Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello. Good afternoon. My name is Jeremy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fastly Second Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers’ the will question-and-answer be After [Operator Instructions]

to I’d Please over turn to like go Vernon Fastly. conference at the now Relations Essi, ahead. Investor

Vernon Essi

conference our you, quarter Thank everyone, to welcome, XXXX and earnings call. second

referencing We dialing have CFO, with our ID can conclusion today. a conference us one website, call will Nightingale; XXX-XXX-XXXX fastly.com webcast available this be accessed replay Ron year. shortly archived of for Kisling, XXX-XXXX, The be after CEO, today’s Fastly’s of Todd and and through by and be number will Also, the call.

of press can website. in today’s our A Relations found financial copy furnished all today, filing Investor earnings Fastly’s be tables supplement, and of investor X-K are in related which of the release, portion

forward-looking sales, and risks, strategy, statements during growth prospects. results those to we statements of are known differ this projected including materially subject performance from expected future unknown could will related implied long-term product business, uncertainties the During future results, to the assumptions actual These our or that make statements, cause and call. overall financial to call, and

sections to and further Please SEC XX-Q for risk information read these our XX-K for please Risk filed differ. particular to of the We release entitled discussion the For documents. a Factors. cause our quarter Form results recent refer with could factors refer the XXXX second our and most supplement encourage our business, you earnings regarding Form and to that to factors in

obligation certain measures. discuss today’s call, on forward-looking today Also we required revenue statements, to be information we basis. date. the by forward-looking noted, non-GAAP numbers this law. undertake this Unless on an no will except available update any note all are as statements call financial than discuss adjusted on to other as that will non-GAAP otherwise of based during We us Also

Investor on GAAP release non-GAAP Relations to the a Reconciliations our measures financial are in not provided intended supplement to the and results. measures most are directly our earnings be website. for comparable GAAP substitute These

prepared our Frontiers quarter, will begin KeyBanc Growth in two Colorado Piper the on we September Sandler in we please Tennessee third and Forum Technology Nashville, the Vail, conferences Xth Leadership Conference comments, on that the note August XXth. attending Before be in

With to that, call I’ll the Todd? over turn Todd.

Todd Nightingale

everyone, us Thanks, Vern. so Hi, for thanks and much joining today.

call I to results and quarter before highlights, will strategy of motion results provide discuss financial then Ron made brief product the in go-to-market our First, and second progress I a to quick give quarter guidance the on update and our over summary a the financial will in hand I second detail. and

and strength the our range go-to-market a we pleased see customers second Fastly’s rest quarter-over-quarter. to enterprise the We momentum larger This XX% that as expect within of $XXX.X on growth growing teams. customers guidance saw our new of XXXX. I’m significant I’m rate increase of glad grew our quarter. platform to X% million, and see reported year-over-year in which year-over-year that last a represents quarter and our carry quarter XX% we the during revenue draw some from of into exceeded upside

Fastly plan look I possibly like new forward and go-to-market of together to a to team I’d congratulate the strategy strong the and to in on exceeding delivering QX. initiatives XXXX. remainder executing our pulling for

strong. remains Our engine and growth customer retention

in from flat NRR ago the from Our slightly year was quarter. LTM QX in the XXX% and XXX% down second quarter,

more our these continue year. platform’s Both our quarter, was QX cross-sell of traffic of customers. expansion, to from XXX% in more Thanks metrics in XXX% Our and of XXX% existing DBNER the existing healthy from we wallet customers. indicative gains and last are to up share also QX with in functionality second to

customers increased by a It’s XX decreased customer customer decline worth quarter XX that good from momentum XX QX did but third ARR. year-over-year. QX to in XXX was this second of and small in see from of XX enterprise quarter, We compared these consolidations. the were year-over-year. total count in which About X,XXX relatively most increase the in also was to an Our quarter-over-quarter noting customers customers due totaling

expansion. enterprise average was share as continued quarter-over-quarter representing year. $XXX,XXX, a as more on well to Our X% we’ve spend focused with a be last We’ve teams from QX seen success customers our increase XX% increase customer aligned customer wallet as of and expansion

has strong for as feature portfolio This strength than We’ve ever especially existing our product yield WAF enable customers. network technology, are and seen especially to Fastly our services parity growth next-gen cross-selling core strategy Our Edge activity. CDN line, true our expansion augmenting continues in in reached now been to offerings. security, WAF has easier

WAF, important saw some observability In incubation to modules. upsell wins excited wins both and us. success seen seen and I’m and second customers expansion as key compute our in observability. standalone share We success logo new We’ve also in and existing good quarter verticals in sales. we’ve selling Compute@Edge new strategic for businesses, momentum the

We our saw omnichannel an innovative & here, a selling. our team on with well-established an brand unseating model. I’m in a our incumbent Abercrombie packaging and first competitive win really Fitch, win new very focus at leveraging proud of

for here can You June’s to information. refer press more release

vertical. new one in It’s wins is of noting logo also worth retail the that this several

them Hornbach brands their enhancing we supplier to improvement many Rockler. chain, tied and of retail woodworking experience, Yurman They European home presence. David their major the like Diptyque, quarter, brick-and-mortar and closely include digital closed During specialized customers, X new luxury

also travel We and addition presence with our of Interactive. leisure expanded Bally’s the

cybersecurity developer crowd-sourced new including cybersecurity Bugcrowd, platform. We logos a saw the tooling high-tech, quarter, closing also ML-matching great interest the X and categories during from in

continues Tango, to the well serving a platform. region addition expand streaming the Bonnier News, Nordic vertical as with media as media of Our social live

can supplement more You refer investor to for information. our

on fixed are the basis-point real cost this quarter-over-quarter second rigorously expansion footprint incredibly XXX year-over-year. our work results. continued representing quarter, revenue a Our our efforts to gross and margin result I’m XXX pleased XX.X% yielding a was and for increase of basis-point with as cost

$XX expenses in coming in by Our anticipated lower million $X were approximately quarter, million. the operating than

to half cost timing and While our of the half marketing increase controls software. due the of capitalization this rigorous drove internal-use expenses in decline, about of was an other

that recall explain to in more future spending XXXX a our favorable, prior for we target tax that $X.X the will can a occur looking year. and please operating G&A now quarters. refund improve Ron our we million but in XX% to as due loss guidance, Also, detail, won’t in from took on benefit see you is are

for continued to the our our in authentication and you our will for quarter, This resources origin. -- bidirectional developments trusted released During management we innovation durable setup several can digital certificate support technology such Mutual MTLS as customers’ the in for new quarter, see feature customers. around deliver TLS and our releases, our to engine were set. second save time There new feature supplement,

Backends, Focusing released definitions new on the Fastly seamlessly. backend customers more platform, even automation Dynamic server enabling power create we of the

Our extend globally new developers cash allows Core with Cache network. their API to our our on code powerful to platform Edge distributed access Compute

about to launches our Flagging in edge Advanced technology WAF the future caps of excited a like security WAF our Site solution, Rate our Next-Gen We’re native off migration platform. This IP Limiting signal. and

that limited more and about reliability. capacity are Certainly, improving a coming authentication services. trusted TLS of enable for availability to and which lot validated And websites identification in lastly, provides into Expect hear This TLS we security certificates this managed our fully will Fastly our website released automated the in domain customers, quarters.

take Let share lot questions from this discuss investor thoughts. I AI. to really of We’ve to a community, a me moment our on gotten and the like

models edge using be indicated in cloud. generative learning for past, our inference would in the we’ve cloud we running we’ll As AI, the be to mostly and to expect the central run

latency have what them, advantages to the customers AI is gain more they how accurate recommendations are this In and more and coming we very personalized and see case across We of engagement grappling of might many be from to risks from from technology. going affect e-commerce, the what AI. industries able low

For their cost media and users AI provide Others for toxicity experiences be content. media, interested the spam more more help recognition. friendly via even new detection user-generated see and identify computer smoother speech and we analysis images in or to might user vision uploaded by and sentiment, language

our user engaging. next that about the and good position a as build on of safe to incredibly via fast, are experiences which feel AI, generation experiences We platform

with for Fastly’s packages reception to for development. customers to tiered excited so during customers on go-to-market our and use our incredibly from favorable our and platform. packages, easier and buy The including pricing I’m share that the you flat-rate quarter, has to Moving portfolio, pricing Fastly’s we of sizes far. new try, it been making all introduced

shaping on as creative voice is roles joined bringing Fastly new of as expert at well our CMO Point Harmonic Peter Peter as Check his passionate, expertise technology of a CMO, demand as in marketing generation leadership and Cisco. companies. Alexander the

as his roles Fastly CISO, community. Mozilla joined our is in to Erwin their addition CSO bringing Marshal from intelligence the in U.S. expertise

to promoted joined was serving She Greenstein Karen been General and XXXX interim as GC. And our has Fastly Counsel. in

lower I’m importantly, our on excited driving to revenue leadership business enormous innovation, of and will Marshal logo senior about experience new evolution and incredibly employee growth. I believe most acquisitions bring contributions focus team. our and friction the and Karen durable a Peter, a huge

excited New very quarter, be During annual conference, on in user share hosting that September our third to the XX. you with I’m we’ll York Altitude

using the Fastly’s their to investor community experiences join our as will invite webcast We customers share platform.

$XXX in aggregate which principal we million of On gain a million, to convertible This XX% repurchased the for reflected net par. recording second front, resulted million amount financial the discount debt in $XXX $XX a in quarter. our

effort shareholders is return. the our needs team finance actively for an our capital best in optimizing while give markets monitoring the to possible liquidity cost capital of Our

And least, in virtually Exchange the person New event. June us. greatly Exchange. engagement of York thank ever the who joined I all New late you Stock of we we in Stock brought milestone the Investor and both to We appreciate first want last held Day level but this to and at York not our

IR may seen encourage not you those visit I it, of our you have website. For who to

Now, let moment internal taking me transformation take Fastly. at discuss a the place to

in groups. mentioned teams processes realigned our I we’ve and functional departmental put changes place structural to our As before, into

initiatives positive brought strategic to outcomes results. are We seeing the financial has our and this

guidance to innovation guidance pleased operating strive the So updated our with efforts friction progress loss is XXXX, and and ways velocity, our and far, reflected revenue we’ll annual strong making experience. in the the lowering our this through we’re go-to-market both of streamlining for employee our find in and for that outperform strategically We to year. raised I’m projections

vision where with following an opportunity that to Longer term, within of I And cloud. experience intersection. the guide will end-user intersect is our best those there enormous needs edge market us believe, the

offering around deploy we find will we As easier to customers. it amazing world, and simplify the web technology our make new

best talent at of reach impactful cloud segment mid-market, be returns a to acquire to to Fastly, monetizing with favorable across larger and providing to the edge the cloud from a motivated rate our drive we channel the will As faster customers shareholders. we the bring empowered to community a and

Fastly have place our for to internet enthusiasm are a for and have a employees all experiences and real customers Our a make passion solutions, engaging. safe better Fastly’s the fast, real mission where

excited road by am I about how me Let saying the close ahead.

to the world have and experiences Of is plenty believe success built course, define digital experiences on drive and mission impact every delivered. there the work Fastly do, and will will digital significant but around of almost a the the I way are of organization

to now, to call guidance, and over the the I of quarter the discuss turn details will And Ron? Ron. financial

Ron Kisling

unless our and forward for my based. review are our discuss and I’ll business stated, joining non-GAAP guidance. and financial results Todd, results that metrics you, to thanks us everyone all financial Note in discussion then today. otherwise Thank

products quarter for of million price of exceeding of to increase, million, of $XXX the adjustments revenue our or guidance XX% from excluding increased revenue, impact million. the a Total Sciences purchase a revenue. XX% to deferred was $XXX.X $XXX Signal Revenue XX% to increase year-over-year end related year-over-year second top the XX%

results growth of calculate Also, actual to the percent. percentage we note revenue rounded total the with the that rates nearest of

the major than led As seasonal Todd usually the better upsell typical to second This which expansion shared, as saw to customers relative in cross-selling we in quarter, sequentially. flat pattern quarter well growth relatively second and first, traffic activity. the is a strong in as

in of demand increasing revenue to confidence on marketing packaging, a focused XXXX pricing our activities our and initiatives motions number us simplify that and partnership guidance. have programs We generation, give

slightly was Our net year in retention trailing the and the quarter. flat XXX% than XX-month the quarter prior rate with ago lower XXX%,

churn our continue dynamics strong. to low and experience remain very customer We retention

which XX As customers XXX Todd quarter. the an of had QX, classified compared enterprise, an end shared, of of as the to increase X,XXX X at we of in increase were first

QX. annualized Enterprise customers XX% XX% revenue accounted up in from total on for of an basis,

in $XXX,XXX to previous up the Our was from of and average last enterprise X% compared XX% year. customer $XXX,XXX $XXX,XXX, spend from quarter up QX

in in XXXX. XX the from of our XX% XX% contribution revenues customers total the quarter, second Our increase comprised an top QX

take or me RPO, a our discuss Let performance moment remaining to obligations.

committed current revenue RPO future contracts customer Our from reflects revenue. and deferred

augment Also, contract our we customer the our anticipate due renewals. revenue revenue a will investor community. more timing become predictable fluctuate of basis our model we As to on the with RPO seasonality quarter-to-quarter the consumption-based meaningful RPO primarily packages, and to will

a So looking RPO. at change way our evaluate year-over-year changes to meaningful is the the in

for the For $XXX our now turn to the $XXX rest results quarter and first second the from million in quarter. second X% quarter, XXXX I was second $XXX XXXX. the million of the down quarter of RPO will from million, financial up of XX% our in

in XX.X% Our quarter the second was XX.X% compared of first to the XXXX. gross margin for quarter

results half our half efforts the seeing down we the second of million in revenue of call continuing refund expense first due This software. the decline favorability from fixed from of the cost our a X% in $XX.X timing to reflects programs measures expenses, to as Todd X% to our operating sales remainder sequentially cost expenses use marketing About and million tax we in relative to on the from As capitalization QX and internal-use certain due quarter, million were the and and $X.X with of the impact expenses half compared in the to the footprint. manage increase moving approximately favorable are as an costs our to XXXX discussed a discussed, this Operating QX where $X control see was related we second first expectations. and well of quarter.

to of high margins and better-than-expected This of guidance, operating of in exceeding high the range guidance million, $XX favorability, operating our an combined end gross loss million. of above the $XX end million with $X.X revenue our loss resulted

to second loss of and a basic basic and net diluted Our $XX per loss the compared in loss XXXX. in $X.X QX per and million share or million share loss was quarter a $X.XX net a diluted $X.XX

report in compared $X.X in to at that second in to negative XXXX. pleased $XX I’m QX EBITDA our positive quarter, million million turned the coming adjusted

cash, the We cash securities balance the long marketable to $XXX those quarter ended Turning approximately equivalents, sheet. and with classified including as in investments term. million

in $XXX a net value par principal million reflected amount the of in gain. debt During discount our million quarter, a recording we $XX GAAP convertible repurchased XX% $XXX aggregate which to for million and resulted

of will continue at capital, monitor and markets the on our We continue to capital levels. are evaluate appropriate we’ll and focused improving convertible debt of buybacks liquidity discount and to our cost

and cash second sequential million, million from quarter. This driven margins. by first was improvement a negative free working quarter Our $XX positive in flow primarily $XX.X an was the $X.X in for operating the million capital expanded increase improvement

of cash above Our expenditures expenditures capital our of quarter, of of revenue capital X% for end were X% in outlook the approximately revenue of to X% second high XXXX. the

in year. decline and be with our to second outlook full in line expenditures for cash half capital quarterly to the expect the XXXX, We of

capitalized reminder, include capital a cash our software. internal-use As expenditures

in our the third that may quarter no I will to turn the remind as today the current undertake results based to obligation these statements include required on future, statements we outlook update year everyone and statements. and forward-looking are by discuss XXXX. as full I’d now expectations following for to of materially, except differ again and forward-looking law. Actual like

customers, XXXX products. deliver our continued part by ability driven via customer line new in upsell full and and and year cross-sell our enhanced quarter expansion acquisition third improved and in Our top outlook growth strong to reflects existing

visibility have today. Our based the is we revenue that guidance on

growth expense losses over a in and improvement We expect to to lag XXXX expect in the year year-over-year operating XXXX. meaningful our growth revenue for continue

our quarter, are last to growth our stated investing to efforts we revenue existing go-to-market part As in we acquisition. in new customers our continue accelerate our as customer and initiatives, our of expansion

our greater of operations, in We a meaningful will and decrease in to and G&A efficiencies leverage XXXX see percent R&D, G&A continue investments to in revenue. in our our to see drive opportunities as meaningful these for and costs and product especially expect costs across we

accelerates a experienced revenue quarter growth sequential the third quarter. fourth Historically, that into

$XXX growth and For the X% third we representing XX% the of in $XXX to at sequential range million growth expect the midpoint. revenue million quarter, annual

As revenue traffic for second capacity our we’ve discussed, in XXXX. higher half and are the we managing expected of

initially While onboarded disciplined network basis we to our have patterns our bandwidth of which that variable newer being in very cost. better quarter be revenues, impact traffic second expected, continue to have our gross to and we investment margins than XXX points modest adverse cost a contributed we approximately

points quarter, will margin least third points approximately points. to the in quarter we basis accretion basis see relative minus And above margins fourth anticipate decline our basis the second XXX or quarter, expect of XXX to result, levels. a in XXX As QX at the we plus gross gross

As call, in increase on second traffic the some quarter as result customer. from quarter of in first we delivery a a shared additional our major winning we saw price declines

pricing the changes. our its with ongoing We of base expected to traffic in combined second in are our to cost pricing trajectory any cost trajectory expect Normal offset to half into return reductions fixed increasing normal in and half second the network optimization, our XXXX. bandwidth

an loss As of this increase approximately with than to we improvement of our the half in capitalization due previously, million was of use earlier our operating better projections $X marketing mentioned internal QX expenses timing software. and

of also loss operating expected sales $X.X the from million use and refund. QX benefit a reflected Our tax

our quarter, will efforts. third continue we cost For the control

sales expense the use experienced in a see benefit nonrecurring However, marketing tax we benefit in both quarter. the reversal second will and and the

$XX $X to loss million of and $X.XX result, increase the to our to $X operating to expect a non-GAAP quarter, share. third $X.XX a we million non-GAAP for of per loss $XX million by million As a to loss

free expectations, and to the our be flow capital results our cash we third expect Given also negative quarter. working for these

For of $XXX to year million revenue This range annual range we to a $XXX represents our million of XXXX, XX% $XXX million growth are million. the calendar $XXX for midpoint. raising at guidance a to increase

We range operating reflecting an improve operating in to an margin XXXX. at million XX% of of margin negative compared operating midpoint expect million, a non-GAAP to loss negative $XX to $XX to our X% of the

in resulting net our the in expect repurchase debt diluted basic in improvement on the loss remain at million expectations, to convertible our spent second income $X.XX lower $X.XX half non-GAAP second by and We quarter. per share share, $XXX the interest reflecting offset loss to our operating from the per

questions, open to you for we Before the Operator? support your line for in Fastly. like would we and thank interest your

Operator

[Operator Instructions] from Our of question comes first the James line Fish.

James Fish

guys. A couple Hey, guys. quarter. you Congrats the questions of on for

was year, you help you at sound as customers. you like move I quarter net it especially trying of it’s And I trailing nice months numbers did at just if retention but some rates, larger can what kind and first, what’s the increased understand guess, higher? rates business How about Just look to off can retention see landed you high should your customers, traffic the here? given back gross that -- stabilize, number confidence like as us net think good did Ron, of about your next this in underneath one you’re that quality new we the to number of to of some looked we some given the adds quite see quarter. new XX come half shed the

Todd Nightingale

terms deals usage sales is getting of of from at platform, lot motion. of seeing that effect. multi-portfolio -- lot on in the of wins, a our rate net I and and largest motion even made and I lever wins. retention meaning really a has the look platform confidence side, the we progress platform We’ve with are strong think, growth that cross-sell about our unification just think logo More new the organic that more our of seasonal biggest And here rate, cross-sell. there simplifying and teams a some momentum. is gaining really retention in we’re But reason When our is

why think, I we the confidence really rate. And see on retention so net there that’s,

Ron Kisling

our plus When saw, you total And low X% actually one, exclude actually to accelerated aggregate looking net little XX%. the see when customers, customers number you you a a the I did think, end, plus look bit we from as enterprise customers of add. at customers, at at

increase X,XXX a If the in you have you some total would on take under customers ARR, quarter-on-quarter number customer seen basis.

end, good the quality we’re adds. at customer seeing So, high medium and and

James Fish

for Todd, I need a with the new all? as new mainly going incentives your of it. be you, replace these for security the for additionally, existing differentiation to security have maybe And Got sales the both about feel But expansion new opportunity, use the ability in lot to change guess, rather at aligned sales accounts? we for major of competitors Day, incentives and and kind what’s you cases logos Analyst talked spear And today. base. all a logos do customer and align to and potentially at overlapping cross-sell a more to than big

Todd Nightingale

-- a ways customers the natural a of We total incentives relationship The great are revenue we sales offering, lot logo of of look logo or WAF. sales we at growth, incentives. around especially whom it’s SPIFs special relationship, best-in-class new think, but security have growth, growth, in a really and course, I especially with primarily in focusing Next-Gen cross-sell, motion when extension is new

around the complete by would new primarily. unification acquisition customer to need which have think, to in piece we a our we’re WAP, story. expect making in last for saw feature the on I really the solution not anticipating really play. platform puzzle Edge platform cross-sell. unification incentives is platform big completing parity the going I’m market Fastly that SigSci the step we big, the the traditional think past special we’ll of that I that our and with management I end Next-Gen WAF claim, sales which that to cross-sell hope quarter, on year, smoother really, is the This solution,

Operator

You Louthan. might next of the Frank are be Frank, from Our on you question line Please go comes there? ahead. mute. Frank,

Frank Louthan

that. Sorry about

you channel walk program, a of that Sciences begin? Signal where of maybe does -- the are response? Okay. details where And kind that us little you Hey. seeing with And lot. then able a you the and are when that out on through being efforts with with your the delivery, customers cross-sell roll more to on status there? here Can Thanks and

Todd Nightingale

channel I good uptick. ago. pretty quarters launched I Yes. was two And The we’ve a program think, had, think,

increase for in deal huge me, launch. registration, seeing a kind deal here which obviously the focus channel significant is of acquisition, of the healthy also board. in logo registration ours indicator We’re of drives And terms across leading which is a new

We’ve seen some really like creative partnerships far, as folks it onto well. Traditional too. But technology systems been strong. to integrators, their so platforms especially way, on that who that’s have the security able side, incredibly successful Fastly embedded been resell AXX incredibly actually

program we’re So, historically North channel pretty American big that feeling with business. year interesting we had Signal based. last of been lies. primarily for one the about the piece, been have which the the business that, the incubating because right channel bullish before of channel There’s is launch Sciences the sort started now, where Sciences Signal And

in channel our little maturity America. the in -- North bit So has more a

working see We’re hard to comparable but it we and channel out a EU, in that. the lags, certainly, build

we’ve We’re make sure of those got to markets. in coverage investing least at that good both primary there channel

Frank Louthan

that give do or came in that by side, from channel sales Great. can where year-end? end sort the expect us you the percentage of what up quarter, of And on you your to with channel

Ron Kisling

Yes.

business. percentage, launched should that channel-led fairly the launch, ramp that channel more the So, partners. percentage in XX% months is the Signal quarter quarter. of see in ago XX% The But starting to terms being security this the see Signal revenue a coming a through two which point. or aggregate side outside heavily And particularly to the at business the in of channel a We and that in the channel in delivery, half we’ve big been The sold more second led. is business Sciences still early was of piece we’re nominal Sciences channel from the of some it’s the start traction. of has

Todd Nightingale

I were to find some momentum the And matter biggest channel X deals that channel future. to through the in our quarter sourced top And deals that see, the there. team more success of of a the can there. the try us handful continue nice actually sales it -- and to just Internally, our clearance signals that makes was helps highlight it through share get deals, of and and a big of more I’ll the that went the it But to in channel. you difference. thought that

Operator

comes the question Sanjit from next of Our line Singh.

Sanjit Singh

Congrats you you changing? of this saw -- going quarter network guys that called is that mix gross threshold. impact want and sort XX% And you forward? the a sort expect does that traffic or new get expect have on Todd, expand and of you industries sort what margins growth the tech, any the of effect as on your still and of, regaining a composition lot current of quarter sense perspective, that sort your to guys from you into I how the out of on

Todd Nightingale

what, that great have is know some of really a that conversation internally. You because we question

time actually So, of it a when vertical, to loading. the lot by matters shift mix it comes day

streaming evenings load people most tends are Our highest to the entertainment, highest commonly. -- be under infrastructure when in

workload types us. margin to tailwind is be mix And that And of that to a for can have to of a tech you for margin tailwind tends us balanced of will type have like good tend that -- day sure. so, time more shape things verticals imagine a other that

again, a compute people our the also hospitality that, to that platform. case that to tend requirements, be be margins. interested tend a they And tailwind tech is to e-commerce, pretty It’s mix will with large in the retail, personalization

more effect So, in those the start things coming have been to helpful. of see And we’re I that XX to going think months.

Sanjit Singh

up program, on question advocacy. of a of the from The you sort of Fastly sort we’re think the X picking in? of channel inning Investor customer do product sort themes broader then Day. And go-to-market of of sort engineering, unifying some kind one I the What the what’s pipe that to quarters sort minutes be of the attention X you which to? next we talked couple paying a mean, of you should over but about down launched coming ago, more

Todd Nightingale

which platform, if the and When we biggest of swivel deployment the what one management piece that them chair, that easier type job coming that sales unification. add land makes can think expand for you’re course, drives that user for the have meaning delivery, regardless care is our have you from the you is real content Next-Gen WAF And be and of if of no expand expand facet, there’s a to means for you full And management infrastructure sure. the to experience Next-Gen API observability, it’s suite, operation. portfolio WAF they one one importantly, have different a platform means simplicity benefit set It is for product about infrastructure. a don’t multiple run types next. using, one our one single don’t in compute. of one team’s operate a completely offerings to the it all management have civil from that’s if plane, compute, you what of deploy different infrastructure. and and in And managed We easier because We of don’t

in benefit of from API. experience. plane, management I set where our of there’s the And have sales the We all think ops and one and infrastructure certainly one one services customer run,

inning. saying what I’m fourth. in asked the we’re You

Operator

Our comes from Jonathan of the Ho. question next line

Jonathan Ho

sort give for revenue some the even the expect what of you that Can results. use bit become sort little or And soon we strong AI specific the to on -- this cases on you of sort And color opportunity of is? described? driver? maybe potential meaningful it how become a what a the Congrats are, should will us more of

Todd Nightingale

become good question a meaningful Yes. I will when think mean, I a it’s driver. it

a for ROI AI of not inference-based algorithms are this see of driver the of remainder we’re You the We user truly And folks our that for content cetera. matters. use that being cases the I interesting et matters et planning for directly very But and be are to to used feel meaningful especially experience strong customers, right of ability some that’s media, and should at is it a But are now. matters things know algorithm the especially to see incredibly in product this our those there’s edge. we’re and deep interesting. with And a for year. sophistication starting personalization, recommendation, for where recommendation, the like And going cetera. two e-commerce intersection those sector, where us, it [ph] in I AI where personalization think

example this the on We strategy And that and of about are make those we AWS that’s order models at deployed in Day. to real-time decisions. to be I talked kind to of cloud edge and then think multi-cloud in is central Investor good. trained a great And the these GCP know going

both and that that’s and the edge I developers they think central the operate, puts a place the to shine. want cloud where in can way

Jonathan Ho

additional provide? time? in that continued then traffic And just trend terms to impact of you detail any there over Is new that do that this expect potentially can described be a patterns margins. the gross you you And

Todd Nightingale

do I a trend. expect it to be

our because matter think It matters. are I customer we the workloads because the vertical of of to does they and verticals. does matter in differentiation, and But be acquisition that margin. non-media, tailwind of it of any time the to also, gross base workloads compute security focusing day. have, logo tend new differentiation type a -- And obviously in that non-publishing vertical on it

that data definitely give I could expect a to to tailwind base. continue differentiate have right there, but do as it points customer to I thought. have don’t now it we the disclose other any We’ll be I some

Operator

from comes Brooks. question of [Ph] next Madeleine line Our the

Unidentified Analyst

Congrats on strong the quarter.

raise the Just From the is the really it two like beat follow-ups guess, me. of coming a perspective, I quarter. first, guidance looks quick from it’s environment. from the this most

half So on how one AI feeling about the after the quick of into you back Thanks. follow-up just that. then going year? And the are environment

Todd Nightingale

Sure.

to far we that don’t banking, And I there’s little of in market, there. I actually it. here. service As we some get exposure you down was seen a provider our are or a we some growth the have very of Maybe we little in to clear more, of goes, exposure to think numbers. as and the responsible that in other some maybe bullish. think concerned annual don’t want have user have proud good some was their real high that very those able think We’ve the guidance, of be I’d market we the the we -- but we lot think are it about so hitting I like call and to I goes, the do folks pretty hope confidence team far as Look, being I a pull guide any. bit have in as base. environment make fact very guidance the again. I clarity about be out, up the again,

Unidentified Analyst

And understand will on you From and the that model doing inferencing the do you so then edge require more something AI, the and perspective, storage sufficient spent the doing at on then when feel that you everything or edge. that already be planning SaaS a training see is become does at for CapEx edge? really core on the confident the than have storage it that far an for opportunity, do you’re CapEx

Todd Nightingale

No.

you And -- our store, deployed We using the an features as to in absolutely has as us value order quarters. outcomes the store to have absolutely see see this big We KV we part compute already over going pair can is plan. releases part you’re Store, of future have edge And which in deliver which platform for inference-based for. in And storage out last this. been it from key used forward. as storage we But absolutely model. of launched is as go the what built few be well more

significant build a not that. of our because expecting We’re change plan to

Operator

line the Our from next question of Power. Will comes

Unidentified Analyst

on Just pricing packaging. and

bulk finish great. benefits you the kick in now? to be that that you to it you you mentioned And do of would when And color say Thanks. you introduce when expect right quarter. think journey Kind in are where the do of kind the to there? started you I Any this of expect transition? would

Todd Nightingale

Yes.

I think part force it’s trying going it. to long to transition, we’re in a be not relatively because

customers of to to run utility We in And that want motion. entertainment true they customers have a run. media, want back promotion, especially lots

something But that’s want changes making they and of a And especially, all chunk one revenue. that sort intention gives it us strong is We monthly and monthly reliable, no reliable there’s a wants of there. that makes package revenue an huge billing. of any or for a commit think in bit us good have more little the I and that renewing enterprise market our

the to seeing say And track the out progress I which into this improvement in you think sales around. RPO, time maybe the steady will like part, I shift run over I kind until base in kind months. would maybe our in two transition I next towards hit We’re motion, a XX the this the things disclosure years think, the But we another hope state. be that can customer of here. so of

was see overages the to again, nice incumbent. new system were set. that no called using we big packages. see. that deeply was packaging of them a the reason made was of entrenched why some and feature It some out one to nice named And in deals rate that, That change Flat packaging, all a from

Unidentified Analyst

competitive Thanks. competitive just seeing the there? What then biz, business CDN core environment. in And quickly on the you on the environment? the changes are Any

Todd Nightingale

performance an one are as tends solution. some part are that I for at customers market the trends some seen And edge we CDN being with and consolidation, vendor interest. the when is there to good because is as of multi-CDN tend large choose think looking and leader we’re But -- two vendors. that cloud that to more us we their a big in that be see is consolidation and have We the seeing bought selected they largely, what down of more see

a And solution. tool. much play platform we think so enormous point a of of for the industry see is platform same competitors large some having that good it’s that kind of is this complete And targeting I motion. And an our the more becoming instead of

Operator

from line Kessinger. of Rudy question next comes Our the

Unidentified Analyst

two for I just you. ones quick had

had First said roughly further in that was guys in know guys I’m per off, I Analyst Day roughly curious any at the in sorry, -- just saw XX% revenue was you was the QX? below QX server improvement you And I QX peak. if

Todd Nightingale

deploy track this I guess, a and That’s not don’t server every revenue any additional per revenue did the quarter up. to significant can you quarter. is tell hardware we great have in what went question. We I

server server of adding a the around day all overall. down figure ops we the that chance It I there’s just reducing that picture, that and cost certainly margin chasing every like per good a be optimizing trade-off I track hindsight, to we goal take Day feel I I If the increased. quarter. we’ll servers team tracking revenue Investor my types per trend cost because think it’s but instead revenue the But not it’s painted optimize in of few disclosed during interesting was are most carefully. other can by single So, and a a revenue was want honest, of gross don’t of revenue costs, long. for really

Unidentified Analyst

from just products then second will gotten just then DDoS one, And go bot And when GA? early any beta? feedback you’ve mitigation and the bot

Todd Nightingale

in about the going will had play. excited. the excited deployments That’s -- a and beta that of mitigation, question. out so team great, bot great be and been we now. we’re No, on My in bunch a a It’s really hands we’ve response have security right great customers’

The lots win. think confident It’s that and growth has really for MSS of has be DDoS more security the a of the years side, mitigation. nice the in part available from team, that’s DDoS but our had to DDoS attractive technology the of a which those amount the past. competitors and in, think really customer Fastly we’re bot And It the a our On honest, access now. we’re operations been gives right threat obviously, And mitigation enormous most security years, managed two, security getting an some had in includes interesting of to pipeline in-depth I I And DDoS service. mitigation, healthy a something have seeing incredibly really we’ve direct been a visibility full tailwind. there. interest been service, and

Operator

comes [Operator Instructions] question next line from of the Our Rishi Jaluria.

Rich Poland

is questions. my Thanks for taking Poland Rishi. for Rich on This

suitable be the for packaging to industry there cases? of quarters First types just wins packaging, in couple anything it’s one on on over else past that for And more help hi-tech now of a and little of I besides that you pricing anything you those use the done some those you the out think expand just could is and use bit? good pricing you’ve mentioned retail called and new and particular. cases, Is

Todd Nightingale

hard I Sure. on pushed automation. mean, we’ve really

experience, There’s to details Backends, think there’s making on And side but supplement, platform, house there’s that. easiest our work and, be we’re on helps to a of not we’re I the which easiest management automate the work platform working lot at hard Fastly easier as bunch and automate. Mutual honest, here the of with make Fastly to the doing in we use and TLS. use to for, powerful just saw Dynamic pushed more that develop itself powerful to a on You security the simplifying customer and just most cloud more have the the

other see enterprise think, complete where they need benefits we’re we’ve possible. steadily single very The seen strength more, Because seen. vendor delivery, thing verticals unification. of is I very think, some platform, has to improvements single that vertical, want very strategic excited that suite. efficacy been, content -- of direct while easy on as I edge focused want the a hard a the about. really one pushing that a really lot we’re to we’re the excited could increasing, be media I hope and to there real They say it’s and onboard platform we most about as really we’ve platform was security But Certainly, on already if to

and improvements some I to verticals. unification in new UI, get So, -- going these a our that’s in story, lot in we’ve linking knock down the us platform consolidation. we account think seen But as logos really help expansion of of full

Rich Poland

just the on how as then flow for packaging of And just terms we rolling generally also products? monetization of but think as in like speaking, it then follow-up changes. model to about How out. of are into should that pricing those does a some applies some maybe we just and that products And about kind of the security think the

Todd Nightingale

Sure.

security that the as try packaging kind our new solution, sell So, to unified in package, solutions. security application one we -- the especially web modern of

to be going primary anti-bot see à one as a think WAF. you’re So We think Next-Gen them package, DDoS, see as carte, sell more to la -- will sold That I as application security. and of that obviously motion more consistent think our mitigation I package, that we’re more. and but going web more

that the sold TLS, make certificate view we the in kind a lot a gets call solution and is really sold platform of folks going and separately. with that radically a for certainly do usually will lot lot yours make simpler that support presences to have think of certainly be a and to what But web help especially that different us easier, that for is conjunction CDN going TLS of that The them. I platform,

a there’s bit So of little motion different there. a

that’s I sold guess, Largely, we the cetera, core carte. certificate la management, sort and it. Yes. of like see solution how being et things security sold TLS, being à package a as

Operator

it over our looks like that of And now back to turn Todd I and would to the questions. all team. like

Todd Nightingale

Thanks so much.

we thank fast, make partners investors. our a are ever all experiences close our internet the committed I engaging. to the as customers, and Before remain better where to safe want We our employees, as our call, and place

delivering to our of for and you much Thank Moving business and execution lasting your growth all today. focused shareholders. value bringing forward, we so remain to our on time

Operator

That concludes today’s call. Have a pleasant day.

Fastly (FSLY) 2 Aug 232023 Q2 Earnings call transcript