Fastly, Inc.

Good afternoon. My name is Mary and I will be your conference operator today. At this time, I would like to welcome everyone to the FASLI second quarter 2021 earnings conference call. All lines have been placed in 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 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 Stephanie Fligo, Investor Relations at Fastly. Please go ahead.

Hello, everyone. Thank you for joining our second quarter 2021 earnings call. We have Fastly CEO Joshua Bixby and CFO Adria Oladas 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, 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 review our filing with the SEC and our Q2 2021 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 statement 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 this call over to Joshua.

Thanks, Stephanie. Hi, 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. Despite these challenges, our 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 that impact our Q2 results and will have an impact on our Q3 and full year outlook. The outage resulted from an undiscovered software bug that was triggered by a valid customer configuration change. We detected the bug within one 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 volumes decrease and subsequently issued credits to select customers following the incident. given the usage-based nature of our business model that's resulted in 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, one of them a 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 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 a solid strategy to deliver incredible value to our customers and are optimizing the organization to execute against this strategy. We now have two new seasoned executives to drive our sales and finance organizations. Brett Shirk, 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 SignalScience's 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 edge 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 expansive power and potential of Computed Edge. We're tapping into functionality that goes well beyond improving website performance and experiences. Businesses like LaunchDarkly and GraphCDN, as well as Fastly's own engineering teams, are building and re-architecting products on Computed 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 up-sell wins with customers across multiple verticals, including gaming, ad tech, financial services, and e-commerce. Our wins represented both replacements of incumbent providers and capturing additional wallet share from existing customers. Both segments attributed the wins to the strength of solution, our ease of use, and new capabilities resulting from continued innovation at the edge. An important note that all of our customer metrics will combine 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 2,458 in Q1 to 2,581 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 $702,000 was similar to $705,000 in the first quarter and now reflects the combined Fastly and SignalScience's average enterprise customer spend. Additionally, our dollar-based net expansion rate remains strong at 126%. Our DBNER 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-month NRR removes much of the volatility that is inherent in a usage-based business model. Now I'll turn it over to Adriel to go over the financials.