- First quarter revenue totaled $138.1 million, representing an
increase of 51% year-over-year
- Record dollar-based net retention of 123%, representing an
increase of 600 basis points year-over-year
- Strong large customer growth, with a record addition of roughly
120 large customers in the quarter and large customers now
representing greater than 50% of revenue
Cloudflare, Inc. (NYSE: NET), the security, performance, and
reliability company helping to build a better Internet, today
announced financial results for its first quarter ended March 31,
2021.
“We had a record-setting start to the year. Our Q1 revenue
growth was up 51% year-over-year, and dollar net retention
increased to 123%. We crossed 4 million total customers, and our
large customer count was up 70% year-over-year, accounting for more
than half of our total revenue,” said Matthew Prince, co-founder
& CEO of Cloudflare. “We delivered terrific financial results
while also investing in innovation, the fuel our engine runs on.
Firing on all cylinders, we've already announced or delivered more
than 100 products and capabilities this year. There's no slowing
down as we continue to deliver business-critical offerings and
displace point solutions with Cloudflare's robust global
network.”
First Quarter Fiscal 2021 Financial Highlights
- Revenue: Total revenue of $138.1 million, representing
an increase of 51% year-over-year.
- Gross Profit: GAAP gross profit was $106.0 million, or
76.8% gross margin, compared to $70.4 million, or 77.2%, in the
first quarter of 2020. Non-GAAP gross profit was $107.2 million, or
77.6% gross margin, compared to $71.5 million, or 78.3%, in the
first quarter of 2020.
- Operating Loss: GAAP loss from operations was $31.3
million, or 22.6% of total revenue, compared to $36.1 million, or
39.5% of total revenue, in the first quarter of 2020. Non-GAAP loss
from operations was $7.5 million, or 5.4% of total revenue,
compared to $14.4 million, or 15.8% of total revenue, in the first
quarter of 2020.
- Net Loss: GAAP net loss was $40.0 million, compared to
$32.7 million in the first quarter of 2020. Non-GAAP net loss was
$9.3 million, compared to $12.3 million in the first quarter of
2020. GAAP net loss per share was $0.13, compared to $0.11 in the
first quarter of 2020. Non-GAAP net loss per share was $0.03,
compared to $0.04 in the first quarter of 2020.
- Cash Flow: Net cash flow from operations was $23.5
million, compared to negative $14.3 million for the first quarter
of 2020. Free cash flow was negative $2.2 million, or 2% of total
revenue, compared to negative $30.6 million, or 34% of total
revenue, in the first quarter of 2020.
- Cash, cash equivalents, and available-for-sale
securities were $1,035.2 million as of March 31, 2021.
The section titled "Non-GAAP Financial Information" below
describes our usage of non-GAAP financial measures. Reconciliations
between historical GAAP and non-GAAP information are contained at
the end of this press release following the accompanying financial
data.
Financial Outlook
The following forward-looking statements regarding our financial
outlook are subject to substantial uncertainty as a result of the
ongoing COVID-19 pandemic, reflect our estimates as of May 6, 2021
regarding the impact of the pandemic on our operations, and are
highly dependent on numerous factors that we may not be able to
predict or control, including, among others: the duration, spread,
and severity of the pandemic; actions taken by governments and
businesses in response to the pandemic and the resulting impact on
our customers, vendors, and partners; the timing of administering
COVID-19 vaccines around the world and the long-term efficiency of
these vaccines; the impact of the pandemic on global and regional
economies and economic activity generally; our ability to continue
operating in impacted areas; and customer demand and spending
patterns.
For the second quarter of fiscal 2021, we expect:
- Total revenue of $145.5 to $146.5 million
- Non-GAAP loss from operations of $10 to $9 million
- Non-GAAP net loss per share of $0.04 to $0.03, utilizing
weighted average common shares outstanding of approximately 308
million
For the full year fiscal 2021, we expect:
- Total revenue of $612 to $616 million
- Non-GAAP loss from operations of $28 to $24 million
- Non-GAAP net loss per share of $0.11 to $0.10, utilizing
weighted average common shares outstanding of approximately 310
million
Conference Call Information
Cloudflare will host an investor conference call to discuss its
first quarter ended March 31, 2021 earnings results today at 2:00
p.m. Pacific time (5:00 p.m. Eastern time). Interested parties can
access the call by dialing (866) 211-4146 from the United States or
(647) 689-6734 internationally with conference ID 2173317. A live
webcast of the conference call will be accessible from the investor
relations website at cloudflare.NET. A replay will be available
approximately two hours after the conclusion of the live event and
will remain available for approximately 30 days.
Supplemental Financial and Other Information
Supplemental financial and other information can be accessed
through the Company’s investor relations website at
https://cloudflare.NET.
Non-GAAP Financial Information
Cloudflare believes that the presentation of non-GAAP financial
information provides important supplemental information to
management and investors regarding financial and business trends
relating to the Company’s financial condition and results of
operations. Reconciliations of non-GAAP financial measures to the
most directly comparable financial results as determined in
accordance with GAAP are included at the end of this press release
following the accompanying financial data. A reconciliation of
non-GAAP guidance measures to corresponding GAAP measures is not
available on a forward-looking basis without unreasonable effort
due to the uncertainty of expenses that may be incurred in the
future. For further information regarding why Cloudflare believes
that these non-GAAP measures provide useful information to
investors, the specific manner in which management uses these
measures, and some of the limitations associated with the use of
these measures, please refer to the “Explanation of Non-GAAP
Financial Measures” section at the end of this press release.
Available Information
Cloudflare intends to use its press releases, website, investor
relations website, news site, blog, Twitter account, Facebook
account, and Instagram account, in addition to filings made with
the Securities and Exchange Commission (SEC) and public conference
calls, as a means of disclosing material non-public information and
for complying with its disclosure obligations under Regulation
FD.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which statements involve substantial risks and
uncertainties. In some cases, you can identify forward-looking
statements because they contain words such as “may,” “will,”
“should,” “expect,” “explore,” “plan,” “anticipate,” “could,”
“intend,” “target,” “project,” “contemplate,” “believe,”
“estimate,” “predict,” “potential,” or “continue,” or the negative
of these words, or other similar terms or expressions that concern
our expectations, strategy, plans, or intentions. However, not all
forward-looking statements contain these identifying words.
Forward-looking statements expressed or implied in this press
release include, but are not limited to, statements regarding our
future financial and operating performance, our reputation and
performance in the market, general market trends, our estimated and
projected revenue, non-GAAP net loss from operations and non-GAAP
net loss per share, shares outstanding, the benefits to customers
from using our products, the expected functionality and performance
of our products, our plans and objectives for future operations,
growth, initiatives, or strategies, and comments made by our CEO
and others. There are a significant number of factors that could
cause actual results to differ materially from statements made in
this press release, including: the extent and duration of the
impact of the COVID-19 pandemic and resulting adverse conditions in
the general domestic and global economic markets; the impact of the
COVID-19 pandemic on our and our customers’, vendors’, and
partners’ operations and future financial performance; our history
of net losses; our limited operating history; risks associated with
managing our rapid growth; our ability to attract and retain new
customers (including new large customers); our ability to retain
and upgrade paying customers and convert free customers to paying
customers; our ability to effectively increase sales to large
customers; problems with our internal systems, network, or data,
including actual or perceived breaches or failures; rapidly
evolving technological developments in the market; length of sales
cycles; activities of our paying and free customers or the content
of their websites and other Internet properties that use our
network and products; changes in the legal, tax, and regulatory
environment applicable to our business; and general market,
political, economic, and business conditions. Our actual results
could differ materially from those stated or implied in
forward-looking statements due to a number of factors, including
but not limited to, risks detailed in our filings with the SEC,
including our Annual Report on Form 10-K filed on February 25,
2021, as well as other filings that we may make from time to time
with the SEC.
The forward-looking statements made in this press release relate
only to events as of the date on which the statements are made. We
undertake no obligation to update any forward-looking statements
made in this press release to reflect events or circumstances after
the date of this press release or to reflect new information or the
occurrence of unanticipated events, except as required by law. We
may not actually achieve the plans, intentions, or expectations
disclosed in our forward-looking statements, and you should not
place undue reliance on our forward-looking statements.
About Cloudflare
Cloudflare, Inc. (www.cloudflare.com / @cloudflare) is on a
mission to help build a better Internet. Cloudflare’s suite of
products protect and accelerate any Internet application online
without adding hardware, installing software, or changing a line of
code. Internet properties powered by Cloudflare have all web
traffic routed through its intelligent global network, which gets
smarter with every request. As a result, they see significant
improvement in performance and a decrease in spam and other
attacks. Cloudflare was named to Entrepreneur Magazine’s Top
Company Cultures 2018 list and ranked among the World’s Most
Innovative Companies by Fast Company in 2019. Headquartered in San
Francisco, CA, Cloudflare has offices in Austin, TX, Champaign, IL,
New York, NY, San Jose, CA, Seattle, WA, Washington, D.C., Lisbon,
London, Munich, Paris, Beijing, Singapore, Sydney, Tokyo, and
Toronto.
CLOUDFLARE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share
data)
(unaudited)
Three Months Ended
March 31,
2021
2020
Revenue
$
138,055
$
91,250
Cost of revenue(1)(2)
32,084
20,821
Gross profit
105,971
70,429
Operating expenses:
Sales and marketing(1)
69,974
46,965
Research and development(1)(3)
39,527
33,354
General and administrative(1)(3)
27,724
26,181
Total operating expenses
137,225
106,500
Loss from operations
(31,254
)
(36,071
)
Non-operating income (expense):
Interest income
544
2,569
Interest expense(4)
(10,234
)
(67
)
Other income, net
148
485
Total non-operating income (expense),
net
(9,542
)
2,987
Loss before income taxes
(40,796
)
(33,084
)
Benefit from income taxes
(833
)
(338
)
Net loss
$
(39,963
)
$
(32,746
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.13
)
$
(0.11
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
305,947
296,077
____________
(1) Includes stock-based compensation and related employer
payroll taxes as follows:
Cost of revenue
$
523
$
305
Sales and marketing
6,835
3,579
Research and development
11,058
7,127
General and administrative
4,648
3,606
Total stock-based compensation and related
employer payroll taxes
$
23,064
$
14,617
(2) Includes amortization of acquired intangible assets as
follows:
Cost of revenue
$
700
$
731
Total amortization of acquired intangible
assets
$
700
$
731
(3) Includes acquisition-related and other expenses as
follows:
Research and development
$
—
$
5,776
General and administrative
—
554
Total acquisition-related and other
expenses
$
—
$
6,330
(4) Includes amortization of debt discounts and issuance costs
as follows:
Amortization of debt discounts and
issuance costs
$
8,971
$
—
Total amortization of debt discounts and
issuance costs
$
8,971
$
—
CLOUDFLARE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
value)
(unaudited)
March 31, 2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents
$
187,476
$
108,895
Available-for-sale securities
847,748
923,201
Accounts receivable, net
71,240
63,499
Contract assets
3,660
3,538
Restricted cash short-term
2,659
2,591
Prepaid expenses and other current
assets
27,085
28,230
Total current assets
1,139,868
1,129,954
Property and equipment, net
135,795
123,688
Goodwill
17,167
17,167
Acquired intangible assets, net
2,100
2,800
Operating lease right-of-use assets
41,745
43,148
Deferred contract acquisition costs,
noncurrent
48,982
44,176
Restricted cash
6,660
6,660
Other noncurrent assets
13,209
13,058
Total assets
$
1,405,526
$
1,380,651
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
20,475
$
14,485
Accrued expenses and other current
liabilities
24,022
20,217
Accrued compensation
31,724
25,410
Operating lease liabilities
17,990
17,717
Liability for early exercise of unvested
stock options
7,517
8,603
Deferred revenue
66,418
54,945
Total current liabilities
168,146
141,377
Convertible senior notes, net
392,246
383,275
Operating lease liabilities,
noncurrent
25,627
27,309
Deferred revenue, noncurrent
5,064
1,891
Other noncurrent liabilities
10,403
9,859
Total liabilities
601,486
563,711
Stockholders’ Equity:
Class A common stock; $0.001 par value;
2,250,000 shares authorized as of March 31, 2021 and December 31,
2020; 255,958 and 249,401 shares issued and outstanding as of March
31, 2021 and December 31, 2020, respectively
256
249
Class B common stock; $0.001 par value;
315,000 shares authorized as of March 31, 2021 and December 31,
2020; 54,567 and 59,239 shares issued and outstanding as of March
31, 2021 and December 31, 2020, respectively
51
55
Additional paid-in capital
1,264,182
1,236,993
Accumulated deficit
(460,483
)
(420,520
)
Accumulated other comprehensive income
34
163
Total stockholders’ equity
804,040
816,940
Total liabilities and stockholders’
equity
$
1,405,526
$
1,380,651
CLOUDFLARE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March
31,
2021
2020
Cash Flows From Operating
Activities
Net loss
$
(39,963
)
$
(32,746
)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Depreciation and amortization expense
15,218
10,563
Non-cash operating lease costs
5,346
4,543
Amortization of deferred contract
acquisition costs
6,060
3,499
Stock-based compensation expense
18,042
12,897
Amortization of debt discount and issuance
costs
8,971
—
Net accretion of discounts and
amortization of premiums on available-for-sale securities
1,879
(456
)
Deferred income taxes
(1,513
)
(117
)
Provision for bad debt
1,470
2,209
Other
79
(197
)
Changes in operating assets and
liabilities, net of effect of acquisitions:
Accounts receivable, net
(9,211
)
(8,120
)
Contract assets
(122
)
284
Deferred contract acquisition costs
(10,866
)
(6,486
)
Prepaid expenses and other current
assets
614
(1,086
)
Other noncurrent assets
1,361
(658
)
Accounts payable
6,181
1,507
Accrued expenses and other current
liabilities
10,119
40
Operating lease liabilities
(5,352
)
(4,804
)
Deferred revenue
14,646
6,445
Other noncurrent liabilities
535
(1,593
)
Net cash provided by (used in)
operating activities
23,494
(14,276
)
Cash Flows From Investing
Activities
Purchases of property and equipment
(22,268
)
(11,405
)
Capitalized internal-use software
(3,445
)
(4,922
)
Cash paid for acquisitions, net of cash
acquired
—
(13,639
)
Purchases of available-for-sale
securities
(188,377
)
(110,609
)
Maturities of available-for-sale
securities
261,822
131,580
Other investing activities
44
223
Net cash provided by (used in)
investing activities
47,776
(8,772
)
Cash Flows From Financing
Activities
Proceeds from the exercise of stock
options
7,964
2,675
Proceeds from the early exercise of stock
options
95
32
Repurchases of unvested common stock
(150
)
(70
)
Payments on note payable
—
(200
)
Payment of tax withholding obligation on
RSU settlement
(530
)
(7,115
)
Net cash provided by (used in)
financing activities
7,379
(4,678
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
78,649
(27,726
)
Cash, cash equivalents, and restricted
cash, beginning of period
118,146
145,636
Cash, cash equivalents, and restricted
cash, end of period
$
196,795
$
117,910
CLOUDFLARE, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended
March 31,
2021
2020
Reconciliation of cost of
revenue:
GAAP cost of revenue
$
32,084
$
20,821
Less: Stock-based compensation and related
employer payroll taxes
(523
)
(305
)
Less: Amortization of acquired intangible
assets
(700
)
(731
)
Non-GAAP cost of revenue
$
30,861
$
19,785
Reconciliation of gross profit:
GAAP gross profit
$
105,971
$
70,429
Add: Stock-based compensation and related
employer payroll taxes
523
305
Add: Amortization of acquired intangible
assets
700
731
Non-GAAP gross profit
$
107,194
$
71,465
GAAP gross margin
76.8
%
77.2
%
Non-GAAP gross margin
77.6
%
78.3
%
Reconciliation of operating
expenses:
GAAP sales and marketing
$
69,974
$
46,965
Less: Stock-based compensation and related
employer payroll taxes
(6,835
)
(3,579
)
Non-GAAP sales and marketing
$
63,139
$
43,386
GAAP research and development
$
39,527
$
33,354
Less: Stock-based compensation and related
employer payroll taxes
(11,058
)
(7,127
)
Less: Acquisition-related and other
expenses
—
(5,776
)
Non-GAAP research and development
$
28,469
$
20,451
GAAP general and administrative
$
27,724
$
26,181
Less: Stock-based compensation and related
employer payroll taxes
(4,648
)
(3,606
)
Less: Acquisition-related and other
expenses
—
(554
)
Non-GAAP general and administrative
$
23,076
$
22,021
Reconciliation of loss from
operations:
GAAP loss from operations
$
(31,254
)
$
(36,071
)
Add: Stock-based compensation and related
employer payroll taxes
23,064
14,617
Add: Amortization of acquired intangible
assets
700
731
Add: Acquisition-related and other
expenses
—
6,330
Non-GAAP loss from operations
$
(7,490
)
$
(14,393
)
GAAP operating margin
(22.6
)%
(39.5
)%
Non-GAAP operating margin
(5.4
)%
(15.8
)%
Reconciliation of interest
expense:
GAAP interest expense
$
(10,234
)
$
(67
)
Add: Amortization of debt discount and
issuance costs
8,971
—
Non-GAAP interest expense
$
(1,263
)
$
(67
)
Reconciliation of provision for
(benefit from) income taxes:
GAAP benefit from income taxes
$
(833
)
$
(338
)
Income tax effect of non-GAAP
adjustments(1)
2,103
1,251
Non-GAAP provision for income taxes
$
1,270
$
913
CLOUDFLARE, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended
March 31,
2021
2020
Reconciliation of net loss and net loss
per share:
GAAP net loss attributable to common
stockholders
$
(39,963
)
$
(32,746
)
Add: Stock-based compensation and related
employer payroll taxes
23,064
14,617
Add: Amortization of acquired intangible
assets
700
731
Add: Acquisition-related and other
expenses
—
6,330
Add: Amortization of debt discount and
issuance costs
8,971
—
Income tax effect of non-GAAP
adjustments(1)
(2,103
)
(1,251
)
Non-GAAP net loss
$
(9,331
)
$
(12,319
)
GAAP net loss per share
$
(0.13
)
$
(0.11
)
Add: Stock-based compensation and related
employer payroll taxes
0.08
0.05
Add: Amortization of acquired intangible
assets
—
—
Add: Acquisition-related and other
expenses
—
0.02
Add: Amortization of debt discount and
issuance costs
0.03
—
Income tax effect of non-GAAP
adjustments(1)
(0.01
)
—
Non-GAAP net loss per share(2)
$
(0.03
)
$
(0.04
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
305,947
296,077
____________
(1) Non-GAAP adjustment for Q1'20 includes $0.7 million of
income tax benefit from valuation allowance release as a result of
the S2 Systems acquisition.
(2) Totals may not sum due to rounding. Figures are calculated
based upon the respective underlying non-rounded data.
Three Months Ended
March 31,
2021
2020
Free cash flow
Net cash provided by (used in) operating
activities
$
23,494
$
(14,276
)
Less: Purchases of property and
equipment
(22,268
)
(11,405
)
Less: Capitalized internal-use
software
(3,445
)
(4,922
)
Free cash flow
$
(2,219
)
$
(30,603
)
Net cash provided by (used) in investing
activities
$
47,776
$
(8,772
)
Net cash provided by (used in) financing
activities
$
7,379
$
(4,678
)
Net cash provided by (used in) operating
activities
(percentage of revenue)
17
%
(16
)%
Less: Purchases of property and
equipment
(percentage of revenue)
(17
)%
(13
)%
Less: Capitalized internal-use
software
(percentage of revenue)
(2
)%
(5
)%
Free cash flow margin(1)
(2
)%
(34
)%
____________
(1) Totals may not sum due to rounding. Figures are calculated
based upon the respective underlying non-rounded data.
Explanation of Non-GAAP Financial Measures
In addition to our results determined in accordance with
generally accepted accounting principles in the United States (U.S.
GAAP), we believe the following non-GAAP measures are useful in
evaluating our operating performance. We use the following non-GAAP
financial information to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively, may be
helpful to investors because it provides consistency and
comparability with past financial performance. However, non-GAAP
financial information is presented for supplemental informational
purposes only, has limitations as an analytical tool and should not
be considered in isolation or as a substitute for financial
information presented in accordance with U.S. GAAP. In particular,
free cash flow is not a substitute for cash provided by (used in)
operating activities. Additionally, the utility of free cash flow
as a measure of our liquidity is further limited as it does not
represent the total increase or decrease in our cash balance for a
given period. In addition, other companies, including companies in
our industry, may calculate similarly-titled non-GAAP measures
differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of our
non-GAAP financial measures as tools for comparison. A
reconciliation is provided above for each non-GAAP financial
measure to the most directly comparable financial measure stated in
accordance with U.S. GAAP. Investors are encouraged to review the
related U.S. GAAP financial measures and the reconciliation of
these non-GAAP financial measures to their most directly comparable
U.S. GAAP financial measures, and not to rely on any single
financial measure to evaluate our business.
Expenses Excluded from Non-GAAP Measures. We exclude
stock-based compensation expense, which is a non-cash expense, from
certain of our non-GAAP financial measures because we believe that
excluding this item provides meaningful supplemental information
regarding operational performance. We exclude employer payroll tax
expenses related to stock-based compensation which is a cash
expense, from certain of our non-GAAP financial measures because
such expenses are dependent on the price of our common stock and
other factors that are beyond our control and do not correlate to
the operation of our business. We exclude amortization of acquired
intangible assets, which is a non-cash expense, related to business
combinations from certain of our non-GAAP financial measures
because such expenses are related to business combinations and have
no direct correlation to the operation of our business. We exclude
acquisition-related and other expenses from certain of our non-GAAP
financial measures because such expenses are related to business
combinations and have no direct correlation to the operation of our
business. Acquisition-related and other expenses can be cash or
non-cash expenses and include third-party transaction costs and
compensation expense for key acquired personnel. We exclude
amortization of debt discount and issuance costs, which is a
non-cash expense, from certain of our non-GAAP financial measures
because such expenses have no direct correlation to the operation
of our business.
Non-GAAP Gross Profit and Non-GAAP Gross Margin. We
define non-GAAP gross profit and non-GAAP gross margin as U.S. GAAP
gross profit and U.S. GAAP gross margin, respectively, excluding
stock-based compensation and related employer payroll taxes and
amortization of acquired intangible assets.
Non-GAAP Loss from Operations and Non-GAAP Operating
Margin. We define non-GAAP loss from operations and non-GAAP
operating margin as U.S. GAAP loss from operations and U.S. GAAP
operating margin, respectively, excluding stock-based compensation
and related employer payroll taxes, amortization of acquired
intangible assets, and acquisition-related and other expenses.
Non-GAAP Net Loss and Non-GAAP Net Loss per Share, Basic and
Diluted. We define non-GAAP net loss as GAAP net loss plus
stock-based compensation and related employer payroll taxes,
amortization of acquired intangible assets, acquisition-related and
other expenses, and a non-GAAP provision for (benefit from) income
taxes. Generally, the difference between our GAAP and non-GAAP
income tax expense (benefit) is primarily due to adjustments in
stock-based compensation and related employer payroll taxes,
amortization of acquired intangibles associated with business
combinations, acquisition-related and other expenses, and
amortization of debt discount and issuance costs. We define
non-GAAP net loss per share, basic and diluted, as non-GAAP net
loss divided by the weighted-average common shares outstanding.
Since we have reported net losses for all periods presented, we
have excluded all potentially dilutive securities from the
calculation of net loss per share as their effect is antidilutive
and accordingly, basic and diluted net loss per share is the same
for all periods presented. We believe that excluding these items
from non-GAAP net loss and non-GAAP net loss per share, diluted,
provides management and investors with greater visibility into the
underlying performance of our core business operating results.
Free Cash Flow and Free Cash Flow Margin. Free cash flow
is a non-GAAP financial measure that we calculate as net cash
provided by (used in) operating activities less cash used for
purchases of property and equipment and capitalized internal-use
software. Free cash flow margin is calculated as free cash flow
divided by revenue. We believe that free cash flow and free cash
flow margin are useful indicators of liquidity that provide
information to management and investors about the amount of cash
generated from our operations that, after the investments in
property and equipment and capitalized internal-use software, can
be used for strategic initiatives, including investing in our
business, and strengthening our financial position. We believe that
historical and future trends in free cash flow and free cash flow
margin, even if negative, provide useful information about the
amount of cash generated (or consumed) by our operating activities
that is available (or not available) to be used for strategic
initiatives. For example, if free cash flow is negative, we may
need to access cash reserves or other sources of capital to invest
in strategic initiatives. One limitation of free cash flow and free
cash flow margin is that they do not reflect our future contractual
commitments. Additionally, free cash flow does not represent the
total increase or decrease in our cash balance for a given
period.
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version on businesswire.com: https://www.businesswire.com/news/home/20210506005381/en/
Investor Relations Information Jayson Noland
ir@cloudflare.com
Press Contact Information Daniella Vallurupalli
press@cloudflare.com
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