Q4 2024 Cloudflare Inc Earnings Call Transcript
Key Points
- Cloudflare Inc (NET) achieved a revenue of $459.9 million in Q4 2024, marking a 27% year-over-year increase.
- The company added a record number of new large customers, with those paying more than $100,000 per year increasing by 27% year-over-year.
- Gross margin remained strong at 77.6%, above the long-term target range of 75% to 77%.
- Operating profit reached $67.2 million, representing an operating margin of 14.6%.
- Cloudflare Inc (NET) continues to generate strong free cash flow, achieving $47.8 million during the quarter and $166.9 million for the full year.
- Customers have been disciplined with their budgets, scrutinizing deals carefully, which could impact future growth.
- The percentage of paid versus free customer traffic increased, leading to a higher allocation of expenses to cost of goods sold.
- Network CapEx is expected to increase to 12% to 13% of revenue for full year 2025 due to investment in GPU rollout.
- Dollar-based net retention was 111%, showing only a 1-percentage-point increase sequentially, indicating potential challenges in customer retention.
- Free cash flow decreased to $47.8 million in the quarter from $50.7 million in the same period last year.
Good day, everyone, and welcome to the Cloudflare Q4 2024 Earnings Call. This conference is being recorded.
At this time, I would like to hand the call over to Mr. Phil Winslow. Please go ahead, sir.
Thank you for joining us today to discuss Cloudflare's financial results for the fourth quarter of 2024. With me on the call, we have Matthew Prince, Co-Founder and CEO; Michelle Zatlyn, Co-Founder President; and Thomas Seifert, CFO.
By now, everyone should have access to our earnings announcement. This announcement as well as our supplemental financial information may be found on our Investor Relations website.
As a reminder, we will be making forward-looking statements during today's discussion, including, but not limited to, our customers, vendors and partners' operations and future financial performance; anticipated product launches and the timing and market potential of those products. Our anticipated future financial and operating performance
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