Q2 2021 Fastly Inc Earnings Call
Good afternoon. My name is Mary and I will be your conference operator today at this time I would like to welcome everyone did of past due the first lien second quarter 2021 earnings conference call all of <unk>.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question you or any of the spine simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question past of bounty. Thank you I would now like to turn the conference over to Stephanie for legal investor relation.
It's fastly. Please go ahead.
Hello, everyone. Thank you for joining our second quarter 2021 earnings call, we have Fastly CEO, Joshua Bixby and CFO Adrian of lot of on with Us 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. Since the letter provides a lot of detail we will make some brief opening remarks and reserve the rest of the time for your questions.
During this call we will make forward looking statements, including statements related to the expected performance of our business future financial results.
<unk> 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 review our filing with the FCC and our Q2.2021shareholder 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 turn the call over to Joshua.
Thanks, Stephanie.
Everyone and thanks for joining us today.
In our second quarter, we managed through a significant outage that impacted our Q2 results and saw several customers delay their launch of new products, which will delay the timing of traffic coming onto our platform.
The outage and these delays will also have an impact on our Q3 and full year outlook.
These challenges are mission of fueling and securing the modern digital experience remains strong and relevant.
We are confident that our operational rigor security led go to market motion and expansion of computed edge capabilities will continue to drive long term value for our customers and shareholders.
Before we further discuss our strategy I'd like to discuss the outage and customer delays.
In early June we had a significant outage could impact our Q2 results and will have an impact on our Q3 and full year outlook.
The average resulted from an undiscovered software bug that was triggered by a valid customer configuration change.
We detected the bug within 1 minute and returned 95% of our network to normal within 49 minutes that being said our customers were negatively impacted.
As a result, we saw traffic volume decrease.
Subsequently issued credits to select customers following the incident.
Given the usage based nature of our business model. This resulted in the impact to our Q2 results and we expect to see some downstream impact on revenue from the outage in the near to medium term as we work with our customers to bring back their traffic to normal levels.
We also have a couple of customers 1 of them of top 10 customer that have not yet returned traffic back to the platform post outage.
We also have some additional uncertainty with the timing of several customers ramping additional traffic onto the platform in the second half of the year.
We continue to believe that this traffic will come onto the network in 2021, but later than we had originally expected thus impacting our outlook for the second half of the year.
We have implemented and will continue to implement significant measures to ensure increased resiliency for our customers and their users.
As I mentioned at the beginning of the call. We believe we have of solid strategies to deliver incredible value to our customers and are optimizing the organization to execute against the strategy.
We now have 2 new seasoned executives to drive our sales and finance organizations, Brett <unk>, who joined as our Chief revenue Officer in Q1, and Ron Kisling, who will be joining as Chief Financial Officer later this month.
Both bring significant experience in building and managing organizations through high growth.
Turning now to products and go to market execution, we are seeing very strong growth in security sales driven by our next generation WAF.
Our WAF is now available for customers to purchase by the Amazon AWS marketplace, representing an important new route to market through channel partnerships.
This is a great example of how our refreshed go to market strategy is creating growth opportunities.
We recently announced the achievement of a significant integration milestone with the introduction of a beta version of signal Sciences agent on the Fastly edge cloud.
We also introduced our first managed security offering Fastly response security service.
We continue to execute against our computer that's roadmap, having recently added support for the popular Javascript programming language and local testing.
I'd also like to highlight how our customers and our engineering teams are revealing the expensive power and potential of compute at edge.
We're tapping into functionality that goes well beyond improving website performance and experiences businesses like launch darkly in graph CDN as well as Fastly as own engineering teams are building and re architected products on compute at edge.
By adopting computed edge technology companies like this will have the ability to develop entire businesses at high velocity to continue fueling the modern digital experience.
This quarter, we saw new business and cross sell and upsell wins with customers across multiple verticals, including gaming AD Tech financial services and E Commerce.
Our wins represented both replacement of incumbent providers and capturing additional wallet share from existing customers.
The segment's attributed the wins to the strength of solution.
Our ease of use and new capabilities, resulting from continued innovation at the edge.
And important to note that all of our customer metrics will combine the signal sciences and fastly customers moving forward.
We also included the new combined metrics for all quarters since the acquisition at the bottom of our shareholder letter.
Our customer count grew from 2000 and 458 in Q1.2581 in Q2.2021.
In addition to growing our core customer base. We also saw increased engagement and further expansion of our enterprise customer base, we increased our enterprise customer count, including signal Sciences to 408 from 395 in the previous quarter.
Our second quarter average enterprise customer spend of $702000 was similar to 705000 in the first quarter and now reflects the combined Fastly and signal Sciences average enterprise customer spend. Additionally.
Additionally, our dollar based net expansion rate remained strong at 126% or.
<unk> highlights the continued strength of our platform and relationships with our enterprise customers.
We delivered a net retention rate of 93% in Q2, 2021, and last 12 month net retention rate of 121%.
We believe the last 12 months and our our removes much of the volatility that is inherent in the usage based business model.
Now I'll turn it over to Adrian to go over the financials.
Thank you Joshua and good afternoon, everyone.
Before I get into the numbers I want to note that the contribution of signal Sciences has been included in our second quarter financial results as well as our key metrics.
Turning to the quarterly results aside from the outage the business performed as expected.
This quarter, we generated $85 million of revenue net of the $1.2 million deferred revenue write down associated with the acquisition of signal Sciences.
Representing 14% year over year growth.
While acknowledging the tough year over year comparison to Q2.2020, we are pleased with the ongoing demand and long term growth potential of the platform.
Turning to gross margin our.
GAAP gross margin was 52, 6% for the quarter compared to 62% in the same quarter a year ago.
Please note that this includes the accounting adjustments related to the acquisition of simple Sciences.
Our non-GAAP gross margin, which excludes stock based compensation and the intangible amortization expenses.
<unk> 57, 6% for the quarter.
Impaired to 61, 7% in the same quarter last year the.
The decrease in gross margin reflects our continued investment in infrastructure and capacity in anticipation of customer demand.
We believe we have a tremendous opportunity to invest in our edge cloud mission this year and plan to do so to position fastly for future growth.
As we have said before we will continue to invest in our network and the disciplined manner, keeping long term profitability in mind.
Turning to the balance sheet, we ended the quarter with $1.1 billion in cash restricted cash and investments, we remain well capitalized to invest in the future growth of Fastly.
As we discuss our Q3 and full year 2021 guidance I want to remind everyone that we have the usage base model, meaning of our revenue can be impacted by unforeseen changes in the timing of customers coming onto our platform and anticipated renewables.
As explained by Joshua we are revising our guidance in the near to medium term to reflect this.
As always we base our revenue guidance on the visibility that we have today and we expect to gain additional visibility as the year progresses.
Joshua outlined earlier, the outage along with the uncertainty related to the timing of of returning traffic new initiatives of new customers ramping traffic have had an impact on our third quarter and full year guidance.
For the third quarter, we expect revenue in the range of $80 million to $85 million.
Non-GAAP operating loss in the range of negative 23, the negative $19 million.
Non-GAAP net loss per share in the range of negative 21.
The negative 18 cents.
For the full year of 2021, we've revised our revenue guidance in the range of 340 million to $350 million.
From $380 million to $390 million.
Non-GAAP operating loss in the range of negative <unk> 75 to negative 65 million for.
From negative 50 to negative $40 million.
Non-GAAP net loss per share in the range of of negative 65 day.
<unk> 57.
From negative 21 times.
The negative 18.
Despite the recent challenges we've experienced our mission of fueling and securing the modern digital experience remains strong and relevant we are confident that our operational rigor and security led go to market motion and the expansion of our compute at edge capabilities, we will continue to deliver value for our customers and shareholders.
As Joshua said, we are confident in our ability to execute and we believe we are well positioned for long term success.
With that I'll turn it back over to the operator to take your questions.
At this time I would like to remind people in order to ask the question sorry.
Star then the number 1 on your telephone keypad, we'll pause for just a moment to compile the Q&A of rosner.
Your first question comes from benign of Bel power from.
From Baird. Your line is open.
Thanks for taking the question.
I was hoping of just drill into the kind of the confidence level that you have and the visibility you have right now in the expected customer ramp that you mentioned in the back half of the year.
So you could just talk a little bit more about the confidence level around that that'd be great.
Sure, Hey, well, it's Joshua our confidence.
Remains high. These are these are customers, who moved based on their own timelines. This is not directly related to us.
And those.
Seems strong so right now we see you know it's only a handful of customers again. These are timelines that are based on situations that are either regulatory or licensing. For example, there are few of them and in those cases, what we see is are those.
Those timelines more or less locked in.
But again later than what we had anticipated I think the important thing in these situations is to build the relationships remains strong with these customers.
And we continue to work closely with them as you know in our usage based business, we don't always get a chance to time exactly when large initiatives come what's really great is these are new and large initiatives and we remain confident in.
But we also at least when we look at our guidance want to be very careful.
Given the history and so we are only going with what we see and we expect material impact in revenue in 2022 from from the deal sort of pushed out.
Gotcha, Thanks, Joshua and then 1 for AGL, Israel, how should we think about gross margins for the rest of this year and then beyond as well.
Yes, I think the from a gross margin standpoint, as you know seasonally Q2 from a revenue standpoint, because relatively flat.
Clearly 2020 was the tough compare because Q2 wasn't seasonally strong.
Just on the pandemic and so as a result, you saw.
In respect of unexpected leveraged last year. So this year, we're sort of more normalized from a revenue standpoint now the outage did have an impact from that standpoint, because when you think about gross margin its really much more about the utilization and whatnot. So from the way that I think about it is.
It kind of goes along with revenue normally what you see as revenue should drive into the second half of the year into Q3, and ultimately into Q4, which is where you drive the leverage but when I think about.
Sort of the longer term I still feel confident about sort of the longer term I just think of this year.
Given sort of the recent impact of the outage I think thats, what impacted Q2 sort of more.
Sort of more unusually the normal.
Got you thanks, guys.
Thanks, a lot.
Next question comes from the line of Jonathan Ho from William Blair. Your line is now open.
Hi, Good afternoon can you give us a little bit more color on maybe the actions that you're taking to restore confidence and maybe some of the customers that haven't fully returned their traffic or.
Just maybe you could give us a sense of you know also what gives you the confidence that some of these customers that have delayed will come back as well.
Sure Yeah, absolutely and I think we should separate those 2 things you know as we talked about the customers that have delayed that we called out specifically are really unrelated to the outage I think if you specifically focus on the average as we talked about we've got 1 top 10 customer I think if you flip this around what you see is 99% of the enterprise customers are more cash.
Back and continue to.
Continue to grow with US we are lucky our customers are technologies technologists like us in many cases, they understand that outages occur and that's not the downplay the outages just to acknowledge that it happened we own it.
Our responsibility, but I've got a chance that the archer and others to get them on the phone with these executives and what you hear is you know.
Wanted to understand in 2 of our real.
Depreciation for of transparent we were during that during that process and after we talked about we put a blog post out we talked about what happened in the outage and we've talked about.
We talked about what we're going to do I think it's also important to remember that although we wont tell you who those customers are if you did I think it wouldn't be surprising because these are the most stringent.
High performance.
And technologically advanced companies in the world. So they have very high requirements and the very high bar and when we had the outage I think all of US notice that's not the case for every other outage and it's because of the type of customers. We have so specifically in the in the short term there was a lot of questions about the remediation there were a lot of quest.
<unk> about the actions that we took and how we could make sure that those actions can be taken again and we've been able to remediate that I think the next layer of remediation is really about the future that we had set in place for $4.5 years ago, which is that when we built compute at edge. We built it we've talked about this a lot with 2 mindset for the firm.
Mindset with the absolutely 1 of our customers to have more flexibility of more safety and what they're doing but we also wanted that for ourselves and so the outage has really.
Pushed forward.
Of drive that we've had for a long time, which is to move all of our own delivery and security products to the compute at edge platform, which mitigates. These types of challenges in the multi tenant environment, you've already seen some real progress on that we announced some real progress with the signal Sciences acquisition and having the.
That available and you will continue to see us pushing very aggressively in that direction and that's that's the long term litigation our customers have told us they are not going to wait for that but they understand that the mitigation that we have in place, which we've now completed or we hope sufficient and we hope to be in this position of a quarter from now talking about the fact.
All of them are back not just 99% plus.
That's helpful and 1 for your internal of just in terms of the actual credits and the actual costs associated with the outage is there a way for you to maybe quantify for us either revenue lost or had to be applied and maybe what that impact was on the quarter and what do you expect it to be for the full year. Thank you.
Yeah Jonathan.
To the sort of 2 impacts there's clearly 1 which is the.
The impact of the outage and for those customers at the time that the had not yet ramped or brought that traffic clearly the when it occurred at the occurred of June so you'd imagine that the impact for lost revenue lost traffic occurred in June the other impact of the actual sort of credits that we actually ended up giving out all of that stuff is reflected in.
Our June quarter. So that's a those are all complete and for.
From my standpoint.
The fact that it occurred in June.
It would of clearly had we not had this occurred we probably would've been a bit higher than that the fact that we were sort of within the range as a result, even within as a result of the despite the credits I think.
All things being equal was I think for the outcome just given the data which is it wasn't even longer and that we were able to strength so quickly to it but just.
Just maybe sort of keeping the.
Sort of the <unk> of it is that credit is already included in the June quarter relatively immaterial, but certainly impacted the month of June and I think it's really much more of what could we have.
Generated at the traffic kept on as it was and it's a bit of an unknown.
Thank you.
Thanks, Jonathan.
Next question comes from the line of really the Kissinger from D. A Davidson your line is open.
Hey, guys. Thanks for taking my question Josh in this just the first couple of minutes of European So I apologize.
Were already addressed.
I'm curious on the step down of the annual guide of $40 million reduction just is there any way you can break that out between the.
The customers that had delays in launch and ramping traffic and then also of the customers, particularly the top 10 that Hasnt returned to the platform yet just what's the split in the reduction.
Yes.
If you think about it they both have a pretty significant impact of that number.
You know our top customers.
<unk> have large dollar figures of associated to their monthly spend. So if you think about a few of those and you think about either.
Unknown, which is the case with our the top 10 customer we're talking about in terms of when they come back and we want to be cautious and really put into guidance. What we see and then you talk about what we do know which is the delay in a few customers there's sort of a.
Roughly 60, 40, I would say in.
In terms of in terms of how that how that plays out of $50.50, but both have a significant impact.
Got it and then I'm curious you know the.
Of the computed edge the announcement.
For the spirit.
Now of being able to be compiled the wasn't just how meaningful of an important is that.
For the longer term prospects of computed edge from your customers.
It's incredibly meaningful I mean this is the number 1 thing our customers have been asking for.
It's not just Javascript they want the program in the language of their choice and what we know is the Java script is the language of choice for many so it really helps democratize the.
The platform bring it into a number of developers who may not of it is comfortable with what we know with developers as these ecosystems be it Ruby book be it yet.
Javascript all of these ecosystems have their own culture their own communities around them and this is computer to edge its about going into those communities and about meeting people where they are at so that's really the goal of it. So it really allows us to assemble.
A really large group of developers and we're already seeing that momentum I mean, we talked to me we talked in the in the script about some amazing projects, which are being built on compute at edge of companies who are relying on computer that you look for example, like the the graph CDN folks who've looked at the entire industry looked at all of the solutions out there.
They were fantastic blog post about this about why our computer edge solution was the right thing to build their business on and we're seeing more and more of that it is very exciting thats, becoming a much larger part of the cost for example, the I'm on when I talked to customers. This is a true differentiator for us.
Got it helpful. Thanks.
Thanks.
Your next question comes from the line of Tyler Radke from Citi. Your line is open.
Hey, good afternoon, Thanks for taking my question.
I wanted to ask you about the the customers the related to the outage that have left the platform I guess first do you have visibility on where are they going are they going to the competitor or are they taking this in house and secondly.
Just kind of what's your confidence level.
In terms of the new customer conversations you have that.
The the recent outage is not impacting the ability to land new customers. Thank you.
Sure I think on the on the outage first of all we have not seen any significant change in our churn.
Yet in terms of that as I said, we do have a couple of customers from if you look at churn certainly continues to look and act like the horse historically has which is very low. So we are looking at customers who have in.
At least from the top 10 day lead to pull it in house, but 1 of the reasons customers like this works with us even though they have in house capabilities, just because of the incredible advanced capabilities that we bring in so if you actually if I think back to the conversations that I've been having with customers and this is 1 in particular.
It is the drive to get back onto the platform because they know how important the speed. It. So I would say you know this is.
This is about the advancements we bring and yes, it's nice to have stopped GAAP and something you can bring in house, but there is a reason for the customers pick up so I think on that that's what we see I think on the large customers and large project projects as we indicated in guy.
Those are those are delayed for things unrelated to the work that we're doing.
The internally and unrelated to the outage for the most part of this is just not of churn issue.
Great and if I could sneak in 1 more for Adrian.
Could you is there a way to.
Quantify kind of the the performance of the signal science in the quarter and just trying to understand kind of as you look at your outlook.
Kind of the assumptions embedded in there, but I know you talked about strong performance, but if there's any metrics you can give so we can kind of look at the.
The performance on a on a revenue basis.
Sure So I think.
As I spoke about earlier this year when we initially gave kind of a sort of annual guidance for the year at the beginning of the year, we talked about them being about 10% of revenue.
In Q1 that was closer to sort of the high nines.
Q2 is expected to be in sort of the 10%.
Level, so I think in the.
In this case the outage clearly impacts of sort of the heritage Fastly revenue So day so so.
Simple scientists continue to sort of deliver where they were doing they were growing in fact, a lot of our new customer wins actually occurred after the outage and it was specifically led by a lot of the signal sciences products that sort of came through the acquisition. So I think from that standpoint that still remains the case I would imagine that given that the revenue came in a little bit on the <unk>.
And as a result of the impacts of the credits of the.
It was sort of ticked up a little bit higher than 10%.
So generally they are still sort of progressing as we expected.
Great. Thank you.
Thank you.
Your next question comes from the line of teams fish from Piper Sandler Your line is open.
Thanks for the questions just wanted to go off of the pilot is a little bit there.
600 checks on our own they've been really strong and.
The demand for itself I guess first what are you seeing for demand with signal Sciences that you can.
Give a little bit more color on the can you just the and how should we think about the mix of new business for them versus the expansionary at this point and what amount of the business is coming from the self hosted term license products versus the cloud based SaaS web application firewall and Ddos solutions.
Sure Hey, Jim It's Joshua let me, let me start at the high end the demand as you said is very high I mean, when you look at the every metric from the pipeline to deals that are close we're seeing continued momentum through that.
And through the entire quarter and the start of this quarter. So.
From our perspective.
It's a great story, and I think as that gains momentum and gets to.
The increase in size, it's going to be incredibly helpful. It's a really important wedge it helps us get into accounts overall, we continue to see the ratio of <unk> as we've historically seen about 90% SaaS, 10% licensing in that in that range and from a from a mix of business perspective, 1 of the initial.
Gives the bread is driving in his transformation of the go to market engine is the real sales shift with the security of being at the forefront and so it should be no surprise as we fill up that pipe with the security led motion that we're going to see more and more of that we're also innovating on the product side as I talked about we brought out.
The <unk> Si.
The capabilities at the edge and we're going to continue to drive for that all of that further drives margin and performance. There's a real virtuous cycle. There. So overall, we're seeing a really nice mix of business and a lot of out of a lot of this is actually new business, which I think is the most exciting part because we see that roll through the.
The business it gives us a lot of confidence about 'twenty 2.
Got you that's helpful. But we're up to 145 terabytes per second network, you know really of some.
Size at this point and you're typically you know 30 Terabits a second of at various stages of isn't a day does it makes sense to actually continue to focus on building out more capacity at this point, especially 1 of the supply chain shortages are out there or does it make more sense to actually focus and refocus the business on execution.
And go to market and really Adrian if the credits are super material here can you actually quantify the impacts in the quarter.
Because it does sound like it was material and I think it would be helpful to all of US here to understand how much it was material and we can have an understanding.
Of this thing can happen so how much was it in the quarter and then also is it.
For the downstream impact how much is that impacting your Q3 guide thanks guys.
Sure Yeah, let me start on the network sites the <unk>.
Macro number on the match of the network size doesn't always tell the story because what we're really looking at is building out strategically in locations and you have to think of our business as if we had a lot of capacity in a certain region, but the demand is and is it 1 place and 1 area of that global numbers not as applicable. So we're constantly looking at where can we.
Build out where do we build out capacity, where do our customers need us and as you know we have to build ahead of our customers. So although we have some delays as we talked about.
234 months delays still warrant us continuing to be thoughtful about where we build but it's something that we're certainly always thinking about and if you think of this time last year, we were in a position where the network was extremely hot and we're in a position this year, where we built out for some demand that pushed out of few months, but we still have the <unk>.
It's the coming so I would spend sort of less time on the aggregate number if you look at the Capex spending that we did in this quarter and that we're doing over the year I think it is very much in line with the demand that we're expecting you do point out of an important issue you know that the chips.
Our.
<unk>.
For for all vendors I think we've been really lucky about how we've managed our relationships and that's not that's not a it's a risk but it's not of risks.
Impacted us in the quarter.
I think.
On the credit side 8 year old you want to answer that.
I do I, just need to be refined menu, but my apologies.
From.
From a credit standpoint, Jim is the bat is about 1%.
So hopefully that gives you some some perspective about sort of magnitude I think from us. It's really the more of a question about what we're trying to bring traffic clearly back, which we think we could've done better had we not had the outage we would have been more on track and more importantly, as this impacts the rest of the year in terms of where that traffic.
Would have been had all had all of that been sort of normal.
Thank you guys.
Sure.
Your next question comes from the line of freezes Andrea from RBC. Your line is open.
Hey, Jonathan in Israel day, Thanks for taking my questions first I wanted to go back to the.
The discussion around churn and I guess in this case.
All of you about churn as well as customers, maybe downgrading their spend with the fastly.
If I look at the NRI in the quarter itself.
The first time I've ever seen this number dropped below a 100% and thats kind of a little bit of of scary number. The C. Can you maybe walk me through why was the NR. So.
So low this quarter at 93% what does that.
When you have question was that of shrinking their footprint is it brings.
Bringing more of the competitors is it bringing more of in house, maybe walk us through that number and how we should be thinking about that metric going forward in the lab follow up.
Sure, Hey, Julien <unk> of Cowen.
Hey, reshape yeah happy to walk through this.
As you know the net retention rate metric compares 2 months in terms of solitude as opposed to the last 12 months takes it clearly 12 months, which takes a lot of volatility in this particular case youre basically comparing June of 2021 to June of 2020, and as you know.
June of 2020 was a great month for us.
A lot of unexpected reasons as a result of the pandemic and then consequently June.
June 2021 was also the month also that we actually pulled all of the credit. So all of the credit has hit that month as opposed to spread through the quarter as well as net spread over sort of the 12 month period. So I think youre comparing the 2 months of sort of sort of impact of that particular metric much more forcefully than it what about the otherwise.
Okay got it got it.
And then maybe maybe something a little bit more philosophical as we think about the longer term trajectory right I understand there is some.
Some kind of 1 time issues and obviously the compares are really top of especially in Q2, but even for the remainder of the year.
But as we look at the print I mean, this is a low single digit organic growth and kind of looking at that for the back half of the year of as well.
Maybe getting out of this year and when some of these investments really start to show dividends of the integration of signal science of starts to pay off.
I guess, how should we be thinking about the growth profile of this company longer term is this a double digit type grower or is this a 20% type grower, which is the story of kind of that that we were told at the IPO time, just philosophically how should we be thinking about the growth profile of this business over the next 3 to 5 years, putting aside the current.
She is in the tough compares from last year. Thanks.
Yeah, absolutely I mean, I think from my perspective.
We still see.
The next 3 to 5 years holding the growth pattern that we had assumed.
The market has only grown if you look at our CAGR over since the IPO. It's in that range, we've had some ups and downs, but if you just fundamentally step back and I like the idea of looking at the philosophically. We've got so many trends which are driving towards the complete rethink of how security looks for almost every organization in the world.
We've got a complete change to how applications are built with the edge now of being a critical part of that we have technology trends like 5 G and others, pushing more and more content and more and more interactive interactive capabilities and if you. If you just look at that and then you look at the huge budget.
That are associated with these areas many of them still remain in appliances and legacy enterprise costs. The companies who are not servicing the need. So if you think about our business. We've got 400 odd enterprise customers. If you think of the businesses who came before us they have 100000 of 120000 enterprise customers.
So we look at this and say we are in the early innings of this isn't early story and so absolutely. When it's early some of the larger accounts may have a larger influence is our base of smaller but the reality of the story for US is that the entire world is changing with this digital transformation that has only been accelerated by the pet.
And we look at that and we see opportunity. So we are certainly.
Notwithstanding the push outs in the year, our optimism remains high we think we are on the right side of history here.
Got it that's helpful. Thank you so much.
Again, if he would like to ask the question. Please press Star then the number 1 on your telephone keypad.
Next question comes from the line of Jim Harmon from Oppenheimer. Your line is open.
Thanks, guys did you say the top 10, plus some of that left wants to come back because you know the performance of substantially better.
Whats it going to take to get him back on thanks.
Yes, I mean, we aren't going to count our chickens before they hatch, but as I said I've been in meetings with them. Archer has this is a what we're being told at this point is it temporary.
The checkpoint to make sure that the remediation or in place as expected and our hope certainly is that the customer comes back.
And continues which is the expectation of the team for the hope I should say of the team working on the project. So our relationships are strong dialog is great and I Hope you know as I said to be in this call in a few months and talk about the fact that.
That that traffic is back and larger than ever.
And do you think that customer and others are going to maybe increase their multi source.
Basically relationships and and and how easy would it be for.
For customers to switch from <unk> to a competitor I guess, if there is an outage as a way to kind of make that easier to make people more confident that book that there was an outage we will.
Political down at this point.
I mean, you asked me about the only 1 of the Tet outages and the last of the last few months the other.
We have as well and I think what that speaks to is that that's.
Something everyone has to look at in terms of their resiliency planning I think when you look at the resiliency planning, but our customers want they want to take advantage of the benefits of the unique benefits of the platform breaks and so when we're exploring resiliency with our customers, it's actually about exploring different ways to have resiliency on the fastly platform.
And there are a number of really innovative ideas and ways that we can do that so imagine you could have.
Your own copies of things in case, we went down in other ideas like that are being are being talked about a lot. So that so that we are you have the benefit of of the technology, but you have multiple.
Capabilities upon which to deliver and scale. It. So I would say that's the thrust of the conversations that we're having and you know because everyone has seen the.
All vendors are not immune to this.
It sort of Sparks of different conversation, which is if this if this is this risk lives everywhere why would you go to the lowest common denominator, where you actually don't bring the performance.
And the security that you want.
Are there other ways to achieve this I think we're going to see some real novel and interesting ways. We already see this in our customers. As you know we have a managed of private offering some of our customers use the managed or private offering in order to be redundant. So were redundant with ourselves and I think we're going to see a lot more of that.
Got it interest and then just computed edge can you give us sort.
Sense of you know.
What kind of revenue for getting there or maybe you know what it's growing out of when it can start to be material.
Sure I mean, we've talked about this and I think we're well on track. We said the 22 excuse me the year, where we really see material benefit. We are on the revenue side, we are already seeing and we've talked about some examples about the growth that we've seen in the examples that we have so it's out there in the wild and present, providing significant value today, but we really see 'twenty 2.
As the year, where it hits that inflection point, where revenue will be more meaningful.
Thank you.
Thank you.
Next question comes from the line of Brad Reback from Stifel. Your line is now open.
Great. Thanks, very much Josh you have over $1 billion of cash on the balance sheet.
Clearly a lot of dry powder do you need to fix the business.
Before you do additional deals or can you do those concurrently.
I look at the success of the signal Sciences deal.
And and what we're seeing there and it gives me a tremendous optimism about our ability to do deals.
I think we are undergoing a transformation, but it was very much aided by a transaction like that so I think for US we don't see anything broken right now, we certainly see that the transformation that that our customers are asking us to.
Bring to the table, which is more security more compute is absolutely underway, but I think the lesson that we can take so far at least.
Is that is the we can do that and do that successfully.
Great. Thanks very much.
<unk>.
There are no further questions at this time, Mr. Joshua Bixby I turn the call over back to you.
Thank you operator.
I'm inspired by how our team responded and the incredible resilience and commitment every fastly employee has shown for our customers.
And the World I can honestly say that I've never been more motivated and committed to providing a fast secure reliable and trustworthy internet for all I am confident in the future of faster and I Hope you took that from our call today, we look forward to regaining any of the trust we have lost throughout the year.
Turning to leadership changes.
Want to welcome Ron Kisling, as our new Chief Financial Officer, who will join US later this month.
It brings strong leadership principles to Fastly.
Excellent and is an excellent.
Excellent addition for the executive team.
His experience in leading sophisticated financial organizations high growth environments will make an immediate and I believe of very positive impact on fastly as we continue to grow and scale our business.
Also on behalf of of all Fastly I'd like to extend our gratitude to Adrian for his tremendous effort in getting us to where we are today, we wish him. The best of luck in his new endeavor.
Before we sign off I want to sincerely. Thank you entire fastly community for your continued support.
Thank you.
This concludes today's conference call you may now disconnect.
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