Cloudflare Inc (NET, Financial) released its third-quarter earnings for the fiscal year 2023 on November 2, 2023. The company reported a 32% year-over-year increase in revenue, totaling $335.6 million. This marks the fifth consecutive quarter of record operating profitability for the company.
Financial Highlights
Cloudflare's GAAP gross profit for Q3 2023 was $257.5 million, representing a 76.7% gross margin, compared to $191.9 million, or 75.6%, in Q3 2022. The non-GAAP gross profit stood at $264.2 million, or 78.7% gross margin, compared to $198.4 million, or 78.1%, in the same quarter of the previous year.
The GAAP loss from operations was $39.2 million, or 11.7% of revenue, compared to $45.9 million, or 18.1% of revenue, in Q3 2022. The non-GAAP income from operations was $42.5 million, or 12.7% of revenue, compared to $14.8 million, or 5.8% of revenue, in Q3 2022.
The GAAP net loss was $23.5 million, compared to $42.5 million in Q3 2022. The non-GAAP net income was $55.3 million, compared to $19.1 million in the same quarter of the previous year.
Cash Flow and Liquidity
Cloudflare's net cash flow from operating activities was $68.1 million, compared to $42.7 million for Q3 2022. Free cash flow was $34.9 million, or 10% of revenue, compared to negative $4.6 million, or 2% of revenue, in Q3 2022. As of September 30, 2023, the company had cash, cash equivalents, and available-for-sale securities totaling $1,574.3 million.
Outlook
For the fourth quarter of fiscal 2023, Cloudflare expects total revenue of $352.0 to $353.0 million and non-GAAP income from operations of $28.0 to $29.0 million. For the full year fiscal 2023, the company expects total revenue of $1,286.0 to $1,287.0 million and non-GAAP income from operations of $110.0 to $111.0 million.
Cloudflare's CEO, Matthew Prince, expressed satisfaction with the company's performance, stating,
We delivered another strong quarter, growing revenue by 32% year-over-year to $335.6 million and delivering our fifth consecutive quarter of record operating profitability."
Prince also highlighted the company's ongoing innovation and efforts in AI, including the announcement of the most complete platform to deploy fast, secure, compliant AI inference at scale with Workers AI.
Explore the complete 8-K earnings release (here) from Cloudflare Inc for further details.
