Cloudflare(NET) - 2024 Q4 - Annual Report

Customer Growth - As of December 31, 2024, the company had approximately 238,000 paying customers, up from 2,042 in 2022, representing a growth of 71.5% year-over-year[59] - The number of large customers increased from 2,756 in 2023 to 3,497 in 2024, indicating a growth of 26.9%[59] Financial Performance - Total revenues for the year ended December 31, 2024, were $1,669.6 million, with a significant portion derived from contracted customers[504] - Total revenue for 2024 reached$1,669,626, representing a 29% increase from $1,296,745 in 2023[512] - Gross profit for 2024 was$1,290,924, up from $989,740 in 2023, indicating a gross margin improvement[512] - Operating expenses increased to$1,445,685 in 2024, compared to $1,175,225 in 2023, primarily driven by higher sales and marketing costs[512] - The net loss for 2024 was$78,800, a significant reduction from the net loss of $183,949 in 2023[512] - The company’s stockholders' equity increased to$1,046,201 in 2024, up from $763,047 in 2023, indicating improved financial health[510] - Net loss for 2024 was$78.8 million, a decrease from $183.9 million in 2023, indicating improved financial performance[523] Cash and Liquidity - As of December 31, 2024, the company had cash and cash equivalents of$147.7 million and available-for-sale securities totaling $1,708.2 million[482] - Cash and cash equivalents increased to$147,691 in 2024 from $86,864 in 2023, reflecting improved liquidity[510] - Total cash, cash equivalents, and restricted cash at the end of 2024 was$154.2 million, compared to $91.2 million at the end of 2023[523] Investment and Expenses - The company prioritizes investment in research and development, resulting in the launch of new products that attract new customers[77] - Stock-based compensation expense rose to$338.5 million in 2024, compared to $274.0 million in 2023, indicating increased investment in employee incentives[523] - Purchases of property and equipment increased significantly to$185.0 million in 2024 from $114.4 million in 2023, suggesting expansion efforts[523] - Advertising expenses for the years ended December 31, 2024, 2023, and 2022 were$78.6 million, $57.6 million, and$43.5 million, respectively, reflecting a significant increase in marketing investment[546] Assets and Liabilities - Total assets grew to $3,301,162 in 2024, up from$2,759,767 in 2023, indicating strong asset accumulation[510] - Total liabilities increased to $2,254,961 in 2024, compared to$1,996,720 in 2023, primarily due to higher deferred revenue[510] - The allowance for doubtful accounts increased to $8.2 million as of December 31, 2024, from$6.0 million in 2023[605] Operational Efficiency - Net cash provided by operating activities increased to $380.4 million in 2024, up from$254.4 million in 2023, reflecting stronger operational efficiency[523] - The company maintained effective internal control over financial reporting as of December 31, 2024, according to the independent auditor's opinion[495] Market and Risk Management - The company is exposed to market risks, including interest rate risk and foreign currency risk, but does not believe inflation has materially affected its operations[489] - A hypothetical 1% increase or decrease in interest rates would have resulted in a $12.1 million change in the market value of available-for-sale securities as of December 31, 2024[484] Sustainability and Social Responsibility - The company has committed to powering its operations with 100$1,293.8 million aggregate principal amount of 0% Convertible Senior Notes due 2026, with net proceeds of $1,274.0 million[618] - The Company issued$575.0 million aggregate principal amount of 0.75% Convertible Senior Notes due 2025, with no outstanding notes as of December 31, 2024[630]