Cloudflare (NET) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $479.1 million, up 27% year-over-year, driven by strong growth in large enterprise and international customers, with record-breaking contract wins including the largest in company history exceeding $100 million and the longest-term SASE contract.

• Large customers (>$100K) grew 23% year-over-year to 3,527, now contributing 69% of total revenue, and the number of $1M+ and $5M+ customers increased 48% and 54% year-over-year, respectively.

• Total paying customers reached 250,819, up 27% year-over-year, with international revenue rising to 51% of total.

• Dollar-based net retention rate was 111%, stable quarter-over-quarter, indicating strong expansion within existing accounts.

• The company continues to expand its global network, now in 330+ cities across 125+ countries, and maintains momentum in innovation and customer acquisition.

Financial highlights

• Gross margin was 77.1% (non-GAAP), down from 79.5% year-over-year, and GAAP gross margin was 75.9%.

• Non-GAAP income from operations was $56 million (11.7% margin), with GAAP operating loss at $53.2 million (11.1% of revenue).

• Net income was $58.4 million non-GAAP ($0.16 diluted EPS); GAAP net loss was $38.5 million ($0.11/share).

• Free cash flow was $52.9 million (11% of revenue), up from $35.6 million (9% of revenue) a year ago; net cash from operating activities was $145.8 million.

• Cash, equivalents, and available-for-sale securities totaled $1.91–$1.92 billion at quarter end.

Outlook and guidance

• Q2 2025 revenue expected at $500–$501 million, with non-GAAP operating income of $62.5–$63.5 million and non-GAAP EPS of $0.18.

• Full-year 2025 revenue guidance is $2,090–$2,094 million, non-GAAP operating income of $272–$276 million, and non-GAAP EPS of $0.79–$0.80.

• Guidance reflects prudence amid ongoing macroeconomic volatility and a focus on long-term growth over short-term profitability.