Company: NET
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001477333-25-000082
Chunk: 358

Company: Cloudflare, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 358
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 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 EndedMarch 31,20252024(dollars in thousands)Net cash provided by operating activities$145,784 $73,579 Less: Purchases of property and equipment(85,889)(32,056)Less: Capitalized internal-use software(7,028)(5,916)Free cash flow$52,867 $35,607 Net cash provided by (used in) investing activities$(92,438)$96,950 Net cash provided by financing activities$3,522 $21 Net cash provided by operating activities (as a percentage of revenue)30 %19 %Less: Purchases of property and equipment (as a percentage of revenue)(18)%(8)%Less: Capitalized internal-use software (as a percentage of revenue)(1)%(2)%Free cash flow margin11 %9 %

Key Business Metrics

In addition to our results determined in accordance with U.S. GAAP and the non-GAAP measures discussed above, we also review the key business metrics discussed below to assist us in evaluating our business, measuring performance, identifying trends, formulating business plans, and making strategic decisions. There are a number of limitations associated with the use of key business metrics as analytical tools, however, and we do not rely upon any single key business metric to evaluate our business. In addition, other companies, including companies in our industry, may calculate similarly-titled business metrics differently or may use other measures to evaluate their 

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performance, all of which could reduce the usefulness of these business metrics as tools for comparison to such companies.

Paying Customers

We believe our ability to grow the number of paying customers on our network provides a key indicator of growth of our business and our future business opportunities. We define a paying customer at the end of the quarter as a