credit Agreement contains a financial covenant that requires us to maintain a consolidated adjusted quick ratio of at least 1:25 to 1:00 tested on a quarterly basis as well as a springing revenue growth covenant for certain periods if our consolidated adjusted quick ratio falls below 1.75 to 1:00 on the last day of any fiscal quarter. As of September 30, 2024, we were in compliance with these covenants and we expect to continue to be in compliance for at least the next 12 months. During the nine months ended September 30, 2024 and 2023, no amounts were drawn down on the Credit Agreement.

Previous wording

For the six months ended June 30, 2024, cash provided by operating activities was $6.2 million, consisting primarily of our net loss of $87.2 million, adjusted for non-cash items of $118.2 million, and net cash flows used in operating assets and liabilities of $24.8 million. The main drivers of the changes in operating assets and liabilities were a$12.0 million decrease in operating lease liabilities, a $6.8 million decrease in accrued expenses due to timing of payments, a $5.0 million decrease in other assets, a $1.2 million decrease in other liabilities as well as a $4.8 million decrease in prepaid expenses and other current assets. This was offset by a net increase of accounts receivable of $5.3 million, primarily due to the growth of our business and the timing of cash receipts from our customers.

Current wording

For the nine months ended September 30, 2024, cash provided by operating activities was $11.2 million, consisting primarily of our net loss of $125.2 million, adjusted for non-cash items of $174.1 million, and net cash flows used in operating assets and liabilities of $37.8 million. The main drivers of the changes in operating assets and liabilities were a$19.3 million of operating lease payments, a $4.1 million decrease in accrued expenses due to timing of payments, a $7.7 million decrease in other assets, a $4.9 million decrease in other liabilities as well as a $7.4 million decrease in prepaid expenses and other current assets. This was offset by a $4.5 million increase in accounts payable due to timing of payments as well as a net increase of accounts receivable of $1.3 million, primarily due to the growth of our business and the timing of cash receipts from our customers.

Previous wording

For the six months ended June 30, 2023, cash used in operating activities was $16.1 million, consisting primarily of our net loss of $55.4 million, adjusted for non-cash items of $86.4 million, and net cash flows used in operating assets and liabilities of $14.9 million. The main drivers of the changes in operating assets and liabilities werean increase in other long-term assets of $12.0 million primarily due to an increase in capitalized commissions and an increase of $1.2 million in accrued expenses and other liabilities due to timing of payments and release of accrued bonus. We also had $12.4 million of operating lease payments. This was offset by a net increase in accounts receivable of $10.2 million, primarily due to the growth of our business and the timing of cash receipts from our customers.

Current wording

For the nine months ended September 30, 2023, cash provided by operating activities was $7.7 million, consisting primarily of our net loss of $109.7 million, adjusted for non-cash items of $154.9 million, and net cash flows used in operating assets and liabilities of $37.5 million. The main drivers of the changes in operating assets and liabilities werean increase in other long-term assets of $16.3 million primarily due to an increase in capitalized commissions. The increase was further driven by a net increase in accounts receivable of $10.4 million, primarily due to the growth of our business and the timing of cash receipts from our customers. We also had $16.9 million of operating lease payments.

Previous wording

For the six months ended June 30, 2024, cash provided by investing activities was $41.7 million, primarily consisting of $176.7 million of maturities and sales of marketable securities. The cash inflow was partially offset by $117.2 million purchases of marketable securities, $13.7 million of additions to capitalized internal-use software and $3.4 million of payments related to purchases of property and equipment to expand our network.

Current wording

For the nine months ended September 30, 2024, cash provided by investing activities was $108.0 million, primarily consisting of $289.7 million of maturities and sales of marketable securities. The cash inflow was partially offset by $155.1 million purchases of marketable securities, $20.5 million of additions to capitalized internal-use software, $5.4 million of payments related to purchases of property and equipment to expand our network and $0.8 million related to advance purchases of property and equipment.

Previous wording

For the six months ended June 30, 2023, cash provided by investing activities was $324.5 million, primarily consisting of $342.9 million of maturities and sales of marketable securities, offset by $10.4 million of additions to capitalized internal-use software and $8.0 million of payments related to purchases of property and equipment to expand our network.

Current wording

For the nine months ended September 30, 2023, cash provided by investing activities was $332.2 million, primarily consisting of $428.9 million of maturities and sales of marketable securities, offset by $15.4 million of additions to capitalized internal-use software and $8.3 million of payments related to purchases of property and equipment to expand our network.

Previous wording

For the six months ended June 30, 2024, cash used in financing activities was $8.7 million, primarily consisting of $9.1 million of finance lease payments as well as a $3.8 million payment of deferred consideration for business acquisition. The cash outflow was partially offset by inflow of $3.9 million in proceeds from the employee stock purchase plan (“ESPP”) and $0.3 million in proceeds from stock option exercises by our employees.

Current wording

For the nine months ended September 30, 2024, cash used in financing activities was $9.8 million, primarily consisting of $12.4 million of finance lease payments as well as a $3.8 million payment of deferred consideration for business acquisition. The cash outflow was partially offset by inflow of $6.1 million in proceeds from the employee stock purchase plan (“ESPP”) and $0.3 million in proceeds from stock option exercises by our employees.