Cloudflare, Inc.

Note 1. Organization and Basis of Presentation

Organization and Description of Business

Cloudflare, Inc. (the Company, Cloudflare, we, us, or our) is a global cloud services provider that delivers a broad range of services to businesses of all sizes and in all geographies, making them more secure, enhancing the performance of their business-critical applications, and eliminating the cost and complexity of managing individual network hardware. Cloudflare’s network serves as a scalable, easy-to-use, unified control plane to deliver security, performance, and reliability across on-premises, hybrid, cloud, and software-as-a-service (SaaS) applications. The Company was incorporated in Delaware in July 2009. The Company is headquartered in San Francisco, California.

Basis of Presentation and Principles of Consolidation

The accompanying interim condensed consolidated financial statements and accompanying notes have been prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP) and applicable regulations of the Securities and Exchange Commission (the SEC) regarding interim financial reporting, and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company’s fiscal year ends on December 31.

Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable required disclosures and regulations of the SEC. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Unaudited Interim Condensed Consolidated Financial Information

The accompanying interim condensed consolidated balance sheet as of September 30, 2025, the condensed consolidated statements of operations and of comprehensive income (loss) for the three and nine months ended September 30, 2025 and 2024, the condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2025 and 2024, and the related footnote disclosures are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. In management’s opinion, the unaudited interim condensed consolidated financial statements include all adjustments necessary to state fairly the Company’s financial position as of September 30, 2025, its results of operations for the three and nine months ended September 30, 2025 and 2024, and its cash flows for the nine months ended September 30, 2025 and 2024. The results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results expected for the full year ending December 31, 2025 or any future period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company's Annual Report on Form 10-Kfor the fiscal year ended December 31, 2024.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes to the condensed consolidated financial statements. Such estimates include, but are not limited to, allowance for doubtful accounts, deferred contract acquisitions costs, the period of benefit generated from the Company’s deferred contract acquisition costs, the capitalization and estimated useful life of internal-use software, valuation of acquired intangible assets, the assessment of recoverability of intangible assets and their estimated useful lives, useful lives of property and equipment, the determination of the incremental borrowing rate used for operating lease liabilities, the valuation and recognition of stock-based compensation awards, the assessment of uncertain tax positions, and the recognition and measurement of current and deferred income tax assets and liabilities. Management bases these estimates and assumptions on historical experience and on various other assumptions that are believed to be reasonable. Due in part to the conflicts in the Middle East and Ukraine, the potential worsening and expansion of such conflicts, and other macroeconomic and geopolitical conditions, there is ongoing uncertainty and significant disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or assumptions or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates and assumptions may change in the future, however, as new events occur and additional information is obtained. Actual results could differ materially from these estimates.

Note 2. Summary of Significant Accounting Policies

Significant Accounting Policies

The Company's significant accounting policies are discussed in the "Notes to Consolidated Financial Statements, Note 2. Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no changes to these policies that have had a material impact on the Company's condensed consolidated financial statements and related notes, except as noted below.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

There have been no recently adopted accounting pronouncements since the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 that may have a material impact on the Company's condensed consolidated financial statements.

Note 3. Revenue

Disaggregation of Revenue

Subscription and support revenue is recognized over time and accounted for substantially all of the Company’s revenue for the three and nine months ended September 30, 2025 and 2024.

The following table summarizes the revenue by region based on the billing address of customers who have contracted to use the Company’s global network and products:

The following table summarizes the revenue from contracts by type of customer:

Contract Balances

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period. For the nine months ended September 30, 2025, the Company recognized revenue of $433.5 million, that was included in the corresponding contract liability balance at the beginning of the period presented.

The Company receives payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Standard payment terms are due upon receipt. Contract assets include amounts related to the Company’s contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced.

The following table summarizes the activity of the deferred contract acquisition costs:

The Company didnot recognize any impairment losses of deferred contract acquisition costs during the periods presented.

Remaining Performance Obligations

As of September 30, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $2,143.1 million. As of September 30, 2025, the Company expected to recognize 64% of its remaining performance obligations as revenue over the next 12 months with the remainder recognized thereafter.

Note 4. Fair Value Measurements

Fair value is defined as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Assets and liabilities measured at fair value are classified into the following categories:

•Level I: Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•Level II: Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and

•Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on the Company’s own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

The Company classifies money market funds within Level I of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its time deposits and investments, which are comprised of U.S. treasury securities, U.S. government agency securities, commercial paper, and corporate bonds, within Level II of the fair value hierarchy because the fair value of these securities is priced by using inputs based on non-binding market consensus prices that are primarily corroborated by observable market data or quoted market prices for similar instruments. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each period. There were no transfers between levels during the periods presented.

The following table summarizes the Company’s cash, cash equivalents and available-for-sale securities’ amortized cost, unrealized gains (losses), and fair value by significant investment category reported as cash and cash equivalents, restricted cash short-term, restricted cash, or available-for-sale securities as of September 30, 2025 and December 31, 2024.

As of September 30, 2025, the Company had $6.8 million in total restricted cash mainly related to indemnity holdback consideration associated with asset acquisitions and business combinations.

The aggregate fair value of the Company’s money market funds and time deposits approximated amortized cost and, as such, there wereno unrealized gains or losses on money market funds and time deposits as of September 30, 2025 and December 31, 2024. Realized gains and losses, net of tax, were not material for any of the periods presented.

The amortized cost of available-for-sale investments with maturities less than one year was $1,886.6 million and $1,139.9 million as of September 30, 2025 and December 31, 2024, respectively. The amortized cost of available-for-sale investments with maturities greater than one year was $1,098.2 million and $565.8 million as of September 30, 2025 and December 31, 2024, respectively.

Net unrealized gain on investments was $6.0 million and $2.6 million as of September 30, 2025 and December 31, 2024, respectively and was included in accumulated other comprehensive income on the condensed consolidated balance sheet. The unrealized gains and losses on available-for-sale investments are related to U.S. treasury securities, U.S. government agency securities, commercial paper, and corporate bonds. The Company determined any unrealized losses to be temporary. Factors considered in determining whether a loss is temporary include the financial condition and near-term prospects of the investee, the extent of the loss related to the credit of the issuer, the expected cash flows from the security, the Company’s intent to sell the security, and whether or not the Company will be required to sell the security before the recovery of its amortized cost. As of September 30, 2025, the Company's investment portfolio consisted of investment grade securities with an average credit rating of AA.

The Company carries the Notes (as defined below) issued in August 2021 and June 2025 at face value less the unamortized issuance costs on its condensed consolidated balance sheets and presents that fair value for disclosure purposes only. As of September 30, 2025, the fair value of the 2026 Notes and 2030 Notes (each as defined below) were $1,588.1 million and $2,276.8 million, respectively. The fair value of the Notes, which are classified as Level II financial instruments, were determined based on the quoted bid prices of the Notes in an over-the-counter market on the last trading day of the reporting period. For further details on the Notes, refer to Note 7 to these condensed consolidated financial statements.

The Company classifies financial instruments in Level III of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to these unobservable inputs, the valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable, either directly or indirectly. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. There were no financial instruments classified as Level III of the fair value hierarchy as of September 30, 2025 and December 31, 2024.

Note 5. Balance Sheet Components

Accounts Receivable, Net

As of September 30, 2025 and December 31, 2024, the Company’s allowance for doubtful accounts was $8.0 million and $8.2 million, respectively. Provision for bad debt for the three months ended September 30, 2025 and 2024 was $5.0 million and $2.6 million, respectively, and for the nine months ended September 30, 2025 and 2024 was $12.8 million and $6.7 million, respectively. Write-offs of uncollectible accounts receivable for the three months ended September 30, 2025 and 2024 was $4.3 million and $2.6 million, respectively, and for the nine months ended September 30, 2025 and 2024 was $13.0 million and $5.0 million, respectively.

Property and Equipment, Net

Property and equipment, net consisted of the following:

Depreciation and amortization expense on property and equipment for the three months ended September 30, 2025 and 2024 was $43.7 million and $27.9 million, respectively, and for the nine months ended September 30, 2025 and 2024 was$120.9 million and$78.3 million, respectively. This includes amortization expense for capitalized internal-use software which totaled $7.9 million and $6.3 million for the three months ended September 30, 2025 and 2024, respectively, and$23.1 million and$17.7 millionfor the nine months ended September 30, 2025 and 2024, respectively.

Goodwill

As of September 30, 2025 and December 31, 2024, the Company's goodwill was $181.1 million. No goodwill impairments were recorded during the nine months ended September 30, 2025 and 2024.

Acquired Intangible Assets, Net

Acquired intangible assets, net consisted of the following:

Amortization of acquired intangible assets was $3.7 million and $2.4 million for the three months ended September 30, 2025 and 2024, respectively, and $10.7 million and $9.7 million for the nine months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, the estimated future amortization expense of acquired intangible assets was as follows:

Note 6. Leases

The Company's lease portfolio consists of real estate and co-location agreements in the United States and internationally. The real estate leases include leases for office space and have remaining lease terms of up to 9.0 years. Certain of these leases contain options that allow the Company to extend or terminate the lease agreement. The Company's co-location leases have remaining lease terms of up to 10.1 years. All of the Company's leases are classified as operating leases.

The components of lease cost related to the Company's operating leases included in the condensed consolidated statements of operations were as follows:

Variable lease cost, short-term lease cost, and sublease income for the three and nine months ended September 30, 2025 and September 30, 2024 were not material.

As of September 30, 2025, the Company had $75.0 million of total undiscounted future payments under operating leases that have not yet commenced, which were not included on the condensed consolidated balance sheets. These operating leases will commence between October 2025 and February 2027 and have an average lease term of 4.4 years.

As of September 30, 2025, the weighted-average remaining term of the Company’s operating leases was 4.8 years and the weighted-average discount rate used to measure the present value of the operating lease liabilities was 4.8%.

Maturities of the operating lease liabilities as of September 30, 2025 are as follows:

Note 7. Financing Arrangements

2030 Convertible Senior Notes

In June 2025, the Company issued $2,000.0 million aggregate principal amount of 0% Convertible Senior Notes due 2030 (the 2030 Notes). The total proceeds from the issuance of the 2030 Notes, net of initial purchaser discounts and commissions and debt issuance costs, were $1,971.0 million.

The 2030 Notes are senior unsecured obligations of the Company and will mature on June 15, 2030, unless earlier redeemed, repurchased, or converted, and are governed by the terms of the Indenture dated June 17, 2025 (the 2030 Indenture). The 2030 Notes do not bear regular cash interest.

The 2030 Notes are convertible at an initial conversion rate of 4.0376 shares of the Company's Class A common stock per $1,000 principal amount of the 2030 Notes, which is equivalent to an initial conversion price of approximately$247.67 per share, subject to adjustment upon the occurrence of specified events in accordance with the terms of the 2030 Indenture. The 2030 Notes may be converted at any time on or after March 15, 2030 until the close of business on the second scheduled trading day immediately preceding the maturity date.

Holders of the 2030 Notes may convert all or any portion of their 2030 Notes at their option at any time prior to the close of business on the business day immediately preceding March 15, 2030, only under the following circumstances:

(1)during any calendar quarter commencing after the calendar quarter ending September 30, 2025 (and only during such calendar quarter), if the last reported sale price of the Company's Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(2) during thefive business day period after anyfive consecutive trading day period in which the trading price per $1,000 principal amount of the 2030 Notes for each trading day of such measurement period was less than 98% of the product of the last repo rted sale price of the Company's Class A common stock and the conversion rate on each such trading day;

(3) if the Company calls such 2030 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

(4) upon the occurrence of specified corporate events.

None of the circumstances described in the paragraphs above were met during the quarter ended September 30, 2025.

In addition, if the 2030 Notes are converted prior to the maturity date following certain specified corporate events or because the Company issues a notice of redemption, the Company will increase the conversion rate for such 2030 Notes converted in connection with such a corporate event or during the related redemption period, as the case may be, in certain circumstances set forth in the 2030 Indenture.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company's Class A common stock, or a combination of cash and shares of the Company's Class A common stock, at the Company's election. It is the Company’s current intent to settle the principal amount of 2030 Notes in cash.

The Company may redeem for cash all or any portion of the 2030 Notes (subject to the partial redemption limitation (as defined below)), at its option, if the last reported sale price of the Company’s Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus any accrued and unpaid special interest to, but excluding, the redemption date. If the Company elects to redeem fewer than all of the outstanding 2030 Notes, at least $100.0 million aggregate principal amount of 2030 Notes must be outstanding and not subject to redemption as of the relevant redemption date. No sinking fund is provided for the 2030 Notes.

If the Company undergoes a fundamental change (as defined in the 2030 Indenture), holders of the 2030 Notes may require the Company to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid special interest to, but excluding, the fundamental change repurchase date.

2030 Capped Call Transactions

In connection with the offering of the 2030 Notes, the Company entered into privately-negotiated capped call option transactions (the 2030 Capped Calls) with certain financial institution counterparties. The 2030 Capped Calls each have an initial strike price of approximately$247.67 per share of the Company's Class A common stock, subject to certain adjustments, which corresponds to the initial conversion price of the 2030 Notes. The 2030 Capped Calls each have an initial cap price of approximately $469.73 per share, subject to certain adjustments. The 2030 Capped Calls initially cover, subject to anti-dilution adjustments, approximately 8.1 million shares of the Company's Class A common stock. The 2030 Capped Calls are intended to generally offset potential dilution to the Company's Class A common stock upon conversion of the 2030 Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount upon any conversion, subject to the cap price. The 2030 Capped Calls are subject to either adjustment or termination upon the occurrence of certain specified events affecting the Company, including a merger event, a tender offer, a nationalization, insolvency, or delisting involving the Company. The 2030 Capped Calls expire in incremental components on each trading date between May 16, 2030 and June 13, 2030. As of September 30, 2025, the terms of the 2030 Capped Calls have not been adjusted.

The 2030 Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. The premium paid for the purchase of the 2030 Capped Calls of $283.4 million was recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets.

2026 Convertible Senior Notes

In August 2021, the Company issued $1,293.8 million aggregate principal amount of 0% Convertible Senior Notes due 2026 (the 2026 Notes, and together with the 2030 Notes, the Notes). The total proceeds from the issuance of the 2026 Notes, net of initial purchaser discounts and commissions and debt issuance costs, were $1,274.0 million.

The 2026 Notes are senior unsecured obligations of the Company and will mature on August 15, 2026, unless earlier redeemed, repurchased, or converted, and are governed by the terms of the Indenture dated August 13, 2021 (the 2026 Indenture, and together with the 2030 Indenture, the Indentures). The 2026 Notes do not bear regular cash interest.

The 2026 Notes are convertible at an initial conversion rate of 5.2263 shares of the Company's Class A common stock per $1,000 principal amount of the 2026 Notes, which is equivalent to an initial conversion price of approximately $191.34 per share, subject to adjustment upon the occurrence of specified events in accordance with the terms of the 2026 Indenture. The 2026 Notes may be converted at any time on or after May 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date.

Holders of the 2026 Notes may convert all or any portion of their 2026 Notes at their option at any time prior to the close of business on the business day immediately preceding May 15, 2026, only under the following circumstances:

(1)during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company's Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(2) during thefive business day period after anyfive consecutive trading day period in which the trading price per $1,000 principal amount of the 2026 Notes for each trading day of such measurement period was less than 98% of the product of the last reported sale price of the Company's Class A common stock and the conversion rate on each such trading day;

(3) if the Company calls such 2026 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

(4) upon the occurrence of specified corporate events.

None of the circumstances described in the paragraphs above were met during the quarter ended September 30, 2025.

Based on the closing price of the Company's Class A common stock of $191.34 on September 30, 2025, the if-converted value of the 2026 Notes exceeded its principal amount by approximately $157.2 million. As of September 30, 2025, the Company classified the net carrying value of the 2026 Notes of $1,290.3 million as current portion of convertible senior notes, net.

Refer to Note 7 to the consolidated financial statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for further information on the 2026 Notes.

2026 Capped Call Transactions

In connection with the offering of the 2026 Notes, the Company entered into privately-negotiated capped call option transactions (the 2026 Capped Calls) with certain financial institution counterparties. The 2026 Capped Calls each have an initial strike price of approximately $191.34 per share of the Company's Class A common stock, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. The 2026 Capped Calls each have an initial cap price of approximately $250.94 per share, subject to certain adjustments. As of September 30, 2025, the terms of the 2026 Capped Calls have not been adjusted.

The 2026 Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. The premium paid for the purchase of the 2026 Capped Calls of $86.3 million was recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets.

Refer to Note 7 to the consolidated financial statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for further information on the 2026 Capped Calls.

2025 Convertible Senior Notes

In May 2020, the Company issued $575.0 million aggregate principal amount of 0.75% Convertible Senior Notes due 2025 (the 2025 Notes). The 2025 Notes were senior unsecured obligations of the Company, with interest payable semi-annually in arrears, at a rate of 0.75% per year.

The 2025 Notes were convertible at an initial conversion rate of 26.7187 shares of the Company's Class A common stock per $1,000 principal amount of the 2025 Notes, which was equivalent to an initial conversion price of approximately $37.43 per share, subject to adjustment upon the occurrence of specified events in accordance with the terms of the Indenture dated May 15, 2020.

During the fiscal year ended December 31, 2023, the Company repurchased $123.0 million principal amount of the 2025 Notes for approximately $172.7 million in cash, which resulted in a $50.3 million loss on extinguishment of debt. During the same fiscal year, the Company also settled conversions of approximately $35.4 million aggregate principal amount of the 2025 Notes with a combination of cash equal to the aggregate principal amount of the converted 2025 Notes and the issuance of approximately 0.5 million shares of the Company's Class A common stock for the remainder of the conversion value in excess of the aggregate principal amount converted.

There are no 2025 Notes currently outstanding as a result of these transactions above and past transactions which are not presented herein. Refer to Note 7 to the consolidated financial statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for further information on the 2025 Notes.

2025 Capped Call Transactions

In connection with the offering of the 2025 Notes, the Company entered into privately-negotiated capped call option transactions (the 2025 Capped Calls) with certain financial institution counterparties. The 2025 Capped Calls each had an initial strike price of approximately$37.43 per share of the Company's Class A common stock, subject to certain adjustments, which corresponded to the initial conversion price of the 2025 Notes. The 2025 Capped Calls each had an initial cap price of $57.58 per share, subject to certain adjustments. The 2025 Capped Calls expired between March and May 2025 and were settled in accordance with their terms in May 2025.

In March 2025, the Company elected cash settlement for the 2025 Capped Calls. Upon the cash settlement elections, the 2025 Capped Calls no longer met the criteria for equity classification and were reclassified from additional paid-in capital to derivative asset of $308.3 million on the Company's condensed consolidated balance sheet as of March 31, 2025. The derivative asset was included in prepaid expenses and other current assets. The Company used the Black-Scholes option-pricing model to determine the fair value of the derivative asset, with significant inputs being the expected term, risk free rate, volatility and the Company’s share price as of the valuation dates. Upon the last 2025 Capped Calls expiration in May 2025, the Company received $309.6 million in cash in connection with the settlements and recognized a gain of $1.3 million in other income (expense), net on the Company's condensed consolidated statement of operations.

Refer to Note 7 to the consolidated financial statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for further information on the 2025 Notes and 2025 Capped Calls.

The net carrying amounts of the Notes were as follows:

The following tables set forth total interest expense recognized related to the Notes:

Revolving Credit Facility

In May 2024, the Company entered into a credit agreement with a syndicated group of lenders, that provides for a senior secured $400.0 million revolving credit facility (the Revolving Credit Facility), with a sublimit of $30.0 million available for the issuance of letters of credit and $30.0 million available for swingline borrowings. The credit agreement permits the Company to increase the commitments under the Revolving Credit Facility by an aggregate principal amount of up to $150.0 million, subject to the satisfaction of certain conditions. The proceeds of the loans under the Revolving Credit Facility may be used for working capital and general corporate purposes.

The Company is required to pay a commitment fee on the daily unused amount of Revolving Credit Facility commitments ranging from 0.25% to 0.40% per annum, depending upon the Company’s total net leverage ratio. Borrowings under the credit agreement will bear interest, at the Company’s option, at either: (a) the alternate base rate, which is defined as a fluctuating rate per annum equal to the greatest of (i) the prime rate then in effect, (ii) the federal funds rate then in effect, plus 0.50% per annum, and (iii) an adjusted term SOFR rate determined on the basis of a one-month interest period plus 1.00%, in each case, plus a margin of between 0.75% and 1.50%; or (b) an adjusted term SOFR rate (based on one, three or six month interest periods, or, with the consent of each lender, twelve months or less than one month), plus a margin of between 1.75% and 2.50%. The applicable margin in each case is determined based on the Company’s total net leverage ratio. Interest is payable quarterly in arrears with respect to borrowings bearing interest at the alternate base rate or on the last day of an interest period, but at least every three months, with respect to borrowings bearing interest at the term SOFR rate.

The obligations under the Revolving Credit Facility are required to be guaranteed and secured by the Company's assets. The credit agreement contains customary affirmative and negative covenants, including financial covenants requiring the Company to maintain compliance with a maximum consolidated net leverage ratio, in each case, calculated in accordance with the terms of the credit agreement. During the three months ended June 30, 2025, the Company entered into an amendment to the credit agreement to amend the financial covenants.

The Revolving Credit Facility commitments terminate, and all outstanding loans are due and payable on May 17, 2029. However, the maturity date will automatically be accelerated to the date that is 91 days prior to the scheduled maturity date of the 2026 Notes or certain types of other convertible notes that may be issued in the future to refinance, exchange or replace the 2026 Notes, if (a) all or any portion of the 2026 Notes or such other convertible notes is outstanding with a maturity date within the date that is 91 days after May 17, 2029, and (b) the Company’s unrestricted cash plus borrowing availability under the revolving credit facility, as defined by the credit agreement, is less than 125% of the aggregate principal amount of the 2026 Notes or such other convertible notes then outstanding.

As of September 30, 2025, the Company was in compliance with all covenants under the credit agreement.

As of September 30, 2025, no loans were outstanding under the Revolving Credit Facility. Letters of credit issued under the credit agreement were not material as of September 30, 2025.

Note 8. Commitments and Contingencies

Non-cancelable Purchase Commitments

The Company enters into long-term non-cancelable agreements for the purchase of goods and services, including to purchase capacity, such as bandwidth and co-location space, for the Company’s global network. For the lease components of co-location agreements, refer to Note 6 to these condensed consolidated financial statements. As of September 30, 2025, there were no material changes outside the ordinary course of business to the Company’s non-cancelable purchase commitments, including bandwidth and co-location commitments, disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Legal Matters

From time to time the Company is a party to various legal proceedings that arise in the ordinary course of business. In addition, third parties may from time to time assert claims against the Company in the form of letters and other communications. Management currently believes that there is no pending or threatened legal proceeding to which the Company is a party that is likely to have a material adverse effect on the Company’s condensed consolidated financial statements. However, the results of legal proceedings are inherently unpredictable and if an unfavorable ruling were to occur in any of the legal proceedings there exists the possibility of a material adverse effect on the Company’s financial position, results of operations, and cash flows. The Company accrues for legal proceedings that it considers probable and for which the loss can be reasonably estimated. The Company also discloses material contingencies when it believes a loss is not probable but reasonably possible. Legal costs incurred and expected to be incurred related to litigation matters are expensed as incurred.

The Company’s network and associated products are subject to various restrictions under U.S. export control and sanctions laws and regulations, including the U.S. Department of Commerce’s Export Administration Regulations (EAR) and various economic and trade sanctions regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Controls (OFAC). The U.S. export control laws and U.S. economic sanctions laws include restrictions or prohibitions on the sale or supply of certain products and services to U.S. embargoed or sanctioned countries, governments, persons and entities and also require authorization for the export of certain encryption items. In addition, various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements and have enacted or could enact laws that could limit the Company’s ability to distribute its products through its network.

Although the Company takes precautions to prevent its network and associated products from being accessed or used in violation of such laws, the Company may have inadvertently allowed its network and associated products to be accessed or used by some customers in apparent violation of U.S. economic sanctions laws, including by users in embargoed or sanctioned countries, and the Company may have exported or allowed the download of certain software prior to making required filings with the U.S. Department of Commerce’s Bureau of Industry and Security. As a result, the Company has submitted to OFAC and to the Bureau of Industry and Security a voluntary self-disclosure concerning potential violations, and the Company has submitted a voluntary self-disclosure to the Census Bureau regarding potential violations of the Foreign Trade Regulations related to some incorrect electronic export information statements to the U.S. government for certain hardware exports, which were authorized. The voluntary self-disclosure to the Census Bureau was completed with no penalties in November 2019, and the voluntary self-disclosure to the Bureau of Industry and Security was completed with no penalties in June 2020. The voluntary self-disclosure to OFAC remains under review. If the Company is found to be in violation of U.S. economic sanctions or export control laws, it could result in substantial fines and penalties for the Company and for the individuals working for the Company. The Company may also be adversely affected through other penalties, reputational harm, loss of access to certain markets or otherwise. No loss has been recognized in the condensed consolidated financial statements for this loss contingency as it is not probable a loss has been incurred and the range of a possible loss is not yet estimable.

Guarantees and Indemnifications

If the Company's services do not meet certain service level commitments, its contracted customers and certain of its pay-as-you-go customers are entitled to receive service credits, and in certain cases, refunds, each representing a form of variable consideration. To date, the Company has not incurred any material costs as a result of such commitments.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third-party’s intellectual property rights. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the condensed consolidated financial statements.

The Company has also agreed to indemnify its directors, executive officers, and certain other employees for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by them in any action or proceeding to which any of them are, or are threatened to be, made a party by reason of their service as a director or officer. The Company maintains director and officer insurance coverage that would generally enable it to recover a portion of any future amounts paid. The Company also may be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

Note 9. Common Stock

The Company’s amended and restated certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. The holder of each share of Class A common stock is entitled toone vote per share, while the holder of each share of Class B common stock is entitled to 10 votes per share.

Holders of the Company’s Class A common stock and Class B common stock are entitled to dividends when, as and if, declared by the Company’s Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. Any dividends paid to the holders of the Class A common stock and Class B common stock will be paid on a pro rata basis. As of September 30, 2025 and December 31, 2024, the Company had not declared any dividends. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Shares of the Company's Class B common stock are convertible into an equivalent number of shares of the Company's Class A common stock and generally convert into shares of the Company's Class A common stock upon cessation of employment or transfer, except for certain transfers described in the Company's amended and restated certificate of incorporation. Class A common stock and Class B common stock are referred to, collectively, as common stock throughout the notes to these condensed consolidated financial statements, unless otherwise indicated.

Common Stock Reserved for Future Issuance

Shares of common stock reserved for future issuance, on an as-if converted basis, are as follows:

Note 10. Stock-based Compensation

Equity Incentive Plans

The 2019 Equity Incentive Plan (2019 Plan) provides for the granting of stock options, restricted stock, RSUs, stock appreciation rights, performance shares, PSUs, and performance awards for the Company's Class A common stock to the Company's employees, directors, and consultants. Certain outstanding equity awards were granted under the Company’s 2010 Equity Incentive Plan that is no longer active, but continues to govern the outstanding equity awards granted thereunder.

Stock Options

The Company has granted to certain executive officers and other key employees 10-year stock options with market conditions that vest and become exercisable to purchase shares of the Company's Class A common stock if the Company achieves certain stock price milestones and the employee continues to provide services to the Company through the applicable vesting dates (the Performance Options). The exercise price per share and the number of tranches and corresponding stock price milestones for the tranches of the Performance Options outstanding at such time were amended in the fiscal year ended December 31, 2023. As of September 30, 2025, there were approximately 2.9 million outstanding Performance Options.

The Company recognizes stock-based compensation expense for the Performance Options based on the grant date fair value and using a graded attribution method over the weighted-average requisite service period. The Company recorded a reversal of stock-based compensation of $12.7 million during the three months ended September 30, 2025 due to forfeitures of the Performance Options upon key employee departures. The total stock-based compensation expense for the Performance Options for the three months ended September 30, 2025 and 2024 were $(1.6) million and $9.4 million, respectively, and for the nine months ended September 30, 2025 and 2024 were $12.5 million and $21.9 million, respectively. As of September 30, 2025, there was $89.2 million of unrecognized stock-based compensation expense related to the Performance Options that is expected to be recognized over a weighted-average period of 3.3 years.

Restricted Stock Units and Performance Stock Units

During the three months ended March 31, 2025, the Company’s Board of Directors granted to the Company’s CEO and President (each, a Co-Founder) an aggregate of 350,220 PSUs with market conditions that vest if the Company achieves certain stock price milestones and the Co-Founders, individually, continue to provide services to the Company through the applicable vesting dates.

The weighted average assumptions used to determine the fair value of the PSUs with market conditions were as follows:

The total stock-based compensation expense for RSUs and PSUs for the three months ended September 30, 2025 and 2024 was $112.0 million and $78.8 million, respectively, and for the nine months ended September 30, 2025 and 2024 was $315.7 million and $217.1 million, respectively. As of September 30, 2025, the total unrecognized stock-based compensation expense related to unvested RSUs and PSUs was $936.2 million that is expected to be recognized over a weighted-average period of 3.0 years. The stock-based compensation expense associated with PSUs, with market or financial performance conditions, werenot material during the three and nine months ended September 30, 2025. As of September 30, 2025, the total unrecognized stock-based compensation related to PSUs with market conditions was $29.0 million and is expected to be recognized over a weighted-average period of 2.3 years.

2019 Employee Stock Purchase Plan

In September 2019, the Company's Board of Directors adopted and stockholders approved the ESPP, which became effective one business day prior to the effective date of the Company's registration statement on Form S-1 filed with the SEC in connection with the Company’s initial public offering.164,778 shares of Class A common stock were purchased under the ESPP during the nine months ended September 30, 2025. As of September 30, 2025, the total unrecognized stock-based compensation expense related to the ESPP wasnot material and will be recognized through the year ended December 31, 2025.

Stock-based Compensation Expense

The following table sets forth the total stock-based compensation expense included in the Company’s condensed consolidated statements of operations:

Note 11. Net Loss per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been antidilutive. The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive are as follows:

Note 12. Income Taxes

The computation of the provision for income taxes for interim periods is determined by applying the estimated annual effective tax rate to year-to-date earnings from recurring operations and adjusting for discrete tax items recorded in the period. The Company's ability to estimate the geographic mix of earnings is impacted by the relatively high-growth nature of the business, fluctuations of business operations by country, and implementation of tax planning strategies.

The Company recorded an income tax expense of $3.1 million and $2.5 million for the three months ended September 30, 2025 and 2024, respectively, and an income tax expense of$8.0 million and$5.9 million for the nine months ended September 30, 2025 and 2024, respectively.

The income tax expense of $3.1 million for the three months ended September 30, 2025 and$8.0 millionfor the nine months ended September 30, 2025 was primarily related to withholding taxes in the United States and income tax expense from foreign jurisdictions.

The income tax expense of$2.5 million for the three months ended September 30, 2024 was primarily related to withholding taxes in the United States and income tax expense from foreign jurisdictions. The income tax expense of$5.9 million for the nine months ended September 30, 2024 was primarily related to withholding taxes in the United States and income tax expense from foreign jurisdictions, offset by the partial release of the U.S. and U.K. valuation allowances in connection with acquisitions.

In determining the need for a valuation allowance, the Company weighs both positive and negative evidence in the various jurisdictions in which it operates to determine whether it is more likely than not that its deferred tax assets are realizable. A full valuation allowance has been established in the United States and United Kingdom and no deferred tax assets and related tax benefits have been recognized in the condensed consolidated financial statements. There is no valuation allowance associated with any other foreign jurisdictions.

On July 4, 2025, the United States signed into law the One Big Beautiful Bill Act (OBBBA), which, among other provisions, makes permanent the immediate expensing of domestic research and development expenditures, reinstates 100% bonus depreciation for certain qualified property, and modifies the international tax framework. The enactment of OBBBA resulted in an immaterial impact on the income tax provision due to the Company’s full valuation allowance in the United States.

Note 13. Business Combinations

Kivera

On October 7, 2024, the Company acquired all of the outstanding shares of Kivera, a company that has developed cloud security, data protection, and compliance technology, for a total purchase consideration of $28.0 million. The total purchase consideration included (i) acquisition-date cash payments of $23.1 million, (ii) a cash holdback of $4.5 million, of which the Company is retaining 50% for up to 12 months and the remaining 50% for up to 24 months and will be payable to the previous owners of Kivera, subject to offset by the Company for any of the previous owners’ indemnification obligations in connection with the acquisition, and (iii) an adjustment holdback of $0.5 million, which the Company is retaining for up tofour months and will be payable to the previous owners of Kivera, subject to the final purchase price adjustment.

The transaction-related costs for the acquisition were not material and are included in general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2024.

The fair values of assets acquired and liabilities assumed on the acquisition date are summarized as follows (in thousands):

The acquired assets and assumed liabilities were recorded at their estimated fair values. The estimated useful life for the acquired developed technology istwo years. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, none of which is deductible for tax purposes. Goodwill is primarily attributable to the assembled workforce as well as the anticipated synergies from the integration of Kivera's technology with the Company's technology.

This acquisition did not have a material impact on the Company’s consolidated financial statements; therefore, historical and pro forma disclosures have not been presented.

Note 14. Segment and Geographic Information

The Company’s chief operating decision maker (CODM) is its CEO, President, and CFO, collectively. The Company has no segment managers who are held accountable by the CODM for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, the Company has determined it has a single operating segment.

The CODM uses consolidated net loss for purposes of allocating resources and evaluating financial performance, including monitoring actual results versus historical periods. Adjusted cost of revenue, adjusted sales and marketing, adjusted research and development and adjusted general and administrative expenses are considered significant segment expenses that are regularly provided to the CODM and included within consolidated net loss. The measure of segment assets is the total assets on the Company’s condensed consolidated balance sheets. Capital expenditures are reported on a consolidated basis on the Company’s condensed consolidated statements of cash flows. The following table includes the Company's segment revenue, significant segment expenses, and other segment items to reconcile to net loss:

(1)Cost of revenue, sales and marketing expense, research and development expense and general and administrative expense in the condensed consolidated statements of operations are adjusted to exclude stock-based compensation and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related and other expenses, and lease impairment charges during the three and nine months ended months ended September 30, 2025 and 2024, and a one-time compensation charge during three months ended March 31, 2024.

(2)Other segment items include the adjustments described in the notes above, as well as interest income, interest expense, other income (expense), net and provision for income taxes in the condensed consolidated statements of operations.

Refer to Note 3 to these condensed consolidated financial statements for revenue by geography.

The Company’s property and equipment, net, by geographic area were as follows:

No single country other than the United States accounted for more than 10% of total property and equipment, net as of September 30, 2025 and December 31, 2024.