Company: NET
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001477333-25-000082
Chunk: 388

Company: Cloudflare, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 388
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 receive cash in connection with the settlements. Upon the cash settlement elections, the 2025 Capped Calls no longer met the criteria for equity classification and were reclassified from additional paid-in capital to derivative asset, with an estimated fair value at cash settlement election date of $308.3 million. The derivative asset was included in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet as of March 31, 2025. The fair value of the derivative asset did not change as of the balance sheet date. The Company used the Black-Scholes option-pricing model to determine the fair value of the derivative asset, with significant inputs being the expected term, risk free rate, volatility and the Company’s share price as of the valuation dates.Refer to Note 7 to the consolidated financial statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for further information on the 2025 Notes and 2025 Capped Calls.The net carrying amounts of the 2026 Notes were as follows:March 31, 2025December 31, 2024(in thousands)Principal$1,293,750 $1,293,750 Unamortized debt issuance costs(5,439)(6,429)Carrying amount, net$1,288,311 $1,287,321 The following tables set forth total interest expense recognized related to the 2026 Notes:Three Months Ended March 31,20252024(in thousands)Amortization of debt issuance costs990 990 Total$990 $990 Revolving Credit Facility

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In May 2024, the Company entered into a credit agreement with a syndicated group of lenders, that provides for a senior secured $400.0 million revolving credit facility (the Revolving Credit Facility), with a sublimit of $30.0 million available for the issuance of letters of credit and $30.0 million available for swingline borrowings. The credit agreement permits the Company to increase the commitments under the Revolving Credit Facility by an aggregate principal amount of up to $150.0 million, subject to the satisfaction of certain conditions. The proceeds of the loans under the Revolving Credit Facility may be used for working capital and general corporate purposes.The Company is required to pay a commitment fee on the daily unused amount of Revolving Credit Facility commitments ranging from 0.25% to