BusinessWire

Cloudflare Announces Second Quarter 2020 Financial Results

  • Second quarter revenue totaled $99.7 million, representing an increase of 48% year-over-year
  • Q2 GAAP operating margin of (24.8)%, representing an increase of 450 basis points year-over-year; non-GAAP operating margin of (9.5)%, representing an increase of 1,820 basis points year-over-year
  • Q2 GAAP net loss per share of $(0.09), representing an improvement of $0.14 year-over-year; non-GAAP net loss per share of $(0.03), representing an improvement of $0.19 year-over-year

SAN FRANCISCO--(BUSINESS WIRE)--Cloudflare, Inc. (NYSE: NET), the security, performance, and reliability company helping to build a better Internet, today announced financial results for its second quarter ended June 30, 2020.


"We delivered a strong second quarter, with revenue growth up 48% year-over-year, and added a record number of both large and paying customers," said Matthew Prince, co-founder and CEO, Cloudflare. "It has been incredible to see the rate of innovation that has continued, and even accelerated, as we work remotely. We hired more new team members than any other quarter in our history, attracting more than 47,000 applicants in just three months. As others pull back, we're investing in our future, and the services our customers depend on for a fast, reliable, and secure Internet during these challenging times."

Second Quarter Fiscal 2020 Financial Highlights

  • Revenue: Total revenue of $99.7 million, representing an increase of 48% year-over-year.
  • Gross Profit: GAAP gross profit was $75.6 million, or 75.8% gross margin, compared to $52.6 million, or 78.0%, in the second quarter of 2019. Non-GAAP gross profit was $76.6 million, or 76.8% gross margin, compared to $52.7 million, or 78.1%, in the second quarter of 2019.
  • Operating Loss: GAAP loss from operations was $24.7 million, or 24.8% of total revenue, compared to $19.8 million, or 29.3% of total revenue, in the second quarter of 2019. Non-GAAP loss from operations was $9.5 million, or 9.5% of total revenue, compared to $18.7 million, or 27.7% of total revenue, in the second quarter of 2019.
  • Net Loss: GAAP net loss was $26.1 million, compared to $19.7 million in the second quarter of 2019. Non-GAAP net loss was $9.6 million, compared to $18.6 million in the second quarter of 2019. GAAP net loss per share was $(0.09), compared to $(0.23) in the second quarter of 2019. Non-GAAP net loss per share was $(0.03), compared to $(0.22) in the second quarter of 2019.
  • Cash Flow: Net cash flow from operations was $4.0 million, compared to negative $2.9 million for the second quarter of 2019. Free cash flow was negative $20.2 million, or 20% of total revenue, compared to negative $16.9 million, or 25% of total revenue, in the second quarter of 2019.
  • Cash, cash equivalents, and available-for-sale securities were $1,069.1 million as of June 30, 2020.

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 COVID-19 pandemic, reflect our estimates as of August 6, 2020 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 and spread 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 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 third quarter of fiscal 2020, we expect:

  • Total revenue of $102.5 to $103.5 million
  • Non-GAAP loss from operations of $16 to $15 million
  • Non-GAAP net loss per share of $0.06 to $0.05, utilizing weighted average common shares outstanding of approximately 302 million

For the full year fiscal 2020, we expect:

  • Total revenue of $404 to $408 million
  • Non-GAAP loss from operations of $55 to $53 million
  • Non-GAAP net loss per share of $0.18 to $0.17, utilizing weighted average common shares outstanding of approximately 301 million

Conference Call Information

Cloudflare will host an investor conference call to discuss its second quarter ended June 30, 2020 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 3977999. 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 cloudflare.NET. Beginning with the quarter ended March 31, 2020, we have transitioned the method for calculating our key business metrics from a billings-based methodology to a revenue-based methodology. We believe the change in methodology to GAAP-based metrics provides improved disclosures for our investors by better aligning our key business metrics with GAAP and our financial statements and will provide a better representation of these important components of our operating model and business performance as we continue to scale. We have recast these metrics for the eight trailing quarters to reflect this new methodology in our supplemental materials.

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, and Twitter 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, the impact of the COVID-19 pandemic on our and our customers’, vendors’, and partners’ operations and future financial 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, and 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 adverse conditions in the general domestic and global economic markets; our history of net losses; our limited operating history; risks associated with managing our rapid growth; our ability to attract and retain new customers; our ability to retain and upgrade paying customers and convert free customers to paying 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; 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 Quarterly Report on Form 10-Q filed on May 11, 2020, 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 platform protects and accelerates 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, Seattle, WA, New York, NY, San Jose, CA, Washington, D.C., Lisbon, London, Munich, Beijing, Singapore, Sydney, and Tokyo.

CLOUDFLARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(thousands, except per share data)

(unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2020

 

2019

 

 

2020

 

 

2019

Revenue

$

99,721

 

 

$

67,424

 

 

$

190,971

 

 

$

129,151

 

Cost of revenue(1)(2)

 

24,164

 

 

 

14,832

 

 

 

44,985

 

 

 

29,192

 

Gross profit

 

75,557

 

 

 

52,592

 

 

 

145,986

 

 

 

99,959

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing(1)

 

51,376

 

 

 

35,836

 

 

 

98,341

 

 

 

66,653

 

Research and development(1)(3)

 

28,131

 

 

 

18,868

 

 

 

61,485

 

 

 

36,517

 

General and administrative(1)(3)

 

20,754

 

 

 

17,659

 

 

 

46,935

 

 

 

33,707

 

Total operating expenses

 

100,261

 

 

 

72,363

 

 

 

206,761

 

 

 

136,877

 

Loss from operations

 

(24,704

)

 

 

(19,771

)

 

 

(60,775

)

 

 

(36,918

)

Non-operating income (expense):

 

 

 

 

 

 

 

Interest income

 

1,857

 

 

 

830

 

 

 

4,426

 

 

 

1,743

 

Interest expense(4)

 

(5,007

)

 

 

(290

)

 

 

(5,074

)

 

 

(563

)

Other expense, net

 

(219

)

 

 

(86

)

 

 

266

 

 

 

(379

)

Total non-operating income (expense), net

 

(3,369

)

 

 

454

 

 

 

(382

)

 

 

801

 

Loss before income taxes

 

(28,073

)

 

 

(19,317

)

 

 

(61,157

)

 

 

(36,117

)

Provision for (benefit from) income taxes

 

(1,938

)

 

 

389

 

 

 

(2,276

)

 

 

703

 

Net loss

$

(26,135

)

 

$

(19,706

)

 

$

(58,881

)

 

$

(36,820

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.09

)

 

$

(0.23

)

 

$

(0.20

)

 

$

(0.43

)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

 

299,321

 

 

 

85,683

 

 

 

297,392

 

 

 

85,382

 

 

____________

(1) Includes stock-based compensation and related employer payroll taxes as follows:

Cost of revenue

$

329

 

 

$

34

 

 

$

634

 

 

$

66

 

Sales and marketing

 

3,975

 

 

 

275

 

 

 

7,554

 

 

 

554

 

Research and development

 

6,917

 

 

 

406

 

 

 

14,044

 

 

 

823

 

General and administrative

 

3,347

 

 

 

329

 

 

 

6,953

 

 

 

658

 

Total stock-based compensation and related employer payroll taxes

$

14,568

 

 

$

1,044

 

 

$

29,185

 

 

$

2,101

 

 

(2) Includes amortization of acquired intangible assets as follows:

Cost of revenue

$

700

 

 

$

32

 

 

$

1,431

 

 

$

63

 

Total amortization of acquired intangible assets

$

700

 

 

$

32

 

 

$

1,431

 

 

$

63

 

 

(3) Includes acquisition-related and other expenses as follows:

Research and development

$

(51

)

 

$

 

 

$

5,725

 

 

$

 

General and administrative

 

 

 

 

 

 

 

554

 

 

 

 

Total acquisition-related and other expenses

$

(51

)

 

$

 

 

$

6,279

 

 

$

 

 

(4) Includes amortization of debt discounts and issuance costs as follows:

Amortization of debt discounts and issuance costs

$

4,303

 

 

$

 

 

$

4,303

 

 

$

 

Total amortization of debt discounts and issuance costs

$

4,303

 

 

$

 

 

$

4,303

 

 

$

 

 

CLOUDFLARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)

 

 

June 30,
2020

 

December 31,
2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

313,983

 

 

 

$

138,976

 

 

Available-for-sale securities

755,108

 

 

 

497,972

 

 

Accounts receivable, net

43,646

 

 

 

33,867

 

 

Contract assets

2,224

 

 

 

2,063

 

 

Prepaid expenses and other current assets

17,163

 

 

 

16,994

 

 

Total current assets

1,132,124

 

 

 

689,872

 

 

Property and equipment, net

114,549

 

 

 

101,466

 

 

Goodwill

17,167

 

 

 

4,083

 

 

Acquired intangible assets, net

4,200

 

 

 

31

 

 

Operating lease right-of-use assets

46,150

 

 

 

 

 

Deferred contract acquisition costs, noncurrent

33,880

 

 

 

25,184

 

 

Restricted cash

8,847

 

 

 

6,660

 

 

Other noncurrent assets

7,138

 

 

 

3,528

 

 

Total assets

$

1,364,055

 

 

 

$

830,824

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

17,278

 

 

 

$

11,463

 

 

Accrued expenses and other current liabilities

32,076

 

 

 

28,314

 

 

Operating lease liabilities

17,239

 

 

 

 

 

Liability for early exercise of unvested stock options

10,735

 

 

 

13,263

 

 

Deferred revenue

43,419

 

 

 

30,843

 

 

Total current liabilities

120,747

 

 

 

83,883

 

 

Long-term debt

365,949

 

 

 

 

 

Build-to-suit lease financing obligation

 

 

 

10,506

 

 

Operating lease liabilities, noncurrent

30,869

 

 

 

 

 

Deferred revenue, noncurrent

1,599

 

 

 

804

 

 

Other noncurrent liabilities

9,273

 

 

 

9,803

 

 

Total liabilities

528,437

 

 

 

104,996

 

 

Stockholders’ Equity:

 

 

 

Class A common stock; $0.001 par value; 2,250,000 shares authorized as of June 30, 2020 and December 31, 2019; 184,900 and 87,072 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

184

 

 

 

87

 

 

Class B common stock; $0.001 par value; 315,000 shares authorized as of June 30, 2020 and December 31, 2019; 120,524 and 213,101 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

116

 

 

 

207

 

 

Additional paid-in capital

1,194,125

 

 

 

1,027,179

 

 

Accumulated deficit

(360,031

)

 

 

(301,706

)

 

Accumulated other comprehensive income

1,224

 

 

 

61

 

 

Total stockholders’ equity

835,618

 

 

 

725,828

 

 

Total liabilities and stockholders’ equity

$

1,364,055

 

 

 

$

830,824

 

 

 

CLOUDFLARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Six Months Ended June 30,

 

2020

 

2019

Cash Flows From Operating Activities

 

 

 

Net loss

$

(58,881

)

 

 

$

(36,820

)

 

Adjustments to reconcile net loss to cash used in operating activities:

 

 

 

Depreciation and amortization expense

22,113

 

 

 

13,160

 

 

Non-cash operating lease costs

9,332

 

 

 

 

 

Amortization of deferred contract acquisition costs

7,462

 

 

 

4,904

 

 

Stock-based compensation expense

25,346

 

 

 

2,101

 

 

Net accretion of discounts and amortization of premiums on marketable securities

(367

)

 

 

(852

)

 

Amortization of debt discount and issuance costs

4,303

 

 

 

 

 

Deferred income taxes

(2,621

)

 

 

 

 

Provision for bad debt

2,493

 

 

 

451

 

 

Change in fair value of redeemable convertible preferred stock warrant liability

 

 

 

327

 

 

Other

(95

)

 

 

9

 

 

Changes in operating assets and liabilities, net of effect of acquisitions:

 

 

 

Accounts receivable, net

(12,272

)

 

 

(5,222

)

 

Contract assets

(161

)

 

 

(153

)

 

Deferred contract acquisition costs

(16,158

)

 

 

(8,446

)

 

Prepaid expenses and other current assets

(171

)

 

 

(314

)

 

Other noncurrent assets

(894

)

 

 

(1,373

)

 

Accounts payable

4,333

 

 

 

4,887

 

 

Accrued expenses and other current liabilities

4,179

 

 

 

920

 

 

Operating lease liabilities

(10,205

)

 

 

 

 

Deferred revenue

13,371

 

 

 

10,727

 

 

Other noncurrent liabilities

(1,396

)

 

 

3,137

 

 

Net cash used in operating activities

(10,289

)

 

 

(12,557

)

 

Cash Flows From Investing Activities

 

 

 

Purchases of property and equipment

(30,605

)

 

 

(18,990

)

 

Capitalized internal-use software

(9,863

)

 

 

(7,471

)

 

Cash paid for acquisitions, net of cash acquired

(13,691

)

 

 

 

 

Purchases of available-for-sale securities

(579,437

)

 

 

(45,143

)

 

Sales of available-for-sale securities

 

 

 

1,978

 

 

Maturities of available-for-sale securities

323,832

 

 

 

97,448

 

 

Other investing activities

223

 

 

 

25

 

 

Net cash provided by (used in) investing activities

(309,541

)

 

 

27,847

 

 

Cash Flows From Financing Activities

 

 

 

Gross proceeds from issuance of convertible senior notes

575,000

 

 

 

 

 

Purchases of capped calls related to convertible senior notes

(67,333

)

 

 

 

 

Cash paid for issuance costs on convertible senior notes

(12,520

)

 

 

 

 

Proceeds from the exercise of stock options

4,335

 

 

 

1,067

 

 

Proceeds from the early exercise of stock options

80

 

 

 

2,174

 

 

Repurchases of unvested common stock

(101

)

 

 

(88

)

 

Payments on note payable

(200

)

 

 

(182

)

 

Proceeds from the issuance of common stock for employee stock purchase plan

5,447

 

 

 

 

 

Proceeds from build-to-suit lease financing obligation drawdown

 

 

 

47

 

 

Payment of tax withholding obligation on RSU settlement

(7,308

)

 

 

 

 

Payment of tax withholding obligation on common stock issued under employee stock purchase plan

(376

)

 

 

 

 

Payments of deferred offering costs

 

 

 

(969

)

 

Net cash provided by financing activities

497,024

 

 

 

2,049

 

 

Net increase in cash, cash equivalents, and restricted cash

177,194

 

 

 

17,339

 

 

Cash, cash equivalents, and restricted cash, beginning of period

145,636

 

 

 

31,426

 

 

Cash, cash equivalents, and restricted cash, end of period

$

322,830

 

 

$

48,765

 

 

CLOUDFLARE, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2020

 

2019

 

2020

 

2019

Reconciliation of cost of revenue:

 

 

 

 

 

 

 

 

GAAP cost of revenue

 

$

24,164

 

 

 

14,832

 

 

$

44,985

 

 

 

$

29,192

 

 

Less: Stock-based compensation and related employer payroll taxes

 

(329

)

 

 

(34

)

 

 

(634

)

 

 

(66

)

 

Less: Amortization of acquired intangible assets

 

(700

)

 

 

(32

)

 

 

(1,431

)

 

 

(63

)

 

Non-GAAP cost of revenue

 

$

23,135

 

 

 

$

14,766

 

 

 

$

42,920

 

 

 

$

29,063

 

 

Reconciliation of gross profit:

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

75,557

 

 

 

$

52,592

 

 

 

$

145,986

 

 

 

$

99,959

 

 

Add: Stock-based compensation and related employer payroll taxes

 

329

 

 

 

34

 

 

 

634

 

 

 

66

 

 

Add: Amortization of acquired intangible assets

 

700

 

 

 

32

 

 

 

1,431

 

 

 

63

 

 

Non-GAAP gross profit

 

$

76,586

 

 

 

$

52,658

 

 

 

$

148,051

 

 

 

$

100,088

 

 

Non-GAAP gross margin

 

76.8

 

%

 

78.1

 

%

 

77.5

 

%

 

77.5

 

%

Reconciliation of operating expenses:

 

 

 

 

 

 

 

 

GAAP sales and marketing

 

$

51,376

 

 

 

35,836

 

 

 

$

98,341

 

 

 

$

66,653

 

 

Less: Stock-based compensation and related employer payroll taxes

 

(3,975

)

 

 

(275

)

 

 

(7,554

)

 

 

(554

)

 

Non-GAAP sales and marketing

 

$

47,401

 

 

 

$

35,561

 

 

 

$

90,787

 

 

 

$

66,099

 

 

GAAP research and development

 

$

28,131

 

 

 

18,868

 

 

 

$

61,485

 

 

 

$

36,517

 

 

Less: Stock-based compensation and related employer payroll taxes

 

(6,917

)

 

 

(406

)

 

 

(14,044

)

 

 

(823

)

 

Less: Acquisition-related and other expenses

 

51

 

 

 

 

 

 

(5,725

)

 

 

 

 

Non-GAAP research and development

 

$

21,265

 

 

 

$

18,462

 

 

 

$

41,716

 

 

 

$

35,694

 

 

GAAP general and administrative

 

$

20,754

 

 

 

17,659

 

 

 

$

46,935

 

 

 

$

33,707

 

 

Less: Stock-based compensation and related employer payroll taxes

 

(3,347

)

 

 

(329

)

 

 

(6,953

)

 

 

(658

)

 

Less: Acquisition-related and other expenses

 

 

 

 

 

 

 

(554

)

 

 

 

 

Non-GAAP general and administrative

 

$

17,407

 

 

 

$

17,330

 

 

 

$

39,428

 

 

 

$

33,049

 

 

Reconciliation of loss from operations:

 

 

 

 

 

 

 

 

GAAP loss from operations

 

$

(24,704

)

 

 

(19,771

)

 

 

$

(60,775

)

 

 

$

(36,918

)

 

Add: Stock-based compensation and related employer payroll taxes

 

14,568

 

 

 

1,044

 

 

 

29,185

 

 

 

2,101

 

 

Add: Amortization of acquired intangible assets

 

700

 

 

 

32

 

 

 

1,431

 

 

 

63

 

 

Add: Acquisition-related and other expenses

 

(51

)

 

 

 

 

 

6,279

 

 

 

 

 

Non-GAAP loss from operations

 

$

(9,487

)

 

 

$

(18,695

)

 

 

$

(23,880

)

 

 

$

(34,754

)

 

Non-GAAP operating margin

 

(9.5

)

%

 

(27.7

)

%

 

(12.5

)

%

 

(26.9

)

%

Reconciliation of interest expense:

 

 

 

 

 

 

 

 

GAAP interest expense

 

$

(5,007

)

 

 

$

(290

)

 

 

$

(5,074

)

 

 

$

(563

)

 

Add: Amortization of debt discount and issuance costs

 

4,303

 

 

 

 

 

 

4,303

 

 

 

 

 

Non-GAAP interest expense

 

$

(704

)

 

 

$

(290

)

 

 

$

(771

)

 

 

$

(563

)

 

Reconciliation of provision for (benefit from) income taxes:

 

 

 

 

 

 

 

 

GAAP provision for (benefit from) income taxes

 

$

(1,938

)

 

 

$

389

 

 

 

$

(2,276

)

 

 

$

703

 

 

Income tax effect of non-GAAP adjustments(1)

 

2,979

 

 

 

(10

)

 

 

4,230

 

 

 

(4

)

 

Non-GAAP provision for (benefit from) income taxes

 

$

1,041

 

 

 

$

379

 

 

 

$

1,954

 

 

 

$

699

 

 

 

CLOUDFLARE, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands)

(unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

2020

2019

2020

2019

Reconciliation of net loss and net loss per share:

 

 

 

 

GAAP net loss attributable to common stockholders

 

$

(26,135

)

 

$

(19,706

)

 

$

(58,881

)

 

$

(36,820

)

Add: Stock-based compensation expense

 

 

14,568

 

 

 

1,044

 

 

 

29,185

 

 

 

2,101

 

Add: Amortization of acquired intangible assets

 

 

700

 

 

 

32

 

 

 

1,431

 

 

 

63

 

Add: Acquisition-related and other expenses

 

 

(51

)

 

 

 

 

 

6,279

 

 

 

 

Add: Amortization of debt discount and issuance costs

 

 

4,303

 

 

 

 

 

 

4,303

 

 

 

 

Income tax effect of non-GAAP adjustments(1)

 

 

(2,979

)

 

 

10

 

 

 

(4,230

)

 

 

4

 

Non-GAAP net loss

 

$

(9,594

)

 

$

(18,620

)

 

$

(21,913

)

 

$

(34,652

)

GAAP net loss per share

 

$

(0.09

)

 

$

(0.23

)

 

$

(0.20

)

 

$

(0.43

)

Add: Stock-based compensation expense

 

 

0.05

 

 

 

0.01

 

 

 

0.10

 

 

 

0.02

 

Add: Amortization of acquired intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

Add: Acquisition-related and other expenses

 

 

 

 

 

 

 

 

0.02

 

 

 

 

Add: Amortization of debt discount and issuance costs

 

 

0.01

 

 

 

 

 

 

0.01

 

 

 

 

Income tax effect of non-GAAP adjustments(1)

 

 

(0.01

)

 

 

 

 

 

(0.01

)

 

 

 

Non-GAAP net loss per share(2)

 

$

(0.03

)

 

$

(0.22

)

 

$

(0.07

)

 

$

(0.41

)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

 

 

299,321

 

 

 

85,683

 

 

 

297,392

 

 

 

85,382

 

 

____________

(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
June 30,

Six Months Ended
June 30,

 

2020

2019

2020

2019

Free cash flow

 

 

 

 

Net cash provided by (used in) operating activities

$

3,987

 

$

(2,867

)

$

(10,289

)

$

(12,557

)

Less: Purchases of property and equipment

 

(19,200

)

 

(9,954

)

 

(30,605

)

 

(18,990

)

Less: Capitalized internal-use software

 

(4,941

)

 

(4,074

)

 

(9,863

)

 

(7,471

)

Free cash flow

$

(20,154

)

$

(16,895

)

$

(50,757

)

$

(39,018

)

Net cash provided by (used in) investing activities

$

(300,769

)

$

12,638

 

$

(309,541

)

$

27,847

 

Net cash provided by (used in) financing activities

$

501,702

 

$

(199

)

$

497,024

 

$

2,049

 

Net cash provided by (used in) operating activities
(percentage of revenue)

 

4

%

 

(4

)%

 

(5

)%

 

(10

)%

Less: Purchases of property and equipment
(percentage of revenue)

 

(19

)%

 

(15

)%

 

(17

)%

 

(15

)%

Less: Capitalized internal-use software
(percentage of revenue)

 

(5

)%

 

(6

)%

 

(5

)%

 

(5

)%

Free cash flow margin(1)

 

(20

)%

 

(25

)%

 

(27

)%

 

(30

)%

____________

(1) Totals may not sum due to rounding. Figures are calculated based upon the respective underlying non-rounded data.


Contacts

Investor Relations Information
Jayson Noland
ir@cloudflare.com

Press Contact Information
Daniella Vallurupalli
press@cloudflare.com


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