Company: NET
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0001477333-25-000043
Chunk: 150

Company: Cloudflare, Inc.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 7
Chunk 150
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 Ended December 31, 2024 and 2023

RevenueYear Ended December 31,Change20242023$%(dollars in thousands)Revenue$1,669,626 $1,296,745 $372,881 29 %

Revenue increased by $372.9 million, or 29%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase in revenue was primarily due to the addition of new paying customers, which increased by 25% during the year ended December 31, 2024, as well as expansion within our existing paying customers, which was reflected by our dollar-based net retention rate of 111% for the three months ended December 31, 2024.

Cost of Revenue and Gross MarginYear Ended December 31,Change20242023$%(dollars in thousands)Cost of revenue$378,702 $307,005 $71,697 23 %Gross margin77 %76 %

Cost of revenue increased by $71.7 million, or 23%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase in the cost of revenue was primarily due to an increase of $32.6 million of third-party technology services costs, registry expenses, and payment processing fees, an increase of $23.9 million in expenses related to operating in co-location facilities and network and bandwidth costs for operating our global network for our expanded customer base, as well as increased capacity to support our growth, an increase of $15.4 

86

million in employee-related costs, and an increase of $2.1 million in purchases of computer equipment and supplies. This increase was partially offset by $6.4 million of decreased depreciation expense. The decrease in depreciation expense was mainly driven by the $14.9 million decrease due to the impact of the change in useful life of servers associated with cost of revenue from 4 years to 5 years, partially offset by an increase related to purchases of equipment located in co-location facilities. 

Gross margin did not significantly fluctuate during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Operating Expenses

Sales and MarketingYear Ended December 31,Change20242023$%(dollars in thousands)Sales and marketing$745,791 $599,117 $146,674