Company: NET
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001477333-25-000082
Chunk: 379

Company: Cloudflare, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 379
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 related to the Company’s contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced. The following table summarizes the activity of the deferred contract acquisition costs:Three Months Ended March 31,20252024(in thousands)Beginning balance$172,217 $133,236 Capitalization of contract acquisition costs25,458 22,398 Amortization of deferred contract acquisition costs(23,132)(18,107)Ending balance$174,543 $137,527 The Company did not recognize any impairment losses of deferred contract acquisition costs during the periods presented.Remaining Performance ObligationsAs of March 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $1,864.2 million. As of March 31, 2025, the Company expected to recognize 66% of its remaining performance obligations as revenue over the next 12 months with the remainder recognized thereafter.

Note 4. Fair Value Measurements

Fair value is defined as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.Assets and liabilities measured at fair value are classified into the following categories:•Level I: Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;•Level II: Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and•Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on the Company’s own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

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The Company classifies money market funds within Level I of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its investments, which are comprised of U.S. treasury securities, U.S. government agency securities, commercial paper, and corporate bonds, within Level II of the fair value hierarchy because the fair value of these securities is priced by using inputs based on non-binding market consensus prices that are primarily corroborated by observable market data or quoted market prices for similar instruments. The Company recognizes transfers between levels within the fair value hierarchy,