Fastly, Inc.

Previous 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.

Current wording

For the three months ended March 31, 2025 and 2024, our revenue was $144.5 million and $133.5 million, respectively, an increase of 8%. For the three months ended March 31, 2025 and 2024, we incurred a net loss of $39.1 million and $43.4 million, respectively.

Previous 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.

Current wording

No single customer accounted for more than 10% of our revenue for each of the three months ended March 31, 2025 and 2024. No affiliated customers that are business units of a single company generated more than 10% of our revenue for the three months ended March 31, 2025. Affiliated customers that are business units of a single company in the streaming entertainment space generated an aggregate of 12% of our revenue for the three months ended March 31, 2024.

Previous wording

We are continuing to bring a durable, consistent, and predictable pipeline of new innovations to our edge cloud platform and software-defined modern network architecture, and are seeing interest from customers in our existing product lines like Network Services and Security, and newer product lines like Compute and Observability. We will continue to build out a single, unified platform, simplify customer onboarding and service usage, and simplify our pricing and packaging. This will require us to dedicate significant resources to further develop the market for our platform and differentiate our platform from competitive products and services. We will also need to expand, retain, and motivate our sales and marketing personnel in order to target our sales efforts at larger enterprises and senior management of these potential customers.

Current wording

We are continuing to bring a durable, consistent, and predictable pipeline of new innovations to our edge cloud platform and software-defined modern network architecture, and are seeing interest from customers in our existing product lines like Network Services, Security, and Other product lines, including Compute and Observability. We will continue to build out a single, unified platform, simplify customer onboarding and service usage, and simplify our pricing and packaging. This will require us to dedicate significant resources to further develop the market for our platform and differentiate our platform from competitive products and services. We will also need to expand, retain, and motivate our sales and marketing personnel in order to target our sales efforts at larger enterprises and senior management of these potential customers.

Previous wording

We emphasize retaining our customers and expanding their usage of our platform and adoption of our other products. Customers often begin with smaller deployments of one of our products and then expand their usage over time. Our platform includes a variety of offerings across Network Services, Security, Compute and Observability product lines. As our customers mature, we assist them in expanding their use of our platform, including the use of additional offerings beyond content delivery or security. As enterprises grow and experience increased traffic, their needs evolve, leading them to find additional use cases for our platform and expand their usage accordingly. In addition, given that customer acquisition costs are incurred largely for acquiring and initial onboarding, we may gain operating leverage to the extent that existing customers expand their use of our platform and products.

Current wording

Observability. As our customers mature, we assist them in expanding their use of our platform, including the use of additional offerings beyond content delivery or security. As enterprises grow and experience increased traffic, their needs evolve, leading them to find additional use cases for our platform and expand their usage accordingly. In addition, given that customer acquisition costs are incurred largely for acquiring and initial onboarding, we may gain operating leverage to the extent that existing customers expand their use of our platform and products.

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 nine months ended September 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 such governmental action could have a negative impact on our business. In April 2024, under the prior administration, a bill was signed into law that would effectively ban TikTok in the United States if ByteDance, its China-based parent company, does not sell its stake in TikTok within a set time frame. The current administration issued an executive order on January 20, 2025 instructing the Attorney General not to enforce the law or impose any penalties against any entity for noncompliance for a period of 75 days and to provide written guidance as to how the law will be implemented. On April 4, 2025, the current administration issued an executive order extending the prior non-enforcement instruction until June 19, 2025. TikTok was one of our largest customers for the three months ended March 31, 2025 and remains a customer of ours. While the full impact of the legislation is unknown, it could eventually lead to a reduction in TikTok’s United States traffic levels which could have a negative impact on our business. We do not know whether or how ByteDance might restructure its business and how that may impact our traffic levels.

Previous wording

Our international expansion, including our global sales efforts, continues to add increased complexity and cost to our business. This requires us to expand our sales and marketing capabilities outside of the United States, increase the number of markets we have a presence in around the world to support our customers, and manage the administrative aspects of a global organization, each of which place a strain on our business and culture. In addition, our bandwidth costs are higher in markets outside of the United States and Europe, which may impact our gross margins.

Current wording

Our international expansion, including our global sales efforts, continues to add increased complexity and cost to our business. This requires us to continue to expand our sales and marketing capabilities outside of the United States, increase the number of markets we have a presence in around the world to support our customers, and manage the administrative aspects of a global organization, each of which place a strain on our business and culture. In addition, our bandwidth costs are higher in markets outside of the United States and Europe, which may impact our gross margins.

Previous wording

We are closely monitoring the unfolding events of the Russian invasion of Ukraine, as well as the more recent hostilities in Israel, and their global impacts. While the conflicts are still evolving and the outcomes remain highly uncertain, we do not believe the Russia-Ukraine or Israel-Hamas conflicts will have a material impact on our business and results of operations. We do not have Points of Presence (“POPs”) or operations in Russia, Ukraine, or Israel. However, some threat actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we, the third parties upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell, and distribute our goods and services. If either conflict continues or worsens, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted.

Current wording

We are closely monitoring the unfolding events of the Russian invasion of Ukraine, as well as the more recent hostilities in Israel, and their global impacts. While the conflicts are still evolving and the outcomes remain highly uncertain, we do not believe the Russia-Ukraine or Israel-Hamas conflicts will have a material impact on our business and results of operations. We do not have Points of Presence (“POPs”) in Russia, Ukraine, or Israel. However, some threat actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we, the third parties upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services. If either conflict continues or worsens, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted. Our customers operating in Russia, Ukraine, and Israel represented an immaterial portion of our consolidated revenue as of both the three months ended March 31, 2025 and 2024.

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 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.

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 March 31, 2025 and 2024, our research and development expenses as a percentage of revenue were 26% and 29%, respectively. Our research and development expenses in each period are impacted by the amount of software development costs that meet the criteria for capitalization. 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 the event that there are errors in software, failures of hardware, damages to a facility or misconfigurations of any of our services, whether caused by our own error, security breaches, third-party error, or natural disasters, we could experience lengthy interruptions in our platform availability as well as delays and additional expenses in arranging new facilities and services. In addition, there can be no assurance that we are adequately prepared for unexpected increases in bandwidth demands by our customers, particularly when we or our customers experience cyber-attacks. The bandwidth we have contracted to purchase may become unavailable for a variety of reasons, including service outages, payment disputes, network providers going out of business, natural disasters, networks imposing traffic limits, or governments adopting regulations that impact network operations.

Current wording

In addition, international trade disputes may further disrupt or delay our supply chain for these components or lead to pricing increases. For example, the United States has imposed or indicated an intention to impose tariffs on certain countries which may lead to retaliatory actions such as counter-tariffs and increase production costs and disruptions in our supply chain. If our supply of certain components is further disrupted or delayed, there can be no assurance that we will be able to obtain adequate replacements for the existing components or that supplies will be available on terms and prices that are favorable to us, if at all. In the event that there are errors in software, failures of hardware, damages to a facility or misconfigurations of any of our services, whether caused by our own error, security breaches, third-party error, or natural disasters, we could experience lengthy interruptions in our platform availability as well as delays and additional expenses in arranging new facilities and services. In addition, there can be no assurance that we are adequately prepared for unexpected increases in bandwidth demands by our customers, particularly when we or our customers experience cyber-attacks. The bandwidth we have contracted to purchase may become unavailable for a variety of reasons, including service outages, payment disputes, network providers going out of business, natural disasters, networks imposing traffic limits, or governments adopting regulations that impact network operations.

Previous wording

We use the following key metrics presented in the table below to evaluate our business, measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. The calculation of these key metrics below may differ from other similarly titled metrics used by other companies, analysts, or investors. We no longer consider Average Enterprise Customer Spend, Dollar-Based Net Expansion Rate, and Quarterly Net Retention Rate to be key business metrics. We believe Average Enterprise Customer Spend to be redundant in light of our disclosure of Total Customer Count and Enterprise Customer Count. Dollar-Based Net Expansion Rate and Quarterly Net Retention Rate were used infrequently by investors and are no longer used by management to manage and monitor the performance of our business. In lieu of Quarterly Net Retention Rate, a measure that is seasonal and fluctuates frequently throughout the year, management believes LTM Net Retention Rate, which measures the last twelve-month period and removes seasonality, is a more accurate performance metric to monitor the business. As such, we will no longer report those metrics because we do not believe they are material to an understanding of our business.

Current wording

We use the following key metrics presented in the table below to evaluate our business, measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. The calculation of these key metrics below may differ from other similarly titled metrics used by other companies, analysts, or investors.

Previous wording

We believe that our total number of customers is an important indicator of the adoption of our platform. Our definition of a customer consists of identifiable operating entities with which we have a billing relationship in good standing and which we have recognized revenue from. An identifiable operating entity is defined as a company, a government entity, or a distinct business unit of a larger company that has a relationship with us through direct sales or through one of our reseller partners where charges are identified on an end-customer basis. We may treat separate subsidiaries, segments, divisions, or business units of a single organization that use our platform as unique customers where they have distinct account identifiers. In cases where charges are identified through a reseller partner rather than on an end-customer basis, we would count the reseller as a single customer in our customer count. Our customer groupings may be impacted by changes to our customers’ business, including any impact from acquisition activities, internal business reorganizations leading to operational and decision-making changes, and corporate structure changes such as subsidiary consolidation and reorganization that may arise in the future.

Current wording

We believe that our total number of customers is an important indicator of the adoption of our platform. Our definition of a customer consists of identifiable operating entities with which we have a billing relationship in good standing and which we have recognized revenue from during the reporting period. An identifiable operating entity is defined as a company, a government entity, or a distinct business unit of a larger company that has a relationship with us through direct sales or through one of our reseller partners where charges are identified on an end-customer basis. We may treat separate subsidiaries, segments, divisions, or business units of a single organization that use our platform as unique customers where they have distinct account identifiers. In cases where charges are identified through a reseller partner rather than on an end-customer basis, we would count the reseller as a single customer in our customer count. Our customer groupings may be impacted by changes to our customers’ business, including any impact from acquisition activities, internal business reorganizations leading to operational and decision-making changes, and corporate structure changes such as subsidiary consolidation and reorganization that may arise in the future.

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 September 30, 2024 and 2023, we had 3,638 and 3,102 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 March 31, 2025 and 2024, we had 3,035 and 3,290 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 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.

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 March 31, 2025, we had 595 of such enterprise customers which generated 93% of the total annualized current quarter revenue for our total customers for the three months ended March 31, 2025. As of March 31, 2024, we had 577 of such enterprise customers which generated 91% of the total annualized current quarter revenue for our total customers for the three months ended March 31, 2024.

Previous wording

Last-Twelve Months Net Retention Rate (“LTM NRR”)

Current wording

Last-Twelve Months Net Retention Rate

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 September 30, 2024 and 2023 our LTM NRR was 105.3% and 113.6%, 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 March 31, 2025 and 2024 our LTM NRR was 100.0% and 114.0%, respectively.

Previous wording

General and administrative expenses consist primarily of personnel costs, including salaries, benefits, bonuses, and stock-based compensation for our administrative support personnel. General and administrative expenses also include costs related to legal and other professional services fees, SaaS costs, an allocation of our general overhead expenses, credit losses and acquisition-related costs.

Current wording

General and administrative expenses consist primarily of personnel costs, including salaries, benefits, bonuses, and stock-based compensation for our administrative support personnel. General and administrative expenses also include costs related to legal and other professional services fees, an allocation of our general overhead expenses, credit losses and acquisition-related costs.

Previous wording

Our interest income consists primarily of interest earned on our cash, cash equivalents and investments. Our interest expense consists primarily of the interest expense on our finance leases and amortization of discount and debt issuance costs associated with our debt obligations. Our other income (expense), net, consists primarily of foreign currency transaction gains and losses.

Current wording

Our interest income consists primarily of interest earned on our cash, cash equivalents and investments. Our interest expense consists primarily of the interest expense on our finance leases, amortization of discount, coupon interest expense, and debt issuance costs associated with our debt obligations. Our other expense, net, consists primarily of foreign currency transaction gains and losses.

Previous 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.

Current wording

In both the three months ended March 31, 2025 and 2024, approximately 95% of our revenue was driven by usage on our platform. 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 $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.

Current wording

March 31, 2025, compared to $24.6 million for the three months ended March 31, 2024, an increase of $1.8 million, or 7%. 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 $4.8 million for the three months ended March 31, 2025, compared to $2.9 million for the three months ended March 31, 2024, an increase of $1.9 million, or 64%. The increase in Other revenue was primarily driven by further adoption of Compute solutions.

Previous 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%.

Current wording

U.S. revenue was $110.5 million, or 77% of revenue, for the three months ended March 31, 2025, compared to $98.5 million, or 74% of revenue, for the three months ended March 31, 2024. This represents an increase of $12.0 million, or 12%. International revenue was $33.9 million, or 23% of revenue, for the three months ended March 31, 2025, compared to $35.0 million, or 26%, of revenue for the three months ended March 31, 2024. This represents a decrease of $1.1 million, or 3%.

Previous 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.

Current wording

Cost of revenue was $67.7 million for the three months ended March 31, 2025 compared to $60.3 million for the three months ended March 31, 2024, an increase of $7.4 million, or 12%. The increase was primarily due to a $6.0 million increase in bandwidth costs, a $1.9 million increase in depreciation and amortization expense as a result of increased investments in our platform, as well as a $1.0 million increase in software costs. The increase was partially offset by a $1.1 million decrease in personnel-related cost as well as a $0.8 million decrease in stock-based compensation expense.

Previous wording

General and administrative costs were $27.2 million for the three months ended September 30, 2024 compared to $30.0 million for the three months ended September 30, 2023, a decrease of $2.8 million, or 9%. The decrease was primarily due to a $3.1 million decrease in stock-based compensation expenses as well as a $0.4 million decrease in capitalized cloud computing costs. The decrease was partially offset by a $0.8 million increase in bad debt expense.

Current wording

General and administrative costs were $28.2 million for the three months ended March 31, 2025 compared to $31.6 million for the three months ended March 31, 2024, a decrease of $3.4 million, or 11%. The decrease was primarily due to a $2.8 million decrease in stock-based compensation expenses, as well as a $1.3 million decrease in personnel-related costs. The decrease was partially offset by a $0.7 million increase in professional services fees.

Previous 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.

Current wording

Other expense, net remained relatively flat at less than $0.1 million for both the three months ended March 31, 2025 and March 31, 2024. The changes were mainly driven by our foreign currency transaction gains and losses between the periods.

Previous 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.

Current wording

Income tax expense was $0.7 million for the three months ended March 31, 2025 compared to $0.3 million for the three months ended March 31, 2024, an increase of $0.4 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 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.

Current wording

As of March 31, 2025, we had cash, cash equivalents, marketable securities, and restricted cash totaling $307.3 million. Our cash, cash equivalents, and marketable securities primarily consisted of money market funds, investment-grade commercial paper, corporate notes and bonds, U.S. treasury securities, municipal bonds, and certificates of deposit. As of March 31, 2025, we did not have any marketable securities classified as non-current.

Previous wording

To date, we have financed our operations primarily through equity issuances, payments received from customers, the net proceeds we received through sales of our debt securities, and proceeds from our convertible notes. Our principal uses of cash in the near term have primarily been around funding our operations, our capital expenditures, business acquisitions, investments and fulfilling our debt and contractual commitments. We have also entered into longer term commitments to support our operations, including arrangements to directly lease and operate our infrastructure assets and colocation facilities. We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities.

Current wording

To date, we have financed our operations primarily through equity issuances, payments received from customers, the net proceeds we received through sales of our debt securities, and proceeds from our convertible notes. Our principal uses of cash in the near term have primarily been around funding our operations, capital expenditures, business acquisitions, and investments, and fulfilling our debt and contractual commitments. We have also entered into longer term commitments to support our operations, including arrangements to directly lease and operate our infrastructure assets and colocation facilities. We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities.

Previous wording

We believe that our cash and cash equivalents balances, available borrowing capacity under our credit facility, and the cash flows generated by our operations, net of the cash outflows used in our operations, will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. We have generated losses from operations in the past and expect to continue to incur operating losses for the foreseeable future due to the investments and strategic initiatives we intend to make to grow our business. Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain. We may also use our cash to buy back any outstanding debt on our convertible notes or on any future equity issuances.

Current wording

We believe that our cash and cash equivalents balances, available borrowing capacity under our credit facility, and the cash flows generated by our operations, net of the cash outflows used in our operations, will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at least the next twelve months. We have generated losses from operations in the past and expect to continue to incur operating losses for the foreseeable future due to the investments and strategic initiatives we intend to make to grow our business. Our uses of cash beyond the next twelve months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain. We may also use our cash to buy back any outstanding debt on our convertible notes or on any future equity issuances.

Previous wording

On February 16, 2021, we entered into a Senior Secured Credit Facilities Agreement (“Credit Agreement”) with the lenders from time to time party thereto (the “Lenders”) and Silicon Valley Bank, as a lender and as administrative agent and collateral agent for the Lenders for an aggregate commitment amount of $100.0 million, with a maturity date of February 16, 2024. The Credit Agreement originally bore interest at a rate per annum equal to the sum of LIBOR for the applicable interest period plus 1.75% to 2.00%, depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement. On June 28, 2023, we entered into the First Amendment to Credit Agreement with the Lenders and First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank)), as a lender and as administrative agent and collateral agent for the Lenders, which, among other things, amended the interest rate provisions of the Credit Agreement to replace LIBOR with the Secured Overnight Finance Rate (“SOFR”) as the interest rate benchmark. On February 16, 2024, we entered into the Second Amendment to Credit Agreement with the Lenders and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as a lender and as administrative agent and collateral agent for the Lenders, which, among other things, extended the maturity date of the loans under the Credit Agreement to June 14, 2024. On April 30, 2024, we entered into the Third Amendment to Credit Agreement with the Lenders and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as a lender and as administrative agent and collateral agent for the Lenders, which, among other things, extended the maturity date of the loans under the Credit Agreement to April 30, 2027 and decreased the commitment amount from $100.0 million to $60.0 million, including a $10.0 million sublimit for the issuance of letters of credit, and a swingline subfacility of up to $20.0 million. As amended, the revolving loans bear interest, at the Company’s election, at an annual rate based on SOFR or a base rate. Loans based on SOFR bear interest at a rate per annum equal to SOFR, plus an adjustment of 0.10%, plus 1.75% to 2.00%, depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement. Loans based on the base rate bear interest at a rate per annual equal to the base rate plus 0.75% to 1.00%, depending on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement.

Current wording

On February 16, 2021, we entered into a Senior Secured Credit Facilities Agreement (as amended by that certain First Amendment to Credit Agreement, the “Credit Agreement”) with the lenders from time to time party thereto (the “Lenders”) and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as administrative agent, issuing lender and swingline lender, “SVB First Citizens”), which provides for a $100.0 million senior secured revolving credit facility, with a maturity date of February 16, 2024. The loans under the Credit Agreement bear interest at a rate per annum equal to, at our option, the ABR (as defined in the Credit Agreement) or the Adjusted Term SOFR (as defined in the Credit Agreement), in each case, plus a margin based on the average daily outstanding balance of all loans and letters of credit under the Credit Agreement and ranging from 0.75% to 1.00%, in the case of loans bearing interest at ABR, and 1.75% to 2.00%, in the case of loans bearing interest at Adjusted Term SOFR.On February 16, 2024, we entered into the Second Amendment to Credit Agreement with the Lenders and SVB First-Citizens, which, among other things, extended the maturity date of the loans under the Credit Agreement to June 14, 2024. On April 30, 2024, we entered into the Third Amendment to Credit Agreement with the Lenders and SVB First-Citizens, pursuant to which, among other things, we (a) reduced the commitments under the Credit Agreement to $60.0 million, (b) set the interest rate for loans bearing interest at ABR at 1.00% and loans bearing interest at Adjusted Term SOFR at 2.00%, and (c) extended the maturity date under the Credit Agreement to the earliest of (i) April 30, 2027, (ii) so long as any permitted convertible debt is outstanding, on January 30, 2027, unless Net Liquidity as of January 30, 2027 is greater than or equal to $200.0 million (or, if the amount of outstanding permitted convertible debt is less than $35.0 million, $120.0 million), and (iii) so long as any permitted convertible debt is outstanding after January 30, 2027, if Net Liquidity is less than $200.0 million (or, if the amount of outstanding permitted convertible debt is less than $35.0 million, $120.0 million), on such date.

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 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.

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 March 31, 2025, 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 three months ended March 31, 2025 and 2024, no amounts were drawn down on the Credit Agreement.

Previous wording

In March 2021, we issued approximately $948.8 million aggregate principal amount of 0% convertible senior unsecured notes due in 2026 (the “Notes”) in a private placement to qualified institutional buyers pursuant to Rule144A under the Securities Act.

Current wording

In March 2021, we issued approximately $948.8 million aggregate principal amount of 0% convertible senior unsecured notes due in 2026 (the “2026 Notes”) in a private placement to qualified institutional buyers pursuant to Rule144A under the Securities Act.

Previous wording

On May 25, 2022, the Company entered into separate, privately negotiated transactions with certain holders of the Notes to repurchase (the “Repurchases”) $235.0 million aggregate principal amount of the Notes for an aggregate cash repurchase price of $176.4 million and aggregate transaction costs of $0.7 million.

Current wording

On May 25, 2022, we entered into separate, privately negotiated transactions with certain holders of the 2026 Notes to repurchase (the “Repurchases”) $235.0 million aggregate principal amount of the 2026 Notes for an aggregate cash repurchase price of $176.4 million and aggregate transaction costs of $0.7 million.

Previous wording

During the year ended December 31, 2023, the Company entered into several separate privately negotiated transactions with certain holders of the Notes to repurchase $367.3 million aggregate principal amount of the Notes for an aggregate cash repurchase price of $309.1 million and aggregate transaction costs of $2.0 million.

Current wording

During the year ended December 31, 2023, we entered into several separate privately negotiated transactions with certain holders of the 2026 Notes to repurchase $367.3 million aggregate principal amount of the 2026 Notes for an aggregate cash repurchase price of $309.1 million and aggregate transaction costs of $2.0 million.

Previous wording

The remaining Notes will mature on March 15, 2026, unless earlier converted, redeemed or repurchased.

Current wording

The remaining 2026 Notes with an aggregate principal balance of $188.6 million will mature on March 15, 2026, unless earlier converted, redeemed or repurchased.

Previous 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.

Current wording

For the three months ended March 31, 2025, cash provided by operating activities was $17.3 million, consisting primarily of our net loss of $39.1 million, adjusted for non-cash items of $57.5 million, and net cash flows used in operating assets and liabilities of $1.1 million. The main drivers of the changes in operating assets and liabilities were$5.6 million of operating lease payments, a net decrease of accounts receivable of $4.0 million, primarily due to the timing of cash receipts from our customers, a $3.4 million decrease in accrued expenses due to timing of payments and a $2.1 million decrease in other assets. This was offset by a $9.2 million increase in other liabilities, a $2.6 million increase in accounts payable due to timing of payments, and a $2.2 million increase in prepaid expenses and other current assets.

Previous 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.

Current wording

For the three months ended March 31, 2024, cash provided by operating activities was $11.1 million, consisting primarily of our net loss of $43.4 million, adjusted for non-cash items of $60.6 million, and net cash flows used in operating assets and liabilities of $6.1 million. The main drivers of the changes in operating assets and liabilities were a$7.6 million decrease in operating lease liabilities, a $8.8 million decrease in accrued expenses due to timing of payments, as well as a $2.7 million decrease in prepaid expenses and other current assets. This was offset by a net increase of accounts receivable of $12.0 million, primarily due to the growth of our business and the timing of cash receipts from our customers, and a $2.7 million increase in other liabilities.

Previous 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.

Current wording

For the three months ended March 31, 2025, cash used in investing activities was $178.9 million, primarily consisting of $179.5 million purchases of marketable securities, $4.8 million of additions to capitalized internal-use software, and $2.6 million of payments related to purchases of property and equipment to expand our network. The cash outflow was partially offset by $8.0 million of maturities of marketable securities.

Previous 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.

Current wording

For the three months ended March 31, 2024, cash provided by investing activities was $33.7 million, primarily consisting of $99.1 million of maturities and sales of marketable securities. The cash inflow was partially offset by $56.9 million of purchases of marketable securities, $6.8 million of additions to capitalized internal-use software, and $1.6 million of payments related to purchases of property and equipment to expand our network.

Previous wording

For the nine months ended September 30, 2023, cash used in financing activities was $213.6 million, primarily consisting of $196.9 million used for the debt extinguishment, $21.2 million of finance lease payments and $4.4 million of deferred consideration payment for prior acquisitions. The cash outflow was partially offset by inflow of $2.0 million in proceeds from stock option exercises by our employees and $7.0 million in proceeds from the employee stock purchase plan (“ESPP”).

Current wording

For the three months ended March 31, 2025, cash provided by financing activities was $0.8 million, primarily consisting of $2.1 million in proceeds from the employee stock purchase plan (“ESPP”) and $0.4 million in proceeds from stock option exercises by our employees. The cash inflow was partially offset by $1.7 million of finance lease payments.

Previous 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.

Current wording

For the three months ended March 31, 2024, cash used in financing activities was $1.9 million, primarily consisting of $4.9 million of finance lease payments. The cash outflow was partially offset by inflow of $2.9 million in proceeds from the ESPP and $0.1 million in proceeds from stock option exercises by our employees.

Previous wording

Our principal commitments consist of obligations under operating and finance leases, purchase obligations for capital expenditures, purchase obligations for contracts with our cloud infrastructure providers, network service providers, and other vendors, and outstanding debt. There have not been any material changes in our contractual obligations and commitments from our most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except for those described under Note 6, Note 8, and Note 9 of our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Current wording

Our principal commitments consist of obligations under operating and finance leases, purchase obligations for capital expenditures, purchase obligations for contracts with our cloud infrastructure providers, network service providers, and other vendors, and outstanding debt. There have not been any material changes in our contractual obligations and commitments from our most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2024, except for those described under Note 6, Note 8, and Note 9 of our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.