Cloudflare (NET) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $479.1 million, up 27% year-over-year, driven by strong growth in large enterprise customers, international markets, and record-breaking contract wins.

• Closed the largest contract in company history (over $130 million, five-year deal) and the longest-term SASE contract (seven years), with major wins in Zero Trust and developer platforms.

• Large customers ($100K+ annualized revenue) grew 23% to 3,527, now accounting for 69% of total revenue.

• Total paying customers increased 27% to 250,819, with 51% of revenue from outside the U.S.

• Continued investment in go-to-market, engineering, and innovation, driving sales productivity and pipeline attainment.

Financial highlights

• Revenue: $479.1 million, up 27% year-over-year; gross margin: 77.1% non-GAAP, 75.9% GAAP, both down year-over-year.

• Non-GAAP operating income: $56 million (11.7% margin); GAAP operating loss: $53.2 million (11.1% of revenue).

• Net income: $58.4 million non-GAAP ($0.16/share); GAAP net loss: $38.5 million ($0.11/share).

• Free cash flow: $52.9 million (11% of revenue), up from $35.6 million (9%) year-over-year.

• Cash, cash equivalents, and AFS securities: $1.91–$1.92 billion as of March 31, 2025.

Outlook and guidance

• Q2 2025 revenue expected at $500–$501 million; non-GAAP operating income $62.5–$63.5 million; non-GAAP EPS $0.18.

• FY 2025 revenue guidance: $2,090–$2,094 million; non-GAAP operating income $272–$276 million; non-GAAP EPS $0.79–$0.80.

• FY 2025 network capex expected at 12–13% of revenue.

• Guidance reflects prudence amid ongoing macroeconomic volatility and uncertainty.