Cloudflare(US:NET)2024-11-07 21:17Revenue and Financial Performance - Third quarter revenue totaled $430.1 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 $452.0 million and non-GAAP income from operations of $57.0 to $58.0 million[6] - For the full year fiscal 2024, the company expects total revenue of $1,661.0 to $1,662.0 million and non-GAAP income from operations of $220.0 to $221.0 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 $63.5 million, or 15% of revenue[1][4] - Non-GAAP operating income for Q3 2024 was $63.5 million, a significant increase from $42.5 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 $257.5 million, or 76.7%, in the third quarter of 2023[4] - Non-GAAP gross profit for Q3 2024 was $339.1 million, compared to $264.2 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 $55.3 million in the third quarter of 2023[4] - GAAP net loss for Q3 2024 was $15.3 million, an improvement from a $23.5 million loss in Q3 2023, while Non-GAAP net income for Q3 2024 was $72.6 million, up from $55.3 million in Q3 2023[22] - Non-GAAP net income per diluted share for Q3 2024 was $0.20, compared to $0.16 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 $45.3 million, or 11% of revenue[1][4] - Free cash flow for the three months ended September 30, 2024, was $45.3 million, compared to $34.9 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 $68.1 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 $100.2 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 $34.6 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 $68.7 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 $169.0 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 $84.6 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 $202.0 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 $110.9 million, and general and administrative expenses were $68.8 million for the third quarter[17] - Cost of revenue increased to $2,943 million in the latest quarter, up from $2,367 million in the previous quarter[18] - Sales and marketing expenses rose to $24,677 million, compared to $20,674 million in the prior quarter[18] - Research and development spending reached $40,459 million, up from $36,353 million in the previous quarter[18] - Total stock-based compensation and related employer payroll taxes amounted to $91,767 million, an increase from $76,857 million[18] - Stock-based compensation and related employer payroll taxes totaled $91.8 million in Q3 2024, up from $76.9 million in Q3 2023[21] - GAAP cost of revenue for Q3 2024 was $96.0 million, compared to $78.1 million in Q3 2023, while Non-GAAP cost of revenue was $91.0 million vs. $71.4 million respectively[21] - Non-GAAP sales and marketing expenses for Q3 2024 were $160.2 million, up from $129.0 million in Q3 2023[21] - Non-GAAP research and development expenses for Q3 2024 were $70.5 million, compared to $54.2 million in Q3 2023[21] - Non-GAAP general and administrative expenses for Q3 2024 were $45.0 million, up from $38.5 million in Q3 2023[21] Balance Sheet and Assets - Cash, cash equivalents, and available-for-sale securities were $1,823.8 million as of September 30, 2024[4] - Cash and cash equivalents grew to $182,883 million as of September 30, 2024, from $86,864 million at the end of 2023[19] - Total assets increased to $3,062,746 million, up from $2,759,767 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 $156,084 million in the same period last year[20] - Net cash provided by operating activities was $253,121 million, compared to $168,965 million in the previous year[20] - Purchases of property and equipment totaled $111,884 million, up from $83,580 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]