Growth and Market Expansion Strategy

Q2 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.

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