Cloudflare (NET) Q4 2024 earnings summary

Executive summary

• Achieved Q4 2024 revenue of $459.9 million, up 27% year-over-year, and full-year revenue of $1.67 billion, up 29% year-over-year, with record growth in large customers and strong free cash flow generation.

• Ended 2024 with 237,714 paying customers and 3,497 large customers, with large customers contributing 69% of revenue.

• Saw improvements in sales productivity, close rates, and sales cycles, with a focus on enterprise sales hiring and ramped account executives.

• Notable customer wins included a $20 million contract with a Fortune 100 tech company and significant expansions with AI, retail, and financial sector clients.

• Positioned for growth in AI, security, and modernization, leveraging platform strengths and improved go-to-market execution.

Financial highlights

• Q4 gross margin was 77.6% non-GAAP and 76.4% GAAP; full-year gross margin was 78.7% non-GAAP and 77.3% GAAP.

• Q4 non-GAAP operating income was $67.2 million (14.6% margin), up 69% year-over-year; full-year non-GAAP operating income was $230.1 million (13.8% margin).

• Q4 non-GAAP net income was $68.8 million, or $0.19 per diluted share; full-year non-GAAP net income was $269.0 million, or $0.75 per diluted share.

• Free cash flow was $47.8 million in Q4 and $166.9 million for the year, representing 10% of revenue.

• Ended Q4 with $1.86 billion in cash, cash equivalents, and available-for-sale securities.

Outlook and guidance

• Q1 2025 revenue expected at $468–$469 million, up 24% year-over-year; non-GAAP income from operations $54–$55 million; EPS $0.16.

• Full-year 2025 revenue guidance is $2,090–$2,094 million, up 25% year-over-year; non-GAAP income from operations $272–$276 million; EPS $0.79–$0.80.

• Network CapEx for 2025 expected at 12–13% of revenue, up from 10% in 2024, to support AI inference demand.