Q1 2021 Fastly Inc Earnings Call
Okay.
Good afternoon, My name is Christian and I'll be a conference operator today at this time I would like to welcome everyone to know Fastly first quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this.
Time simply press Star then the number one on your telephone keypad.
If you would like to withdraw your question press the pound key.
I would now like to turn the conference over to your host MS. Maria Lukens, Vice President of Investor Relations Ma'am. Please go ahead.
Okay.
Hi, everyone. Thank you for joining our first quarter 2021 earnings call, we have Fastly CEO, Joshua Bixby and CFO Adrian law has the best today before we start I want to remind everyone about the usual format of our call. We published a shareholder letter on our Investor Relations website and with the SEC about an hour ago.
Who buys a lot of details we'll make some brief opening remarks and restarted the rest of the time for your questions. During this call we will be making forward looking statements, including statements related to the expected performance of our business future financial results strategy long term growth and overall future prospects. These statements are subject to known and unknown risks.
Uncertainties and assumptions that could cause actual results to differ materially from those projected or implied during the call. Please.
Please take a look at our filings with the SEC and our Q1 2021 shareholder letter for a discussion of the factors that could cause our results to differ also note that the forward looking statements on this call are based on information available to us as of today's date.
We disclaim any obligation to update any forward looking statements except as required by law also during this call we will discuss certain non-GAAP financial measures reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our Investor Relations website.
These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call is being webcast and will be archived on our website. Shortly afterwards with that I'll turn the call over to Joshua.
Thanks Maria.
Hi, everyone and thanks for joining us today.
We had another outstanding quarter, delivering 35% year over year topline growth with revenues of nearly $85 million.
We are now over a year into the pandemic and digital transformation is showing no signs of slowing in fact, it's accelerating and we believe we were at the start of a new era.
We are innovating and building the delivery edge computing and security products necessary to accelerate the digital capability of every organization in the world.
Fastly makes your online experience everywhere around the world fast and secure.
Unlike Q2 of 2020, which was extraordinary in many ways 2021 appears to be more in line with our historical trends typically we signed new customers in Q1, and Q2, which then ramp on our platform in the latter half of the year.
Historically usage expansion on the platform is slower in Q2 as people tend to spend more time outside and less time on devices.
This year, we believe this effect will be somewhat exaggerated as the world begins to reopen.
Despite the challenging year over year compare we remain confident in our continued growth.
If you take a long term view, you'll note that we're exiting Q1 and subsequently guiding Q2 at a CAGR of over 35% from Q1, and Q2 of 2019, which continues to exceed our expectations from the time of our IPO.
Our current guidance reflects continued growth and.
And it's more in line with our seasonal trends, where Q2 is roughly flat with Q1, followed by an uptick in growth in the second half of the year as indicated by our increased revenue outlook for full year 2021.
This quarter. Thanks in part to the integration of signal Sciences, and the tremendous leadership and sense of urgency we have seen from Brett as our new Chief revenue Officer, we saw significant cross sell and joint selling opportunities as demonstrated by customer wins across multiple verticals.
In less than two quarters since the closing of the signal Sciences acquisition, we've made it possible for customers to purchase Fastly and signal sciences offerings on a single unified contract simplify the ordering process and shortening sales cycles.
Additionally, we are very pleased with the continued maturity of compute at edge, which continues to drive customer interest as well as produce major operational efficiencies and our product development.
Our customers have communicated to us that a key difference of the platform is our position in technology to support privacy.
Privacy is core to who we are and we view it as inseparable from security.
Tangible benefit of securing the enterprise is to ensure the privacy of their customers.
The intersection of edge compute security and privacy is ripe for innovation.
By making user security and privacy are core focus of our efforts, we can provide more benefits to a wider array of customers around the world.
All of these things fueled strong demand in the beginning of 2021.
Our total customer count excluding signal Sciences increased 2207 up from 2084 in Q4, 2020 and enterprise customers increased to 336 up from 324 in Q4 2020.
We saw several customer wins across high Tech ecommerce digital publishing financial services crypto currency in health care, including human security, a leading bot mitigation provider relied on by many of the internet's largest advertising platforms or enterprises.
A leading provider of multi layered network switches and software defined networking solutions, and a leading automotive insurance SaaS provider among others.
In addition to generating new customer demand, we continued to execute on our land and expand strategy among existing customers with average enterprise customer spend increasing to 800000 up from 782000 in the prior quarter and another strong dollar based net expansion rate of 139.
Percent.
We believe our edge cloud platform, which seamlessly combines delivery edge computing and security presents a tremendous market opportunity and we will continue to invest in it to position our company for future growth.
Before I turn it over to Adrian to go over the financials I'd like to take a moment to address some news we shared in our press release and shareholder letter that Adrian will be stepping down from his role as CFO after five years of service.
Adrian will continue in his role as CFO for a transition period during which we expect to appoint a successor and for a period of time after as an advisor to ensure a smooth transition.
On behalf of the entire board and management team.
Adrian Youll be greatly missed and we wish you the best of luck in your future endeavors.
We're also deeply appreciative that you will remain with fastly to help facilitate a smooth leadership transition.
Now I'll turn it over to Adrian to go over the financials.
Thank you Joshua I appreciate the kind words and good afternoon everyone.
As Joshua mentioned, we had a strong first quarter building off the continued demand trends we saw in 2020 as companies remain focused on their digital transformation.
Before I go through the numbers I want to again point out as I mentioned last quarter with the contribution of signals Sciences has been consolidated into our first quarter financial information. So.
So the revenue and margin numbers I'm about to give includes signal sciences.
Provided separate Fastly and signal sciences customer metrics in the shareholder letter this quarter we.
We intend to begin reported consolidated customer metrics later in 2021.
This quarter, we generated nearly 85 million revenue net.
About $1 5 million deferred revenue write down associated with the acquisition of signal Sciences.
35% year over year growth.
We believe our edge cloud platform complemented by simple science of security offerings provide the vast market opportunity and we will continue to invest in the business.
To accelerate our expansion and position ourselves for further success.
Gross margin for the quarter reflects this focus and the additional scale and recent acquisition of signal Sciences.
GAAP gross margin was 55, 8% for the quarter compared to 56, 7% in the same quarter, a year ago, which reflects investments for additional scale and the recent acquisition of signal Sciences among other factors.
Non-GAAP gross margin, which excludes stock based compensation and intangible amortization expenses.
61% for the quarter slightly.
Despite the continued year over year improvement up from 57, 6%.
Same quarter last year.
As we have always said our gross margin will continue to be impacted by the timing of personnel and infrastructure investments and seasonal usage by customers on the platform.
We remain confident in our ability to deliver long term leverage on an annual basis.
In terms of the balance sheet, we ended the quarter with $1 1 billion in cash restricted cash and investments.
As a reminder, in March we took advantage of favorable market conditions tissue $949 million in aggregate principal amount of zero percent convertible senior notes due in 2026 and a private offering.
This new capitals solidifies, our strong financial position.
<unk> the flexibility to take full advantage of the opportunities ahead.
As we continue to see strong demand for our edge cloud and security offerings, our focus remains on innovating and investing in our platform for further growth in 2021 and beyond.
Our Q2 and full year 2021 outlook reflects our strong topline growth momentum.
<unk> investments in security and cloud computing.
And the incremental expense from the signal Sciences acquisition.
Consistent with prior years, we based our revenue guidance on the visibility that we have today and given our usage based business model, we expect to gain additional visibility as the year progresses.
Beginning with the second quarter, we expect revenue in the range of $84 million to $87 million non.
Non-GAAP operating loss in the range of negative 22.
Negative $18 million.
Non-GAAP net loss per share in the range of negative <unk> 19 cents.
Can they get a 16 cents.
For the full year 2021, we've increased our revenue guidance range to $380 million to $390 million.
From 375 million to $380 million.
We maintain non-GAAP operating loss in the range of negative 50 to negative $40 million.
And non-GAAP net loss per share in the range of negative <unk> 44.
To negative 35 cents.
And finally before we begin Q&A.
Let's say that I'm grateful to Archer for bringing me to Fastly and allowing me the privilege of shepherding fastly from pre IPO to a public company to one of the premier companies, leading the charge to the future of the Internet.
I'm going to be here for a while still and I look forward to continuing to work with Joshua Archer and the rest of the Fastly team as we keep expanding our offerings and delivering on our edge cloud platform.
With that I'll turn it back to the operator to take your questions.
And at this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad again that is star one we'll pause for just a moment to compile the Q&A roster.
Your first question is from Jonathan Ho from William Blair. Your line is open.
Hi, This is John a lot of work for Jonathan Thanks for taking our question.
First off for AGL anytime our CFO takes the company through an.
An IPO that sounds good.
Proud of so congratulations on that and wish you best of luck in your future endeavors.
Josh I would like to ask.
Can you can you talk about some of the parameters youre looking for.
Net.
Sure I mean, there's going to be a big shoes to fill so you know we have had over the last few quarters, a number of executive searches I think one of the things Thats whats come out as how desirable Fastly is at a place now David will talk about the opportunity here is tremendous so certainly looking for that.
Knowledge and expertise somebody who's seen a much larger business. We believe as you know that we are poised for continued successful growth many years into the future and as such we want somebody who has seen that and seen it at scale. So that's really important I think AGL brings a really special mix.
As well on the cultural side, so we need someone who.
Understand the values of Fastly and wants to live by them.
Looking for someone with a lot of experience in the field. So.
We found that before if we found that with Brett we found that with Danielle.
And in in all of the searches that we've conducted like this one the demand is high and people with a tremendous amount of experience or are interested in joining us. So.
Excited about the prospects of bringing someone in.
But we will certainly Miss Adrian.
Thank you I appreciate the color.
We'd like to also ask the question Hugh I'd like you to elaborate as you quote on your outlook.
Okay.
Pretty good explanation on on the.
<unk>.
The.
How the year will progress with <unk> being more typical flat with what you and then second half taking low but I'm curious.
Since you raised your outlook.
Second since you raised the outlook overall.
Did anything change in the quarter since its first quarter met.
It was within your guidance range did anything happen in the market or have you seen anything that has made you. What's made you increase your outlook is it that is it is it the COVID-19 reopening reopening from COVID-19, that's target or anything in the marketplace. That's driving that can you give a little more color there.
Uh huh.
The raise for the full year.
Even though second quarter is expected to be somewhat flattish with the first quarter.
Sure happy to do so I'm happy to have a drill sort of add some color. After I think you know this.
Starts with our traditional business cycle, and if you look at our business customers come to us.
Land all throughout the year, but a lot of the big ones make buying decisions in Q1 and Q2, so that in the Q3 and particularly the Q4 timeframe they are ready.
I think about an ecommerce business that has a huge amount of business at the end of the year or many of our businesses have a similar similar cycles. So as the year progresses, we get more visibility into that and I think what we're seeing is robust customer acquisition, it's really the quality of those customers that matters, we see a lot of really large opt.
<unk>, we're seeing green shoots sprouting in industries that you know, we're definitely challenged by COVID-19 and in the industries that really got a bounce from COVID-19, we're not seeing them give back those gains as we see things open up. So I think we are in this luxurious position, having a worldwide global network I've talked about this crystal ball.
So in the past, where we can look in and say okay. What happens in these countries that are opening up what happens to these services.
We are all looking out and saying Hey. These are these COVID-19 bumps are they not COVID-19 bumps I think I think we're seeing them.
A true phenomenon not only as fastly, not a stock driven and defined by COVID-19 in our business driven and defined by COVID-19, but neither are most of our customers and I think that's giving us tremendous a tremendous sense that the future is bright and as we see that we obviously prison.
Present that back so in terms of a general concept the reopens, although that's going to have an impact on Q2, as we talked about because it's an extraordinary quarter not just because of COVID-19, but also because of <unk>.
Specific customer customers that are a little bit different informed than they are now but overall, we are seeing that optimism. That's certainly I'm glad you're picking up on that because that's certainly what we're projecting a draw anything to add to that.
Yeah, Thanks, Joshua and thanks, John for the kind words, I'm definitely going to Miss Fastly, but.
But I know, there's still plenty of plenty of head, but specific to the question.
One of the things that's been but I've observed is that a 2021 just from a business standpoint in terms of what we're seeing in the business is beginning to sort of act and feel like yours path and I'm, putting sort of a 2020 and sort of the exception category and really look at more of a 2018 in 2019, where we were growing in the high 30% 30 718.
Percentage 38, 7% and if I look at this past quarter debit or a 139%.
Net charge still sub 1% and those are sort of at the makings of income continue to acquire customers as we get more visibility. So basically as we get further into the year I can sort of see a little bit further and so it's because of them sort of that very fundamental reason why we're able to sort of waves. The year as we did and again as we get a little bit further at the end of Q2, we'll get a little bit.
More visibility beyond that so I always at the beginning of every calendar year.
We're sort of a little bit more conservative just because we are primarily a usage based model, but again with the passage of time and with the metrics being what they are.
We just get a little bit more confidence, we sort of see where our current customers doing.
Josh was point, but making these decisions are planning for the second half of the year and then so that that part is sort of familiar which is why it gives me confidence to do what we did.
Okay. That's very helpful color. Thank you very much I'll jump back into the queue. Thank you.
Your next question is from Tim Horan from Oppenheimer. Your line is open.
Thanks, guys, so just to be clear on the guidance.
The second half, we're looking for pretty large ramp I mean mathematically it's like 15%.
Sequential growth for third and fourth quarter, you know what.
I know it can kind of balance out in either way, but.
Our bookings stronger.
Well, yeah, just any more color on the confidence of that and the visibility on that.
What gave you the confidence to kind of guide to that.
Yeah.
As we talked about it it's a collection of a number of things. It's you're right. It's just looking at what's coming down the pipe. It's the growth in our existing customers and it's a lot of really important opportunities that are that are coming our way that are our foundation of us being a unique extremely large network.
<unk>.
That really values security privacy and other things that are really top of mind. So it's absolutely a confidence in what we're seeing in the pipe.
As Brent has come on.
<unk> talked about this in the prepared remarks, we certainly have seen.
And operational rigor in a diligence, which is really where we've already seen start to help.
In terms of in terms of focus.
One of the things that he is focusing on as well in a in a slight shift for US is is really focusing on partners and were seeing them.
Renewed in.
Strong growth through through channels, which gives us a lot of leverage in our business. So a lot of things combined to give us that confidence.
And is computed edge, an important part of that yet and maybe just any more color around your confidence of computed edge have differentiated us longer term from what you're seeing right now.
Yeah compute remains strong in terms of our view on this market I think to put this into context as you know our compute storage is very differentiated we're talking about.
A technology that works at scale that is secure that has passed the muster of the largest technical and most savvy technical organizations in the world.
And that is available to our customers now it is forming a very important part of the buying decision for our customers, but it's not just compute we're also looking at.
Really significant differentiation on the security front as well and so we started to integrate signal sciences into the portfolio, we're seeing emerging qualities, where what what they do plus what we do creating even better outcome for customers in terms of visibility and capability operational ease of use all things that are very important so I would say it's a combination.
Both the compute and the security stories, which are coming together to create that unique differentiation in that you know that differentiation, we seem to be increasing.
Our lead.
Particularly versus the legacy the legacy players.
Very helpful. Thank you.
Thank you.
Your next question is from gift battery from Craig Hallum Capital markets. Your line is open.
Hey, guys. This is rudy on for Jeff. Thanks for taking my question.
What are kind of circle back to the guide I'm, just I'm curious with the linearity.
No Q2 to three and four.
Past years, excluding 2020 that Q2 to Q3 a.
Typically it's a seven 8% sequential increase.
Q3 to Q4 typically mid teens I mean, you know.
If I were to assume a typical seven or 8% Q2 to Q3.
That would force like a 30% sequential from Q3 to Q4.
To get to the low end of the annual guide. So I'm just curious how you know how you expect that limit linearity to play out for the rest of the year.
Sure, Hey, Julien I'll handle that one.
Yeah, absolutely yeah, its youre likely going to see probably stronger growth across both of those two parameters and the other factor here is clearly just where are we really sort of come out in Q2.
But overall just in terms of the the visibility of the underlying.
So the growth that we see in the customers that we are currently have today.
Your service pressure, clearly applying sort of a faster growth.
In the second half of the other one index.
So far in the first half of the year.
So there's sort of some positions of how exactly its going to sort of play out in Q3, Q4, I think will remain to be seen but I think youre definitely going to see.
Second half growth, that's going to be a bit faster from first Josh.
Got it and then.
We expect the signals Sciences I'm just curious what you guys have learned right now with respect to the.
Kind of the different buying motion are you seeing a.
Different kind of customers how is that sales team integrating them with these existing sales team just any more color you can share on that front.
Sure Let me let me start.
In terms of integration, we moved at the start of the year to integrate the sales teams completely so.
<unk>.
Everyone at Fastly, you're selling the complete suite again, it really comes back to our view that delivery and security are intimately intertwined.
The advent of the differentiated sort of buyer opportunity here does have us expand into different buying centers, we're seeing some.
Nine centers for example, in the CSO or the security groups.
Does it signal Sciences has has been able to crack and we're taking advantage of that so we're definitely seeing an expansion of that.
It's allowing us to wedge into organizations in sort of leave of waiting for these larger enterprise sales cycles that may be a renewal of a large delivery contracting fastly has always had a history of finding ways to slip the camel's nose under the tent.
Done that in the delivery space and we're seeing real opportunities in the security space. So overall.
A differentiated approach expanding out the customer subset and we saw really nice growth in the <unk> business.
Well over a quarter over quarter, which is a which is fantastic.
Great and then just lastly, if I could gross margin, obviously a pretty steep.
Steep step down from Q4 about 350 basis points.
What drove that was it you know we've heard some competitors talk about some pricing pressures and then just how should we think about that from.
From here for the rest of the year.
Sure Andrew.
Yes, certainly.
I think.
First and foremost we still feel confident that we're going to grow gross margin year over year at least 200 basis points.
In terms of the sort of the step down to name a.
A few things driving that.
Primarily.
During a few investments.
Warmly due at the beginning of the year. So you normally see a step down the other factors as we got some additional oh.
Investments into our actual infrastructure into our pulp locations.
Increase the resiliency of the network are better than it already is and so I think from our standpoint. This is sort of a normal cadence that we experienced if you look at our Capex in Q1, it's in the high single digits and we still expect to be Capex spend this year to be somewhere in that sort of a 13.
13% to 14% range. So from my standpoint. This is all normal are you starting to see a normal seasonal.
Sort of a downtick here in the first half and then Youll see as revenue and utilization picks up in Q3 and Q4, you'll see that dashboard that gross margin got again in particular, especially from the customer wins on the enterprise side, there's some joint wins with physical sciences, and so I think on that side I feel.
Good about our sort of future uptick in gross margin as well because the simple sciences from our products are equally.
A much greater an accretive gross margin that will be that typically.
Great. Thanks, that's it from me.
Thank you.
Your next question is from Robert <unk> from Raymond James Your line is open.
Great. Thanks Best of luck Adrian it's always a pleasure working with you two questions. If I can one you touched on it but maybe you could just quantify how should we think about the level of year over year CDN traffic growth in Q2.
And for the remainder of the year and what's embedded in your guidance as we start to exit COVID-19 and you start to face some pretty tough prior year comparison.
Two can you give us some color on the revenue contribution from single Sciences, Inc. Q1, <unk>. The implied contribution the Q2 guide and if you can't share specifics just any further general color on how quickly that product portfolio is ramping would be helpful. Thanks.
Sure why don't I take the traffic question and the nature of why don't you take the <unk> question. I think you know traffic has grown it continues to grow.
We continue to see a nice pace of that growth.
Theres nothing that is unexpected in that and I think that speaks to our confidence when we when we look at it.
The world moving back into normality in Q3, Q4, we certainly see that continuing I think that's that's outlined in projected in our.
Our assumptions around around guidance, we're pleased with the growth in it.
It's it's important in it and its a its strong atrial why don't you why don't you take this exact question.
Yeah happy to so.
<unk> was around approximately 10% of revenue.
In Q1 and in terms of growth rates at a low it grew approximately mid teens from around 15% quarter over quarter. So that business still continues to grow nicely.
And as I've mentioned.
Earlier before.
There's some great cross sell the results that we've had and also in the pipe.
A lot of business.
That is really being generated.
Generation from a top to top of the funnel perspective on the security side.
It's nice to see I think its what we think the world is going to so.
What are the best products out there I think is it painful thoughtfully and again also thank you for the kind of as much appreciate it.
No. That's helpful. Thank you thank.
Thank you.
Again, if you would like to ask a question. Please press Star then the number one on your telephone keypad again that is star one.
Your next question is from James Fish from Piper Sandler Your line is open.
Hey, guys Pedro.
I'll Miss working with you here, but maybe just going back from that last question.
Obviously, you guys have talked about it being revenue off the balance sheet for signal sciences, but theres new term licenses in new staff licenses now what did you see this quarter and what do you expect kind of next quarter.
As most of the business generated from new and upsell or renewals and maintenance at this point.
Signal Sciences.
Pedro.
Yes.
Hey, Jim definitely.
I would definitely see you out there regardless, but.
I think we're still expecting signal sciences to be in that sort of 10% range I think given the growth rates that we're seeing.
We're still we're bullish and I think what we're trying to really encourage more is sort of the cross selling of a co selling because it does also bring on a new opportunities for us to sell but sort of the FASB heritage.
Every part of the business. So I think from our standpoint things look good I think that's what's leading to not only.
The results. We just saw in Q1, but also just the general bullishness that we have for the rest of the year.
Yes, you may have noticed this in the letter you would've you would've seen the eight enterprise customer new wins from from <unk> over the quarter again, that's an indication of the future of what we're going to we're going to continue to see them ramp up.
Yeah, no absolutely Josh I mean, it's a it's a good environment for perfect science.
Not to beat a dead horse here, but the Q2 guide full year, obviously, it's a tough compare for Q2, but you know.
What are you anticipating for kind of it seems like youre anticipating kind of flat to low single digit organic growth in Q2, obviously again, a tough compare but that kind of brings our NR or down to kind of.
Around 100% and really on the back half guide, obviously, some large events like Olympics and other large sporting events.
How much of guidance anticipating those events happening and some of the share wins from some from one of the largest streaming providers out there that we've picked up.
Sure Andrew why don't you take the the guide side and I'll come in on the on the traffic side.
It sounds good yeah.
For the second half of the year it doesn't particularly in and we've talked about this before Jim which is given necessarily and the bets that drives them.
Sort of like the quarters or second half a portion of the revenue I think what you're seeing in that second half of the guidance second half of the year Guide.
Implied in the full year guide is the enterprise customers that we clearly brought onboard most recently in Q1, but also just the current customers that we had and the things that they are planning for it.
In a way we're sort of further penetrating those customers. So it gives us a level of confidence that's kind of outside events.
Well there isn't necessarily.
A particular event that weren't necessarily I'm sort of implying into that guide. It really is just an overall general uptick that we've seen before and again, we're sort of going back to sort of seasonal patterns that we've seen before in our business again Excusing Q2, 2022, excuse me 2020 of last year and Youre right.
2020.
In terms of the comparison to Q2 of 2021, that's going to be the low point of comparison.
And I think once you get beyond that given some of the disruptions. We had from Q3 of last year, you'll begin to see the sort of upticks that'll just kind of generally follow our business, but it's the comparisons I will sort of alleviate once you get past Q2.
Yeah, I think the other thing that's important to recognize here about Q2 last year as we had our previously disclosed largest customer who has a large.
A large chunk of revenue. So if you normalize the remove that and you normalize for <unk>, we're still seeing 20% plus growth in the quarter.
Which which you know.
Notwithstanding the COVID-19 Lockdown. The fact, we all where we're locked in our houses for those three months, which we're not seeing now. So if you sort of look at that and say, hey, there's a 20% growth above and beyond that.
We're feeling confident about the growth both in the quarter and leading through the next the latter part of the year.
Thanks, guys for the color.
I appreciate it thank you.
Your next question is from Tyler Frank from Citi. Your line is open.
Hey, Thanks, Thanks, a lot everyone and just first to follow up on Jim's question, just on the net retention rate.
Down at I think 107% down.
Down from.
130, a year ago, maybe just help me understand kind of the drivers of that and is this just something that you expect to kind of recover.
As you get into the back half of the year end.
No as comps normalize maybe just help put a little bit more color around that.
Net revenue retention number sure Pedro you want me to take that one.
Yeah Tyler.
I think the thing that we point to and we sort of published both metrics, but if you take a look at the LTM version of the NR.
That came in at 133%, which is again it was slightly down from Q4, which was at 136, 5%.
I think that because the true of a traditional in our which is a sort of a SaaS based metric, which eventually we will have a greater component of within Fastly.
That one measures just one month, whereas the LTM version cooler tried to take that seasonality out which is why we sort of referenced the degner etcetera etcetera. So I think the LTM.
<unk> is a better way to look at whereas the NR, Although we will make sure. We published just to make sure you have that metric will bounce around a little bit more than normal.
Okay. Thanks, and then a follow up just on <unk>.
Computed edge I know you talked a little bit about it in the prepared remarks with some of the momentum and I think there was a reference to a new customer in that.
Investor letter, but kind of curious number one are there certain verticals that you're you're seeing the momentum the strongest there and what's kind of the timing in terms of when you would really expect that to be.
A piece of the business that you would be ready to disclose.
Yeah. So we certainly have seen a strong uptick in e-commerce.
We're seeing strong uptick in security as we referenced with the Human Security example, where where this is being used to augment security security is a fast moving space.
And requires this kind of technology to keep up with the bad folks on the other side, who are innovating all the time. So those are two big markets were certainly seeing some really interesting use cases.
In the Iot space et cetera, I think we have said all along that this year is a year 2021 is a year, where we will be getting the marquee. Examples in cases out there in 2022 is when this will have a meaningful impact on revenue and nothing's changed from my perspective, I believe that to be the case.
One thing that's not well understood about our business is that our customers today are using compute I mean, they are they are.
Writing code at our edges it happens to be in PCL for many of our customers, but that's starting to change into the language of their choice, but overall, our customers rely on us in part to.
Have their compute work at the edge and that's the case for almost all of our enterprise customers and many of our customers who are below the enterprise level. So.
This is not something new to our customers. The idea of bringing code. What is new is the ability to write it in languages of their choice and to be able to extend that beyond some of the functionality that we offer.
In the Bcl version of our product today, but you know don't don't be fooled into thinking that our customers aren't writing code, that's where core differentiation of fastly in the past and will continue to be in the future.
Okay. Thank you.
Thank you.
Your next question is from Brad Reback from Stifel. Your line is open.
Great. Thanks, Josh with 1 billion of cash now on the balance sheet, roughly what's the appetite for future M&A.
Yes, I mean, we raised that money in part with that in mind.
We continue to have to be very engaged in the ecosystem Fastly is not a business that's grown over its 10 year history and we now are at our 10 year anniversary. So congratulations to all but we're not a company that's grown by <unk>.
Having M&A continuously doing M&A. So I think what you saw on the signal Sciences deal, although hallmarks from what we're gonna be looking for which is the best technology the best people.
And a real overlap with our customer needs, we're going to be picky in that regard, we're going to continue to low <unk>.
We will continue to look for opportunities so.
That was a unique asset will continue to look for unique assets and if one pops up and it meets our criteria, which are pretty strict I could see us acting but.
It gives us that opportunity, which is fantastic and we will see how the what the future holds in that regard.
Great. Thank you very much.
Thank you.
There are no further questions at this time, Mr. Bixby I'll turn the call over back to you.
Before we sign off I want to take a quick moment to acknowledge fastly 10 year anniversary as a company a huge milestone that marks our many achievements together.
<unk> seen in the past decade, we take pride in having led with our values served our customers safeguarded, our culture and remain remarkably agile in the face of rapid change.
Given all that we've accomplished I'm extremely confident in the growing demand for fastly and the future of our business, which is guided by our ambitious product vision and unchanged commitments to a fast secure private and reliant internet for all.
I look forward to what lies ahead for us this year Adrian I hope to connect with many of you in the upcoming investor conferences. Thank you.
Yeah.
This concludes today's conference call. Thank you for your participation and have a wonderful day.
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