Cloudflare, Inc 8-K, filed May 7, 2020

Cloudflare, Inc. (NET)

8-K 2020-05-07 For: 2020-05-07

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Added on April 05, 2026

About this 8-K

Cloudflare, Inc filed this 8-K on May 7, 2020.

Items reported

Item 2.02: Financial results
Item 5.03: Charter or bylaw amendment, or fiscal year change
Item 7.01: Regulation FD disclosure
Item 9.01: Financial statements and exhibits

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Delaware	001-39039	27-0805829
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
101 Townsend Street
San Francisco, CA		94107
(Address of principal executive offices)		(Zip code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value	NET	New York Stock Exchange


Exhibit No.						Description
3.1						Amended and Restated Bylaws
99.1						Press Release issued by Cloudflare, Inc. dated May 7, 2020


			Page
ARTICLE I - CORPORATE OFFICES			1
1.1 REGISTERED OFFICE			1
1.2 OTHER OFFICES			1
ARTICLE II - MEETINGS OF STOCKHOLDERS			1
2.1 PLACE OF MEETINGS			1
2.2 ANNUAL MEETING			1
2.3 SPECIAL MEETING			1
2.4 ADVANCE NOTICE PROCEDURES			2
2.5 NOTICE OF STOCKHOLDERS’ MEETINGS			6
2.6 QUORUM			6
2.7 ADJOURNED MEETING; NOTICE			6
2.8 CONDUCT OF BUSINESS			7
2.9 VOTING			7
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING			7
2.11 RECORD DATES			7
2.12 PROXIES			8
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE			8
2.14 INSPECTORS OF ELECTION			9
ARTICLE III - DIRECTORS			9
3.1 POWERS			9
3.2 NUMBER OF DIRECTORS			9
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS			9
3.4 RESIGNATION AND VACANCIES			9
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE			10
3.6 REGULAR MEETINGS			10
3.7 SPECIAL MEETINGS; NOTICE			10
3.8 QUORUM; VOTING			11
3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING			11
3.10 FEES AND COMPENSATION OF DIRECTORS			11
3.11 REMOVAL OF DIRECTORS			11
ARTICLE IV - COMMITTEES			12
4.1 COMMITTEES OF DIRECTORS			12
4.2 COMMITTEE MINUTES			12
4.3 MEETINGS AND ACTION OF COMMITTEES			12


4.4 SUBCOMMITTEES			13
ARTICLE V - OFFICERS			13
5.1 OFFICERS			13
5.2 APPOINTMENT OF OFFICERS			13
5.3 SUBORDINATE OFFICERS			13
5.4 REMOVAL AND RESIGNATION OF OFFICERS			13
5.5 VACANCIES IN OFFICES			14
5.6 REPRESENTATION OF SECURITIES OF OTHER ENTITIES			14
5.7 AUTHORITY AND DUTIES OF OFFICERS			14
ARTICLE VI - STOCK			14
6.1 STOCK CERTIFICATES; PARTLY PAID SHARES			14
6.2 SPECIAL DESIGNATION ON CERTIFICATES			15
6.3 LOST CERTIFICATES			15
6.4 DIVIDENDS			15
6.5 TRANSFER OF STOCK			15
6.6 STOCK TRANSFER AGREEMENTS			16
6.7 REGISTERED STOCKHOLDERS			16
ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER			16
7.1 NOTICE OF STOCKHOLDERS’ MEETINGS			16
7.2 NOTICE TO STOCKHOLDERS SHARING AN ADDRESS			16
7.3 NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL			16
7.4 WAIVER OF NOTICE			17
ARTICLE VIII - INDEMNIFICATION			17
8.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS			17
8.2 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION			17
8.3 SUCCESSFUL DEFENSE			18
8.4 INDEMNIFICATION OF OTHERS			18
8.5 ADVANCE PAYMENT OF EXPENSES			18
8.6 LIMITATION ON INDEMNIFICATION			18
8.7 DETERMINATION; CLAIM			19
8.8 NON-EXCLUSIVITY OF RIGHTS			19
8.9 INSURANCE			19
8.10 SURVIVAL			20
8.11 EFFECT OF REPEAL OR MODIFICATION			20
8.12 CERTAIN DEFINITIONS			20
ARTICLE IX - GENERAL MATTERS			20
9.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS			20
9.2 FISCAL YEAR			21
9.3 SEAL			21


9.4 CONSTRUCTION; DEFINITIONS			21
ARTICLE X - AMENDMENTS			21
ARTICLE XI - EXCLUSIVE FORUM			21


	Three Months Ended March 31,
	2020		2019
Revenue	$	91,250	$	61,727
Cost of revenue ⁽¹⁾⁽²⁾	20,821		14,360
Gross profit	70,429		47,367
Operating expenses:
Sales and marketing ⁽¹⁾	46,965		30,817
Research and development ⁽¹⁾⁽³⁾	33,354		17,649
General and administrative ⁽¹⁾⁽³⁾	26,181		16,048
Total operating expenses	106,500		64,514
Loss from operations	(36,071)		(17,147)
Non-operating income (expense):
Interest income	2,569		913
Interest expense	(67)		(273)
Other expense, net	485		(293)
Total non-operating income (expense), net	2,987		347
Loss before income taxes	(33,084)		(16,800)
Provision for (benefit from) income taxes	(338)		314
Net loss	$	(32,746)	$	(17,114)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.11)	$	(0.20)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	296,077		85,078


Cost of revenue	$	305	$	32
Sales and marketing	3,579		279
Research and development	7,127		417
General and administrative	3,606		329
Total stock-based compensation and related employer payroll expenses	$	14,617	$	1,057


Cost of revenue	$	731	$	31
Total amortization of acquired intangible assets	$	731	$	31


Research and development	$	5,776	$	—
General and administrative	554		—
Total acquisition-related and other expenses	$	6,330	$	—


	March 31, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	109,063	$	138,976
Available-for-sale securities	478,791		497,972
Accounts receivable, net	39,778		33,867
Contract assets	1,779		2,063
Prepaid expenses and other current assets	18,193		16,994
Total current assets	647,604		689,872
Property and equipment, net	100,174		101,466
Goodwill	16,399		4,083
Acquired intangible assets, net	4,900		31
Operating lease right-of-use assets	48,234		—
Deferred contract acquisition costs, noncurrent	28,171		25,184
Restricted cash	8,847		6,660
Other noncurrent assets	4,202		3,528
Total assets	$	858,531	$	830,824
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,301	$	11,463
Accrued expenses and other current liabilities	27,872		28,314
Operating lease liabilities	17,009		—
Liability for early exercise of unvested stock options	12,006		13,263
Deferred revenue	37,096		30,843
Total current liabilities	108,284		83,883
Build-to-suit lease financing obligation	—		10,506
Operating lease liabilities, noncurrent	33,795		—
Deferred revenue, noncurrent	996		804
Other noncurrent liabilities	9,104		9,803
Total liabilities	152,179		104,996
Stockholders’ Equity:
Class A common stock; $0.001 par value; 2,250,000 shares authorized as of March 31, 2020 and December 31, 2019; 154,622 and 87,072 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	154		87
Class B common stock; $0.001 par value; 315,000 shares authorized as of March 31, 2020 and December 31, 2019; 148,735 and 213,101 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	143		207
Additional paid-in capital	1,038,544		1,027,179
Accumulated deficit	(333,896)		(301,706)
Accumulated other comprehensive income	1,407		61
Total stockholders’ equity	706,352		725,828
Total liabilities and stockholders’ equity	$	858,531	$	830,824


	Three Months Ended March 31,
	2020		2019
Cash Flows From Operating Activities
Net loss	$	(32,746)	$	(17,114)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization expense	10,563		6,170
Non-cash operating lease costs	4,543		—
Amortization of deferred contract acquisition costs	3,499		2,319
Stock-based compensation expense	12,897		1,057
Net accretion of discounts and amortization of premiums on marketable securities	(456)		(518)
Deferred income taxes	(117)		—
Provision for bad debt	2,209		259
Change in fair value of redeemable convertible preferred stock warrant liability	—		118
Other	(197)		4
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	(8,120)		(5,616)
Contract assets	284		180
Deferred contract acquisition costs	(6,486)		(4,225)
Prepaid expenses and other current assets	(1,086)		(121)
Other noncurrent assets	(658)		(148)
Accounts payable	1,507		(2,553)
Accrued expenses and other current liabilities	40		1,022
Operating lease liabilities	(4,804)		—
Deferred revenue	6,445		7,400

Other noncurrent liabilities	(1,593)		2,076
Net cash used in operating activities	(14,276)		(9,690)
Cash Flows From Investing Activities
Purchases of property and equipment	(11,405)		(9,036)
Capitalized internal-use software	(4,922)		(3,397)
Cash paid for acquisitions, net of cash acquired	(13,639)		—
Purchases of marketable securities	(110,609)		(14,856)
Sales of marketable securities	—		1,978
Maturities of marketable securities	131,580		40,498
Other investing activities	223		22
Net cash used in investing activities	(8,772)		15,209
Cash Flows From Financing Activities
Proceeds from the exercise of stock options	2,675		681
Proceeds from the early exercise of stock options	32		1,638
Repurchases of unvested common stock	(70)		(4)
Payments on note payable	(200)		(90)
Proceeds from build-to-suit lease financing obligation drawdown	—		23
Payment of tax withholding obligation on RSU settlement	(7,115)		—
Net cash provided by financing activities	(4,678)		2,248
Net increase in cash, cash equivalents, and restricted cash	(27,726)		7,767
Cash, cash equivalents, and restricted cash, beginning of period	145,636		31,426
Cash, cash equivalents, and restricted cash, end of period	$	117,910	$	39,193


	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Reconciliation of cost of revenue:
GAAP cost of revenue	$	20,821		$	14,360
Less: Stock-based compensation and related employer payroll taxes	(305)			(32)
Less: Amortization of acquired intangible assets	(731)			(31)
Non-GAAP cost of revenue	$	19,785		$	14,297
Reconciliation of gross profit:
GAAP gross profit	$	70,429		$	47,367
Add: Stock-based compensation and related employer payroll taxes	305			32
Add: Amortization of acquired intangible assets	731			31
Non-GAAP gross profit	$	71,465		$	47,430
Non-GAAP gross margin	78.3		%	76.8		%
Reconciliation of operating expenses:
GAAP sales and marketing	$	46,965		$	30,817
Less: Stock-based compensation and related employer payroll taxes	(3,579)			(279)
Non-GAAP sales and marketing	$	43,386		$	30,538
GAAP research and development	$	33,354		$	17,649
Less: Stock-based compensation and related employer payroll taxes	(7,127)			(417)
Less: Acquisition-related and other expenses	(5,776)			—
Non-GAAP research and development	$	20,451		$	17,232
GAAP general and administrative	$	26,181		$	16,048
Less: Stock-based compensation and related employer payroll taxes	(3,606)			(329)
Less: Acquisition-related and other expenses	(554)			—
Non-GAAP general and administrative	$	22,021		$	15,719
Reconciliation of loss from operations:
GAAP loss from operations	$	(36,071)		$	(17,147)
Add: Stock-based compensation and related employer payroll taxes	14,617			1,057
Add: Amortization of acquired intangible assets	731			31
Add: Acquisition-related and other expenses	6,330			—
Non-GAAP loss from operations	$	(14,393)		$	(16,059)
Non-GAAP operating margin	(15.8)		%	(26.0)		%
Reconciliation of provision for (benefit from) income taxes:
GAAP provision for (benefit from) income taxes	$	(338)		$	314
Income tax effect of non-GAAP adjustments ⁽¹⁾	1,251			6
Non-GAAP provision for (benefit from) income taxes	$	913		$	320
Reconciliation of net loss and net loss per share:
GAAP net loss attributable to common stockholders	$	(32,746)		$	(17,114)
Add: Stock-based compensation expense	14,617			1,057
Add: Amortization of acquired intangible assets	731			31
Add: Acquisition-related and other expenses	6,330			—
Income tax effect of non-GAAP adjustments ⁽¹⁾	(1,251)			(6)
Non-GAAP net loss	$	(12,319)		$	(16,032)
GAAP net loss per share	$	(0.11)		$	(0.20)
Add: Stock-based compensation expense	0.05			0.01
Add: Amortization of acquired intangible assets	—			—
Add: Acquisition-related and other expenses	0.02			—
Income tax effect of non-GAAP adjustments ⁽¹⁾	—			—
Non-GAAP net loss per share ⁽²⁾	$	(0.04)		$	(0.19)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	296,077			85,078