#1CLOUDFLARE Investor Presentation As of June 30, 2022 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 set forth on the cover page of this presentation. 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 ongoing COVID-19 pandemic, Russia-Ukraine conflict, and related macroeconomic conditions and the resulting impact on our business, our customers, vendors and partners, 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 may 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 and products. 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.#3Cloudflare at a Glance 2010 Launched 151K+ Paying Customers Total Revenue ($M) $656 Large Customers > $100,000 Annualized Revenue 1,749 275+ Cities in Network >50% Of Revenue from Large Customers 3,063 Employees CLOUDFLARE © Copyright Cloudflare, Inc. 76% GAAP Gross Margin 51% CAGR $287 54% $235 66% CAGR $431 $152 637 Q2 Q2 2019 2020 2021 2021 2022 1,088 Q2 Q2 Q2 2020 2021 2022 Note: For additional information on the restatement of Paying Customers for the first quarter of 2022, please refer to Slide 23. Unless indicated otherwise, all data in orange shaded area of slide are as of June 30, 2022, except revenue from Large Customers and GAAP gross margin are for three months ended June 30, 2022. Large Customers data in white shaded area of slide are as of applicable year ends. See Appendix for "Large Customers" definition.#4Environmental, Social, Governance Building a Greener Internet Green Compute on Cloudflare Workers Green Hosting with Cloudflare Pages Published first Greenhouse Gas Emissions Report CLOUDFLARE ©Copyright Cloudflare, Inc. Promoting Human Rights Published Human Rights Policy Athenian Project International Expansion Published UN Communication on Progress (COP) Building Sustainable Communities Project Pangea First Diversity, Equity, Inclusion Report First Impact 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 For more information, visit https://www.cloudflare.com/impact/#5Cloudflare's mission is to Help build a better Internet CLOUDFLARE © Copyright Cloudflare, Inc.#6The 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#7From 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#8Evolution of Enterprise Stack Hardware/Software (Buy) Yesterday SONICWALL impervą ZYXEL Services/Cloud (Rent) Tomorrow SOPHOS Barracuda NETSCOUT E radware FORCEPOINT ✓ Symantec ARBOR Extreme FRTINET. STORMSHIELD CISCO paloalto Check Point SAP Microsoft NETWORKS Juniper f5 NETWORKS riverbed FIREEYE ORACLEⓇ A10 NETWORK Array NETWORKS hp ----------- 3PAR Serving Information Sun microsystems DELL COMPAQ EMC AMDAHL CLOUDFLARE Copyright Cloudflare, Inc. CLOUDFLARE® salesforce A workday. Adobe APPLICATION NETSUITE zendesk servicenow Dropbox box shopify ELA Alibaba.com® Global trade starts here." STORE/COMPUTE Lenovo Google Microsoft amazon#9An Integrated Global Cloud Platform Cloudflare Zero Trust Services Cloudflare Network Services Cloudflare Application Services CLOUDFLARE 1 Cloudflare One Cloudflare for Teams suite ZTNA with Private Routing Remote Browser Isolation SWG with CASB WAN-as-a-Service Firewall-as-a-Service L3 & L4 DDoS Protection Network Interconnect Smart Routing Identity/Endpoint Integration WAF with API Protection Rate Limiting Load Balancing Bot Management L7 DDoS Protection CDN and DNS Cloudflare Edge Developer Platform Workers {Workers KV Pages Durable Objects Video Streaming Cloudflare Global Network Global Edge: 275+ cities, 95% of population within ~50ms, 11,000 interconnects, 155 Tbps capacity, China Network Building Blocks: SSL/TLS, mTLS, Authoritative/Recursive DNS, DNSSEC, DNS over HTTP, L4-7 over Wireguard Compliance/Privacy: ISO, SOC, PCI, GDPR-compliant Logs & Analytics, Data Localization Suite Copyright Cloudflare, Inc. ZTNA = Zero Trust Network Access | SWG = Secure Web Gateway | CASB = Cloud Access Security Broker#10We Operate at Massive Scale 124B 151K+ Cyber Threats Blocked per Day Total Paying Customers CLOUDFLARE Copyright Cloudflare, Inc. >50% 47% Of Revenue from Large Customers Of Revenue from Outside of the U.S. Note: For additional information on the restatement of Paying Customers for the first quarter of 2022, please refer to Slide 23. Cyber threats blocked per day is average over the three months ended June 30, 2022. All other figures as of or for the three months ended June 30, 2022 or, in the case of total Paying Customers, as of June 30, 2022. See Appendix for "Paying Customers" and "Large Customers" definitions.#11CLOUDFLARE • 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#12of A Global Network Powering our Platform 275+ cities in 100+ countries, including mainland China 11,000 networks directly connect to Cloudflare, including ISPS, cloud providers, and large enterprises cho 155 Tbps of network capacity and growing 151,000+ paying customers Cloudflare city- Plans for 1,000+ of the world's busiest office buildings and multi-dwelling units to link directly with the Cloudflare network in the future 61% year-over-year Large Customer growth in Q2'22 95% of the world's population is within ~50 ms of a Cloudflare data center Note: All figures as of June 30, 2022. See Appendix for "Large Customers" definition.#13Our 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#14Data Intelligence & Quality Assurance at Scale Global sensor network with paying customers in 175+ countries. Machine learning systems improve products with every customer's request. Immune system for the Internet blocking an average of 124 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, 2022. Other figures as of the three months ended June 30, 2022.#15Our 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#16Our 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#17Innovation Drives Massive TAM Expansion 1 Cloudflare One $125B $115B $135B R2 Object Storage Cloudflare Network Services Carrier Services Areas for Potential Incremental Growth </> Serverless Cloudflare Application Services • Application Delivery Controllers • WAN • CDN DDoS . Intrusion Detection & Prevention • Firewall CLOUDFLARE Copyright Cloudflare, Inc. $32B $80B (MPLS & SD-WAN) • Offices Database Cloudflare Zero Trust Services • VPN • Content Filtering Remote Browser Isolation • Data Loss Prevention • Privileged Access Internet of Things (121) A 5G Cellular Management Network Analytics • • Email CASB 2018 2021 2022 2023 2024 Note: Total Addressable Market figures are Cloudflare estimates based on IDC market forecasts. Figures reflect the markets addressed by our current product offerings. Consumer#18Traditional 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.#19. 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#20CLOUDFLARE Financial Overview CLOUDFLARE © Copyright Cloudflare, Inc.#21Key Financial Highlights $115B Large Addressable Market in 2022 54% Y/Y Q2'22 Revenue Growth 76% Q2'22 GAAP Gross Margin 1,749 Large Customers CLOUDFLARE © Copyright Cloudflare, Inc. Note: Total Addressable Market represents 2022 expected spend from our analysis based on IDC data. Year-over-year revenue growth and gross margin are as of the three months ended June 30, 2022. Large Customers is as of June 30, 2022. See the Appendix for how we define "Large Customers."#22Track Record of Delivering Revenue Growth Total Revenue ($M) 51% CAGR $287 $193 $135 $85 2016 2017 CLOUDFLARE Copyright Cloudflare, Inc. $656 54% $431 $152 $235 2018 2019 2020 2021 Q2 2021 Q2 2022 Investment in enterprise sales Large customer momentum Land and expand strategy drives growth across cohorts Strong penetration across the entire product portfolio#23Rapid Customer Growth Paying Customers 25% CAGR 151,803* 126,735 96,178 77,626 Large Customers >$100,000 Annualized Revenue 65% CAGR 1,088 CLOUDFLARE Q2 2019 Q2 2020 Q2 2021 Q2 2022 637 387 Q2 2019 Q2 2020 Q2 2021 1,749 Q2 2022 * We identified a system error with respect to our previously announced calculation of Paying Customers for the first quarter of 2022 that caused our Paying Customer count to be overstated by 5,925 pay-as-you-go customers. The error was one-time in nature and surfaced as a result of a billing platform migration. It had less than a $160K impact on revenue for the quarter ended March 31, 2022. © Copyright Cloudflare, Inc. Note: See the Appendix for how we define "Paying Customers" and "Large Customers."#24CLOUDFLARE Strong Dollar-Based Net Retention 127% 126% 125% 124% 124% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 © Copyright Cloudflare, Inc. Note: See the Appendix for how we define "Dollar-Based Net Retention." Gross revenue retention is defined as 1 - gross revenue churn. Do DNR includes all paying customers Large customers are a tailwind to DNR Gross retention above 90% Continuous innovation offers expansion opportunities#25Non-GAAP Gross Margin 79% 79% 79% 79% 78% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 CLOUDFLARE ©Copyright Cloudflare, Inc. Note: See Appendix for GAAP to Non-GAAP reconciliation. Attractive & Consistent Gross Margin Serverless architecture deployed on commodity hardware Single software stack across the network Symbiotic relationship with ISPS Leverage idle capacity across network#26Leverage of Our Operating Model Non-GAAP Operating Margin (25)% (8)%. (3)% 23% (1)% (0)% Operating Expense as a % of Revenue 18% 27% 15% 16% 15% 21% 20% 20% 20% CLOUDFLARE Copyright Cloudflare, Inc. 52% 46% 45% 45% 44% 2019 2020 S&M Note: See the Appendix for GAAP to Non-GAAP reconciliation. 2021 Q2 Q2 2021 2022 R&D G&A#27Cash, Cash Equiv, & AFS ($ in millions) Strong Cash Position Raised $565 million in our IPO that priced on September 12th, 2019, net of fees and expenses Raised $495 million in our Convertible Notes Offering due 2025 that priced on May 13th, 2020, net of issuance costs and a capped call with respect to the 2025 convertible notes Raised $790 million in our Convertible Note Offering due 2026 that priced on August 10th, 2021, net of the repurchase of 2025 notes, issuance costs, and a capped call with respect to the 2026 convertible notes Cash Balance $2,000 $1,814 $1,822 $1,725 $1,642 $1,667 $1,333 $1,034 $1,000 $667 $333 $0 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 CLOUDFLARE Copyright Cloudflare, Inc. Operating Cash Flow ($ millions) Operating Cash Flow & Margin $90.0 30% $60.0 17% $30.0 21% 20% 16% $40.6 $38.3 10% 5% $23.5 $0.0 ($8.8) $7.5 ($6.9) 0% -4% -7% ($30.0) ($35.5) -10% -17% ($60.0) -20% Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022#28Q3 2022 Revenue Y/Y Growth $250.0 251.0 45% -46% Guidance (as of Aug 04, 2022) Revenue Y/Y Growth FY 2022 $968.0 972.0 47% -48% FY 2022 Network Capex as % of Revenue 12%-14% Operating Loss Operating Margin $0.0 - $1.0 0% Operating Income Operating Margin $7.0 - $11.0 1% EPS $0.00 - $0.01 EPS $0.03 - $0.04 Anticipate Returning to Free Cash Flow Positive CLOUDFLARE Copyright Cloudflare, Inc. 2nd Half 2022 Note: These forward looking statements were provided by us on Aug 04, 2022. This forward looking guidance speaks only as of such date and the inclusion of such guidance in this presentation should not be interpreted as a confirmation or affirmation of such guidance as of any other date. 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.#29Long-Term Model Q2 2019 2020 2021 2022 Long-Term Model I Non-GAAP Gross Margin 78% 78 % 79% 79 % 75% - 77% Sales & Marketing 52 % 46 % 45% 44 % 27% -29% (% of revenue) Research & Development 27 % 21% 20% 20% 18%-20% (% of revenue) General & Administrative 23 % 18% 15% 15% 8% -10% (% of revenue) Non-GAAP Operating (25)% (8)% (1)% (0)% 20% + Margin Driving product innovation as the marginal cost to serve customers declines creates significant long-term operating margin opportunity CLOUDFLARE Copyright Cloudflare, Inc. Note: Metrics shown are Non-GAAP. See Appendix for GAAP financial measures and GAAP to Non-GAAP reconciliation.#30Our 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#31CLOUDFLARE © Copyright Cloudflare, Inc. CLOUDFLARE® Appendix#322019 2020 2021 GAAP Cost of Revenue Less: Stock-based Compensation Expense & Related Payroll Taxes $63,423 -$716 Less: Amortization of Acquired Intangible Assets Non-GAAP Cost of Revenue -$125 $62,582 GAAP Gross Profit Add: Stock-based Compensation & Related Payroll Taxes Add: Amortization of Acquired Intangible Assets $223,599 $716 $125 Non-GAAP Gross Profit GAAP Gross Margin Non-GAAP Gross Margin $224,440 $101,055 -$1,466 -$3,081 $96,508 $330,004 $1,466 $3,081 $334,551 $147,134 -$3,703 -$2,946 $140,485 $509,292 $3,703 $2,946 $515,941 78% 78% 77% 78% 78% 79% GAAP to Non-GAAP Reconciliation (Annual) Less: Stock-based Compensation & Related Payroll Taxes Non-GAAP Sales and Marketing GAAP Sales and Marketing $159,298 -$8,709 $150,589 $217,875 -$17,678 $200,197 $328,065 -$32,869 $295,196 GAAP S&M Expense as a % of Revenue 56% Non-GAAP S&M Expense as a % of Revenue 52% 51% 46% 50% 45% GAAP Research and Development $90,669 $127,144 Less: Stock-based Compensation & Related Payroll Taxes -$13,037 -$30,497 $189,408 -$61,056 Less: Acquisition-related and other expenses -$5,725 Non-GAAP Research and Development $77,632 $90,922 $128,352 GAAP R&D Expense as a % of Revenue 32% 29% 29% Non-GAAP R&D Expense as a % of Revenue GAAP General and Administrative 27% 21% 20% $81,578 Less: Stock-based Compensation & Related Payroll Taxes -$14,165 Less: Acquisition-related and other expenses 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 $67,413 28% 23% $91,753 -$13,875 -$554 $77,324 $119,503 -$19,706 -$380 $99,417 21% 18% 18% 15% -$107,946 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 $36,627 $125 -$71,194 -38% -$106,768 $63,516 $3,081 $6,279 -$33,892 -25% -$127,684 $117,334 $2,946 $380 -$7,024 -19% Non-GAAP Operating Margin -25% -8% -1% CLOUDFLARE © Copyright Cloudflare, Inc.#33Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 GAAP Cost of Revenue Less: Stock-based Compensation Expense & Related Payroll Taxes $35,029 -$803 $37,525 $42,496 $47,051 $55,804 -$1,040 -$1,337 -$1,323 -$2,001 Less: Amortization of Acquired Intangible Assets Non-GAAP Cost of Revenue -$700 -$700 -$846. -$507 -$4,312 $33,526 $35,785 $40,313 $45,221 GAAP Gross Profit $117,399 $134,822 Add: Stock-based Compensation & Related Payroll Taxes $803 Add: Amortization of Acquired Intangible Assets $700 Non-GAAP Gross Profit $118,902 $1,040 $700 $136,562 $151,100 $1,337 $846 $165,116 $49,491 $178,713 $1,323 $2,001 $153,283 $507 $166,946 $4,312 $185,026 GAAP Gross Margin 77% 78% 78% 78% 76% GAAP to Non-GAAP Reconciliation (Quarterly) Less: Stock-based Compensation & Related Payroll Taxes Less: Amortization of acquired intangible assets. Non-GAAP Gross Margin GAAP Sales and Marketing 78% 79% 79% 79% 79% $75,995 -$7,579 $85,877 -$8,271 $96,219 -$10,184 $100,057 -$10,379 $117,622 -$12,907 -$575 Less: Acquisition-related and other expenses Non-GAAP Sales and Marketing -$265 $68,416 $77,606 $86,035 $89,678 $103,875 GAAP S&M Expense as a % of Revenue 50% 50% Non-GAAP S&M Expense as a % of Revenue 45% 45% 50% 44% 47% 42% 50% 44% GAAP Research and Development $41,349 $46,770 $61,762 $67,054 $75,114 Less: Stock-based Compensation & Related Payroll Taxes -$11,280 -$13,971 -$24,747 Less: Acquisition-related and other expenses -$24,079 -$2,639 -$27,873 -$1,043 Non-GAAP Research and Development $30,069 $32,799 $37,015 $40,336 $46,198 GAAP R&D Expense as a % of Revenue 27% 27% 32% 32% 32% Non-GAAP R&D Expense as a % of Revenue 20% 19% 19% 19% 20% GAAP General and Administrative $28,927 $28,669 Less: Stock-based Compensation & Related Payroll Taxes Less: Acquisition-related and other expenses -$4,486 -$4,742 Non-GAAP General and Administrative Expense $24,441 $23,927 $34,183 -$5,830 -$380 $27,973 $38,029 -$6,018 $50,518 -$14,674 $32,011 GAAP G&A Expense as a % of Revenue 19% 17% Non-GAAP G&A Expense as a % of Revenue GAAP Loss from Operations 16% 14% 18% 14% 18% $35,844 22% 15% 15% -$28,872 Add: Stock-based Compensation & Related Payroll Taxes Add: Amortization of Acquired Intangible Assets Add: Acquisition-related and other expenses. Non-GAAP Loss from Operations $24,148 $700 -$26,494 $28,024 $700 -$41,064 $42,098 $846 $380 -$40,024 $41,799 -$64,541 $57,455 $507 $4,887 $2,639 $1,308 -$4,024 CLOUDFLARE © Copyright Cloudflare, Inc. GAAP Operating Margin Non-GAAP Operating Margin -19% $2,230 -15% $2,260 $4,921 -$891 -21% -19% -28% -3% 1% 1% 2% 0%#34Definitions 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.