Fastly (FSLY) risk factors, FY2025 10-K

Risks Related to Our Business, Industry and Technology

1. 01The costs incurred in correcting any material defects, errors, or other performance problems in our platform may be substantial and could harm our business
2. 02If we are unable to attract new customers, in particular, enterprise customers, and to have existing enterprise customers continue and increase their use of our platform, our business will likely be harmed
3. 03We receive a substantial portion of our revenues from a limited number of customers within a limited number of industries, and the loss of, or a significant reduction in usage by, one or more of our major customers would result in lower revenues and could harm our business53% rewritten
4. 04Component delays, shortages, or price increases could interrupt our ability to complete the construction of our servers or POPs and to meet the usage needs of our customers. Our operating results could be materially harmed if we are unable to adequately manage our infrastructure needs35% rewritten
5. 05Our history of operating losses makes it difficult to evaluate our current business and prospects and may increase the risks associated with your investment42% rewritten
6. 06If we fail to efficiently develop and sell new products and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements, or preferences, our products may become less competitive37% rewritten
7. 07If we fail to forecast our revenue accurately, or if we fail to manage our expenditures, our operating results could be adversely affected
8. 08Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform
9. 09The markets in which we participate are competitive, and if we do not compete effectively, our business will be harmed
10. 10If we fail to maintain and enhance our brand, our ability to expand our customer base will be impaired and our business, results of operations and financial condition may suffer
11. 11Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, and dilute stockholder value
12. 12We are, and may in the future be, involved in class-action lawsuits and other litigation matters that are expensive and time-consuming. If resolved adversely, lawsuits and other litigation matters could seriously harm our business27% rewritten
13. 13We may not be able to scale our business quickly enough to meet our customers’ growing needs. If we are not able to grow efficiently, our business could be harmed
14. 14We may have insufficient transmission bandwidth and colocation space, which could result in disruptions to our platform and loss of revenue
15. 15The nature of our business exposes us to inherent liability risks
16. 16Our dedication to our values may negatively influence our financial results21% rewritten
17. 17Our growth depends in large part on the success of our partner relationships
18. 18We operate in an emerging and evolving market, which may develop more slowly or differently than we expect. If our market does not grow as we expect, or if we cannot expand our services to meet the demands of this market, our revenue may decline, or fail to grow, and we may incur operating losses
19. 19Usage of our platform accounts for substantially all of our revenue, and as a result, our operating results could suffer from a reduction in usage
20. 20In addition, because substantially all of our usage-based revenue is recognized at the time of use during the term of the relevant contract, downturns or upturns in sales contracts are not immediately reflected in full in our operating results
21. 21We expect fluctuations in our financial results and key metrics, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors, our stock price and the value of your investment could decline significantly
22. 22Our pricing models subject us to various challenges that could make it difficult for us to derive sufficient value from our customers, and we do not have sufficient history with our pricing models to accurately predict the optimal pricing necessary to attract new customers and retain existing customers
23. 23Our sales and onboarding cycles with customers can be long and unpredictable, and our sales and onboarding efforts require considerable time and expense
24. 24Given these factors, it is difficult to predict whether and when a customer will switch to our platform
25. 25If our platform does not achieve sufficient market acceptance, our financial results and competitive position will suffer
26. 26If our platform and any future enhancements do not achieve adequate acceptance in the market, or if products and technologies developed by others achieve greater acceptance in the market, our business could be harmed
27. 27We rely on third-party providers that may be difficult to replace52% rewritten
28. 28Our business is exposed to risks associated with credit card and other online payment processing methods
29. 29If we do not or cannot maintain the compatibility of our platform with third-party applications that our customers use in their businesses, our business will be harmed22% rewritten
30. 30We provide service level commitments under our customer agreements. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service, or face contract termination with refunds of prepaid amounts, which could harm our business
31. 31If we fail to offer high quality support, our business may be harmed
32. 32Scrutiny relating to environmental, social and governance factors may impose additional costs and expose us to new risks22% rewritten

Risks Related to Employees and Managing Our Growth

1. 33The failure to attract and retain qualified personnel could prevent us from executing our business strategy
2. 34We rely on the performance of highly skilled personnel, including our senior management and other key employees, and the loss or transition of one or more of such personnel, or of a significant number of our team members, could harm our business20% rewritten
3. 35Our past growth may not be indicative of our future growth and we may not be able to manage our growth effectively
4. 36If we cannot maintain our company culture as we grow, our success and our business may be harmed

Risks Related to Our Financial Position and Need for Additional Capital

1. 37Our ability to timely raise capital in the future may be limited, or may be unavailable on acceptable terms, if at all, and debt or equity issued to raise additional capital may reduce the value of our common stock
2. 38Seasonality may cause fluctuations in our sales and operating results
3. 39Our current operations are international in scope and we plan on further geographic expansion, creating a variety of operational challenges
4. 40If our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our results of operations could be adversely affected20% rewritten
5. 41Current and future indebtedness could restrict our operations, particularly our ability to respond to changes in our business or to take specified actions68% rewritten
6. 42If we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock may be seriously harmedNew
7. 43We may not be able to successfully manage the growth of our business if we are unable to improve our internal systems, processes and controls
8. 44Our financial results may be adversely affected by changes in accounting principles applicable to us

Risks Related to Laws, Regulations, and the Global Economy

1. 45Failure to comply with United States and foreign governmental laws and regulations could harm our business55% rewritten
2. 46For example, in the United States, federal, state, and local governments have enacted numerous privacy and data security laws, including data breach notification laws, Personal Information privacy laws, consumer protection laws (e.g., Section 5 of the FTC Act), and other similar laws (e.g., wiretapping laws)New
3. 47Similar laws have been enacted in numerous other states, and proposed at the federal and local levels, and we expect more states to pass similar laws in the future, which could increase our compliance costs and adversely affect our business73% rewritten
4. 48Regulatory and legislative developments on the development and deployment of AI technologies could adversely affect our use of such technologies in our business operations or our products and servicesNew
5. 49Activities of our customers or the content of their websites and other Internet properties may violate applicable laws and/or our terms of service and could subject us to lawsuits, regulatory enforcement actions, reputational harm, and/or liability in various jurisdictions20% rewritten
6. 50Our sales to highly regulated organizations and government entities are subject to a number of challenges and risks
7. 51The success of our business depends on customers’ continued and unimpeded access to our platform on the Internet
8. 52We are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws, and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business
9. 53Changes in our effective tax rate or tax liability may harm our business
10. 54We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our clients would have to pay for our offering and harm our business
11. 55Adverse tax laws or regulations could be enacted or existing laws could be applied to us, which could adversely affect our business and financial condition
12. 56Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
13. 57Our international operations may subject us to potential adverse tax consequences
14. 58We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate such controls
15. 59We are exposed to fluctuations in currency exchange rates
16. 60Unfavorable conditions in our industry or the global economy, rising inflation or reductions in information technology spending could harm our business

Risks Related to Intellectual Property

1. 61We could incur substantial costs in protecting or defending our intellectual property and proprietary rights, and any failure to adequately protect our rights could impair our competitive position and we may lose valuable assets, experience reduced revenue, and incur costly litigation to protect our rights
2. 62Elements of our platform and our products use open source software, which may restrict the functionality of our platform and our products, or require that we release the source code of certain products subject to those licenses
3. 63Provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection, and other losses

Risks Related to Ownership of Our Common Stock

1. 64Our stock price is volatile, and the value of our common stock may decline26% rewritten
2. 65We may not have the ability to raise the funds necessary to repay or settle conversions of the Notes in whole or in part in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes26% rewritten
3. 66Conversion of the Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock
4. 67Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt
5. 68Regulatory actions and other events may adversely affect the trading price and liquidity of the Notes
6. 69The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results
7. 70Future sales and issuances of our capital stock or rights to purchase capital stock could result in dilution of the percentage ownership of our stockholders and could cause the price of our common stock to decline
8. 71Future sales of our common stock in the public market could cause the market price of our common stock to decline
9. 72If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our common stock price and trading volume could decline
10. 73We do not intend to pay dividends for the foreseeable future35% rewritten
11. 74We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices
12. 75Anti-takeover provisions in our charter documents, the indenture governing the Notes, and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current board of directors or management and limit the market price of our common stock