Fastly, Inc.

Good afternoon. My name is Christina and I will be your conference operator today. At this time, I would like to welcome everyone to the Fastly first quarter 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the conference over to Maria Lukens, Vice President of Investor Relations. Please go ahead.

Hi, everyone. Thank you for joining our first quarter 2020 earnings call. We have Fastly CEO, Joshua Dixie, Chief Architect and Executive Chairperson, Arthur Bergman, and CFO, Adria Larris with us today. Before they start, I would like to mention that we are joining you remotely today from our home offices, and we apologize for any technical difficulties this may cause. I also want to remind everyone about the format of our call. We published a shareholder letter on our investor relations website and with the SEC about an hour ago. We hope everyone had a chance to read it. Since the letter provides a lot of detail, we'll 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 the 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 risk, uncertainties, and assumptions that could cause actual results to differ materially from those projected or implied during the call. Please take a look at our filings with the SEC and our Q1 2020 shareholder letter for 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 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 welcome. Thank you for joining us today to discuss our first quarter 2020 results. Before we dive into the results, I want to take a moment to acknowledge the COVID-19 pandemic, something that has and is continuing to greatly affect the entire world. As with everyone else, we are closely monitoring the situation and our thoughts are with those whose lives have been severely affected by COVID-19. As we collectively navigate these unprecedented times, We at Fastly are intently focused on ensuring the safety of our employees and communities while simultaneously continuing to provide scalable, reliable, and the most secure digital experiences for our customers. To protect our employees and their families, we shifted to a fully remote workforce on March 1st and expanded sick leave benefits. We also suspended all non-essential travel. Staying true to our Fastly values, We're also prioritizing the health and safety of our communities. We doubled our open source and nonprofit program to provide $50 million of free Fastly services to nonprofit organizations around the world. And we've contributed to public health organizations fighting the virus. Lastly, but certainly not least, we're prioritizing our customers who rely on Fastly to help protect and deliver news, connections, commerce, and entertainment to billions of end users around the world. Our customers' content has never been in higher demand as more people are staying at home, and we are proud to be their partner in reliably and securely delivering it. To ensure the health and reliability of our network, we applied additional resources to increase monitoring, refine capacity planning, and add redundancy to our supply chain. Our network is designed to handle spikes in traffic and continues to perform flawlessly. We are very confident in our underlying business model. The structural changes we anticipate coming out of this pandemic help our business in the short and long term. We remain confident in the long-term efficiency of our business model, and we anticipate we will continue to see leverage as we grow. Now, turning to results. We delivered strong first quarter results with continued top-line growth, generating $63 million in revenue, up 38% year over year. we continue to see strong customer adoption of our Edge Cloud platform and security products by both new and existing customers across multiple verticals. Our enterprise customer count grew to 297, up from 288 last quarter, with average enterprise customer spend also increasing to $642,000, up from $607,000 in the previous quarter. This resulted in enterprise customers generating 88% of our trailing 12-month total revenue, up from 87% last quarter. Our existing customers are continuing to rely on us more, as reflected in a consistently strong dollar-based net expansion rate of 133%. We also continue to demonstrate the stickiness of our platform, as reflected in our new metric, net retention rate, which was 130%. Additionally, we are seeing the results from the investments that we made in 2019 in our demand generation, sales, and marketing teams, which is also reflected in the increased total customer count of 1,837 up from 1,743 last quarter. As I touched upon in the shareholder letter, Fastly's platform is playing an important role as we continue to operate in these uncertain times. As social distancing measures increased over the March period, We continue to see increased traffic across the internet and our platform, which certainly provides an additional boost to our results. But more than anything, our first quarter results were driven by Fastly's strong business fundamentals and the quality of our offerings, which we believe will continue to attract the best of the web. Fastly is the platform of choice for innovators. We are partnering with the most technologically advanced and creative companies who we believe will not only weather the storm, but will continue to thrive in this environment. Companies are increasingly recognizing the importance of digital transformation, not only to survive during these uncertain times but also for long-term success. As we are seeing this trend accelerate and evolve, we believe we are best positioned to partner and grow with these companies as they look for a trustworthy and modern platform. For these reasons, We are even more inspired as we continue building and investing in our offerings and network. More of our customers are using Computed Edge through the beta program. We've also been learning from them and are inspired to see the variety of innovative use cases that we're enabling. The feedback we are receiving enables us to iterate and improve the product in order to drive further transformation at the edge. We are on track and expect to further expand the availability of Computed Edge in the second half of the year. We are also continuing to adapt our modern network to meet the new demands of Computed Edge. We want to keep being as efficient, if not more, as we've been in the past. When I stepped into the role of CEO in February, we were just starting to comprehend the magnitude of COVID-19. It was not the challenge I expected to face during the first few months. But I can sincerely say that the challenges we're facing are bringing out the very best in Fastly as well as our community, because it's never been clearer how instrumental our platform is in making the Internet and people's lives better. Our first quarter results and guidance reflect that Fastly is uniquely positioned to empower our customers and will continue to drive growth as we all weather the current storm together. Before I hand off to Adriel to walk through our financial discussion, I want to touch upon a leadership transition. Wolfgang Masberg, Fastly's EBP of global sales and field operations, will be departing from the company in November 2020 to pursue personal passions. Wolf has been a huge part of Fastly for the past four years, and we are grateful for everything he has done. As of the middle of June, I will directly oversee global sales and field operations with support from Wolf, to ensure a seamless transition. During this transition, I will evaluate what leadership mix is required for FASLI's next phase of growth. With that, I will turn it over to Adriel.