March 13, 2019
Artur Bergman
Chief Executive Officer
Fastly, Inc.
475 Brannan Street, Suite 300
San Francisco, CA 94107
Re: Fastly, Inc.
Draft Registration Statement on Form S-1
Submitted February 14, 2019
CIK: 0001517413
Dear Mr. Bergman:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1 submitted February 14, 2019
Prospectus Summary, page 1
1. Please disclose that your directors, executive officers and principal
stockholders will
continue to have substantial control over the company after the
offering. Disclose the
percentage of the voting power to be held by affiliates following the
offering.
Risk Factors
Risks Related to Our Business and Industry
We leverage a strategy of offering trial versions of our platform products...,
page 31
2. We note that you utilize free trial versions of your platform as part of
your marketing
strategy. Please disclose the conversion rate from free to paid users
for the periods
Artur Bergman
FirstName LastNameArtur Bergman
Fastly, Inc.
Comapany2019
March 13, NameFastly, Inc.
March 13, 2019 Page 2
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FirstName LastName
presented.
Use of Proceeds, page 55
3. You state that you intend to use proceeds from this offering to repay
the outstanding
indebtedness under your Second Lien Credit Agreement which you entered
into in
December 2018. Please expand the disclosure to describe the use of
proceeds of this
indebtedness (other than short-term borrowings used for working
capital). Refer to
Instruction 4 to Item 504 of Regulation S-K.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 64
4. Please revise your overview section to provide a balanced discussion
regarding
the material challenges, risks and opportunities focused on by your
management. For
example, discuss any material trends or uncertainties in your efforts
to attract customers
outside of the United States and to increase the numbers of POPs. In
this regard, consider
discussing your significant challenges related to the specific
geographic areas in which
you intend to focus. As another example, explain the trends of
converting non-paying
accounts into paying customers. See Item 303(a) of Regulation S-K and
SEC Release No.
33-8350.
Key Business Metrics
Number of Customers, page 68
5. Your Dollar-Based Net Expansion Rate (DBMER) measures the expansion of
usage
among continuing customers but does not account for the decrease in
the revenue
attributable to former customers. To help us better understand your
metric, please tell us
how you measure retention of your customers. To the extent that it is
material to an
understanding of your customer count and the DBNER, please disclose
and provide a
discussion of your retention or attrition rate of customers.
Results of Operations
Year Ended December 31, 2017
Revenue, page 71
6. You disclose that 2017 revenue was primarily attributed to usage of
your platform. Please
quantify for us the amount of revenues attributed to each of the other
types of services you
provide and if such services contributed materially to revenue growth
from 2017 to 2018,
revise to quantify such revenues. Refer to Section III.B.1 of SEC
Release No. 33-8350.
Critical Accounting Policies and Estimates
Common Stock Valuation, page 76
7. Please provide us with analysis of all equity awards granted to date
in 2018 and 2019
Artur Bergman
FirstName LastNameArtur Bergman
Fastly, Inc.
Comapany2019
March 13, NameFastly, Inc.
March 13, 2019 Page 3
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FirstName LastName
including the amounts and fair value of the underlying common stock
used to value such
awards. To the extent there were any significant fluctuations in the
fair values from
period-to-period, please describe for us the factors that contributed
to these fluctuations,
including any intervening events within the company or changes in your
valuation
assumptions or methodology.
Business, page 80
8. We note your disclosure on page F-8 that one customer accounted for
10% of total
revenue for the year ended December 31, 2017. Please disclose the name
of your greater
than ten percent customer and provide a description of the material
terms of any
agreements with this customer. Refer to Item 101(c)(vii) of Regulation
S-K.
Market Opportunity, page 90
9. Please tell us the basis for your belief that you have a total market
opportunity of $35.8
billion in 2022. We note that you are incorporating the total sum of
the markets that you
address when you only address a portion of each of those markets. Your
response should
include your material assumptions underlying this prediction.
Description of Capital Stock
Voting Rights, page 128
10. Please clarify the circumstances under which a separate class voting
right will be provided
to Class A shareholders under Delaware law.
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Revenue Recognition, page F-10
11. You disclose on page 65 that you charge fees for the use of your
platform based on
committed, actual, or expected use and use is measured in gigabytes
and requests. Please
revise to disclose your policy for fees charged for expected use in
reasonable detail. Also,
revise your policy to describe how revenue is recognized for the
different types of usage.
General
12. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
13. Please supplementally provide us with copies of any graphical
materials or artwork you
intend to use in your prospectus. Upon review of such materials, we
may have further
comments. For guidance, refer to Question 101.02 of our Securities Act
Forms
Compliance and Disclosure Interpretations.
Artur Bergman
Fastly, Inc.
March 13, 2019
Page 4
You may contact David Edgar, Staff Accountant, at (202) 551-3459 or
Craig
Wilson, Senior Assistant Chief Accountant, at (202) 551-3226 if you have
questions regarding
comments on the financial statements and related matters. Please contact Jeff
Kauten, Staff
Attorney, at (202) 551-3447 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
FirstName LastNameArtur Bergman Division of
Corporation Finance
Office of Information
Technologies
Comapany NameFastly, Inc.
and Services
March 13, 2019 Page 4
cc: Seth Gottlieb
FirstName LastName