#1CLOUDFLARE Investor Presentation June 30, 2021 CLOUDFLARE © Copyright Cloudflare, Inc.#2Safe Harbor This presentation and the accompanying oral commentary have been prepared by Cloudflare, Inc. ("Cloudflare") for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise, or representation by the presenter or Cloudflare or any officer, director, employee, agent, or advisor of Cloudflare. This presentation does not purport to be all-inclusive or to contain all of the information you may desire. Information provided in this presentation and the accompanying oral commentary speak only as of the date hereof. This presentation and the accompanying oral commentary contain express and implied "forward-looking" statements within the meaning of the federal securities laws, and these statements involve substantial risks, assumptions, and uncertainties. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, the current and planned functionality of our products, expectations of future operating results or financial performance, business strategy and plans, the impact of the COVID-19 pandemic on our and other businesses and economic conditions generally, market trends, size and growth opportunities, the calculation of certain of our key financial and operating metrics, capital expenditures, plans for future operations, competitive position, technological capabilities, and strategic relationships, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "intend," "potential," "would," "continue," "ongoing" or the negative of these terms or other comparable terminology. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Actual results could differ materially from our current expectations as a result of many factors, including those identified in the "Risk Factors" section of our filings made with the Securities and Exchange Commission ("SEC"). You can locate these reports on our investor relations website (https://cloudflare.NET) or on the SEC website (www.sec.gov). If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements included in this presentation represent our views only as of the date of this presentation, and except as required by law, we assume no obligation and do not intend to update these forward-looking statements or to conform these statements to actual results or to changes in our expectations. In addition to our results determined in accordance with generally accepted accounting principles ("GAAP"), this presentation includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. See the appendix for a reconciliation of those measures to the most directly comparable GAAP measures. This presentation and the accompanying oral commentary contain statistical data, estimates, and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do we undertake to update such data after the date of this presentation. By attending or receiving this presentation you acknowledge that you will be solely responsible for your own assessment of the market and our market position and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of our business. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the network and products of Cloudflare. CLOUDFLARE Copyright Cloudflare, Inc.#32010 Launched 126K+ Paying Customers Cloudflare at a Glance Total Revenue ($M) 200+ Cities in Network ~19% Of Fortune 1,000 are Paying Customers 50% CAGR $193 $287 2,050 Employees 77% GAAP Gross Margin CLOUDFLARE © Copyright Cloudflare, Inc. $431 53% $100 $152 Q2 Q2 2018 2019 2020 2020 2021 Large Customers > $100,000 Annualized Revenue 68% CAGR 387 637 1,088 Q2 Q2 Q2 2019 2020 2021 Note: Q2 2021 data as of or for the three months ended June 30, 2021. See Appendix for "Large Customers" definition.#4Cloudflare's mission is to Help build a better Internet CLOUDFLARE © Copyright Cloudflare, Inc.#5The Internet was not built for what it has become. CLOUDFLARE © Copyright Cloudflare, Inc. ARPANET LOGICAL MAP, MARCH 1977 POP-10 CDC 7600 POP-11 PDP-11 POP-10 CDC 6 600 MOFFETT LBL UTAH ILLINOIS PDP-10 PDP-10 DATA- COMPUTER PDP-10 POP-11 DEC-2050 PLURIBUS POP-10 WPAFB PLI MIT 6 CCA RCC5 RCC PDP-11 PDP-11 360/67 PDP-11 POP-10 LLL HAWAN AMESIS AMES 16 PDP-10 POP-11 PDP-11 SRI 2 SRI 51 PDP-11 DEC-1090 SPS-41 PDP-11 PDP-11 PDP-11 PDP-11 POP-10 H6180 50 PDP-11 H68/80 PDP-11 SPS-41 PDP-11 MIT 44 POP-10 PDP-11 POP-10 PDP-10 XEROX MAXC PDP-10 PDP-11 ANL PDP-10 PDP-10 CMU RCC 49 ECLIPSE DEC-1080 H316 DCU-50 BBN 40 LINCOLN PDP-10 NOVA-BOO PARC-MAXC2 BBN 300 CDC6600 PDP-11 RADC H-6180 370/168 CDC7600 C.mmp SUMEX TYMSHARE STANFORD, VARIAN 73 370/195 SCOTT H-6160 PDP-11 SPS-41 DEC CDC6600 DEC-1090 PDP-11 POP-10 POP-10 HARVARD PDP-11 FNWC POP-1 PDP-10 SPS-41 PDP-11 POP-11 CDC6500 CDC3200 OGWC POP-11 NYU POP-11 PDP-10 UNIVAC 1108] SCAL MP32 Сросв PDP-10 TRUTGERS BELVOIR UNIVAC-1108 PDP-11 POP-11 H716 VPDP 11 PDP-11 360/44 PLI POP-11 DCEC POP ABERDEEN SDAC NORSAR UCLA Usc 360/91 360/40 umma360/40 POP-IN NSA NUC PDP-11 POP-10 360/40 360/40 ARPA NELC POP-11 PLURIBUS NBS LONDON MITRE FPS AP-1208 PDP-11 PDP-10 370-150 RAND POP POP-15 POP-11 PDP-10 PDP-11 POP-9 PDP-11 DEC-2040 POP-10 POP-10 POP-10 PDP-11 XGP 8-4700 PDP-11 XGP ISI 52 POP-10 ISI 22 AFWL ◇ IMP □ TIP A PLURIBUS IMP SATELLITE CIRCUIT POP-1 TEXAS GUNTER EGLIN PDP-11 CDC6600 ✓ PDP-11 85500 EGLIN POP-11 PENTAGON ☑POP-9 360/195 GEC 4080 ICL 470 CDC6400 CDC6600 CDC 7600 (PLEASE NOTE THAT WHILE THIS MAP SHOWS THE HOST POPULATION OF THE NETWORK ACCORDING TO THE BEST INFORMATION OBTAINABLE, NO CLAIM CAN BE MADE FOR ITS ACCURACY) NAMES SHOWN ARE IMP NAMES. NOT INECESSARILY HOST NAMES#6From Endless Hardware to a Global Cloud Platform BAND-AID BOXES • Costly and complex • Web of dependencies Specialized hardware On-premise only • Point solutions . BETTER INTERNET Easy-to-use, flexible, and scalable • Unified control plane • • • Serverless cloud architecture Cloud, hybrid, on-premise, and SaaS Broad, integrated product platform CLOUDFLARE Global Cloud Platform#7CLOUDFLARE Evolution of Enterprise Stack Hardware/Software (Buy) Yesterday CISCO. f5 riverbed SAP Check Point SOFTWARE TECHNOLOGIES LTD. paloalto Juniper NETWORKS NETWORK FIREEYE™ Services/Cloud (Rent) Tomorrow CLOUDFLARE workday. Microsoft ORACLE APPLICATION NETSUITE ® hp EMC² Copyright Cloudflare, Inc. Lenovo DELL Sun microsystems zendesk A Adobe salesforce servicenow. box shopify Dropbox box Alibaba Cloud STORE/COMPUTE COMPAQ Google Cloud Microsoft Azure aws#8An Integrated Global Cloud Platform Cloudflare Zero Trust Services of Cloudflare Network Services Cloudflare for Teams Suite Magic Transit Cloudflare Application Services D 1 Cloudflare One Cloudflare Serverless Developer Platform Cloudflare Global Network CLOUDFLARE Copyright Cloudflare, Inc. OTT VPN Content Filtering * Remote Browser Isolation Data Loss Prevention Access Management Network Interconnect Smart Routing Firewall-as-a-Service -6 Web Application Firewall Rate Limiting Load Balancing Bot Management Video Delivery CDN Workers Workers KV Pages Durable Objects Video Streaming Global edge: 200+ cities, 9,800 interconnects, 90 Tbps of network capacity, China network Building blocks: SSL/TLS, mTLS, DNSSEC, DNS over HTTP, Authoritative/Recursive DNS Compliance/Privacy: ISO, COC, PCI, GDPR compliant, Data Localization Suite#9We Operate at Massive Scale 87B Cyber Threats 126K+ Blocked per Day Total Paying Customers CLOUDFLARE © Copyright Cloudflare, Inc. ~19% Of the Fortune 1,000 are Paying Customers 48% Of revenue from outside of the U.S. Note: Cyber threats blocked per day is approximate average over the three months ended June 30, 2021. All other figures as of or for the three months ended June 30, 2021. See Appendix for "Paying Customers" definition.#10CLOUDFLARE • CLOUDFLARE © Copyright Cloudflare, Inc. • Our Flexible, Scalable, & Efficient Serverless Architecture Abstracts underlying infrastructure Dynamically optimizes and leverages capacity across network Single unified code base Deployment on commodity hardware#11A Global Network Powering our Platform 200+ Cities Cloudflare network city CLOUDFLARE © Copyright Cloudflare, Inc. Note: All figures as of June 30, 2021. Paying Customers in 180+ Countries 9,800 Interconnects 99% Of the Internet-connected developed world population is located within 100 milliseconds of our network#12Our Product & Network Flywheels Drive Our Business Serve Everyone Network Product * CLOUDFLARE® Better Products Increased Efficiency Helping Build a Better Internet Serverless Architecture Ease of use CLOUDFLARE © Copyright Cloudflare, Inc. Global Scale#13Data Intelligence & Quality Assurance at Scale Global sensor network with paying customers in 180+ countries. Machine learning systems improve products with every customer's request. Immune system for the Internet blocking an average of 87 billion cyber threats each day. Rapid development cycles and QA through free users volunteering to test new products. CLOUDFLARE © Copyright Cloudflare, Inc. Note: Cyber threats blocked per day is approximate average over the three months ended June 30, 2021. Other figures as of the three months ended June 30, 2021.#14Our Competitive Advantages 101010101 10010 1101010 1010 0 SHARED INTELLIGENCE NETWORK EASE SCALE OF USE CLOUDFLARE ©Copyright Cloudflare, Inc. 1010 101 10010 10 1101 0101 1010 010 NO TRADE OFFS Security + Performance#15Our Favorable Competitive Position On-Premise TUT CLOUDFLARE Copyright Cloudflare, Inc. Point Solutions SA G • Limitations • Complex and expensive Not suited to address cloud-based and hybrid deployments Architected to deliver single point / more narrow product portfolio Customers are increasingly looking for an integrated platform offering security, performance, and reliability through a single vendor Public Cloud Cx • Inability to serve as a unified control plane across on-premise, cloud, hybrid, and SaaS infrastructure Customer lock-in and competition concerns#16Innovation Drives TAM Expansion Areas for Potential Incremental Growth Cloudflare 1 Cloudflare One $100B Network Services < $86B Carrier Services (MPLS & SD-WAN) Serverless $72B Cloudflare Application Services • Application Delivery Controllers • WAN • CDN DDoS • Intrusion Detection & Prevention • Firewall $32B n CLOUDFLARE Copyright Cloudflare, Inc. Cloudflare Zero Trust Services • VPN • Content Filtering Remote Browser Isolation • Data Loss Prevention • Privileged Access Management • Network Analytics Internet of Things (485) DIDE 5G Cellular Consumer 2018 2020 2022 2024 Note: Total Addressable Market represents expected spend by year from our analysis based on IDC data. Figures reflect the markets addressed by our current product offerings.#17Traditional Go-To-Market Model Inverted We don't build ahead of the curve. Sources of Leverage Self service adoption for customers of all sizes Natural expansion Pulled into new geographies CLOUDFLARE Model Get customers Add sales reps to service new customer segments Spend marketing budget • Pulled up market CLOUDFLARE © Copyright Cloudflare, Inc.#18. Acquire new customers Grow awareness • Field sales Our Strategy for Growth International coverage Expand channel partnerships CLOUDFLARE Copyright Cloudflare, Inc. Expand relationships with existing customers • Upgrading to premium plans Increased usage . Adding products ° Develop new products Extend our serverless platform strategy High product velocity Set pace for innovation in market Expand into new markets to expand TAM Enable a new class of applications Power store and compute workloads Increase stickiness Opens new market opportunity#19CLOUDFLARE Financial Overview CLOUDFLARE © Copyright Cloudflare, Inc.#20$72B Large Addressable Market in 2020 CLOUDFLARE © Copyright Cloudflare, Inc. Key Financial Highlights 53% Y/Y 77% 1,088 Total Revenue Growth GAAP Gross Margin Large Customers Note: Total Addressable Market represents 2020 expected spend from our analysis based on IDC data. All other figures as of or for the three months ended June 30, 2021. See the Appendix for how we define "Large Customers."#21CLOUDFLARE Track Record of Delivering Revenue Growth Total Revenue ($M) $431 $85 2016 ©Copyright Cloudflare, Inc. 50% CAGR $193 $135 53% $287 $100 $152 Do Investment in enterprise sales Large customer momentum Land and expand strategy drives growth across cohorts 100% Subscription-based revenue model 2017 2018 2019 2020 Q2 2020 Q2 2021 Note: Subscription-based revenue includes related support services and usage fees.#22Rapid Customer Growth 62,653 Paying Customers 26% CAGR 77,626 96,178 Large Customers >$100,000 Annualized Revenue 126,735 1,088 67% CAGR 387 235 637 Q2 2018 Q2 2019 Q2 2020 Q2 2021 Q2 Q2 Q2 Q2 2018 2019 2020 2021 CLOUDFLARE Copyright Cloudflare, Inc. Note: See the Appendix for how we define "Paying Customers" and "Large Customers."#23CLOUDFLARE Strong Dollar-Based Net Retention 123% 124% 119% 115% 116% Do DNR includes all paying customers Large customers are a tailwind to DNR Gross retention above 90% DNR benefits from strong upsell, expansion, and new product introductions Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 © Copyright Cloudflare, Inc. Note: See the Appendix for how we define "Dollar-Based Net Retention." Gross revenue retention is defined as 1 - gross revenue churn. Cloudflare One offers 1 bundling opportunities#24Non-GAAP Gross Margin 78% 78% 78% 77% 77% Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 CLOUDFLARE ©Copyright Cloudflare, Inc. Note: See Appendix for GAAP to Non-GAAP reconciliation. Attractive & Consistent Gross Margin Serverless architecture deployed on commodity hardware Single software stack across the network Symbiotic relationship with ISPs Leverage idle capacity across network#25Leverage of Our Operating Model Non-GAAP Operating Margin (30)% (25)% (10)% (8)% 31% 23% (3)% Operating Expense as a % of Revenue 17% 27% 18% 16% 27% 21% 21% 20% 52% 48% 46% 48% 45% CLOUDFLARE Copyright Cloudflare, Inc. 2018 2019 S&M Note: See the Appendix for GAAP to Non-GAAP reconciliation. 2020 Q2 2020 Q2 2021 R&D G&A#26Long-Term Model Q2 2018 2019 2020 2021 Long-Term Model Non-GAAP Gross Margin 78% 78% 78 % 78% 75%-77% I Sales & Marketing 48 % 52 % 46% 45% 27% -29% (% of revenue) Research & Development 27% 27% 21% 20% 18%-20% (% of revenue) General & Administrative 31% 23 % 18% 16% 8%-10% (% of revenue) Non-GAAP Operating (30)% (25)% (8)% (3)% 20% + Margin CLOUDFLARE Copyright Cloudflare, Inc. Note: Metrics shown are Non-GAAP. See Appendix for GAAP financial measures and GAAP to Non-GAAP reconciliation.#27Cash, Cash Equiv, & AFS ($ in millions) Strong Cash Position Raised $565 million, net of fees and expenses, in our IPO that priced on September 12th, 2019 Raised $562 million, net of fees and expenses, in our Convertible Notes Offering that priced on May 13th, 2020 Cash Balance $1,200 $1,069 $1,051 $1,032 $1,035 $1,034 $1,000 $800 $600 $400 $200 III $0 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 CLOUDFLARE Copyright Cloudflare, Inc. Operating Cash Flow ($ millions) Operating Cash Flow & Margin 20% $30.0 17% $23.5 12% $18.0 5% 4% 4% $6.0 2% $7.5 $4.0 $2.0 ($6.0) ($14.3) ($18.0) -16% ($8.8) -4% -7% -12% ($30.0) -20% Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021#28Environmental, Social, Governance Building a Greener Internet Green Compute on Cloudflare Workers Published first Greenhouse Gas Emissions Report Promoting Human Rights Launched Project Pangea Athenian Project International Expansion For more information, visit https://www.cloudflare.com/impact/ Building Sustainable Communities Released first Diversity, Equity, Inclusion Report Joined the 1% Pledge PLEDGE 1% PROUD MEMBER We are powering our network with 100% renewable energy and committed to removing all historical emissions from our global network by 2025 CLOUDFLARE ©Copyright Cloudflare, Inc.#29Our Business Model D0. Disrupting a large and growing total addressable market Widely distributed global cloud platform Expansive product portfolio; open to developer innovation Highly efficient business model and low fundamental cost structure CLOUDFLARE © Copyright Cloudflare, Inc. High growth subscription revenue model with attractive gross margin#30CLOUDFLARE © Copyright Cloudflare, Inc. CLOUDFLARE® Appendix#31GAAP to Non-GAAP Reconciliation (Annual) CLOUDFLARE © Copyright Cloudflare, Inc. 2018 2019 2020 GAAP Cost of Revenue $43,537 $63,423 $101,055 Less: Stock-based Compensation Expense & Related Payroll Taxes -$119 Less: Amortization of Acquired Intangible Assets Non-GAAP Cost of Revenue -$517 $42,901 GAAP Gross Profit Add: Stock-based Compensation & Related Payroll Taxes Add: Amortization of Acquired Intangible Assets $149,137 $119 $517 -$716 -$125 $62,582 $223,599 $716 -$1,466 -$3,081 $96,508 $330,004 $1,466 $125 Non-GAAP Gross Profit GAAP Gross Margin Non-GAAP Gross Margin: GAAP Sales and Marketing $149,773 $224,440 $3,081 $334,551 77% 78% 78% 78% 77% 78% $94,394 Less: Stock-based Compensation & Related Payroll Taxes -$979 Non-GAAP Sales and Marketing $93,415 $159,298 -$8,709 $150,589 $217,875 -$17,678 $200,197 GAAP S&M Expense as a % of Revenue 49% Non-GAAP S&M Expense as a % of Revenue 48% 56% 52% 51% 46% GAAP Research and Development $54,463 Less: Stock-based Compensation & Related Payroll Taxes -$1,532 $90,669 -$13,037 Less: Acquisition-related and other expenses $127,144 -$30,497 -$5,725 Non-GAAP Research and Development $52,931 $77,632 $90,922 GAAP R&D Expense as a % of Revenue 28% Non-GAAP R&D Expense as a % of Revenue 27% 32% 27% 29% 21% GAAP General and Administrative $85,179 $81,578 Less: Stock-based Compensation & Related Payroll Taxes -$24,717 -$14,165 Less: Acquisition-related and other expenses $91,753 -$13,875 -$554 Non-GAAP General and Administrative Expense $60,462 $67,413 $77,324 GAAP G&A Expense as a % of Revenue 44% Non-GAAP G&A Expense as a % of Revenue GAAP Loss from Operations 31% 28% 23% 21% 18% -$84,899 Add: Stock-based Compensation & Related Payroll Taxes Add: Amortization of Acquired Intangible Assets Add: Acquisition-related and other expenses $27,347 $517 -$107,946 $36,627 $125 -$106,768 $63,516 $3,081 $6,279 Non-GAAP Loss from Operations -$57,035 -$71,194 GAAP Operating Margin -44% -38% -$33,892 -25% Non-GAAP Operating Margin -30% -25% -8%#32Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 GAAP Cost of Revenue Less: Stock-based Compensation Expense & Related Payroll Taxes $24,164 -$329 $27,005 -$354 $29,065 -$478 $32,084 -$523 $35,029 -$803 Less: Amortization of Acquired Intangible Assets Non-GAAP Cost of Revenue -$700 -$700 -$950 -$700 -$700 $23,135 $25,951 $27,637 $30,861 $33,526 GAAP Gross Profit $75,557 $87,157 $96,861 $105,971 $117,399 Add: Stock-based Compensation & Related Payroll Taxes $329 $354 $478 Add: Amortization of Acquired Intangible Assets $700 $700 $950 $523 $700 $803 $700 Non-GAAP Gross Profit $76,586 $88,211 $98,289 $107,194 $118,902 GAAP Gross Margin 76% 76% 77% 77% 77% Non-GAAP Gross Margin 77% 77% 78% 78% 78% GAAP to Non-GAAP Reconciliation (Quarterly) GAAP General and Administrative Less: Stock-based Compensation & Related Payroll Taxes Less: Acquisition-related and other expenses GAAP Sales and Marketing $51,376 $55,982 $63,552 $69,974 $75,995 Less: Stock-based Compensation & Related Payroll Taxes -$3,975 -$4,761 -$5,363 -$6,835 -$7,579 Non-GAAP Sales and Marketing $47,401 $51,221 $58,189 $63,139 $68,416 GAAP S&M Expense as a % of Revenue 52% 49% 50% 51% 50% Non-GAAP S&M Expense as a % of Revenue 48% 45% 46% 46% 45% GAAP Research and Development $28,131 $30,902 Less: Stock-based Compensation & Related Payroll Taxes -$6,917 Less: Acquisition-related and other expenses $51 -$7,373 $0 $34,757 -$9,080 $39,527 -$11,058 $41,349 -$11,280 $0 $0 $0 Non-GAAP Research and Development $21,265 GAAP R&D Expense as a % of Revenue Non-GAAP R&D Expense as a % of Revenue 28% 21% $23,529 27% 21% $25,677 28% $28,469 $30,069 20% 29% 21% 27% 20% $20,754 -$3,347 $0 $21,525 -$3,518 $0 $23,293 $27,724 $28,927 -$3,404 $0 -$4,648 -$4,486 $0 $0 Non-GAAP General and Administrative Expense GAAP G&A Expense as a % of Revenue Non-GAAP G&A Expense as a % of Revenue GAAP Loss from Operations $17,407 21% 17% $18,007 19% 16% $19,889 18% 16% $23,076 20% $24,441 19% 17% 16% -$24,704 Add: Stock-based Compensation & Related Payroll Taxes Add: Amortization of Acquired Intangible Assets Add: Acquisition-related and other expenses Non-GAAP Loss from Operations GAAP Operating Margin $14,568 $700 -$51 -$21,252 $16,006 $700 $0 -$24,741 $18,325 $950 $0 -$31,254 $23,064 -$28,872 $24,148 $700 $0 $700 $0 -$9,487 -25% -$4,546 -19% -$5,466 -$7,490 -$4,024 -20% -23% -19% Non-GAAP Operating Margin -10% -4% -4% -5% -3% CLOUDFLARE © Copyright Cloudflare, Inc.#33Definitions Paying Customers. We believe our ability to grow the number of paying customers on our network provides a key indicator of growth of our business and our future business opportunities. We define a paying customer at the end of the quarter as a person or entity who has generated revenue during such quarter, excluding (i) customers that were not acquired through ordinary sales channels, (ii) customers using only our registrar product, and (iii) customers using our consumer applications, such as 1.1.1.1 and Warp, which agreements and customers together represent an insignificant amount of our revenue. An entity is defined as a company, a government institution, a non-profit organization, or a distinct business unit of a large company that has an active contract with us or one of our partners. Large Customers (> $100,000 Annualized Revenue). While we continue to grow customers across all sizes, over time, our large customers have contributed an increasing share of our revenue. We view the number of customers with Annualized Revenue greater than $100,000 as indicative of our penetration within large enterprise accounts. To measure Annualized Revenue at the end of a quarter, we take the sum of revenue for each customer in the quarter and multiply that amount by four. For example, if we signed a new customer that generated $1,800 of revenue in a quarter, that customer would account for $7,200 of Annualized Revenue for that year. Our Annualized Revenue calculation excludes (i) agreements that were not entered into through our ordinary sales channels, (ii) revenue generated from customers using only our registrar product, and (iii) customers using our consumer applications, such as 1.1.1.1 and Warp, which agreements and customers together represent an insignificant amount of our revenue. Our Annualized Revenue metric also includes any usage charges by a customer during a period, which represents a small portion of our total revenue and may not be recurring. As a result, Annualized Revenue may be higher than actual revenue over the course of the year. Dollar-Based Net Retention. Our ability to maintain long-term revenue growth and achieve profitability is dependent on our ability to retain and grow revenue generated from our existing paying customers. We believe that we will achieve these objectives by continuing to focus on customer loyalty and adding additional products and functionality to our network. Our dollar-based net retention rate is a key way we measure our performance in these areas. Dollar-based net retention measures our ability to retain and expand recurring revenue from existing customers. To calculate dollar-based net retention for a quarter, we compare the Annualized Revenue from paying customers four quarters prior to the Annualized Revenue from the same set of customers in the most recent quarter. Our dollar-based net retention includes expansion and is net of contraction and attrition, but excludes Annualized Revenue from new customers in the current period. Our dollar-based net retention excludes professional services and the benefit of free customers that upgrade to a paid subscription between the prior and current periods, even though this is an important source of incremental growth. CLOUDFLARE © Copyright Cloudflare, Inc.