Company: NET
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0001477333-25-000137
Chunk: 426

Company: Cloudflare, Inc.
Filing Date: 2025-07-31
Form: 10-Q
Item: Part I, Item 8
Chunk 426
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 and other expenses from certain of our non-GAAP financial measures because such expenses are related to business combinations and have no direct correlation to the operation of our business. Acquisition-related and other expenses can be cash or non-cash expenses incurred in connection with the acquisition, and include third-party transaction costs and compensation expense for key acquired personnel. We exclude lease impairment charges related to real estate leases, which is a non-cash expense, from certain of our non-GAAP financial measures because they are not indicative of the Company’s ongoing cost structure and core business performance. We also excluded the one-time cash compensation charge incurred during the three months ended March 31, 2024 from certain of our non-GAAP financial measures because it was not attributable to services provided and did not correlate to the ongoing operation of our business. 

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Three Months EndedJune 30,Six Months EndedJune 30,2025202420252024(dollars in thousands)(dollars in thousands)Loss from operations$(67,264)$(34,698)$(120,511)$(89,248)Add:Stock-based compensation expense and related employer payroll taxes131,993 89,507 237,888 166,234 Amortization of acquired intangible assets3,746 1,982 6,987 7,248 Acquisition-related and other expenses— 162 112 162 One-time compensation charge— — — 15,000 Lease impairment charges3,840 — 3,840 — Non-GAAP income from operations$72,315 $56,953 $128,316 $99,396 Operating margin(13)%(9)%(12)%(11)%Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue)14 %14 %13 %13 %

Free Cash Flow and Free Cash Flow Margin

Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used for purchases of property and equipment and capitalized internal-use software. Free cash flow margin is calculated as free cash flow divided by revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our operations that, after the investments in property and equipment and capitalized internal-use software, can be used for strategic initiatives, including investing in our business, and strengthening our financial position. We believe that historical