Cloudflare Announces Third Quarter 2022 Financial Results
Cloudflare reported Q3 revenue of $253.9 million, a 47% year-over-year increase, surpassing $1 billion in annualized revenue for the first time. The company added 159 large customers, totaling 1,908 large clients. While GAAP net loss was $42.5 million, a notable improvement from $107.3 million in the previous year, non-GAAP net income rose to $19.1 million. The firm aims to achieve $5 billion in annualized revenue in five years, highlighting strong market potential with less than 1% market penetration.
- Revenue growth of 47% year-over-year.
- Surpassed $1 billion in annualized revenue.
- Added 159 large customers in the quarter.
- GAAP loss from operations increased to $45.9 million.
- Gross margin decreased from 78.2% to 75.6% year-over-year.
-
Third quarter total revenue totaled
, representing an increase of$253.9 million 47% year-over-year, surpassing in annualized revenue$1 billion - Strong large customer growth, with an addition of 159 large customers in the quarter, bringing the total number of large customers to 1,908
-
Delivered GAAP loss from operations of
, or$45.9 million 18% of total revenue, and non-GAAP income from operations of , or$14.8 million 6% of total revenue
“We achieved an important milestone in the third quarter, surpassing
Third Quarter Fiscal 2022 Financial Highlights
-
Revenue: Total revenue of
, representing an increase of$253.9 million 47% year-over-year. -
Gross Profit: GAAP gross profit was
, or$191.9 million 75.6% gross margin, compared to , or$134.8 million 78.2% , in the third quarter of 2021. Non-GAAP gross profit was , or$198.4 million 78.1% gross margin, compared to , or$136.6 million 79.2% , in the third quarter of 2021. -
Operating Income (Loss): GAAP loss from operations was
, or$45.9 million 18.1% of total revenue, compared to , or$26.5 million 15.4% of total revenue, in the third quarter of 2021. Non-GAAP income from operations was , or$14.8 million 5.8% of total revenue, compared to non-GAAP income from operations of , or$2.2 million 1.3% of total revenue, in the third quarter of 2021. -
Net Income (Loss): GAAP net loss was
, compared to$42.5 million in the third quarter of 2021. GAAP net loss per basic and diluted share was$107.3 million , compared to$0.13 in the third quarter of 2021. Non-GAAP net income was$0.34 , compared to$19.1 million in the third quarter of 2021. Non-GAAP net income per diluted share was$1.4 million , compared to non-GAAP net income per diluted share of$0.06 in the third quarter of 2021.$0.00 -
Cash Flow: Net cash flow from operating activities was
, compared to negative$42.7 million for the third quarter of 2021. Free cash flow was negative$6.9 million , or$4.6 million 2.0% of total revenue, compared to negative , or$39.7 million 23% of total revenue, in the third quarter of 2021. -
Cash, cash equivalents, and available-for-sale securities were
as of$1,636.3 million September 30, 2022 .
The section titled "Non-GAAP Financial Information" below describes our usage of non-GAAP financial measures. Reconciliations between historical GAAP and non-GAAP information are contained at the end of this press release following the accompanying financial data.
Financial Outlook
The following forward-looking statements regarding our financial outlook are subject to substantial uncertainty as a result of challenging general economic conditions, including inflation, rising interest rates, and other impacts of the ongoing COVID-19 pandemic or
For the fourth quarter of fiscal 2022, we expect:
-
Total revenue of
to$273.5 $274.5 million -
Non-GAAP income from operations of
to$12.0 $13.0 million -
Non-GAAP net income per share of
to$0.04 , utilizing weighted average common shares outstanding of approximately 343 million$0.05
For the full year fiscal 2022, we expect:
-
Total revenue of
to$974.0 $975.0 million -
Non-GAAP income from operations of
to$31.0 $32.0 million -
Non-GAAP net income per share of
to$0.11 , utilizing weighted average common shares outstanding of approximately 342 million$0.12
President of Revenue Appointment
Cloudflare also announced the appointment of
“It’s rare to join a company that is fundamentally changing an industry, and Cloudflare is truly helping to build a better Internet,” said
Marc is now overseeing Cloudflare’s sales organization, which was led by
“Very few sales leaders can say that they built a company from
Conference Call Information
Cloudflare will host an investor conference call to discuss its third quarter ended
Supplemental Financial and Other Information
Supplemental financial and other information can be accessed through the Company’s investor relations website at https://cloudflare.NET.
Non-GAAP Financial Information
Cloudflare believes that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations. Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future. For further information regarding why Cloudflare believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the “Explanation of Non-GAAP Financial Measures” section at the end of this press release.
Available Information
Cloudflare intends to use its press releases, website, investor relations website, news site, blog, Twitter account, Facebook account, and Instagram account, in addition to filings made with the
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “explore,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these words, or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. However, not all forward-looking statements contain these identifying words. Forward-looking statements expressed or implied in this press release include, but are not limited to, statements regarding our future financial and operating performance, our reputation and performance in the market, general market trends, our estimated and projected revenue, non-GAAP net income (loss) from operations and non-GAAP net income (loss) per share, shares outstanding, the benefits to customers from using our products, the expected functionality and performance of our products, our plans and objectives for future operations, growth, initiatives, or strategies, our expectations about senior management transitions, our goal of organically achieving
The forward-looking statements made in this press release relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
About Cloudflare
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Revenue |
$ |
253,857 |
|
|
$ |
172,347 |
|
|
$ |
700,541 |
|
|
$ |
462,830 |
|
|
Cost of revenue(1)(2) |
|
61,967 |
|
|
|
37,525 |
|
|
|
164,822 |
|
|
|
104,638 |
|
|
Gross profit |
|
191,890 |
|
|
|
134,822 |
|
|
|
535,719 |
|
|
|
358,192 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|||||||||
Sales and marketing(1)(2)(3) |
|
116,033 |
|
|
|
85,877 |
|
|
|
333,712 |
|
|
|
231,846 |
|
|
Research and development(1)(3) |
|
76,432 |
|
|
|
46,770 |
|
|
|
218,600 |
|
|
|
127,646 |
|
|
General and administrative(1) |
|
45,372 |
|
|
|
28,669 |
|
|
|
133,919 |
|
|
|
85,320 |
|
|
Total operating expenses |
|
237,837 |
|
|
|
161,316 |
|
|
|
686,231 |
|
|
|
444,812 |
|
|
Loss from operations |
|
(45,947 |
) |
|
|
(26,494 |
) |
|
|
(150,512 |
) |
|
|
(86,620 |
) |
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|||||||||
Interest income |
|
3,852 |
|
|
|
385 |
|
|
|
6,554 |
|
|
|
1,302 |
|
|
Interest expense(4) |
|
(1,512 |
) |
|
|
(12,448 |
) |
|
|
(4,109 |
) |
|
|
(33,126 |
) |
|
Loss on extinguishment of debt |
|
— |
|
|
|
(72,234 |
) |
|
|
— |
|
|
|
(72,234 |
) |
|
Other income (expense), net |
|
2,433 |
|
|
|
361 |
|
|
|
2,179 |
|
|
|
(368 |
) |
|
Total non-operating income (expense), net |
|
4,773 |
|
|
|
(83,936 |
) |
|
|
4,624 |
|
|
|
(104,426 |
) |
|
Loss before income taxes |
|
(41,174 |
) |
|
|
(110,430 |
) |
|
|
(145,888 |
) |
|
|
(191,046 |
) |
|
Provision for (benefit from) income taxes |
|
1,372 |
|
|
|
(3,095 |
) |
|
|
1,576 |
|
|
|
(8,238 |
) |
|
Net loss |
$ |
(42,546 |
) |
|
$ |
(107,335 |
) |
|
$ |
(147,464 |
) |
|
$ |
(182,808 |
) |
|
Net loss per share attributable to common stockholders, basic and diluted |
$ |
(0.13 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.59 |
) |
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
|
326,590 |
|
|
|
314,543 |
|
|
|
325,457 |
|
|
|
309,618 |
|
____________ |
||||||||||||||||
(1) Includes stock-based compensation and related employer payroll taxes as follows: |
||||||||||||||||
Cost of revenue |
$ |
2,157 |
|
$ |
1,040 |
|
$ |
5,481 |
|
$ |
2,366 |
|||||
Sales and marketing |
|
11,919 |
|
|
|
8,271 |
|
|
|
35,205 |
|
|
|
22,685 |
|
|
Research and development |
|
30,049 |
|
|
|
13,971 |
|
|
|
82,001 |
|
|
|
36,309 |
|
|
General and administrative |
|
11,763 |
|
|
|
4,742 |
|
|
|
32,455 |
|
|
|
13,876 |
|
|
Total stock-based compensation and related employer payroll taxes |
$ |
55,888 |
|
|
$ |
28,024 |
|
|
$ |
155,142 |
|
|
$ |
75,236 |
|
(2) Includes amortization of acquired intangible assets as follows: |
||||||||||||||||
Cost of revenue |
$ |
4,314 |
|
$ |
700 |
|
$ |
9,133 |
|
$ |
2,100 |
|||||
Sales and marketing |
|
575 |
|
|
|
— |
|
|
|
1,150 |
|
|
|
— |
|
|
Total amortization of acquired intangible assets |
$ |
4,889 |
|
|
$ |
700 |
|
|
$ |
10,283 |
|
|
$ |
2,100 |
|
(3) Includes acquisition-related and other expenses as follows: |
|||||||||||||||||
Sales and marketing |
$ |
— |
$ |
— |
$ |
265 |
$ |
— |
|||||||||
Research and development |
|
— |
|
— |
|
3,682 |
|
— |
|||||||||
Total acquisition-related and other expenses |
$ |
— |
$ |
— |
$ |
3,947 |
$ |
— |
(4) Includes amortization of debt discounts and issuance costs as follows*: |
||||||||||||||||
Amortization of debt discounts and issuance costs* |
$ |
1,165 |
|
$ |
12,334 |
|
$ |
3,497 |
|
$ |
30,488 |
|||||
Total amortization of debt discounts and issuance costs |
$ |
1,165 |
|
|
$ |
12,334 |
|
|
$ |
3,497 |
|
|
$ |
30,488 |
|
|
* The Company recorded amortization of debt discount as interest expense prior to the adoption of ASU 2020-06 on |
||||||||||||||||
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(in thousands, except par value) |
||||||||
(unaudited) |
||||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
137,838 |
|
|
$ |
313,777 |
|
Available-for-sale securities |
|
|
1,498,424 |
|
|
|
1,508,066 |
|
Accounts receivable, net |
|
|
126,868 |
|
|
|
95,543 |
|
Contract assets |
|
|
7,211 |
|
|
|
6,079 |
|
Restricted cash short-term |
|
|
10,709 |
|
|
|
2,958 |
|
Prepaid expenses and other current assets |
|
|
34,737 |
|
|
|
29,433 |
|
Total current assets |
|
|
1,815,787 |
|
|
|
1,955,856 |
|
Property and equipment, net |
|
|
264,132 |
|
|
|
183,736 |
|
|
|
|
149,122 |
|
|
|
23,530 |
|
Acquired intangible assets, net |
|
|
37,371 |
|
|
|
1,254 |
|
Operating lease right-of-use assets |
|
|
132,962 |
|
|
|
130,314 |
|
Deferred contract acquisition costs, noncurrent |
|
|
87,282 |
|
|
|
70,320 |
|
Restricted cash |
|
|
471 |
|
|
|
4,223 |
|
Other noncurrent assets |
|
|
3,490 |
|
|
|
2,838 |
|
Total assets |
|
$ |
2,490,617 |
|
|
$ |
2,372,071 |
|
Liabilities, Temporary Equity and Stockholders’ Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
39,227 |
|
|
$ |
26,086 |
|
Accrued expenses and other current liabilities |
|
|
55,070 |
|
|
|
38,085 |
|
Accrued compensation |
|
|
42,573 |
|
|
|
65,905 |
|
Operating lease liabilities |
|
|
28,526 |
|
|
|
25,175 |
|
Liability for early exercise of unvested stock options |
|
|
2,493 |
|
|
|
4,651 |
|
Deferred revenue |
|
|
171,398 |
|
|
|
116,546 |
|
Current portion of convertible senior notes, net |
|
|
— |
|
|
|
12,117 |
|
Total current liabilities |
|
|
339,287 |
|
|
|
288,565 |
|
Convertible senior notes, net |
|
|
1,435,030 |
|
|
|
1,146,877 |
|
Operating lease liabilities, noncurrent |
|
|
104,017 |
|
|
|
109,037 |
|
Deferred revenue, noncurrent |
|
|
8,686 |
|
|
|
4,680 |
|
Other noncurrent liabilities |
|
|
9,608 |
|
|
|
7,114 |
|
Total liabilities |
|
|
1,896,628 |
|
|
|
1,556,273 |
|
|
|
|
|
|
||||
Temporary equity, convertible senior notes |
|
|
— |
|
|
|
4,439 |
|
|
|
|
|
|
||||
Stockholders’ Equity: |
|
|
|
|
||||
Class A common stock; |
|
283 |
|
|
|
277 |
|
|
Class B common stock; |
|
44 |
|
|
|
44 |
|
|
Additional paid-in capital |
|
|
1,404,934 |
|
|
|
1,494,512 |
|
Accumulated deficit |
|
|
(793,974 |
) |
|
|
(680,829 |
) |
Accumulated other comprehensive loss |
|
|
(17,298 |
) |
|
|
(2,645 |
) |
Total stockholders’ equity |
|
|
593,989 |
|
|
|
811,359 |
|
Total liabilities, temporary equity and stockholders’ equity |
|
$ |
2,490,617 |
|
|
$ |
2,372,071 |
|
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(in thousands) |
||||||||
(unaudited) |
||||||||
|
|
|
||||||
|
|
Nine Months Ended |
||||||
|
|
2022 |
|
2021 |
||||
Cash Flows From Operating Activities |
|
|
|
|||||
Net loss |
$ |
(147,464 |
) |
|
$ |
(182,808 |
) |
|
Adjustments to reconcile net loss to cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization expense |
|
72,702 |
|
|
|
48,275 |
|
|
Non-cash operating lease costs |
|
26,954 |
|
|
|
17,740 |
|
|
Amortization of deferred contract acquisition costs |
|
32,019 |
|
|
|
20,688 |
|
|
Stock-based compensation expense |
|
142,545 |
|
|
|
61,638 |
|
|
Amortization of debt discount and issuance costs |
|
3,497 |
|
|
|
30,488 |
|
|
Net accretion of discounts and amortization of premiums on available-for-sale securities |
|
3,666 |
|
|
|
6,004 |
|
|
Deferred income taxes |
|
(1,603 |
) |
|
|
(10,678 |
) |
|
Provision for bad debt |
|
3,140 |
|
|
|
2,911 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
72,234 |
|
|
Exchange of convertible senior notes attributable to the accreted interest related to debt discount |
|
— |
|
|
|
(29,353 |
) |
|
Other |
|
575 |
|
|
|
111 |
|
|
Changes in operating assets and liabilities, net of effect of acquisitions: |
|
|
|
|||||
Accounts receivable, net |
|
(32,831 |
) |
|
|
(24,117 |
) |
|
Contract assets |
|
(1,132 |
) |
|
|
(1,511 |
) |
|
Deferred contract acquisition costs |
|
(48,981 |
) |
|
|
(38,119 |
) |
|
Prepaid expenses and other current assets |
|
(7,367 |
) |
|
|
723 |
|
|
Other noncurrent assets |
|
1,398 |
|
|
|
1,462 |
|
|
Accounts payable |
|
685 |
|
|
|
5,820 |
|
|
Accrued expenses and other current liabilities |
|
(23,643 |
) |
|
|
22,147 |
|
|
Operating lease liabilities |
|
(31,271 |
) |
|
|
(16,315 |
) |
|
Deferred revenue |
|
51,909 |
|
|
|
40,140 |
|
|
Other noncurrent liabilities |
|
674 |
|
|
|
(3,449 |
) |
|
Net cash provided by operating activities |
|
45,472 |
|
|
|
24,031 |
|
|
Cash Flows From Investing Activities |
|
|
|
|||||
Purchases of property and equipment |
|
(103,461 |
) |
|
|
(64,652 |
) |
|
Capitalized internal-use software |
|
(15,440 |
) |
|
|
(11,105 |
) |
|
Cash paid for acquisitions, net of cash acquired |
|
(88,187 |
) |
|
|
— |
|
|
Purchases of available-for-sale securities |
|
(755,097 |
) |
|
|
(1,060,883 |
) |
|
Sales of available-for-sale securities |
|
— |
|
|
|
15,756 |
|
|
Maturities of available-for-sale securities |
|
746,420 |
|
|
|
766,304 |
|
|
Other investing activities |
|
25 |
|
|
|
53 |
|
|
Net cash used in investing activities |
|
(215,740 |
) |
|
|
(354,527 |
) |
|
Cash Flows From Financing Activities |
|
|
|
|||||
Gross proceeds from issuance of convertible senior notes |
|
— |
|
|
|
1,293,750 |
|
|
Purchases of capped calls related to convertible senior notes |
|
— |
|
|
|
(86,293 |
) |
|
Cash consideration paid in exchange of convertible senior debt |
|
— |
|
|
|
(370,647 |
) |
|
Cash paid for issuance costs on convertible senior notes |
|
— |
|
|
|
(18,760 |
) |
|
Repayments of convertible senior notes |
|
(16,571 |
) |
|
|
— |
|
|
Proceeds from the exercise of stock options |
|
8,130 |
|
|
|
16,802 |
|
|
Proceeds from the early exercise of stock options |
|
62 |
|
|
|
95 |
|
|
Repurchases of unvested common stock |
|
(3 |
) |
|
|
(188 |
) |
|
Proceeds from the issuance of common stock for employee stock purchase plan |
|
8,687 |
|
|
|
7,174 |
|
|
Payment of tax withholding obligation on RSU settlement |
|
(1,977 |
) |
|
|
(2,033 |
) |
|
Payment of indemnity holdback |
|
— |
|
|
|
(2,188 |
) |
|
Net cash provided by (used in) financing activities |
|
(1,672 |
) |
|
|
837,712 |
|
|
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
(171,940 |
) |
|
|
507,216 |
|
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
320,958 |
|
|
|
118,146 |
|
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
149,018 |
|
|
$ |
625,362 |
|
|
|
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
||||||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Reconciliation of cost of revenue: |
|
|
|
|
|
|
|
|
||||||||
GAAP cost of revenue |
|
$ |
61,967 |
|
|
$ |
37,525 |
|
|
$ |
164,822 |
|
|
$ |
104,638 |
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(2,157 |
) |
|
|
(1,040 |
) |
|
|
(5,481 |
) |
|
|
(2,366 |
) |
Less: Amortization of acquired intangible assets |
|
|
(4,314 |
) |
|
|
(700 |
) |
|
|
(9,133 |
) |
|
|
(2,100 |
) |
Non-GAAP cost of revenue |
|
$ |
55,496 |
|
|
$ |
35,785 |
|
|
$ |
150,208 |
|
|
$ |
100,172 |
|
Reconciliation of gross profit: |
|
|
|
|
|
|
|
|
||||||||
GAAP gross profit |
|
$ |
191,890 |
|
|
$ |
134,822 |
|
|
$ |
535,719 |
|
|
$ |
358,192 |
|
Add: Stock-based compensation and related employer payroll taxes |
|
|
2,157 |
|
|
|
1,040 |
|
|
|
5,481 |
|
|
|
2,366 |
|
Add: Amortization of acquired intangible assets |
|
|
4,314 |
|
|
|
700 |
|
|
|
9,133 |
|
|
|
2,100 |
|
Non-GAAP gross profit |
|
$ |
198,361 |
|
|
$ |
136,562 |
|
|
$ |
550,333 |
|
|
$ |
362,658 |
|
GAAP gross margin |
|
|
75.6 |
% |
|
|
78.2 |
% |
|
|
76.5 |
% |
|
|
77.4 |
% |
Non-GAAP gross margin |
|
|
78.1 |
% |
|
|
79.2 |
% |
|
|
78.6 |
% |
|
|
78.4 |
% |
Reconciliation of operating expenses: |
|
|
|
|
|
|
|
|
||||||||
GAAP sales and marketing |
|
$ |
116,033 |
|
|
$ |
85,877 |
|
|
$ |
333,712 |
|
|
$ |
231,846 |
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(11,919 |
) |
|
|
(8,271 |
) |
|
|
(35,205 |
) |
|
|
(22,685 |
) |
Less: Amortization of acquired intangible assets |
|
|
(575 |
) |
|
|
— |
|
|
|
(1,150 |
) |
|
|
— |
|
Less: Acquisition-related and other expenses |
|
|
— |
|
|
|
— |
|
|
|
(265 |
) |
|
|
— |
|
Non-GAAP sales and marketing |
|
$ |
103,539 |
|
|
$ |
77,606 |
|
|
$ |
297,092 |
|
|
$ |
209,161 |
|
GAAP research and development |
|
$ |
76,432 |
|
|
$ |
46,770 |
|
|
$ |
218,600 |
|
|
$ |
127,646 |
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(30,049 |
) |
|
|
(13,971 |
) |
|
|
(82,001 |
) |
|
|
(36,309 |
) |
Less: Acquisition-related and other expenses |
|
|
— |
|
|
|
— |
|
|
|
(3,682 |
) |
|
|
— |
|
Non-GAAP research and development |
|
$ |
46,383 |
|
|
$ |
32,799 |
|
|
$ |
132,917 |
|
|
$ |
91,337 |
|
GAAP general and administrative |
|
$ |
45,372 |
|
|
$ |
28,669 |
|
|
$ |
133,919 |
|
|
$ |
85,320 |
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(11,763 |
) |
|
|
(4,742 |
) |
|
|
(32,455 |
) |
|
|
(13,876 |
) |
Non-GAAP general and administrative |
|
$ |
33,609 |
|
|
$ |
23,927 |
|
|
$ |
101,464 |
|
|
$ |
71,444 |
|
Reconciliation of income (loss) from operations: |
|
|
|
|
|
|
|
|
||||||||
GAAP loss from operations |
|
$ |
(45,947 |
) |
|
$ |
(26,494 |
) |
|
$ |
(150,512 |
) |
|
$ |
(86,620 |
) |
Add: Stock-based compensation and related employer payroll taxes |
|
|
55,888 |
|
|
|
28,024 |
|
|
|
155,142 |
|
|
|
75,236 |
|
Add: Amortization of acquired intangible assets |
|
|
4,889 |
|
|
|
700 |
|
|
|
10,283 |
|
|
|
2,100 |
|
Add: Acquisition-related and other expenses |
|
|
— |
|
|
|
— |
|
|
|
3,947 |
|
|
|
— |
|
Non-GAAP income (loss) from operations |
|
$ |
14,830 |
|
|
$ |
2,230 |
|
|
$ |
18,860 |
|
|
$ |
(9,284 |
) |
GAAP operating margin |
|
|
(18.1 |
)% |
|
|
(15.4 |
)% |
|
|
(21.5 |
)% |
|
|
(18.7 |
)% |
Non-GAAP operating margin |
|
|
5.8 |
% |
|
|
1.3 |
% |
|
|
2.7 |
% |
|
|
(2.0 |
)% |
|
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
||||||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Reconciliation of interest expense: |
|
|
|
|
|
|
|
|
||||||||
GAAP interest expense |
|
$ |
(1,512 |
) |
|
$ |
(12,448 |
) |
|
$ |
(4,109 |
) |
|
$ |
(33,126 |
) |
Add: Amortization of debt discount and issuance costs(1) |
|
|
1,165 |
|
|
|
12,334 |
|
|
|
3,497 |
|
|
|
30,488 |
|
Non-GAAP interest expense |
|
$ |
(347 |
) |
|
$ |
(114 |
) |
|
$ |
(612 |
) |
|
$ |
(2,638 |
) |
Reconciliation of loss on extinguishment of debt: |
|
|
|
|
|
|
|
|
||||||||
GAAP loss on extinguishment of debt |
|
$ |
— |
|
|
$ |
(72,234 |
) |
|
$ |
— |
|
|
$ |
(72,234 |
) |
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
72,234 |
|
|
|
— |
|
|
|
72,234 |
|
Non-GAAP loss on extinguishment of debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Reconciliation of provision for (benefit from) income taxes: |
|
|
|
|
|
|
|
|
||||||||
GAAP provision for (benefit from) income taxes |
|
$ |
1,372 |
|
|
$ |
(3,095 |
) |
|
$ |
1,576 |
|
|
$ |
(8,238 |
) |
Income tax effect of non-GAAP adjustments |
|
|
296 |
|
|
|
4,603 |
|
|
|
2,543 |
|
|
|
12,513 |
|
Non-GAAP provision for income taxes |
|
$ |
1,668 |
|
|
$ |
1,508 |
|
|
$ |
4,119 |
|
|
$ |
4,275 |
|
Reconciliation of net income (loss) and net income (loss) per share: |
|
|
|
|
|
|
|
|
||||||||
GAAP net loss attributable to common stockholders |
|
$ |
(42,546 |
) |
|
$ |
(107,335 |
) |
|
$ |
(147,464 |
) |
|
$ |
(182,808 |
) |
Add: Stock-based compensation and related employer payroll taxes |
|
|
55,888 |
|
|
|
28,024 |
|
|
|
155,142 |
|
|
|
75,236 |
|
Add: Amortization of acquired intangible assets |
|
|
4,889 |
|
|
|
700 |
|
|
|
10,283 |
|
|
|
2,100 |
|
Add: Acquisition-related and other expenses |
|
|
— |
|
|
|
— |
|
|
|
3,947 |
|
|
|
— |
|
Add: Amortization of debt discount and issuance costs(1) |
|
|
1,165 |
|
|
|
12,334 |
|
|
|
3,497 |
|
|
|
30,488 |
|
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
72,234 |
|
|
|
— |
|
|
|
72,234 |
|
Income tax effect of non-GAAP adjustments |
|
|
(296 |
) |
|
|
(4,603 |
) |
|
|
(2,543 |
) |
|
|
(12,513 |
) |
Non-GAAP net income (loss) |
|
$ |
19,100 |
|
|
$ |
1,354 |
|
|
$ |
22,862 |
|
|
$ |
(15,263 |
) |
|
|
|
|
|
|
|
|
|
||||||||
GAAP net loss per share, basic |
|
$ |
(0.13 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.59 |
) |
|
|
|
|
|
|
|
|
|
||||||||
GAAP net loss per share, diluted |
|
$ |
(0.13 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.59 |
) |
Add: Stock-based compensation and related employer payroll taxes |
|
|
0.17 |
|
|
|
0.09 |
|
|
|
0.48 |
|
|
|
0.24 |
|
Add: Amortization of acquired intangible assets |
|
|
0.01 |
|
|
|
— |
|
|
|
0.03 |
|
|
|
0.01 |
|
Add: Acquisition-related and other expenses |
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
Add: Amortization of debt discount and issuance costs(1) |
|
|
— |
|
|
|
0.04 |
|
|
|
0.01 |
|
|
|
0.10 |
|
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
0.23 |
|
|
|
— |
|
|
|
0.23 |
|
Income tax effect of non-GAAP adjustment |
|
|
— |
|
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.04 |
) |
Effect of dilutive shares |
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-GAAP net income (loss) per share, diluted(2)(3) |
|
$ |
0.06 |
|
|
$ |
0.00 |
|
|
$ |
0.07 |
|
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic |
|
|
326,590 |
|
|
|
314,543 |
|
|
|
325,457 |
|
|
|
309,618 |
|
Weighted-average shares used in computing non-GAAP net income (loss) per share attributable to common stockholders, diluted(3) |
|
|
341,151 |
|
|
|
342,439 |
|
|
|
341,558 |
|
|
|
309,618 |
|
____________ |
||
(1) |
The Company recorded amortization of debt discount as interest expense prior to the adoption of ASU 2020-06 on |
|
(2) |
Totals may not sum due to rounding. Figures are calculated based upon the respective underlying non-rounded data. |
|
(3) |
For the period in which we had non-GAAP net income, diluted non-GAAP net income per share is calculated using weighted-average shares, adjusted for dilutive potential shares that were assumed outstanding during period. |
|
|
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
||||||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Free cash flow |
|
|
|
|
||||||||||||
Net cash provided by (used in) operating activities |
$ |
42,688 |
|
$ |
(6,918 |
) |
$ |
45,472 |
|
$ |
24,031 |
|
||||
Less: Purchases of property and equipment |
|
(41,896 |
) |
|
(28,812 |
) |
|
(103,461 |
) |
|
(64,652 |
) |
||||
Less: Capitalized internal-use software |
|
(5,406 |
) |
|
(4,002 |
) |
|
(15,440 |
) |
|
(11,105 |
) |
||||
Free cash flow |
$ |
(4,614 |
) |
$ |
(39,732 |
) |
$ |
(73,429 |
) |
$ |
(51,726 |
) |
||||
Net cash used in investing activities |
$ |
(48,887 |
) |
$ |
(444,773 |
) |
$ |
(215,740 |
) |
$ |
(354,527 |
) |
||||
Net cash provided by (used in) financing activities |
$ |
1,439 |
|
$ |
820,183 |
|
$ |
(1,672 |
) |
$ |
837,712 |
|
||||
Net cash provided by (used in) operating activities
|
|
17 |
% |
|
(4 |
)% |
|
6 |
% |
|
5 |
% |
||||
Less: Purchases of property and equipment
|
|
(17 |
)% |
|
(17 |
)% |
|
(14 |
)% |
|
(14 |
)% |
||||
Less: Capitalized internal-use software
|
|
(2 |
)% |
|
(2 |
)% |
|
(2 |
)% |
|
(2 |
)% |
||||
Free cash flow margin(1) |
|
(2 |
)% |
|
(23 |
)% |
|
(10 |
)% |
|
(11 |
)% |
____________ | ||
(1) |
Totals may not sum due to rounding. Figures are calculated based upon the respective underlying non-rounded data. |
|
Explanation of Non-GAAP Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in
Expenses Excluded from Non-GAAP Measures. We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. We exclude employer payroll tax expenses related to stock-based compensation which is a cash expense, from certain of our non-GAAP financial measures because such expenses are dependent on the price of our common stock and other factors that are beyond our control and do not correlate to the operation of our business. We exclude amortization of acquired intangible assets, which is a non-cash expense, related to business combinations from certain of our non-GAAP financial measures because such expenses are related to business combinations and have no direct correlation to the operation of our business. We exclude acquisition-related and other expenses from certain of our non-GAAP financial measures because such expenses are related to business combinations and have no direct correlation to the operation of our business. Acquisition-related and other expenses can be cash or non-cash expenses and include third-party transaction costs and compensation expense for key acquired personnel. We exclude amortization of issuance costs, which is a non-cash expense, from certain of our non-GAAP financial measures because such expenses have no direct correlation to the operation of our business. Prior to adoption of ASU 2020-06 on
Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define non-GAAP gross profit and non-GAAP gross margin as
Non-GAAP Income (Loss) from Operations and Non-GAAP Operating Margin. We define non-GAAP income (loss) from operations and non-GAAP operating margin as
Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share, Diluted. We define non-GAAP net income (loss) as GAAP net income (loss) adjusted for stock-based compensation and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related and other expenses, amortization of issuance costs, loss on extinguishment of debt, and a non-GAAP provision for (benefit from) income taxes. Generally, the difference between our GAAP and non-GAAP income tax expense (benefit) is primarily due to adjustments in stock-based compensation and related employer payroll taxes, amortization of acquired intangibles associated with business combinations, acquisition-related and other expenses, and amortization of issuance costs. We define non-GAAP net loss per share, diluted, as non-GAAP net loss divided by the weighted-average common shares outstanding. Calculation of non-GAAP net loss per share, diluted excludes all potentially dilutive securities as their effect is antidilutive. We define non-GAAP net income per share, diluted, as non-GAAP net income divided by the weighted-average common shares outstanding, adjusted for dilutive potential shares that were assumed outstanding during period. Currently, potential dilutive effect mainly consists of employee equity incentive plans and convertible senior notes. We believe that excluding these items from non-GAAP net income (loss) share, diluted, provides management and investors with greater visibility into the underlying performance of our core business operating results.
Free Cash Flow and Free Cash Flow Margin. Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized internal-use software. Free cash flow margin is calculated as free cash flow divided by revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our operations that, after the investments in property and equipment and capitalized internal-use software, can be used for strategic initiatives, including investing in our business, and strengthening our financial position. We believe that historical and future trends in free cash flow and free cash flow margin, even if negative, provide useful information about the amount of cash generated (or consumed) by our operating activities that is available (or not available) to be used for strategic initiatives. For example, if free cash flow is negative, we may need to access cash reserves or other sources of capital to invest in strategic initiatives. One limitation of free cash flow and free cash flow margin is that they do not reflect our future contractual commitments. Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221103005366/en/
Investor Relations Information
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Press Contact Information
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