Cloudflare Announces Third Quarter 2024 Financial Results
-
Third quarter revenue totaled
$430.1 million , representing an increase of 28% year-over-year -
GAAP loss from operations of
$30.8 million , or 7% of revenue, and non-GAAP income from operations of$63.5 million , or 15% of revenue -
Operating cash flow of
$104.7 million , or 24% of revenue, and free cash flow of$45.3 million , or 11% of revenue
"I am pleased with our results for the third quarter—exceeding expectations for revenue, operating margin, and free cash flow while also reaching a key inflection point in the transformation of our go-to-market organization. In addition, we added a record 219 large customers and achieved a new milestone—35% of the Fortune 500 are now paying
Third Quarter Fiscal 2024 Financial Highlights
-
Revenue: Total revenue of
$430.1 million , representing an increase of 28% year-over-year. -
Gross Profit: GAAP gross profit was
$334.1 million , or 77.7% gross margin, compared to$257.5 million , or 76.7%, in the third quarter of 2023. Non-GAAP gross profit was$339.1 million , or 78.8% gross margin, compared to$264.2 million , or 78.7%, in the third quarter of 2023. -
Operating Income (Loss): GAAP loss from operations was
$30.8 million , or 7.2% of revenue, compared to$39.2 million , or 11.7% of revenue, in the third quarter of 2023. Non-GAAP income from operations was$63.5 million , or 14.8% of revenue, compared to$42.5 million , or 12.7% of revenue, in the third quarter of 2023. -
Net Income (Loss): GAAP net loss was
$15.3 million , compared to$23.5 million in the third quarter of 2023. GAAP net loss per basic and diluted share was$0.04 , compared to$0.07 in the third quarter of 2023. Non-GAAP net income was$72.6 million , compared to$55.3 million in the third quarter of 2023. Non-GAAP net income per diluted share was$0.20 , compared to$0.16 in the third quarter of 2023. -
Cash Flow: Net cash flow from operating activities was
$104.7 million , compared to$68.1 million for the third quarter of 2023. Free cash flow was$45.3 million , or 11% of revenue, compared to$34.9 million , or 10% of revenue, in the third quarter of 2023. -
Cash, cash equivalents, and available-for-sale securities were
$1,823.8 million as ofSeptember 30, 2024 .
The section titled "Non-GAAP Financial Information" below describes our usage of non-GAAP financial measures. Reconciliations between historical GAAP and non-GAAP information are contained at the end of this press release following the accompanying financial data.
Financial Outlook
For the fourth quarter of fiscal 2024, we expect:
-
Total revenue of
$451.0 to$452.0 million -
Non-GAAP income from operations of
$57.0 to$58.0 million -
Non-GAAP net income per share of
$0.18 , utilizing weighted average common shares outstanding of approximately 360 million
For the full year fiscal 2024, we expect:
-
Total revenue of
$1,661.0 to$1,662.0 million -
Non-GAAP income from operations of
$220.0 to$221.0 million -
Non-GAAP net income per share of
$0.74 , utilizing weighted average common shares outstanding of approximately 357 million
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Conference Call Information
Supplemental Financial and Other Information
Supplemental financial and other information can be accessed through the Company’s investor relations website at https://cloudflare.NET.
Non-GAAP Financial Information
Available Information
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “explore,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these words, or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. However, not all forward-looking statements contain these identifying words. Forward-looking statements expressed or implied in this press release include, but are not limited to, statements regarding our future financial and operating performance, our reputation and performance in the market, general market trends, our estimated and projected revenue, non-GAAP income from operations and non-GAAP net income per share, shares outstanding, the benefits to customers from using our products, the expected functionality and performance of our products, the demand by customers for our products, our plans and objectives for future operations, growth, initiatives, or strategies, our market opportunity, and comments made by our CEO and others. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: the impact of adverse macroeconomic conditions, such as inflation, high interest rates, actual or potential bank failures and recessionary concerns, on our and our customers’, vendors’, and partners’ operations and future financial performance; the impact of the conflicts in the
The forward-looking statements made in this press release relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
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|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Revenue |
$ |
430,082 |
|
|
$ |
335,603 |
|
|
$ |
1,209,680 |
|
|
$ |
934,272 |
|
|
Cost of revenue(1)(2) |
|
95,967 |
|
|
|
78,069 |
|
|
|
270,016 |
|
|
|
223,722 |
|
|
Gross profit |
|
334,115 |
|
|
|
257,534 |
|
|
|
939,664 |
|
|
|
710,550 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
|
Sales and marketing(1)(2)(4) |
|
185,221 |
|
|
|
150,214 |
|
|
|
553,824 |
|
|
|
433,903 |
|
|
Research and development(1) |
|
110,911 |
|
|
|
90,593 |
|
|
|
301,161 |
|
|
|
261,742 |
|
|
General and administrative(1)(3) |
|
68,777 |
|
|
|
55,939 |
|
|
|
204,721 |
|
|
|
157,561 |
|
|
Total operating expenses |
|
364,909 |
|
|
|
296,746 |
|
|
|
1,059,706 |
|
|
|
853,206 |
|
|
Loss from operations |
|
(30,794 |
) |
|
|
(39,212 |
) |
|
|
(120,042 |
) |
|
|
(142,656 |
) |
|
Non-operating income (expense): |
|
|
|
|
|
|
|
||||||||
|
Interest income |
|
22,471 |
|
|
|
17,954 |
|
|
|
65,438 |
|
|
|
47,977 |
|
|
Interest expense(5) |
|
(1,433 |
) |
|
|
(1,138 |
) |
|
|
(3,751 |
) |
|
|
(4,803 |
) |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(50,300 |
) |
|
Other income (expense), net |
|
(3,066 |
) |
|
|
115 |
|
|
|
(1,673 |
) |
|
|
(2,269 |
) |
|
Total non-operating income (expense), net |
|
17,972 |
|
|
|
16,931 |
|
|
|
60,014 |
|
|
|
(9,395 |
) |
|
Loss before income taxes |
|
(12,822 |
) |
|
|
(22,281 |
) |
|
|
(60,028 |
) |
|
|
(152,051 |
) |
|
Provision for income taxes |
|
2,509 |
|
|
|
1,254 |
|
|
|
5,924 |
|
|
|
4,033 |
|
|
Net loss |
$ |
(15,331 |
) |
|
$ |
(23,535 |
) |
|
$ |
(65,952 |
) |
|
$ |
(156,084 |
) |
|
Net loss per share attributable to common stockholders, basic and diluted |
$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.47 |
) |
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
|
342,356 |
|
|
|
334,666 |
|
|
|
340,539 |
|
|
|
332,600 |
|
|
____________ |
|||||||||||||||
|
(1) Includes stock-based compensation and related employer payroll taxes as follows: |
|||||||||||||||
|
Cost of revenue |
$ |
2,943 |
|
$ |
2,367 |
|
$ |
8,776 |
|
$ |
6,296 |
||||
|
Sales and marketing |
|
24,677 |
|
|
20,674 |
|
|
71,081 |
|
|
57,276 |
||||
|
Research and development |
|
40,459 |
|
|
36,353 |
|
|
106,545 |
|
|
103,142 |
||||
|
General and administrative |
|
23,688 |
|
|
17,463 |
|
|
71,599 |
|
|
43,482 |
||||
|
Total stock-based compensation and related employer payroll taxes |
$ |
91,767 |
|
$ |
76,857 |
|
$ |
258,001 |
|
$ |
210,196 |
||||
|
(2) Includes amortization of acquired intangible assets as follows: |
|||||||||||||||
|
Cost of revenue |
$ |
2,054 |
|
$ |
4,313 |
|
$ |
8,364 |
|
$ |
12,938 |
||||
|
Sales and marketing |
|
363 |
|
|
575 |
|
|
1,301 |
|
|
1,725 |
||||
|
Total amortization of acquired intangible assets |
$ |
2,417 |
|
$ |
4,888 |
|
$ |
9,665 |
|
$ |
14,663 |
||||
|
(3) Includes acquisition-related and other expenses as follows: |
|||||||||||||||
|
General and administrative |
$ |
78 |
|
$ |
— |
|
$ |
240 |
|
$ |
— |
||||
|
Total acquisition-related and other expenses |
$ |
78 |
|
$ |
— |
|
$ |
240 |
|
$ |
— |
||||
|
(4) Includes one-time compensation charge as follows: |
|||||||||||||||
|
Sales and marketing |
$ |
— |
|
$ |
— |
|
$ |
15,000 |
|
$ |
— |
||||
|
Total one-time compensation charge |
$ |
— |
|
$ |
— |
|
$ |
15,000 |
|
$ |
— |
||||
|
(5) Includes amortization of debt issuance costs as follows: |
|||||||||||||||
|
Interest expense |
$ |
990 |
|
$ |
1,059 |
|
$ |
2,970 |
|
$ |
3,529 |
||||
|
Total amortization of debt issuance costs |
$ |
990 |
|
$ |
1,059 |
|
$ |
2,970 |
|
$ |
3,529 |
||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value) (unaudited) |
|||||||
|
|
|
|
|
||||
|
Assets |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
182,883 |
|
|
$ |
86,864 |
|
|
Available-for-sale securities |
|
1,640,963 |
|
|
|
1,586,880 |
|
|
Accounts receivable, net |
|
252,927 |
|
|
|
248,268 |
|
|
Contract assets |
|
13,458 |
|
|
|
11,041 |
|
|
Restricted cash short-term |
|
1,000 |
|
|
|
2,522 |
|
|
Prepaid expenses and other current assets |
|
72,647 |
|
|
|
47,502 |
|
|
Total current assets |
|
2,163,878 |
|
|
|
1,983,077 |
|
|
Property and equipment, net |
|
396,552 |
|
|
|
322,813 |
|
|
|
|
157,200 |
|
|
|
148,047 |
|
|
Acquired intangible assets, net |
|
19,247 |
|
|
|
19,564 |
|
|
Operating lease right-of-use assets |
|
151,513 |
|
|
|
138,556 |
|
|
Deferred contract acquisition costs, noncurrent |
|
152,380 |
|
|
|
133,236 |
|
|
Restricted cash |
|
2,023 |
|
|
|
1,838 |
|
|
Other noncurrent assets |
|
19,953 |
|
|
|
12,636 |
|
|
Total assets |
$ |
3,062,746 |
|
|
$ |
2,759,767 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable |
$ |
74,110 |
|
|
$ |
53,727 |
|
|
Accrued expenses and other current liabilities |
|
68,885 |
|
|
|
63,597 |
|
|
Accrued compensation |
|
65,797 |
|
|
|
63,801 |
|
|
Operating lease liabilities |
|
43,028 |
|
|
|
38,351 |
|
|
Deferred revenue |
|
389,795 |
|
|
|
347,608 |
|
|
Total current liabilities |
|
641,615 |
|
|
|
567,084 |
|
|
Convertible senior notes, net |
|
1,286,332 |
|
|
|
1,283,362 |
|
|
Operating lease liabilities, noncurrent |
|
121,374 |
|
|
|
113,490 |
|
|
Deferred revenue, noncurrent |
|
21,990 |
|
|
|
17,244 |
|
|
Other noncurrent liabilities |
|
18,345 |
|
|
|
15,540 |
|
|
Total liabilities |
|
2,089,656 |
|
|
|
1,996,720 |
|
|
Stockholders’ Equity |
|
|
|
||||
|
Class A common stock; |
|
305 |
|
|
|
297 |
|
|
Class B common stock; |
|
37 |
|
|
|
40 |
|
|
Additional paid-in capital |
|
2,046,593 |
|
|
|
1,784,566 |
|
|
Accumulated deficit |
|
(1,089,792 |
) |
|
|
(1,023,840 |
) |
|
Accumulated other comprehensive income |
|
15,947 |
|
|
|
1,984 |
|
|
Total stockholders’ equity |
|
973,090 |
|
|
|
763,047 |
|
|
Total liabilities and stockholders’ equity |
$ |
3,062,746 |
|
|
$ |
2,759,767 |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
|||||||
|
|
Nine Months Ended |
||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
Cash Flows from Operating Activities |
|
|
|
||||
|
Net loss |
$ |
(65,952 |
) |
|
$ |
(156,084 |
) |
|
Adjustments to reconcile net loss to cash provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization expense |
|
91,476 |
|
|
|
99,640 |
|
|
Non-cash operating lease costs |
|
35,624 |
|
|
|
32,899 |
|
|
Amortization of deferred contract acquisition costs |
|
56,707 |
|
|
|
44,757 |
|
|
Stock-based compensation expense |
|
243,969 |
|
|
|
199,565 |
|
|
Amortization of debt issuance costs |
|
2,970 |
|
|
|
3,529 |
|
|
Net accretion of discounts and amortization of premiums on available-for-sale securities |
|
(33,980 |
) |
|
|
(31,039 |
) |
|
Deferred income taxes |
|
(1,338 |
) |
|
|
(588 |
) |
|
Provision for bad debt |
|
7,357 |
|
|
|
9,527 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
50,300 |
|
|
Other |
|
361 |
|
|
|
713 |
|
|
Changes in operating assets and liabilities, net of effect of acquisitions: |
|
|
|
||||
|
Accounts receivable, net |
|
(12,016 |
) |
|
|
(60,451 |
) |
|
Contract assets |
|
(2,417 |
) |
|
|
(3,397 |
) |
|
Deferred contract acquisition costs |
|
(75,851 |
) |
|
|
(66,766 |
) |
|
Prepaid expenses and other current assets |
|
(25,313 |
) |
|
|
(17,115 |
) |
|
Other noncurrent assets |
|
621 |
|
|
|
(1,189 |
) |
|
Accounts payable |
|
7,817 |
|
|
|
5,252 |
|
|
Accrued expenses and other current liabilities |
|
11,316 |
|
|
|
8,378 |
|
|
Operating lease liabilities |
|
(36,020 |
) |
|
|
(31,096 |
) |
|
Deferred revenue |
|
46,933 |
|
|
|
81,075 |
|
|
Other noncurrent liabilities |
|
857 |
|
|
|
1,055 |
|
|
Net cash provided by operating activities |
|
253,121 |
|
|
|
168,965 |
|
|
Cash Flows from Investing Activities |
|
|
|
||||
|
Purchases of property and equipment |
|
(111,884 |
) |
|
|
(83,580 |
) |
|
Capitalized internal-use software |
|
(22,076 |
) |
|
|
(16,637 |
) |
|
Asset acquisitions and business combinations, net of cash acquired |
|
(15,015 |
) |
|
|
— |
|
|
Purchases of available-for-sale securities |
|
(1,187,287 |
) |
|
|
(1,293,014 |
) |
|
Sales of available-for-sale securities |
|
— |
|
|
|
20,248 |
|
|
Maturities of available-for-sale securities |
|
1,173,041 |
|
|
|
1,288,364 |
|
|
Other investing activities |
|
29 |
|
|
|
65 |
|
|
Net cash used in investing activities |
|
(163,192 |
) |
|
|
(84,554 |
) |
|
Cash Flows from Financing Activities |
|
|
|
||||
|
Repayments of convertible senior notes |
|
— |
|
|
|
(207,649 |
) |
|
Cash paid for issuance costs on revolving credit facility |
|
(2,148 |
) |
|
|
— |
|
|
Proceeds from the exercise of stock options |
|
9,031 |
|
|
|
11,384 |
|
|
Proceeds from the early exercise of stock options |
|
6 |
|
|
|
— |
|
|
Repurchases of unvested common stock |
|
— |
|
|
|
(34 |
) |
|
Proceeds from the issuance of common stock for employee stock purchase plan |
|
10,455 |
|
|
|
10,450 |
|
|
Payment of tax withholding obligation on RSU settlement |
|
(12,591 |
) |
|
|
(5,643 |
) |
|
Payment of indemnity holdback |
|
— |
|
|
|
(10,483 |
) |
|
Net cash provided by (used in) financing activities |
|
4,753 |
|
|
|
(201,975 |
) |
|
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
94,682 |
|
|
|
(117,564 |
) |
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
91,224 |
|
|
|
215,204 |
|
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
185,906 |
|
|
$ |
97,640 |
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited) |
||||||||||||||||
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Reconciliation of cost of revenue: |
|
|
|
|
|
|
|
|
||||||||
|
GAAP cost of revenue |
|
$ |
95,967 |
|
|
$ |
78,069 |
|
|
$ |
270,016 |
|
|
$ |
223,722 |
|
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(2,943 |
) |
|
|
(2,367 |
) |
|
|
(8,776 |
) |
|
|
(6,296 |
) |
|
Less: Amortization of acquired intangible assets |
|
|
(2,054 |
) |
|
|
(4,313 |
) |
|
|
(8,364 |
) |
|
|
(12,938 |
) |
|
Non-GAAP cost of revenue |
|
$ |
90,970 |
|
|
$ |
71,389 |
|
|
$ |
252,876 |
|
|
$ |
204,488 |
|
|
Reconciliation of gross profit: |
|
|
|
|
|
|
|
|
||||||||
|
GAAP gross profit |
|
$ |
334,115 |
|
|
$ |
257,534 |
|
|
$ |
939,664 |
|
|
$ |
710,550 |
|
|
Add: Stock-based compensation and related employer payroll taxes |
|
|
2,943 |
|
|
|
2,367 |
|
|
|
8,776 |
|
|
|
6,296 |
|
|
Add: Amortization of acquired intangible assets |
|
|
2,054 |
|
|
|
4,313 |
|
|
|
8,364 |
|
|
|
12,938 |
|
|
Non-GAAP gross profit |
|
$ |
339,112 |
|
|
$ |
264,214 |
|
|
$ |
956,804 |
|
|
$ |
729,784 |
|
|
GAAP gross margin |
|
|
77.7 |
% |
|
|
76.7 |
% |
|
|
77.7 |
% |
|
|
76.1 |
% |
|
Non-GAAP gross margin |
|
|
78.8 |
% |
|
|
78.7 |
% |
|
|
79.1 |
% |
|
|
78.1 |
% |
|
Reconciliation of operating expenses: |
|
|
|
|
|
|
|
|
||||||||
|
GAAP sales and marketing |
|
$ |
185,221 |
|
|
$ |
150,214 |
|
|
$ |
553,824 |
|
|
$ |
433,903 |
|
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(24,677 |
) |
|
|
(20,674 |
) |
|
|
(71,081 |
) |
|
|
(57,276 |
) |
|
Less: Amortization of acquired intangible assets |
|
|
(363 |
) |
|
|
(575 |
) |
|
|
(1,301 |
) |
|
|
(1,725 |
) |
|
Less: One-time compensation charge |
|
|
— |
|
|
|
— |
|
|
|
(15,000 |
) |
|
|
— |
|
|
Non-GAAP sales and marketing |
|
$ |
160,181 |
|
|
$ |
128,965 |
|
|
$ |
466,442 |
|
|
$ |
374,902 |
|
|
GAAP research and development |
|
$ |
110,911 |
|
|
$ |
90,593 |
|
|
$ |
301,161 |
|
|
$ |
261,742 |
|
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(40,459 |
) |
|
|
(36,353 |
) |
|
|
(106,545 |
) |
|
|
(103,142 |
) |
|
Non-GAAP research and development |
|
$ |
70,452 |
|
|
$ |
54,240 |
|
|
$ |
194,616 |
|
|
$ |
158,600 |
|
|
GAAP general and administrative |
|
$ |
68,777 |
|
|
$ |
55,939 |
|
|
$ |
204,721 |
|
|
$ |
157,561 |
|
|
Less: Stock-based compensation and related employer payroll taxes |
|
|
(23,688 |
) |
|
|
(17,463 |
) |
|
|
(71,599 |
) |
|
|
(43,482 |
) |
|
Less: Acquisition-related and other expenses |
|
|
(78 |
) |
|
|
— |
|
|
|
(240 |
) |
|
|
— |
|
|
Non-GAAP general and administrative |
|
$ |
45,011 |
|
|
$ |
38,476 |
|
|
$ |
132,882 |
|
|
$ |
114,079 |
|
|
Reconciliation of income (loss) from operations: |
|
|
|
|
|
|
|
|
||||||||
|
GAAP loss from operations |
|
$ |
(30,794 |
) |
|
$ |
(39,212 |
) |
|
$ |
(120,042 |
) |
|
$ |
(142,656 |
) |
|
Add: Stock-based compensation and related employer payroll taxes |
|
|
91,767 |
|
|
|
76,857 |
|
|
|
258,001 |
|
|
|
210,196 |
|
|
Add: Amortization of acquired intangible assets |
|
|
2,417 |
|
|
|
4,888 |
|
|
|
9,665 |
|
|
|
14,663 |
|
|
Add: Acquisition-related and other expenses |
|
|
78 |
|
|
|
— |
|
|
|
240 |
|
|
|
— |
|
|
Add: One-time compensation charge |
|
|
— |
|
|
|
— |
|
|
|
15,000 |
|
|
|
— |
|
|
Non-GAAP income from operations |
|
$ |
63,468 |
|
|
$ |
42,533 |
|
|
$ |
162,864 |
|
|
$ |
82,203 |
|
|
GAAP operating margin |
|
|
(7.2 |
)% |
|
|
(11.7 |
)% |
|
|
(9.9 |
)% |
|
|
(15.3 |
)% |
|
Non-GAAP operating margin |
|
|
14.8 |
% |
|
|
12.7 |
% |
|
|
13.5 |
% |
|
|
8.8 |
% |
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited) |
||||||||||||||||
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Reconciliation of interest expense: |
|
|
|
|
|
|
|
|
||||||||
|
GAAP interest expense |
|
$ |
(1,433 |
) |
|
$ |
(1,138 |
) |
|
$ |
(3,751 |
) |
|
$ |
(4,803 |
) |
|
Add: Amortization of debt issuance costs |
|
|
990 |
|
|
|
1,059 |
|
|
|
2,970 |
|
|
|
3,529 |
|
|
Non-GAAP interest expense |
|
$ |
(443 |
) |
|
$ |
(79 |
) |
|
$ |
(781 |
) |
|
$ |
(1,274 |
) |
|
Reconciliation of loss on extinguishment of debt: |
|
|
|
|
|
|
|
|
||||||||
|
GAAP loss on extinguishment of debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(50,300 |
) |
|
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50,300 |
|
|
Non-GAAP loss on extinguishment of debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Reconciliation of provision for income taxes: |
|
|
|
|
|
|
|
|
||||||||
|
GAAP provision for income taxes |
|
$ |
2,509 |
|
|
$ |
1,254 |
|
|
$ |
5,924 |
|
|
$ |
4,033 |
|
|
Income tax effect of non-GAAP adjustments |
|
|
7,346 |
|
|
|
4,005 |
|
|
|
19,718 |
|
|
|
6,454 |
|
|
Non-GAAP provision for income taxes |
|
$ |
9,855 |
|
|
$ |
5,259 |
|
|
$ |
25,642 |
|
|
$ |
10,487 |
|
|
Reconciliation of net income (loss) and net income (loss) per share: |
|
|
|
|
|
|
|
|
||||||||
|
GAAP net loss attributable to common stockholders |
|
$ |
(15,331 |
) |
|
$ |
(23,535 |
) |
|
$ |
(65,952 |
) |
|
$ |
(156,084 |
) |
|
Add: Stock-based compensation and related employer payroll taxes |
|
|
91,767 |
|
|
|
76,857 |
|
|
|
258,001 |
|
|
|
210,196 |
|
|
Add: Amortization of acquired intangible assets |
|
|
2,417 |
|
|
|
4,888 |
|
|
|
9,665 |
|
|
|
14,663 |
|
|
Add: Acquisition-related and other expenses |
|
|
78 |
|
|
|
— |
|
|
|
240 |
|
|
|
— |
|
|
Add: One-time compensation charge |
|
|
— |
|
|
|
— |
|
|
|
15,000 |
|
|
|
— |
|
|
Add: Amortization of debt issuance costs |
|
|
990 |
|
|
|
1,059 |
|
|
|
2,970 |
|
|
|
3,529 |
|
|
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50,300 |
|
|
Income tax effect of non-GAAP adjustments |
|
|
(7,346 |
) |
|
|
(4,005 |
) |
|
|
(19,718 |
) |
|
|
(6,454 |
) |
|
Non-GAAP net income |
|
$ |
72,575 |
|
|
$ |
55,264 |
|
|
$ |
200,206 |
|
|
$ |
116,150 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP net loss per share, basic |
|
$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.47 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP net loss per share, diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.47 |
) |
|
Add: Stock-based compensation and related employer payroll taxes |
|
|
0.27 |
|
|
|
0.23 |
|
|
|
0.76 |
|
|
|
0.63 |
|
|
Add: Amortization of acquired intangible assets |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.04 |
|
|
Add: Acquisition-related and other expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Add: One-time compensation charge |
|
|
— |
|
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
|
Add: Amortization of debt issuance costs |
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
Add: Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.15 |
|
|
Income tax effect of non-GAAP adjustment |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.06 |
) |
|
|
(0.02 |
) |
|
Effect of dilutive shares |
|
|
(0.02 |
) |
|
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
|
Non-GAAP net income per share, diluted(1)(2) |
|
$ |
0.20 |
|
|
$ |
0.16 |
|
|
$ |
0.56 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic |
|
|
342,356 |
|
|
|
334,666 |
|
|
|
340,539 |
|
|
|
332,600 |
|
|
Weighted-average shares used in computing non-GAAP net income per share attributable to common stockholders, diluted(2) |
|
|
356,855 |
|
|
|
351,709 |
|
|
|
356,789 |
|
|
|
343,432 |
|
|
____________ |
|
|
(1) |
Totals may not sum due to rounding. Figures are calculated based upon the respective underlying non-rounded data. |
|
(2) |
For the period in which we had non-GAAP net income, diluted non-GAAP net income per share is calculated using weighted-average shares, adjusted for dilutive potential shares that were assumed outstanding during period. |
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
Free cash flow |
|
|
|
|
|
|
|
||||||||
|
Net cash provided by operating activities |
$ |
104,727 |
|
|
$ |
68,100 |
|
|
$ |
253,121 |
|
|
$ |
168,965 |
|
|
Less: Purchases of property and equipment |
|
(50,203 |
) |
|
|
(27,291 |
) |
|
|
(111,884 |
) |
|
|
(83,580 |
) |
|
Less: Capitalized internal-use software |
|
(9,245 |
) |
|
|
(5,934 |
) |
|
|
(22,076 |
) |
|
|
(16,637 |
) |
|
Free cash flow |
$ |
45,279 |
|
|
$ |
34,875 |
|
|
$ |
119,161 |
|
|
$ |
68,748 |
|
|
Net cash used in investing activities |
$ |
(76,400 |
) |
|
$ |
(100,229 |
) |
|
$ |
(163,192 |
) |
|
$ |
(84,554 |
) |
|
Net cash provided by (used in) financing activities |
$ |
(2,411 |
) |
|
$ |
(34,610 |
) |
|
$ |
4,753 |
|
|
$ |
(201,975 |
) |
|
Net cash provided by operating activities (percentage of revenue) |
|
24 |
% |
|
|
20 |
% |
|
|
21 |
% |
|
|
18 |
% |
|
Less: Purchases of property and equipment (percentage of revenue) |
|
(11 |
)% |
|
|
(8 |
)% |
|
|
(9 |
)% |
|
|
(9 |
)% |
|
Less: Capitalized internal-use software (percentage of revenue) |
|
(2 |
)% |
|
|
(2 |
)% |
|
|
(2 |
)% |
|
|
(2 |
)% |
|
Free cash flow margin(1) |
|
11 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
7 |
% |
|
____________ |
|
|
(1) |
Totals may not sum due to rounding. Figures are calculated based upon the respective underlying non-rounded data. |
Explanation of Non-GAAP Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in
Items Excluded from Non-GAAP Measures. We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. We exclude employer payroll tax expenses related to stock-based compensation, which is a cash expense, from certain of our non-GAAP financial measures because such expenses are dependent on the price of our Class A common stock and other factors that are beyond our control and do not correlate to the operation of our business. We exclude amortization of acquired intangible assets, which is a non-cash expense, related to business combinations 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. We exclude acquisition-related 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 and include third-party transaction costs and compensation expense for key acquired personnel. We also excluded the one-time cash compensation charge incurred during the three months ended
Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define non-GAAP gross profit and non-GAAP gross margin as
Non-GAAP Income from Operations and Non-GAAP Operating Margin. We define non-GAAP income from operations and non-GAAP operating margin as
Non-GAAP Net Income and Non-GAAP Net Income per Share, Diluted. We define non-GAAP net income as GAAP net income (loss) adjusted for stock-based compensation expense and its related employer payroll taxes, amortization of acquired intangible assets, acquisition-related and other expenses, amortization of issuance costs, loss on extinguishment of debt, and a non-GAAP provision for (benefit from) income taxes. Generally, the difference between our GAAP and non-GAAP income tax expense (benefit) is primarily due to adjustments in stock-based compensation and related employer payroll taxes, amortization of acquired intangibles associated with business combinations, acquisition-related and other expenses, and amortization of issuance costs. We define non-GAAP net income per share, diluted, as non-GAAP net income divided by the weighted-average common shares outstanding, adjusted for dilutive potential shares that were assumed outstanding during period. Currently, potential dilutive effect mainly consists of employee equity incentive plans and convertible senior notes. We believe that excluding these items from non-GAAP net income per share, diluted, provides management and investors with greater visibility into the underlying performance of our core business operating results.
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.
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