Fastly, Inc. · NASDAQ:FSLY

Fastly — Q2 2020 Earnings Presentation

26 slides from Fastly's earnings presentation, August 2020

  1. Slide 1: Investor Presentation

    Investor Presentation August 2020 ©2020 Confidential 1

  2. Slide 2: Who Is Fastly?

    Who Is ? Fastly provides developers with a secure and programmable edge cloud platform ©2020 Confidential 2

  3. Slide 3: Momentum-at-a-Glance

    Momentum-at-a-Glance At IPO (May 2019) Today $246M / 45% YoY $145M / 38% YoY LTM as of June 30, 2020 For the year ended December 31, 2018 $75M / 62% YoY Revenue Q2 2020 as of June 30, 2020 $530K+ $716K+ Average Revenue Across All For the year ended December 31, 2018 LTM as of June 30, 2020 Enterpris

  4. Slide 4: The Modern Internet Has New Requirements

    The Modern Internet Has New Requirements Digital Applications Software Era Transformation Built, Not Bought Empowering Developers Pre COVID, 56% of 75% of New Architecture Operational Efficiency companies applications describe their digital will be built, not 75% of data will be 90% of companies bou

  5. Slide 5: Digital Innovators Choose Fastly

    Digital Innovators Choose Fastly * * *Partners We believe COVID will accelerate digital innovation ©2020 Confidential 5

  6. Slide 6: Evolution of Web Architecture: Edge Cloud Extends Developer Control

    Evolution of Web Architecture: Edge Cloud Extends Developer Control Developer Control IT Control Users CDN Network Legacy Edge POP London London Servers Load WAF Bot DDOS Edge Balancing Appliance Appliance Appliance Router Edge POP Appliance New York New York End-to-End Developer Control Edge Cloud

  7. Slide 7: Fastly: Innovators Platform

    Fastly: Innovators Platform Global Network 100 Tbp/s 55 Markets We operate at global scale ©2020 Confidential 7

  8. Slide 8: Competitive Differentiators

    Competitive Differentiators Customer Programmable Software-defined Safety in Empowerment Edge Modern Network Depth Philosophy Empowering developers with a secure and programmable edge cloud platform ©2020 Confidential 8

  9. Slide 9: Why We Win

    Why We Win Existing Offerings Why Customers Choose Fastly ✓ Visibility, Agility and Control ✓ Cost Efficiency Legacy CDNs ✓ Modern, Developer-Friendly Architecture ✓ Reliable Technical Customer Support ✓ Better Performance ✓ Instant Scaling ✓ Cloud Agnostic Centralized Clouds ✓ Reusable Modules at t

  10. Slide 10: Enterprise Customers Are Driving Growth

    Enterprise Customers Are Driving Growth # of Enterprise Customers* 304 288 262 227 170 $507k 12%$536k $514k 14% $553k of total customers ** ** ** of total customers ** CY 2017 CY 2018 CY 2019 Q2 2019 Q2 2020 % of Revenue 82% 84% 87% 86% 88% Average Spend Per $507K $536K $607K $557K $716K Enterprise

  11. Slide 11: Expanding Customer Usage

    Expanding Customer Usage Illustrative Customer Revenue Expansion Leading Online Payments Company INITIAL DEPLOYMENT $45.0 Land Implemented Fastly for origin offload, cloud $40.0 Expand*** optimization and as a redundant solution to their $35.0 incumbent provider Adopt** $30.0 $25.0 DIGITAL TRANSFORM

  12. Slide 12: Strong Customer Loyalty and Retention Metrics

    Strong Customer Loyalty and Retention Metrics Dollar-Based Net Expansion Rate* Annual Revenue Retention Rate** 99.3% 138% 98.9% 136% 132% 132% CY 2018 CY 2019 Q2 2019 Q2 2020 CY 2018 CY 2019 * We calculate Dollar Based Net Expansion Rate by dividing the revenue for a given period from customers who

  13. Slide 13: How We Grow

    How We Grow International and Vertical Expansion Grow revenue outside of the US Leverage Partners and penetrate new verticals Expand distribution footprint and technology ecosystem Platform Expansion Continue innovation with Land & Expand focus on solutions and Continue vertical modules for vertical

  14. Slide 14: Financial Overview

    Financial Overview ©2020 Confidential 14

  15. Slide 15: Financial Highlights

    Financial Highlights Strong Expanding Significant Disciplined Topline Gross Operating Path to Growth Margin Leverage Profitability ©2020 Confidential 15

  16. Slide 16: Positioned to Capture a Large and Growing Market

    Positioned to Capture a Large and Growing Market $35.4B ✓ Edge Computing1 $17.9B App Services and ✓ WAF, Bot Detection, and DDoS Prevention345 Security at the Edge ✓ Application Delivery and Control6 ✓ Web Performance Optimization2 $17.5B CDN & Streaming ✓ Media Delivery2 2022 CDN & Streaming App Se

  17. Slide 17: Strong Revenue Growth

    Strong Revenue Growth Note: U.S. Dollars (in millions) 39% 45% CAGR Growth $200.5 $74.7 38% Growth $62.9 $144.6 $58.9 $49.8 $45.6 $46.2 $104.9 $40.8 $36.8 $34.4 $32.5 $30.0 $26.2 $24.4 $24.3 CY 2017 CY 2018 CY 2019 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 ©

  18. Slide 18: Multiple Levers Drive Gross Margin Expansion

    Multiple Levers Drive Gross Margin Expansion Non-GAAP Gross Margin* Inherent Network Efficiency Drives Margin Increase 61.7% 56.6% 55.6% 54.9% 53.8% CY 2017 CY 2018 CY 2019 Q2 19 Q2 20 Levers include: • Future state should see bandwidth as largest contributor to Cost of Revenue • People / Colocation

  19. Slide 19: One Network with Many Use Cases: Increase Efficiency + Scale

    One Network with Many Use Cases: Increase Efficiency + Scale Offload Fastly Hardware Bandwidth Verticals Sensitivity Software Utilization Requirements eCommerce High Tech High Programmable (APIs / Site APIs Requests Negligible FinTech Traffic) Security Digital Publishing Instant Purge Time to first

  20. Slide 20: Fastly's Software Drives Capex Efficiency

    Fastly’s Software Drives Capex Efficiency Capital Expenditures* as % of revenue 14% 13% 10% Single network reduces hardware requirements and increases flexibility CY 2017 CY 2018 CY 2019 Increased computing capacity / efficiency per dollar spent Free Cash Flow** Margin CY 2017 CY 2018 CY 2019 Networ

  21. Slide 21: Substantial Operating Leverage as We Scale

    Substantial Operating Leverage as We Scale Sales & Marketing as a % of Revenue* 39% 35% 35% 37% 33% Recent leverage in S&M driven by capital optimization for go-to-market CY 2017 CY 2018 CY 2019 Q2 19 Q2 20 Research & Development as a % of Revenue* Increasing demand generation and account-based mark

  22. Slide 22: Thank you!

    Thank you! Thank You ©2020 Confidential 22

  23. Slide 23: Appendix

    Appendix ©2020 Confidential 23

  24. Slide 24: Legal Disclosure

    Legal Disclosure Important Notice This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical facts, including our business strategy and plans and our objectives for future operations, as well as our financial performance a

  25. Slide 25: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation ($MM) FY2017 FY2018 FY2019 Q1'2019 Q2'2019 Q3'2019 Q4'2019 Q1'2020 Q2'2020 Gross Profit GAAP gross Profit 56.2 79.1 112.1 25.8 25.4 27.5 33.4 35.7 45.0 Stock-based compensation 0.2 0.3 1.4 0.1 0.3 0.4 0.5 0.6 1.1 Non-GAAP gross profit $56.4 $79.3 $113.6 $26.0 $25.7 $2

  26. Slide 26: GAAP to Non-GAAP Reconciliation (Cont'd)

    GAAP to Non-GAAP Reconciliation (Cont’d) ($MM) FY2017 FY2018 FY2019 Q1'2019 Q2'2019 Q3'2019 Q4'2019 Q1'2020 Q2'2020 GAAP net loss ($32.5) ($30.9) ($51.6) ($9.7) ($15.6) ($12.2) ($14.1) ($12.0) ($14.5) Stock-based compensation 2.8 4.1 12.1 1.5 2.2 3.8 4.6 6.3 16.3 Depreciation and amortization 9.6 13

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