Fastly makes slow roll into 2026
Fastly chipped away the remainder of low-cost convertible bonds issued in 2021 by raising an upsized US$160m from the sale of a new low-cost CB issue, culminating what has been a protracted refinancing.
The edge-of-network content delivery provider repurchased US$150m of the legacy zero-percent CBs, leaving just US$38.5m of the original US$948.8m raised ahead of maturity in March 2026.
JP Morgan, Evercore and First Citizens were joint bookrunners on the new five-year CBs priced with a zero-percent coupon and 32.5% conversion premium, toward the aggressive-ends of 0%–0.5% and 30%–35% terms marketed for one day on Thursday. The banks were able to upsize the offering from US$125m.
Fastly shares fell just 1.9% Thursday to US$11.52 but plunged another 9.2% post-pricing on Friday to US$10.46.
Despite the new and legacy paper having zero-percent coupons, they are not the same.
The zero-percent CB issue maturing in March is convertible at US$102.80.
Fastly began dealing with the funding overhang by buying back US$235m of those bonds in 2022, and repurchasing another US$367.3m the following year, at steep discounts in both instances – it paid 75 cents on the dollar on the 2022 repurchase and 84 cents in 2023.
In 2024, Fastly exchanged US$157.9m of the zero-percent CBs for US$150m of a 7.75% CB issue that is convertible at US$19.74 and matures in 2028.
Helping to cushion this painful exercise, Fastly spent US$16.1m to purchase a capped call to offset dilution from the new zero-percent CBs up to a share price of US$23.04, a 100% premium to reference.
Fastly is now on firmer financial footing after recently increasing full-year 2025 non-GAAP operating income and revenue guidance to US$9m─$13m and US$610m─$614m, from a US$9m–$13m loss and US$594m─$602m previously.