Fastly Inc.

02/25/2026 | Press release | Distributed by Public on 02/25/2026 16:07

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and in other parts of this Annual Report on Form 10-K. Our fiscal year ends on December 31.
As used herein, "Fastly,""we,""our,""the Company"and similar terms include Fastly, Inc. and its subsidiaries, unless the context indicates otherwise.
Overview
Organizations around the world are more dependent on the quality of digital experiences they provide than ever before. As the internet approaches an inflection point where automated, artificial intelligence ("AI")-driven traffic increases demands on infrastructure, Fastly is the essential platform to deliver resilient, highly performant, always-on software and services at global scale.
The edge cloud is a category of Infrastructure as a Service ("IaaS") that enables software engineers to build, secure, and deliver digital experiences at the edge of the Internet. Our platform represents the convergence of the Content Delivery Network ("CDN") with functionality that has traditionally been delivered by hardware-centric appliances such as Application Delivery Controllers ("ADC"), Web Application Firewalls ("WAF"), API Management, Bot Detection, Distributed Denial of Service ("DDoS"), Web Application and API Protection ("WAAP"), and infrastructure protection.
Processing at the edge is an ideal way to handle highly dynamic and time-sensitive data, especially when performance matters. Organizations of all sizes, including Fortune 500 companies that run 24/7 operations, leverage our edge cloud platform for a diverse range of critical functions that benefit from processing at the edge, including enhancing user experience, scaling agentic AI workloads, and powering core commerce capabilities to drive conversion and customer success. The edge cloud complements data center, central cloud, and hybrid solutions, and is critical for responsive, safe, and secure AI-centric experiences.
Fastly focuses holistically on the edge cloud from developer creation to end-user experience, with our global footprint and integrated security core to our platform. Our platform is poised to capitalize on the rise of agentic AI, where autonomous agent consumption is driving the bulk of internet traffic. Fastly is uniquely positioned - and has laid the groundwork - to lead the intelligence fabric that helps enterprises adapt to this shift. We are capturing this opportunity by supporting edge workloads and AI traffic management, allowing organizations to optimize AI-driven services alongside human interactions. We play a unique role in helping enterprises optimize and accelerate interactions with authorized AI agents and blocking abuse, powering their differentiation and AI-fueled innovation.
Organizations must keep up with a complex and ever-evolving landscape. We've built a powerful unified edge platform designed from the ground up to be programmable and support agile software development, and we continuously drive innovation to meet the ever changing needs of our customers. We believe that our platform gives our customers a significant competitive advantage - whether they were born into the AI-centric digital age or are just embarking on their transformation journey.
We focus our direct selling efforts on expanding our customers'use of our platform, which includes companies that are exhibiting significant growth. We engage with and support these customers with our field sales representatives, account managers, and technical account managers who focus on customer satisfaction and drive expansion of their usage of our platform and products. These teams work with technical and business leaders to help our customers' end users receive the best possible digital experience, while also lowering our customers' total cost of ownership. These direct selling efforts are reflected by the revenue generated by our enterprise customers. Our Last-Twelve Months Net Retention Rate ("LTM NRR") metric also measures the revenue growth from existing customers attributable to increased usage of our platform and features, and purchase of additional products and services. For additional details on our key metrics, refer to the "Key Business Metrics" section.
We generate substantially all of our revenue from charging our customers based on their usage of our platform, and we generate a substantial majority of our revenue from customers that have negotiated contracts with us. Customers typically choose to utilize our platform for Network Services, for which we charge fees based on their committed or actual use of our platform, as measured in gigabytes and requests. Many of our customers generate billings in excess of their minimum commitment. We also generate revenue from Security and Other product lines, including Compute and Observability, as well as professional and other services, such as implementation, account management and enhanced customer support. We charge a flat one-time or recurring monthly fee depending on the additional products and services selected. Typically, the term of our contracts with customers is 12 months and includes a minimum monthly billing commitment in exchange for more favorable pricing terms. In addition, customers can sign up online by providing their credit card information and agreeing to a minimum monthly fee.
The majority of our revenue is usage based and changes in usage by our largest customers can create volatility in our revenue. The length of our sales cycles, from initial evaluation to payment, can range from several months to well over a year and can vary substantially from customer to customer. Similarly, the onboarding and ramping process with new as well as existing enterprise customers with new business can take several months and can be subject to delays for unanticipated reasons. The timing of new revenue from our sales efforts and changes in usage by our largest customers can make revenue difficult to predict.
For the years ended December 31, 2025 and 2024, our revenue was $624.0 million and $543.7 million, respectively, an increase of 15%. We incurred a net loss of $121.7 million and $158.1 million in the years ended December 31, 2025 and 2024, respectively.
Our 10 largest customers generated an aggregate of 32% and 33% of our revenue in the trailing 12 months ended December 31, 2025 and 2024, respectively.
No single customer accounted for more than 10% of revenue for the years ended December 31, 2025 and 2024. Affiliated customers that are business units of a single company generated an aggregate of 10% of the Company's revenue for the year ended December 31, 2025. No affiliated customers that are business units of a single company generated more than 10% of revenue for the year ended December 31, 2024.
Factors Affecting Our Performance
We are focused on continuing to attract new customers and expanding our relationship with existing customers by enhancing our product experience, investing in technology, and leveraging our partner ecosystem. Our customer base ranges from emerging companies to large enterprises undergoing digital transformation across diverse industries and verticals. Utilizing our direct sales force, we have multiple selling points within organizations to acquire new customers and increase usage from our existing customers. We will continue to increase our discretionary marketing spend, including account-based, targeted demand generation and brand spend, to drive the effectiveness of our sales teams. As a result, we expect our total operating expenses to increase as we continue to expand. A key component of our cost-efficient customer acquisition strategy is developer outreach, as developers often advocate for the adoption and promotion of our platform within their organizations and across the broader developer community. We will also continue to build out a single, unified platform, simplify customer onboarding and service usage, and simplify our pricing and packaging. This will require us to dedicate significant resources to further develop the market for our platform and differentiate our platform from competitive products and services. We will also need to expand, retain, and motivate our sales and marketing personnel in order to target our sales efforts at larger enterprises and senior management of these potential customers.
We emphasize retaining our customers and expanding their usage of our platform and adoption of our other products. Customers often begin with smaller deployments of one of our products and then expand their usage over time. Our platform includes a variety of offerings across Network Services, Security, and Other product lines, including Compute and Observability. As our customers mature, we assist them in expanding their use of our platform, including the use of additional offerings beyond content delivery or security. In addition, given that customer acquisition costs are incurred largely for acquiring and initial onboarding, we may gain operating leverage to the extent that existing customers expand their use of our platform and products. Our ability to retain customers and expand their usage could be impaired for a variety of reasons, including a customer moving to another provider or reducing usage within the term of their contract. Even if our customers expand their usage of our platform, we cannot guarantee that they will maintain those usage levels for any meaningful period of time or that they will renew their commitments.
We intend to continue expanding our efforts to attract customers outside of the United States by augmenting our sales teams and strategically increasing our presence in the number of markets in select international locations. Our international expansion, including our global sales efforts, continues to add increased complexity and cost to our business. This requires us to continue to expand our sales and marketing capabilities outside of the United States, increase the number of markets we have a presence in around the world to support our customers, and manage the administrative aspects of a global organization, each of which place a strain on our business and culture. In addition, our bandwidth costs are higher in markets outside of the United States and Europe, which may impact our gross margins.
Many jurisdictions have enacted laws on data localization and cross-border data transfers, and the evolving enforcement and interpretation of such laws has created uncertainty regarding data stored abroad and transferred across borders, which could impact customer growth and acquisition for customers and potential customers conducting business in Europe and elsewhere outside of the United States. In addition, we cannot be certain what actions the United States or another country's government may take with respect to certain of our customers that may adversely affect our ability to do business with our customers that operate in China, target China as a market or that have strong business ties to China, and any such governmental action could have a negative impact on our business. In April 2024, under the prior administration, a bill was signed into law that would effectively ban TikTok in the United States if ByteDance, its China-based parent company, does not sell its stake in TikTok within a set time frame. Following a series of executive orders in 2025 that suspended enforcement of this law, on January 22, 2026, ByteDance announced the establishment of TikTok USDS Joint Venture LLC in compliance with the law to secure United States user data, apps, and the algorithm through data privacy and cybersecurity measures. TikTok was one of our largest customers for the year ended December 31, 2025 and remains a customer of ours. We do not know how the restructuring may impact our traffic levels. For additional details, refer to the section titled "Risk Factors."
We are closely monitoring various global conflicts and developments, including, but not limited to, the conflict between Russia and Ukraine, as well as the hostilities in the Middle East, and their global impacts. While the conflicts are still evolving and the outcomes remain highly uncertain, we do not believe the Russia-Ukraine, Israel-Hamas, or other conflicts will have a material impact on our business and results of operations. We do not have Points of Presence ("POPs") in Russia, Ukraine, or Israel. However, some threat actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we, the third parties upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services. If such conflicts continue or worsen, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted.
We must continue to invest in our platform and network infrastructure to maintain our position in the market. We expect our revenue growth to be dependent on an expanding customer base and continued adoption of our edge cloud delivery, security, and other products and services. In anticipation of winning new customers and staying ahead of our customers' needs, we plan to continue to invest in order to expand the scale and capacity of our software-defined modern network. This could result in increased network service provider fees, which could adversely affect our gross margins if we are unable to offset these costs with revenue from new customers and increase revenue from existing customers. Our customers require constant innovation within their own organizations and expect the same from us. Therefore, we will continue to invest in resources to enhance our development capabilities and introduce new products and features on our platform. We believe that investment in research and development will contribute to our long-term growth but may also negatively impact our short-term profitability. For the years ended December 31, 2025 and 2024, our research and development expenses as a percentage of revenue were 26% and 25%, respectively. Our research and development expenses in each period are impacted by the amount of software development costs that meet the criteria for capitalization. We may also seek to acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities.
Developers use our platform to build custom applications and require a state-of-the-art infrastructure to test and run these applications. We will continue to invest in our network infrastructure by strategically increasing our POPs. We also anticipate making investments in upgrading our technology and hardware to continue providing our customers a fast and secure platform. Our gross margins and operating results are impacted by these investments. As we continue to experience growth, we may face challenges managing adequate server capacity in our POPs due to potential component delays, shortages, price increases, hardware efficiencies gained through internal development, or any potential changes in server architecture, including due to technological advances or obsolescence. If we have server asset levels in excess of forecasted network capacity needs,
we have in the past and may need to continue to write-down or write-off server assets. Conversely, if we underestimate network capacity needs, we may in future periods be unable to meet demand and be required to incur higher costs to secure necessary parts and components of our servers.
In addition, international trade disputes may further disrupt or delay our supply chain for these components or lead to pricing increases. For example, the United States has imposed or indicated an intention to impose tariffs on certain countries which may lead to retaliatory actions such as counter-tariffs and increase production costs and disruptions in our supply chain. The United States and other jurisdictions have also leveraged various trade and value chain requirements, including on environmental and social criteria, which may make sourcing more costly, require us to change suppliers, or otherwise adversely impact our operations. Further, it is possible that government policy changes, including policy changes made with little to no advance notice, and related uncertainty about policy changes could increase market volatility. If our supply of certain components is further disrupted or delayed, there can be no assurance that we will be able to obtain adequate replacements for the existing components or that supplies will be available on terms and prices that are favorable to us, if at all. In the event that there are errors in software, failures of hardware, damages to a facility or misconfigurations of any of our services, whether caused by our own error, security breaches, third-party error, or natural disasters, we could experience lengthy interruptions in our platform availability as well as delays and additional expenses in arranging new facilities and services. In addition, there can be no assurance that we are adequately prepared for unexpected increases in bandwidth demands by our customers, particularly when we or our customers experience cyber-attacks. The bandwidth we have contracted to purchase may become unavailable for a variety of reasons, including service outages, payment disputes, network providers going out of business, natural disasters, networks imposing traffic limits, or governments adopting regulations that impact network operations.
Key Business Metrics
We use the following key metrics presented in the table below to evaluate our business, measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. The calculation of these key metrics below may differ from other similarly titled metrics used by other companies, analysts, or investors.
As of December 31,
2025 2024
Total Customer Count (based on current quarter revenue) 3,092 3,061
Enterprise Customer Count (based on annualized revenue) 628 596
Annual Revenue Retention Rate
98.7 % 99.0 %
Last-twelve Months Net Retention Rate ("LTM NRR") 110.1 % 102.3 %
Remaining Performance Obligations ("RPO") (in millions)
$ 353.8 $ 244.4
Total Customer Count
We believe that our total number of customers is an important indicator of the adoption of our platform. Our definition of a customer consists of identifiable operating entities with which we have a billing relationship in good standing and which we have recognized revenue from during the reporting period. An identifiable operating entity is defined as a company, a government entity, or a distinct business unit of a larger company that has a relationship with us through direct sales or through one of our reseller partners where charges are identified on an end-customer basis. We may treat separate subsidiaries, segments, divisions, or business units of a single organization that use our platform as unique customers where they have distinct account identifiers. In cases where charges are identified through a reseller partner rather than on an end-customer basis, we would count the reseller as a single customer in our customer count. Our customer groupings may be impacted by changes to our customers' business, including any impact from acquisition activities, internal business reorganizations leading to operational and decision-making changes, and corporate structure changes such as subsidiary consolidation and reorganization that may arise in the future. During the fourth quarter of 2024, we identified an immaterial error in the historical calculation of our total customer count related to our online self-service customers. Revenue that would have been recorded for these customers was less than $0.1 million for the quarter ended December 31, 2024. Due to the immateriality, we have not revised prior periods.
In addition to our paying customers, we also have trial, developer, nonprofit and open source programs, and other non-paying accounts that are excluded from our customer count metric. We operate globally and as a result, the success of our ability to retain our customers is also affected by general economic and market conditions around the world. As of December 31, 2025 and 2024, we had 3,092 and 3,061 customers, respectively.
Enterprise Customer Count
Historically our revenue has been driven primarily by a subset of our customers, our enterprise customers, who have leveraged our platform substantially from a usage standpoint. We believe that the recruitment and cultivation of enterprise customers is critical to our long-term success. Our enterprise customer count is defined as customers with annualized current quarter revenue in excess of $100,000. This is calculated by taking the revenue we recognized for each customer in the current quarter and multiplying it by four. As of December 31, 2025, we had 628 enterprise customers which generated 94% of the total annualized current quarter revenue for our total customers for the period ended December 31, 2025. As of December 31, 2024, we had 596 enterprise customers which generated 93% of the total annualized current quarter revenue for our total customers for the period ended December 31, 2024.
Annual Revenue Retention Rate ("ARR")
We separately monitor customer retention and churn on an annual basis by measuring our annual revenue retention rate, which we calculate by first multiplying the final full month of revenue from a customer that terminated its contract with us (a "Churned Customer") by the number of months remaining in the same calendar year to get our "Annual Revenue Churn". The quotient of the Annual Revenue Churn from all of our Churned Customers divided by our annual revenue of the same calendar year is then subtracted from 100% to determine our annual revenue retention rate. We believe this calculation is helpful in that it is based on the amount of revenue that we would expect to have received in the remaining portion of a particular period had a customer not terminated its contract with us. It is not indicative of the actual revenue contribution from churned customers in past periods. By comparing this amount to actual revenue for the period, we are able to assess our ability to replace terminated revenue by generating revenue from new and continuing customers.
Our ARR rate is calculated by subtracting the quotient of the Annual Revenue Churn from all of our Churned Customers from which we recognized revenue during the last quarter of the prior year divided by our annual revenue of the same calendar year from 100%. For the years ended December 31, 2025 and 2024 the ARR was 98.7% and 99.0%, respectively.
Last-Twelve Months Net Retention Rate ("LTM NRR")
Our ability to generate and increase our revenue is also dependent upon our ability to retain our existing customers. LTM NRR allows us to track customer retention which demonstrates the stickiness of our edge cloud platform.
Our LTM NRR removes some of the volatility that is inherent in a usage-based business model from the measurement of the NRR metric. We calculate LTM NRR by dividing the total customer revenue for the prior twelve-month period ("prior 12-month period") ending at the beginning of the last twelve-month period ("LTM period") minus revenue contraction due to billing decreases or customer churn, plus revenue expansion due to billing increases during the LTM period from the same customers by the total prior 12-month period revenue. For the trailing twelve months ended December 31, 2025 and 2024 our LTM NRR was 110.1% and 102.3%, respectively.
Remaining Performance Obligations ("RPO")
RPO represent future committed revenue for periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied. As of December 31, 2025, the aggregate amount of the transaction price in our contracts allocated to RPO that were unsatisfied or partially unsatisfied was $353.8 million.
Key Components of Statement of Operations
Revenue
We derive our revenue primarily from usage-based fees earned from customers using our platform. We also earn fixed-rate recurring revenue from security and other products and services.
Our usage-based fees earned from customers using our platform are generally billed in arrears. Our security products are primarily annual subscriptions that are billed in advance. Many customers have tiered usage pricing which reflects discounted rates as usage increases. For most contracts, usage charges are determined on a monthly basis based on actual usage
within the month and do not impact usage charges within any other month. Our larger customers often enter into contracts that contain minimum billing commitments and reflect discounted pricing associated with such usage levels.
We present our disaggregated revenue by three product lines: Network Services, Security, and Other. Network Services include solutions designed to improve performance of websites, apps, application programming interfaces ("APIs"), and digital media. Security includes products designed to protect websites, apps, APIs and users. Other includes Compute solutions that allow developers to build and deploy modern web applications on our edge cloud platform, and Observability solutions that provide real-time logs, data and metrics streamed from our edge platform for actionable insights.
We define United States revenue ("U.S. revenue") as revenue from customers that have a billing address in the United States, and we define international revenue as revenue from customers that have a billing address outside of the United States.
Cost of Revenue and Gross Margin
Cost of revenue consists primarily of fees paid to network providers for bandwidth and to third-party network data centers for housing servers, also known as colocation costs. Cost of revenue also includes employee costs for network operation, build-out and support and services delivery, network storage costs, cost of managed services and software-as-a-service, depreciation of network equipment used to deliver services, and amortization of network-related internal-use software. Our arrangements with network service providers require us to pay fees based on bandwidth use, in some cases subject to minimum commitments, which may be underutilized. Over the long term we expect cost of revenue to decrease as a percentage of revenue as we continue to drive efficiencies in our operations. However, our cost of revenue may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
Our gross margin has been and will continue to be affected by a number of factors, including utilization of our network, the timing of our investments in the expansion of our network, which can increase depreciation and colocation costs in advance of expected demand, our ability to manage our network service providers and cloud infrastructure-related fees, the timing of amortization of capitalized software development costs, changes in personnel costs to provide customer support and operate the network, and customer pricing. Over the long term we expect gross margin to increase as we continue to drive efficiencies in our operations and increase our revenue. However, our gross margin may fluctuate from period to period.
Research and Development
Research and development expenses consist primarily of personnel costs, including salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include cloud infrastructure fees for development and testing, and an allocation of our general overhead expenses. We capitalize the portion of our software development costs that meet the criteria for capitalization.
We continue to focus our research and development efforts on adding new features and products including new use cases, improving the efficiency and performance of our network, and increasing the functionality of our existing products. Over the long term we expect our research and development expenses to decrease as a percentage of our revenue. However, our research and development expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel costs, including commissions for our sales employees, salaries, benefits, bonuses, and stock-based compensation. Sales and marketing expenses also include expenditures related to advertising, marketing, our brand awareness activities, bandwidth and co-location costs for free trial users, costs related to our customer events, including our customer conferences, professional services fees, amortization of our intangible assets, and an allocation of our general overhead expenses.
We focus our sales and marketing efforts on generating awareness of our platform and products, creating sales leads, and establishing and promoting our brand, both domestically and internationally. Over the long term, we expect our sales and marketing expenses to decrease as a percentage of our revenue. However, our sales and marketing expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
General and Administrative
General and administrative expenses consist primarily of personnel costs, including salaries, benefits, bonuses, and stock-based compensation for our administrative support personnel. General and administrative expenses also include costs related to legal and other professional services fees, an allocation of our general overhead expenses, credit losses, and acquisition-related costs.
In the near term, we expect to continue to incur costs associated with supporting the growth of our business, including international expansion, but expect these costs to decrease as a percentage of our revenue over the long term as we continue to drive efficiencies in our operations. However, our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
Impairment Expense
Our impairment expense relates to non-recurring charges for our long-lived assets.
Restructuring Charges
Our restructuring charges relate to a 2024 restructuring plan to reduce expenses including a reduction of the Company's workforce. The charges incurred consist primarily of employee-related severance and termination benefits in connection with such 2024 workforce reduction.
Net Gain on Extinguishment of Debt
Our net gain on extinguishment of debt relates to the partial retirement of our outstanding senior convertible notes.
Other Income and Expenses
Our interest income consists primarily of interest earned on our cash, cash equivalents, and investments. Our interest expense consists primarily of the interest expense on our finance leases, amortization of discount, coupon interest expense, and debt issuance costs associated with our debt obligations. Our other expense, net, consists primarily of foreign currency transaction gains and losses.
Income Taxes
Our income tax expense (benefit) consists primarily of income taxes in certain foreign jurisdictions where we conduct business and state minimum income taxes in the United States. We currently maintain a full valuation allowance on our U.S. Federal and state net deferred tax assets. We expect to maintain this valuation allowance for the foreseeable future.
Results of Operations
In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Year ended December 31,
2025 2024
(in thousands)
Consolidated Statement of Operations:
Revenue $ 624,018 $ 543,676
Cost of revenue 267,815 247,738
Gross profit 356,203 295,938
Operating expenses:
Research and development 162,662 137,980
Sales and marketing 201,434 198,610
General and administrative 110,692 113,399
Impairment expense 415 4,144
Restructuring charges - 9,720
Total operating expenses 475,203 463,853
Loss from operations (119,000) (167,915)
Net gain on extinguishment of debt 941 1,365
Interest income 12,290 14,871
Interest expense (12,699) (2,747)
Other expense, net
(721) (1,028)
Loss before income tax expense
(119,189) (155,454)
Income tax expense
2,488 2,604
Net loss attributable to common stockholders $ (121,677) $ (158,058)
The following tables set forth our results of operations for the period presented as a percentage of our revenue:
Year ended December 31,
2025 2024
Consolidated Statements of Operations, as a percentage of revenue:*
Revenue 100 % 100 %
Cost of revenue 43 46
Gross profit 57 54
Operating expenses:
Research and development 26 25
Sales and marketing 32 36
General and administrative 18 21
Impairment expense
- 1
Restructuring charges
- 2
Total operating expenses 76 85
Loss from operations (19) (31)
Net gain on extinguishment of debt - -
Interest income 2 3
Interest expense (2) (1)
Other expense, net
- -
Loss before income tax expense
(19) (29)
Income tax expense
- -
Net loss attributable to common stockholders (19) % (29) %
__________
* Columns may not add up to 100% due to rounding.
Revenue
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Network Services
$ 477,774 $ 427,690 $ 50,084 12 %
Security
125,061 103,037 22,024 21 %
Other
21,183 12,949 8,234 64 %
Total revenue $ 624,018 $ 543,676 $ 80,342 15 %
Percentage of revenue:
Network Services
77 % 79 % (2) %
Security
20 % 19 % 1 %
Other
3 % 2 % 1 %
Revenue was $624.0 million for the year ended December 31, 2025 compared to $543.7 million for the year ended December 31, 2024, an increase of $80.3 million, or 15%. Revenue growth was driven by a $66.4 million increase in revenue related to further adoption of our modern edge platform and products.
For the years ended December 31, 2025 and 2024, approximately 96% and 95% of our revenue was driven by usage on our platform, respectively. Revenue was primarily from existing customers, as revenue from new customers contributed less than 10% of our revenue. The proportion of the revenue contribution between new and existing customers is consistent with prior periods and typical customer behavior as customers tend to contribute more revenue over time as their use of the platform
increases. The remainder of our revenue was generated by our other products and services, including support and professional services.
Network Services revenue was $477.8 million for the year ended December 31, 2025, compared to $427.7 million for the year ended December 31, 2024, an increase of $50.1 million, or 12%. The increase in Network Services revenue was primarily driven by growth in usage from existing customers. Security revenue was $125.1 million for the year ended December 31, 2025, compared to $103.0 million for the year ended December 31, 2024, an increase of $22.0 million, or 21%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue, partially offset by a decrease in Fastly legacy WAF revenue. Other revenue was $21.2 million for the year ended December 31, 2025, compared to $12.9 million for the year ended December 31, 2024, an increase of $8.2 million, or 64%. The increase in Other revenue was primarily driven by further adoption of our Compute solutions.
Cost of Revenue
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Cost of revenue $ 267,815 $ 247,738 $ 20,077 8 %
Cost of revenue was $267.8 million for the year ended December 31, 2025 compared to $247.7 million for the year ended December 31, 2024, an increase of $20.1 million, or 8%. The increase in cost of revenue is a result of an increase in bandwidth costs of $8.0 million, a $5.5 million increase in amortization of capitalized software and a $4.4 million increase in software costs. There was also a $3.9 million increase in colocation costs, a $1.7 million increase in depreciation expense as a result of increased investments in our platform, as well as a $1.5 million increase in stock-based compensation expenses. This increase was partially offset by a $2.5 million decrease in intangible asset amortization, a $1.3 million decrease in personnel-related costs, a decrease in repair and maintenance cost of $0.6 million, as well as a $0.5 million decrease in network costs.
Gross Profit and Gross Margin
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Gross profit $ 356,203 $ 295,938 $ 60,265 20 %
Gross margin 57 % 54 % 3 %
Gross profit was $356.2 million for the year ended December 31, 2025 compared to $295.9 million for the year ended December 31, 2024, an increase of $60.3 million, or 20%. Gross margin was 57% for the year ended December 31, 2025 compared to 54% for the year ended December 31, 2024, an increase of 3%. The increase in gross margin was driven by revenue growth during the year ended December 31, 2025 outpacing the increases in the costs incurred to support the growth of our network.
Operating Expenses
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Research and development $ 162,662 $ 137,980 $ 24,682 18 %
Sales and marketing 201,434 198,610 2,824 1 %
General and administrative 110,692 113,399 (2,707) (2) %
Impairment expense
415 4,144 (3,729) (90) %
Restructuring charges
- 9,720 (9,720) (100) %
Total operating expenses $ 475,203 $ 463,853 $ 11,350 2 %
Percentage of revenue:
Research and development 26 % 25 % 1 %
Sales and marketing 32 % 36 % (4) %
General and administrative 18 % 21 % (3) %
Impairment expense - % 1 % (1) %
Restructuring charges
- % 2 % (2) %
Research and Development
Research and development expenses were $162.7 million for the year ended December 31, 2025 compared to $138.0 million for the year ended December 31, 2024, an increase of $24.7 million, or 18%. This increase was primarily due to a $10.8 million increase in stock-based compensation expense, a $9.2 million decrease in capitalized software, an increase of $5.7 million of personnel-related costs, as well as a $1.0 million increase in software costs. This increase was partially offset by a $1.4 million decrease in travel and entertainment expense, as well as a $0.6 million decrease in corporate costs.
Sales and Marketing
Sales and marketing expenses were $201.4 million for the year ended December 31, 2025 compared to $198.6 million for the year ended December 31, 2024, an increase of $2.8 million, or 1%. This increase was primarily due to a $3.9 million increase in stock-based compensation expenses, a $0.7 million increase in marketing expenses, and a $0.5 million increase in third party commissions. The increase was partially offset by a $0.8 million decrease in personnel related costs including sales commissions, a $0.6 million decrease in software costs, as well as a $0.5 million decrease in corporate costs.
General and Administrative
General and administrative costs were $110.7 million for the year ended December 31, 2025 compared to $113.4 million for the year ended December 31, 2024, a decrease of $2.7 million, or 2%. The decrease was primarily due to a $6.9 million decrease in stock-based compensation expenses as well as a $1.4 million decrease in personnel related costs. This decrease was partially offset by a $2.8 million increase in professional service fees, a $1.3 million increase in corporate costs, as well as a $1.0 million increase in executive transition costs.
Impairment Expense
During the year ended December 31, 2025, we recognized an impairment charge of $0.4 million, which primarily consisted of the write-off of intangible assets no longer in use. During the year ended December 31, 2024, we recognized an impairment charge of $4.1 million related to property and equipment.
Restructuring Charges
During the year ended December 31, 2024, in an effort to streamline our organization, we initiated a restructuring plan to reduce expenses including a reduction of our workforce. In connection with this plan, we incurred charges of $9.7 million primarily consisting of employee-related severance and termination benefits. There were no restructuring activities in 2025.
Net Gain on Extinguishment of Debt
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Net gain on extinguishment of debt $ 941 $ 1,365 $ (424) (31) %
Net gain on extinguishment of debt was $0.9 million for the year ended December 31, 2025 compared to $1.4 million for the year ended December 31, 2024, a decrease of $0.4 million, or 31%. The decrease was primarily due to a lower aggregate principal amount of convertible notes retired in the year ended December 31, 2025.
Other Income and Expense
Interest Income
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Interest income $ 12,290 $ 14,871 $ (2,581) (17) %
Interest income was $12.3 million for the year ended December 31, 2025 compared to $14.9 million for the year ended December 31, 2024, a decrease of $2.6 million, or 17%. This decrease was primarily due to lower interest income on our cash equivalents and marketable security investments as a result of decreased interest rates.
Interest Expense
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Interest expense $ 12,699 $ 2,747 $ 9,952 362 %
Interest expense was $12.7 million for the year ended December 31, 2025 compared to $2.7 million for the year ended December 31, 2024, an increase of $10.0 million, or 362%. This increase was primarily due to the coupon interest on our 2028 Notes issued in December 2024.
Other Expense, net
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Other expense, net
$ 721 $ 1,028 $ (307) (30) %
Other expense, net was $0.7 million for the year ended December 31, 2025 compared to $1.0 million for the year ended December 31, 2024, a decrease of $0.3 million, or 30%. The decrease was mainly driven by our foreign currency transaction gains between the periods.
Income Taxes
Year ended December 31, Change
2025 2024 $ Change % Change
(in thousands)
Income tax expense
$ 2,488 $ 2,604 $ (116) 4 %
Income tax expense was $2.5 million for the year ended December 31, 2025 compared to $2.6 million for the year ended December 31, 2024. The Company continues to maintain a full valuation allowance in the U.S. and the tax expense for the periods were primarily due to foreign tax expense.
Liquidity and Capital Resources
As of December 31, 2025, we had cash, cash equivalents, and marketable securities totaling $361.8 million. Our cash, cash equivalents, and marketable securities primarily consisted of money market funds, investment-grade commercial paper, corporate notes and bonds, U.S. treasury securities, certificates of deposit, and municipal bonds. As of December 31, 2025, we did not have any marketable securities classified as non-current.
To date, we have financed our operations primarily through equity issuances, payments received from customers, the net proceeds we received through sales of our debt securities, and proceeds from our convertible notes. Our principal uses of cash in the near term have primarily been around funding our operations, our capital expenditures, business acquisitions, and investments and fulfilling our debt and contractual commitments. We have also entered into longer term commitments to support our operations, including arrangements to directly lease and operate our infrastructure assets and colocation facilities. We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities.
We believe that our cash and cash equivalents balances, available borrowing capacity under our credit facility, and the cash flows generated by our operations, net of the cash outflows used in our operations, will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. We have generated losses from operations in the past and may continue to incur operating losses for the foreseeable future due to the investments and strategic initiatives we intend to make to grow our business. Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain. We may also use our cash to buy back any outstanding debt on our convertible notes or on any future equity issuances.
Senior Secured Credit Facilities Credit Agreement
In 2021, we entered into the Credit Agreement (as defined in Note 8 in our consolidated financial statements). As of December 31, 2025, we were in compliance with the covenants described in Note 8 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K, and we expect to continue to be in compliance for at least the next 12 months. During the year ended December 31, 2025 and 2024, no amounts were drawn down on the Credit Agreement.
Convertible Senior Notes
In March 2021, we issued approximately $948.8 million aggregate principal amount of 0% convertible senior unsecured notes due in 2026 (the "2026 Notes") in a private placement to qualified institutional buyers pursuant to Rule144A under the Securities Act.
On May 25, 2022, we entered into separate, privately negotiated transactions with certain holders of the 2026 Notes to repurchase (the "Repurchases") $235.0 million aggregate principal amount of the 2026 Notes for an aggregate cash repurchase price of $176.4 million and aggregate transaction costs of $0.7 million.
During the year ended December 31, 2023, we entered into several separate privately negotiated transactions with certain holders of the 2026 Notes to repurchase $367.3 million aggregate principal amount of the 2026 Notes for an aggregate cash repurchase price of $309.1 million and aggregate transaction costs of $2.0 million.
During the year ended December 31, 2024, we entered into separate, privately negotiated transactions with certain holders of the 2026 Notes to exchange $157.9 million aggregate principal amount of the 2026 Notes for $150.0 million aggregate principal amount of 7.75% convertible senior notes due 2028 (the "2028 Notes") and aggregate transaction costs of $5.8 million.
On December 9, 2025, we entered into separate, privately negotiated transactions with certain holders of the 2026 Notes to repurchase $150.0 million aggregate principal amount of the 2026 Notes for an aggregate cash repurchase price of $148.9 million and aggregate transaction costs of $6.7 million. On December 17, 2025, we also issued $180.0 million aggregate principal amount of 0% convertible senior unsecured notes due in 2030 (the "2030 Notes") in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act.
Capped Calls
In connection with the pricing of the issuance of the 2030 Notes, the Company entered into privately negotiated capped call transactions with certain counterparties (the "Capped Calls"). The Capped Calls resulted in a $18.2 million outflow of cash. Refer to Note 8 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
As of December 31, 2025 our material cash requirements include non-cancelable contractual obligations from the 2028 Notes, 2030 Notes, purchase commitments and lease obligations. Refer to Notes 5, 6, and 8 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding these material cash requirements.
In addition to the contractual obligations described above, as of December 31, 2025, we had a $7.7 million purchase commitment for equipment due within the next twelve months.
Cash Flows
The following table summarizes our cash flows for the period indicated:
Year ended December 31,
2025 2024 2023
(in thousands)
Net cash provided by operating activities $ 94,444 $ 16,406 $ 362
Net cash (used in) provided by investing activities $ (213,032) $ 178,900 $ 294,940
Net cash (used in) provided by financing activities $ 12,761 $ (17,099) $ (331,380)
Cash Flows from Operating Activities
For the year ended December 31, 2025, cash provided by operating activities consisted primarily of our net loss of $121.7 million, adjusted for non-cash items of $239.0 million, and net cash flows used in operating assets and liabilities of $22.9 million. The main drivers of the changes in operating assets and liabilities were $20.7 million of operating lease payments, an increase in other assets of $19.5 million related to deferred contract costs, a $18.0 million increase in other liabilities, a $6.2 million increase in accounts receivable, primarily due to an increase in revenue and the timing of cash receipts, a $4.5 million decrease in accounts payable due to timing of payments, and a decrease of $1.6 million in prepaid expenses and other current assets due to pre-payments for hosting services and software licenses.
For the year ended December 31, 2024, cash provided by operating activities consisted primarily of our net loss of $158.1 million, adjusted for non-cash items of $228.6 million, and net cash flows used in operating assets and liabilities of $54.1 million. The main drivers of the changes in operating assets and liabilities were $26.5 million of operating lease payments, an increase in other assets of $11.9 million related to deferred contract costs, an increase of $7.6 million in prepaid expenses and other current assets due to pre-payments for hosting services and software licenses, a $6.4 million decrease in other liabilities and a $2.9 million decrease in accrued expenses due to timing of payments.
For the year ended December 31, 2023, cash provided by operating activities consisted primarily of our net loss of $133.1 million, adjusted for non-cash items of $203.3 million, and net cash flows used in operating assets and liabilities of
$69.9 million. The main drivers of the changes in operating assets and liabilities were an increase in accounts receivable of $32.9 million, primarily due to an increase in revenue and the timing of cash receipts, an increase in other assets of $23.1 million related to deferred contract costs as well as $22.1 million of operating lease payments. This was partially offset by decreases of $8.7 million in prepaid expenses.
Cash Flows from Investing Activities
For the year ended December 31, 2025, cash used in investing activities was $389.8 million in purchases of marketable securities, $17.7 million of additions to capitalized internal-use software, and $28.7 million of payments related to purchases of property and equipment to expand our network. This was offset by $223.1 million of maturities and sales of marketable securities.
For the year ended December 31, 2024, cash provided by investing activities was $178.9 million, primarily consisting of $371.2 million of maturities and sales of marketable securities. This was offset by $155.1 million in purchases of marketable securities, $26.1 million of additions to capitalized internal-use software, and $10.3 million of payments related to purchases of property and equipment to expand our network.
For the year ended December 31, 2023, cash provided by investing activities was $294.9 million, primarily consisting of $459.4 million of maturities and sales of marketable securities. This was offset by $132.2 million in purchases of marketable securities, $21.3 million of additions to capitalized internal-use software, and $11.0 million of payments related to purchases of property and equipment to expand our network.
Cash Flows from Financing Activities
For the year ended December 31, 2025, cash provided by financing activities was $12.8 million, primarily consisting of proceeds of $180.0 million from issuance of convertible notes, $7.0 million in proceeds from the employee stock purchase plan ("ESPP"), and $1.0 million in proceeds from stock option exercises by our employees and directors. This was partially offset by $148.9 million paid for debt extinguishment, $18.2 million for purchase of capped calls, $5.9 million payment of debt issuance costs, and $2.3 million of finance lease liabilities repayments.
For the year ended December 31, 2024, cash used in financing activities was $17.1 million, primarily consisting of $15.0 million of finance lease liabilities repayments, $5.7 million payment of debt issuance costs and $3.8 million in payments for deferred consideration for business acquisitions. This was partially offset by $6.2 million in proceeds from the employee stock purchase plan ("ESPP") and $1.1 million in proceeds from stock option exercises by our employees and directors.
For the year ended December 31, 2023, cash used in financing activities was $331.4 million, primarily consisting of $310.5 million used for the partial repurchase of our convertible debt, $27.2 million of finance lease liabilities repayments and $4.4 million in payments for deferred consideration for business acquisitions. This was partially offset by $8.6 million in proceeds from the employee stock purchase plan ("ESPP") and $2.2 million in proceeds from stock option exercises by our employees and directors.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, expenses, and related disclosures. Actual results and outcomes could differ significantly from our estimates, judgments, and assumptions. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.
Revenue Recognition
We recognize revenue in accordance with ASC 606, where revenue is recognized upon transfer of control of promised services to customers in an amount that reflects the consideration we expect to receive in exchange for those services. The processing and recording of certain revenue requires a manual process, which uses a set of procedures to generate complete and accurate data to record these revenue transactions. We enter into contracts that can include various combinations of services, each of which are distinct and accounted for as separate performance obligations.
Recent Accounting Pronouncements
Please refer to Note 2-Summary of Significant Accounting Policies included in the Notes to consolidated financial statements.
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