All right, great. Thanks everybody for being here and joining on the webcast. I'm very pleased to have Fastly here with us this year. We have CFO Ron Kisling, and we have Vern Essi from Investor Relations here today. Let's jump in a little bit. Maybe talk to us a little bit about, you know, tell us a little bit about Fastly where you are, where you fit in with the other CDNs, and what kind of makes you know, similar or different as with security and so forth. As a background, I think We're the world's fastest, you know, edge cloud platform. We do that with a software-first approach to delivering content on the internet. Drives a lot more efficient, less hardware intensive than a lot of our competitors who came to the market, you know, from very different places over the last, you know, decade or two. What that allows us to do is to deliver fast, low-latency services. We have a portfolio of security products that provide security at the edge, both web application firewall, DDoS protection, and Bot Protection. And we provide service to some of the largest media, consumer, and technology companies to enable them to provide robust, personalized experiences to their users. Compute and Observability capabilities that allow personalized experiences at the edge, as well as for our customers to see what's going on in terms of their network and get visibility to where issues arise very quickly. Just a little bit of background on some of the corporate stuff. Last year, we grew 22%, set revenues of $432 million, and saw improvement in our margins from a cost control perspective, as well as managing our OpEx. Last September, we welcomed a new CEO, Todd Nightingale, who joined from Cisco. He was their GM of their multi-billion dollar network services business All right, great. Let's dig in a little bit on the network side people are very familiar with Akamai and how kind of they built that. What is it about your, you know, your network architecture built on sort of SDN technology and so forth? What is, you know, what's How does that differentiate you and how difficult is something like that to replicate? Yeah. I think the biggest differentiation, and I think a lot of it is where we came to this, we started with kind of a software-first mentality. How do we handle the management of traffic, the routing of traffic, you know, the switching to a software mechanism? What that does is it allows us to deliver content with a lot less hardware intensive environment. It also allows us, as we do upgrades, to make upgrades across the entire global network as a software upgrade as opposed to swapping out hardware. What that also does is by having that lower hardware intensity means that ultimately, you know, our cost of providing delivery to the edge is a lot lower. We've started to see some of the benefits in the second half of 2022 in terms of our margins, where we started to see, you know, real meaningful improvement in our margins. If you look at, say, Akamai, for example, who kind of invented the space, if you will, say two decades ago, their initial approach was really around how do we protect, you know, customers' data when you see a big spike in traffic so you don't bring down their network. They built a very robust global hardware-centric network. They do a great reliable job of delivering network and hardware, but it's hardware-centric. As you look at, those companies in terms of if they want to move to a new architecture, rather than it being a software upgrade, it means on a global basis, you know, being able to sort of replicate and move to and install, you know, a new hardware architecture on a global basis, which is, you know, expensive and challenging to do while you keep the network up and running. You know, additionally, the other piece that is a big differentiation is, you know, our product is very easy to configure. We can get a customer up and running very, very quickly. You can, you know, point their website to our server, and we begin caching their information. A lot of the more legacy players, it's more of a hardwired system. Also, as you make that change, you also have to deal with migrating all of your customers to that new architecture. That gets to my, kinda my next question. What's sort of the sales proposition? What exactly are customers, what are they buying your product for? What kind of applications are they using your network for that you bring? I think that, you know, from a sales cycle perspective, one of the things, it's been our focus, is really on the user experience. I think what's happened over, you know, the last couple years is more and more companies are realizing that that experience at the edge, a fast experience, a personalized experience, actually has a meaningful impact on their business, their retention. Our ability to do that faster is a differentiator. What we found is, you know, early on, we were very successful in the large enterprise space by delivering that differentiation. Those were some of the earlier customers to adopt an edge platform strategy. I think as we look forward, the areas where there's opportunity is some of the smaller customers, you know, aren't as aware of Fastly, you know, and have not yet sort of adopted our product. As we look to 2022, one of the things we're doing is we're taking our product and packaging, and we're simplifying that into packages that include delivery, the security you need to deploy, you know, for a fixed price. We see that as an opportunity to engage with that next level of customer. It's also an opportunity for us to leverage the channel in delivering, you know, our delivery product to their customers. Okay, great. You, you've covered pretty well in the last couple years. You started right at the infamous network outage. I think I was interviewing Joshua the day that the outage happened. Yes. You, you know, again, recovered very nicely from that. What's different about the company now, and what have you learned from that experience versus what was going on then? Yeah. I mean, I think two things. One is, one of the things that was a real asset to the company when we had the outage was our really strong customer service and reputation we had with our customers. When the outage happened, you know, we were very transparent about what happened. Over 90% of our customers brought traffic back within the month. Our largest customer brought back traffic over the next two or three quarters to where their traffic now exceeds what it was sort of pre-outage. I think what we learned was a number of things in terms of building network resiliency. Again, with this sort of software-first network, we can make these updates on a global basis by updating the software. We certainly were able to build in more safeguards into the network. You know, outages are things that have happened, but we are able to automate and create less opportunity for those to occur. As I said, leveraging, you know, our customer service and our transparency, was really important when we went through that outage that we had in 2021. All right, great. With that, new CEO, talk to us a little bit about the leadership under Todd. Yeah. What can we expect to see differently? What is he bringing to the organization as it matures and so forth? Yeah. How should we think about that? Yeah. I think first and foremost, I think, you know, Todd has really hit the ground running. I think, you know, his experience, you know, leading, you know, the networking business at Cisco, really gave him a really strong background, both from a technology perspective, but also in terms of how the market works and how customers look at the industry. He came in and very quickly is focused around three areas. On the product side, his focus is around building platform unification. You know, we have a delivery component, we have a security portfolio, we have Compute, and we have Observability. Bringing those into sort of a single management console, the single pane of glass, so that it is much easier, a better experience for our consumers. Also easy for them to add and adopt new products if they're all on the same management platform, is one of the initiatives that we're launching this year. The other piece is the pricing and packaging that I spoke about earlier, which is again, packaging up our delivery with the security that customers want to deploy in a configuration that they can deploy without a lot of thought. Being able to add in Compute for a predictable monthly cost, which has been one of the impediments is, if we turn this on, we don't know what it's gonna cost. Launching that in the first half of this year, as a way to accelerate new customer acquisition, reach a segment of customers that we haven't reached today, and really enable the channel motion that we've seen work very well on our web application firewall, but we haven't been able to do on the delivery side. On the go-to-market side, again, sort of leveraging that pricing and packaging around reorganizing the sales team to have very linear alignment between the rep all the way through to customer service around customer segments. Lastly, sort of the operational rigor you would expect someone from, you know, an established company like Cisco around being efficient. You saw that in terms of our outlook for this year. Really running the business on a efficient basis, looking for where there's opportunities for savings, and extreme discipline around what we're targeting in terms of OpEx to actually achieve those results. To follow up on that, when you upgrade things, this, you know, single pane of glass and so forth, how does that get deployed? Is that just new customers? Does everybody get it at once? Then how do you educate the customers? Then when you say you've got the sales sort of segmented by that, that by vertical? Is it by dollar spend per month? How do you have that organized? I think on the first question, you know, be available to all customers. I think the deployment's gonna depend on the customer's personal situation, where they are in their cycle. Some customers have blackout dates. Depends on what components they're using. If they're only using one component, you know, it's certainly less of a benefit than if you're using the portfolio. Obviously, we wanna get everybody on it, so it makes it easier to adopt other components of the portfolio. On the second question, in terms of... What was the second question? On, you mentioned how the sales is organized. Is it by vertical? What does it mean by— It's really more by. Of course, we have a regional, but it's really by size in terms of focusing on really the large enterprise customers, channel support, and the mid-market. All right, great. last year, you came out with your guidance and did very well, exceeded that. Yeah. What does it take this year to get to more of the high end of the range of the guidance? What's sort of baked into your assumptions there? You know, I'll level set, and that's a question I always get is, how did you come up with your guidance? I think, you know, it's important that, you know, we set our guidance based on, you know, what our forecast is, the visibility that we have today, and we have a big piece of our business is usage-based, so that visibility at the beginning of the year is always a little bit challenging. We have a very robust engagement with our customers to come up with that forecast. It really reflects, you know, the number that we have confidence in today that we can achieve. In that number, though, if you look at where there's opportunities for overachievement, particularly around the pricing and packaging, if we see, you know, an accelerated adoption, both by our customers or by the channel with their customers, you know, that's an opportunity for upside because we didn't factor in a significant uplift from that in the first year of launch. That's probably the biggest opportunity. We get a lot of questions about the macroeconomy and the impact on guidance. You know, we're not immune from the macroeconomy, if you look at our growth rates today, it's largely been driven by market share gains. We're relatively small in the space. Even if the broad market is not growing, we're able to gain market share and show growth. Additionally, the efficiency of our network gives us an opportunity, you know, as companies are looking to be more efficient, looking to provide the best possible experience to get as much market share or revenue from their customers. You know, that also could be a lever to actually drive more adoption of our network. Right. Great. Looking at your different product segments, what's driving pricing this year? What's the outlook for pricing in the major segments? Yeah. Excuse me. You know, when it comes to delivery, you know, we've really seen a stabilization in terms of pricing over the last, say, you know, 18 months since I've been here in terms of pricing, from maybe what we've seen before. We've seen fairly small decreases. Typically, when customers do an annual contract, at the end of that contract, there's some re-rate, but it's relatively small. Those tend to be in line with the efficiencies we see in terms of our costs going down. From Moore's Law, we see, you know, dropping in the price of hardware. We see our bandwidth costs going down every year. We just recently, you know, at the end of Q3, renegotiated our bandwidth costs. They tend to move pretty much in tandem. Okay, great. you know, there's always the rise of self-provisioning on the delivery side. You know, the major content providers all are in a lot of the same data centers you're in and, you know, and so forth. How do you. How do you defend us against that? How do you remain relevant with them and continue to have them to use your services versus building it themselves? Yeah. I think first and foremost, we look at, you know, the risk of someone, you know, self deploying, similar to sort of any other competitor, and it's really amount of what value are we adding? Can we add a faster, efficient network? We have a complete suite, portfolio of security products. We have, you know, a Compute and Observability. That being built on the software first and that efficiency allows us to compete very favorably in terms of a cost. We can leverage, you know, our learnings and technology developments and ongoing improvements in efficiency across all of our customers. It's really a matter of adding or reflecting better value, and we believe that we can do that the same way we've done it, you know, in terms of our competitive wins. It's really that same motion in terms of whether you self-deploy or utilize Fastly, and we think we're very well-positioned to offer a comprehensive solution that competes, you know, favorably from a security, speed, and cost perspective. Related to that, what are some examples of types of content or applications that are really well-suited for you that customers seek you out for? What are maybe some that they don't, that you— Yeah. You don't do as well or you're not as well designed for? Yeah. I mean, I think if you look to date, a lot of it may mirror, you know, customers who have really recognized the need for that, you know, strong user experience. If you look at the media space, you know, protecting the brand, delivering, you know, content reliably is really important to those customers. On the commerce side, differentiation in terms of, you know, faster page loads or better recommendations has a meaningful impact on, cart abandonment and overall return from your website. We've seen very strong early success in those spaces. We're starting to see. You know, we announced a win, some wins in the travel industry. I think more and more companies in other industries are gonna start to realize the benefits of having a fast, robust, personalized experience on the web. I think while it's been the largest companies today, I think that drive to more immersive experiences is you're gonna start to see more and more companies move to the edge that aren't there today. You know, today it's been the larger companies. That's where we've had success. I think over time, you will absolutely see smaller companies also come to the edge so that they have a competitive, personalized, fast experience for their customers. Yeah, I think one thing to add to that is you go down the path of our roadmap, Compute@Edge, you know, putting compute resources at the edge will bring a lot more market opportunities in different areas. I mean, last year we had a very interesting win with New Relic to help them work on their Observability solution for software customers on their end. It's just an example that probably two years prior, we may not have thought of, you know, this being a use case. There are industries very random for Compute@Edge. I mean, people would immediately think gaming is a big opportunity, which it is, there's things like, say, process control at a factory automation level. A computer vision is another huge example of that. I think you're gonna see a lot of applications like that we play really well into. We just haven't had that go-to-market motion, if you will, to address it. You mentioned edge, and that's probably one of the most oft spoken words at conferences like this, in this area. What does edge mean to you, and, you know, what are you doing to sell that, and what are customers coming to you for? Yeah. I, you know, I think when we look at edge, you know, it really is a sort of a differentiation from the central cloud in terms of, you know, bringing content security, you know, Compute close to the user. By close to the user, it's really locating it, you know, close to the internet points of presence. You know, that's how you achieve it. Having that data close to the user, you really get that fast experience. One of the things that I think is central to being really successful at the edge is being able to really cache data from the central cloud and de-cache or, you know, deploy that out very efficiently. 'cause that has a big impact on ingress and egress costs as well as how fast your experiences are. That's one thing where I think we offer a meaningfully differentiated experience that plays out in terms of, you know, faster response, you know, lower costs for our customers, and an efficient use of the network. Are you in the right locations? You did a big upgrade last year in a lot of your data centers you need to be in further in different places or do you, or can you solve all these products you're talking about where your network is currently deployed? If you look at our network deployment today, I think across, you know, most of the world, we're deployed where we need to be to support, you know, Europe, the Americas, and the like. There are some locations that are hard to serve where we don't have the presence we would need to have a strong local presence, you know, Taiwan being an example. You know, Akamai has a much more global network in some of those very hard to reach locations. Today though, we cover a very big piece of the market and, you know, as we grow, we will be stepping into, you know, more and more markets over time as the demand plays out. Okay. let's shift gears a little bit and talk about security offering. Tell us about what you offer there and how that fits in with your overall network capabilities and so forth. You know, I think first and foremost, we're focused on the security that you really need as an edge cloud provider. You know, what is that security portfolio? Generally, that portfolio consists of a web application firewall, denial of service protection or DDoS, and Bot Protection. We offer products across all of those. Our web application firewall is best in class. It's maybe the only web application firewall that is run more than 90% of the time in blocking mode, not just reporting mode. It's an exceptionally good product. It came from our Signal Sciences acquisition, a few years ago, and it's now been integrated into our edge platform. On the DDoS, we actually have a really good technology around denial of service protection. We need to package that more completely to make it easier for customers to deploy. We also offer a bot product. That's an area where we are working to continue to enhance and improve our bot detection this year. Great. Do you feel like you have the parts that you need? What else are you looking for, is this more of a build versus buy kinda decision? How do you think about adding those other features that you might need? Yeah. That's a good question. If you look at the, you know, sort of the core technology across the critical security that we have, we have the technology that we need. We don't need to go out and buy or bring in new technology. It's really a lot of packaging or filling in some additional areas around those products. Similarly, with, you look at kind of our emerging product lines, Compute, again, we have the technology to roll that out. That is being sold. We're starting to see a really exciting sort of uptick. It's, you know, nascent revenues today. Similarly, as we start to roll Observability, you know, that's an internal development. Okay. When you're out in the marketplace and you win in the security, you know, what is driving that? You know, what is sort of the reason you're winning over your competitors your product? Yeah. I think the best case to sort of look at that would be on a web application firewall, where there is just a meaningful performance difference in terms of not flagging sort of false positives. We see really great adoption of our web application firewall. We have our web application firewall running at companies that are running a different delivery network, one of our competitor's delivery networks. I would say that's probably the biggest example where we see strength. I would say across the other products, we tend to run them on our own platform with our own delivery. Okay. You know, where does the sales force fit into that, as far as getting more traction on the security side of things? Yeah, I think, you know, there's really two pieces to it. I think first and foremost, on the delivery side, security is part of every sort of conversation. You know, if people are looking to deploy delivery or have delivery and they're looking to expand, having, you know, core security, particularly if it's on the same platform. One of the things, you know, as companies are looking at being more efficient is they're looking closely at their cost structures. You know, having that built into the platform versus having to integrate, you know, multiple security products, you know, is a cost savings. It's important that we have that portfolio on the platform. As we look to sell, a lot of times it is looking at, you know, we follow leads in terms of, you know, security opportunities. As I said, we've frequently sold, you know, our WAF. The other element of really driving sales across security is we do have a good channel motion around our web application firewall today, with the channel selling that in independent of delivery. Our pricing and packaging, what we wanna do is we wanna enable that channel to not just be able to sell security, but to also be able to sell delivery into their customers, into our customers. It's always kinda curious, I think for investors as well, you mentioned that you have a customer that's using your WAF, and they're not using your CDN. To what extent are these sold separately, sold together, and to what extent does a security customer get pulled in to buy the CDN or vice versa? Well, I would say certainly, you know, amongst our delivery customers, we have really high adoption of our security products. We have had certainly instances where a customer not running our delivery, you know, is running our firewall, and we do gain some of the delivery business. You know, what it really, it gets back to our overall expand motion. You know, if we can get into a customer and they can see, you know, the quality of our customer support, how easy our products are to use, and how effective they are, it's very easy to get them to try to adopt additional products. As they do those and try them, then we see the expand motion where we get a bigger share of the traffic or a bigger share of their business in a particular area. I think it is important to be clear on a point here too, though. Our security solution has unseated packaged portfolio motions from other companies. We've been able to segregate that out and win that business and hopefully over time, deliver, you say deliver delivery, but win the delivery side of that business as well. Okay, great. Anybody in the audience have any questions? Maybe talk to us a little about capital priorities for the year. Last year, one of them was that, you know, the upgrades and all on the data centers. How should we think about capital priorities for you? I think, you know, one of the things that, as I said earlier, our architecture allows us to be less capital intensive. Certainly, if you go back over the last couple years, we've had an expansion motion, and built out quite a bit of capacity. We've done a much better job of sort of planning that going forward. You know, sort of integrating our build plans with our sales forecast. What we've seen is, you know, a decline in that capital intensity. We sort of entered 2022, with an expectation that our cash spending on CapEx would be 12%-14% of revenue. As we got to kinda mid-year and a lot of the processes we put in place around planning came into effect, we reduced that to 10%-12% and into the year at about 10%. For 2023, we've adjusted that, and we believe that we'll be spending between 6% and 8%. We've seen a meaningful reduction in terms of the CapEx that we need. That's really bringing it in line with sort of the capital intensity of what our network needs to run. That not only is it a driver of, you know, improving our gross margins, but, you know, as we get more efficient on CapEx, it's a tailwind to our cash flow. The 6%-8% is kind of a run rate going forward. I think in the— And down— In the near to medium term. That's— In the near to medium term, yes. Talk to us about profitability and getting, you know, achieving those kind of goals. Where is that in the guide, and how do we see getting EBITDA positive and moving-? forward? You know, I think that, you know, that's a big priority for Fastly. It was one when I joined, is how do we move from. We've done a really good job historically of kind of, you know, growing expenses in line with revenue. How do we get leverage in the business? That path as you look to, you know, 2023, we see two things, which is we see meaningful improvement in our gross margins. You saw that in the second half of this year. As we move into 2023, you know, we expect to see sequential growth. We expect to exit the year within striking distance of 60% gross margins. As you look at our OpEx, you know, while we're focusing, we're a very focused investment in sales and marketing around quota-carrying sales reps. Overall, we're driving leverage in the business. In 2023, we're moving from an operating loss that's, you know, 18% of revenue down to 10% in 2023. Expect to continue that meaningful improvement in our operating losses going forward to get to profitability. The cash movement, because of the efficiency we see in CapEx, I expect our progress on cash flow to be even more meaningful than what we're seeing in terms of our progress on our operating losses. What are some of the areas that you've found to take some of the cost out of the business? Yeah. I think, you know, in the OpEx side, a lot of it is, it's good discipline and hygiene. We put in place a what I call a robust purchasing process, where we're, you know, actively negotiating with vendors. We have visibility to what our spend is. We've taken a review of, you know, one of the things if you don't have good control is it's very easy for department managers to adopt SaaS solutions. It's a great selling opportunity if you're in sales. Really taking a look at those SaaS applications where we have duplicate applications. Looking at key areas where maybe we have multiple applications, serving a certain function and replacing those with a single application that not only do they drive savings in terms of third-party costs, but they allow us to be a lot more efficient in terms of our own internal resources, meaning we need less people to manage a certain process. Okay, great. Any questions from the audience? All right. Just real quick at the end, what do you think is sort of the most misunderstood about the story and you think investors should really dig into? Yeah. I think, historically we've not done, I think, the best job of explaining our differentiation to our customers, you know, and to the market in terms of how meaningful our software first network is. What impact it can do in terms of providing, you know, faster, more robust experiences. You know, with execution, what that can drive in terms of long-term gross margin accretion. Yep. Okay, great. Well, thanks everybody for being here. Appreciate it. Thanks Ron and Vern. Thank you. We'll go down to the breakout session if anyone wants to continue. All right.