10-QPeriod: Q1 FY2023

Cloudflare, Inc. Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 27, 2023For Securities:NET

Summary

Cloudflare, Inc. (NET) reported its first-quarter 2023 financial results, demonstrating continued strong revenue growth, up 37% year-over-year to $290.2 million. This growth was driven by an increase in paying customers and strong retention from existing ones. The company also saw a positive shift in cash flow, generating $36.4 million in net cash from operating activities, a significant improvement from the prior year's comparable period, and positive free cash flow of $13.9 million. This indicates improving operational efficiency and a move towards stronger financial health. Despite the growth and improved cash flow, Cloudflare continues to operate at a net loss, reporting a net loss of $38.1 million for the quarter. However, this loss narrowed compared to the prior year. The company's significant investments in research and development and sales and marketing continue to impact profitability, which is a key aspect for investors to monitor. The substantial amount of available-for-sale securities provides a strong liquidity position, giving the company flexibility for future investments and operational needs.

Financial Highlights

51 data points
Beta

Revenue

$290.18M

75.7% Gross Margin

Net Income

-$38.08M

-13.1% Net Margin

EPS (Diluted)

$-0.12

Total Assets

$2.67B

Cash & Equivalents

$256.36M

Free Cash Flow

$18.87M

Financial Statements
Beta
Revenue$290.18M
Cost of Revenue$70.43M
Gross Profit$219.74M
R&D Expenses$81.54M
Operating Expenses$267.01M
Operating Income-$47.27M
Interest Expense$2.13M
Net Income-$38.08M
EPS (Basic)$-0.12
EPS (Diluted)$-0.12
Shares Outstanding (Basic)330.39M
Shares Outstanding (Diluted)330.39M

Key Highlights

  • 1Revenue increased by 37% year-over-year to $290.2 million, indicating robust top-line growth.
  • 2Net cash provided by operating activities was $36.4 million, a significant turnaround from the prior year's negative $35.5 million.
  • 3Free cash flow turned positive at $13.9 million, up from a negative $64.4 million in the prior year.
  • 4Paying customers increased by 13% year-over-year to 168,159.
  • 5Customers with over $100,000 in annualized revenue grew by 34% year-over-year to 2,156, highlighting success in enterprise customer acquisition.
  • 6Dollar-based net retention rate was 117%, indicating strong revenue expansion from existing customers.
  • 7Gross margin remained strong at 76%.

Frequently Asked Questions

Cloudflare reported a 37% year-over-year increase in revenue for the first quarter of 2023, reaching $290.2 million.

No, Cloudflare reported a net loss of $38.1 million for the first quarter of 2023. However, this represents a narrowing of the net loss compared to the same period last year.

Cloudflare generated $36.4 million in net cash from operating activities and $13.9 million in free cash flow during the first quarter of 2023. This is a significant improvement from the prior year, indicating positive momentum in cash generation.

The company saw a 13% increase in paying customers year-over-year, reaching 168,159. Importantly, customers with over $100,000 in annualized revenue grew by 34% to 2,156, showing strong traction with larger enterprise clients.