Company: NET
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0001477333-25-000141
Chunk: 438

Company: Cloudflare, Inc.
Filing Date: 2025-10-30
Form: 10-Q
Item: Part I, Item 8
Chunk 438
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 for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily driven by $77.7 million in increased employee-related costs due to a 22% increase in headcount in our sales and marketing organization, including an increase of $26.2 million in stock-based compensation expense. The remainder of the increase was primarily due to an increase of $8.0 million in co-location and bandwidth expenses for free customers, an increase of $6.1 million in expenses for marketing programs, investments in brand awareness advertising, third-party industry events, and digital performance marketing, an increase of $6.0 million in travel-related expenses, an increase of $5.2 million in consulting expenses, an increase of $3.5 million in allocated overhead costs, and an increase of $3.4 million in subscription expenses.

Research and Development

Three Months EndedSeptember 30,ChangeNine Months EndedSeptember 30,Change20252024$%20252024$%(dollars in thousands)(dollars in thousands)Research and development$120,956 $110,911 $10,045 9 %$370,602 $301,161 $69,441 23 %

Research and development expenses increased by $10.0 million, or 9%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily driven by $8.0 million 

45

in increased employee-related costs due to a 14% increase in headcount in our research and development organization. The increase in employee-related cost was net of a $5.5 million decrease in stock-based compensation expense. The Company recorded a reversal of stock-based compensation of $10.0 million during the three months ended September 30, 2025 due to forfeitures of the Performance Options upon a key employee departure.

Research and development expenses increased by $69.4 million, or 23%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily driven by $63.4 million in increased employee-related costs due to a 14% increase in headcount in our research and development organization, including an increase of $12.1 million in stock-based compensation expense, net of a $10.0 million decrease due to forfeitures of the Performance Options upon