Core Viewpoint - Cloudflare, Inc. reported non-GAAP earnings of 16 cents per share for Q1 2025, matching the Zacks Consensus Estimate, with revenues increasing by 27% year-over-year to $479.1 million, driven by strong enterprise customer onboarding and a focus on security [1][2]. Financial Performance - Q1 revenues reached $479.1 million, surpassing the consensus mark by 2.2%, attributed to the onboarding of large enterprise customers and growth in the public sector [2]. - Non-GAAP gross profit increased by 22.7% year-over-year to $369.3 million, although the non-GAAP gross margin contracted by 240 basis points to 77.1% [4]. - Non-GAAP operating income rose to $56 million from $42.4 million in the previous year, with the non-GAAP operating margin expanding by 50 basis points to 11.7% [5]. Customer Metrics - Cloudflare had 250,819 paying customers at the end of Q1, a 27% increase year-over-year, including 30 new customers contributing over $100,000 in annual revenues, totaling 3,527 such customers [4]. Balance Sheet and Cash Flow - As of March 31, 2025, Cloudflare's cash, cash equivalents, and available-for-sale securities amounted to $1.91 billion, up from $1.86 billion at the end of 2024 [6]. - The company generated an operating cash flow of $145.8 million and free cash flow of $52.9 million during Q1 [6]. Guidance - For FY 2025, Cloudflare anticipates revenues between $2.09 billion and $2.094 billion, indicating a year-over-year rise of 25.3% [7]. - The company projects non-GAAP earnings per share between 79 cents and 80 cents, with the Zacks Consensus Estimate at 79 cents, reflecting a 5.3% year-over-year increase [8]. - For Q2, Cloudflare expects revenues in the range of $500 million to $501 million, suggesting a year-over-year rise of 24.9% [9]. - Non-GAAP income from operations for Q2 is expected to be between $62.5 million and $63.5 million, with anticipated earnings of 18 cents per share [10].

Group 1 - Cloudflare reported quarterly earnings of $0.16 per share, matching the Zacks Consensus Estimate, and the same as the previous year [1] - The company posted revenues of $479.09 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 2.21%, compared to $378.6 million a year ago [2] - Cloudflare shares have increased approximately 13% since the beginning of the year, while the S&P 500 has declined by 4.3% [3] Group 2 - The earnings outlook for Cloudflare is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.19 on revenues of $500.94 million, and for the current fiscal year, it is $0.79 on revenues of $2.09 billion [7] - The Internet - Software industry, to which Cloudflare belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable outlook [8]

Financial Data and Key Metrics Changes - Cloudflare achieved revenue of $479.1 million, representing a 27% year-over-year increase [9][27] - The gross margin was 77.1%, above the long-term target of 75% to 77% [11][29] - Operating profit was $56 million, with an operating margin of 11.7%, an increase of 50 basis points year-over-year [32] - Free cash flow was $52.9 million, or 11% of revenue, compared to $35.6 million, or 9% of revenue, in the same period last year [35] Business Line Data and Key Metrics Changes - The number of customers paying more than $100,000 increased by 23% year-over-year, totaling 3,527 [9][28] - Revenue contribution from large customers grew to 69% of total revenue, up from 67% in the first quarter of the previous year [9][28] - Dollar-based net retention was 111%, consistent quarter-over-quarter [10][29] Market Data and Key Metrics Changes - U.S. revenue represented 49% of total revenue, increasing by 20% year-over-year [27] - EMEA accounted for 28% of revenue, with a 27% year-over-year increase [27] - APAC represented 15% of revenue, showing a significant 54% year-over-year growth [27] Company Strategy and Development Direction - The company is focused on disciplined execution and investing in go-to-market strategies, which have shown positive returns [14][48] - Cloudflare is positioning itself as a mission-critical partner for customers, emphasizing the importance of its innovative products and engineering capabilities [14][24] - The company is actively pursuing large contracts and has secured its largest contract in history, exceeding $100 million [13][15] Management's Comments on Operating Environment and Future Outlook - Management noted that the current global environment is more volatile than in previous quarters, but the company remains committed to its strategy [12][14] - The company is optimistic about long-term opportunities despite short-term volatility, focusing on customer needs and operational efficiency [14][38] - Management expects revenue for Q2 2025 to be in the range of $500 million to $505 million, representing a 25% year-over-year increase [37][38] Other Important Information - The company has seen a significant increase in DDoS attacks, with a 300% year-over-year rise, but its architecture allows it to absorb these attacks without additional costs [58][60] - Cloudflare's investments in AI and developer platforms have resulted in substantial growth, with AI inference requests up nearly 4000% year-over-year [22][23] Q&A Session Summary Question: Trends observed through early May regarding traffic and tariffs - Management indicated that there has been no significant change in internet traffic patterns despite tariff discussions, with traffic remaining steady [41][46] Question: Insights on margin performance and CapEx spending - Management reiterated a focus on the 40% rule for margins and indicated that there are still more margin opportunities than revenue opportunities [47][48] Question: Sales productivity and capacity tracking in the enterprise segment - Management expressed satisfaction with improvements in sales productivity and anticipated continued increases in sales capacity as new hires ramp up [52][54] Question: Impact of DDoS attacks on business - Management noted that the company’s architecture allows it to handle large-scale DDoS attacks effectively, without incurring additional costs [58][60] Question: Trends in the SaaS market and winning larger deals - Management highlighted that Cloudflare has caught up on critical features and offers superior performance compared to competitors, leading to increased success in securing larger deals [67][70] Question: Government sector traction - Management noted that governments are increasingly adopting zero trust approaches and choosing Cloudflare for its comprehensive solutions [73][74]

Financial Data and Key Metrics Changes - The company achieved revenue of $479.1 million, representing a 27% year-over-year increase [8][26] - Gross margin was 77.1%, above the long-term target of 75% to 77% [10][29] - Operating profit was $56 million, with an operating margin of 11.7%, an increase of 50 basis points year-over-year [32] - Free cash flow was $52.9 million, or 11% of revenue, compared to $35.6 million, or 9% of revenue, in the same period last year [34] Business Line Data and Key Metrics Changes - The number of large customers (paying over $100,000) increased by 23% year-over-year to 3,527 [8][28] - Revenue contribution from large customers grew to 69% of total revenue, up from 67% in the same quarter last year [8][28] - Dollar-based net retention was 111%, consistent quarter-over-quarter [9][29] Market Data and Key Metrics Changes - U.S. revenue represented 49% of total revenue, increasing by 20% year-over-year [26] - EMEA accounted for 28% of revenue, with a 27% year-over-year increase [26] - APAC represented 15% of revenue, showing a significant 54% year-over-year growth [26][28] Company Strategy and Development Direction - The company is focused on disciplined execution and investing in go-to-market strategies, which have shown positive returns [12][13] - Cloudflare is positioning itself as a mission-critical partner for customers, emphasizing the importance of its innovative products and engineering capabilities [12][23] - The company aims to capture opportunities in a volatile environment while maintaining operational efficiency [23][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the global environment is more volatile than before, but the company has navigated this effectively [10][11] - There is confidence in the long-term growth opportunities despite short-term volatility [12][23] - The company expects revenue for Q2 2025 to be in the range of $500 million to $505 million, representing a 25% year-over-year increase [36][37] Other Important Information - The company signed its largest contract in history, exceeding $100 million, driven by its workers developer platform [12][14] - The longest duration contract in the company's history was also secured during the quarter [12][25] - Remaining Performance Obligations (RPO) increased by 39% year-over-year to $1.864 billion [35] Q&A Session Summary Question: Trends observed through early May regarding traffic and tariff rhetoric - Management indicated that there has been no significant change in internet traffic patterns despite tariff discussions, with traffic remaining steady [40][45] Question: Insights on margin performance and CapEx spending - Management reiterated a focus on the 40% rule for margins and indicated that there are still margin opportunities despite revenue growth [46][47] Question: Sales productivity and capacity tracking in the enterprise segment - Management expressed satisfaction with improvements in sales productivity and anticipated continued capacity ramp-up in the coming quarters [51][52] Question: Impact of increased DDoS attacks on business - Management noted that the company’s architecture allows it to absorb large-scale DDoS attacks without incurring additional costs, differentiating it from competitors [57][62] Question: Trends in the SaaS market and winning larger deals - Management highlighted that the company has caught up on critical features and offers superior performance, leading to increased success in securing larger contracts [67][70] Question: Government sector traction and Zero Trust solutions - Management reported strong interest from government agencies in adopting Cloudflare's Zero Trust solutions, reflecting a shift away from on-premise hardware [74][75] Question: Details on the $100 million workers deal - Management explained that the deal reflects the comprehensive capabilities of Cloudflare Workers, which provide better performance and lower costs compared to traditional hyperscalers [78][80] Question: Customer additions and go-to-market strategy - Management attributed strong overall customer additions to effective go-to-market strategies, while noting that timing affected the number of large customer additions [83][88]

As of March 31, 2025 © 2025 Cloudflare, Inc. Safe Harbor This presentation has been prepared by Cloudflare, Inc. ("Cloudflareˮ) for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise, or representation by the presenter or Cloudflare or any officer, director, employee, agent, or advisor of Cloudflare. This presentation does not purport to be all-inclusive or to contain all of the information you may desire ...

Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________ FORM 10-Q __________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-39039 _ ...

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) [First Quarter 2025 Overview](index=1&type=section&id=First%20Quarter%202025%20Overview) Cloudflare reported strong Q1 2025 financial results, driven by significant revenue growth and key contract wins - Cloudflare reported **strong financial results** for its first quarter ended March 31, 2025[1](index=1&type=chunk) [Key Business Achievements](index=1&type=section&id=Key%20Business%20Achievements) Cloudflare secured its largest contract (over $100 million) and longest SASE contract, highlighting innovation in networking, security, and AI - Landed the **largest contract in Cloudflare's history**, a **more than $100 million deal**, driven by the Workers developer platform[2](index=2&type=chunk) - Signed the **longest-term SASE contract** to date[2](index=2&type=chunk) - CEO Matthew Prince emphasized the company's scale, technology, and team to capture massive opportunities, citing innovation across networking, security, and AI[2](index=2&type=chunk) [First Quarter Fiscal 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%202025%20Financial%20Highlights) [Revenue and Gross Profit](index=1&type=section&id=Revenue%20and%20Gross%20Profit) Cloudflare's Q1 2025 revenue grew **27%** to **$479.1 million**, with GAAP gross margin at **75.9%** and non-GAAP gross margin at **77.1%** Q1 2025 Revenue and Gross Profit (YoY Comparison) | Metric | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $479.1 million | $378.6 million | +27% | | GAAP Gross Profit | $363.5 million | $293.6 million | +23.8% | | GAAP Gross Margin | 75.9% | 77.5% | -1.6 pp | | Non-GAAP Gross Profit | $369.3 million | $301.1 million | +22.6% | | Non-GAAP Gross Margin | 77.1% | 79.5% | -2.4 pp | [Operating Income (Loss)](index=1&type=section&id=Operating%20Income%20(Loss)) GAAP operating loss improved to **$53.2 million** (**11.1%** of revenue); non-GAAP operating income rose to **$56.0 million** (**11.7%** of revenue) Q1 2025 Operating Income (Loss) (YoY Comparison) | Metric | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | GAAP Loss from Operations | $(53.2) million | $(54.6) million | Improved | | GAAP Operating Margin | (11.1)% | (14.4)% | +3.3 pp | | Non-GAAP Income from Operations | $56.0 million | $42.4 million | +32.1% | | Non-GAAP Operating Margin | 11.7% | 11.2% | +0.5 pp | [Net Income (Loss) and EPS](index=1&type=section&id=Net%20Income%20(Loss)%20and%20EPS) GAAP net loss widened to **$38.5 million** (**$0.11** per share); non-GAAP net income remained stable at **$58.4 million** (**$0.16** per diluted share) Q1 2025 Net Income (Loss) and EPS (YoY Comparison) | Metric | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | GAAP Net Loss | $(38.5) million | $(35.5) million | Widened | | GAAP Net Loss per Share (Basic & Diluted) | $(0.11) | $(0.10) | Widened | | Non-GAAP Net Income | $58.4 million | $58.2 million | +0.3% | | Non-GAAP Net Income per Diluted Share | $0.16 | $0.16 | Stable | [Cash Flow and Liquidity](index=1&type=section&id=Cash%20Flow%20and%20Liquidity) Net cash from operations significantly increased to **$145.8 million**, free cash flow grew to **$52.9 million** (**11%** of revenue), maintaining a strong cash position Q1 2025 Cash Flow and Liquidity (YoY Comparison) | Metric | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | $145.8 million | $73.6 million | +98.1% | | Free Cash Flow | $52.9 million | $35.6 million | +48.6% | | Free Cash Flow Margin | 11% | 9% | +2 pp | | Cash, Cash Equivalents, and Available-for-Sale Securities (as of March 31, 2025) | $1,914.9 million | N/A | N/A | [Financial Outlook](index=1&type=section&id=Financial%20Outlook) [Second Quarter Fiscal 2025 Guidance](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Guidance) Cloudflare projects Q2 2025 total revenue of **$500.0-$501.0 million**, non-GAAP operating income of **$62.5-$63.5 million**, and non-GAAP EPS of **$0.18** Q2 Fiscal 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $500.0 to $501.0 million | | Non-GAAP Income from Operations | $62.5 to $63.5 million | | Non-GAAP Net Income per Share | $0.18 | | Weighted Average Common Shares Outstanding | Approximately 364 million | [Full Year Fiscal 2025 Guidance](index=1&type=section&id=Full%20Year%20Fiscal%202025%20Guidance) Cloudflare projects full-year 2025 total revenue of **$2,090.0-$2,094.0 million**, non-GAAP operating income of **$272.0-$276.0 million**, and non-GAAP EPS of **$0.79-$0.80** Full Year Fiscal 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $2,090.0 to $2,094.0 million | | Non-GAAP Income from Operations | $272.0 to $276.0 million | | Non-GAAP Net Income per Share | $0.79 to $0.80 | | Weighted Average Common Shares Outstanding | Approximately 364 million | [Company Information](index=3&type=section&id=Company%20Information) [About Cloudflare](index=4&type=section&id=About%20Cloudflare) Cloudflare is a leading connectivity cloud company building a better Internet with a unified platform for faster, more secure applications and networks, trusted globally - Cloudflare, Inc. (NYSE: NET) is a leading connectivity cloud company with a **mission to help build a better Internet**[17](index=17&type=chunk) - Empowers organizations with a **full-featured, unified platform** of cloud-native products and developer tools for faster, more secure employees, applications, and networks, reducing complexity and cost[17](index=17&type=chunk) - Powered by one of the world's largest networks, it **blocks billions of online threats daily** and is trusted by **millions of organizations globally**[18](index=18&type=chunk) [Conference Call and Investor Information](index=3&type=section&id=Conference%20Call%20and%20Investor%20Information) Cloudflare hosted a Q1 earnings investor conference call on May 8, 2025, with replay available, and provides supplemental financial information and contact details on its investor relations website - An investor conference call was held on May 8, 2025, at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss Q1 2025 earnings results[9](index=9&type=chunk) - A live webcast and replay are available on the investor relations website (https://cloudflare.NET)[9](index=9&type=chunk) - Contact information for Investor Relations (Phil Winslow) and Press (Daniella Vallurupalli) is provided[19](index=19&type=chunk) [Available Information](index=3&type=section&id=Available%20Information) Cloudflare uses press releases, its website, investor relations site, news site, blog, social media, SEC filings, and public conference calls for disclosing material non-public information and complying with Regulation FD - Cloudflare uses press releases, its website, investor relations website, news site, blog, X account, Facebook account, Instagram account, SEC filings, and public conference calls for disclosing material non-public information and complying with Regulation FD[12](index=12&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements about future performance, market trends, and growth strategies, subject to substantial risks and uncertainties, including macroeconomic conditions, geopolitical tensions, and technological developments; the company undertakes no obligation to update these statements - The press release contains **forward-looking statements** concerning future financial and operating performance, market reputation, revenue, non-GAAP income, product benefits, demand, and growth strategies[13](index=13&type=chunk) - **Actual results may differ materially** due to significant risks and uncertainties, including adverse macroeconomic conditions, geopolitical conflicts (Middle East, Ukraine), net losses, challenges in managing growth, customer acquisition and retention, product innovation, sales force effectiveness, internal system issues, rapidly evolving technological developments (e.g., AI), sales cycle length, foreign currency fluctuations, and changes in legal/regulatory environments[15](index=15&type=chunk) - Cloudflare undertakes **no obligation to update** any **forward-looking statements** to reflect events or circumstances after the date of the press release, except as required by law[16](index=16&type=chunk) [Financial Statements (Unaudited)](index=5&type=section&id=Financial%20Statements%20(Unaudited)) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations detail Cloudflare's financial performance for Q1 2025 versus Q1 2024, including revenue, cost of revenue, gross profit, operating expenses, and net loss Condensed Consolidated Statements of Operations (Three Months Ended March 31) | Metric (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $479,087 | $378,602 | | Cost of revenue | $115,576 | $85,038 | | Gross profit | $363,511 | $293,564 | | Total operating expenses | $416,758 | $348,114 | | Loss from operations | $(53,247) | $(54,550) | | Net loss | $(38,454) | $(35,543) | | Net loss per share, basic and diluted | $(0.11) | $(0.10) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets present Cloudflare's financial position as of March 31, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (as of) | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $2,624,291 | $2,268,997 | | Total assets | $3,721,259 | $3,301,162 | | Total current liabilities | $821,009 | $793,654 | | Total liabilities | $2,295,381 | $2,254,961 | | Total stockholders' equity | $1,425,878 | $1,046,201 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows outline cash inflows and outflows from operating, investing, and financing activities for Q1 2025 versus Q1 2024 Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | Metric (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $145,784 | $73,579 | | Net cash provided by (used in) investing activities | $(92,438) | $96,950 | | Net cash provided by financing activities | $3,522 | $21 | | Net increase in cash, cash equivalents, and restricted cash | $56,868 | $170,550 | | Cash, cash equivalents, and restricted cash, end of period | $211,082 | $261,774 | [Non-GAAP Financial Measures](index=8&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations between GAAP and non-GAAP financial measures for key line items, including revenue, gross profit, operating expenses, income, interest, taxes, net income, EPS, and free cash flow for Q1 2025 and 2024 Cost of Revenue and Gross Profit Reconciliation (Three Months Ended March 31) | Metric (in thousands) | 2025 (GAAP) | 2025 (Non-GAAP) | 2024 (GAAP) | 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Cost of revenue | $115,576 | $109,817 | $85,038 | $77,525 | | Gross profit | $363,511 | $369,270 | $293,564 | $301,077 | | Gross margin | 75.9% | 77.1% | 77.5% | 79.5% | Operating Expenses Reconciliation (Three Months Ended March 31) | Metric (in thousands) | 2025 (GAAP) | 2025 (Non-GAAP) | 2024 (GAAP) | 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $214,011 | $183,418 | $194,102 | $156,752 | | Research and development | $115,089 | $76,820 | $87,703 | $58,723 | | General and administrative | $87,658 | $53,031 | $66,309 | $43,159 | Income (Loss) from Operations Reconciliation (Three Months Ended March 31) | Metric (in thousands) | 2025 (GAAP) | 2025 (Non-GAAP) | 2024 (GAAP) | 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Loss from operations | $(53,247) | $56,001 | $(54,550) | $42,443 | | Operating margin | (11.1)% | 11.7% | (14.4)% | 11.2% | Interest Expense and Income Taxes Reconciliation (Three Months Ended March 31) | Metric (in thousands) | 2025 (GAAP) | 2025 (Non-GAAP) | 2024 (GAAP) | 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Interest expense | $(1,443) | $(453) | $(1,100) | $(110) | | Provision for income taxes | $1,695 | $15,064 | $2,269 | $6,559 | Net Income (Loss) and EPS Reconciliation (Three Months Ended March 31) | Metric | 2025 (GAAP) | 2025 (Non-GAAP) | 2024 (GAAP) | 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Net loss attributable to common stockholders (in thousands) | $(38,454) | $58,415 | $(35,543) | $58,150 | | Net loss per share, basic | $(0.11) | N/A | $(0.10) | N/A | | Net loss per share, diluted | $(0.11) | $0.16 | $(0.10) | $0.16 | Free Cash Flow Reconciliation (Three Months Ended March 31) | Metric (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $145,784 | $73,579 | | Less: Purchases of property and equipment | $(85,889) | $(32,056) | | Less: Capitalized internal-use software | $(7,028) | $(5,916) | | Free cash flow | $52,867 | $35,607 | | Free cash flow margin | 11% | 9% | [Explanation of Non-GAAP Financial Measures](index=11&type=section&id=Explanation%20of%20Non-GAAP%20Financial%20Measures) This section clarifies Cloudflare's rationale for using non-GAAP financial measures to evaluate operational performance and ensure consistency, detailing excluded items and defining non-GAAP gross profit, operating income, net income, and free cash flow - **Non-GAAP financial information is used to evaluate ongoing operations**, for internal planning and forecasting, and to provide consistency and comparability with past financial performance[34](index=34&type=chunk) - **Items excluded from non-GAAP measures** include stock-based compensation and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related and other expenses, one-time compensation charges, and amortization of debt issuance costs[35](index=35&type=chunk) - **Definitions are provided for Non-GAAP Gross Profit**, Non-GAAP Gross Margin, Non-GAAP Income from Operations, Non-GAAP Operating Margin, Non-GAAP Net Income, Non-GAAP Net Income per Share (Diluted), Free Cash Flow, and Free Cash Flow Margin, explaining how they are derived from GAAP measures[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)

Core Viewpoint - The cloud and AI markets are experiencing rapid growth, benefiting companies like Microsoft, Cloudflare, and Five9, which are well-positioned to capitalize on these trends over the coming decades [1][2]. Microsoft - Microsoft has transformed from a slow-growth tech giant to a leader in cloud and AI under CEO Satya Nadella since 2014, expanding its cloud ecosystem and investing in AI technologies [4][5]. - Microsoft's Azure is now the second-largest cloud infrastructure platform globally, following Amazon Web Services (AWS), and the company has a significant stake in OpenAI, integrating AI capabilities into its products [5][6]. - From fiscal 2014 to fiscal 2024, Microsoft's revenue grew at a compound annual growth rate (CAGR) of 11%, with earnings per share (EPS) increasing at a CAGR of 16%. Analysts project a continued revenue and EPS growth of 14% CAGR from fiscal 2024 to fiscal 2027 [6][7]. Cloudflare - Cloudflare is a major content delivery network (CDN) provider, enhancing digital content delivery and protecting websites from cyber threats [8][10]. - The company aims to be a "water filtration" system for the internet, recently launching Workers AI to enable developers to build AI applications on its edge networks [9][10]. - Cloudflare's revenue has grown at a CAGR of 40% from 2020 to 2024, with expectations of 27% CAGR growth from 2024 to 2027, and it is projected to become profitable by the end of this period [11]. Five9 - Five9 specializes in cloud-based customer support services, utilizing AI-powered chatbots and human agents to manage customer interactions across various channels [12][13]. - The company serves over 3,000 customers and processes more than 14 billion call minutes annually, with a business model designed to thrive during economic downturns [12][13]. - From 2014 to 2024, Five9's revenue grew at a CAGR of 26%, with projections of 10% CAGR growth from 2024 to 2027, and an expected EPS growth of 125% over the next two years [14].

Core Viewpoint - Cloudflare is expected to report strong revenue growth for Q1 2025, with anticipated revenues between $468 million and $469 million, reflecting a year-over-year increase of 23.8% [1][2] Financial Performance - The company expects non-GAAP earnings of 16 cents per share for Q1 2025, with the Zacks Consensus Estimate also at 16 cents, indicating no change from the previous year [2] - Cloudflare has consistently beaten earnings estimates in the past four quarters, with an average surprise of 20.7% [4] Customer Growth and Market Trends - The first-quarter performance is likely to benefit from the shift towards zero-trust cybersecurity solutions and the hybrid working trend, which necessitates enhanced network security [7] - Cloudflare added approximately 16,174 new paying customers in Q4 2024, bringing the total to around 237,714, and added 232 new large customers, totaling 3,497 [8][9] Competitive Landscape - The market for web infrastructure and security services is highly competitive, with established players like Akamai, Fastly, and Amazon Web Services competing for market share [18][20] - Cloudflare is focusing on AI and expanding its Zero Trust security offerings, positioning itself for long-term growth potential [21] Valuation and Investment Considerations - Cloudflare's shares have increased by 67.8% over the past year, outperforming the S&P 500 index's growth of 10% [11] - The company is currently trading at a forward 12-month price-to-sales ratio of 18.86X, significantly higher than the industry average of 5.12X, indicating a stretched valuation [14] - Despite strong growth prospects, the current overvaluation raises concerns for investors, suggesting a hold position for the stock [23]

Core Viewpoint - A class action lawsuit has been filed against NET Power Inc. for misleading statements regarding Project Permian, which is expected to be delayed and more costly than previously indicated [4]. Group 1: Lawsuit Details - The lawsuit claims that NET Power was unlikely to complete Project Permian on schedule due to supply chain issues and site-specific challenges [4]. - Defendants' projections regarding the time and capital needed for Project Permian were deemed unrealistic, leading to significant negative impacts on NET Power's business and financial results [4]. - The lawsuit alleges that the public statements made by the defendants were materially false and misleading throughout the class period [4]. Group 2: Class Action Participation - Investors who purchased NET Power securities between June 9, 2023, and March 7, 2025, may be entitled to compensation without any out-of-pocket fees through a contingency fee arrangement [2]. - Interested parties can join the class action by submitting a form or contacting the law firm for more information [3][6]. - A lead plaintiff must be appointed by June 17, 2025, to represent other class members in the litigation [3]. Group 3: Law Firm Credentials - The Rosen Law Firm has a strong track record in securities class actions, having achieved significant settlements for investors, including over $438 million in 2019 [5]. - The firm has been recognized for its success in securities class action settlements and has been ranked among the top firms in this area since 2013 [5].