Cloudflare Announces Third Quarter 2024 Financial Results
Cloudflare (NYSE: NET) reported strong Q3 2024 financial results with revenue reaching $430.1 million, up 28% year-over-year. The company posted a GAAP loss from operations of $30.8 million but achieved non-GAAP income from operations of $63.5 million. Operating cash flow was $104.7 million with free cash flow of $45.3 million.
Notable achievements include adding a record 219 large customers, with 35% of Fortune 500 companies now being paying customers. The company provided Q4 2024 guidance with expected revenue of $451.0-452.0 million and full-year 2024 revenue guidance of $1,661.0-1,662.0 million.
Cloudflare (NYSE: NET) ha riportato risultati finanziari solidi per il terzo trimestre del 2024, con un fatturato che ha raggiunto 430,1 milioni di dollari, in aumento del 28% rispetto all'anno precedente. L'azienda ha registrato una perdita operativa GAAP di 30,8 milioni di dollari, ma ha ottenuto un reddito operativo non GAAP di 63,5 milioni di dollari. Il flusso di cassa operativo è stato di 104,7 milioni di dollari, con un flusso di cassa libero di 45,3 milioni di dollari.
Tra i risultati notevoli c'è l'aggiunta di un numero record di 219 grandi clienti, con il 35% delle aziende Fortune 500 ora clienti paganti. L'azienda ha fornito previsioni per il quarto trimestre del 2024, con un fatturato atteso di 451,0-452,0 milioni di dollari e una previsione di fatturato per l'intero anno 2024 di 1.661,0-1.662,0 milioni di dollari.
Cloudflare (NYSE: NET) reportó sólidos resultados financieros para el tercer trimestre de 2024, con ingresos que alcanzaron 430,1 millones de dólares, un aumento del 28 % en comparación con el año anterior. La compañía registró una pérdida de operación GAAP de 30,8 millones de dólares, pero logró un ingreso operativo no GAAP de 63,5 millones de dólares. El flujo de caja operativo fue de 104,7 millones de dólares con un flujo de caja libre de 45,3 millones de dólares.
Logros notables incluyen la incorporación de un récord de 219 grandes clientes, con el 35 % de las empresas Fortune 500 ahora siendo clientes de pago. La compañía proporcionó orientación para el cuarto trimestre de 2024 con ingresos esperados de 451,0 a 452,0 millones de dólares y una guía de ingresos para todo el año 2024 de 1.661,0 a 1.662,0 millones de dólares.
클라우드플레어 (NYSE: NET)는 2024년 3분기 실적을 발표하며 수익이 4억 3천만 달러에 달해 지난해 대비 28% 증가했다고 보고했습니다. 회사는 GAAP 기준으로 운영 손실이 3천만 8천 달러였으나, 비GAAP 기준으로 운영 수익은 6천 3백 5십만 달러를 달성했습니다. 운영 현금 흐름은 1억 470만 달러, 자유 현금 흐름은 4천 5백 30만 달러로 집계되었습니다.
주목할 만한 성과로는 기록적으로 219명의 대 고객을 추가하였으며, Fortune 500 기업의 35%가 이제 유료 고객이 되었습니다. 회사는 2024년 4분기 가이던스를 제공하며 예상 수익이 4억 5천 1백만에서 4억 5천 2백만 달러, 2024년 전체 연간 수익은 16억 6천 1백만에서 16억 6천 2백만 달러로 예상하고 있습니다.
Cloudflare (NYSE: NET) a présenté de solides résultats financiers pour le troisième trimestre 2024, avec des revenus atteignant 430,1 millions de dollars, en hausse de 28 % par rapport à l'année précédente. L'entreprise a affiché une perte d'exploitation selon les normes GAAP de 30,8 millions de dollars, mais a réalisé un revenu d'exploitation non GAAP de 63,5 millions de dollars. Le flux de trésorerie d'exploitation s'est élevé à 104,7 millions de dollars, avec un flux de trésorerie libre de 45,3 millions de dollars.
Parmi les réalisations notables figure l'ajout d'un nombre record de 219 grands clients, avec 35 % des entreprises du Fortune 500 devenant désormais des clients payants. L'entreprise a également donné des prévisions pour le quatrième trimestre 2024, avec des revenus attendus entre 451,0 et 452,0 millions de dollars et des prévisions de revenus pour l'année complète 2024 de 1,661 à 1,662 milliards de dollars.
Cloudflare (NYSE: NET) berichtete über starke Finanzzahlen für das dritte Quartal 2024, mit einem Umsatz von 430,1 Millionen US-Dollar, was einem Anstieg von 28 % im Vergleich zum Vorjahr entspricht. Das Unternehmen verzeichnete einen GAAP-Betriebsverlust von 30,8 Millionen US-Dollar, erzielte jedoch einen Non-GAAP-Betriebsgewinn von 63,5 Millionen US-Dollar. Der operative Cashflow betrug 104,7 Millionen US-Dollar, während der freie Cashflow bei 45,3 Millionen US-Dollar lag.
Zu den bemerkenswerten Erfolgen zählt die Gewinnung von insgesamt 219 großen Kunden, wobei 35 % der Fortune-500-Unternehmen jetzt zahlende Kunden sind. Das Unternehmen gab einen Ausblick für das vierte Quartal 2024 mit einem erwarteten Umsatz von 451,0 bis 452,0 Millionen US-Dollar und einer Umsatzprognose für das Gesamtjahr 2024 von 1,661 Milliarden bis 1,662 Milliarden US-Dollar.
- Revenue grew 28% YoY to $430.1 million
- Non-GAAP income from operations increased to $63.5 million (14.8% of revenue) from $42.5 million year-over-year
- Operating cash flow improved to $104.7 million from $68.1 million YoY
- Added record 219 large customers
- Gross margin improved to 77.7% from 76.7% YoY
- Strong cash position with $1,823.8 million in cash and securities
- GAAP net loss of $15.3 million in Q3
- GAAP loss from operations of $30.8 million (7.2% of revenue)
Insights
Cloudflare delivered strong Q3 results with notable improvements across key metrics.
The addition of 219 large customers and
Q4 guidance of
Cloudflare's performance reflects the growing demand for edge computing and security services. The company's success in penetrating the Fortune 500 market validates its enterprise-grade capabilities and positions it well against competitors like Akamai and Fastly.
The expansion of large customer accounts indicates successful up-selling and cross-selling of their expanding product portfolio. Their role in protecting U.S. election infrastructure demonstrates their technical capabilities and strategic importance in cybersecurity, which should drive further government and enterprise adoption.
-
Third quarter revenue totaled
, representing an increase of$430.1 million 28% year-over-year -
GAAP loss from operations of
, or$30.8 million 7% of revenue, and non-GAAP income from operations of , or$63.5 million 15% of revenue -
Operating cash flow of
, or$104.7 million 24% of revenue, and free cash flow of , or$45.3 million 11% of revenue
"I am pleased with our results for the third quarter—exceeding expectations for revenue, operating margin, and free cash flow while also reaching a key inflection point in the transformation of our go-to-market organization. In addition, we added a record 219 large customers and achieved a new milestone—
Third Quarter Fiscal 2024 Financial Highlights
-
Revenue: Total revenue of
, representing an increase of$430.1 million 28% year-over-year. -
Gross Profit: GAAP gross profit was
, or$334.1 million 77.7% gross margin, compared to , or$257.5 million 76.7% , in the third quarter of 2023. Non-GAAP gross profit was , or$339.1 million 78.8% gross margin, compared to , or$264.2 million 78.7% , in the third quarter of 2023. -
Operating Income (Loss): GAAP loss from operations was
, or$30.8 million 7.2% of revenue, compared to , or$39.2 million 11.7% of revenue, in the third quarter of 2023. Non-GAAP income from operations was , or$63.5 million 14.8% of revenue, compared to , or$42.5 million 12.7% of revenue, in the third quarter of 2023. -
Net Income (Loss): GAAP net loss was
, compared to$15.3 million in the third quarter of 2023. GAAP net loss per basic and diluted share was$23.5 million , compared to$0.04 in the third quarter of 2023. Non-GAAP net income was$0.07 , compared to$72.6 million in the third quarter of 2023. Non-GAAP net income per diluted share was$55.3 million , compared to$0.20 in the third quarter of 2023.$0.16 -
Cash Flow: Net cash flow from operating activities was
, compared to$104.7 million for the third quarter of 2023. Free cash flow was$68.1 million , or$45.3 million 11% of revenue, compared to , or$34.9 million 10% of revenue, in the third quarter of 2023. -
Cash, cash equivalents, and available-for-sale securities were
as of September 30, 2024.$1,823.8 million
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
For the fourth quarter of fiscal 2024, we expect:
-
Total revenue of
to$451.0 $452.0 million -
Non-GAAP income from operations of
to$57.0 $58.0 million -
Non-GAAP net income per share of
, utilizing weighted average common shares outstanding of approximately 360 million$0.18
For the full year fiscal 2024, we expect:
-
Total revenue of
to$1,661.0 $1,662.0 million -
Non-GAAP income from operations of
to$220.0 $221.0 million -
Non-GAAP net income per share of
, utilizing weighted average common shares outstanding of approximately 357 million$0.74
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Conference Call Information
Cloudflare will host an investor conference call to discuss its third quarter ended September 30, 2024 earnings results today at 2:00 p.m. Pacific time (5:00 p.m. Eastern time). Interested parties can access the call by dialing (877) 400-4517 from
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, X account, Facebook account, and Instagram account, in addition to filings made with the Securities and Exchange Commission (SEC) and public conference calls, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
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 income from operations and non-GAAP net income per share, shares outstanding, the benefits to customers from using our products, the expected functionality and performance of our products, the demand by customers for our products, our plans and objectives for future operations, growth, initiatives, or strategies, our market opportunity, and comments made by our CEO and others. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: the impact of adverse macroeconomic conditions, such as inflation, high interest rates, actual or potential bank failures and recessionary concerns, on our and our customers’, vendors’, and partners’ operations and future financial performance; the impact of the conflicts in the
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
Cloudflare, Inc. (NYSE: NET) is the leading connectivity cloud company on a mission to help build a better Internet. It empowers organizations to make their employees, applications and networks faster and more secure everywhere, while reducing complexity and cost. Cloudflare’s connectivity cloud delivers the most full-featured, unified platform of cloud-native products and developer tools, so any organization can gain the control they need to work, develop, and accelerate their business.
Powered by one of the world’s largest and most interconnected networks, Cloudflare blocks billions of threats online for its customers every day. It is trusted by millions of organizations – from the largest brands to entrepreneurs and small businesses to nonprofits, humanitarian groups, and governments across the globe.
Learn more about Cloudflare’s connectivity cloud at cloudflare.com/connectivity-cloud. Learn more about the latest Internet trends and insights at radar.cloudflare.com.
CLOUDFLARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) |
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenue |
$ |
430,082 |
|
|
$ |
335,603 |
|
|
$ |
1,209,680 |
|
|
$ |
934,272 |
|
Cost of revenue(1)(2) |
|
95,967 |
|
|
|
78,069 |
|
|
|
270,016 |
|
|
|
223,722 |
|
Gross profit |
|
334,115 |
|
|
|
257,534 |
|
|
|
939,664 |
|
|
|
710,550 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Sales and marketing(1)(2)(4) |
|
185,221 |
|
|
|
150,214 |
|
|
|
553,824 |
|
|
|
433,903 |
|
Research and development(1) |
|
110,911 |
|
|
|
90,593 |
|
|
|
301,161 |
|
|
|
261,742 |
|
General and administrative(1)(3) |
|
68,777 |
|
|
|
55,939 |
|
|
|
204,721 |
|
|
|
157,561 |
|
Total operating expenses |
|
364,909 |
|
|
|
296,746 |
|
|
|
1,059,706 |
|
|
|
853,206 |
|
Loss from operations |
|
(30,794 |
) |
|
|
(39,212 |
) |
|
|
(120,042 |
) |
|
|
(142,656 |
) |
Non-operating income (expense): |
|
|
|
|
|
|
|
||||||||
Interest income |
|
22,471 |
|
|
|
17,954 |
|
|
|
65,438 |
|
|
|
47,977 |
|
Interest expense(5) |
|
(1,433 |
) |
|
|
(1,138 |
) |
|
|
(3,751 |
) |
|
|
(4,803 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(50,300 |
) |
Other income (expense), net |
|
(3,066 |
) |
|
|
115 |
|
|
|
(1,673 |
) |
|
|
(2,269 |
) |
Total non-operating income (expense), net |
|
17,972 |
|
|
|
16,931 |
|
|
|
60,014 |
|
|
|
(9,395 |
) |
Loss before income taxes |
|
(12,822 |
) |
|
|
(22,281 |
) |
|
|
(60,028 |
) |
|
|
(152,051 |
) |
Provision for income taxes |
|
2,509 |
|
|
|
1,254 |
|
|
|
5,924 |
|
|
|
4,033 |
|
Net loss |
$ |
(15,331 |
) |
|
$ |
(23,535 |
) |
|
$ |
(65,952 |
) |
|
$ |
(156,084 |
) |
Net loss per share attributable to common stockholders, basic and diluted |
$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.47 |
) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
|
342,356 |
|
|
|
334,666 |
|
|
|
340,539 |
|
|
|
332,600 |
|
____________ |
|||||||||||||||
(1) Includes stock-based compensation and related employer payroll taxes as follows: |
|||||||||||||||
Cost of revenue |
$ |
2,943 |
|
$ |
2,367 |
|
$ |
8,776 |
|
$ |
6,296 |
||||
Sales and marketing |
|
24,677 |
|
|
20,674 |
|
|
71,081 |
|
|
57,276 |
||||
Research and development |
|
40,459 |
|
|
36,353 |
|
|
106,545 |
|
|
103,142 |
||||
General and administrative |
|
23,688 |
|
|
17,463 |
|
|
71,599 |
|
|
43,482 |
||||
Total stock-based compensation and related employer payroll taxes |
$ |
91,767 |
|
$ |
76,857 |
|
$ |
258,001 |
|
$ |
210,196 |
(2) Includes amortization of acquired intangible assets as follows: |
|||||||||||||||
Cost of revenue |
$ |
2,054 |
|
$ |
4,313 |
|
$ |
8,364 |
|
$ |
12,938 |
||||
Sales and marketing |
|
363 |
|
|
575 |
|
|
1,301 |
|
|
1,725 |
||||
Total amortization of acquired intangible assets |
$ |
2,417 |
|
$ |
4,888 |
|
$ |
9,665 |
|
$ |
14,663 |
(3) Includes acquisition-related and other expenses as follows: |
|||||||||||||||
General and administrative |
$ |
78 |
|
$ |
— |
|
$ |
240 |
|
$ |
— |
||||
Total acquisition-related and other expenses |
$ |
78 |
|
$ |
— |
|
$ |
240 |
|
$ |
— |
(4) Includes one-time compensation charge as follows: |
|||||||||||||||
Sales and marketing |
$ |
— |
|
$ |
— |
|
$ |
15,000 |
|
$ |
— |
||||
Total one-time compensation charge |
$ |
— |
|
$ |
— |
|
$ |
15,000 |
|
$ |
— |
(5) Includes amortization of debt issuance costs as follows: |
|||||||||||||||
Interest expense |
$ |
990 |
|
$ |
1,059 |
|
$ |
2,970 |
|
$ |
3,529 |
||||
Total amortization of debt issuance costs |
$ |
990 |
|
$ |
1,059 |
|
$ |
2,970 |
|
$ |
3,529 |
||||
CLOUDFLARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value) (unaudited) |
|||||||
|
September 30,
|
|
December 31,
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
182,883 |
|
|
$ |
86,864 |
|
Available-for-sale securities |
|
1,640,963 |
|
|
|
1,586,880 |
|
Accounts receivable, net |
|
252,927 |
|
|
|
248,268 |
|
Contract assets |
|
13,458 |
|
|
|
11,041 |
|
Restricted cash short-term |
|
1,000 |
|
|
|
2,522 |
|
Prepaid expenses and other current assets |
|
72,647 |
|
|
|
47,502 |
|
Total current assets |
|
2,163,878 |
|
|
|
1,983,077 |
|
Property and equipment, net |
|
396,552 |
|
|
|
322,813 |
|
Goodwill |
|
157,200 |
|
|
|
148,047 |
|
Acquired intangible assets, net |
|
19,247 |
|
|
|
19,564 |
|
Operating lease right-of-use assets |
|
151,513 |
|
|
|
138,556 |
|
Deferred contract acquisition costs, noncurrent |
|
152,380 |
|
|
|
133,236 |
|
Restricted cash |
|
2,023 |
|
|
|
1,838 |
|
Other noncurrent assets |
|
19,953 |
|
|
|
12,636 |
|
Total assets |
$ |
3,062,746 |
|
|
$ |
2,759,767 |
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
74,110 |
|
|
$ |
53,727 |
|
Accrued expenses and other current liabilities |
|
68,885 |
|
|
|
63,597 |
|
Accrued compensation |
|
65,797 |
|
|
|
63,801 |
|
Operating lease liabilities |
|
43,028 |
|
|
|
38,351 |
|
Deferred revenue |
|
389,795 |
|
|
|
347,608 |
|
Total current liabilities |
|
641,615 |
|
|
|
567,084 |
|
Convertible senior notes, net |
|
1,286,332 |
|
|
|
1,283,362 |
|
Operating lease liabilities, noncurrent |
|
121,374 |
|
|
|
113,490 |
|
Deferred revenue, noncurrent |
|
21,990 |
|
|
|
17,244 |
|
Other noncurrent liabilities |
|
18,345 |
|
|
|
15,540 |
|
Total liabilities |
|
2,089,656 |
|
|
|
1,996,720 |
|
Stockholders’ Equity |
|
|
|
||||
Class A common stock; |
|
305 |
|
|
|
297 |
|
Class B common stock; |
|
37 |
|
|
|
40 |
|
Additional paid-in capital |
|
2,046,593 |
|
|
|
1,784,566 |
|
Accumulated deficit |
|
(1,089,792 |
) |
|
|
(1,023,840 |
) |
Accumulated other comprehensive income |
|
15,947 |
|
|
|
1,984 |
|
Total stockholders’ equity |
|
973,090 |
|
|
|
763,047 |
|
Total liabilities and stockholders’ equity |
$ |
3,062,746 |
|
|
$ |
2,759,767 |
|
CLOUDFLARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
|||||||
|
Nine Months Ended September 30, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Cash Flows from Operating Activities |
|
|
|
||||
Net loss |
$ |
(65,952 |
) |
|
$ |
(156,084 |
) |
Adjustments to reconcile net loss to cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization expense |
|
91,476 |
|
|
|
99,640 |
|
Non-cash operating lease costs |
|
35,624 |
|
|
|
32,899 |
|
Amortization of deferred contract acquisition costs |
|
56,707 |
|
|
|
44,757 |
|
Stock-based compensation expense |
|
243,969 |
|
|
|
199,565 |
|
Amortization of debt issuance costs |
|
2,970 |
|
|
|
3,529 |
|
Net accretion of discounts and amortization of premiums on available-for-sale securities |
|
(33,980 |
) |
|
|
(31,039 |
) |
Deferred income taxes |
|
(1,338 |
) |
|
|
(588 |
) |
Provision for bad debt |
|
7,357 |
|
|
|
9,527 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
50,300 |
|
Other |
|
361 |
|
|
|
713 |
|
Changes in operating assets and liabilities, net of effect of acquisitions: |
|
|
|
||||
Accounts receivable, net |
|
(12,016 |
) |
|
|
(60,451 |
) |
Contract assets |
|
(2,417 |
) |
|
|
(3,397 |
) |
Deferred contract acquisition costs |
|
(75,851 |
) |
|
|
(66,766 |
) |
Prepaid expenses and other current assets |
|
(25,313 |
) |
|
|
(17,115 |
) |
Other noncurrent assets |
|
621 |
|
|
|
(1,189 |
) |
Accounts payable |
|
7,817 |
|
|
|
5,252 |
|
Accrued expenses and other current liabilities |
|
11,316 |
|
|
|
8,378 |
|
Operating lease liabilities |
|
(36,020 |
) |
|
|
(31,096 |
) |
Deferred revenue |
|
46,933 |
|
|
|
81,075 |
|
Other noncurrent liabilities |
|
857 |
|
|
|
1,055 |
|
Net cash provided by operating activities |
|
253,121 |
|
|
|
168,965 |
|
Cash Flows from Investing Activities |
|
|
|
||||
Purchases of property and equipment |
|
(111,884 |
) |
|
|
(83,580 |
) |
Capitalized internal-use software |
|
(22,076 |
) |
|
|
(16,637 |
) |
Asset acquisitions and business combinations, net of cash acquired |
|
(15,015 |
) |
|
|
— |
|
Purchases of available-for-sale securities |
|
(1,187,287 |
) |
|
|
(1,293,014 |
) |
Sales of available-for-sale securities |
|
— |
|
|
|
20,248 |
|
Maturities of available-for-sale securities |
|
1,173,041 |
|
|
|
1,288,364 |
|
Other investing activities |
|
29 |
|
|
|
65 |
|
Net cash used in investing activities |
|
(163,192 |
) |
|
|
(84,554 |
) |
Cash Flows from Financing Activities |
|
|
|
||||
Repayments of convertible senior notes |
|
— |
|
|
|
(207,649 |
) |
Cash paid for issuance costs on revolving credit facility |
|
(2,148 |
) |
|
|
— |
|
Proceeds from the exercise of stock options |
|
9,031 |
|
|
|
11,384 |
|
Proceeds from the early exercise of stock options |
|
6 |
|
|
|
— |
|
Repurchases of unvested common stock |
|
— |
|
|
|
(34 |
) |
Proceeds from the issuance of common stock for employee stock purchase plan |
|
10,455 |
|
|
|
10,450 |
|
Payment of tax withholding obligation on RSU settlement |
|
(12,591 |
) |
|
|
(5,643 |
) |
Payment of indemnity holdback |
|
— |
|
|
|
(10,483 |
) |
Net cash provided by (used in) financing activities |
|
4,753 |
|
|
|
(201,975 |
) |
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
94,682 |
|
|
|
(117,564 |
) |
Cash, cash equivalents, and restricted cash, beginning of period |
|
91,224 |
|
|
|
215,204 |
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
185,906 |
|
|
$ |
97,640 |
|
CLOUDFLARE, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Reconciliation of cost of revenue: |
|
|
|
|
|
|
|
|
||||||||
GAAP cost of revenue |
|
$ |
95,967 |
|
|
$ |
78,069 |
|
|
$ |
270,016 |
|
|
$ |
223,722 |
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(2,943 |
) |
|
|
(2,367 |
) |
|
|
(8,776 |
) |
|
|
(6,296 |
) |
Less: Amortization of acquired intangible assets |
|
|
(2,054 |
) |
|
|
(4,313 |
) |
|
|
(8,364 |
) |
|
|
(12,938 |
) |
Non-GAAP cost of revenue |
|
$ |
90,970 |
|
|
$ |
71,389 |
|
|
$ |
252,876 |
|
|
$ |
204,488 |
|
Reconciliation of gross profit: |
|
|
|
|
|
|
|
|
||||||||
GAAP gross profit |
|
$ |
334,115 |
|
|
$ |
257,534 |
|
|
$ |
939,664 |
|
|
$ |
710,550 |
|
Add: Stock-based compensation and related employer payroll taxes |
|
|
2,943 |
|
|
|
2,367 |
|
|
|
8,776 |
|
|
|
6,296 |
|
Add: Amortization of acquired intangible assets |
|
|
2,054 |
|
|
|
4,313 |
|
|
|
8,364 |
|
|
|
12,938 |
|
Non-GAAP gross profit |
|
$ |
339,112 |
|
|
$ |
264,214 |
|
|
$ |
956,804 |
|
|
$ |
729,784 |
|
GAAP gross margin |
|
|
77.7 |
% |
|
|
76.7 |
% |
|
|
77.7 |
% |
|
|
76.1 |
% |
Non-GAAP gross margin |
|
|
78.8 |
% |
|
|
78.7 |
% |
|
|
79.1 |
% |
|
|
78.1 |
% |
Reconciliation of operating expenses: |
|
|
|
|
|
|
|
|
||||||||
GAAP sales and marketing |
|
$ |
185,221 |
|
|
$ |
150,214 |
|
|
$ |
553,824 |
|
|
$ |
433,903 |
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(24,677 |
) |
|
|
(20,674 |
) |
|
|
(71,081 |
) |
|
|
(57,276 |
) |
Less: Amortization of acquired intangible assets |
|
|
(363 |
) |
|
|
(575 |
) |
|
|
(1,301 |
) |
|
|
(1,725 |
) |
Less: One-time compensation charge |
|
|
— |
|
|
|
— |
|
|
|
(15,000 |
) |
|
|
— |
|
Non-GAAP sales and marketing |
|
$ |
160,181 |
|
|
$ |
128,965 |
|
|
$ |
466,442 |
|
|
$ |
374,902 |
|
GAAP research and development |
|
$ |
110,911 |
|
|
$ |
90,593 |
|
|
$ |
301,161 |
|
|
$ |
261,742 |
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(40,459 |
) |
|
|
(36,353 |
) |
|
|
(106,545 |
) |
|
|
(103,142 |
) |
Non-GAAP research and development |
|
$ |
70,452 |
|
|
$ |
54,240 |
|
|
$ |
194,616 |
|
|
$ |
158,600 |
|
GAAP general and administrative |
|
$ |
68,777 |
|
|
$ |
55,939 |
|
|
$ |
204,721 |
|
|
$ |
157,561 |
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(23,688 |
) |
|
|
(17,463 |
) |
|
|
(71,599 |
) |
|
|
(43,482 |
) |
Less: Acquisition-related and other expenses |
|
|
(78 |
) |
|
|
— |
|
|
|
(240 |
) |
|
|
— |
|
Non-GAAP general and administrative |
|
$ |
45,011 |
|
|
$ |
38,476 |
|
|
$ |
132,882 |
|
|
$ |
114,079 |
|
Reconciliation of income (loss) from operations: |
|
|
|
|
|
|
|
|
||||||||
GAAP loss from operations |
|
$ |
(30,794 |
) |
|
$ |
(39,212 |
) |
|
$ |
(120,042 |
) |
|
$ |
(142,656 |
) |
Add: Stock-based compensation and related employer payroll taxes |
|
|
91,767 |
|
|
|
76,857 |
|
|
|
258,001 |
|
|
|
210,196 |
|
Add: Amortization of acquired intangible assets |
|
|
2,417 |
|
|
|
4,888 |
|
|
|
9,665 |
|
|
|
14,663 |
|
Add: Acquisition-related and other expenses |
|
|
78 |
|
|
|
— |
|
|
|
240 |
|
|
|
— |
|
Add: One-time compensation charge |
|
|
— |
|
|
|
— |
|
|
|
15,000 |
|
|
|
— |
|
Non-GAAP income from operations |
|
$ |
63,468 |
|
|
$ |
42,533 |
|
|
$ |
162,864 |
|
|
$ |
82,203 |
|
GAAP operating margin |
|
|
(7.2 |
)% |
|
|
(11.7 |
)% |
|
|
(9.9 |
)% |
|
|
(15.3 |
)% |
Non-GAAP operating margin |
|
|
14.8 |
% |
|
|
12.7 |
% |
|
|
13.5 |
% |
|
|
8.8 |
% |
CLOUDFLARE, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Reconciliation of interest expense: |
|
|
|
|
|
|
|
|
||||||||
GAAP interest expense |
|
$ |
(1,433 |
) |
|
$ |
(1,138 |
) |
|
$ |
(3,751 |
) |
|
$ |
(4,803 |
) |
Add: Amortization of debt issuance costs |
|
|
990 |
|
|
|
1,059 |
|
|
|
2,970 |
|
|
|
3,529 |
|
Non-GAAP interest expense |
|
$ |
(443 |
) |
|
$ |
(79 |
) |
|
$ |
(781 |
) |
|
$ |
(1,274 |
) |
Reconciliation of loss on extinguishment of debt: |
|
|
|
|
|
|
|
|
||||||||
GAAP loss on extinguishment of debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(50,300 |
) |
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50,300 |
|
Non-GAAP loss on extinguishment of debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Reconciliation of provision for income taxes: |
|
|
|
|
|
|
|
|
||||||||
GAAP provision for income taxes |
|
$ |
2,509 |
|
|
$ |
1,254 |
|
|
$ |
5,924 |
|
|
$ |
4,033 |
|
Income tax effect of non-GAAP adjustments |
|
|
7,346 |
|
|
|
4,005 |
|
|
|
19,718 |
|
|
|
6,454 |
|
Non-GAAP provision for income taxes |
|
$ |
9,855 |
|
|
$ |
5,259 |
|
|
$ |
25,642 |
|
|
$ |
10,487 |
|
Reconciliation of net income (loss) and net income (loss) per share: |
|
|
|
|
|
|
|
|
||||||||
GAAP net loss attributable to common stockholders |
|
$ |
(15,331 |
) |
|
$ |
(23,535 |
) |
|
$ |
(65,952 |
) |
|
$ |
(156,084 |
) |
Add: Stock-based compensation and related employer payroll taxes |
|
|
91,767 |
|
|
|
76,857 |
|
|
|
258,001 |
|
|
|
210,196 |
|
Add: Amortization of acquired intangible assets |
|
|
2,417 |
|
|
|
4,888 |
|
|
|
9,665 |
|
|
|
14,663 |
|
Add: Acquisition-related and other expenses |
|
|
78 |
|
|
|
— |
|
|
|
240 |
|
|
|
— |
|
Add: One-time compensation charge |
|
|
— |
|
|
|
— |
|
|
|
15,000 |
|
|
|
— |
|
Add: Amortization of debt issuance costs |
|
|
990 |
|
|
|
1,059 |
|
|
|
2,970 |
|
|
|
3,529 |
|
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50,300 |
|
Income tax effect of non-GAAP adjustments |
|
|
(7,346 |
) |
|
|
(4,005 |
) |
|
|
(19,718 |
) |
|
|
(6,454 |
) |
Non-GAAP net income |
|
$ |
72,575 |
|
|
$ |
55,264 |
|
|
$ |
200,206 |
|
|
$ |
116,150 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP net loss per share, basic |
|
$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.47 |
) |
|
|
|
|
|
|
|
|
|
||||||||
GAAP net loss per share, diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.47 |
) |
Add: Stock-based compensation and related employer payroll taxes |
|
|
0.27 |
|
|
|
0.23 |
|
|
|
0.76 |
|
|
|
0.63 |
|
Add: Amortization of acquired intangible assets |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.04 |
|
Add: Acquisition-related and other expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add: One-time compensation charge |
|
|
— |
|
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
Add: Amortization of debt issuance costs |
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
0.01 |
|
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.15 |
|
Income tax effect of non-GAAP adjustment |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.06 |
) |
|
|
(0.02 |
) |
Effect of dilutive shares |
|
|
(0.02 |
) |
|
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
Non-GAAP net income per share, diluted(1)(2) |
|
$ |
0.20 |
|
|
$ |
0.16 |
|
|
$ |
0.56 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic |
|
|
342,356 |
|
|
|
334,666 |
|
|
|
340,539 |
|
|
|
332,600 |
|
Weighted-average shares used in computing non-GAAP net income per share attributable to common stockholders, diluted(2) |
|
|
356,855 |
|
|
|
351,709 |
|
|
|
356,789 |
|
|
|
343,432 |
|
____________ |
|
(1) |
Totals may not sum due to rounding. Figures are calculated based upon the respective underlying non-rounded data. |
(2) |
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. |
CLOUDFLARE, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited) |
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Free cash flow |
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities |
$ |
104,727 |
|
|
$ |
68,100 |
|
|
$ |
253,121 |
|
|
$ |
168,965 |
|
Less: Purchases of property and equipment |
|
(50,203 |
) |
|
|
(27,291 |
) |
|
|
(111,884 |
) |
|
|
(83,580 |
) |
Less: Capitalized internal-use software |
|
(9,245 |
) |
|
|
(5,934 |
) |
|
|
(22,076 |
) |
|
|
(16,637 |
) |
Free cash flow |
$ |
45,279 |
|
|
$ |
34,875 |
|
|
$ |
119,161 |
|
|
$ |
68,748 |
|
Net cash used in investing activities |
$ |
(76,400 |
) |
|
$ |
(100,229 |
) |
|
$ |
(163,192 |
) |
|
$ |
(84,554 |
) |
Net cash provided by (used in) financing activities |
$ |
(2,411 |
) |
|
$ |
(34,610 |
) |
|
$ |
4,753 |
|
|
$ |
(201,975 |
) |
Net cash provided by operating activities (percentage of revenue) |
|
24 |
% |
|
|
20 |
% |
|
|
21 |
% |
|
|
18 |
% |
Less: Purchases of property and equipment (percentage of revenue) |
|
(11 |
)% |
|
|
(8 |
)% |
|
|
(9 |
)% |
|
|
(9 |
)% |
Less: Capitalized internal-use software (percentage of revenue) |
|
(2 |
)% |
|
|
(2 |
)% |
|
|
(2 |
)% |
|
|
(2 |
)% |
Free cash flow margin(1) |
|
11 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
7 |
% |
____________ |
|
(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
Items 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 Class A 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 also excluded the one-time cash compensation charge incurred during the three months ended March 31, 2024 from certain of our non-GAAP financial measures because it was not attributable to services provided and did not correlate to the ongoing operation of our business. We exclude amortization of debt issuance costs and loss on extinguishment of debt, which are non-cash expenses, from certain of our non-GAAP financial measures because such expenses have no direct correlation to the operation of our business.
Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define non-GAAP gross profit and non-GAAP gross margin as
Non-GAAP Income from Operations and Non-GAAP Operating Margin. We define non-GAAP income from operations and non-GAAP operating margin as
Non-GAAP Net Income and Non-GAAP Net Income per Share, Diluted. We define non-GAAP net income as GAAP net income (loss) adjusted for stock-based compensation expense and its 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 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 per 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 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 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.
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Investor Relations Information
Phil Winslow
ir@cloudflare.com
Press Contact Information
Daniella Vallurupalli
press@cloudflare.com
Source: Cloudflare, Inc.
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