Latest Cloudflare Earnings Report Q4 2024

Cloudflare's Q4 2024 earnings report reveals a 27% revenue increase to $459 million, with net income of $68.8 million, or $0.19 per share, driven by record large customer additions and strong AI innovation.

Author

Milan Reichl
February 15th, 2025 • Reading Time: 5 minutes

Cloudflare, Inc.

Company Overview

Cloudflare, Inc. (NYSE: NET) is a global cloud services provider committed to enhancing the security, performance, and reliability of internet properties. Founded in 2009 by Matthew Prince, Lee Holloway, and Michelle Zatlyn, the company offers a comprehensive suite of solutions, including content delivery network services, DDoS mitigation, internet security, and distributed domain name server services. Cloudflare's mission is to help build a better internet by providing businesses and individuals with tools to protect and accelerate their online presence. As of December 31, 2024, approximately 35% of Fortune 500 companies are paying customers, and the company's network serves an average of 71 million HTTP requests per second. With data centers in over 335 cities across more than 125 countries, Cloudflare ensures that 95% of internet users worldwide are within approximately 50 milliseconds of its network. In 2024, the company reported a gross margin of 77% and achieved a revenue compound annual growth rate (CAGR) exceeding 42% from fiscal years 2019 to 2024.

Latest Cloudflare Earnings Comparison (Q4 2024)

Metric

Expected

Actual

Variance

EPS

$0.18

$0.19

5.56%

Revenue

$452M

$459M

1.73%

Historical Cloudflare Earnings Data

Period

EPS (Exp/Act)

Revenue (Exp/Act)

Variance (EPS/Revenue)

Q3 2024

$0.18 / $0.20

$424M / $430M

11.11% / 1.41%

Q2 2024

$0.14 / $0.20

$394M / $401M

42.86% / 1.60%

Q1 2024

$0.13 / $0.16

$373M / $379M

23.08% / 1.48%

Q4 2023

$0.12 / $0.15

$353M / $362M

25.00% / 2.65%

Cloudflare Earnings Call Summary Q4 2024

Highlights

  • Strong Revenue Growth: Q4 revenue increased 27% YoY to $459.9M, with full-year revenue reaching $1.69B.

  • Enterprise Expansion: Large customer count grew 27% YoY to 3,497, with enterprise customers contributing 69% of total revenue.

  • Record AI & Security Deals: Signed a $20M contract with a Fortune 100 tech firm, a $13.5M deal with a leading AI company, and major agreements in finance and retail.

  • AI Growth & Cloudflare Workers Adoption: Surpassed 3 million developers, with increasing adoption of Workers AI and serverless inference solutions.

  • Operational Efficiency: Achieved an operating margin of 14.6%, with free cash flow of $47.8M for the quarter and $166.9M for the full year.

  • FedRAMP High Certification: Enables expansion into U.S. federal government contracts, maintaining network uniformity while meeting security requirements.

  • Raised Full-Year 2025 Guidance: Revenue expected to reach $2.09B, reflecting 25% YoY growth.

Risks

While Cloudflare is experiencing strong growth, key risks remain:

  1. Sales Execution & Capacity: Cloudflare’s sales force remains a bottleneck, with revenue growth dependent on expanding enterprise account executive capacity.

  2. Competition in AI & Security: Increasing pressure from hyperscalers (AWS, Microsoft, Google) and cybersecurity firms could slow market share gains.

  3. AI Infrastructure Investment: Expanding GPU infrastructure for Workers AI & inference services requires higher network CapEx (12-13% of revenue in 2025).

  4. Revenue Recognition Challenges: Pool of funds contracts, while growing, create short-term variability in revenue recognition.

  5. International Growth Dependence: EMEA (28% of revenue) and APAC (14%) saw strong growth, but global macroeconomic conditions could impact expansion.

Opportunities

Cloudflare is well-positioned for long-term enterprise expansion and AI-driven growth:

  1. AI & Cloudflare Workers Growth: AI inference and agent workloads are accelerating, with Cloudflare Workers AI offering cost-efficient, serverless inference solutions.

  2. Enterprise & Security Expansion: Increased $1M+ enterprise contracts (173 customers, +47% YoY) signal broader enterprise adoption.

  3. Government & FedRAMP High Certification: Enables growth in U.S. federal and international public sector contracts.

  4. Zero Trust & SASE Leadership: Displacing legacy vendors in Zero Trust & network security, leveraging a unified platform advantage.

  5. Developer Ecosystem & AI Gateway: AI developers are increasingly choosing Cloudflare for inference, benefiting from lower latency and lower costs.

Outlook

  • AI & Security-Led Growth: Cloudflare’s Workers AI & Zero Trust solutions are seeing increased adoption in enterprise and AI-native companies.

  • Sales Execution as a Key Focus: Expanding sales force efficiency and capacity will be critical for accelerating enterprise revenue growth.

  • Steady Revenue Acceleration: 2025 revenue is projected at $2.09B (25% YoY growth), with revenue weighing more heavily in H2 2025.

  • Profitability & Cash Flow Strength: Strong gross margins (77.6%) and operating leverage support long-term profitability.

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The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.