Financial Data and Key Metrics Changes - The company achieved an annual run rate revenue exceeding $2 billion, with quarterly revenue of $512.3 million, reflecting a year-over-year growth of 28%, up from 26.5% in the previous quarter [6][26] - The gross margin was reported at 76.3%, consistent with the long-term target range of 75% to 77% [7][30] - Operating income for the quarter was $72.3 million, representing a 27% increase year-over-year, with an operating margin of 14.1% [33] - Free cash flow was $33.3 million, accounting for 6% of revenue, compared to 10% in the same period last year [34] Business Line Data and Key Metrics Changes - The number of customers paying over $100,000 annually increased by 22% year-over-year, totaling 3,712 customers [7][28] - Revenue contribution from large customers grew to 71% of total revenue, up from 67% in the same quarter last year [28] - The dollar-based net retention rate improved to 114%, up 3% quarter-over-quarter [7][29] Market Data and Key Metrics Changes - Revenue from the U.S. represented 49% of total revenue, increasing by 22% year-over-year, while EMEA accounted for 28% with a 29% increase, and APAC represented 15% with a 44% increase [27][28] - The company added over 15,000 paying customers sequentially, totaling approximately 266,000 paying customers, marking a 27% year-over-year increase [28] Company Strategy and Development Direction - The company is focused on reaccelerating growth through innovation and operational efficiency, with a strong emphasis on large enterprise customers and strategic partnerships [6][26] - The introduction of new product areas, referred to as "Act Four," aims to address the evolving needs of content creators in an AI-driven web [24][22] - The company is positioning itself to facilitate transactions between AI companies and content creators, ensuring a level playing field in the emerging market [72][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue executing its growth strategy, citing strong performance in the second quarter as evidence of successful initiatives [36][56] - The management highlighted the importance of adapting to changes in the web ecosystem, particularly the shift from search to AI, and the need for new business models for content creators [20][22] - The company anticipates continued momentum in the second half of the year, supported by improvements in sales productivity and capacity [26][56] Other Important Information - The company issued $2 billion in convertible senior notes due in June 2030, which includes a capped call option to protect against dilution [34] - Remaining Performance Obligations (RPO) increased by 39% year-over-year, totaling $1.977 billion [34] Q&A Session Summary Question: Insights on the business model for the Agentic web - Management acknowledged uncertainty in defining the business models but emphasized the potential for various models to emerge as the market evolves [40][41] Question: Discussion on Act One products and their performance - Management highlighted the architectural advantages of Act One products, which allow for efficient handling of DDoS attacks without increasing costs [49][52] Question: Path towards the $5 billion ARR target by FY 2028 - Management confirmed that the company is tracking well against expectations, driven by success with large customers and variable revenue [56][57] Question: Updates on partner momentum and its impact on larger deals - Management noted a shift towards a partner-first sales strategy, which is contributing to the growth of larger deals [63][64] Question: Engagement with foundation model vendors - Management indicated that a significant portion of major AI companies are already customers, utilizing Cloudflare for security and performance optimization [81][84]

Financial Data and Key Metrics Changes - Cloudflare achieved an annual run rate revenue exceeding $2 billion, with quarterly revenue of $512.3 million, reflecting a 28% year-over-year growth, up from 26.5% in the first quarter [5][24] - The company reported a gross margin of 76.3%, consistent with its long-term target range of 75% to 77% [6][28] - Operating income was $72.3 million, representing a 27% increase year-over-year, with an operating margin of 14.1% [31] Business Line Data and Key Metrics Changes - The number of customers paying over $100,000 annually increased by 22% year-over-year, totaling 3,712 customers [6][26] - Revenue contribution from large customers grew to 71% of total revenue, up from 67% in the same quarter last year [6][26] - Dollar-based net retention rate improved to 114%, up 3% quarter-over-quarter [6][27] Market Data and Key Metrics Changes - The U.S. market accounted for 49% of total revenue, increasing by 22% year-over-year, while EMEA represented 28% of revenue with a 29% increase, and APAC represented 15% with a 44% increase [25][26] - The total number of paying customers reached approximately 266,000, marking a 27% year-over-year increase [26] Company Strategy and Development Direction - Cloudflare is focusing on reaccelerating growth through innovation and operational efficiency, with a strong emphasis on large enterprise customers and expanding its sales capacity [5][24] - The company is positioning itself to capitalize on the shift from traditional web models to AI-driven business models, particularly in the publishing sector [20][21] - Cloudflare is developing its product offerings into distinct acts, with Act Four focusing on enabling transactions in an AI-driven web [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain growth momentum, driven by strong performance in large customer segments and ongoing innovation [24][34] - The management highlighted the strategic importance of partnerships with media and AI companies to adapt to changing market dynamics [20][21] Other Important Information - Cloudflare issued $2 billion in convertible senior notes due in 2030, enhancing its financial flexibility [32] - The company ended the quarter with $4 billion in cash and equivalents, indicating a strong liquidity position [32] Q&A Session Summary Question: Insights on the business model for the Agentic web - Management indicated that various business models will likely emerge, emphasizing the need for a level playing field in content access and monetization [37][40] Question: Discussion on Act One products and their performance - Management highlighted the architectural advantages of Cloudflare's network, which allows for efficient handling of DDoS attacks without increasing costs [46][50] Question: Update on large deal momentum and partner growth - Management noted that the go-to-market strategy has shifted to a partner-first approach, which is driving growth in larger deals [60][62] Question: Media sector's attractiveness and Cloudflare's strategy - Management discussed the strategic importance of media partnerships and the potential for free services to create long-term value [75][76] Question: Relationship with foundation model vendors - Management confirmed that a significant portion of major AI companies are Cloudflare customers, utilizing its security and inference capabilities [80][82]

Financial Performance - Total revenue reached $1.67 billion in 2024, demonstrating a 26% compound annual growth rate (CAGR)[12] - Q2 2025 revenue was $512 million[12] - Non-GAAP gross margin stood at 76% as of Q2 2025[14] - The company projects full-year 2025 revenue between $2.1135 billion and $2.1155 billion, representing a 27% year-over-year growth[86] Customer Growth - The company had 265,000 paying customers as of Q2 2025, reflecting a 21% CAGR[14, 69] - Large customers (>$100,000 annualized revenue) numbered 3,712 in Q2 2025, with a 29% CAGR[12, 69] - Revenue from large customers accounted for 71% of the total revenue[14, 33] Network and Security - The platform blocks an average of 190 billion cyber threats per day[33, 43] - The network spans 330 cities across 125+ countries[14, 37] - 95% of the world's Internet-connected population is within ~50 ms of a Cloudflare data center[37] Market Opportunity - The company estimates a large addressable market of $181 billion in 2025[51, 62]

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 June 30, 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 __ ...

Financial Outlook For the third quarter of fiscal 2025, we expect: Cloudflare Announces Second Quarter 2025 Financial Results San Francisco, CA, July 31, 2025 — Cloudflare, Inc. (NYSE: NET), the leading connectivity cloud company, today announced financial results for its second quarter ended June 30, 2025. "We had an excellent second quarter, exceeding $2 billion in annualized revenue while also reaccelerating revenue growth to 28% year-over-year. We're innovating faster than ever, and demand remains stron ...

Matthew Prince is the CEO of Cloudflare. He joins Big Technology Podcast to discuss whether the web can survive the wave of generative AI chatbots that scrape websites, summarize them, and present their content to users without cutting in the content creators. Prince has a solution that Cloudflare is rolling out this summer, and he describes how online publishers can fight back. Tune in for a deep, technical discussion about the future of the web. --- Enjoying Big Technology Podcast? Please rate us five sta ...

Core Viewpoint - Cloudflare is expected to report second-quarter 2025 results with anticipated revenues between $500 million and $501 million, reflecting a year-over-year growth of 24.87% [1][8] Revenue Expectations - The Zacks Consensus Estimate for Cloudflare's second-quarter revenues is $500.7 million [1] - The company expects non-GAAP earnings of 18 cents per share, which is a decline of 10% from the same quarter last year [2] Earnings Performance - Cloudflare has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 14.88% [3] Factors Influencing Q2 Results - Transition from traditional cybersecurity solutions to a zero-trust approach is expected to benefit Cloudflare's performance [6] - The company has seen a rise in high-value contracts and aggressive global expansion, with approximately 50% of its 2024 revenues generated outside the United States [7][8] - The addition of around 13,105 new paying customers in Q1 2025 has brought the total to approximately 250,819, contributing to revenue growth [8] Competitive Landscape - Cloudflare faces intense competition from larger players like Akamai Technologies and Amazon Web Services, as well as from Palo Alto Networks in the cybersecurity space [15][16] - The market for web infrastructure and security services is becoming increasingly competitive, with new entrants and niche players emerging [15] Investment Considerations - Cloudflare's delayed revenue recognition due to large funding deals may create near-term headwinds for metrics like Dollar-Based Net Retention, which remained flat at 111% in Q1 2025 [14] - The company has invested heavily in enhancing its sales and marketing capabilities, which has negatively impacted operating margins [18] Stock Performance and Valuation - Year-to-date, Cloudflare's shares have surged 84.2%, outperforming the Zacks Internet - Software industry's growth of 17.4% [11] - The stock is trading at a premium with a forward 12-month P/S of 28.58X compared to the industry's 5.82X, indicating a stretched valuation [12]

Company Performance - Cloudflare's stock closed at $190.55, down 3.65% from the previous session, underperforming the S&P 500's gain of 0.06% [1] - Over the past month, Cloudflare shares increased by 7.55%, lagging behind the Computer and Technology sector's gain of 9.6% but outperforming the S&P 500's gain of 5.88% [1] Upcoming Earnings Report - Cloudflare is set to release its earnings on July 31, 2025, with an expected EPS of $0.18, reflecting a 10% decrease from the prior-year quarter [2] - The consensus estimate for quarterly revenue is $500.72 million, which represents a 24.87% increase from the same period last year [2] Fiscal Year Projections - For the entire fiscal year, earnings are projected at $0.79 per share, with revenue expected to reach $2.09 billion, indicating increases of 5.33% and 25.38% respectively from the prior year [3] Analyst Estimates and Market Sentiment - Recent adjustments to analyst estimates for Cloudflare are crucial as they reflect short-term business trends, with positive revisions indicating a favorable outlook on business health and profitability [4] - The Zacks Rank system, which incorporates estimate changes, currently ranks Cloudflare as 5 (Strong Sell), suggesting a negative sentiment among analysts [6] Valuation Metrics - Cloudflare's Forward P/E ratio stands at 249.6, significantly higher than the industry average of 29.18 [6] - The company has a PEG ratio of 10.15, compared to the Internet - Software industry's average PEG ratio of 2.18 [7] Industry Context - The Internet - Software industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 77, placing it in the top 32% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1, highlighting the importance of industry strength in investment decisions [8]

Core Insights - KeyCorp reported a revenue of $1.8 billion for Q2 2025, reflecting a 21% increase year-over-year, driven by a 10% growth in noninterest income and a 4% increase in net interest income [1][2][6] - The net income attributable to Key common shareholders for Q2 2025 was $387 million, or $0.35 per diluted common share, compared to $370 million, or $0.33 per diluted common share in Q1 2025, and $237 million, or $0.25 per diluted common share in Q2 2024 [1][5][49] - The company experienced a decline in net loan charge-offs by 8% quarter-over-quarter, indicating stable to improved credit metrics [1][20] Revenue and Income - Total revenue for Q2 2025 was $1.84 billion, up 20.6% from $1.526 billion in Q2 2024, with net interest income at $1.15 billion, a 27.9% increase year-over-year [6][49] - Noninterest income reached $690 million, a 10% increase from $627 million in Q2 2024, driven by higher investment banking and debt placement fees [10][11][49] Expenses - Noninterest expenses increased to $1.154 billion, a 7% rise from $1.079 billion in Q2 2024, primarily due to higher personnel expenses related to incentive compensation [13][14][49] - The company managed to keep deposit costs below 2%, with average deposits totaling $147.4 billion, reflecting a 2.3% increase year-over-year [18][19] Asset Quality - Net loan charge-offs for Q2 2025 were $102 million, or 0.39% of average total loans, compared to $91 million, or 0.34%, in Q2 2024 [20][22] - Nonperforming loans at the end of Q2 2025 totaled $696 million, representing 0.65% of period-end portfolio loans, stable compared to previous quarters [23][22] Capital Position - KeyCorp's Common Equity Tier 1 ratio was 11.7% as of June 30, 2025, maintaining a strong capital position above regulatory benchmarks [25][27] - The company declared a dividend of $0.205 per common share in May 2025, consistent with previous quarters [28][49] Business Segments Performance - The Consumer Bank segment generated $912 million in revenue, a 20.3% increase from Q2 2024, with net income of $122 million [32][35] - The Commercial Bank segment reported $974 million in revenue, up 26.8% year-over-year, with net income of $349 million [31][38]

Core Insights - Cloudflare (NET) stock has surged 87.3% over the past three months, significantly outperforming the Zacks Internet - Software industry's growth of 38.7% during the same period [1][5] - The stock's momentum is driven by success in Cloudflare One bookings, traction in its AI portfolio, and increased acceptance by U.S. federal agencies following FedRAMP certification [1][5] Valuation and Performance - Cloudflare is currently trading at a forward 12-month Price/Sales ratio of 27.72X, which is substantially higher than the Zacks Internet Software Industry's ratio of 5.7X, indicating a rich valuation [2][5] - Revenue growth has slowed, with guidance for 2025 indicating a growth rate of only 25%, down from previous years [5][9] Revenue Sources and Challenges - Approximately 49% of Cloudflare's revenues have come from outside the United States over the past five years, making it vulnerable to U.S. tariff policies [7] - The company is experiencing challenges with revenue recognition due to pool of funds deals, which can delay metrics like Dollar-Based Net Retention (DBNR) [8] Competitive Landscape - Cloudflare faces intense competition in both content delivery and cybersecurity sectors from companies like Amazon, Akamai, Palo Alto Networks, and Zscaler [10][12] - Competitors are leveraging advanced technologies and market expansion strategies, putting pressure on Cloudflare's market position [11][12] Financial Outlook - Cloudflare's operating margins are under pressure due to heavy investments in sales and marketing, particularly in international markets [14] - The company's bottom-line growth rate is projected to be in the mid-single digits for the full year 2025 [14] Earnings Estimates - Zacks Consensus Estimates for earnings per share (EPS) show a year-over-year decline of 10% for the current quarter, with a modest growth of 5.33% for the current year [15]