Fastly, Inc.

Previous wording

The edge cloud is a category of Infrastructure as a Service (“IaaS”) that enables developers to build, secure, and deliver digital experiences at the edge of the Internet. This service represents the convergence of the Content Delivery Network (“CDN”) with functionality that has been traditionally delivered by hardware-centric appliances such as Application Delivery Controllers (“ADC”), Web Application Firewalls (“WAF”), Bot Detection, Distributed Denial of Service (“DDoS”), and Observability solutions. It also includes the emergence of a new, but growing, edge computing market which aims to move compute power and logic as close to the end user as possible. When milliseconds matter, processing at the edge is an ideal way to handle highly dynamic and time-sensitive data. This has led to its acceptance and adoption by organizations who monetize or grow their user base with every millisecond saved. Organizations that want to improve their user experience, whether it’s faster loading websites or reduced shopping cart abandonment, can benefit from processing at the edge. The edge cloud complements data center, central cloud, and hybrid solutions.

Current wording

The edge cloud is a category of Infrastructure as a Service (“IaaS”) that enables software engineers to build, secure, and deliver digital experiences at the edge of the Internet. Our platform represents the convergence of the Content Delivery Network (“CDN”) with functionality that has traditionally been delivered by hardware-centric appliances such as Application Delivery Controllers (“ADC”), Web Application Firewalls (“WAF”), API Management, Bot Detection, Distributed Denial of Service (“DDoS”), Web Application and API Protection (“WAAP”), and infrastructure protection.

Previous wording

Organizations must keep up with complex and ever-evolving end-user requirements. We help them surpass their end users’ expectations by powering fast, safe, and engaging digital experiences. We built a powerful edge cloud platform, designed from the ground up to be programmable and support agile software development. We believe that our platform gives our customers a significant competitive advantage, whether they were born into the digital age or are just embarking on their digital transformation journey.

Current wording

Organizations must keep up with a complex and ever-evolving landscape. We’ve built a powerful unified edge platform designed from the ground up to be programmable and support agile software development, and we continuously drive innovation to meet the ever changing needs of our customers. We believe that our platform gives our customers a significant competitive advantage – whether they were born into the AI-centric digital age or are just embarking on their transformation journey.

Previous wording

We focus our direct selling efforts on expanding our customers’ use of our platform, which includes companies that are exhibiting significant growth. We engage with and support these customers with our field sales representatives, account managers, and technical account managers who focus on customer satisfaction and drive expansion of their usage of our platform and products. These teams work with technical and business leaders to help our customers’ end users receive the best possible digital experience, while also lowering our customers’ total cost of ownership. These direct selling efforts are reflected by the revenue generated by our enterprise customers. Our Last-Twelve Months Net Retention Rate (“LTM NRR”) metric also measures the revenue growth from existing customers attributable to increased usage of our platform and features, and purchase of additional products and services. For additional details on our key metrics, refer to the “Key Business Metrics” section.

Current wording

We focus our direct selling efforts on expanding our customers’ use of our platform, which includes companies that are exhibiting significant growth. We engage with and support these customers with our field sales representatives, account managers, and technical account managers who focus on customer satisfaction and drive expansion of their usage of our platform and products. These teams work with technical and business leaders to help our customers’ end users receive the best possible digital experience, while also lowering our customers’ total cost of ownership. These direct selling efforts are reflected by the revenue generated by our large customers. Our Last-Twelve Months Net Retention Rate (“LTM NRR”) metric also measures the revenue growth from existing customers attributable to increased usage of our platform and features, and purchase of additional products and services. For additional details on our key metrics, refer to the “Key Business Metrics” section.

Previous wording

No single customer accounted for more than 10% of our revenue for each of the three and nine months ended September 30, 2025 and 2024. Affiliated customers that are business units of a single company generated an aggregate of 10% of our revenue for the three months ended September 30, 2025 and less than 10% our of revenue for the nine months ended September 30, 2025. Affiliated customers that are business units of a single company in the streaming entertainment space generated an aggregate of less than 10% of our revenue for the three months ended September 30, 2024 and 10% of our revenue for the nine months ended September 30, 2024.

Current wording

No single customer accounted for more than 10% of revenue for the three months ended March 31, 2026 and 2025. No affiliated customers that are business units of a single company generated more than 10% of revenue for the three months ended March 31, 2026 and 2025.

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, 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.

Current wording

We are focused on continuing to attract new customers and expanding our relationship with existing customers by enhancing our product experience, investing in technology, and leveraging our partner ecosystem. Our customer base ranges from emerging companies to large enterprises undergoing digital transformation across diverse industries and verticals. Utilizing our direct sales force, we have multiple selling points within organizations to acquire new customers and increase usage from our existing customers. We will continue to increase our discretionary marketing spend, including account-based, targeted demand generation and brand spend, to drive the effectiveness of our sales teams. As a result, we expect our total operating expenses to increase as we continue to expand. A key component of our cost-efficient customer acquisition strategy is developer outreach, as developers often advocate for the adoption and promotion of our platform within their organizations and across the broader developer community. We will also 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, and Other product lines, including Compute and 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.

Current 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, and Other product lines, including Compute and 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. 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. Our ability to retain customers and expand their usage could be impaired for a variety of reasons, including a customer moving to another provider or reducing usage within the term of their contract. Even if our customers expand their usage of our platform, we cannot guarantee that they will maintain those usage levels for any meaningful period of time or that they will renew their commitments.

Previous 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.

Current wording

We intend to continue expanding our efforts to attract customers outside of the United States by augmenting our sales teams and strategically increasing our presence in the number of markets in select international locations. 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

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 June 19, 2025, the current administration extended the prior non-enforcement instructions until September 17, 2025. As of September 25, 2025, the current administration further extended the non-enforcement instructions until January 23, 2026 in consideration of a proposed divestiture of TikTok's United States operations. TikTok was one of our largest customers for the three and nine months ended September 30, 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, including under the proposed divestiture, and how that may impact our traffic levels.

Current wording

Many jurisdictions have enacted laws on data localization and cross-border data transfers, and the evolving enforcement and interpretation of such laws has created uncertainty regarding data stored abroad and transferred across borders, which could impact customer growth and acquisition for customers and potential customers conducting business in Europe and elsewhere outside of the United States. 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. Following a series of executive orders in 2025 that suspended enforcement of this law, on January 22, 2026, ByteDance announced the establishment of TikTok USDS Joint Venture LLC in compliance with the law to secure United States user data, apps, and the algorithm through data privacy and cybersecurity measures. TikTok was one of our largest customers for the three months ended March 31, 2026 and remains a customer of ours. We do not know how the restructuring may impact our traffic levels. For additional details, refer to the section titled “Risk Factors.”

Previous wording

We are closely monitoring the conflict between Russia and Ukraine, as well as the more recent hostilities in the Middle East, and their global impacts. While the conflicts are still evolving and the outcomes remain highly uncertain, we do not believe the Russia-Ukraine, Israel-Hamas, or other 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 such conflicts continue or worsen, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted.

Current wording

We are closely monitoring various global conflicts and developments, including, but not limited to, the conflict between Russia and Ukraine, the recent military conflict involving Iran, the United States, and Israel, as well as other conflicts in the Middle East, and their global impacts. While the conflicts are still evolving and the outcomes remain highly uncertain, we do not believe these or other conflicts will have a material impact on our business and results of operations. We do not have Points of Presence (“POPs”) in Russia, Ukraine, Iran, 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 such conflicts continue or worsen, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted.

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, 2025 and 2024, our research and development expenses as a percentage of revenue were 26% and 23%, respectively. For the nine months ended September 30, 2025 and 2024, our research and development expenses as a percentage of revenue were 27% and 26%, 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.

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, 2026 and 2025, our research and development expenses as a percentage of revenue were 24% and 26%, 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.

Previous 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.

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. The United States and other jurisdictions have also leveraged various trade and value chain requirements, including on environmental and social criteria, which may make sourcing more costly, require us to change suppliers, or otherwise adversely impact our operations. Further, it is possible that government policy changes, including policy changes made with little to no advance notice, and related uncertainty about policy changes could increase market volatility. 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 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.

Current wording

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

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, 2025, we had 627 of such enterprise customers which generated 94% of the total annualized current quarter revenue for our total customers for the three months ended September 30, 2025. As of September 30, 2024, we had 576 of such enterprise customers which generated 92% of the total annualized current quarter revenue for our total customers for the three months ended September 30, 2024.

Current wording

Historically our revenue has been driven primarily by a subset of our customers, our large customers, who have leveraged our platform substantially from a usage standpoint. We believe that the recruitment and cultivation of large customers is critical to our long-term success. Our large 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, 2026, we had 634 of such large customers which generated 94% of the total annualized current quarter revenue for our total customers for the three months ended March 31, 2026. As of March 31, 2025, we had 595 of such large customers which generated 93% of the total annualized current quarter revenue for our total customers for the three months ended March 31, 2025.

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, 2025 and 2024 our LTM NRR was 105.8% and 105.3%, 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, 2026 and 2025 our LTM NRR was 113.0% and 100.0%, respectively.

Previous wording

RPO represent future committed revenue for periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied. As of September 30, 2025, the aggregate amount of the transaction price in our contracts allocated to RPO that were unsatisfied or partially unsatisfied was $268.0 million.

Current wording

RPO represent future committed revenue for periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied. As of March 31, 2026, the aggregate amount of the transaction price in our contracts allocated to RPO that were unsatisfied or partially unsatisfied was $368.7 million.

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. 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.

Current wording

Our income tax expense (benefit) 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 and nine months ended September 30, 2025, approximately 96% of our revenue was driven by usage on our platform. In both the three and nine months ended September 30, 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.

Current wording

In the three months ended March 31, 2026 and 2025, 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 $118.8 million for the three months ended September 30, 2025, compared to $107.4 million for the three months ended September 30, 2024, an increase of $11.4 million, or 11%. The increase in Network Services revenue was primarily driven by growth in usage from existing customers. Security revenue was $34.0 million for the three months ended September 30, 2025, compared to $26.2 million for the three months ended September 30, 2024, an increase of $7.8 million, or 30%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue. Other revenue was $5.4 million for the three months ended September 30, 2025, compared to $3.6 million for the three months ended September 30, 2024, an increase of $1.8 million, or 51%. The increase in Other revenue was primarily driven by further adoption of our Compute solutions.

Current wording

Network Services revenue was $126.2 million for the three months ended March 31, 2026, compared to $113.3 million for the three months ended March 31, 2025, an increase of $12.9 million, or 11%. The increase in Network Services revenue was primarily driven by growth in usage from existing customers. Security revenue was $38.8 million for the three months ended March 31, 2026, compared to $26.4 million for the three months ended March 31, 2025, an increase of $12.4 million, or 47%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue. Other revenue was $8.0 million for the three months ended March 31, 2026, compared to $4.8 million for the three months ended March 31, 2025, an increase of $3.2 million, or 67%. The increase in Other revenue was primarily driven by further adoption of our Compute solutions.

Previous wording

Cost of revenue was $65.9 million for the three months ended September 30, 2025 compared to $62.5 million for the three months ended September 30, 2024, an increase of $3.4 million, or 5%. The increase was primarily due to a $2.0 million increase in depreciation and amortization as a result of increased investments in our platform, a $1.4 million increase in colocation costs, a $1.0 million increase in software costs, as well as a $0.9 million increase in stock-based compensation expense. The increase was partially offset by a $0.7 million decrease in bandwidth costs, a $0.4 million decrease in equipment purchases, a $0.4 million decrease in maintenance costs, as well as a $0.3 million decrease in personnel-related costs.

Current wording

Cost of revenue was $64.8 million for the three months ended March 31, 2026 compared to $67.7 million for the three months ended March 31, 2025, a decrease of $2.9 million, or 4%. The decrease was primarily due to a $6.0 million decrease in depreciation and amortization as well as a $1.5 million decrease in bandwidth cost. The decrease was partially offset by a $1.8 million increase in colocation costs, a $1.2 million increase in software costs, a $1.1 million increase in personnel-related costs, as well as a $0.6 million increase in stock-based compensation expense.

Previous wording

Gross profit was$92.3 million for the three months ended September 30, 2025 compared to $74.7 million for the three months ended September 30, 2024, an increase of $17.6 million, or 24%. Gross margin was 58% for the three months ended September 30, 2025 and 54% for the three months ended September 30, 2024. The increase in gross margin was driven by revenue growth during the three months ended September 30, 2025 outpacing the increases in the costs incurred to support the growth of our network.

Current wording

Gross profit was$108.2 million for the three months ended March 31, 2026 compared to $76.8 million for the three months ended March 31, 2025, an increase of $31.4 million, or 41%. Gross margin was 63% for the three months ended March 31, 2026 and 53% for the three months ended March 31, 2025. The increase in gross margin was driven by revenue growth during the three months ended March 31, 2026 combined with the decreases in cost of revenue.

Previous wording

Sales and marketing expenses were $50.0 million for the three months ended September 30, 2025 compared to $46.0 million for the three months ended September 30, 2024, an increase of $4.0 million, or 9%. The increase was primarily due to a $2.4 million increase in personnel-related costs including commission expense, a $1.6 million increase in stock-based compensation expenses, as well as a $0.7 million increase in marketing expenses. The increase was partially offset by a $0.3 million decrease in software costs and a $0.2 million decrease in professional fees.

Current wording

Sales and marketing expenses were $55.1 million for the three months ended March 31, 2026 compared to $49.3 million for the three months ended March 31, 2025, an increase of $5.8 million, or 12%. The increase was primarily due to a $3.0 million increase in personnel-related costs including commission expense, a $2.7 million increase in stock-based compensation expenses, as well as a $0.7 million increase in third-party commission expenses. The increase was partially offset by a $0.7 million decrease in software costs.

Previous wording

General and administrative costs were $29.7 million for the three months ended September 30, 2025 compared to $27.2 million for the three months ended September 30, 2024, an increase of $2.5 million, or 9%. The increase was primarily due to a $1.0 million increase in stock-based compensation expenses, a $0.7 million increase in corporate costs as well as a $0.7 million increase in executive transition costs.

Current wording

General and administrative costs were $35.0 million for the three months ended March 31, 2026 compared to $28.2 million for the three months ended March 31, 2025, an increase of $6.8 million, or 24%. The increase was primarily due to a $5.0 million increase in stock-based compensation expenses, a $0.8 million increase in personnel-related costs, a $0.7 increase in executive transition costs as well as a $0.6 million increase in bad debt costs.

Previous wording

Income tax expense was $0.6 million for the three months ended September 30, 2025 compared to $0.5 million for the three months ended September 30, 2024, an increase of $0.1 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 benefit was $4.1 million for the three months ended March 31, 2026 compared to income tax expense of $0.7 million for the three months ended March 31, 2025, a decrease of $4.8 million. The decrease was primarily due to the recognition of a previously unrecognized tax benefit of $4.3 million resulting from the lapse of the applicable statute of limitations in the UK. The Company continues to maintain a full valuation allowance in the U.S. and the tax expense/(benefit) for the periods were primarily due to foreign tax expense/(benefit).

Previous wording

As of September 30, 2025, we had cash, cash equivalents and marketable securities, totaling $342.9 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, agency bonds, and certificates of deposit. As of September 30, 2025, we did not have any marketable securities classified as non-current.

Current wording

As of March 31, 2026, we had cash, cash equivalents, and marketable securities totaling $330.5 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, agency bonds, and certificates of deposit. As of March 31, 2026, 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, 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.

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, our 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 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.

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 12 months. We have generated losses from operations in the past and may 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.

Previous wording

Senior Secured Credit Facilities Agreement

Current wording

Senior Secured Credit Facilities Credit Agreement

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, 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 nine months ended September 30, 2025 and 2024, no amounts were drawn down on the Credit Agreement.

Current wording

In 2021, we entered into the Credit Agreement (as defined in Note 8 in our condensed consolidated financial statements). As of March 31, 2026, we were in compliance with the covenants described in Note 8 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, and we expect to continue to be in compliance for at least the next 12 months. During the three months ended March 31, 2026 and 2025, 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 “2026 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 Rule 144A under the Securities Act.

Previous wording

For the nine months ended September 30, 2025, cash provided by operating activities was $72.0 million, consisting primarily of our net loss of $106.2 million, adjusted for non-cash items of $178.8 million, and net cash flows used in operating assets and liabilities of $0.7 million. The main drivers of the changes in operating assets and liabilities were a $18.8 million increase in other liabilities, an increase of accounts receivable of $3.6 million, a $3.3 million increase in accounts payable and a $0.8 million increase in prepaid expenses and other current assets. This was offset by a $13.0 million decrease in other assets, $13.7 million of operating lease payments, and a $0.5 million decrease in accrued expenses.

Current wording

For the three months ended March 31, 2026, cash provided by operating activities was $28.9 million, consisting primarily of our net loss of $20.5 million, adjusted for non-cash items of $57.0 million, and net cash flows used in operating assets and liabilities of $7.6 million. The main drivers of the changes in operating assets and liabilities were an increase in accounts receivable of $13.5 million, a $5.8 million operating lease payment, and an increase in prepaid expenses and other current assets of $2.6 million. This was partially offset by an increase in accounts payable of $6.8 million, an increase in accrued expenses of $3.5 million, an increase in other liabilities of $2.7 million, and a decrease in other assets of $1.4 million.

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$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, 2025, cash used in investing activities was $249.2 million, primarily consisting of $352.1 million purchases of marketable securities, $18.5 million of payments related to purchases of property and equipment to expand our network, and $14.0 million of additions to capitalized internal-use software. The cash outflow was partially offset by $117.2 million of maturities of marketable securities and $18.1 million from the sale of marketable securities.

Current wording

For the three months ended March 31, 2026, cash used in investing activities was $27.0 million, primarily consisting of $179.3 million purchases of marketable securities, $21.0 million of payments related to purchases of property and equipment to expand our network, and $3.7 million of additions to capitalized internal-use software. The cash outflow was partially offset by $177.1 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, 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 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 and $0.3 million in proceeds from stock option exercises by our employees.

Current wording

For the three months ended March 31, 2026, cash used in financing activities was $35.8 million, primarily consisting of repayment of the remaining balance of 2026 Notes and $0.5 million from payment of 2030 Notes issuance cost that was unpaid as of December 31, 2025. This was partially offset by $2.3 million in proceeds from the employee stock purchase plan and $1.0 million in proceeds from stock option exercises by our employees.

Previous wording

For the nine months ended September 30, 2025, cash provided by financing activities was $3.9 million, primarily consisting of $5.5 million in proceeds from the employee stock purchase plan and $0.8 million in proceeds from stock option exercises by our employees. The cash inflow was partially offset by $2.3 million of finance lease payments.

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 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.