US Market News
1 hour ago
Governments Are Racing to Rebuild Encryption Before Quantum Computers Break It, and a Canadian Company Is Taking Its Toolkit to Southeast AsiaJuly 7, 2026 12:27 PM
PR Newswire (Canada) Issued on behalf of QSE - Quantum Secure Encryption Corp.QSE - Quantum Secure Encryption Corp. (CSE: QSE) (OTCQB: QSEGF) (FSE: VN80) will showcase its portfolio of post-quantum cybersecurity solutions at CYDES 2026, one of Southeast Asia's premier cybersecurity conferences, alongside a regional digital-trust partner, as part of its broader expansion across the region.VANCOUVER, BC, July 7, 2026 /CNW/ -- Equity Insider News Commentary, One of the quieter but more consequential races in technology is the effort to rebuild the world's encryption before quantum computers grow powerful enough to break it. Governments and standards bodies have set migration deadlines, regulators are turning quantum risk into a compliance requirement, and the market for solutions is beginning to form around that urgency. Into that moment steps QSE - Quantum Secure Encryption Corp. (CSE: QSE) (OTCQB: QSEGF) (FSE: VN80), a post-quantum cybersecurity company that has announced it will showcase its platform at CYDES 2026, a leading Southeast Asian cybersecurity conference, in collaboration with a regional digital-trust partner, as it pushes deeper into a region it sees as a meaningful growth opportunity. Key TakeawaysQSE - Quantum Secure Encryption Corp. (CSE: QSE) (OTCQB: QSEGF) (FSE: VN80) will participate in CYDES 2026, one of Southeast Asia's premier cybersecurity conferences, where it plans to showcase its portfolio of post-quantum cybersecurity solutions in collaboration with a regional digital-trust and cybersecurity partner.The Company plans to demonstrate practical enterprise products, including its QPrime Quantum Preparedness Assessment, QAuth quantum-ready authentication, Quantum Secure Storage, and enterprise cryptographic migration solutions.CYDES brings together government agencies, regulators, and critical infrastructure operators from across Asia-Pacific, and QSE's participation supports its broader Southeast Asia expansion strategy, following recent commercial activity within Malaysia's financial-services sector.QSE describes itself as focused on quantum-resilient data protection, identity security, secure storage, and cryptographic migration readiness, built around quantum-delivered entropy and a zero-knowledge architecture.Other publicly traded names positioned across post-quantum security and cybersecurity include SEALSQ (NASDAQ: LAES), Fortinet (NASDAQ: FTNT), Cloudflare (NYSE: NET), and Lattice Semiconductor (NASDAQ: LSCC), each distinct, most far larger, and none a proxy for QSE.The Deadline Nobody Can IgnoreTo understand why a conference appearance matters for a company like QSE, it helps to understand the problem the whole sector is organized around. Much of the encryption that protects the world's data today, from banking and healthcare records to government communications, relies on mathematical problems that conventional computers cannot solve quickly. A sufficiently powerful quantum computer could, in principle, solve some of those problems and render that encryption vulnerable. The machines capable of doing so do not exist yet, but the threat is already treated as real because of what security professionals call "harvest now, decrypt later": adversaries can collect encrypted data today and simply wait to decrypt it once the technology matures.That dynamic has turned what might sound like a distant, theoretical risk into a present-day planning problem. Standards bodies have finalized the first post-quantum cryptography standards, and governments have begun setting timelines for migrating critical systems to quantum-resistant encryption. The practical implication is that organizations cannot wait for quantum computers to arrive before acting; because migrating cryptography touches nearly every system that uses it, the work has to begin years in advance. That is what converts quantum risk from a research topic into a budget line, and it is the demand QSE and its peers are built to serve.What QSE Is Bringing to CYDESAt CYDES 2026, QSE plans to demonstrate a set of enterprise products designed to walk an organization through the practical steps of preparing for that migration. The company has described four core offerings it intends to showcase. Its QPrime Quantum Preparedness Assessment is designed to help organizations identify cryptographic exposure and prioritize migration planning, essentially a way to find where the risk lives before trying to fix it. QAuth, its quantum-ready authentication product, is designed to strengthen enterprise login and identity security. Quantum Secure Storage is designed to protect sensitive data against both current cyber threats and future quantum-enabled attacks. And a set of enterprise cryptographic migration solutions supports the longer-term planning organizations need for post-quantum security requirements.The through-line across those products is practicality. Rather than positioning itself around the far-off moment when quantum computers can break encryption, QSE frames its platform as something organizations can begin using today: assess exposure, protect identities, secure data, and plan the migration. That framing reflects a broader reality of the post-quantum security market, where the near-term commercial opportunity lies less in dramatic breakthroughs and more in the unglamorous, compliance-driven work of inventorying systems and planning transitions."CYDES provides an important platform to engage directly with government agencies that are moving from awareness to action on post-quantum cybersecurity," said Ted Carefoot, Chief Executive Officer of QSE. "Before agencies and organizations can protect themselves, they need to understand where their encryption, identity and data risks exist. QSE's platform is designed to make that process practical, clear and manageable."Why Southeast Asia, and Why NowThe choice of venue is itself part of the story. CYDES brings together government agencies, regulators, and critical infrastructure operators from across the Asia-Pacific region to discuss emerging cyber threats and next-generation security technologies, exactly the audience a post-quantum security company needs to reach. These are the organizations that hold the most sensitive long-lived data and that face the earliest regulatory pressure to act, which makes them natural first customers for quantum-readiness tools.For QSE, the appearance supports a broader Southeast Asia expansion strategy, and it follows what the company describes as recent commercial activity within Malaysia's financial-services sector. Management believes the region represents a meaningful growth opportunity as governments, critical infrastructure operators, and regulated enterprises begin evaluating how to prepare for quantum-related cybersecurity risks. In other words, the company is trying to be present in a market at the moment that market is beginning to move from awareness toward procurement. Whether that translates into meaningful revenue remains to be demonstrated, and a conference appearance is an opportunity to build relationships rather than a booked result, but the strategic logic of showing up early where demand is forming is clear."Post-quantum security is quickly moving from a technical discussion to a business and compliance priority," added Carefoot. "Events such as CYDES allow us to show that QSE is focused on practical solutions organizations can start using today, rather than waiting for the quantum threat to become an immediate operational problem." The company believes demand for quantum migration planning is accelerating as governments and standards bodies encourage organizations to assess cryptographic risk, inventory vulnerable systems, and begin planning future migration strategies.The Technology UnderneathQSE describes itself as a Canadian technology company specializing in post-quantum data security, encryption, and secure data infrastructure. According to the company, its solutions are built around quantum-delivered entropy and a zero-knowledge architecture, and are designed to protect sensitive data from both current cyber threats and future quantum-enabled attacks. Entropy, in cryptography, refers to the quality of the randomness used to generate encryption keys; better randomness makes keys harder to predict or reproduce. A zero-knowledge architecture, broadly, is one designed so that the service provider itself cannot access the underlying data it protects.The company says it serves organizations across commercial, enterprise, and public-sector environments that require long-term data confidentiality and resilience, precisely the customers for whom the harvest-now-decrypt-later threat is most pressing, because their data must stay confidential for years or decades. As with any early-stage technology company, the value of that positioning will ultimately be measured by adoption and revenue rather than by architecture alone, and investors should weigh the company's small size and stage against the scale of the opportunity it is pursuing.The Public Companies Across Post-Quantum SecurityQSE is a small, early-stage company quoted on the Canadian Securities Exchange, and it is not directly comparable to the names below. These comparisons are for industry context only; each company pursues a different technology and business model, most operate at vastly greater scale, and none is a proxy for QSE or implies any partnership or comparable performance.SEALSQ (NASDAQ: LAES) designs semiconductors and public-key infrastructure for device security, with a stated focus on post-quantum cryptography and quantum-resistant chips for connected-device, identity, and IoT markets. As one of the more visible pure-play post-quantum security names in the public markets, SEALSQ is the closest thematic reference point to the segment QSE operates in, though it pursues a hardware-centric model.Fortinet (NASDAQ: FTNT) is a large, established cybersecurity and network-security company offering firewalls, secure networking, cloud security, and endpoint protection to businesses worldwide. Fortinet has been identified by analysts as a potential beneficiary of post-quantum cryptography spending, illustrating how incumbent security platforms are positioning for the same migration wave from a very different scale.Cloudflare (NYSE: NET) provides cloud-based security and network services and has rolled out post-quantum support across parts of its platform. Like Fortinet, Cloudflare represents the large-incumbent approach to the post-quantum transition, embedding quantum-safe capabilities into an existing, broadly deployed service rather than as a standalone product.Lattice Semiconductor (NASDAQ: LSCC) makes low-power programmable chips and has positioned itself for the post-quantum transition through crypto-agile, secure hardware designed to support evolving cryptographic standards. Lattice offers a view of the semiconductor layer of the migration, where quantum-resistant capability is built into the hardware that security ultimately runs on.The Bottom LineA conference appearance is a beginning, not a milestone that changes a company's fundamentals on its own, and QSE remains a small, early-stage company whose commercial traction still has to be proven against far larger and better-capitalized competitors. But the moment it is stepping into is a real one: governments and regulators have turned post-quantum migration into a deadline-driven requirement, Southeast Asia is an early-moving region, and QSE is positioning its practical toolkit, from cryptographic assessment to authentication, storage, and migration planning, directly in front of the government and infrastructure buyers who face that requirement first. For investors tracking how the post-quantum security market takes shape, QSE's push into Southeast Asia is a concrete data point, with commercial contracts, revenue, and customer adoption the markers worth watching from here.SIGNAL OVER NOISESignal over noise. Cybersecurity, quantum-computing, and post-quantum-security headlines move fast, and the crowd often moves first. Eagle Eye is a real-time investor signal-intelligence platform that surfaces sentiment shifts, news flow, and trending tickers as they happen, so you see the move forming instead of reading about it later. See it at eagle-eye.dev.CONTACT
Equity Insider
info@equity-insider.comSOURCES[1] QSE - Quantum Secure Encryption Corp., "QSE to Showcase Quantum-Ready Cybersecurity Platform at CYDES 2026 with Regional Digital Trust Partner" (news release, Vancouver, British Columbia, 2026; QPrime, QAuth, Quantum Secure Storage, cryptographic migration solutions; Southeast Asia expansion; Malaysia financial-services activity).[2] SEALSQ Corp (NASDAQ: LAES), Fortinet, Inc. (NASDAQ: FTNT), Cloudflare, Inc. (NYSE: NET), and Lattice Semiconductor Corporation (NASDAQ: LSCC), corporate disclosures and market data, 2026.DISCLAIMERNothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. This article is being distributed for Market IQ Media Group Limited, a company incorporated under the laws of Ireland ("MIQL"), which wholly owns and operates Equity Insider. MIQL has not been paid a fee in connection with this article. MIQL and/or its associates have previously been paid a fee for QSE - Quantum Secure Encryption Corp. advertising and digital media, which compensation has since expired. MIQL and/or its associates, owners, and operators own shares of QSE - Quantum Secure Encryption Corp. that were acquired through private placements and in the open market, and reserve the right to buy and sell shares of QSE - Quantum Secure Encryption Corp. at any time without any further notice commencing immediately and ongoing. There may also be 3rd parties who may have shares of QSE - Quantum Secure Encryption Corp., and may liquidate their shares which could have a negative effect on the price of the stock. This share ownership constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this publication as the basis for any investment decision. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.FORWARD-LOOKING STATEMENTS: This publication contains forward-looking statements, including statements regarding QSE's participation in CYDES 2026 and the products it plans to showcase; its collaboration with a regional digital-trust partner; its Southeast Asia expansion strategy and recent commercial activity in Malaysia's financial-services sector; the anticipated growth of demand for post-quantum migration planning; and the capabilities and positioning of its QPrime, QAuth, Quantum Secure Storage, and cryptographic migration solutions. Forward-looking statements are based on current expectations and assumptions and are subject to known and unknown risks and uncertainties, many beyond the company's control, including the early-stage nature of the company and the post-quantum security market; the risk that conference participation and business-development activity may not translate into contracts or revenue; the pace of government and enterprise adoption of post-quantum cryptography; competition from larger and better-capitalized companies; the company's need for additional capital; continued satisfaction of Canadian Securities Exchange requirements; regulatory and general economic conditions; and the other risks described in the company's management discussion and analysis and other filings available under its profile on SEDAR+ at www.sedarplus.ca. Actual results could differ materially from those projected. Except as required by applicable law, the company assumes no obligation to update any forward-looking statement. The Canadian Securities Exchange has in no way passed upon the merits of the business of the company and has neither approved nor disapproved the contents of this publication. References to other companies are based on those companies' public disclosures, are provided for industry context only, and do not imply any partnership, endorsement, affiliation, or comparable performance. View original content to download multimedia:https://www.prnewswire.com/news-releases/governments-are-racing-to-rebuild-encryption-before-quantum-computers-break-it-and-a-canadian-company-is-taking-its-toolkit-to-southeast-asia-302819738.html Original: Governments Are Racing to Rebuild Encryption Before Quantum Computers Break It, and a Canadian Company Is Taking Its Toolkit to Southeast Asia
US Market News
5 months ago
Cloudflare Announces Fourth Quarter and Fiscal Year 2025 Financial ResultsFebruary 10, 2026 4:15 PM
Business Wire
Fourth quarter revenue totaled $614.5 million, representing an increase of 34% year-over-year; fiscal year 2025 revenue totaled $2,167.9 million, representing an increase of 30% year-over-year
GAAP loss from operations of $49.2 million, or 8% of total revenue, and non-GAAP income from operations of $89.6 million, or 15% of total revenue
Delivered RPO year-over-year growth of 48% and Current RPO year-over-year growth of 34%
Cloudflare, Inc. (NYSE: NET), the leading connectivity cloud company, today announced financial results for its fourth quarter and fiscal year ended December 31, 2025.
"We had an exceptionally strong end to 2025. In Q4, we closed our largest annual contract value deal ever—averaging $42.5 million per year—and total new ACV grew nearly 50 percent year-over-year, our fastest growth rate since 2021," said Matthew Prince, co-founder & CEO, Cloudflare. "The shift toward AI and agents represents a fundamental re-platforming of the Internet that's driving demand across Cloudflare's services. If agents are the new users of the web, Cloudflare is the platform they run on and the network they pass through. This creates a virtuous flywheel: more agents drive more code to Cloudflare Workers, which fuels demand for our performance, security, and networking services. We were built for this moment and the rise of the Agentic Internet."
Fourth Quarter 2025 Financial Highlights
Revenue: Total revenue of $614.5 million, representing an increase of 33.6% year-over-year.
Gross Profit: GAAP gross profit was $452.6 million, or 73.6% gross margin, compared to $351.3 million, or 76.4%, in the fourth quarter of 2024. Non-GAAP gross profit was $460.2 million, or 74.9% gross margin, compared to $356.8 million, or 77.6%, in the fourth quarter of 2024.
Operating Income (Loss): GAAP loss from operations was $49.2 million, or 8.0% of total revenue, compared to $34.7 million, or 7.5% of total revenue, in the fourth quarter of 2024. Non-GAAP income from operations was $89.6 million, or 14.6% of total revenue, compared to $67.2 million, or 14.6% of total revenue, in the fourth quarter of 2024.
Net Income (Loss): GAAP net loss was $12.1 million, compared to $12.8 million in the fourth quarter of 2024. GAAP net loss per basic and diluted share was $0.03, compared to $0.04 in the fourth quarter of 2024. Non-GAAP net income was $106.8 million, compared to $68.8 million in the fourth quarter of 2024. Non-GAAP net income per diluted share was $0.28, compared to $0.19 in the fourth quarter of 2024.
Cash Flow: Net cash flow from operating activities was $190.4 million, compared to $127.3 million for the fourth quarter of 2024. Free cash flow was $99.4 million, or 16.2% of total revenue, compared to $47.8 million, or 10.4% of total revenue, in the fourth quarter of 2024.
Cash, cash equivalents, and available-for-sale securities were $4,101.3 million as of December 31, 2025.
Full Year 2025 Financial Highlights
Revenue: Total revenue of $2,167.9 million, representing an increase of 29.8% year-over-year.
Gross Profit: GAAP gross profit was $1,615.4 million, or 74.5% gross margin, compared to $1,290.9 million, or 77.3%, in fiscal 2024. Non-GAAP gross profit was $1,643.2 million, or 75.8% gross margin, compared to $1,313.6 million, or 78.7%, in fiscal 2024.
Operating Income (Loss): GAAP loss from operations was $207.2 million, or 9.6% of total revenue, compared to $154.8 million, or 9.3% of total revenue, in fiscal 2024. Non-GAAP income from operations was $303.9 million, or 14.0% of total revenue, compared to $230.1 million, or 13.8% of total revenue, in fiscal 2024.
Net Income (Loss): GAAP net loss was $102.3 million, compared to $78.8 million for fiscal 2024. GAAP net loss per basic and diluted share was $0.29, compared to $0.23 for fiscal 2024. Non-GAAP net income was $342.9 million, compared to $269.0 million for fiscal 2024. Non-GAAP net income per diluted share was $0.93, compared to $0.75 for fiscal 2024.
Cash Flow: Net cash flow from operating activities was $603.1 million, compared to $380.4 million for fiscal 2024. Free cash flow was $260.6 million, or 12.0% of total revenue, compared to $166.9 million, or 10.0% of total revenue, for fiscal 2024.
The section titled "Non-GAAP Financial Information" below describes our usage of non-GAAP financial measures. Reconciliations between historical GAAP and non-GAAP information are contained at the end of this press release following the accompanying financial data.
Financial Outlook
For the first quarter of 2026, we expect:
Total revenue of $620.0 to $621.0 million
Non-GAAP income from operations of $70.0 to $71.0 million
Non-GAAP net income per share of $0.23, utilizing weighted average common shares outstanding of approximately 377 million
For the full year 2026, we expect:
Total revenue of $2,785.0 to $2,795.0 million
Non-GAAP income from operations of $378.0 to $382.0 million
Non-GAAP net income per share of $1.11 to $1.12, utilizing weighted average common shares outstanding of approximately 377 million
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Conference Call Information
Cloudflare will host an investor conference call to discuss its fourth quarter and fiscal year ended December 31, 2025 earnings results today at 2:00 p.m. Pacific time (5:00 p.m. Eastern time). Interested parties can access the call by dialing (646) 968-2727 or toll-free at (888) 596-4244 with conference ID 3723782. A live webcast of the conference call will be accessible from the investor relations website at https://cloudflare.NET. A replay will be available approximately two hours after the conclusion of the live event and will remain available for approximately one year.
Supplemental Financial and Other Information
Supplemental financial and other information can be accessed through the Company’s investor relations website at https://cloudflare.NET.
Non-GAAP Financial Information
Cloudflare believes that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations. Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future. For further information regarding why Cloudflare believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the “Explanation of Non-GAAP Financial Measures” section at the end of this press release.
Available Information
Cloudflare intends to use its press releases, website, investor relations website, news site, blog, X account, Facebook account, and Instagram account, in addition to filings made with the Securities and Exchange Commission (SEC) and public conference calls, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “explore,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these words, or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. However, not all forward-looking statements contain these identifying words. Forward-looking statements expressed or implied in this press release include, but are not limited to, statements regarding our future financial and operating performance, our reputation and performance in the market, general market trends, our estimated and projected revenue, non-GAAP income from operations and non-GAAP net income per share, shares outstanding, the benefits to customers from using our products, the expected functionality and performance of our products, the demand by customers for our products, our plans and objectives for future operations, growth, initiatives, or strategies, our market opportunity, and comments made by our CEO and others. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: the impact of adverse macroeconomic conditions on our and our customers’, vendors’, and partners’ operations and future financial performance; the impact of conflicts and geopolitical tension around the world, or any worsening or expansion of those conflicts or tensions, as well as other geopolitical events such as elections and other governmental changes, threats of tariffs and other impediments to cross-border trade; our history of net losses; risks associated with managing our growth; our ability to attract and retain new customers (including new large customers); our ability to retain and upgrade paying customers and convert free customers to paying customers; our ability to expand the number of products we sell to paying customers; our ability to effectively increase sales to large customers; our ability to increase brand awareness; our ability to continue to innovate and develop new products and product features; our ability to generate demand for our products; our ability to effectively attract, train, and retain our sales force to be able to sell our existing and new products and product features; our sales team’s productivity; our ability to effectively attract, integrate and retain key personnel; problems with our internal systems, network, or data, including actual or perceived breaches or failures; rapidly evolving technological developments in the market, including advancements in AI; length of our sales cycles and the timing of payments by our customers; activities of our paying and free customers or the content of their websites and other Internet properties that use our network and products; foreign currency fluctuations; changes in the legal, tax, and regulatory environment applicable to our business; and other general market, political, economic, and business conditions. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in our filings with the SEC, including our Quarterly Report on Form 10-Q filed on October 30, 2025, as well as other filings that we may make from time to time with the SEC.
The forward-looking statements made in this press release relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
About Cloudflare
Cloudflare, Inc. (NYSE: NET) is the leading connectivity cloud company on a mission to help build a better Internet. It empowers organizations to make their employees, applications and networks faster and more secure everywhere, while reducing complexity and cost. Cloudflare’s connectivity cloud delivers the most full-featured, unified platform of cloud-native products and developer tools, so any organization can gain the control they need to work, develop, and accelerate their business.
Powered by one of the world’s largest and most interconnected networks, Cloudflare blocks billions of threats online for its customers every day. It is trusted by millions of organizations – from the largest brands to entrepreneurs and small businesses to nonprofits, humanitarian groups, and governments across the globe.
Learn more about Cloudflare’s connectivity cloud at cloudflare.com/connectivity-cloud. Learn more about the latest Internet trends and insights at radar.cloudflare.com.
CLOUDFLARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2025
2024
2025
2024
Revenue
$
614,507
$
459,946
$
2,167,937
$
1,669,626
Cost of revenue(1)(2)
161,956
108,686
552,525
378,702
Gross profit
452,551
351,260
1,615,412
1,290,924
Operating expenses:
Sales and marketing(1)(2)(4)
251,138
191,967
920,817
745,791
Research and development(1)
141,887
120,213
512,489
421,374
General and administrative(1)(3)(6)(7)
108,760
73,799
389,311
278,520
Total operating expenses
501,785
385,979
1,822,617
1,445,685
Loss from operations
(49,234
)
(34,719
)
(207,205
)
(154,761
)
Non-operating income (expense):
Interest income
41,885
21,988
131,219
87,426
Interest expense(5)
(2,887
)
(1,445
)
(8,766
)
(5,196
)
Other income (expense), net
(272
)
3,333
(7,954
)
1,660
Total non-operating income, net
38,726
23,876
114,499
83,890
Loss before income taxes
(10,508
)
(10,843
)
(92,706
)
(70,871
)
Provision for income taxes
1,569
2,005
9,561
7,929
Net loss
$
(12,077
)
$
(12,848
)
$
(102,267
)
$
(78,800
)
Net loss per share attributable to common stockholders, basic and diluted
$
(0.03
)
$
(0.04
)
$
(0.29
)
$
(0.23
)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
351,087
344,003
348,421
341,411
(1) Includes stock-based compensation and related employer payroll taxes as follows:
Cost of revenue
$
3,975
$
2,821
$
14,605
$
11,597
Sales and marketing
36,038
24,682
137,848
95,763
Research and development
46,947
45,391
174,622
151,936
General and administrative
45,391
25,528
162,863
97,127
Total stock-based compensation and related employer payroll taxes
$
132,351
$
98,422
$
489,938
$
356,423
(2) Includes amortization of acquired intangible assets as follows:
Cost of revenue
$
3,653
$
2,720
$
13,172
$
11,084
Sales and marketing
659
362
1,826
1,663
Total amortization of acquired intangible assets
$
4,312
$
3,082
$
14,998
$
12,747
(3) Includes acquisition-related and other expenses as follows:
General and administrative
$
3,797
$
462
$
3,909
$
702
Total acquisition-related and other expenses
$
3,797
$
462
$
3,909
$
702
(4) Includes one-time compensation charge as follows:
Sales and marketing
$
—
$
—
$
—
$
15,000
Total one-time compensation charge
$
—
$
—
$
—
$
15,000
(5) Includes amortization of debt issuance costs as follows:
Interest expense
$
2,440
$
989
$
7,070
$
3,959
Total amortization of debt issuance costs
$
2,440
$
989
$
7,070
$
3,959
(6) Includes lease impairment charges as follows:
General and administrative
$
1,257
$
—
$
5,097
$
—
Total lease impairment charges
$
1,257
$
—
$
5,097
$
—
(7) Includes legal reserve and settlements as follows:
General and administrative
$
(2,886
)
$
—
$
(2,886
)
$
—
Total legal reserve and settlements
$
(2,886
)
$
—
$
(2,886
)
$
—
CLOUDFLARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(unaudited)
December 31,
2025
December 31,
2024
Assets
Current assets:
Cash and cash equivalents
$
943,536
$
147,691
Available-for-sale securities
3,157,715
1,708,228
Accounts receivable, net
382,488
316,753
Contract assets
23,531
16,568
Restricted cash short-term
9,364
4,273
Prepaid expenses and other current assets
128,203
75,484
Total current assets
4,644,837
2,268,997
Property and equipment, net
618,691
467,420
Goodwill
226,563
181,087
Acquired intangible assets, net
41,799
21,865
Operating lease right-of-use assets
237,646
168,379
Deferred contract acquisition costs, noncurrent
219,499
172,217
Restricted cash
1,457
2,250
Other noncurrent assets
45,764
18,947
Total assets
$
6,036,256
$
3,301,162
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
84,115
$
105,807
Accrued expenses and other current liabilities
109,054
81,602
Accrued compensation
111,005
80,854
Operating lease liabilities
70,901
47,626
Deferred revenue
684,207
477,765
Current portion of convertible senior notes, net
1,291,281
—
Total current liabilities
2,350,563
793,654
Convertible senior notes, net
1,974,120
1,287,321
Operating lease liabilities, noncurrent
182,025
128,266
Deferred revenue, noncurrent
41,088
22,095
Other noncurrent liabilities
29,337
23,625
Total liabilities
4,577,133
2,254,961
Stockholders’ Equity
Class A common stock; $0.001 par value; 2,250,000 shares authorized as of December 31, 2025 and 2024; 317,319 and 307,892 shares issued and outstanding as of December 31, 2025 and 2024, respectively
317
307
Class B common stock; $0.001 par value; 315,000 shares authorized as of December 31, 2025 and 2024; 34,568 and 36,963 shares issued and outstanding as of December 31, 2025 and 2024, respectively
34
37
Additional paid-in capital
2,651,420
2,152,750
Accumulated deficit
(1,204,907
)
(1,102,640
)
Accumulated other comprehensive income (loss)
12,259
(4,253
)
Total stockholders’ equity
1,459,123
1,046,201
Total liabilities and stockholders’ equity
$
6,036,256
$
3,301,162
CLOUDFLARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Year Ended December 31,
2025
2024
Cash Flows from Operating Activities
Net loss
$
(102,267
)
$
(78,800
)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization expense
189,742
127,722
Non-cash operating lease costs
66,427
49,476
Amortization of deferred contract acquisition costs
101,623
77,822
Stock-based compensation expense
451,454
338,461
Amortization of debt issuance costs
7,070
3,959
Net accretion of discounts and amortization of premiums on available-for-sale securities
(29,897
)
(42,081
)
Deferred income taxes
1,333
2,111
Provision for bad debt
14,989
10,038
Other
(38
)
643
Changes in operating assets and liabilities, net of effect of asset acquisitions and business combinations:
Accounts receivable, net
(80,595
)
(78,523
)
Contract assets
(4,507
)
(5,527
)
Deferred contract acquisition costs
(148,905
)
(116,803
)
Prepaid expenses and other current assets
(79,995
)
(38,227
)
Other noncurrent assets
6,792
2,170
Accounts payable
8,864
18,626
Accrued expenses and other current liabilities
15,422
9,900
Accrued compensation
26,675
18,742
Operating lease liabilities
(63,757
)
(55,248
)
Deferred revenue
223,815
135,008
Other noncurrent liabilities
(1,131
)
960
Net cash provided by operating activities
603,114
380,429
Cash Flows from Investing Activities
Purchases of property and equipment
(315,617
)
(185,037
)
Capitalized internal-use software
(26,935
)
(28,477
)
Asset acquisitions and business combinations, net of cash acquired
(50,884
)
(37,991
)
Purchases of available-for-sale securities
(3,537,085
)
(1,572,113
)
Maturities of available-for-sale securities
2,121,993
1,493,356
Other investing activities
1,828
38
Net cash used in investing activities
(1,806,700
)
(330,224
)
Cash Flows from Financing Activities
Proceeds from settlement of the 2025 Capped Calls
309,616
—
Gross proceeds from issuance of 2030 convertible senior notes
2,000,000
—
Purchases of capped calls related to the 2030 convertible senior notes
(283,400
)
—
Cash paid for issuance costs on 2030 convertible senior notes
(29,004
)
—
Cash paid for issuance costs on revolving credit facility
—
(2,148
)
Proceeds from the exercise of stock options
33,123
12,905
Proceeds from the early exercise of stock options
—
6
Proceeds from the issuance of common stock for employee stock purchase plan
25,435
19,796
Payment of tax withholding obligation on RSU and PSU settlement
(48,254
)
(16,774
)
Payment of indemnity holdback
(3,787
)
(1,000
)
Net cash provided by financing activities
2,003,729
12,785
Net increase in cash, cash equivalents, and restricted cash
800,143
62,990
Cash, cash equivalents, and restricted cash, beginning of period
154,214
91,224
Cash, cash equivalents, and restricted cash, end of period
$
954,357
$
154,214
CLOUDFLARE, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2025
2024
2025
2024
Reconciliation of cost of revenue:
GAAP cost of revenue
$
161,956
$
108,686
$
552,525
$
378,702
Less: Stock-based compensation and related employer payroll taxes
(3,975
)
(2,821
)
(14,605
)
(11,597
)
Less: Amortization of acquired intangible assets
(3,653
)
(2,720
)
(13,172
)
(11,084
)
Non-GAAP cost of revenue
$
154,328
$
103,145
$
524,748
$
356,021
Reconciliation of gross profit:
GAAP gross profit
$
452,551
$
351,260
$
1,615,412
$
1,290,924
Add: Stock-based compensation and related employer payroll taxes
3,975
2,821
14,605
11,597
Add: Amortization of acquired intangible assets
3,653
2,720
13,172
11,084
Non-GAAP gross profit
$
460,179
$
356,801
$
1,643,189
$
1,313,605
GAAP gross margin
73.6
%
76.4
%
74.5
%
77.3
%
Non-GAAP gross margin
74.9
%
77.6
%
75.8
%
78.7
%
Reconciliation of operating expenses:
GAAP sales and marketing
$
251,138
$
191,967
$
920,817
$
745,791
Less: Stock-based compensation and related employer payroll taxes
(36,038
)
(24,682
)
(137,848
)
(95,763
)
Less: Amortization of acquired intangible assets
(659
)
(362
)
(1,826
)
(1,663
)
Less: One-time compensation charge
—
—
—
(15,000
)
Non-GAAP sales and marketing
$
214,441
$
166,923
$
781,143
$
633,365
GAAP research and development
$
141,887
$
120,213
$
512,489
$
421,374
Less: Stock-based compensation and related employer payroll taxes
(46,947
)
(45,391
)
(174,622
)
(151,936
)
Non-GAAP research and development
$
94,940
$
74,822
$
337,867
$
269,438
GAAP general and administrative
$
108,760
$
73,799
$
389,311
$
278,520
Less: Stock-based compensation and related employer payroll taxes
(45,391
)
(25,528
)
(162,863
)
(97,127
)
Less: Acquisition-related and other expenses
(3,797
)
(462
)
(3,909
)
(702
)
Less: Lease impairment charges
(1,257
)
—
(5,097
)
—
Less: Legal reserve and settlements
2,886
—
2,886
—
Non-GAAP general and administrative
$
61,201
$
47,809
$
220,328
$
180,691
Reconciliation of income (loss) from operations:
GAAP loss from operations
$
(49,234
)
$
(34,719
)
$
(207,205
)
$
(154,761
)
Add: Stock-based compensation and related employer payroll taxes
132,351
98,422
489,938
356,423
Add: Amortization of acquired intangible assets
4,312
3,082
14,998
12,747
Add: Acquisition-related and other expenses
3,797
462
3,909
702
Add: One-time compensation charge
—
—
—
15,000
Add: Lease asset impairment expense
1,257
—
5,097
—
Add: Legal reserve and settlements
(2,886
)
—
(2,886
)
—
Non-GAAP income from operations
$
89,597
$
67,247
$
303,851
$
230,111
GAAP operating margin
(8.0
)%
(7.5
)%
(9.6
)%
(9.3
)%
Non-GAAP operating margin
14.6
%
14.6
%
14.0
%
13.8
%
CLOUDFLARE, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2025
2024
2025
2024
Reconciliation of interest expense:
GAAP interest expense
$
(2,887
)
$
(1,445
)
$
(8,766
)
$
(5,196
)
Add: Amortization of debt issuance costs
2,440
989
7,070
3,959
Non-GAAP interest expense
$
(447
)
$
(456
)
$
(1,696
)
$
(1,237
)
Reconciliation of provision for income taxes:
GAAP provision for income taxes
$
1,569
$
2,005
$
9,561
$
7,929
Income tax effect of non-GAAP adjustments
22,411
21,300
72,977
41,018
Non-GAAP provision for income taxes
$
23,980
$
23,305
$
82,538
$
48,947
Reconciliation of net income (loss) and net income (loss) per share:
GAAP net loss attributable to common stockholders
$
(12,077
)
$
(12,848
)
$
(102,267
)
$
(78,800
)
Add: Stock-based compensation and related employer payroll taxes
132,351
98,422
489,938
356,423
Add: Amortization of acquired intangible assets
4,312
3,082
14,998
12,747
Add: Acquisition-related and other expenses
3,797
462
3,909
702
Add: One-time compensation charge
—
—
—
15,000
Add: Amortization of debt issuance costs
2,440
989
7,070
3,959
Add: Lease impairment charges
1,257
—
5,097
—
Add: Legal reserve and settlements
(2,886
)
—
(2,886
)
—
Income tax effect of non-GAAP adjustments
(22,411
)
(21,300
)
(72,977
)
(41,018
)
Non-GAAP net income
$
106,783
$
68,807
$
342,882
$
269,013
GAAP net loss per share, basic
$
(0.03
)
$
(0.04
)
$
(0.29
)
$
(0.23
)
GAAP net loss per share, diluted
$
(0.03
)
$
(0.04
)
$
(0.29
)
$
(0.23
)
Add: Stock-based compensation and related employer payroll taxes
0.38
0.29
1.41
1.04
Add: Amortization of acquired intangible assets
0.01
0.01
0.04
0.04
Add: Acquisition-related and other expenses
0.01
—
0.01
—
Add: One-time compensation charge
—
—
—
0.04
Add: Amortization of debt issuance costs
0.01
—
0.02
0.01
Add: Lease impairment charges
—
—
0.01
—
Add: Legal reserve and settlements
(0.01
)
—
(0.01
)
—
Income tax effect of non-GAAP adjustments
(0.06
)
(0.06
)
(0.21
)
(0.12
)
Effect of dilutive shares
(0.03
)
(0.01
)
(0.05
)
(0.03
)
Non-GAAP net income per share, diluted(1)
$
0.28
$
0.19
$
0.93
$
0.75
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic
351,087
344,003
348,421
341,411
Weighted-average shares used in computing non-GAAP net income per share attributable to common stockholders, diluted
375,478
359,255
370,274
357,686
(1)
Totals may not sum due to rounding. Figures are calculated based upon the respective underlying non-rounded data.
CLOUDFLARE, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2025
2024
2025
2024
Free cash flow
Net cash provided by operating activities
$
190,411
$
127,308
$
603,114
$
380,429
Less: Purchases of property and equipment
(85,190
)
(73,153
)
(315,617
)
(185,037
)
Less: Capitalized internal-use software
(5,777
)
(6,401
)
(26,935
)
(28,477
)
Free cash flow
$
99,444
$
47,754
$
260,562
$
166,915
Net cash used in investing activities
$
(291,719
)
$
(167,032
)
$
(1,806,700
)
$
(330,224
)
Net cash provided by (used in) financing activities
$
(3,827
)
$
8,032
$
2,003,729
$
12,785
Net cash provided by operating activities (percentage of revenue)
31
%
28
%
28
%
23
%
Less: Purchases of property and equipment (percentage of revenue)
(14
)%
(16
)%
(15
)%
(11
)%
Less: Capitalized internal-use software (percentage of revenue)
(1
)%
(2
)%
(1
)%
(2
)%
Free cash flow margin(1)
16
%
10
%
12
%
10
%
(1)
Totals may not sum due to rounding. Figures are calculated based upon the respective underlying non-rounded data.
Explanation of Non-GAAP Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in the United States (U.S. GAAP), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In particular, free cash flow is not a substitute for cash provided by operating activities. Additionally, the utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for a given period. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP 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. A reconciliation is provided above for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
Items Excluded from Non-GAAP Measures. We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. We exclude employer payroll tax expenses related to stock-based compensation, which is a cash expense, from certain of our non-GAAP financial measures because such expenses are dependent on the price of our Class A common stock and other factors that are beyond our control and do not correlate to the operation of our business. We exclude amortization of acquired intangible assets, which is a non-cash expense, related to business combinations from certain of our non-GAAP financial measures because such expenses are related to business combinations and have no direct correlation to the operation of our business. We exclude acquisition-related and other expenses from certain of our non-GAAP financial measures because such expenses are related to business combinations and have no direct correlation to the operation of our business. Acquisition-related and other expenses can be cash or non-cash expenses and include third-party transaction costs and compensation expense for key acquired personnel. We exclude lease impairment charges related to real estate leases, which is a non-cash expense, from certain of our non-GAAP financial measures because they are not indicative of the Company’s ongoing cost structure and core business performance. We exclude amortization of debt issuance costs, which is a non-cash expense, from certain of our non-GAAP financial measures because such expenses have no direct correlation to the operation of our business. We exclude legal reserve and settlements, which can be cash or non-cash expenses, from certain of our non-GAAP financial measures because they are not indicative of the Company’s ongoing cost structure and core business performance. We also excluded the one-time cash compensation charge incurred during the three months ended March 31, 2024 from certain of our non-GAAP financial measures because it was not attributable to services provided and did not correlate to the ongoing operation of our business.
Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define non-GAAP gross profit and non-GAAP gross margin as U.S. GAAP gross profit and U.S. GAAP gross margin, respectively, excluding stock-based compensation and related employer payroll taxes and amortization of acquired intangible assets.
Non-GAAP Income from Operations and Non-GAAP Operating Margin. We define non-GAAP income from operations and non-GAAP operating margin as U.S. GAAP loss from operations and U.S. GAAP operating margin, respectively, excluding stock-based compensation expense and its related employer payroll taxes, amortization of acquired intangible assets, acquisition-related and other expenses, lease impairment charges, and legal reserve and settlements.
Non-GAAP Net Income and Non-GAAP Net Income per Share, Diluted. We define non-GAAP net income as GAAP net loss adjusted for stock-based compensation expense and its related employer payroll taxes, amortization of acquired intangible assets, acquisition-related and other expenses, amortization of issuance costs, lease impairment charges, legal reserve and settlements, and a non-GAAP provision for (benefit from) income taxes. Generally, the difference between our GAAP and non-GAAP income tax expense (benefit) is primarily due to adjustments in stock-based compensation and related employer payroll taxes, amortization of acquired intangibles associated with business combinations, acquisition-related and other expenses, amortization of issuance costs, lease impairment charges, and legal reserve and settlements. We define non-GAAP net income per share, diluted, as non-GAAP net income divided by the weighted-average common shares outstanding, adjusted for dilutive potential shares that were assumed outstanding during period. Currently, potential dilutive effect mainly consists of employee equity incentive plans and convertible senior notes. We believe that excluding these items from non-GAAP net income per share, diluted, provides management and investors with greater visibility into the underlying performance of our core business operating results.
Free Cash Flow and Free Cash Flow Margin. Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used for purchases of property and equipment and capitalized internal-use software. Free cash flow margin is calculated as free cash flow divided by revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our operations that, after the investments in property and equipment and capitalized internal-use software, can be used for strategic initiatives, including investing in our business, and strengthening our financial position. We believe that historical and future trends in free cash flow and free cash flow margin, even if negative, provide useful information about the amount of cash generated by our operating activities that is available (or not available) to be used for strategic initiatives. For example, if free cash flow is negative, we may need to access cash reserves or other sources of capital to invest in strategic initiatives. One limitation of free cash flow and free cash flow margin is that they do not reflect our future contractual commitments. Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260210624682/en/
Investor Relations Information
Phil Winslow
ir@cloudflare.com
Press Contact Information
Daniella Vallurupalli
press@cloudflare.com
Original: Cloudflare Announces Fourth Quarter and Fiscal Year 2025 Financial Results
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