FSLY - Earnings call transcript Q4 2020

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Operator

Good afternoon, my name is David and I will be your conference operator today. At this time, I would like to welcome everyone to the Fastly Fourth Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. to of conference Investor like Lukens, to now President Vice Relations. would turn over the Maria I Please go ahead.

Maria Lukens

Hi everyone, year full fourth quarter thank you for XXXX joining earnings our and call.

with Joshua CFO, Fastly Bixby have CEO, Adriel We Lares us today. and

make the we of the the format brief about rest hour SEC some a letter about of remind relations details, investor Since published usual on We an I our for and to letter call. website remarks Before lot reserve start, the shareholder of everybody we'll your provides want a our and questions. opening ago. with the time

cause during the note During end that call. results. measures during to certain and intended expected forward-looking forward-looking non-GAAP statements risks, investor shareholder financial be to our based performance making except a as will are and These measures. that prospects. letter growth discuss with filings our this GAAP the a Signal non-GAAP measures could subject differ. results, our statements, substitute obligations materially and the by call any business, the most our for to website. call, update take related the today's Also any in of comparable XXXX future overall These financial not relations known to QX future discussion implied Please to as forward-looking GAAP actual results a cause will to call, date. this uncertainties provided or we of financial are Reconciliations the to are those that of on directly statements on could and on of us the unknown the letter available Also, are information We we factors law. disclaim shareholder statements the from SEC launch our results including to for and our projected at strategy, be integration statements assumptions differ look Sciences required

will and website be that, the webcast afterwards. With being turn is call I'll shortly Joshua. our archived this Finally, on to over call

Joshua Bixby

thanks busy us and ever of delivered everyone revenue our businesses changed year, many companies quarter more heavily telecommunication presence Hi line a These results. for invest million. Maria. base and We in education companies changed had top $XX grew. with tech today. existing world top we’ve nearly UC year-over-year largest Last successful new among with joining higher growth XX% a include enterprise a Thanks, and their system. our it. the Blackboard, We our of it’s digital reflected We in customers world’s Subsequently, and than while institution, added before. learning an and others. one customers management Davis, company tier customer saw

gaming beyond also We’ve challenging resources provides and times. our comes and gift Two which support Doximity. gaming company those and being tractioned stories which well seen businesses and up launched and through to racial local, that to to one two media new when allows rapidly their vertical during people looking step also as in We’re as to with companies. take publishing a business me help Gannett their social justice. support it cards Gannett, to leading the are additional from above go customers communities and growing encourage these leading neighbourhood action

secure traffic, a needed reliable when with weeks gave the to of We’re patients connect a company most. in getting times a double was to few a virtually digit while in it time the to turned pandemic. just block providing at to increase needed control of their the growth and a within onset to all helps malicious in patients in matter proud the on calling them our supported running professionals which have security connectivity XX up They traffic sites they saw feature medical these them user offerings, that Doximity, days.

Our We a two our Adorama, Ted and events. net entertain the average online innovation based customer community and online. the in-person stickiness such and event quarter Cornerstone and digital edge year a But around season annualized educate empowerment through expansion want we continued Institute the helped to during based take Vox, virtual other fourth made challenging previous election the of November. of demonstrate Massachusetts was The and gatherings, Fastly time will year. XX%. performance Edge platform; only full for Adriel reflected busy moment before audience crucial retention in very brands our people the the as Cloud an of digital resulting spend holiday On on together gaming from provide cover event in a we've I USA news dollar shopping of $XXX,XXX and doubled breaking schooling rate in through impressive all The our Today, core nearly during transitioned that to compute XXX%, and more Cambridge. both our their and of revenue transformations enabled others, of heard comprehensive the basis rate in from update and security it leading first brought successes delivered to customer financial enterprise for GrubHub, their does, which customers clear he in enabled PayPal, Technology a developer security. Like pillars altitude platform, detail.

system language learners. edge image popular a some the game, in used last traffic edge machine multiplayer website I've version an announced use cases and for Compute to production multiple at Doom, developers. learning seen Edge text seen product We've we the from simplifies of in is new in the native recently quarter, video on A incredibly running an the a verticals. innovative automatically that As market objects identify

seen [ph] great in entry Developers point for specific and a build One C at of is used languages ads cases; to done Edge. as the most use developers key video all on TypeScript based on which ad these time focused Assembly personalized user insertion JavaScript Rust. dynamic I've cases used three compelling and criteria well as is out real the a Script, product

and We of open all by time, technical Wasm Edge. itself, continue as projects leaders, in open are the Rust assembly continued web source future such impactful key community will including source language assembly. several key on working the which of They Computed web of and standard for our co-creators investment talent the hiring technologies the

and upsell the Sciences the we've with security new and recognized our prospects intuitive, customer sell visionary begun its On by progress in industry very our Gartner our quarter base The portfolio and is single, our pipeline impress as exceeded usability closed of existing cross annual front, There no interface last wide easy expectations about has is the since was without security transaction I'm excited in made and the Signal Signal Sciences strong. Quadrant. security to to and a Magic we use quarter.

popular We insights, and continue to on review driven Gartner see a platform. peer excellent rating peer customer reviews

forward. with and to these Both pillars. platform will gaining investment companies going increased interest momentum exciting. realize and customers are offerings secure are of demand our focus our as We beginning key for at two remains for continue the to more Fastly’s enthusiasm be areas Compute from very strong the us And Edge. the and potential The is tremendous

and years experienced, than with has served XX. security organizations CRO Brett at highly is turn to and in Officer. as it welcome be is brings scaling I experience, Brett having Chief building Fastly Cloud revenue Revenue new and I our and technology on aligned Brett want Shirk will extensive over more starting Before also companies, executive values experience to driven February XX mission. at our as and recently Rubrik. He to of a Adriel, purpose acutely officially

are have We him on financials. happy the over turn over to board. With it Adriel that, go to to I'll

Adriel Lares

Fastly’s year rounded another robust today. strong both for customer quarter Thank enterprises driven particularly that joining new the are their and to you, systems. you Joshua. with continuing up edge modern thank And into demand, everyone platform existing from us We integrate by

go our want has I numbers, to following acquisition letter, of through Signal As shareholder information. the into as Sciences noted point consolidated our we been out the financial the quarter contribution fourth in that I

to Signal So include get I'm margin Sciences. the and revenue about numbers

yet order and Sciences from see incremental of their XXXX. provided total quarter, have contribution of have key this Sciences, to Signal growth of metrics customer customers, enterprise report on we our consolidated number in Signal to customer counts However, and intend we the later In XXXX. QX included not most metrics than as

in year-over-year $XX we million revenue $X generated purchase million net to acquisition, adjustments revenue, of deferred representing write This Signal from accounting quarter, growth. the down related Sciences XX%

up $XXX in and For for full GAAP year XX% year-over-year. drive we the XXXX, XX.X% up and the to gross was compensation is the revenue for for amortization year quarter, was acquired year same XXXX. the the last the gross XX.X% Non-GAAP to continuing Full up We're XXXX. compared quarter leverage business. margin in from year. compared XX.X% excludes a margin the from which for in same intangible gross million non-GAAP quarter, margin, in year based ago, for stock XX.X% XX.X% full quarter generated to assets XX.X% of XX.X% XX.X%

profitability trajectory. profile a us opportunities our of related to and annual acquisition by done be seasonal We to opportunity platform, provides of our so timing continue in driven gross usage scale Sciences. well in and gross have do gross growth ability to to incremental as invest continued additional invest strong margin we XXXX while impacted believe will have the We in plan growth long past, our the disciplined deliver by manner, we Signal keeping in confident margin accelerate and and personnel term our by expansion, we tremendous investments, While believe a to of mind. as margin remain infrastructure our the customers as Signal the with Sciences in on in

cash the and the in In with we $XXX million ended quarter terms cash, of launch, investments. restricted

acquisition. As million quarter at our the of of said of cash approximately used beginning on I Signal call, $XXX the upon Sciences the we closing last

in growth demand to on Cloud As we and opportunity platform, initiatives we network and utilization strong to scale. see for growth, capitalize investing Edge drive aim our and continue this revenue continue to increased

have acquisition. given revenue year visibility usage visibility continued that a margin based model, progresses. ability cloud Signal security and from last expect Our approach, computing to additional to expense to our year’s Similar line to our our in the our strong the expansion, and Sciences on-going on-going our extended today. of as top we on guidance deliver growth, we And based XXXX the we gain outlook investments business reflects team the commitment annual gross our

range of million share to For million. to operating $X.XX quarter, the expect we in per non-GAAP negative first $XX the million $XX loss negative the the in Non-GAAP million, loss range of revenue range $X.XX. net to $XX in of negative $XX negative

per loss we loss of in negative range in million operating range $XXX Non-GAAP the $X.XX million For negative year and revenue non-GAAP expect of in net to to the the $X.XX. million. XXXX, $XX full share to million range $XXX negative the negative of $XX

we the positioned over extremely the and your Before we work term more to well are we the innovate questions. through offerings, continue we Fastly. I Joshua's operator Q&A, offerings. it continue help execute, the conviction for that, excited I'll our ahead our future to ability turn for us believe security to as well growth enterprises to will We empowerment, build call quality back a that take as opportunities as augment to internet of as to We're compute move trustworthy about to our team's to as about customers. our the and long success With lie turn developer forward of we reiterate want

Operator

Jonathan question first Your of William Ho [Operator comes from with the line Instructions] Blair.

is line Your open.

Jonathan Ho

just year, some you're the just to on the have, some capacity you're of that COVID headwinds the customer wanted comparisons. the given sort tougher congratulations level, maybe of as from out higher confidence well CapEx in strong a And at tough, guidance may I why things. a standpoint, with your side last trying facing as on of start large understand, to you just, from to level Hi, sustain that be quarter.

Joshua Bixby

saying understand Joshua. that sorry, Jonathan, the you crux just higher to not claim. is of Oh, the I number are wanted it’s why lower? or

Jonathan Ho

number the confidence in so long target, sort what's keep and XX%, that giving of higher? at to sustaining, you term bonds Oh, terms of

Joshua Bixby

guidance where seeing get from as coming just the really we what that do Oh, what mean, giving have to the with I makeup the that they're Yes, to see customers I it. of that's us And, customers we're think they're on got brought relatively in trying themselves. today, I board, of heard is you've respect the the is revenue the some lower to exist past, me than legacy as can our providers And have that of think CapEx as growing that out percentage a quickly. meaningfully still while already you, there. some exceeding long we from term in we we XX%, still model, in is

seen but in which our So our we've far, we're some that guidance. in some that in telling customers the respects, currently particularly Signals is into us what of are today, also QX, so built keeping mind

Jonathan Ho

a then, that your Got a are expectations update you just can customer? maybe what in your And on it. little in bit us of or give of follow Thank at for terms and terms from large either point headwind this contribution of an you. up, XXXX, customer

Joshua Bixby

Appreciate Yes. Hey, here. Joshua question. the is Jonathan

throughout important customer they talked continue we've hasn't on us. an As about this us and process, changed. for rely remain They workloads, to important to that

grow. in for As the and a you of start of large pandemic, out above know category may number handful, at a short but customers and of XX% we XX% period it peaked that who they a come the as have

are to Edge, on are you're at model, us rates unprecedented dealing who software really variations These on to global to your a as customers, on when reliability, security, customers infinitely the trust. for scalable, over the rely and know, have with be usage that continue and you you based growing As going they based, proud and services performance, time. know, you're we're solution

modeled our exactly what in modeled relationship, that's guidance, we've heard from with into modeled have we customer. a to relationship strong So that guidance. in our the we've And,

we So optimistic. feel

Jonathan Ho

thank Great, you.

Joshua Bixby

you. Thank

Operator

question Robert James. of next Majek Raymond line the Your with from comes

is open. line Your

Robert Majek

thanks. Great, great

you in that expansion the the and metrics, us to understand rate? would on for your baked on if color can But the wondering net includes year? later Just next any in revenue Sciences us added can Signal give update just the into contribution more then give Signal guide And Sciences what's numbers Sciences quarter. we that Signal that say have you'll expansion quarter,

Joshua Bixby

go those want Adriel, two? do to you

Adriel Lares

second of also question. part I'll the Sure. your take

to based to it's offer our still Sciences the we're customers us Signal is for that And more Fastly’s historical the First, subscription same we later as how likely continue the that to. have as year. through want based usage in continue well offer products. in used The working challenge been to time model

little Related to metrics it's think in we as to us a I they sort what bit about So of was for we as report contribution contribute going thoughtful we how are those sure together, QX. together, begin take have Signal far. to Sciences to of especially make time the so

about about would There that we a I deferred a related an think you to million recall, deferred we took we revenue. we when that. -- $X quarter, we $X QX, that started had over had to haircut was million we the recognize, the acquisition thought related purchase price

of them. because up. and difficult It's fashion exactly of you're in into So standpoint trying Sciences, the kind build seen a year, we've QX, as sense today. ascertain much to that current bit level you that from partially for abundant in, we've Signal clearly guidance and with as sell how and ended little to in give beginning should a seen from we're to guidance kind as modeling, already be historically, of where And some especially what well the we growth we're

similar that's we've done before. what to very historically So

Robert Majek

maybe of and just have sensitive getting Clubhouse. the a Twitter opportunity given if traffic one Computed latency chat rooms vertical me, that a lately. Edge, I'm speculated is this wondering potential It's been this spaces just clubhouse attention Great, traffic just how more is. serves widely And Agora voice thanks. lot for for from like

Joshua Bixby

talked -- latency seeing I'd latency a around interesting these, we the what high value your we're right, that's in gaming, the is and think really call all we critical. for in of opportunities in I opening about Robert, here. games, environments. letter about to Joshua it's Yes, the seeing talked attention we're which, what sensitive

because mentioned, that But as vertical here. reliability table is performs. making of reasons we're also, Compute the can really One our to Edge performance, that you strong what inroads that of in the bring the

But say, good computing. a So I I is customers. I speak of can't would business think for would this for any as and the specifically about advent I good medium say our

Robert Majek

the call. appreciate lot. a Thanks I

Joshua Bixby

Thank you.

Operator

Your of with next the Tim question line from Horan Oppenheimer. comes

is open. line Your

Timothy Horan

at a of of know sense versus COVID half revenue? has second of just application you percentage maybe Maybe interest given maybe Can can level year point? been you lot. at us the this high maybe impacts? bookings us give customer delivery what year, guys. of the secondly, just revenue And a subscription you. or just things little last are making tied and a the in Thanks, I how give is versus buyings color to around this kind moving a around more how Thank

Joshua Bixby

on me question. the let on the start first first me let Sure,

think revenue overall that as the to same the past in the to bookings range. really the we're look I that, customer in in this itself, continues the of saw talked talked about we build of in that it revenue saw the I business the in remains opening usage. continues and the you the committed in to as you at I revenue about build. in that our stay the half We've remarks of year, excited. same grow, and side year that When continues the have interest think to quarter, is security strength last that half second the that about that happy we that half pipeline on the continues of And and that versus

to see in are I've our our There interest of the ramp services, in those factors security business security, computed the the suite really, clouds, as sell lot continue the we were to to table. of of been important that are cloud we're really of full to and lot we We’re products that a of other customers of we grow. we, that we're multiple a start see compute the edge these scale capabilities products three decisions. compute given the sell the compute, And to bringing brings starting personally on and opportunities transport also bringing, cross table. compute a our a that to the talking three major performance And purchasing

in we of I’ll you in sell that. how Adriel and So terms terms revenue. really confident it to optimistic of percentage turn of

Adriel Lares

Sure. Thanks, Joshua.

for I Sciences it if that, XX% defer outside level what from of amount purely got were number, that do standpoint we that into and but because So than revenue going if Signal thinking in the thinking take it actually million. would just Tim, less you're you you're Sciences, have was recognized was primarily, the security think, just if of you QX, the $X Signal top

XX%. together with again, quickly. it's Sciences. it's selling Signal And which So Today, clearly we're growing sub

little going starting as continue to it's So to but it separates sort be a the two, difficult least of more we're bit from. you sort good where of March we of a at sense XXXX gives

Operator

Your of D.A. from question the next Jaluria line with comes Rishi Davidson.

Your line open. is

Rishi Jaluria

how would a maybe in And for then we've about by bit you color my about first we're got look, what's color we've questions on historically the decline did strong to on guys talked us so continued results. NRR, driven sequentially call QX. fewer give in metric, -- responsible Wanted Hey, It be trailing basis. just wondering month net expansions. if XX on helpful. see for much we're I a just retention if on quarter, up? taking a to And any that nice if more disproportion that I've you follow ask little the large have thank we that the even from is that going at and seen Was customer the as

Joshua Bixby

want a at you that? first Adriel, to Sure, take crack

Adriel Lares

hey, Rishi. Certainly,

XXXX. particular of the QX, nice, did good event live month. NRR And of the a month. particular last the was for ending decent it impact it's that we takes end sized, of it in for and did that quarter the have So But if our number denominator, for year, that recall sort impacts the QX, that

directly sort see So It largest related of you a to that's decline. sort wasn't why a [Indiscernible] customer. of necessarily

to However, good particularly we you move is also addition two to which showed I'd over related instances a But strong we if at COVID. into like and QX points as which still growth, strength XXX.X% be version, to that, especially as have, published, will into particularly our QX, further the XXXX move XXXX, XXXX. look make, in if that over there LTM, we some was we

impacts of least DBNER, some of optimistically, So sort but of when quarter you or the the some give may much nothing at to you just negative NRR see saw may sort more there of sense QX, for and some see, LTM that but that. you especially as you that in in there's impacts want that of version I consider I

Rishi Jaluria

prepared presumably That, some remarks clearly you this vertical that's believe, you shareholder hasn't gaming been? be traction it commoditized getting And Joshua, a real for historically, changed helpful. seem been opportunity, thinking I of less a a huge but that then historically saw are you lot more about it's highlighted term, opportunity the maybe and in made long you, on in has the what's How attractive of both and the gaming. Thanks. there. strength that the than, to letter, it maybe and

Joshua Bixby

Yes. Rishi, great question.

time market, has which media is I value sides this side, our Fastly does, certainly to energy, as think, it, the spends commodity side. market the it is on a right, and two there

changed what's things. is think I two

The beaming more is the more and latency the important just are ever and than is realizing particularly aspect companies was. it first low performance, performance of that

looking as there's scale options out you that around know, And to of where there trying and there, the global start you at, reliability as a up, lot drive scale. and at you element to so latency market, do are an a at not

one So that element. that's

And for traditionally process compute side the one Logic the we imagine a markets, lot opportunity this types saw And really Doom, when transformation. multiplayer Compute and I, the the lot to but And for on of of can market the are Edge. people what have all included, future. [Ph] always in reaching think Edge. what in transforms a it interesting Compute work mean seeing it, this a use are if? trailblazers other future. element to this at sparking mentioned And a people server bring at are I I now area. a Tory and those running And look that's real that's when of really like I often the you seen opportunities they incredible where if, this version do the companies in market for I you this the gaming cases, is at in gaming how

which performance, continues trailblazing attention there's high And ramp So latency Those just and seeing, a think that’s two certainly low compute. the which grabbed reasons I'm I and is that we're to discussions also need element there's up. seeing this are through I'm in exciting. having, for that

Rishi Jaluria

Thank really that’s much, so guys. Right, helpful. you

Joshua Bixby

you. Thank

Operator

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

Your line is open.

Jeff Van Rhee

Great, thanks. A couple quick questions.

guess, XXXX. I Adriel know relates non-GAAP as looked I looks where to it at what First, it there's loss, to there more operating If XX so street the the I or was. like don't spending maybe, relative million

that line the areas would you down here? focus Just team break just just change you that's think on curious be What of And helpful. terms if spending on skills, going gate, hire. are little curious, then more congrats a Obviously, exactly the you might where to out additional there of fall. color previews of things Brett brings of any joining out lot the in of that a by

Joshua Bixby

this And go Brett Sure, the don’t go take Adriel on I'll you question why after. one.

Adriel Lares

primarily, Yes for the driver good. spin. Sounds the

this really look the Signal sort team, it's on it of put XX% a as investment expenses as or operating you in that, XXXX and gives the [ph]. our preview basically X% where what you QX driving but [ph] operating bit with expanded a we of burn, are of really acceleration, in at our non-GAAP the Sciences with And well in sort If acquisition, perspective, to loss into a brought another non-GAAP it's XXXX. with way

X.X%. the you was year sort it XXXX, If of at X%, look minus about nearly

want at kind sort path little a spend like, or sort of we of all is the how it of ahead computer. historically, that that terms well And share than to marketing and little path. know is breaks look on invest and where we But certainly can going look profitability. business in, different to that of think eventually still going more your but security within after down, still we to after into cameras to as in get preview still further So to category to XXXX that I as there's don't want got a bit go I of scale the people brand you're a

a So is with little want to And R&D us engineers some to an push we've leverage, a G&A the again, investments good of going to we spending area that so longer. get In certainly continue where path. pad to And some bit additional an which make effort for investment launching now, to area, want can with it's I XXXX, we got do in couple and that there. production, into. that The XXXX. ultimate our and we Signal if take Sciences think, right we scale of there to a but sort some preview the QX want

Joshua Bixby

tremendous for right announcement, IT of see we we here. workloads. their us in of IT as Yes, and focus are a lead certain not customers on and areas, applications who has the security, only get to person. terms this talk just on a arc and for process that API opportunity really you but know, about been security to and Brett. their I thrilled I've mean, story I'm the And started on us to using web

really interesting a that's think us. area expansion of I for

do us the that lot If a terms message features, you in security ramp three think about a out being still getting and major transport, of of and having the heard. to there there's on be suite full to compute clouds

that's by grow. customer XX% strong revenue is the we really experience that focus and we tremendous. a retention highlighted a customers, have That ensuring that as on focus landing on which continued new we rate, So, keep that

invest going continue we're to Adriel to here. as So, said,

that work really feel compute they of at over thrilled that the And we And the just But are us the of security moon them. so our when of business to to Sciences integrating then We side. terms about excited allows There's do look the some with work. team. in really Signal lead still here. side I'm our democratize

we So going he's that two be those think areas focused I on. to at developers where can scale? more definitely And attract are

Jeff Van Rhee

Great. Very helpful. Thanks.

Joshua Bixby

Thank you.

Operator

Brad of Zelnick with Your next the from Credit line question comes Suisse.

line Your open. is

Ray McDonough

Maybe which Great. color mentioned profitable the in deliver types on at In This Can you McDonough you're type methods for willing willing on? If that about traffic price points more if and to impact the the that on to of traffic How that the changes think on might Joshua take Brad. is start. scalable streaming entail? briefly for shareholder you've letter, platform to various some developed Ray to what those provide way. to Thanks. the take of way methods one traffic? leverage of you all you're you

Joshua Bixby

I'm doing great really It's there. Yes, a we're work proud of that Ray. question. the

we components them. is So one that, a Path talked few about Precision of of

of the of front sort we these Fastly, value optimization start of number ourselves center. we into of since network always can get efficiently? So and our the efficiently? have how capabilities that been look at the do has How servers, can and asking can we bring out If we've number self-healing have? been bandwidth deploy most question. we the we network, efficiency pops, have, of you number our this of that people so the we How And the out of most can the we the

demonstrated to lot of that on to value our really answer are about process focus. value the to that with people matters. our spend take performance became is XXXX high the QX the was a that and that in the a out talked in is, bring market. really high and really time there's a to continue side the think going year that's this energy When earlier gross really, leverage I we're more continue -- of to business that in it's going growth, there. And you and sector, value So, hold. focusing gaming realizing demonstrated looking And take we this margin are we I where by as more seeing But is

So the the reliable. from I examples that Precision is of mean, would out this say, our we first get constantly be we efficiency. of at about support, we're started, faster, most of better, quick, about the can that talked And all business hardware. path, I looking then our would how more days

this go the of we of doesn't bottom It on after. doesn't change this or types of in margin, sort and as continue to said, don't end Adriel So leverage opening XX% the I making model we where are. that margin We're up value focus. it gross towards changes continue regard. low market. our we're our market, of side show really where exactly focused the we'll It traction think going to focus customers gross of And midterm

Ray McDonough

think this Adriel, helpful. just Is quarter That's question grow for Sciences $X and to get seems we a from to what expansion like And around we what's as to contribution million Sciences $XX the on Should included million Signal business, Fastly Signal something you Signal I incremental million comment Roberts from perspective. or organic where $XX it maybe impact. kind margin follow-up and guidance And of a in could expect to something contribution we that like layering maybe Sciences? and about gross a can XXXX core in on fair if build XXXX. on in

Adriel Lares

business. guided percent as kind I And sort coming year overall year. just similar gave given for just XX-ish this the that Yes. in guidance trying think for that XXXX, think about for idea range of I annual clearly when sort last really of of growth. a I you including Signal year actually of But Sciences. tech take us. all And for And up recall I'm that's at of work to clearly, would it

to I kind clearly first And possibilities. in of quarter stick where give bit year when with we of a side, sell I at trying perspective we're Signal of acquisition get keep clearly, were would with at can this at a further are to now, seen least fast think announced. we've now us. just we least sort given little more the what that of are think a just little in now I growing together guidance we quite of they great as to for And terms the last cross-sell level in But today. team. together one our incorporate emphasize about And it's terms then we initial Sciences. was the was for indications So, sort to in high sort ability of just the I for

Ray McDonough

any just expansion core margins Okay, Fastly and there? great. And on thoughts

Adriel Lares

Yes.

from want sort it that possibly and matters? optimism. to out, there's have I with as And What's there's additive a the gross the which the more. growing have, But want and mix bps that. adding I time will Joshua see feel about have we get I mix an still how I see of core somewhere pointed reasons just and next margins further that good little be margin think certainly, standpoint, more think both of the them But Signal point, And XXXX, us really and sort type XXX in from about accelerate as incremental of again, year. we I for of when what this Sciences, we at a that. overall to bit standpoint to the traffic to can us we of for into

Ray McDonough

the sense. color. Thanks Appreciate Make for it.

Joshua Bixby

Thanks Ray.

Operator

line Baird. Your of comes next Will from Power question the with

open. is line Your

Charlie Erlikh

COVID-XX question Thanks macro in work Maybe guidance terms maybe question. Hey. of the whatnot. This for guide to just factors? opening is starting about can in was the I making you terms you of to taking potentially office on in hopping XXXX some in and But you're and Erlikh the assumptions the terms guidance. in the the of environment about Charlie Will. from those and a revenue up for talk ask contemplated what's of

Joshua Bixby

Sure. start? Adriel, don't you why

Adriel Lares

Sure.

previously it mean, of I So, gave. an based on kind answer that I

at we've QX much what got conservative into this I the of seen more how we what Certainly, far. visibility just point. so can in see terms we're in bit we've terms a think be visibility of --

Legacy note -- of some world. terms do assumptions other we of sort in certainly taking We their perspective, have what folks noted the about we think In chose of macro CDN. I see the

out. rolling are vaccines think I

assuming So, I for point. we not I sort I hope that normalized And hope for anything -- now, this year. we're think of personally think at for faster than

So year, how of a I are much the guidance what world what But of see that they kind bit sense original think rate into as we see growth more are our what we further we faster kind are. thought. we'll get numbers of have we'll little that's the again, And of than why little we going into.

Charlie Erlikh

contribution think is revenue. impact from mainly potential XXXX about XXXX in from then way sense. ramping seeing is Compute@Edge That's to Okay. that? XXXX. and Or about in make And think the in just more maybe any meaningful How we it should contribution there

Adriel Lares

my earlier XXXX on learn. Yes. is some also My thinking from prospect so other we also prospective that from In learning pay certainly customers. year far some we that ease about to this will got

I we're I'm use latter of the to could [Indiscernible] must What learn about And more and they -- beyond to -- in calls the as thinking XXXX it lean be learning can contribution. But XXXX half are again, and year. in data meaningful we just would are So cases? think what some of use that

Charlie Erlikh

Make sense. Thanks, Adriel.

Joshua Bixby

Thanks, Charlie.

Operator

from of with James the Your Fish comes next Sandler. question line Piper

is open. line Your

James Fish

guys. Hey,

First, media given the of larger the are of are renewals often And our in there? seeing out few there guys understanding what you are and you around a first for half QX those specifically, year. approaching How renewals? you and actually have noise lot pricing,

Joshua Bixby

Yes. It's here. Joshua

we QX, in gross what year, QX. And in feel obviously you we margin, in increase What about I usages. with that, see the in have we the the including think increase renewals the way saw the past. in through and confident all

value. as delivery forward, commoditized continue look a business we when about we in talked market. our innovations drive think to is There I the

that. We from have stayed away

about of security their a care continue and I content, the who for And be be look that's to customers who want of choice. it to performance to proven think content we prudent reliable. their the care deeply about

I So business here. a reliability. forward. that's do change content we are Demands premium we performance think We simply that don't for -- bad that approach we think. balanced going always deals think taken to and and going the that don't and we've

to optimistic. continue in So future would unusual nothing be that that in the regard. remain And we

James Fish

then Brett pick think Brett? it start made of Services? sort background compute you what guess his I the you Edge is like Rubrik. something a and the background at comes from about or Understood. Or experience guys as it. more security else? And storage and Got more on Edge it good Is side obviously, to enterprise

Joshua Bixby

really experience. of I Yes. Plus, if the combination all of think mean, you that. VMware It's about a

experience, about get If security the experience and what think enterprise. Rubrik is? you You that get the you

security You infrastructure. understand

compute. understand You

startups. growth charging seen fast You've

billions You've of seen corner around to the revenue.

All was valuable of that to really us.

grow, we and So certainly be he's XXXX. invest to that right And we leader theme a that's need I for going understand for to the that. think to as we continue optimize,

those combination Very plus. about So excited all of that. really, it's of

Charlie Erlikh

Thanks, Joshua.

Joshua Bixby

Thank you.

Operator

of Walter the [Operator from with Instructions] line Your Citi. Pritchard next question comes

Your line is open.

Walter Pritchard

Hey. Thanks.

Sciences Signal totally to make clear contributions. want Just sure we're on here this

off of million $X $X down coming modeled up the sheet the it balance rate. write because million in had and you So ended

off to doesn't of that you're own? then you roll rolling it As we that balance that Or year? think rate? throughout doing have million the QX say basis? sheet on you as into go bundled then would proceed that Sciences get and a business is to include the either that doing -- as QX, probably that new fair kind I sort a is to at Signal on have signing their into then as well that the I'm trying sense $X the and you're new just business piece, And

Adriel Lares

Adriel. it's Walter, Hey,

methodology that got correct. You

purchase credit adjustments revenue X, As no clearly accounting for you anything cost post, since forward. that acquisition moving has October book the get

bookings our new are together bringing of in number standpoint, it sort successful from So together. we really of how matters

good least So a at it. that's about methodology, or good a think to way

Walter Pritchard

Because that understand Signal of underlying total the we was then of us I piece to what then, contribution revenue, kind picture are way people rate to could pretty think think growth And to the really there about and understand get the QX, that piece so another help Is Fastly six there there, Sciences? going mean, as QX. that's try you the is? the I plus any to

Joshua Bixby

of to we do meld that's where begins think the some that selling I it the part combination in And together. Yes. with

year, move this just we to going think tried I've in And general. blend begin a So and ballpark methodology into ballpark are as correct. And those probably I of you to together. QX give your is QX to

they're be do buy it's Signal of security. distinctively distinctively going [Indiscernible]. and of or to to our delivery that Fastly, customers be not to it sold secured many so Sciences, going They with want sort to sort together. of And

so sort rate. And of blended buy little one

those a of to you least we're I this we're not starting to -- But sort to our to at point which move as beginning give time. at begin forward standpoint, out go. break So we want direction from

Walter Pritchard

headcount headcount, understanding year a in on may earlier just be Any organic in that spending. just the there's flaring Signal somebody well? sense where on to understand can growth of totality, in your picture then think we as I the of And Sciences asked sort kind as

Adriel Lares

to to sort Yes. add given about say, the certainly at QX, the I the indicative about is think them and XXX the we where more folks added in XXX. Sciences add about I we I'd the nice a probably leverage, going We're in grow we're We'll we But that experienced QX for the to that folks. did We at -- quoted, of going just don't from Signal a operating rates added in that bump, was similarly. going or probably the given ameliorate clip team. that. more year. ended QX, we're the of of same year sort burn, number we

investment about end those headcount. reassess for to in great them, the the sort we that what of by we to of continue point. are that at idea thinking the are Although at we're that are -- for gives fast is we we're And year. returns where hopefully going getting on going, reconsider sort But XXXX, where that of some we of point, how you at that see sense kind then we least if we'll of how

Walter Pritchard

Adriel. Thanks, Great.

you. Thank Okay.

Joshua Bixby

Thanks Walter.

Operator

America. of question from Tal of with the line comes Liani next Bank Your

Your line is open.

Tal Liani

Thanks. already to I revenues understand of it's I the you the mix. this year contribution guys. natural core year And understand tougher I And increase an which at growth don't XX. -- quantify the possible for just you you of also And it know and if COVID. something or I'm to wouldn't bit if the people us your Hi, or because was was qualitatively? if work business. And quantify about of little can XX. to XQ comps? of know saw lot And just post I TikTok growth XX trying generalizing, rates XQ would -- trying there your was jumps kind was in I'm be about at the then XQ look But a in the wanted case, the post the impact of TikTok XX. I'm home, can talk So to that's year, And all. decline last for if don't throughout ask from asked. if COVID, it that the of kind

Joshua Bixby

crystal Yes. ball hard look Tal, its year. into a great it's to next question. for Obviously,

I we've seen a is think what few phenomenon.

that is first more people But we're use The the every seeing is internet. different. industry

in it You've seen we've behavior seen and that and have habits changed.

So happened to outside don't We're I is We to the that trying to additional we and that and outside are market believe of taking this continues a new are continue have who that know. of transforming share grow. there be changes at conservative think that digital optimistically. those the grow. share sustainable a future in first to believe how there share are the element at maintain market digitally And certainly We we transformers. look normal? we is look it. They will But

So that's one element.

the other that It's it's here think been we've element plays and talking here. the it. I security role just important about

of limits nimble. fight we're world, As down we a threats takes legacy not what bogged right? workflows, these against So the using to seeing innovate, digitally to the too. different bring are They're they're and totally and And tool attackers. it all transforming, additional Attackers needs reliable modern these we're traffic. that threats, too. continue digital around They're developers is naturally, people experiences to modern fast is seeing tools, They're the with what security follow solutions.

elements of which view future. the here, our two are so And optimistic driving there's

The and transformation additional digital share. first market this is

this, element and what is around security we're other important The seeing its of there.

guiding And really So enthusiastic tailwinds that we, we think prudent. seeing that's And we're as these we're Adriel conservatively. about. that said, we're

we're question. looking don't your answers that I if how So know right totally But that's now. it at

Tal Liani

it quarter. follow can the the But more have share and speak throughout a about better. I Last Can again, And know you us. the you much can maybe share I don't about, with quarter, is, there up. you how questions were

So in traffic that remove are on the of and traffic has there TikTok that network you about your of that company your the to..? is with of TikTok gone they role and -- can share network? TikTok, can traffic in Or kind of of completely? specific types role can of service us You again, or talk can stay to meaning, the the a your types role like

Joshua Bixby

they for important They Sure. customer. to important us workloads. remain Yes. continue And an rely on

number who a I you customers the XX% pandemic. they at they large said, a grow we and as of short as handful, in large category the out and come for But grow. period this we as peaked start As of know, above a and may XX% of have

few we to to continued may in ultimately, and be in we over very the to for So, see the last the close really diversify we we relationship, year. strong and have have modeled them. But quarter what and enterprise There continue customers the built be customers. on a get XX% in more growth. model our handful continue ease is more months future. large But of We've

enterprise So business I our part is that that's think as of of growth. -- that part an

Adriel Lares

have remove out it they go commodity I'll understand they network services of else to something -- then kind network, can when part. They traffic because more your to anywhere of take what unique. provide because find offline, they of trying you down I'm kind what the keep kind it's of your cannot on because what of

discuss offline it take can we So to it.

Joshua Bixby

Appreciate it. Thanks, Tal.

Operator

closing remarks. questions call for further this to you Bixby, the over at time. Mr. turn no are There I back

Joshua Bixby

has employees, off, to humbled I in ahead circumstances a you for and of of enabler supported both be unexpected with for Thank filled all Stanley our customers, Before to uniquely sign and TMT hope Morgan many bumps. circumstances. all we're we've at challenging how And investors. you. accomplished of lies our incredibly upcoming under year seeing such many customers, what proud and thank extremely partners we I witness forward to Conference. year, I this even connect them us and with that the difficult thriving, look road of our to want team I'm a

Operator

conference call. concludes This today's

now may You disconnect.

Fastly (FSLY) 18 Feb 212020 Q4 Earnings call transcript