Cloudflare(US:NET)2024-08-01 20:23Financial Performance - Revenue for the three months ended June 30, 2024, was $400,996, representing a 29.9% increase from $308,494 for the same period in 2023[17]. - Gross profit for the six months ended June 30, 2024, was $605,549, up 33.6% from $453,016 in the prior year[17]. - Net loss for the three months ended June 30, 2024, was $(15,078), compared to a net loss of $(94,467) for the same period in 2023[18]. - The comprehensive loss for the six months ended June 30, 2024, was $53,924 thousand, down from $126,962 thousand in the same period of 2023, indicating a reduction of about 58%[18]. - The net loss for the six months ended June 30, 2024, was $50,621 thousand, a significant decrease from $132,549 thousand in the same period of 2023, reflecting a reduction of approximately 62%[21]. - Free cash flow for Q2 2024 was $38,275 thousand, compared to $19,970 thousand in Q2 2023, indicating a 91.5% increase[114]. - The company experienced a net loss from operations of $(34,698) thousand in Q2 2024, an improvement from $(56,172) thousand in Q2 2023[119]. Assets and Liabilities - Total current assets increased to $2,093,018, up from $1,983,077 as of December 31, 2023, representing a growth of approximately 5.5%[15]. - Total liabilities increased to $2,035,128 from $1,996,720, reflecting a rise of about 1.9%[15]. - Total stockholders' equity as of June 30, 2024, was $881,545, an increase from $763,047 as of December 31, 2023[19]. - The accumulated deficit as of June 30, 2024, was $1,074,461 thousand, compared to $972,440 thousand as of June 30, 2023, indicating an increase in the deficit of about 10.5%[20]. - Cash and cash equivalents increased to $156,967 as of June 30, 2024, from $86,864 as of December 31, 2023, showing a significant rise of 80.5%[15]. Revenue Sources and Customer Metrics - Subscription and support revenue accounted for 100% of total revenue for both the three and six months ended June 30, 2024[33]. - The number of paying customers increased to 210,166 in Q2 2024, up from 174,129 in Q2 2023, reflecting a growth of 20.7%[114]. - The dollar-based net retention rate for the three months ended June 30, 2024, was 112%, down from 115% in the same period of 2023[126]. - The U.S. market accounted for 51% of total revenue in Q2 2024, slightly down from 53% in Q2 2023[115]. - International markets represented 49% of the company's revenue in Q2 2024, up from 47% in Q2 2023, indicating strong international growth[106]. Expenses and Investments - Total operating expenses for the three months ended June 30, 2024, were $346,683, a 19.8% increase compared to $289,445 for the same period in 2023[17]. - Research and development expenses for the three months ended June 30, 2024, were $102,547, a 14.4% increase from $89,610 in the prior year[17]. - Sales and marketing expenses increased by $27.813 million, or 19%, for the three months ended June 30, 2024, driven by a 6% increase in headcount and higher marketing program costs[152]. - General and administrative expenses increased by $16.5 million, or 31%, for the three months ended June 30, 2024, primarily due to a 17% increase in headcount and $11.5 million in stock-based compensation expense[156]. Stock and Equity - The number of shares issued and outstanding for Class A common stock increased to 303,321 from 298,089, reflecting a growth of approximately 1.7%[15]. - The total stock-based compensation expense for the three months ended June 30, 2024, was $85.99 million, compared to $68.39 million for the same period in 2023, representing a 25.8% increase[87]. - The total unrecognized stock-based compensation expense related to unvested RSUs and PSUs as of June 30, 2024, was $704.7 million, expected to be recognized over a weighted-average period of 2.9 years[85]. Strategic Initiatives and Market Conditions - The company is focused on retaining and upgrading paying customers while also aiming to convert free customers to paying customers[6]. - Future financial performance is expected to be influenced by geopolitical tensions, including the Hamas-Israel and Russia-Ukraine conflicts[11]. - The company anticipates challenges in attracting new paying customers and retaining existing ones, which could impact future results[12]. - The management emphasizes the importance of innovation and the development of new products to maintain competitive advantage[6]. - The company aims to continue expanding its customer base and product offerings, leveraging its efficient go-to-market model and international reach[106]. Cash Flow and Financing - Net cash provided by operating activities for the six months ended June 30, 2024, was $148.4 million, an increase of 47% compared to $100.9 million for the same period in 2023[173]. - The company entered into a credit agreement in May 2024 for a senior secured $400.0 million revolving credit facility, with no loans outstanding as of June 30, 2024[167]. - The company expects existing cash, cash equivalents, and available capacity under the Revolving Credit Facility to meet working capital needs for at least the next 12 months[169].