Cloudflare Reports Strong Q1 2025 Financial Results: Record Revenue Growth and Innovation Leadership
Cloudflare, Inc. (NYSE: NET), a global leader in the connectivity cloud space, has announced its financial results for the first quarter of 2025, showcasing robust growth and operational efficiency. The company reported $479.1 million in revenue, representing a 27% year-over-year increase, while delivering strong non-GAAP profitability and achieving its highest year-over-year growth in net new Annual Contract Value (ACV) in three years. These results underscore Cloudflare’s ability to scale its business, innovate across key verticals, and secure high-value customer contracts.
First Quarter 2025 Financial Highlights
Cloudflare delivered impressive financial performance across multiple metrics, reflecting its continued momentum:
- Revenue Growth: Total revenue reached $479.1 million, up 27% year-over-year, driven by strong adoption of its networking, security, and developer-focused solutions.
- Gross Profit:
- GAAP Gross Profit: $363.5 million, with a gross margin of 75.9%.
- Non-GAAP Gross Profit: $369.3 million, with a gross margin of 77.1%.
- Operating Income (Loss):
- GAAP Loss from Operations: $53.2 million, or 11.1% of revenue, compared to $54.6 million, or 14.4%, in Q1 2024.
- Non-GAAP Income from Operations: $56.0 million, or 11.7% of revenue, up from $42.4 million, or 11.2%, in Q1 2024.
- Net Income (Loss):
- GAAP Net Loss: $38.5 million, with a loss per share of $0.11.
- Non-GAAP Net Income: $58.4 million, with earnings per diluted share of $0.16.
- Cash Flow and Liquidity:
- Net Cash Flow from Operating Activities: $145.8 million, more than double the $73.6 million reported in Q1 2024.
- Free Cash Flow: $52.9 million, or 11% of revenue, up from $35.6 million, or 9%, in Q1 2024.
- Cash, Cash Equivalents, and Securities: $1,914.9 million as of March 31, 2025, ensuring a strong liquidity position.
Record-Breaking Deals and Innovation Leadership
Cloudflare’s Q1 performance was highlighted by several landmark achievements that demonstrate the company’s growing influence and innovation leadership:
- Largest Contract in Company History: Cloudflare secured its largest-ever contract, a deal exceeding $100 million, powered by its Workers developer platform. This underscores the platform’s ability to meet the needs of enterprise customers seeking scalable, reliable, and innovative solutions.
- Longest-Term SASE Contract: The company also signed its longest-term Secure Access Service Edge (SASE) contract to date, reinforcing its leadership in providing integrated networking and security solutions.
Matthew Prince, co-founder and CEO of Cloudflare, commented on the quarter’s results: “We kicked off 2025 with confidence, momentum, and strong results. In Q1, we landed the largest contract in Cloudflare’s history, a more than $100 million deal driven by our Workers developer platform, and signed the longest-term SASE contract to date. We have the scale, the technology, and the team to capture the massive opportunity ahead of us—as evidenced by the size and the length of the deals we’re closing and the caliber of customers betting on Cloudflare. In a constantly changing world, one thing’s for certain: innovation wins. From networking, to security, to AI, Cloudflare is the envy of the industry for innovation, and there’s no slowing down.”
Why Cloudflare’s Growth Matters
Cloudflare’s Q1 results highlight its ability to deliver value across multiple dimensions—revenue growth, profitability, and cash flow generation—all while maintaining a relentless focus on innovation. Key factors contributing to its success include:
- Enterprise Adoption: Large enterprises are increasingly turning to Cloudflare for its comprehensive suite of solutions, including networking, security, and developer tools. The record-breaking deals closed in Q1 reflect the trust placed in Cloudflare by high-profile customers.
- AI and Developer-Centric Solutions: With its Workers platform at the forefront, Cloudflare continues to lead in enabling developers to build and deploy applications at scale. This positions the company as a critical player in the rapidly evolving AI and cloud-native ecosystems.
- SASE Leadership: As organizations adopt hybrid work models, Cloudflare’s SASE offerings provide a unified approach to networking and security, addressing the needs of modern businesses.
Financial Outlook for Q2 and Full-Year 2025
Cloudflare provided guidance for the second quarter and full-year 2025, reflecting its confidence in sustaining growth and profitability:
- Q2 2025 Guidance:
- Total Revenue: $500.0 to $501.0 million
- Non-GAAP Income from Operations: $62.5 to $63.5 million
- Non-GAAP Net Income Per Share: $0.18
- Full-Year 2025 Guidance:
- Total Revenue: $2,090.0 to $2,094.0 million
- Non-GAAP Income from Operations: $272.0 to $276.0 million
- Non-GAAP Net Income Per Share: $0.79 to $0.80
These projections highlight Cloudflare’s ability to balance top-line growth with operational efficiency, positioning the company for sustained success.
