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Cloudflare(NET) - 2024 Q3 - Quarterly Results
NETCloudflare(NET)2024-11-07 21:17

Revenue and Financial Performance - Third quarter revenue totaled 430.1million,representinga28430.1 million, representing a 28% year-over-year increase[1][3] - For the fourth quarter of fiscal 2024, the company expects total revenue of 451.0 to 452.0millionandnon−GAAPincomefromoperationsof452.0 million and non-GAAP income from operations of 57.0 to 58.0million[6]−Forthefullyearfiscal2024,thecompanyexpectstotalrevenueof58.0 million[6] - For the full year fiscal 2024, the company expects total revenue of 1,661.0 to 1,662.0millionandnon−GAAPincomefromoperationsof1,662.0 million and non-GAAP income from operations of 220.0 to 221.0million[6]OperatingResultsandMargins−GAAPlossfromoperationswas221.0 million[6] Operating Results and Margins - GAAP loss from operations was 30.8 million, or 7% of revenue, while non-GAAP income from operations was 63.5million,or1563.5 million, or 15% of revenue[1][4] - Non-GAAP operating income for Q3 2024 was 63.5 million, a significant increase from 42.5millioninQ32023,withoperatingmarginsimprovingto14.842.5 million in Q3 2023, with operating margins improving to 14.8% from 12.7%[21] - GAAP gross profit was 334.1 million, or 77.7% gross margin, compared to 257.5million,or76.7257.5 million, or 76.7%, in the third quarter of 2023[4] - Non-GAAP gross profit for Q3 2024 was 339.1 million, compared to 264.2millioninQ32023,reflectingagrossmarginof78.8264.2 million in Q3 2023, reflecting a gross margin of 78.8% vs. 78.7% respectively[21] Net Income and Earnings - Non-GAAP net income was 72.6 million, compared to 55.3millioninthethirdquarterof2023[4]−GAAPnetlossforQ32024was55.3 million in the third quarter of 2023[4] - GAAP net loss for Q3 2024 was 15.3 million, an improvement from a 23.5millionlossinQ32023,whileNon−GAAPnetincomeforQ32024was23.5 million loss in Q3 2023, while Non-GAAP net income for Q3 2024 was 72.6 million, up from 55.3millioninQ32023[22]−Non−GAAPnetincomeperdilutedshareforQ32024was55.3 million in Q3 2023[22] - Non-GAAP net income per diluted share for Q3 2024 was 0.20, compared to 0.16inQ32023[22]−Weighted−averagesharesusedincomputingNon−GAAPnetincomeperdilutedsharewere356.9millionforQ32024,upfrom351.7millioninQ32023[22]CashFlowandLiquidity−Operatingcashflowwas0.16 in Q3 2023[22] - Weighted-average shares used in computing Non-GAAP net income per diluted share were 356.9 million for Q3 2024, up from 351.7 million in Q3 2023[22] Cash Flow and Liquidity - Operating cash flow was 104.7 million, or 24% of revenue, and free cash flow was 45.3million,or1145.3 million, or 11% of revenue[1][4] - Free cash flow for the three months ended September 30, 2024, was 45.3 million, compared to 34.9millionforthesameperiodin2023[23]−NetcashprovidedbyoperatingactivitiesforthethreemonthsendedSeptember30,2024,was34.9 million for the same period in 2023[23] - Net cash provided by operating activities for the three months ended September 30, 2024, was 104.7 million, representing 24% of revenue, up from 68.1million(2068.1 million (20% of revenue) in the same period in 2023[23] - Free cash flow margin for the three months ended September 30, 2024, was 11%, compared to 10% for the same period in 2023[23] - Net cash used in investing activities for the three months ended September 30, 2024, was 76.4 million, down from 100.2millioninthesameperiodin2023[23]−NetcashprovidedbyfinancingactivitiesforthethreemonthsendedSeptember30,2024,was100.2 million in the same period in 2023[23] - Net cash provided by financing activities for the three months ended September 30, 2024, was 2.4 million, compared to 34.6millionusedinthesameperiodin2023[23]−FreecashflowfortheninemonthsendedSeptember30,2024,was34.6 million used in the same period in 2023[23] - Free cash flow for the nine months ended September 30, 2024, was 119.2 million, compared to 68.7millionforthesameperiodin2023[23]−NetcashprovidedbyoperatingactivitiesfortheninemonthsendedSeptember30,2024,was68.7 million for the same period in 2023[23] - Net cash provided by operating activities for the nine months ended September 30, 2024, was 253.1 million, representing 21% of revenue, up from 169.0million(18169.0 million (18% of revenue) in the same period in 2023[23] - Free cash flow margin for the nine months ended September 30, 2024, was 10%, compared to 7% for the same period in 2023[23] - Net cash used in investing activities for the nine months ended September 30, 2024, was 163.2 million, up from 84.6millioninthesameperiodin2023[23]−NetcashprovidedbyfinancingactivitiesfortheninemonthsendedSeptember30,2024,was84.6 million in the same period in 2023[23] - Net cash provided by financing activities for the nine months ended September 30, 2024, was 4.8 million, compared to 202.0millionusedinthesameperiodin2023[23]CustomerGrowthandMarketPenetration−Thecompanyaddedarecord219largecustomers,with35202.0 million used in the same period in 2023[23] Customer Growth and Market Penetration - The company added a record 219 large customers, with 35% of the Fortune 500 now being paying Cloudflare customers[2] Expenses and Costs - The company's sales and marketing expenses were 185.2 million, research and development expenses were 110.9million,andgeneralandadministrativeexpenseswere110.9 million, and general and administrative expenses were 68.8 million for the third quarter[17] - Cost of revenue increased to 2,943millioninthelatestquarter,upfrom2,943 million in the latest quarter, up from 2,367 million in the previous quarter[18] - Sales and marketing expenses rose to 24,677million,comparedto24,677 million, compared to 20,674 million in the prior quarter[18] - Research and development spending reached 40,459million,upfrom40,459 million, up from 36,353 million in the previous quarter[18] - Total stock-based compensation and related employer payroll taxes amounted to 91,767million,anincreasefrom91,767 million, an increase from 76,857 million[18] - Stock-based compensation and related employer payroll taxes totaled 91.8millioninQ32024,upfrom91.8 million in Q3 2024, up from 76.9 million in Q3 2023[21] - GAAP cost of revenue for Q3 2024 was 96.0million,comparedto96.0 million, compared to 78.1 million in Q3 2023, while Non-GAAP cost of revenue was 91.0millionvs.91.0 million vs. 71.4 million respectively[21] - Non-GAAP sales and marketing expenses for Q3 2024 were 160.2million,upfrom160.2 million, up from 129.0 million in Q3 2023[21] - Non-GAAP research and development expenses for Q3 2024 were 70.5million,comparedto70.5 million, compared to 54.2 million in Q3 2023[21] - Non-GAAP general and administrative expenses for Q3 2024 were 45.0million,upfrom45.0 million, up from 38.5 million in Q3 2023[21] Balance Sheet and Assets - Cash, cash equivalents, and available-for-sale securities were 1,823.8millionasofSeptember30,2024[4]−Cashandcashequivalentsgrewto1,823.8 million as of September 30, 2024[4] - Cash and cash equivalents grew to 182,883 million as of September 30, 2024, from 86,864millionattheendof2023[19]−Totalassetsincreasedto86,864 million at the end of 2023[19] - Total assets increased to 3,062,746 million, up from 2,759,767millionattheendof2023[19]NetLossandCashFlowTrends−NetlossfortheninemonthsendedSeptember30,2024,was2,759,767 million at the end of 2023[19] Net Loss and Cash Flow Trends - Net loss for the nine months ended September 30, 2024, was 65,952 million, an improvement from 156,084millioninthesameperiodlastyear[20]−Netcashprovidedbyoperatingactivitieswas156,084 million in the same period last year[20] - Net cash provided by operating activities was 253,121 million, compared to 168,965millioninthepreviousyear[20]−Purchasesofpropertyandequipmenttotaled168,965 million in the previous year[20] - Purchases of property and equipment totaled 111,884 million, up from 83,580millionintheprioryear[20]−Netcashprovidedbyfinancingactivitieswas83,580 million in the prior year[20] - Net cash provided by financing activities was 4,753 million, a significant improvement from a net cash used of $201,975 million in the previous year[20]