Cloudflare Q2 Earnings and Revenues Beat Estimates, FY25 View Raised

Core Insights - Cloudflare, Inc. reported non-GAAP earnings of 21 cents per share for Q2 2025, exceeding the Zacks Consensus Estimate by 16.7% and showing a 5% year-over-year increase [1][11] - The company achieved Q2 revenues of $512.3 million, a 28% increase year-over-year, surpassing the consensus mark by 2.3% [2][9] - Cloudflare raised its full-year 2025 revenue guidance to between $2,113.5 million and $2,115.5 million, reflecting a year-over-year rise of 25.4% [7][9] Revenue Performance - Q2 revenues were positively impacted by a mix of customer segments, with Channel Partners contributing $130.4 million (up 70% year-over-year) and Direct Customers contributing $381.9 million (up 17.8% year-over-year) [3][9] - The total number of paying customers reached 265,929, a 27% increase year-over-year, with 185 new high-value customers added during the quarter [4][9] Profitability Metrics - Non-GAAP gross profit for Q2 increased by 23% year-over-year to $390.66 million, although the non-GAAP gross margin contracted by 270 basis points to 76.3% [4] - Non-GAAP operating income rose to $72.31 million from $57 million in the previous year, while the non-GAAP operating margin contracted by 10 basis points to 14.1% [5] Balance Sheet and Cash Flow - As of June 30, 2025, Cloudflare had cash and equivalents totaling $3.96 billion, up from $1.91 billion as of March 31, 2025 [6] - The company generated an operating cash flow of $99.8 million and a free cash flow of $33.3 million during Q2 [6] Future Guidance - For Q3, Cloudflare expects revenues in the range of $543.5 million to $544.5 million, indicating a year-over-year rise of 25% [10] - Non-GAAP income from operations for Q3 is projected to be between $75 million and $76 million, with anticipated non-GAAP earnings per share of 23 cents [11]