James Fish: All right guys.
Ron Kisling : Thanks.
Operator: We will take our next question from Rishi Jaluria with RBC Capital Markets. Your line is open.
Richard Poland: Hey. This is Richard Poland on for Rishi Jaluria. Thanks for taking my question. So, I guess first one. Just any sense for how much of that top 10 account expansion was on the traffic side versus, cross-sell of the broader portfolio maybe getting more security products in there? Any color around kind of the breakdown of that?
Todd Nightingale : It is a good question. We don’t disclose this, although we do track it. The peak in international traffic that came from those large multinationals, that’s largely traffic expansion. But there are new use cases being added with those folks all the time. It’s hard for us to disclose details on that. Maybe we’ll look and see if there’s something that that we can share in a longer term. Anything you’d add there?
Ron Kisling : I mean, the one I would add, I think as you look at that growth, I mean, vendor consolidation that we saw at one of our largest customers clearly was a contributor in that concentration. I think, as Todd said earlier, I think as we look forward to the benefits from some of the sales and marketing, the packaging in the channel of that accelerates new customer acquisition. That should be a counter motion to the expansion. We know we’re going to continue to see, particularly our largest customers that you see in that top 10 number.
Richard Poland: Thank you. That’s very helpful. And then just a quick follow-up on the security portfolio. I think, if I recall correctly, the Bot management solution was still in beta as of last quarter. So any update there on just kind of how the progress of the expansion of security portfolio is going? Thanks.
Todd Nightingale : Yeah that’s great. Our bot product is, we have like a very large number of folks on the beta. It’s going limited availability this quarter. I hope to actually to be able to close some deals on this quarter and then GA in the first half. We got amazing success. I’ve been really happy with how many customers have leaned in to the beta, and are helping us really co-develop that solution, and got one more feature to check off and it’ll become available to customers and into our sales teams to start closing deals. So, I’m super excited about that. We’re also looking at a couple of other important areas on the security side. A productization – the potential productization I should say, deeper DDOS analytics, visualization and services, as well as deeper feature set in API security.
It’s become really clear to us that the buyer in this space that’s looking for strategic edge partner in CDN security, edge compute et cetera, they’re looking for a suite of security suite that includes bot DDOS, next-gen and whack, and API security. And we plan on pushing hard on all of those components.
Richard Poland: Got it. Very helpful, Todd. Thank you.
Operator: We will take our next question, from Will Power with Baird. Your line is open.
Will Power : Okay. Great. Thanks. Yeah, I guess a couple, maybe just starting on competition. I mean, you kind of noted and I guess we’ve seen a couple of smaller players selling off contracts. And I guess, exiting the business I just wanted more broadly kind of what you’re seeing from a pricing environment, recently in the US it sounds like you know international pricing is helping probably overall. But just think any kind of color as to kind of how the competitive environment is looking today?
Ron Kisling : Yeah, I think you’re from a pricing perspective, as we said the international mix, we do have slightly favorable pricing relative to kind of the major markets in the US and EU. And that really provided if you some strengths, kind of in the quarter-to-quarter pricing. I see here in US, the trend has been generally in line with our long-term trend. We did have some deceleration in the first half from the vendor consolidation and I would say, outside of that international or if you look at it by market, it’s generally been returned to more of those long-term trends. We haven’t seen any acceleration. And we still see, a good pricing environment. I think this one across the industry.
Will Power : Okay. And then, I guess, Ron, on just on the on the gross margin comments. It sounds like some headwinds just given the international traffic in Q4. But how would you kind of frame up how to think about gross margin progression next year? I mean, I know you generally been expecting it to rise, but how quickly do you get kind of international kind of behind you and back kind of maybe on the targets where you were?
Ron Kisling : Yeah, I think if you look at kind of that timeline, I think, the, the medium to long-term gross margin dynamics are still intact and I think the 80% gross margin that we had mentioned at the Investor Day in that medium to long-term are intact incremental gross margins are intact. I think, if you look at that gross – incremental gross margins that we’ve seen in the last four quarters have been above 60% compared to the teens kind of in early 2020. I think as we go through that contract negotiations, that’s probably a couple of quarters work. I think we generally in 2024 address most of those headwinds and get back to that medium to long-term or the larger targets that we’ve laid out previously.
Will Power : Okay. Thank you.
Operator: We will take our next question from Tim Horan with Oppenheimer. Your line is open.
Tim Horan: Thanks guys. Can you talk a little bit about some products what customers are using it for? And why they are they using you? And any color when it kind of starts to move the revenue needle? Thanks.
Todd Nightingale : Hey sorry. We missed the first part of that. Could you repeat the questions?
Tim Horan: Yeah, I apologize. Can you talk about which compute products your customers are using? And what are they using it for? And why are they using it guys? And when you got moving the needle?
Todd Nightingale : Yeah, great question. The customer that we track, our compute business on customer acquisition, people tend to come to Fastly, because we are really delivering freedom to developers especially with the technology called Labs, and that allows them to compile their own language and run it on the Fastly platform. You saw, there’s a release I think it’s in the supplement of our Go SDK and I think that that gives you a real sense of supporting languages that developers are – that are top of mind for developers and gives them the freedom to go and build serverless components at the edge. The second thing is, people come to Fastly to deliver use cases that are already proven out, and that’s a big deal especially around personalization, shopping cart management, content recommendation, et cetera.
