Cloudflare Finishes 2024 Strong

Core Insights - Cloudflare's fourth-quarter financial report indicates a strong upward trajectory in revenue and adjusted net income, despite a slight decline in gross margin [3][4]. Financial Performance - Total revenue for Q4 2023 was $362.5 million, increasing to $459.9 million in Q4 2024, representing a growth of 27% and beating expectations [2]. - Adjusted earnings per share rose from $0.15 in Q4 2023 to $0.19 in Q4 2024, also a 27% increase and exceeding expectations [2]. - Free cash flow decreased from $50.7 million in Q4 2023 to $47.8 million in Q4 2024, a decline of 6% [2]. - Adjusted gross margin slightly decreased from 78.9% to 77.6%, a drop of 1.3 percentage points [2]. Customer Growth - The company added 55 new clients contributing $1 million or more in revenue during 2024, with over half of these additions occurring in the last quarter [4]. Market Reaction - Following the financial report, Cloudflare's shares rose by 6% in the first hour of post-market trading, reflecting investor satisfaction with the exceeded sales and earnings figures [5]. Future Guidance - For 2025, Cloudflare projects revenue between $2.09 billion and $2.094 billion, indicating a growth rate of approximately 25% [6]. - Adjusted earnings per share are expected to be between $0.79 and $0.80, translating to modest growth of 5% to 7% [6]. Investment in Innovation - The company anticipates significant expenditures to maintain technological innovation, as indicated by the decline in free cash flow during Q4 2024 [7].