Company: NET
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0001477333-25-000137
Chunk: 357

Company: Cloudflare, Inc.
Filing Date: 2025-07-31
Form: 10-Q
Item: Part I, Item 1
Chunk 357
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-date earnings from recurring operations and adjusting for discrete tax items recorded in the period. The Company's ability to estimate the geographic mix of earnings is impacted by the relatively high-growth nature of the business, fluctuations of business operations by country, and implementation of tax planning strategies.The Company recorded an income tax expense of $3.2 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively, and an income tax expense of $4.9 million and $3.4 million for the six months ended June 30, 2025 and 2024, respectively. The income tax expense of $3.2 million for the three months ended June 30, 2025 and $4.9 million for the six months ended June 30, 2025 was primarily related to withholding taxes in the United States and income tax expense from profitable foreign jurisdictions.

31

The income tax expense of $1.1 million for the three months ended June 30, 2024 and $3.4 million for the six months ended June 30, 2024 was primarily related to withholding taxes in the United States and income tax expense from profitable foreign jurisdictions, offset by the partial release of the U.S. and U.K. valuation allowances in connection with acquisitions.In determining the need for a valuation allowance, the Company weighs both positive and negative evidence in the various jurisdictions in which it operates to determine whether it is more likely than not that its deferred tax assets are realizable. A full valuation allowance has been established in the United States and United Kingdom and no deferred tax assets and related tax benefits have been recognized in the condensed consolidated financial statements. There is no valuation allowance associated with any other foreign jurisdictions.

Note 13. Business Combinations

KiveraOn October 7, 2024, the Company acquired all of the outstanding shares of Kivera, a company that has developed cloud security, data protection, and compliance technology, for a total purchase consideration of $28.0 million. The total purchase consideration included (i) acquisition-date cash payments of $23.1 million, (ii) a cash holdback of $4.5 million, of which the Company is retaining 50% for up to 12 months and the remaining 50% for up to 24 months and will be payable to the previous owners of Kivera, subject to offset by the Company for any of the previous owners’ indemnification obligations in connection with the acquisition, and (