Summary
Cloudflare, Inc. (NET) reported its financial results for the quarter ending September 29, 2025. The company demonstrated continued strong revenue growth, with a 31% increase year-over-year for the three-month period and a 28% increase for the nine-month period. This growth was primarily driven by an expansion in paying customers and strong retention rates, as indicated by a dollar-based net retention rate of 119% for the quarter. Despite the revenue growth, Cloudflare reported a net loss for both the three-month and nine-month periods. The cost of revenue increased significantly, impacting gross margins, which decreased from 78% to 74% year-over-year for the quarter. Operating expenses also saw increases across sales and marketing, research and development, and general and administrative functions, largely due to increased headcount and stock-based compensation. The company also significantly increased its cash and cash equivalents and available-for-sale securities, bolstered by proceeds from its 2030 convertible senior notes issuance. While the company remains net-loss generating, its strong revenue growth, increasing customer base, and substantial cash reserves position it for continued investment and expansion.
Financial Highlights
48 data points| Revenue | $562.03M |
| Cost of Revenue | $146.32M |
| Gross Profit | $415.71M |
| R&D Expenses | $120.96M |
| Operating Expenses | $453.17M |
| Operating Income | -$37.46M |
| Net Income | -$1.29M |
| Shares Outstanding (Basic) | 349.31M |
| Shares Outstanding (Diluted) | 349.31M |
Key Highlights
- 1Revenue increased by 31% year-over-year to $562.0 million for the three months ended September 30, 2025, and by 28% to $1.55 billion for the nine months ended September 30, 2025.
- 2The number of paying customers grew by 33% year-over-year, and the dollar-based net retention rate was 119% for the three months ended September 30, 2025, indicating strong customer loyalty and expansion.
- 3Cost of revenue increased by 52% year-over-year for the three-month period, leading to a decrease in gross margin from 78% to 74%.
- 4Operating expenses increased across all major categories (sales and marketing, R&D, G&A), driven by headcount growth and stock-based compensation.
- 5Cloudflare reported a net loss of $1.3 million for the three months ended September 30, 2025, and a net loss of $90.2 million for the nine months ended September 30, 2025.
- 6Cash and cash equivalents and available-for-sale securities grew substantially, reaching $1.05 billion and $2.99 billion respectively, boosted by the issuance of 2030 convertible senior notes.
- 7The company continues to invest heavily in its global network infrastructure, with property and equipment, net, increasing by 26% year-over-year.