Company: FSLY
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001517413-25-000111
Chunk: 445

Company: Fastly, Inc.
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 2
Chunk 445
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Except for the goodwill impairment section below, there have been no material updates to our critical accounting estimates disclosure 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, 2024.

Goodwill Impairment

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and identifiable intangible assets acquired. The carrying amount of goodwill is reviewed for impairment at least annually, in the fourth quarter, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We have a single operating segment and reporting unit structure for all of the periods presented. To test for goodwill impairment, we compare the carrying value of our reporting unit with its fair value. If the carrying value of the goodwill is considered impaired, a loss is measured as the excess of the reporting unit’s carrying value over the fair value. Certain critical assumptions used to estimate the fair value of our reporting unit, including management’s forecasted revenue growth, gross and operating margins and cost of capital, are based on management’s best estimate about our current and future conditions. 

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As of October 30, 2024, as part of our annual goodwill impairment test, we performed a fair value assessment of our one single reporting unit by using a combination of income and market approaches and concluded that the estimated fair value of our single reporting unit substantially exceeded its carrying value. As of March 31, 2025, we identified certain triggering events, including a decrease in our stock price and market capitalization. We performed a qualitative assessment and concluded it is not more likely than not that the fair value of our one single reporting unit is less than its carrying amount. 

Subsequent to March 31, 2025, our stock price has declined and fluctuated. If our stock price were to trade below book value per share for an extended period of time or we experience adverse effects of a continued downward trend in the overall economic environment, changes in the business itself, including any adverse changes in projected earnings and cash flows, we may have to recognize an impairment of all or some portion of our goodwill in subsequent periods. 

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.

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Item 3.         Quantitative and Qualitative