Growth and Scale in Cloud Security

GAAP to Non-GAAP Reconciliation (Quarterly) CLOUDFLARE © Copyright Cloudflare, Inc. Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 GAAP Cost of Revenue Less: Stock-based Compensation Expense & Related Payroll Taxes $29,065 -$478 $32,084 -$523 $35,029 $37,525 $42,496 -$803 -$1,040 -$1,337 Less: Amortization of Acquired Intangible Assets Non-GAAP Cost of Revenue -$950 -$700 -$700 -$700 -$846 $27,637 $30,861 $33,526 $35,785 GAAP Gross Profit $96,861 $105,971 $117,399 $134,822 $40,313 $151,100 Add: Stock-based Compensation & Related Payroll Taxes $478 $523 $803 Add: Amortization of Acquired Intangible Assets $950 $700 $700 $1,040 $700 $1,337 Non-GAAP Gross Profit $98,289 $107,194 $118,902 GAAP Gross Margin 77% 77% 77% $136,562 78% $846 $153,283 78% Non-GAAP Gross Margin 78% 78% 78% 79% 79% GAAP Sales and Marketing $63,552 $69,974 $75,995 $85,877 $96,219 Less: Stock-based Compensation & Related Payroll Taxes -$5,363 -$6,835 -$7,579 -$8,271 -$10,184 Non-GAAP Sales and Marketing $58,189 $63,139 $68,416 $77,606 $86,035 GAAP S&M Expense as a % of Revenue 50% 51% 50% 50% 50% Non-GAAP S&M Expense as a % of Revenue 46% 46% 45% 45% 44% GAAP Research and Development $34,757 $39,527 $41,349 $46,770 $61,762 Less: Stock-based Compensation & Related Payroll Taxes -$9,080 -$11,058 -$11,280 -$13,971 -$24,747 Non-GAAP Research and Development $25,677 $28,469 $30,069 $32,799 $37,015 GAAP R&D Expense as a % of Revenue 28% 29% 27% 27% 32% Non-GAAP R&D Expense as a % of Revenue 20% 21% 20% 19% 19% GAAP General and Administrative $23,293 $27,724 Less: Stock-based Compensation & Related Payroll Taxes -$3,404 -$4,648 $28,927 -$4,486 $28,669 $34,183 -$4,742 -$5,830 Less: Acquisition-related and other expenses -$380 Non-GAAP General and Administrative Expense $19,889 $23,076 $24,441 $23,927 $27,973 GAAP G&A Expense as a % of Revenue 18% Non-GAAP G&A Expense as a % of Revenue 16% 20% 17% 19% 16% 17% 18% 14% 14% GAAP Loss from Operations -$24,741 Add: Stock-based Compensation & Related Payroll Taxes Add: Amortization of Acquired Intangible Assets $18,325 $950 -$31,254 $23,064 $700 -$28,872 $24,148 $700 -$26,494 $28,024 $700 -$41,064 $42,098 $846 Add: Acquisition-related and other expenses $380 Non-GAAP Loss from Operations -$5,466 GAAP Operating Margin -20% Non-GAAP Operating Margin -4% -$7,490 -23% -5% -$4,024 $2,230 $2,260 -19% -15% -21% -3% 1% 1%

View entire presentation