Summary
Cloudflare ended fiscal 2024 with fourth-quarter revenue of $459.95 million, up 26.9% from $362.47 million in the prior-year quarter. Full-year revenue was $1.67 billion, up 28.8%. CEO Matthew Prince pointed to record growth in the company's largest customers, those spending more than $1 million per year, as the standout of the quarter.
Fourth-quarter GAAP gross profit was $351.26 million, up 25.8%, though gross margin slipped to 76.4% from 77.0% in the fourth quarter of 2023. For the full year, gross profit was $1.29 billion, up 30.4%, and gross margin improved to 77.3% from 76.3%. The bottom line still carries losses. The fourth-quarter GAAP operating loss was $34.72 million, narrower than the $42.83 million loss a year earlier, and operating margin improved to negative 7.5% from negative 11.8%, a gain of 4.3 percentage points. The full-year GAAP operating loss was $154.76 million, narrower than $185.48 million in fiscal 2023. GAAP net loss for the quarter was $12.85 million, narrowed from $27.86 million. Full-year GAAP net loss was $78.80 million, narrowed from $183.95 million, and full-year diluted GAAP loss per share was $0.23 against $0.55. On a non-GAAP basis, fourth-quarter income from operations was $67.2 million, or 14.6% of revenue, and non-GAAP net income was $68.8 million, or $0.19 per diluted share.
The customer base widened on both ends. Customers spending more than $1 million annually reached 173, up 47% year over year, and the company added 55 of them during 2024, with more than half coming in the fourth quarter. Total paying customers were 237,714 as of December 31, 2024, up from 189,791 a year earlier, and those spending more than $100,000 in annualized revenue rose to 3,497 from 2,756. Dollar-based net retention was 111% for the three months ended December 31, 2024, down from 115% and 122% in the two prior year-end periods.
Cash generation improved. Fourth-quarter operating cash flow was $127.31 million, up 49.0% from $85.44 million a year earlier, and full-year operating cash flow was $380.43 million, up 49.5%. Free cash flow, a separate non-GAAP measure, was $47.8 million in the quarter, or 10% of revenue, against $50.7 million, or 14%, a year earlier. Capital expenditures climbed to $73.15 million in the quarter, up 137.4%. Remaining performance obligations were $1.69 billion, up 35.5%, and deferred revenue was $477.76 million, up 37.4%.
Guidance for the first quarter of 2025 is framed on non-GAAP measures. Management guided non-GAAP income from operations of $54.0 million to $55.0 million and non-GAAP net income per share of $0.16, using roughly 362 million weighted average shares. For the full year 2025, it guided non-GAAP income from operations of $272.0 million to $276.0 million and non-GAAP net income per share of $0.79 to $0.80 on about 366 million shares. The press release notes that a reconciliation of non-GAAP guidance to the corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort.
The risks are the familiar ones. The 10-K flags a history of net losses, macroeconomic uncertainty that could persist through 2025, geopolitical tension, lengthening sales cycles, higher churn, rising days sales outstanding, and customer requests for concessions. Heavy stock-based compensation and a rising cost base tied to network and headcount investments remain part of the story.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $459.9M | $430.1M | +6.9% | $362.5M | +26.9% |
| Gross profit | $351.3M | $334.1M | +5.1% | $279.2M | +25.8% |
| Gross margin | 76.4% | 77.7% | -1.3 pp | 77.0% | -0.6 pp |
| Research & development | $120.2M | $110.9M | +8.4% | $96.4M | +24.7% |
| Sales & marketing | $192.0M | $185.2M | +3.6% | $165.2M | +16.2% |
| General & administrative | $73.8M | $68.8M | +7.3% | $60.4M | +22.2% |
| Total operating expenses | $386.0M | $364.9M | +5.8% | $322.0M | +19.9% |
| Operating income (loss) | -$34.7M | -$30.8M | -12.7% | -$42.8M | +18.9% |
| Operating margin | -7.5% | -7.2% | -0.4 pp | -11.8% | +4.3 pp |
| Net income (loss) | -$12.8M | -$15.3M | +16.2% | -$27.9M | +53.9% |
| Net margin | -2.8% | -3.6% | +0.8 pp | -7.7% | +4.9 pp |
| Diluted EPS | -$0.04 | -$0.04 | ±$0.00 | -$0.08 | +$0.04 |
| Net retention rate | 111.0% | 110.0% | +1.0 pp | 115.0% | -4.0 pp |
Risks
MD&A states the company is closely monitoring macroeconomic developments and expects that some or all negative trends, including lengthening average sales cycles, pipeline slowdowns, higher churn, and lengthening payment timing, may emerge or recur during future quarters. It also cites inflation, interest rates, tariffs, and geopolitical conflicts as pressures on customer spending.
Risk Factors say the company has experienced periodic lengthening of average sales cycles for new and existing large customers since the first half of 2022, and larger enterprises often undertake more significant evaluation and negotiation processes that could further lengthen the sales cycle materially.
Dollar-based net retention declined to 111% for the three months ended December 31, 2024 from 115% for the three months ended December 31, 2023 and 122% for the three months ended December 31, 2022, which the company links to churn and reduced expansion within existing paying customers.
The company expects competition to increase as new products and technologies, including those leveraging artificial intelligence and machine learning, are introduced, and it is investing in GPUs to support AI-related developer platform products. Larger competitors may bundle products, offer zero or negative margins, or leverage existing relationships.
Growth strategy depends on attracting, expanding, and retaining large customers, which involve longer evaluation periods, greater purchasing leverage, pool of funds arrangements, early termination rights, and potentially lower margins. The company says adverse impact from losing or reducing sales to a large customer could be significant in any quarter.
Risk Factors disclose a reduction in average productivity among sales personnel since late 2022, due in part to new sales hires not becoming as productive as expected, and note leadership changes including the departure of the former President of Revenue and hiring of a new President of Revenue in February 2024.
Risk Factors state that revenue growth has slowed in recent periods and may continue to slow, and that historical growth rates should not be considered indicative of future performance. MD&A reports revenue up 28.8% year to date for FY2024, but the company warns growth may not be sufficient to achieve and sustain profitability.
The company is highly dependent on co-founders Matthew Prince and Michelle Zatlyn and other key personnel, and it has hired several new senior management team members in the past year. It cites intense competition for sales and engineering talent and potential equity-related wealth effects on retention.
The vast majority of customers do not pay, and a substantial majority of free customers historically have not converted to paying customers. The company bears incremental expenses and liabilities, including litigation, from free customers' use of its network and products.
The company has experienced negative publicity from customer use of its network by The Daily Stormer, 8chan, and Kiwi Farms, and it is aware of potential customers that decided not to subscribe because of actions or potential actions of certain paying and free customers.
As of December 31, 2024, $1,293.8 million aggregate principal amount of 2026 Notes remained outstanding, and the company entered a $400 million Revolving Credit Facility in May 2024. The credit agreement contains restrictive covenants and the 2026 Notes have conditional conversion and fundamental change repurchase features that could strain liquidity.
The company has limited experience determining optimal prices and pricing models for newer subscription plans, bundled sales, and professional services, and increasing focus on larger customers may lead to greater price concessions that impact revenue and results of operations.
Growth depends in part on third-party channel partners, referral partners, systems integrators, and managed security service providers. Many arrangements are short-term and can be terminated on 90 days advance notice, and partners may become competitive or be acquired by competitors.
Maintaining customer satisfaction depends on high-quality support, particularly for large customers with complex IT architectures. The company also has limited experience providing professional services and pricing them appropriately, which could harm customer satisfaction and retention.
Headcount grew from 3,217 employees as of December 31, 2022 to 4,263 employees as of December 31, 2024, placing strain on management and administrative, operational, and financial infrastructure. Failure to manage growth could harm network reliability, corporate culture, and product quality.
SaaS KPIs
All quarters →Dollar-Based Net Retention Rate
Free Cash Flow Margin
Paying customers
Non-GAAP Operating Margin
Paying Customers (> $100,000 Annualized Revenue)
Free Cash Flow
Summary, forecast, risks and KPIs are extracted from Cloudflare, Inc.'s SEC filings for Q4 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Sep 24, 2026.