Cloudflare, Inc. reported a revenue of $479.1 million for the first quarter of 2025, marking a 27% increase from $378.6 million in the same period of 2024. The company experienced a net loss of $38.5 million, slightly higher than the $35.5 million loss reported a year earlier. The increase in revenue was attributed to a 27% rise in the number of paying customers, which reached 250,819, and a dollar-based net retention rate of 111%. Despite the growth in revenue, the gross margin decreased to 76% from 78% due to a 36% increase in the cost of revenue, which rose to $115.6 million, driven by higher expenses related to network operations and third-party technology services.
In terms of operational developments, Cloudflare's employee headcount grew to 4,400 as of March 31, 2025, up from 3,704 a year prior. The company also made strategic investments in research and development, with expenses increasing by 31% to $115.1 million, reflecting a focus on enhancing product offerings and expanding its global network. Additionally, Cloudflare completed the acquisition of Kivera, a cloud security and data protection company, for $28 million in October 2024, which is expected to bolster its product capabilities.
Geographically, the United States accounted for 49% of total revenue, while international markets represented 51%, indicating a balanced revenue stream. The company continues to expand its presence in over 125 countries, which is crucial for its growth strategy. Cloudflare's commitment to innovation is evident in its ongoing development of new products, including those related to artificial intelligence, which are designed to meet the evolving needs of its customer base.
Looking ahead, Cloudflare anticipates continued revenue growth, although it acknowledges potential challenges from macroeconomic conditions, including inflation and geopolitical tensions. The company remains focused on attracting new paying customers and retaining existing ones, particularly large enterprises, to sustain its growth trajectory. Cloudflare's management expressed confidence in its ability to navigate these challenges while maintaining a strong operational foundation and investing in future growth initiatives.
About Cloudflare, Inc.
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