Company: NET
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0001477333-25-000141
Chunk: 429

Company: Cloudflare, Inc.
Filing Date: 2025-10-30
Form: 10-Q
Item: Part I, Item 8
Chunk 429
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767 357,587 258,001 Amortization of acquired intangible assets3,699 2,417 10,686 9,665 Acquisition-related and other expenses— 78 112 240 One-time compensation charge— — — 15,000 Lease impairment charges— — 3,840 — Non-GAAP income from operations$85,938 $63,468 $214,254 $162,864 Operating margin(7)%(7)%(10)%(10)%Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue)15 %15 %14 %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 and future trends in free cash flow and free cash flow margin, even if negative, provide useful information about the amount of cash generated by our operating activities that is available (or not available) to be used for strategic initiatives. For example, if free cash flow is negative, we may need to access cash reserves or other sources of capital to invest in strategic initiatives. One limitation of free cash flow and free cash flow margin is that they do not reflect our future contractual commitments. Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period.

Three Months EndedSeptember 30,Nine Months EndedSeptember 30,2025202420252024(dollars in thousands)(dollars in thousands)Net cash provided by operating activities$167,123 $104,727 $412,703 $253,121 Less: Purchases of property and equipment(84,641)(50,203)(230,427)(111,884)Less: Capitalized internal-use software(7,511)(9,245)(21,158)(22,076)Free cash flow$74,971 $45,279 $161