Cloudflare Announces Second Quarter 2020 Financial Results
08/06/2020
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.
Source: https://cloudflare.net/news/news-details/2020/Cloudflare-Ann…