You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q includes forward-looking statements based upon current plans, expectations, and beliefs that involve risks and uncertainties as described under the heading Special Note Regarding Forward-Looking Statements following the Table of Contents of this Quarterly Report on Form 10-Q. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and in other parts of this Quarterly Report on Form 10-Q. Our fiscal year ends on December 31. As used herein, “Fastly,” “we,” “our,” “the Company,” and similar terms include Fastly, Inc. and its subsidiaries, unless the context indicates otherwise. Overview Organizations around the world are more dependent on the quality of digital experiences they provide than ever before. As the internet approaches an inflection point where automated, artificial intelligence (“AI”)-driven traffic increases demands on infrastructure, Fastly is the essential platform to deliver resilient, highly performant, always-on software and services at global scale. The edge cloud is a category of Infrastructure as a Service (“IaaS”) that enables software engineers to build, secure, and deliver digital experiences at the edge of the Internet. Our platform represents the convergence of the Content Delivery Network (“CDN”) with functionality that has traditionally been delivered by hardware-centric appliances such as Application Delivery Controllers (“ADC”), Web Application Firewalls (“WAF”), API Management, Bot Detection, Distributed Denial of Service (“DDoS”), Web Application and API Protection (“WAAP”), and infrastructure protection. Processing at the edge is an ideal way to handle highly dynamic and time-sensitive data, especially when performance matters. Organizations of all sizes, including Fortune 500 companies that run 24/7 operations, leverage our edge cloud platform for a diverse range of critical functions that benefit from processing at the edge, including enhancing user experience, scaling agentic AI workloads, and powering core commerce capabilities to drive conversion and customer success. The edge cloud complements data center, central cloud, and hybrid solutions, and is critical for responsive, safe, and secure AI-centric experiences. Fastly focuses holistically on the edge cloud from developer creation to end-user experience, with our global footprint and integrated security core to our platform. Our platform is poised to capitalize on the rise of agentic AI, where autonomous agent consumption is driving the bulk of internet traffic. Fastly is uniquely positioned – and has laid the groundwork – to lead the intelligence fabric that helps enterprises adapt to this shift. We are capturing this opportunity by supporting edge workloads and AI traffic management, allowing organizations to optimize AI-driven services alongside human interactions. We play a unique role in helping enterprises optimize and accelerate interactions with authorized AI agents and blocking abuse, powering their differentiation and AI-fueled innovation. We focus our direct selling efforts on expanding our customers’ use of our platform, which includes companies that are exhibiting significant growth. We engage with and support these customers with our field sales representatives, account managers, and technical account managers who focus on customer satisfaction and drive expansion of their usage of our platform and products. These teams work with technical and business leaders to help our customers’ end users receive the best possible digital experience, while also lowering our customers’ total cost of ownership. These direct selling efforts are reflected by the revenue generated by our large customers. Our Last-Twelve Months Net Retention Rate (“LTM NRR”) metric also measures the revenue growth from existing customers attributable to increased usage of our platform and features, and purchase of additional products and services. For additional details on our key metrics, refer to the “Key Business Metrics” section. Factors Affecting Our Performance We are focused on continuing to attract new customers and expanding our relationship with existing customers by enhancing our product experience, investing in technology, and leveraging our partner ecosystem. Our customer base ranges from emerging companies to large enterprises undergoing digital transformation across diverse industries and verticals. Utilizing our direct sales force, we have multiple selling points within organizations to acquire new customers and increase 29 usage from our existing customers. We will continue to increase our discretionary marketing spend, including account-based, targeted demand generation and brand spend, to drive the effectiveness of our sales teams. As a result, we expect our total operating expenses to increase as we continue to expand. A key component of our cost-efficient customer acquisition strategy is developer outreach, as developers often advocate for the adoption and promotion of our platform within their organizations and across the broader developer community. We will also continue to build out a single, unified platform, simplify customer onboarding and service usage, and simplify our pricing and packaging. This will require us to dedicate significant resources to further develop the market for our platform and differentiate our platform from competitive products and services. We will also need to expand, retain, and motivate our sales and marketing personnel in order to target our sales efforts at larger enterprises and senior management of these potential customers. We emphasize retaining our customers and expanding their usage of our platform and adoption of our other products. Customers often begin with smaller deployments of one of our products and then expand their usage over time. Our platform includes a variety of offerings across Network Services, Security, and Other product lines, including Compute and Observability. As our customers mature, we assist them in expanding their use of our platform, including the use of additional offerings beyond content delivery or security. In addition, given that customer acquisition costs are incurred largely for acquiring and initial onboarding, we may gain operating leverage to the extent that existing customers expand their use of our platform and products. Our ability to retain customers and expand their usage could be impaired for a variety of reasons, including a customer moving to another provider or reducing usage within the term of their contract. Even if our customers expand their usage of our platform, we cannot guarantee that they will maintain those usage levels for any meaningful period of time or that they will renew their commitments. We intend to continue expanding our efforts to attract customers outside of the United States by augmenting our sales teams and strategically increasing our presence in the number of markets in select international locations. Our international expansion, including our global sales efforts, continues to add increased complexity and cost to our business. This requires us to continue to expand our sales and marketing capabilities outside of the United States, increase the number of markets we have a presence in around the world to support our customers, and manage the administrative aspects of a global organization, each of which place a strain on our business and culture. In addition, our bandwidth costs are higher in markets outside of the United States and Europe, which may impact our gross margins. Many jurisdictions have enacted laws on data localization, data sovereignty, and cross-border data transfers, and the evolving enforcement and interpretation of such laws has created uncertainty regarding data stored abroad and transferred across borders, which could impact customer growth and acquisition for customers and potential customers conducting business in Europe and elsewhere outside of the United States. In addition, we cannot be certain what actions the United States or another country’s government may take with respect to certain of our customers that may adversely affect our ability to do business with our customers that operate in China, target China as a market or that have strong business ties to China, and any such governmental action could have a negative impact on our business. For additional details, refer to the section titled “Risk Factors.” We are closely monitoring various global conflicts and developments, including, but not limited to, the conflict between Russia and Ukraine, conflicts in the Middle East, including the recent military conflict involving Iran, the United States, and Israel, and their global impacts. While the conflicts are still evolving and the outcomes remain highly uncertain, we do not believe these or other conflicts will have a material impact on our business and results of operations. We do not have Points of Presence (“POPs”) in Russia, Ukraine, Iran, or Israel. However, some threat actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we, the third parties upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services. If such conflicts continue or worsen, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted. We must continue to invest in our platform and network infrastructure to maintain our position in the market. We expect our revenue growth to be dependent on an expanding customer base and continued adoption of our edge cloud delivery, security, and other products and services. In anticipation of winning new customers and staying ahead of our customers’ needs, we plan to continue to invest in order to expand the scale and capacity of our software-defined modern network. This could result in increased network service provider fees, which could adversely affect our gross margins if we are unable to offset these costs with revenue from new customers and increase revenue from existing customers. Our customers require constant innovation within their own organizations and expect the same from us. Therefore, we will continue to invest in resources to enhance our development capabilities and introduce new products and features on our platform. We believe that investment in research and development will contribute to our long-term growth but may also negatively impact our short-term profitability. 30 Developers use our platform to build custom applications and require a state-of-the-art infrastructure to test and run these applications. We will continue to invest in our network infrastructure by strategically increasing our POPs. We also anticipate making investments in upgrading our technology and hardware to continue providing our customers a fast and secure platform. Our gross margins and operating results are impacted by these investments. As we continue to experience growth, we may face challenges managing adequate server capacity in our POPs due to potential component delays, shortages, price increases, hardware efficiencies gained through internal development, or any potential changes in server architecture, including due to technological advances or obsolescence. If we have server asset levels in excess of forecasted network capacity needs, we have in the past and may need to continue to write-down or write-off server assets. Conversely, if we underestimate network capacity needs, we may in future periods be unable to meet demand and be required to incur higher costs to secure necessary parts and components of our servers. In addition, international trade disputes may further disrupt or delay our supply chain for these components or lead to pricing increases. For example, the United States has imposed or indicated an intention to impose tariffs on certain countries which may lead to retaliatory actions such as counter-tariffs and increase production costs and disruptions in our supply chain. The United States and other jurisdictions have also leveraged various trade and value chain requirements, including on environmental and social criteria, which may make sourcing more costly, require us to change suppliers, or otherwise adversely impact our operations. Further, it is possible that government policy changes, including policy changes made with little to no advance notice, and related uncertainty about policy changes could increase market volatility. If our supply of certain components is further disrupted or delayed, there can be no assurance that we will be able to obtain adequate replacements for the existing components or that supplies will be available on terms and prices that are favorable to us, if at all. In the event that there are errors in software, failures of hardware, damages to a facility or misconfigurations of any of our services, whether caused by our own error, security breaches, third-party error, or natural disasters, we could experience lengthy interruptions in our platform availability as well as delays and additional expenses in arranging new facilities and services. In addition, there can be no assurance that we are adequately prepared for unexpected increases in bandwidth demands by our customers, particularly when we or our customers experience cyber-attacks. The bandwidth we have contracted to purchase may become unavailable for a variety of reasons, including service outages, payment disputes, network providers going out of business, natural disasters, networks imposing traffic limits, or governments adopting regulations that impact network operations. Key Business Metrics We use the following key metrics presented in the table below to evaluate our business, measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. The calculation of these key metrics below may differ from other similarly titled metrics used by other companies, analysts, or investors. As of June 30, 2026 2025 Large Customer Count 624 622 Last-Twelve Months Net Retention Rate (“LTM NRR”) 117.2 % 104.4 % Our definition of a customer consists of identifiable operating entities with which we have a billing relationship in good standing and which we have recognized revenue from during the reporting period, which differs from the definition used for purposes of assessing concentration of credit risk. An identifiable operating entity is defined as a company, a government entity, or a distinct business unit of a larger company that has a relationship with us through direct sales or through one of our reseller partners where charges are identified on an end-customer basis. We may treat separate subsidiaries, segments, divisions, or business units of a single organization that use our platform as unique customers where they have distinct account identifiers. In cases where charges are identified through a reseller partner rather than on an end-customer basis, we would count the reseller as a single customer in our customer count. Our customer groupings may be impacted by changes to our customers’ business, including any impact from acquisition activities, internal business reorganizations leading to operational and decision-making changes, and corporate structure changes such as subsidiary consolidation and reorganization that may arise in the future. Large Customer Count Historically our revenue has been driven primarily by a subset of our customers, our large customers, who have leveraged our platform substantially from a usage standpoint. We believe that the recruitment and cultivation of large customers is critical to our long-term success. Our large customer count is defined as customers with annualized current quarter revenue in excess of $100,000. This is calculated by taking the revenue we recognized for each customer in the current quarter and multiplying it by four. As of June 30, 2026, we had 624 of such large customers which generated 94% of the total annualized current quarter revenue for our total customers for the three months ended June 30, 2026. As of June 30, 2025, we had 622 of 31 such large customers which generated 94% of the total annualized current quarter revenue for our total customers for the three months ended June 30, 2025. We no longer consider total customer count to be a key business metric. Management believes large customer count, which we continue to disclose, is a more appropriate indicator of the performance of our business, as a majority of our revenue is driven by large customers. Management no longer utilizes total customer count to manage or monitor the performance of our business. Last-Twelve Months Net Retention Rate Our ability to generate and increase our revenue is also dependent upon our ability to retain our existing customers. LTM NRR allows us to track customer retention which demonstrates the stickiness of our edge cloud platform. Our LTM NRR removes some of the volatility that is inherent in a usage-based business model from the measurement of the NRR metric. We calculate LTM NRR by dividing the total customer revenue for the prior twelve-month period (“prior 12-month period”) ending at the beginning of the last twelve-month period (“LTM period”) minus revenue contraction due to billing decreases or customer churn, plus revenue expansion due to billing increases during the LTM period from the same customers by the total prior 12-month period revenue. For the trailing twelve months ended June 30, 2026 and 2025, our LTM NRR was 117.2% and 104.4%, respectively. Remaining Performance Obligations (“RPO”) RPO represent future committed revenue for periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied. As of June 30, 2026, the aggregate amount of the transaction price in our contracts allocated to RPO that were unsatisfied or partially unsatisfied was $340.9 million. Key Components of Statement of Operations Revenue We derive our revenue primarily from usage-based fees earned from customers using our platform. The majority of our customers choose to utilize our platform for Network Services, for which we charge fees based on their committed or actual use of our platform, as measured in gigabytes and requests. Many of our customers generate billings in excess of their minimum commitment. We also earn fixed-rate recurring revenue from Security and Other products and services, including Compute and Observability, as well as professional and other services, such as implementation, account management and enhanced customer support. We charge a flat one-time or recurring monthly fee depending on the additional products and services selected. Typically, the term of our contracts with customers is 12 months and includes a minimum monthly billing commitment in exchange for more favorable pricing terms. In addition, customers can sign up online by providing their credit card information and agreeing to a minimum monthly fee. Our usage-based fees earned from customers using our platform are generally billed in arrears. Our security products are primarily annual subscriptions that are billed in advance. Many customers have tiered usage pricing which reflects discounted rates as usage increases. For most contracts, usage charges are determined on a monthly basis based on actual usage within the month and do not impact usage charges within any other month. Our larger customers often enter into contracts that contain minimum billing commitments and reflect discounted pricing associated with such usage levels. The majority of our revenue is usage based and changes in usage by our largest customers can create volatility in our revenue. We receive a substantial portion of our revenue from a limited number of customers and within a limited number of industries, such as media and entertainment. The length of our sales cycles, from initial evaluation to payment, can range from several months to well over a year and can vary substantially from customer to customer. Similarly, the onboarding and ramping process with new as well as existing large customers with new business can take several months and can be subject to delays for unanticipated reasons. The timing of new revenue from our sales efforts and changes in usage by our largest customers can make revenue difficult to predict. We report our revenue by three product lines: Network Services, Security, and Other. Network Services include solutions designed to improve performance of websites, apps, application programming interfaces (“APIs”), and digital media. Security includes products designed to protect websites, apps, APIs and users. Other includes Compute solutions that allow 32 developers to build and deploy modern web applications on our edge cloud platform, and Observability solutions that provide real-time logs, data and metrics streamed from our edge platform for actionable insights. We define United States revenue (“U.S. revenue”) as revenue from customers that have a billing address in the United States, and we define international revenue as revenue from customers that have a billing address outside of the United States. Cost of Revenue and Gross Margin Cost of revenue consists primarily of fees paid to network providers for bandwidth and to third-party network data centers for housing servers, also known as colocation costs. Cost of revenue also includes employee costs for network operation, build-out and support and services delivery, network storage costs, cost of managed services and software-as-a-service, depreciation of network equipment used to deliver services, and amortization of network-related internal-use software. Our arrangements with network service providers require us to pay fees based on bandwidth use, in some cases subject to minimum commitments, which may be underutilized. Over the long term we expect cost of revenue to decrease as a percentage of revenue as we continue to drive efficiencies in our operations. However, our cost of revenue may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses. Our gross margin has been and will continue to be affected by a number of factors, including utilization of our network, the timing of our investments in the expansion of our network, which can increase depreciation and colocation costs in advance of expected demand, our ability to manage our network service providers and cloud infrastructure-related fees, the timing of amortization of capitalized software development costs, changes in personnel costs to provide customer support and operate the network, and customer pricing. Over the long term we expect gross margin to increase as we continue to drive efficiencies in our operations and increase our revenue. However, our gross margin may fluctuate from period to period. Research and Development Research and development expenses consist primarily of personnel costs, including salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include cloud infrastructure fees for development and testing and an allocation of our general overhead expenses. We capitalize the portion of our software development costs that meet the criteria for capitalization. We continue to focus our research and development efforts on adding new features and products including new use cases, improving the efficiency and performance of our network, and increasing the functionality of our existing products. Over the long term we expect our research and development expenses to decrease as a percentage of our revenue. However, our research and development expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses. Sales and Marketing Sales and marketing expenses consist primarily of personnel costs, including commissions for our sales employees, salaries, benefits, bonuses, and stock-based compensation. Sales and marketing expenses also include third-party commission costs, expenditures related to advertising, marketing, our brand awareness activities, bandwidth costs for free trial users, costs related to our customer events, including our customer conferences, professional services fees, amortization of our intangible assets, and an allocation of our general overhead expenses. We focus our sales and marketing efforts on generating awareness of our platform and products, creating sales leads, and establishing and promoting our brand, both domestically and internationally. Over the long term, we expect our sales and marketing expenses to decrease as a percentage of our revenue. However, our sales and marketing expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses. General and Administrative General and administrative expenses consist primarily of personnel costs, including salaries, benefits, bonuses, and stock-based compensation for our administrative support personnel. General and administrative expenses also include costs related to legal and other professional services fees, an allocation of our general overhead expenses, credit losses, and acquisition-related costs. In the near term, we expect to continue to incur costs associated with supporting the growth of our business, including international expansion, but expect these costs to decrease as a percentage of our revenue over the long term as we continue to 33 drive efficiencies in our operations. However, our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses. Other Income and Expenses Our interest income consists primarily of interest earned on our cash, cash equivalents, and investments. Our interest expense consists primarily of the amortization of discount, coupon interest expense, and debt issuance costs associated with our debt obligations. Our other expense, net, consists primarily of foreign currency transaction gains and losses. Income Taxes Our income tax expense (benefit) consists primarily of income taxes in certain foreign jurisdictions where we conduct business and state minimum income taxes in the United States. We currently maintain a full valuation allowance on our U.S. Federal and state net deferred tax assets. We expect to maintain this valuation allowance for the foreseeable future. Results of Operations The following tables set forth our results of operations for the period presented: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Condensed Consolidated Statement of Operations: Revenue $ 183,317 $ 148,709 $ 356,338 $ 293,183 Cost of revenue 67,366 67,593 132,206 135,269 Gross profit 115,951 81,116 224,132 157,914 Operating expenses: Research and development 42,071 42,221 84,043 79,650 Sales and marketing 56,735 51,100 111,849 100,413 General and administrative 31,578 24,323 66,568 52,558 Impairment expense — 415 — 415 Total operating expenses 130,384 118,059 262,460 233,036 Loss from operations (14,433) (36,943) (38,328) (75,122) Interest income 2,842 3,084 5,769 6,059 Interest expense (3,348) (3,164) (6,654) (6,337) Other (expense) income, net (400) 39 (780) (41) Loss before income taxes (15,339) (36,984) (39,993) (75,441) Income tax expense (benefit) 252 557 (3,878) 1,248 Net loss attributable to common stockholders $ (15,591) $ (37,541) $ (36,115) $ (76,689) 34 The following tables set forth our results of operations for the period presented as a percentage of our revenue: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Condensed Consolidated Statements of Operations, as a percentage of revenue:* Revenue 100 % 100 % 100 % 100 % Cost of revenue 37 45 37 46 Gross profit 63 55 63 54 Operating expenses: Research and development 23 28 24 27 Sales and marketing 31 34 31 34 General and administrative 17 16 19 18 Impairment expense — — — — Total operating expenses 71 78 74 79 Loss from operations (8) (23) (11) (25) Interest income 1 2 2 2 Interest expense (2) (2) (2) (2) Other (expense) income, net — — — — Loss before income taxes (9) (23) (11) (25) Income tax expense (benefit) — — (1) — Net loss attributable to common stockholders (9) % (23) % (10) % (25) % __________ * Columns may not add up to 100% due to rounding. Revenue Three months ended June 30, Six months ended June 30, 2026 2025 % Change 2026 2025 % Change (in thousands) (in thousands) Network Services $ 133,897 $ 114,877 17 % $ 260,134 $ 228,106 14 % Security 41,723 29,267 43 % 80,485 55,702 44 % Other 7,697 4,565 69 % 15,719 9,375 68 % Total revenue $ 183,317 $ 148,709 23 % $ 356,338 $ 293,183 22 % Percentage of revenue: Network Services 73 % 77 % (4) % 73 % 78 % (5) % Security 23 % 20 % 3 % 23 % 19 % 4 % Other 4 % 3 % 1 % 4 % 3 % 1 % Revenue was $183.3 million for the three months ended June 30, 2026, compared to $148.7 million for the three months ended June 30, 2025, an increase of $34.6 million, or 23%. Revenue was $356.3 million for the six months ended June 30, 2026, compared to $293.2 million for the six months ended June 30, 2025, an increase of $63.1 million, or 22%. During the three and six months ended June 30, 2026 and 2025, our revenue was primarily generated from transactions with existing customers, as revenue from new customers contributed less than 10% of our revenue. The proportion of the revenue contribution between new and existing customers is consistent with prior periods and typical customer behavior as customers tend to contribute more revenue over time as their use of the platform increases. The remainder of our revenue was generated by our other products and services, including support and professional services. Network Services revenue was $133.9 million for the three months ended June 30, 2026, compared to $114.9 million for the three months ended June 30, 2025, an increase of $19.0 million, or 17%. The increase in Network Services revenue was 35 primarily driven by growth in usage from existing customers. Security revenue was $41.7 million for the three months ended June 30, 2026, compared to $29.3 million for the three months ended June 30, 2025, an increase of $12.4 million, or 43%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue. Other revenue was $7.7 million for the three months ended June 30, 2026, compared to $4.5 million for the three months ended June 30, 2025, an increase of $3.2 million, or 69%. The increase in Other revenue was primarily driven by further adoption of our Compute solutions. Network Services revenue was $260.1 million for the six months ended June 30, 2026, compared to $228.1 million for the six months ended June 30, 2025, an increase of $32.0 million, or 14%. The increase in Network Services revenue was primarily driven by growth in usage from existing customers. Security revenue was $80.5 million for the six months ended June 30, 2026, compared to $55.7 million for the six months ended June 30, 2025, an increase of $24.8 million, or 44%. The increase in Security revenue was primarily driven by an increase in Next-Gen WAF revenue. Other revenue was $15.7 million for the six months ended June 30, 2026, compared to $9.4 million for the six months ended June 30, 2025, an increase of $6.3 million, or 68%. The increase in Other revenue was primarily driven by further adoption of our Compute solutions. Cost of Revenue Three months ended June 30, Six months ended June 30, 2026 2025 % Change 2026 2025 % Change (in thousands) (in thousands) Cost of revenue $ 67,366 $ 67,593 — % $ 132,206 $ 135,269 (2) % Cost of revenue was $67.4 million for the three months ended June 30, 2026 compared to $67.6 million for the three months ended June 30, 2025, a decrease of $0.2 million, or 0.3%. The decrease was primarily due to a $2.6 million decrease in depreciation expense primarily due to a change in the useful life of our servers as well as a $2.5 million decrease in intangible asset amortization expense due to fully amortized assets. The decrease was partially offset by a $2.6 million increase in colocation costs, a $1.4 million increase in software costs, and a $0.9 million increase in personnel-related costs. Cost of revenue was $132.2 million for the six months ended June 30, 2026 compared to $135.3 million for the six months ended June 30, 2025, a decrease of $3.1 million, or 2%. The decrease was primarily due to a $6.2 million decrease in depreciation expense primarily due to a change in the useful life of our servers as well as a $5.0 million decrease in intangible asset amortization expense due to fully amortized assets. The decrease was also due to a $1.6 million decrease in bandwidth costs, and a $0.4 million decrease in equipment purchases. The decrease was partially offset by a $4.4 million increase in colocation costs, a $2.6 million increase in software costs, a $1.9 million increase in personnel-related costs, a $0.8 million increase in amortization of capitalized software costs, and a $0.8 million increase in stock-based compensation expenses. Gross Profit and Gross Margin Three months ended June 30, Six months ended June 30, 2026 2025 % Change 2026 2025 % Change (in thousands) (in thousands) Gross profit $ 115,951 $ 81,116 43 % $ 224,132 $ 157,914 42 % Gross margin 63 % 55 % 8 % 63 % 54 % 9 % Gross profit was $116.0 million for the three months ended June 30, 2026 compared to $81.1 million for the three months ended June 30, 2025, an increase of $34.9 million, or 43%. Gross margin was 63% for the three months ended June 30, 2026 and 55% for the three months ended June 30, 2025, an increase of 8 percentage points. The increase in gross margin was driven by revenue growth during the three months ended June 30, 2026 combined with relatively flat cost of revenue. Gross profit was $224.1 million for the six months ended June 30, 2026 compared to $157.9 million for the six months ended June 30, 2025, an increase of $66.2 million, or 42%. Gross margin was 63% for the six months ended June 30, 2026 compared to 54% for the six months ended June 30, 2025, an increase of 9 percentage points. The increase in gross margin was driven by revenue growth during the six months ended June 30, 2026 combined with the decreases in cost of revenue. 36 Operating Expenses Three months ended June 30, Six months ended June 30, 2026 2025 % Change 2026 2025 % Change (in thousands) (in thousands) Research and development $ 42,071 $ 42,221 — % $ 84,043 $ 79,650 6 % Sales and marketing 56,735 51,100 11 % 111,849 100,413 11 % General and administrative 31,578 24,323 30 % 66,568 52,558 27 % Impairment Expense — 415 (100) % — 415 (100) % Total operating expenses $ 130,384 $ 118,059 10 % $ 262,460 $ 233,036 13 % Percentage of revenue: Research and development 23 % 28 % (5) % 24 % 27 % (3) % Sales and marketing 31 % 34 % (3) % 31 % 34 % (3) % General and administrative 17 % 16 % 1 % 19 % 18 % 1 % Research and Development Research and development expenses were $42.1 million for the three months ended June 30, 2026 compared to $42.2 million for the three months ended June 30, 2025, a decrease of $0.1 million, or 0.4%. The decrease was primarily due to a $0.7 million decrease in software costs. The decrease was partially offset by a $0.3 million decrease in capitalized software and a $0.3 million increase in personnel-related costs. Research and development expenses were $84.0 million for the six months ended June 30, 2026 compared to $79.7 million for the six months ended June 30, 2025, an increase of $4.3 million, or 6%. The increase was primarily due to a $3.4 million increase in personnel-related costs, a $1.4 million decrease in capitalized software, and a $1.3 million increase in stock-based compensation expense. The increase was partially offset by a $1.4 million decrease in software costs as well as a $0.6 million decrease in corporate costs. Sales and Marketing Sales and marketing expenses were $56.7 million for the three months ended June 30, 2026 compared to $51.1 million for the three months ended June 30, 2025, an increase of $5.6 million, or 11%. The increase was primarily due to a $2.2 million increase in stock-based compensation expense, a $1.7 million increase in third-party commission costs, a $1.6 million increase in personnel-related costs including commission expense, and a $0.6 million increase in marketing-related expenses. The increase was partially offset by a $0.3 million decrease of corporate costs as well as a $0.3 million decrease in software costs. Sales and marketing expenses were $111.8 million for the six months ended June 30, 2026 compared to $100.4 million for the six months ended June 30, 2025, an increase of $11.4 million, or 11%. The increase was primarily due to a $4.8 million increase in stock-based compensation expense, a $4.7 million increase in personnel-related costs including commission expense, a $2.4 million increase in third-party commissions, and a $0.7 million increase in marketing expenses. The increase was partially offset by a $0.9 million decrease in software costs, as well as $0.3 million decrease in travel and entertainment costs. General and Administrative General and administrative expenses were $31.6 million for the three months ended June 30, 2026 compared to $24.3 million for the three months ended June 30, 2025, an increase of $7.3 million, or 30%. The increase was primarily due to a $6.3 million increase in stock-based compensation expense, a $1.2 million increase in personnel-related costs, and a $1.0 million increase in corporate costs. The increase is partially offset by $0.6 million of tax-related benefits during the three months ended June 30, 2026 and a $0.2 million decrease in tax-related expenses, as well as a $0.4 million decrease in professional fees. General and administrative expenses were $66.6 million for the six months ended June 30, 2026 compared to $52.6 million for the six months ended June 30, 2025, an increase of $14.0 million, or 27%. The increase was primarily due to a $11.3 million increase in stock-based compensation expense, a $2.1 million increase in personnel-related costs, a $1.0 million increase in corporate costs, and a $0.7 million increase in executive transition costs. The increase was partially offset by a $0.8 million decrease in professional fees, and $0.6 million of tax-related benefits during the six months ended June 30, 2026. 37 Income Taxes Three months ended June 30, Six months ended June 30, 2026 2025 % Change 2026 2025 % Change (in thousands) (in thousands) Income tax expense (benefit) $ 252 $ 557 (55) % $ (3,878) $ 1,248 (411) % Income tax expense was $0.3 million for the three months ended June 30, 2026 compared to $0.6 million for the three months ended June 30, 2025, a decrease of $0.3 million. The Company continues to maintain a full valuation allowance in the U.S., and the tax expense for the periods were primarily due to foreign tax expense. Income tax benefit was $3.9 million for the six months ended June 30, 2026 compared to income tax expense of $1.2 million for the six months ended June 30, 2025, a decrease of $5.1 million. The decrease was primarily due to the recognition of a previously unrecognized tax benefit of $4.3 million resulting from the lapse of the applicable statute of limitations in the UK. The Company continues to maintain a full valuation allowance in the U.S. and the tax expense for the periods were primarily due to foreign tax expense. Liquidity and Capital Resources As of June 30, 2026, we had cash, cash equivalents, and marketable securities totaling $337.5 million. Our cash, cash equivalents, and marketable securities primarily consisted of U.S. government money market funds, investment-grade commercial paper, corporate notes and bonds, U.S. treasury securities, municipal bonds, and certificates of deposit. As of June 30, 2026, we did not have any marketable securities classified as non-current. To date, we have financed our operations primarily through equity issuances, payments received from customers, the net proceeds we received through sales of our debt securities, and proceeds from our convertible notes. Our principal uses of cash in the near term have primarily been around funding our operations, our capital expenditures, business acquisitions, and investments and fulfilling our debt and contractual commitments. We have also entered into longer term commitments to support our operations, including arrangements to directly lease and operate our infrastructure assets and colocation facilities. We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities. We believe that our cash and cash equivalents balances, available borrowing capacity under our credit facility, and the cash flows generated by our operations, net of the cash outflows used in our operations, will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. We have generated losses from operations in the past and may continue to incur operating losses for the foreseeable future due to the investments and strategic initiatives we intend to make to grow our business. Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain. We may also use our cash to buy back any outstanding debt on our convertible notes or on any future equity issuances. As of June 30, 2026, our material cash requirements include non-cancelable contractual obligations from the 2028 Notes, 2030 Notes, purchase commitments, and lease obligations. Refer to Notes 6, 8, and 9 to the condensed consolidated financial statements in Part I, Item 1 within this Form 10-Q for more information regarding these material cash requirements. Senior Secured Credit Facilities Credit Agreement In 2021, we entered into the Credit Agreement (as defined in Note 8 in our condensed consolidated financial statements). As of June 30, 2026, we were in compliance with the covenants described in Note 8 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, and we expect to continue to be in compliance for at least the next 12 months. During the six months ended June 30, 2026 and 2025, no amounts were drawn down on the Credit Agreement. Convertible Senior Notes In March 2021, we issued approximately $948.8 million aggregate principal amount of 0% convertible senior unsecured notes due in 2026 (the “2026 Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. 38 On May 25, 2022, we entered into separate, privately negotiated transactions with certain holders of the 2026 Notes to repurchase (the “Repurchases”) $235.0 million aggregate principal amount of the 2026 Notes for an aggregate cash repurchase price of $176.4 million and aggregate transaction costs of $0.7 million. During the year ended December 31, 2023, we entered into several separate privately negotiated transactions with certain holders of the 2026 Notes to repurchase $367.3 million aggregate principal amount of the 2026 Notes for an aggregate cash repurchase price of $309.1 million and aggregate transaction costs of $2.0 million. During the year ended December 31, 2024, we entered into separate, privately negotiated transactions with certain holders of the 2026 Notes to exchange $157.9 million aggregate principal amount of the 2026 Notes for $150.0 million aggregate principal amount of 7.75% convertible senior unsecured notes due 2028 (the “2028 Notes”) and aggregate transaction costs of $5.8 million. During the year ended December 31, 2025, we entered into separate, privately negotiated transactions with certain holders of the 2026 Notes to repurchase $150.0 million aggregate principal amount of the 2026 Notes for an aggregate cash repurchase price of $148.9 million and aggregate transaction costs of $6.7 million. We also issued $180.0 million aggregate principal amount of 0% convertible senior unsecured notes due in 2030 (the “2030 Notes”) in private offerings to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. During the six months ended June 30, 2026, the 2026 Notes matured and were repaid in full. Capped Calls In connection with the pricing of the issuance of the 2030 Notes, the Company entered into privately negotiated capped call transactions with certain counterparties (the “Capped Calls”). The Capped Calls resulted in an $18.2 million outflow of cash in the three months ended December 31, 2025. Refer to Note 8 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. Cash Flows The following table summarizes our cash flows for the period indicated: Six months ended June 30, 2026 2025 (in thousands) Net cash provided by operating activities $ 68,200 $ 43,086 Net cash used in investing activities $ (125,648) $ (248,839) Net cash (used in) provided by financing activities $ (33,284) $ 1,810 Cash Flows from Operating Activities For the six months ended June 30, 2026, cash provided by operating activities was $68.2 million, consisting primarily of our net loss of $36.1 million, adjusted for non-cash items of $120.0 million, and net cash flows used in operating assets and liabilities of $15.7 million. The main drivers of the changes in operating assets and liabilities were $12.9 million in operating lease payments, a decrease in other liabilities of $10.9 million, an increase in other assets of $1.8 million and a $0.4 million increase in prepaid expenses and other current assets. This was partially offset by a decrease in accounts receivable of $1.3 million, primarily due to the timing of cash receipts from our customers, an increase in accounts payable of $8.3 million due to timing of payments, and an increase in accrued expenses of $0.9 million. For the six months ended June 30, 2025, cash provided by operating activities was $43.1 million, consisting primarily of our net loss of $76.7 million, adjusted for non-cash items of $115.7 million, and net cash flows provided by operating assets and liabilities of $4.1 million. The main drivers of the changes in operating assets and liabilities were a $16.9 million increase in other liabilities, a $6.0 million increase in accounts payable due to timing of payments, and a $2.3 million decrease in prepaid expenses and other current assets. This was offset by a $8.2 million increase in other assets, $7.9 million of net operating lease payments, a net increase of accounts receivable of $3.3 million, primarily due to the timing of cash receipts from our customers and a $1.8 million decrease in accrued expenses due to timing of payments. 39 Cash Flows from Investing Activities For the six months ended June 30, 2026, cash used in investing activities was $125.6 million, primarily consisting of $266.6 million purchases of marketable securities, $52.6 million of payments related to purchases of property and equipment to expand our network, and $7.9 million of additions to capitalized internal-use software. The cash outflow was partially offset by $201.5 million of maturities of marketable securities. For the six months ended June 30, 2025, cash used in investing activities was $248.8 million, primarily consisting of $272.9 million purchases of marketable securities, $12.5 million of payments related to purchases of property and equipment to expand our network, and $9.3 million of additions to capitalized internal-use software. The cash outflow was partially offset by $45.8 million of maturities of marketable securities. Cash Flows from Financing Activities For the six months ended June 30, 2026, cash used in financing activities was $33.3 million, primarily consisting of a $38.6 million repayment of the remaining balance of 2026 Notes and $0.5 million from payment of 2030 Notes issuance cost that was unpaid as of December 31, 2025. This was partially offset by $4.7 million in proceeds from the employee stock purchase plan and $1.1 million in proceeds from stock option exercises by our employees. For the six months ended June 30, 2025, cash provided by financing activities was $1.8 million, primarily consisting of $3.4 million in proceeds from the employee stock purchase plan (“ESPP”) and $0.7 million in proceeds from stock option exercises by our employees. The cash inflow was partially offset by $2.2 million of finance lease payments. Contractual Obligations and Other Commitments Our principal commitments consist of obligations under operating and finance leases, purchase obligations for capital expenditures, purchase obligations for contracts with our cloud infrastructure providers, network service providers, and other vendors, and outstanding debt. There have not been any material changes in our contractual obligations and commitments from our most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2025, except for those described under Note 6, Note 8, and Note 9 of our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Critical Accounting Estimates We prepare our condensed consolidated financial statements in accordance with U.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, expenses, and related disclosures. Actual results and outcomes could differ significantly from our estimates, judgments, and assumptions. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in “Management’s Discussion and Analysis – Critical Accounting Estimates” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Recent Accounting Pronouncements See Note 2 — Summary of Significant Accounting Policies of our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. 40