Company: NET
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0001477333-25-000141
Chunk: 415

Company: Cloudflare, Inc.
Filing Date: 2025-10-30
Form: 10-Q
Item: Part I, Item 8
Chunk 415
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 related to the Performance Options that is expected to be recognized over a weighted-average period of 3.3 years.Restricted Stock Units and Performance Stock UnitsDuring the three months ended March 31, 2025, the Company’s Board of Directors granted to the Company’s CEO and President (each, a Co-Founder) an aggregate of 350,220 PSUs with market conditions that vest if the Company achieves certain stock price milestones and the Co-Founders, individually, continue to provide services to the Company through the applicable vesting dates.The weighted average assumptions used to determine the fair value of the PSUs with market conditions were as follows:2025Expected term (in years)7.0Expected volatility64.7 %Risk-free interest rate4.3 %Dividend yield— The total stock-based compensation expense for RSUs and PSUs for the three months ended September 30, 2025 and 2024 was $112.0 million and $78.8 million, respectively, and for the nine months ended September 30, 2025 and 2024 was $315.7 million and $217.1 million, respectively. As of September 30, 2025, the total unrecognized stock-based compensation expense related to unvested RSUs and PSUs was $936.2 million that is expected to be recognized over a weighted-average period of 3.0 years. The stock-based compensation expense associated with PSUs, with market or financial performance conditions, were not material during the three and nine months ended September 30, 2025. As of September 30, 2025, the total unrecognized stock-based compensation related to PSUs with market conditions was $29.0 million and is expected to be recognized over a weighted-average period of 2.3 years.2019 Employee Stock Purchase Plan In September 2019, the Company's Board of Directors adopted and stockholders approved the ESPP, which became effective one business day prior to the effective date of the Company's registration statement on Form S-1 filed with the SEC in connection with the Company’s initial public offering. 164,778 shares of Class A common stock were purchased under the ESPP during the nine months ended September 30, 2025. As of September 30, 2025, the total unrecognized stock-based compensation expense related to the ESPP was not material and will be recognized through the year ended December 31, 2025.Stock-based Compensation ExpenseThe following