TLDR
- Cloudflare reported Q1 earnings of $0.16 per share, matching estimates and unchanged from last year
- Revenue reached $479.09 million, up 20% year-over-year, exceeding forecasts by 2.21%
- The company added large customers, with 3,527 customers paying over $100,000 (up 23% year-over-year)
- Cloudflare landed its largest contract ever, worth over $100 million
- Q2 guidance projects $500-501 million revenue, a 25% year-over-year increase
Cloudflare (NET) has maintained its growth trajectory in the first quarter of 2025, with revenue increases outpacing the broader market despite flat earnings per share. The web security and content delivery company reported results that largely met or exceeded analyst expectations.
The company reported quarterly earnings of $0.16 per share for Q1 2025, exactly matching the Zacks Consensus Estimate. This figure equals the earnings from the same period last year, showing stability but not growth in per-share profitability.
Revenue told a more positive story. Cloudflare posted $479.09 million in revenue for the quarter ended March 2025, representing a 20% jump from $378.6 million in the year-ago period. This result beat the consensus estimate by 2.21%.
The performance continues a trend of revenue outperformance. The company has now topped consensus revenue estimates for four consecutive quarters.
Cloudflare’s stock has performed well in 2025, adding approximately 13% since the beginning of the year. This stands in contrast to the S&P 500’s decline of 4.3% over the same period.
Growing Customer Base
One of the key drivers behind Cloudflare’s revenue growth is its expanding customer base, particularly among larger clients. The company closed the quarter with 3,527 customers paying more than $100,000, representing a 23% increase year-over-year.
In a major win, Cloudflare landed the largest contract in its history during the quarter, a deal worth over $100 million. These large customer acquisitions help explain how the company maintains double-digit revenue growth.
The dollar-based net retention rate stood at 111%, remaining flat quarter-to-quarter. This metric indicates that existing customers spent 11% more than they did in the previous year, but the rate of increased spending has not grown from the previous quarter.
Financial Health
Cloudflare’s financial position appears solid. The company reported an operating profit of $56 million for the quarter, representing an operating margin of 11.7%.
Free cash flow reached $52.9 million, or 11% of revenue, giving the company flexibility for future investments. Cloudflare ended the quarter with $1.9 billion in cash and equivalents.
Gross margin came in at 77.1%, above the company’s long-term target range of 75% to 77%. However, this represents a decrease of 240 basis points compared to the same period last year.
Net income for the quarter was $58.4 million, resulting in the previously mentioned diluted earnings per share of $0.16.
The company’s remaining performance obligations (RPO), which represent contractually committed future revenue, reached $1.864 billion, up 39% year-over-year. This metric suggests strong future revenue streams already under contract.
Looking Ahead
Cloudflare provided optimistic guidance for both the next quarter and the full year. For Q2 2025, the company expects revenue between $500 million and $501 million, representing a 25% increase compared to the same period last year.
For the full year 2025, Cloudflare projects revenue in the range of $2.090 billion to $2.094 billion, also up 25% year-over-year.
These projections come despite what the company describes as a volatile macroeconomic environment. Management also noted that sales cycles may increase over time as deals become larger and more complex.
The company faces some headwinds, including increased pressure from AI-driven internet trends affecting media companies. This could potentially impact certain segments of Cloudflare’s business.
Cloudflare’s Q1 performance demonstrates continued revenue growth and customer acquisition success, even as earnings per share remained flat compared to the prior year.
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