All right. Morning, everybody. My name is Jackson Ader, Enterprise Software Analyst here at KeyBanc Capital Markets. Welcome to the Technology Leadership Forum 2026 edition, second year in Park City or Deer Valley, whichever you prefer, I guess. We are thrilled to have Fastly to kick off our post-keynote, the fireside chat portion of the conference. We've got Rich and Vern here, CFO and head of IR from Fastly. Just a quick reminder for everybody in the room, we're going to run through. I have a bunch of questions for these guys, but if you have questions, feel free to raise your hand. I will do my best to ping people throughout so that you hear me and these two over and over again. Do you guys just mind introducing yourselves and introducing the company, and then we'll get into it? Sure. Rich Wong here, the Chief Financial Officer at Fastly. I've been here for about a year, so this month is actually my one-year anniversary since joining Fastly. My background, this is my third time as a CFO. It's a great place to be, and I joined because I believe in the space we play in. For those who don't know us, we are an Edge Cloud company. Edge Cloud meaning that we basically provide edge services, which is around content delivery, security, and compute observability to our users, where we really partner with the central cloud and customers to speed up the internet and make it faster and more reliable and safe. Hi, I'm Vern Essi. I run the IR practice at Fastly. My background, I started my career on the sell side, equity research analyst, very similar to Jackson here. Not as successful, but certainly. Oh. You escaped. And went to the corporate side to run corp dev and IR functions across a couple of companies in the semiconductor industry for about a decade, maybe a little less, then joined Fastly about five years ago, and have seen it go through a lot of changes and certainly am excited about what's happened over the last 12 months as we've gotten, I think, a really good team in place and starting to see some good momentum around our fundamentals and our strategy. Can we actually start with, Rich, you mentioned it's been a year, but there's been kind of a reset in the leadership of late, and I think that that has been really, not to disparage, but it's been really beneficial to the company and to the stock. Do you guys mind just running through, kind of laying the foundation, who's new, where they came from, and why it's been helpful to the strategy? Sure. And maybe I'll even step back a little bit. I chose to join Fastly because I believe in the product that we have and having the right edge products at the right time. There's a huge transition that's happening on the internet, and what's happening, and the need for an edge provider that has Fastly's capabilities, like we are known to have the better technology. So when you're looking for faster, safer, or more reliable internet, Fastly has the better product among our competitors. Having that better product is great, and then I think that when I think about the market share that we should be having versus what we do have, a lot of it was around execution. So what happened was when I got recruited, Kip Compton was our new CEO. He had been around for about 18 months before that, where he was Chief Product Officer. Under his leadership, you see the breadth of products getting launched. When he joined, we had a single security product, which was our Web Application Firewall, our WAF, and by the time he got promoted to CEO, we had the full suite of security products. We went from one product to five key products, which kind of filled out the WAF portfolio. It's probably important also, I'm sorry to interrupt, is that the WAF product came from an acquisition, too. That's right. The internal development of additional products has been a revelation in terms of- Huge. Yeah. We did Signal Sciences acquisition in 2020, and it took us three, four years to really bring that onto our network. What we do is we operate one network for all of our products. And once we were able to get the Signal Sciences acquisition, the WAF that we acquired into our products, into our network, we were able to leverage that and then build a DDoS product, a Bot Management product, an API Security product, a Client-Side Protection product. Just having that full suite enabled us to really be a true security player versus just a single security product. I was a believer in our new CEO, Kip Compton, who's now kind of been on board for three years. The last year as a CEO, two years prior as a Chief Product Officer. I was also very bullish with Scott Lovett. Scott Lovett joined about, I want to say at the same time, mid-2024. In mid-2024, he really elevated the go-to-market function. Our go-to-market function, because we only had one security product, was purely a CDN kind of sales organization. Didn't have a lot of experience selling security, didn't have a lot of experience around cross-selling. What Scott did was he really upleveled the team, brought in experienced sellers who knew how to sell security. Scott himself came from both. He had previously worked at Akamai, where he did content delivery, but he was at Imperva, where he did security sales. He really knew how to do the cross-selling and security. You see the kind of traction that he's done upleveling the team and bringing in the right leaders who knew how to do that. He changed comp plans. He just revamped the whole organization. If you look at what he did, when he joined, all of 2024, we had a sales and marketing expense. When he ended 2025, he had a smaller sales and marketing expense, but he delivered incrementally $80 million-$90 million more of revenue on a year-over-year basis. Very impressive to have a go-to-market leader who I truly believed in. For me, looking at that transformation that he's done, and the leadership team that Kip has brought in as the leaders, I was just very bullish and just believed in that leadership evolution. I think I promise, I do not consider myself a promotional analyst. The other thing that I think is worth noting on the positive side is that in this market, you can't necessarily separate the content delivery on the edge and the security. There are things that when you talk to customers, you talk to analysts, you talk to vendors, there are some security products that are kind of table stakes. Yeah. There will be RFPs on the content side, that if you don't have a mature DDoS, WAF, and Bot Management solution, you're not in that- 100%. Content RFP. It's like there is some synergistic effects of building out the security that can also help, that we've seen, actually, play out on the content delivery side. Absolutely. I mean, what you're saying completely resonates. If you look at where we were 18 months ago, we basically have had accelerating revenues. The synergies just are really playing out, right? When we're talking to customers, we're not talking about just a CDN product. We're talking about the whole portfolio that we have, and how do we bring that portfolio to our customer base. So you'll see that with kind of rising growth rates where the last quarter, we did 23.3% year-over-year growth. I think the last three quarters we've been north of 20%, right? So, it's basically a very synergistic product. The synergies play out not just on the top line. If you see what we're doing, we basically reported 65.8% gross margins, so the synergies are there. This is record gross margins for Fastly, and you see record operating leverage, right? We had $27 million of operating profit. That was our fourth consecutive quarter of operating profits. We've had six consecutive quarters of free cash flow generation, so you really see the transformation with leadership, you see the transformation in full product build-out. Yeah. Really play out and just make us a real credible, strong player in the space. The execution is beginning to match the product quality that we have. Vern, last foundational question. Anything to add on the most recent quarter? What investors have been asking about, maybe, sources of kudos or pushback from the second quarter before we move on? Yeah. I think on the kudos side, certainly, what you've been discussing. Clearly, I think a lot of people are impressed with what's been happening in our revenue diversity in terms of diversification around security. So that's been definitely one of the bigger highlights. Also, just the momentum on the top line, which I think a lot of people were really excited about. So we've seen a lot of attention there. I think where we've been getting a little bit of pushback is on our customer concentration, which our top 10 is, like, 26% of revenue. We're really proud of the fact that we're able to grow with some of the leading enterprises that use our delivery and security. However, it is sort of getting up to a level where we're starting to notice a little bit of more concern among The Street. We're still feeling very comfortable and confident that we can grow that cohort as well as the other and continue to move forward. I think we also have a lot of praise around the ability to continue to drive the go-to-market function around the cross-selling within these different cohorts, and certainly, our compute revenue it grew 70% year-over-year, or other is what we call it, and that's also generated some excitement in The Street. The customer concentration, you're kind of damned if you do, damned if you don't. Yep. If that number starts going down, you're going to hear about it. Yep. When it goes up, you kind of hear about it, too. It was something that I remember talking to Kip Compton about this. It's like, let's put our arms around these guys and actually really truly engage with our largest customers, keep them around, keep them happy, rather than try and actively not dedicate as much resource. So it's been an intentional thing, where it's like you would like to have better relations and growth with the top 10. But it's like- 100%. It's a double-edged sword every time. Okay, let's- One other thing to add, too, and I apologize, I slipped on this, was net retention. We actually had an NRR on a trailing 12-month basis of 117%, which for us was, I believe, a four-year high. Another huge example of how we've been able to garner a lot of retention and recurring revenue with our customers, so it's exciting. Let's switch to AI. What are all the different ways in which artificial intelligence impacts the business, positive, negative, or otherwise? You want to take that? Yeah. On the AI front, we've obviously seen a lot of inbound interest from our customers on what we call co-innovating on our compute platform, which we put in our other revenue category. What's happened is, I think there's just been an influx of projects around trying to work with LLMs to run agentic workloads through an orchestration layer. We've been involved with conversations along those lines with some customers. We're also seeing a lot of one-off instances of where we're working in conjunction with someone running an LLM to, in some instances, use our storage product to sort out, I think even last year, we talked about the images with Shutterstock. Things along those lines, where we've had interesting programs that have come into play. Where we're seeing the biggest vector of near-term growth in AI right now has been in what we would call Bot Management. We have a product called ContentGuard wrapped around that. On our prepared comments on the call, we talked about one of our wins we can talk about publicly, which was with a French media organization, Le Monde. They're running basically this product called ContentGuard, which basically can detect when agents come in to scrape their network, or it's perhaps an agent working on behalf of a benevolent organization around where they already have a relationship. They can use this product to basically filter whether or not they want to reject the agent or take it in, and also have a monetization motion around that. It's sort of a new era, if you will, with agents coming in, and instead of them being mostly harmful, you can start to get a monetization pathway around that. We're excited about that program. We're seeing a lot more interest around those sort of developments on the bot side with agentic traffic in our customer base. Security is probably the most near-term vector. Of course, we see a little bit of that happening in just plain old delivery, where we're seeing agentic traffic come into our network. Then lastly, on the compute side, as I said, there are a lot of discussions around running compute workloads that are agentic. We are seeing some business there, but it's a little early to tell where there's real momentum and where we'll be in, say, a year from now. It's still very early innings. In the long run, do you think that there is. Because I totally appreciate the fact that a lot of what we would call, I guess, agentic use of the internet, where an agent visits 4,000 sites instead of four for a human. That traffic, though, is not necessarily what customers would consider high-quality traffic that they are willing to pay for. I'm just curious whether there's been any customer feedback on that, only on the content side. Bot Management, and ContentGuard, I completely understand. But anything on the delivery side where customers are seeing an influx in traffic and saying, "This isn't exactly what I'd like to be paying for. It's interesting because the way our delivery products work, we charge a lot of customers based on gigabytes delivered plus requests that comes in. AI traffic just has a lot of requests because it just comes in quite often. It usually tends to be lower gigabytes of traffic delivered. Our customers, I think they're working on their strategies because I think even the AI traffic may not be the ones that convert right away, but it is still visibility traffic for them. They haven't pushed back too much on the AI traffic that's happening. I think what they're trying to really spend time working through is some of the products that we have that helps them figure out what is the good AI traffic versus the bad AI traffic, and that's where Bot Management comes into play. Like the ContentGuard, trying to really work with them to say, "Okay, let's allow all the good AI traffic," because they do know that AI traffic is not all bad traffic. Right. They want exposure. AI is now the new SEO, right? To get that visibility and that brand recognition, I think they know that they have to have an AI strategy that allows them to really get top of funnel for with AI traffic. AI is the new SEO. That is something that other people in my coverage know all too well. Okay. So a little- Technical difficulty. Technical. That is right. Our audio is not coming through. Well, Rich, we will ask you a question while- Sure. We get this figured out with Vern. Oh. I think it's- Hopefully our audio got through. Yeah. I think it's probably worth just touching on the incremental revenue growth and the incremental margin that you're seeing. What impacts do the different segments of the revenue structure are contributing more to the incremental margin? As one segment might outgrow the other in the next year or two, what should we expect for incremental margin? Sure. So what Jackson Ader's referring to is the way we've guided around how we think about the additional operating leverage we should get as a company. What we've talked about is a 65%-80% target for gross margin flow-through, which means for every incremental dollar of revenue we get, we should be flowing through 65%-80% on the gross profit side. On the operating leverage side, we talk about 25%-40%. On a last 12-month basis, we've far surpassed that. Last 12 month for gross profit flow-through, we've had 96%, which is far ahead of the 65%-80%. On the operating leverage side, I think we were in 79% operating leverage flow-through versus the 25%-40%. I would say the product mix and the synergies that we see, having complementary products is very helpful. I also say that a lot of the flow-through is also on the upside that we see in the business. We build our plans, with Q2 results, we had a $10.4 million beat relative to the midpoint of our guide, and having that big of a beat allowed us to really flow through a lot. If you look at the last few quarters, we just had pretty good beats around how we've done. Those beats actually give us a lot of additional operating leverage that surpasses the guide that we've given from the 25%-40%. I would say that having synergistic products, having one sales organization that go to customers and bring the full suite of products really makes us much more efficient and effective as a company. We operate one network, and so when we operate one network, a few of our peers may have multiple networks they have to support. They may have a network for delivery services, and they may have a different network for security. In some cases, they might have three networks for delivery services. With Fastly, we have one network, and that one network supports all of our products. I mentioned Signal Sciences acquisition. They are running on our network, and they are on our infrastructure. The same servers that are providing delivery services are also providing the Web Application Firewall from Signal Sciences acquisition. That just makes us very efficient and very capital. Less capital intensive than our peers. If you look at our capital guide from infrastructure perspective, our capital guide is below what our peers are, and we're supporting a lot of traffic, relatively speaking, and yet we have a much more efficient network. I would say that it's a combination of the upside, the synergistic products, but also having a very single network that provides everything, all the products. One more question, then I will come to the audience, so be thinking about it, Aaron. You guys are decidedly not in the GPU game at this point. You want to tell us why? Yeah. I think for Jackson Ader's question, some of our competitors have built out big slugs of GPU capacity and have contracts in place with some of the LLMs on the behalf of doing that. We are not in the business of what we would describe as building a neocloud. We still believe our best positioning and our best value prop to our customers is to be at the very edge of the cloud, having a very open standard, open cloud platform that can cater to all different levels of innovation. We continue to drive on that philosophy. I think, not to pick on our competitors, but I think if you peel the onion a little bit on the investment that's required to do that, and the return on that investment, it's a tougher business model, I think, than what we at Fastly would want to tackle. I'll speak for Rich Wong here a little bit on that, but I don't know if he would want to sign off on these either. But we do see, in our view, enough business on what we're doing right now, to have a nice foothold and strategic presence in this new AI landscape without having to go out and deploy a lot of capital to build a GPU neocloud to do that. If you think about our compute product, and we talked about compute being the majority of our other. Our other was about $8 million last quarter. The compute resources that are needed, we actually can service those with CPUs. Yeah. If you think about our network and what we have, I think previously we were much more I/O bound and not CPU bound. When we work with our customers on their compute needs, a lot of times we come with our whole platform infrastructure viewpoint and say, "Hey, what are you guys trying to do? How we can help?" What we find is that our existing CPUs in the Edge Cloud can do what they need. For us, it's much more efficient, cost-effective, ROI positive from a capital perspective to leverage the existing network we have, where we might have stranded CPU capacity and we can leverage that, than go into the GPU side. Okay. Aaron, go ahead. Yeah, just specifically on the CapEx refresh for these new AI and agentic workloads, in terms of network, router, storage, memory, hardware upgrades, what's going to be necessary? You've got thousands of servers out there. What's the average life and when do you see the big refresh coming, and how will that affect the CapEx? I'll just summarize the question. We're talking about CapEx refreshes. What are going to be the impacts of those refreshes maybe in the coming years, and then any impact from pricing- Yep. That we've seen on components. Good question, Aaron. Thank you for that question. I would say that, I talked about operating one network. I think operating one network actually helps us quite a bit. Our one network that we have is a very software-configured network. We're using a lot of powerful off-the-shelf products that tend to really be powered by the software we have on hand that makes us much more efficient from a network perspective. I think just earlier this year, we went from a five-year CapEx depreciation cycle to six years because we do see that the equipment that we have in place actually have been lasting longer and actually gets us closer to our peers around how they depreciate servers on that front. I would say that because of our capital efficiency, we've been able to use our servers much more efficiently and effectively around a utilization perspective, which is why you see our gross margins being where they are, 66% at the last quarter. I think from a refresh cycle, I think that we look at it every single. We're looking at it constantly, our infrastructure, and making sure that it can support our customer needs, and we build enough capacity in there to really make sure that we can support upside on the revenue. Most of our infrastructure CapEx that we're spending this year, we're launching new POPs. I think we talked about in Latin America, we've talked about some in Southeast Asia around getting more international support in regions that we haven't been as strong from a POP perspective. But I think for us, we're much more efficient from a maintenance CapEx perspective, because we're using more off-the-shelf servers that are powerful. They've been lasting longer. In terms of, Jackson, you added onto the question around the component shortages we're seeing and what does that mean? I think the beauty here is that we watch it pretty constantly. I think for all of 2026, we placed our order in the end of 2025. We were able to get a lot of those component purchases in the first half of the year. So what you'll see with our capital spend is that we are front-end loaded because we saw that component shortage happening early, and we just basically placed the full order in place. We're generally pretty good. We've already started placing orders for 2027. But we feel good with the guide that we provided, which is 10%-12% infrastructure CapEx as a percentage of revenue. And I think that's below what our peers are spending on infrastructure CapEx. I have a quick follow-up. You mentioned right off the bat, this is your third time as a CFO. Your prior CFO experience immediately, I think before Fastly, very SaaS-like, seat-based, right? Very predictable. Yes. This is your first foray into a consumption model. You're a year in. How's it going? How should we be thinking about sources of upside in the quarters or in the years? Yep. In a very different model as CFO as where you came from? Yeah. It is completely right. Actually, my last company, we were very SaaS-based. I had revenue predictability that was so easy because before I started a quarter, I knew where it was going to be. I would say that we have changed a lot over the last 12- 18 months. I think one of the beauties with having Scott here, Scott was also really big and instrumental on getting commits up. If you look at our RPO growth, our RPO growth is up 38% year- on- year. Our current RPO is up 44% year- on- year. That additional commit gives us a lot more visibility, shifting from a consumption-based business into a little bit more predictability. I would love to have commits more. We are still continuing to build that. I would say that, for me, over the last 12 months being here, I am so excited about the momentum that we are building as a company. I would say the momentum around the product velocity. Seeing the number of launches that we have had and being able to build out that product portfolio on the security side, some of the stuff that we are doing on the compute side. We have a lot of other projects going on in the company that I am pretty excited about that we cannot talk about yet. I would say that we have a number of initiatives we are really excited about. I would say that bringing in seasoned leaders has been really good. We talked about the top 10 growing pretty fast. We are very excited about that. We brought in Joan Jenkins, who is our Chief Marketing Officer. She started about four or five months ago, and I think being able to build out that brand and being able to attract new logos beyond that top 50 or top 100 customers that require performance is really key, too. All right. Great. We are out of time. Rich, Vern, thank you very much. Great start to the conference. Thank you. Yeah. Thank you. Thanks, everybody. Thank you, everyone. Thanks, guys.