Fastly (FSLY) 11 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Maria Lukens	VP of IR
Artur Bergman	CEO
Joshua Bixby	President
Adriel Lares	CFO
Brad Zelnick	Credit Suisse
Will Power	Baird
Tal Liana	Bank of America Merrill Lynch
Jonathan Ho	William Blair
Michael Turits	Raymond James
Tim Horan	Oppenheimer
Rishi Jaluria	Davidson
Jeff Van Rhee	Craig-Hallum
Brad Reback	Stifel
Michael Turits	Raymond James

Call transcript

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Operator

Good afternoon. My name is Jesse and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Conference Call. [Operator Instructions] Thank you.

I'd now like to turn the conference over to Maria Lukens, Vice President of Investor Relations. ahead. go Please

Maria Lukens

you Call. Thank our Quarter Second Hi, for Earnings XXXX everyone. joining

We Joshua Bergman; Adriel Artur have CEO, Fastly's President, us Lares today. Bixby; with CFO, and

earnings format First, this outline like the we'd and to future announcement. for

call We will will our on on brief shortly for Investor provides with our the the SEC lot letter begin day website detail, with earnings market a financial shareholder opening release. and Since results before Relations after the a publish questions. shareholder each with close we of of remarks our letter line

- Our a hope is in that result dialogue. open greater this provide format and will transparency have more

and We These on or and performance that XXXX. our results long-term Xth, statements distributed everyone remind this this business, future to financial on cause on projected could were materially forward-looking Certain include uncertainties to to known forward-looking this call. related would call. strategy, Today. discuss during statements like results, subject statements financials actual statements, making differ prospects. from Fastly to overall the unaudited including growth unknown that assumptions August we'll also that call are those expected implied will future and be the risks, of statements

upon as You them as should future not rely predicted events.

on is in at to factors and A financial isolation our non-GAAP substitute not accompanying website made The will All update measures the our those to in and measures obligation GAAP today initial our based included include XX-Q. results. on measures. to for forward-looking them. discussion non-GAAP in of offering our today's or connection found report call filed should this letter. be investors.fastly.com. we in included Please are statements no on risk to and undertake assumptions shareholder in of GAAP shareholder not-GAAP can These letter our today considered tables that public addition to our be Also are in on final reconciliation from quarterly and a and financial with beliefs refer be prospectus Form as

in Finally, will the its and webcast call. archived this our being shortly call on entirety after website is be

With to over call turn that, our I'll the Artur.

Artur Bergman

you, everyone. you this all on call. joining and for us Thank Hello, thank Maria

that. start employees, a investors big and to work and us and going special thanks the for of hard us around a to support, done was we've I'm we're the who a point, all developers very with use this for company public happy to customers, becoming our all world the gotten step us that

do the world trustworthy customers with of We team. need our the create a and in really best the some people Internet to that, right we in

that we maintain full at strive growing kind, to be ethical rate, a people honest, we culture. to sustainable will to of company continue and high a keep and and rate passionate So

scaled first So we've have and and that intentionally say we purposefully. to values and we'll services our grown integrity to do workforce, customer continue proud so. portfolio grown I'm with

takeaways everyone of $XX from this recent issued a We QX, read. like to key on a call, up with year-over-year. shareholder revenue remarks, focus I'd This our to encourage generated afternoon, I which we in On XX% million few detailed letter most quarter.

total XX% quarter. year-over-year. net percentage from up up last months a XXX%, XXX% dollar XX%, enterprise last to was customers Revenue Our from increased as rate based from revenue of expansion XX

year-over-year. Enterprise customer XXX account to XXX increased up from

online, per to terabytes to have XX POPs XX second added capacity. access and network providing of global network have We our now

to digital development in path experiences, powering really of And platform the as toward close expect best allows to as identify we profitability that maintain end opportunities a our come. are Internet. leverage fuels the possible. to drive agile We've built to cloud years to powerful the users and We continue edge modern

capabilities. compute delivery of market latency low and ahead vendors being innovate, core edge flexibility platform is innovate and edge secure tenants, must This developers must scalable and demands quality, high enables still to be on platform support. platforms must applications, provide exceptional security empowered cloud while Our three based of reliable, content, and

increased demands continue will platform. see edge for our to cloud developer We

two growth winning long-term strategies Our new customers existing usage and be will expanding driven customers and key by factors, from partners. enterprise

secure our flexible continued platform, continue that remains our believe to upon I edge customers for cloud in this faster, and success results on in momentum. when our of make pursuit it and We'll invest building focused our team and demonstrate more more strategy developers. we this

have edge test, edge safer discover, for developer cloud solutions released faster, and that it pretested, we solutions. new example, our with For deploy cloud customize make to developers tools this prebase week

this this encouraged Joshua by We many time of forward sharing We're and growth about excited the quarter year. progress third we continued drive remainder recent with and and throughout look the to believe Q&A. rest for future the Adriel the of quarters will we're to our for would our reserve you like and progress, and I

Operator

Zelnick comes Brad Credit first with Your Instructions] from [Operator question Suisse.

open. Your line is

Brad Zelnick

ahead about in what letter then think look Thanks. business guess we competitor after of that going and - they're your capital of Excellent, on traffic. it congratulations how thanks on in your expected is just second traffic quarter, it Is are than the pursuing, And OTT by in least strong public that for maybe CDN should you're quarter goods that we components in see of an to you that we them traffic their cost as you're company. initial think same look of investments expected a could I And know largest results. if your about goods? surge so here mix were of of various terms just of at cost the if an talking half. in your opportunity? starters, ahead the a mix little a - unpack maybe strong that platform? I to I the and But we and lot if the Great and expected you higher percentage expecting. in much your And was wise you look investing bit we at the at commented remarks

Adriel Lares

be Adriel here the It's thanks happy us again here. to and joining and for on call

think it I to before, is basically second way ahead about building of one talked about the we're think this half. we've So

And from allocating percentage standpoint, CapEx percentage of much of sort of from And progress we'll to of of total with CapEx to X ahead we're get a terms a I in as feel of as an going in percentage percentage run. standpoint where the this make time of that we're long comfortable total vein. revenue allocation revenue, a continue this XX% over year revenue of then CapEx still

around we is challenges of here strategic Some the world. where bets make these the

seen previous from years, the normally time. you'll see where percentage second those revenue first we've we've a and CapEx you standpoint the over what now second of booking contracts up the year because the half usually of see of a than terms half, in in made the - And of those sort is half ramp we of sort higher signed

Brad Zelnick

And to very couple mean, feel leading have the follow-up Can customer you to from us how the you're progress in if seems with was to of of only terms give the the in of growth doing some a relative hiring, seeing but ramp I the that be do in enterprise terms to look indicators productivity in it these or at you strong, the hires, of of IPO, or few were invest the that least of it's XX%, you you're I could an XX% I proceeds go expectations? in just the intended At maybe building at in a another what portion to market. question. been know but you, just update, months your time out

Adriel Lares

of expectations company's generation Yes, hiring sort marketing on to initiatives. the we front, into it on gotten marketing, demand the the folks we I our we've and where especially in are be, sales of want think of

that like I sort of we're And standpoint, from feel so our on expectations.

let a of far, right, but we've further sort Joshua little terms early, of more bit In made progress on the that. comment a is you're bit it I'll so

Joshua Bixby

Thank you, for Thanks Adriel, Brad. joining.

know, think that in. historically we invested is You we area about, under as talked have I this an

And the company the that with proceeds most word know We have long-term through intentions to we and that of growth has for that's invest IPO of grown continuing are the mouth area strong that with - of a an part. our we in.

what a on on good the from spend progress, two perspective. we're marketing, Adriel track perspective, IPO been on we're on but the feels said, very we've short as like headcount made has a timeline, the since months It track

enterprise all but early. are but large results our to time know, Now, so signs indicate as through, is deals, thus they investments take these positive far, do it their way you from really work

Brad Zelnick

at the one I being just more for slip want and greedy, risk in of to Artur. Awesome

and and perhaps so just Can most us, at future leading the and to most compute in of talk recently the of that the edge occurring programmatic with lot complexity Artur. know, some in and opportunity of out maybe is you actually exciting confidence some much. capabilities about that more the you a excitement, announced, compute have Thanks - edge? maybe cases the use you more the You

Artur Bergman

do use different pretty edge mean of is I wide, more, has demand lot do where different The, edge content for of cases personalization, the an applying users. just ranges the compute on filtering, with for you can it rules environment to at

see can from communicate then of to back edge this, to back. the and the actually I can so beta most data all center, IoT that see do this, data aggregating You can have you So a don't you way the devices feed

creative more want how to have cases actual companies I've we package but and product you mapping could that perhaps get, to to specific, in very of in much that they be are are the to past, they that use the are There case. kind customers these some maps all use talked want developed

graft lot are up bit do customization and well We're the to final between on driven and we the just also customers evolving to own. their interact And clients servers. demand standards seeing go of that of how a around for

can And and you can edge, centers I the as demand very and possible. can requests not from of also kind away cloud but customized you at attacks for least, data you API functionality evolving application your once that's your the more security, prevent really code far yes, as last does this. your try that drives So think, more at deploy start for edge, or the introspection assemble then

Operator

comes with Your Power Baird. next from Will question

Your line is open.

Will Power

Yes, the thanks albeit the time taking here. for question allocated

are? if expansion to a could apart been start wonder at just I growth, look those as what break strong as drivers you from key the improvement a that's help know been me have themes driving secular sequentially, live perspective, revenue just talk video, level Let driver high growth? net what high the you first from key a dollar just maybe level I has video based rate Yeah, us year-over-year the key that

Joshua Bixby

the Will, thanks question. it's for Joshua,

far of Artur evolve space the leader and security. I continue solution and a compute with strong know, to we number as Artur edge I developer You by are on innovation. to continue said with we help them. compute, mean, but is edge we start that that certainly in to there came push We are would incredible a leadership space. a tools the our library edge collection out of as continue see said, really that

to people more do because can drive they continuing they us that edge the So that they are know is and that coming to and want growth. at

about the the and growth continue of we We talked our customers. strong see past in to a our security as needs connection between

see continue We if the should surprise. market which look growth the security to there at you in be in underlying no general space,

also the - which live that us. which is demand video, driving we're value in is side think seeing market, the I a of strong higher

as security really vectors computer those ones growth, seeing across think, around coming would sure. of and we edge I that XG of important seeing know, So other are and things for the tailwinds as and the important, I a it's say OTP you we're forward, as lot nice well growth start some

Will Power

out of And from if outlook of something for to gross know, front guess seeing then I sounds bit here? the been as of in just you're do you back the years contributing a there, in pricing second that, Is little like the could know, it's from second that And, comment I maybe you of about how Then the think weakness, environment, meaningful gross commentary. investing we thoughts what here? on shifts any part more up if that's about, the competitively over come whether margin wonder any then the couple that half? it's tick should half. the next earlier just it in Adriel, maybe margin kind again, you

Adriel Lares

talk now upticks right that Yes, know, Fastly for on primary to Fastly the goal in second question, age you margin half previously about evangelize our solution, thanks and comfortable of bases. past the in have the some benefits should the your part to sort leverage that, delivering Will, second think platform. all the gross is compute, on of general to about I'm you coming We see I yeah, talked the you talk year-on-your in

our standpoint, want to opportunity XX% price. Fastly, to too we there know comes onboard don't just not leading once rate. the from but And certainly much with and we on retention price, that we're customer our have out we lose There's

our strong want of and take onboard. just got customer DBNERX to bringing a We've we advantage

there sort where QX experience of we're is second is but that time no ahead of we which - we'll the So to different normal the getting half of ready build for the year. seasonality

should both as time that leverage over and sort margin well leverage see of gross And an in so you frame. as operating

Operator

Tal from Bank comes question next Your with Lynch. Merrill America Liana of

open. Your line is

Tal Liana

points that basis was drove below few margin weeks understand anything you was margin it since - ago, just part. a until to us the trying gross - told there what roughly went that changed XXX there gross now you Is to public

Adriel Lares

sure. Yes,

biggest One the the the to sporting of And particularly actually February, is QX in CapEx QX history, as wise that in we QX difference which company's broadcast this ahead about year is event from strong that time. had of hadn't until built roadshow past. talked the of had of we period we a just point of last particular we QX, up on

which the doesn't had sporting didn't that time event QX. we the so season, benefit football And go one of into replicate

gross a basis up actually from if margin XX bump. think XX So that see on - sort a basis. timeframe, about bit a going provided us a a of you of from But a do month year-on-year it year-on-year month over you

continue a so little but seasonally in month, of revenue. should factor over shorter see we have you days you you have bit so that And to XX trend time, for another amount QX, day have two

But really those quarter-on-quarter of from in explains where still term in terms of most I'm sort overall, pressures contraction mean will sort of be in I QX think a the in. confident that longer so margin. And margin of I gross perspective, gross

Tal Liana

is you other it? change or trajectory what The anything does question the in versus revenue before thought

Adriel Lares

which least from can seems and deals to win need PFCs think get at continuing enough now a go we sales for compete if parties actually to the out player anything, we're to in and relatively marketing not terms get course. I and try is when that It's over of still go the why Everything deals are on up then just We're need be what small now I still numbers and end, - we of there. to to in end ramping that the year. see we business, we're to to of the right

discipline And, leverage act part also trying grow we're revenue, while that well. share the you of do to grow balancing delivering and know, is as

deliver. nothing still to in think think least continuing we're this changed what of terms has do I And point, actually that. I will go So at at

Operator

Your next question comes William from Jonathan Blair. Ho with

open. line is Your

Jonathan Ho

bit drove any more the strength start some little events, of a that And you Can there's comments for provide out future what sort mean streaming on marquee to that opportunities? maybe color if does your does - just there. wanted I with business. around maybe the of what

Artur Bergman

series a I a of I'll it talk a and them came some at any sort follow-up QX some of much our standpoint, in in or and look little maybe too episodes on standpoint look marquee speak end to QX that. bit that Joshua finance From at can't way some I similar, the especially events CFO I the about. my that of then from have

know can different we more the who the which or for can But view sub while And time providers - they and first you be become succeeding. if effectively all they of are the who different edge they of stream when deliver that without will become they of can nevertheless, the there ones to providers X of consistency reference we deliver-- points beacons interruption. all

business, to for me more standpoint as you of right a which giving all this from a forecasting All of standpoint guidance it our of for as make really current year. QX, win as give confidence our that's out from this to difference our well gives and the well as the finance for case, sellers more and does that QX, go rest the know, we're future, future in then that enables and

Adriel Lares

know think now because very, player these I large a large is to events importance event. And or signal we handle that the on large of how are. very only enterprise LTT customers they that absolutely are you events also can important these not the a a of that's talk events, but because go commerce when

the for in that handle if worry my largest you all to you need the you can So them, just event at traffic. handle I know, US, don't sporting can suddenly

so a tailwind that strong, very there a is helps And with.

API And streaming we've and architected that our kind it, we traffic platform, focus And are to OTP software the example, are how - good same calls very, underlying suited under really the on life very we during very like the side, where with delivering on modern consistent we network a defined of lot quantity. well traffic object, very, that right? trying technology are the that's election, just streams that, get a the at with live are really, for for of people

sports consistency customers OTT key trying bring we providers glass live And shorter, in delay get short milliseconds to are down as aiming is to the have especially XXX really for the from to delivery delay. them. That high the in on volume

it's suited amounts. say be Thank these us in to we're can And wise, parts it. to deliver platform to helps you. business well the really very so, all And able - of it we that

Jonathan Ho

a there's there or had is as just seeing during competitors any few understand in that opportunities but just quarter, creates? shifts there any if know you're I And competitive the follow-up, want then outages environment. anything a to the I that

Adriel Lares

Jonathan. question, great Yes,

in - seen significant we not changes have know, You that. have I

we continue CDN those largest and we're you the aspire see all. enterprise customers and side the that deals, of environment in to at focused the know, certainly our of changed laser the directly business, that in price small the there medium that legacy the and in to as be enterprise in customers aspire space as know, the and that CDN be you were on of You those largest number outages and targets hasn't but

Operator

Michael Your next James. question with comes Raymond Turits from

open. is line Your

Michael Turits

for the than change First, on CapEx this if quarter there's Adriel, or outlook on prospects CapEx in our in model, year in came wondering on higher was a CapEx? the

Adriel Lares

a a still percentage standpoint, from where should - near revenue as of Michael, at in I think from were a hey CapEx we year Yes, be or XXXX.

And so that. we're still targeting

been see, is of reflected more our think going sort QX As that timing our of much and about basis. our what QX which to pipe It to you can in or were year regard. timely longer some our over QX sort we a quarter in that of of ramping guidance are we investments as related be of see in terms nothing might in changed from a have more we has just believe a up, in sort timeframe customers

Michael Turits

others program Maybe change program have share. making there assessment guys were then on an update your advantage. been where terms the space are product And roadmap terms will in whether of is or not landscape winning And ability. in respects, of in advancing competitive of that been changes any competitive which you your secondly, the a your question ability obviously in one two

Artur Bergman

you. Artur here. Thank

of and run side, investing a technology couple we're a companies roadmap secure product which into safe large to and WebAssembly, innovation driven to create a environment by called is code. the heavily us On

we kind very heavily that the was and and your the are of securely it ecosystem make safely on servers well on involved WebAssembly use adapted for that the and to side it. run desktop server evangelize code to run into ecosystem, and have Initially

it things different the of it frees many that allow us with up languages. one programming And is key to

wide And of so those. customers variety can use a

and tool help We to very of help that's it called very, adoption of just And part a excited. the we across usage have this, of open drive our to this we're have developer base. sourced commitment technology lucet

a equivalent One customer request of to is that user this its every own technology will we for the get our aspects run end sandbox. essentially from of that cool single

we for mitigate and can internally then And I'll degree they or for we if help have both the detect Joshua. really a them on competitive users, that hand offer can safety that, of and potential And so problems side. R&D so high over security our that's on side. to eventual the attackers

Joshua Bixby

changed hasn't dramatically. landscape competitive The

I particularly lot seeing a legacy the friendly think from we're players, more definitely overtures. CDN developer

refer cloud to we're seeing on arcs, sort and anti of as a but of engage to non the services get friendly developer a customers So legacy providers you platform. marketing story lot have fundamentally because the professional our

space, have only enterprise competitively, edge a marketing seen landscape one some competitive out. come But So of not cloud than modern really type remain allows any build dramatic and in we the programmability you other the that developer changes information that's to the the the today that needs. in we dominant

Operator

Tim from Oppenheimer. comes question Horan next with Your

is line open. Your

Tim Horan

be particular seen Any faster that on past you've customer more any around what color segment or any than yes would other growing are that or in applications color great. maybe the

Joshua Bixby

Joshua we've I the shift a say base all. here, overall question, thanks in at that wouldn't dramatic for the seen Tim.

see in digital of of We brings transformation. a one travel, a across e-commerce, verticals continue who you see high And time brands that core think strong big continue the areas often in. are of that really to like us precursors to we about often lot if is tech, growth the

a type less and And shifting in evolution more of same those a tech of follows of build high lot see have we'll that in a in to they that Ticketmaster over core history examples a shifting which their as vendor able the is early verticals, that see and So of out we pattern. us a evolved like where platform, great platform. of we example are they really is replatform, business

sell vendors the and on side, to past, to about to growth. the in and we we growth to hundreds continue to talked market, where see we vendor efficient strongly the way thousands continue of the strong the very that one believe platform see think customers they're S&B through we've we is of platform I as able into sell most path

of - and growing the along it's think say anything historical They security anchor all norm. wouldn't to I I are use But outside cases. continues the they're and programmability the all with edge delivery

Tim Horan

maybe a more edge touch just compute. And on color

it given is an that you you know, it WebAssembly, the this new of very know where revenue well of and percentage of peers I out. small well, a this what rolled of need can You or and especially great? ahead have get saying the And that it's would guess tool clearly more at your is functionality, what a maybe to you're yeah developers kind example kind appears now I this of other be and brand be you programmability box any this and you're do but the case ultimately now, new market, programmability know the a sense need and even to features is in do color I of

Artur Bergman

use I compute our percentage to think it's certain large hard a to of of our degree edge customers a capability. say the amount but revenue,

said continue think often What edge live And much, ostensibly take something streaming. of I quite even see that it cases interesting And but earlier, OTT would really we'll that so very not accelerating so really Joshua is sounds use as time. it if to find the you diverse. are is kind I that as over really compute, why and accelerating need

not user, do the it, you can you if same way that do out to you most insertion fastest need you're everyone and ad the revenue place turns more to it for you do the the and ad. ads To at edge, capability. real ad personalize efficient time efficient that's edge compute each because can the it do showing drive individual insertion to Well,

the across of functionality different areas So of lot we're seeing advance it a most business. like

Operator

Rishi from comes question Jaluria with next Your Davidson.

is line open. Your

Rishi Jaluria

know, to We you wanted expanding start First, see Australia looks you your traction what presence. to announcement international, asking like. wanted there the your about about, recently see I by off did

follow-up. out color got of can any I've with which companies it for in then international helpful and parts think think traction that companies be would international terms there I of give American a I be local you

Artur Bergman

the about we based but talk know, The international we classify where to the that you we customer based. it traffic this for on, is wherever attribute revenue, happens,

international regions. is the we those seeing then when that So growth numbers, customers talk roadshow we're in about from

that we been justification how a physical existing that's when seeing selling And has we're we have networks the to the network have that's start build And this for to a we we and build with region those we want once as getting customers, people of we presence. strategy that up, our a enter into local start actually investing those, markets. customers work those who mass into notice And us.

And success Australia, have said, And two accelerating. pulse with network have pulse had New keep to good where really we with this in on, you going in we're a Australia, as international we really fantastic is being four Zealand.

when untapped transformation. think that's Europe US, to so is comes And we the behind market. a it large digital

world. And so here kind of around the that what we're taking and doing is very applicable much

to behind help there really bit is so actually well-positioned like them. we're little And a

Adriel Lares

Adriel, up. a follow quick it's just Rishi, And

just terms revenue in in XX% billing the with So locations where actual contributed internationally are of the QX.

Rishi Jaluria

line. on sense platforms even capitalize that love live on gaming and there had OTP just of of We'd down then gaming the bit at opportunities. which you talking streaming on is can like a is you gaming thinking these ask Thanks. out your from beyond tail the [indiscernible] better And gaming intersection and secular that of about opportunity, get little car probably to the some the kind you gaming kind We've wind. probably a opportunity about you, I are think things of capitalizing the about just competitors something how

Artur Bergman

you. Artur, is thank this think, I

more on is companies not large definitely to a modern a and just adapting its as in to growth And also way it's moving downloading think the where area. game I of are kind gaming it a an architectures. online world

of those through doing around game edge it, We experience, the API's metadata do experiences and compute give games. opportunity to of personalized enhancing delivering see delivering delivering a that the lot around part

we have really We believe gaming platform that edge well that. some area do the with customers good fits that large a and growth there computing us is of really evolution for the

my sensitivity, to really of as also the do seconds not East to time help from also behind is be latency earlier as live back being glass streaming we where in acceptable. and the going possible comment do area an We want help XX Forge games. they XX, that's - about the And close

And so we have customers that in segment.

Operator

question next Citi. from Your comes with [indiscernible]

line open. Your is

Unidentified Analyst

was return in recent I the around then, the the in sources and $XX spent entirety to you the $XX CapEx to quarter this half and CapEx of most in million spent to because million and wanted it CapEx of of $XX in first XXXX you question maybe million. year just of

sort projects in So in unbucket, I of towards QX that larger was that of wondering, kinds the could you're contributed especially you number. there's help invested this us

Adriel Lares

Sure.

I of earlier, as XX% that percentage software I overall revenue, get capitalization. revenue mentioned around So do time and to inclusive should that of about of as over expect that's CapEx in of a X% sort of

So XXXX, as revenue seen probably we've somewhere of around percentage in a XX%.

land think XXXX. we'll I so And probably in in somewhere that range

XXXX do that I protocol terms mind gig upgrade a terms benefited investment of from network, the a would believe challenge the upgraded that in in we there was be I XX XXX bit from any to at of the in in to for would XXXX that. which XXXX, a here network the the doing in either did XXX ports we in big and alone that to with provider entire across fastest went Internet, did other network gig real really large Keep back, investment a find we which

your still in average of years, did the streamline bit you in we the of would sort expect a half of CapEx that smoothly if of first amount year. the nearly of to was there see sort back But out of of versus that bump returning again XXXX, but a of you second second little So XXXX. question, front more half sort two loading the it those bit year half the I the won't in for

Unidentified Analyst

to nature geographical this turning what Just projects, the was of invested due were in? to expansion,

Adriel Lares

as general, Then just bookings, APAC traffic it Yes, serve overall it overall signal expansion bit traffic actually of they're but is much overall in some EMEA, traffic signals But we're in those allows prospectively. in to terms customers of us regions those receiving terms to as well like sell we're of respects in more in it more there in into receiving was and that QX, us from our in as pull growth. areas areas. terms it a APAC of growth

Unidentified Analyst

clumsy the reach incumbents. part And as as on this and minds a entering really questions competition, you the well, what question compete in a very you stage right albeit of would this probably of CapEx your strategy diversified, So brings because a a comes, semi-permanent do now then are question level just this that maybe key again across become last of people's does one that is new geographies. of geographically

Adriel Lares

perception think total that understand CapEx the no. least in seeing correctly, as the I we at answer in competing or substantial of would that - the we're as revenue given question I would where this percentage future? here, is revenue, put would we if of your are guidance where a dollars is driving change And go the

areas to many of that get that of investments what light cetera, realize margin that to deployed that and are think in cost support, a XX/X for fixed scale, to et do unrelated of us lot account is in of needed cetera. et most get we're point beginning I are worldwide. are you'll manager, enhancing overall the the bandwidth especially what catch gross technical up a to and see servers customer We some to support, incrementally

least get what there's sort revenues to year. the our me well areas. terms around in need or XX%. I be preparation of of of percentage in impact But those as for CapEx we moves long of and that we a efficiency run in half at off drove is nothing scale we realize terms As then grow, that of that QX, far of in that the scale But where the the seen of so we as as bit have will second

Operator

Your next comes Jeff question Rhee from with Van Craig-Hallum.

line open. Your is

Jeff Van Rhee

me. Just a couple for

terms Obviously, bit had I guys of minute in you've the I'd any pipeline, think curious spend see and a more pipe. what's some expand large there. very profile of be in you terms working just maybe high if a events. through the variability

in of result cetera, maybe verticals, use little terms seen any of through cases, and color say in a deal pipe? You've sizes what's the etc variance notable the that coming in very shift just more pipe a

Adriel Lares

from standpoint. stab a I'll just a first, it at finance take

think size, who general, general of I period. bigger. the the in customers bringing customer of any on we're I of more think But are come it's some onboard, is in getting that a and a really there opportunities ramped

of size ramp names scale think opportunities see the is But will the changed. to to is you of a and So what hasn't I that those terms growing. up of period invited increasing, - on being and opportunity take in the of certainly it and in the the actually we terms are take

like many we In are attractive addition more web having solution in such or into e-commerce PCI dependent as firewall. our financial make that on or security to our those qualifications as like solution services offerings that, areas SOC application X or then for areas expand of areas

more solutions, able ultimately faster. ramp to we faster enhance As add win we're and and our those those

nothing say in which our the changed. other I Joshua. anything inbound perspective, is we although my of and has than changed scope in a see incrementally but event post didn't lot But sort of little QX, size significantly will I more general, the that's got sort different, probably

of If some sense you side. have your

Joshua Bixby

No, I people how certainly some and that certainly the know, financial very thing we're position would helpful, around deals look The pipe only the is to I can our helps. IPO us see change larger is that and you can the that they does sense moves and can add and at also they they in that would. seeing, publicity

we're of in dramatic as at seeing a come Adriel some some larger said, sales in see, potential are shift those timelines seeing any I terms the we definitely think not seeing cycle. over the we're But least of percent. underlying deals, long-term to vertical But down the

Jeff Van Rhee

the quarter, the XX thinking then XX in to in percentages? one update in of trends? you nice other business housekeeper that respect DBNER, uptick the months And versus with any in on about And of quarter think think that usage the variance I a committed terms an how your to next on thoughts then terms maybe the little just

Adriel Lares

take Sure, I'll the Adriel here. it's first. second part of question your

down. DBNER, our teammates delivering to customers. on time at about likely focus Fastly, the talked come over bit of will on And we best service here just So our we all that a

pressure possibility over all on us. can the and the customers for with with doing the moving Slack we our a we've We you the DBNER customers. support that PECO educate like to that, we like that extent many that solutions traffic that keep feel account like can of standpoint of puts the partners And from in offer innovated manager we Slack, we upward to feel our on and terms lot extent show our and

challenges So that. you we although as are at time, I'm the sort well aware upward think I'm those pressures, numbers of a same and the know, with associated large person, finance the

I So the to happy was uptick see DBNER. quarter-over-quarter in very

XX/X my work we'll it's time, But of least of but of eventually sort high I one as tune keep all we're some on think again, we sort on can't far I can. attrition - has see at but we the about things focused that there, the nothing so changed as

to don't know. around In question, change we'll future And you and I terms standpoint XX/XX. versus change a nothing it too let over the of significantly, that certainly your usage from still if expect does into split changed much commit commit the first

Jeff Van Rhee

into more adds, just find you of just I'll you now to then to you reps, lot sense them you any on early the IPO are maybe incremental wise. about came get but at then a of mean, rep capacity, little the ramp to and maybe sales color as and are them where ability onboarding add the of finding well? me, ramp, looking are for year the one obviously hedge are thoughts the little I you And count a pace, pace, any on last the finding a And sales out the a

Adriel Lares

at count, general, target and year hit head of to. that we QX. end the way track going you like have of expect somewhere end see think to it number. can Yes, rep we as In we the is count XX we're I the everything that around still from our XXX a on And still by total the feel

like So in not it's expect. things from with standpoint, things line that what we are -

Operator

next comes Brad from Stifel. Your Reback with question

Your open. line is

Brad Reback

for Adriel, come as they have been many have up maybe been the look So at but asked, as mine customers front, what dated trends longer on the renewal, of Thanks. there? pricing you pricing

Adriel Lares

on encapsulates too are you much that DBNER the are and as Nothing situations but customer I into about fact generally our renewal up there think XXX% has still metric. renewals is sort front, that still in that coming for we given of that business if changed where sale, is the and our know, evangelical

So like there. a good I job still feel we're doing

not deliver takes customer but pressure standpoint, to work great of continue to our talk reduce to still from time, great is we it's a so and service at a renewals and way that And the continue can support throughout on year. to lot the renewal

relates standpoint, from to unusual So that changed nothing as has QX that. in it

Operator

next [Operator from James. Michael comes Instructions] Your Turits question with Raymond

open. is line Your

Michael Turits

for take Thanks up. follow letting me a

that end what's need just a is the than you if the this explain expected pull COGS difference about forward invest? higher and is is as I are for would but full missed Adriel, why year where - sorry, higher but this and so you year. not, or to end so, you So saying, maybe the to COGS is it and up And have it, for in the I'm like a so going you CapEx is expected CapEx COGS where

Adriel Lares

former, on a guidance, about I it's COGS given we we've would think the of be sense pull you the as should CapEx absolute I an given basis, that CapEx expect, and it's replace with percentage more where forward really but to where and a that. overall know,

you the forward, start time. pull if As you again, at you that CapEx depreciation

want there still gross percentage numbers over starts to the may margin a be hit what that time year-on-year. the as we're that should So leverage we assuming depreciation overall COGS to kick deliver in is there as

depressed question? then that it didn't And that get event bit a Does QX sort QX, what year-on-year. about up you we should to able have to QX for QX. XXXX. saw to you margin And to What margin see gross in was in that the QX the is be XXXX, being as ready little think difference one second gross is So get of before you relative leverage deliver there specifically half. we answer we your

Michael Turits

higher forward are ends depreciation because wondering year just depreciating if in and CapEx as you just outside I'm it. of you're absolute and or an COGS earlier the for is Sort COGS higher? your never of because that so, if up expenditures pushed

Adriel Lares

on we're is we in the to driving reason continue going because an because then to the grow. to be is expect be well. up is ahead And COGS up of as absolute If time basis revenue revenue CapEx the should that

Operator

the no questions. closing are for There further the presenters to remarks. call back turn I any

Adriel Lares

public out out our this want road. on on to forward the joining Monday. to at the us you first thank And we look We're for in everybody is forward on Conference going call. seeing road. the conference to And Adriel, be you KeyBanc to look I seeing We

Operator

conference today’s This call. concludes

You now disconnect. may

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