Q2 2024 Cloudflare Inc Earnings Call Transcript
Key Points
- Cloudflare Inc (NET) achieved $401 million in revenue for Q2 2024, marking a 30% year-over-year increase.
- The company added 168 new large customers, bringing the total to 3,046, also a 30% year-over-year increase.
- Gross margin was 79%, above the long-term target range of 75% to 77%.
- Operating profit was $57 million, representing an operating margin of 14.2%.
- Strong free cash flow of $38.3 million was generated during the quarter, ahead of expectations.
- Dollar-based net retention rate decreased to 112%, down 3 percentage points quarter-over-quarter.
- The IT-buying environment remains challenging, requiring significant effort to secure deals.
- Revenue recognition from pool of funds deals can be non-linear and may ramp over time, causing potential lumpiness in financial results.
- Network CapEx is expected to increase in the second half of 2024, reaching 10% to 12% of revenue for the full year.
- Sales and marketing expenses remain high, although they decreased as a percentage of revenue from 41% to 37% year-over-year.
Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cloudfare Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)
I would now like to turn the call over to Mr. Phil Winslow. Please go ahead.
Thank you for joining us today to discuss Cloudflare's financial results for the second quarter of 2024.
With me on the call, we have Matthew Prince, Co-Founder and CEO; Michelle Zatlyn, Co-Founder, President and COO; and Thomas Seifert, CFO.
By now, everyone should have access to our earnings announcement. This announcement, as well as our supplemental financial information may be found on our Investor Relations website. As a reminder, we will be making forward-looking statements during today's discussion, including but not limited to our customers, vendors
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