Company: NET
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001477333-25-000082
Chunk: 364

Company: Cloudflare, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 364
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,087 $378,602 $100,485 27 %

Revenue increased by $100.5 million, or 27%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in revenue was primarily due to the addition of new paying customers, as our number of paying customers increased by 27% as of March 31, 2025 compared to the prior period ended March 31, 2024, as well as the expansion within our existing paying customers, which was reflected by our dollar-based net retention rate of 111% for the three months ended March 31, 2025.

Cost of Revenue and Gross Margin

Three Months EndedMarch 31,Change20252024$%(dollars in thousands)Cost of revenue$115,576 $85,038 $30,538 36 %Gross margin76 %78 %

Cost of revenue increased by $30.5 million, or 36%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase in the cost of revenue was primarily due to an increase of $10.4 million in expenses related to operating in co-location facilities and network and bandwidth costs for operating our 

40

global network for our expanded customer base, as well as increased capacity to support our growth, an increase of $10.1 million of third-party technology services costs, and an increase of $9.2 million in depreciation expense due to increase in server acquisitions and deployments. 

Gross margin did not significantly fluctuate during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Operating Expenses

Sales and Marketing

Three Months EndedMarch 31,Change20252024$%(dollars in thousands)Sales and marketing$214,011 $194,102 $19,909 10 %

Sales and marketing expenses increased by $19.9 million, or 10%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily driven by $8.1 million in increased employee-related costs due to an 18% increase in headcount in our sales and marketing organization, including an increase of $7.2 million in stock-based compensation expense. The remainder of the increase was primarily due