10-QPeriod: Q2 FY2024

Cloudflare, Inc. Quarterly Report for Q2 Ended Jun 30, 2024

Filed August 1, 2024For Securities:NET

Summary

Cloudflare, Inc. reported a solid financial performance for the quarter ending June 30, 2024, with revenue growing 30% year-over-year to $400.996 million. This growth was driven by a 21% increase in paying customers and a strong dollar-based net retention rate of 112%, indicating effective customer expansion and retention. The company continues to manage its cost of revenue effectively, maintaining a gross margin of 78% for the quarter. While operating expenses increased, largely due to investments in sales and marketing and research and development, the company's non-GAAP income from operations improved significantly, signaling progress towards sustained profitability. The balance sheet shows a healthy cash position with $157 million in cash and cash equivalents and $1.6 billion in available-for-sale securities, providing ample liquidity. The company also secured a $400 million revolving credit facility. Despite a net loss reported under GAAP, the underlying operational improvements and strong revenue growth are positive indicators for investors. The acquisition of BastionZero in May 2024 for $13.1 million also signals continued strategic investment in enhancing the company's Zero Trust infrastructure access capabilities.

Financial Highlights

49 data points
Beta

Revenue

$401.00M

77.8% Gross Margin

Net Income

-$15.08M

-3.8% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$2.92B

Cash & Equivalents

$156.97M

Free Cash Flow

$45.19M

Financial Statements
Beta
Revenue$401.00M
Cost of Revenue$89.01M
Gross Profit$311.99M
R&D Expenses$102.55M
Operating Expenses$346.68M
Operating Income-$34.70M
Net Income-$15.08M
EPS (Basic)$-0.04
EPS (Diluted)$-0.04
Shares Outstanding (Basic)340.65M
Shares Outstanding (Diluted)340.65M

Key Highlights

  • 1Revenue increased 30% year-over-year to $400.996 million for the three months ended June 30, 2024.
  • 2The number of paying customers grew by 21% year-over-year.
  • 3Dollar-based net retention rate was 112% for the three months ended June 30, 2024, indicating strong expansion from existing customers.
  • 4Gross margin remained strong at 78% for the quarter.
  • 5Non-GAAP income from operations was $56.953 million, a substantial increase from $20.305 million in the prior year period.
  • 6Cash and cash equivalents plus available-for-sale securities totaled $1.76 billion as of June 30, 2024.
  • 7Cloudflare acquired BastionZero for $13.1 million in May 2024 to enhance its Zero Trust infrastructure access platform.

Frequently Asked Questions

Cloudflare reported revenue of $400.996 million for the three months ended June 30, 2024, representing a 30% increase compared to $308.494 million in the same period of the prior year.

The number of paying customers increased by 21% year-over-year, reaching 210,166 as of June 30, 2024. The company also highlighted strong expansion within its existing customer base, as evidenced by a dollar-based net retention rate of 112% for the quarter.

Under GAAP, Cloudflare reported a net loss of $15.078 million for the three months ended June 30, 2024. However, on a non-GAAP basis, the company reported non-GAAP income from operations of $56.953 million, up from $20.305 million in the prior year period, indicating operational improvements.

As of June 30, 2024, Cloudflare maintained a strong liquidity position with $156.967 million in cash and cash equivalents and $1.600 billion in available-for-sale securities, totaling approximately $1.76 billion. The company also has access to a $400 million revolving credit facility.