NET

클라우드플레어
Cloudflare, Inc. · CIK 1477333
NET 리스크 변화 알림 받기
이번 보고서
2026.06 분기보고서
10-Q · 기간 말 2026. 6. 30. · 제출 2026. 8. 6.
비교 기준
2026.03 분기보고서
10-Q · 기간 말 2026. 3. 31.
SEC 원문 ↗
7
새 리스크 항목
19
신규 문단
20
수정 문단
4
삭제
+5%
분량 변화
AI 한국어 요약

한 줄 요약

창업자 지배력 구조와 연결된 대규모 자본구조 변경(무의결권 Class C 주식 분할·Series FF 우선주 교환)과 이를 둘러싼 주주 소송이 새 리스크 섹션으로 추가되었고, 장비 부품 원가 상승에 따른 마진 압박과 경영진 이탈 리스크도 강화되었습니다.

주목할 변화

  • 신규자본구조 변경(Capitalization Changes) 리스크 섹션 신설2026년 6월 주총에서 승인된 계획에 따라 무의결권 Class C 보통주를 만들고, 기존 A·B주 1주당 C주 1주를 배정하는 분할(Class C Split)을 합니다. 창업자 보유 B주의 대부분은 Series FF 우선주와 A주로 교환하며, 회사는 빠르면 2026년 9월 시행을 예상합니다. 경제적 지분은 변하지 않고, 창업자의 의결권 비율도 유지됩니다("no change in their relative voting power"). 반면 창업자 외 기존 B주 보유자는 의결권이 줄어듭니다. 이와 관련해 2030년 만기 전환사채가 일정 기간 전환 가능해진다는 문장도 추가되었습니다.
  • 신규자본구조 변경 관련 주주 소송2026년 8월 5일 기준 주주 소송 8건이 제기되었습니다. 이 중 7건은 병합되어 이사회의 신인의무 위반을 주장합니다. 핵심 주장은 이번 변경이 창업자에게 "maintain control and retain significant liquidity opportunities"를 충분한 대가 없이 허용한다는 것입니다. 나머지 1건은 정관 Article X상 3분의 2 찬성이 필요했다고 주장합니다. 회사는 소송에 근거가 없다고 보지만, 결과를 장담할 수 없다고 명시했습니다.
  • 신규Class C 주식의 할인 거래·유동성 리스크분할 후 A주 가격은 약 절반으로 조정되고, C주는 A주와 비슷한 가격을 예상합니다. 다만 의결권 때문에 A주가 "could trade at a premium"일 수 있습니다. 또 C주의 유동성 있는 시장이 형성되지 않거나 "more meaningful discount"로 거래될 가능성도 인정했습니다.
  • 신규향후 주식 발행은 Class C 중심, 활용도 제약 가능성회사는 의결권 희석을 줄이기 위해 앞으로 인수, 자금조달, 임직원 보상에 C주를 더 많이 쓸 가능성이 높다고 밝혔습니다. 그러나 투자자나 직원이 무의결권 주식을 "negatively" 볼 수 있다고 적었습니다. 이 경우 A주를 사용해 의결권이 희석될 수 있다는 점도 함께 언급했습니다.
  • 강화장비 부품 원가 급등과 매출총이익률 압박핵심 부품 비용이 "continue to escalate rapidly"할 경우를 새로 언급했습니다. 이 비용을 가격에 제때 전가하지 못하면 "compressed gross margins"로 수익성과 현금흐름이 악화될 수 있다는 문장이 추가되었습니다.
  • 강화핵심 경영진 이탈매출 총괄 사장(President of Revenue)이 "departing at the end of 2026"이라는 사실과 전임 최고법무책임자가 2026년 1분기에 사임한 사실이 새로 기재되었습니다. 영업 조직 리더십 변화가 영업 인력 유지에 영향을 줄 수 있다는 기존 문구에도 이 내용이 반영되었습니다.
  • 신규AI 대응 실패가 고객 유치에 미치는 영향신규 고객 유치 리스크 요인에 항목이 추가되었습니다. AI로 인한 보안·운영 리스크에 제품을 맞추지 못하거나, 고객이 요구하는 "AI-driven improvements"를 반영하지 못하는 경우입니다.
  • 강화인수 기업 핵심 인력 유지 실패 인정인수 기업 인력에 대한 유지 인센티브가 성공하지 못할 수 있다는 가정형 표현이 바뀌었습니다. 이제는 "have not always been successful"이라고 실제 실패 경험을 인정합니다. 경쟁 영역에는 "developer platforms"가 추가되었습니다.

읽는 법

이번 분기 변화의 중심은 사업보다 지배구조입니다. 이번 변경은 창업자 지배력을 유지하면서 무의결권 주식을 앞으로의 발행 수단으로 삼는 구조여서, 소송 결과와 시행 시점, Class C의 유동성과 할인 여부를 함께 지켜볼 필요가 있습니다. 사업 측면에서는 부품 원가 상승이 마진에 미치는 영향과 영업 총괄 교체가 새로 강조된 부분이므로, 이후 보고서에서 관련 서술이 어떻게 이어지는지 확인하는 것이 좋습니다.

원문 비교
  1. 신규If we are unable to attract new paying and free customers, our future results of operations could be harmed.
    •our failure to adapt our products to address the security and operational risks from AI, or to incorporate AI-driven improvements demanded by potential customers;
  2. 새 리스크 항목
    Risks Related to the Implementation of the Capitalization Changes
  3. 새 리스크 항목
    If the Capitalization Changes are implemented, it will affect the relative voting power of our outstanding shares of capital stock.
  4. 신규If the Capitalization Changes are implemented, it will affect the relative voting power of our outstanding shares of capital stock.
    As described in the proxy statement in connection with our annual meeting of stockholders that occurred in June 2026 (the 2026 Annual Meeting), we intend to implement the Capitalization Changes, which are comprised of (a) the adoption of an amendment to our amended and restated certificate of incorporation authorizing a new class of non-voting common stock (our Class C common stock), (b) the designation of a new series of our preferred stock as Series FF preferred stock (our Series FF preferred stock) with the powers, preferences and rights, and the qualifications, limitations, or restrictions set forth in the Certificate of Designations of Series FF preferred stock, (the Certificate of Designations), (c) entry into an Exchange Agreement, pursuant to which substantially all of the shares of Class B common stock held by our co-founders and certain of their related entities would be exchanged for (i) an equivalent number of shares of Series FF preferred stock and (ii) an equivalent number of shares of Class A common stock (collectively, the Preferred Exchange), and (d) upon the effectiveness of the amended and restated certificate of incorporation (x) each share of Class A common stock issued and outstanding or held as treasury stock immediately prior to the effectiveness of the amended and restated certificate of incorporation, automatically and without further action by us or any stockholder, would be reconstituted and become one share of Class A common stock and one share of Class C common stock; and (y) each share of Class B common stock issued and outstanding or held as treasury stock immediately prior to the effectiveness of the amended and restated certificate of incorporation, automatically and without further action by us or any stockholder, would be reconstituted and become one share of Class B common stock and one share of Class C common stock ((x) and (y), collectively, the Class C Split). At the 2026 Annual Meeting, our stockholders approved the elements of the Capitalization Changes that required stockholder approval. Subject to the litigation related to the Capitalization Changes described below, we anticipate implementing the Capitalization Changes as early as September 2026.
  5. 신규If the Capitalization Changes are implemented, it will affect the relative voting power of our outstanding shares of capital stock.
    If the Capitalization Changes occur, there will be no effect on the proportionate economic interest of any stockholder. However, if the Capitalization Changes occur, (i) our co-founders and their affiliates would experience a de minimis reduction in the number of votes they are able to cast but no change in their relative voting power as a proportion of the voting power of all outstanding shares of our capital stock, (ii) as a result of the automatic conversion of all remaining shares of Class B common stock into shares of Class A common stock, the holders of Class B common stock prior to the Capitalization Changes (other than our co-founders) would experience a reduction in the number of votes they are able to cast and their relative voting power as a proportion of the voting power of all outstanding shares of our capital stock, and (iii) holders of Class A common stock would experience no change in the number of votes they are able to cast but a de minimis increase in their relative voting power as a proportion of the voting power of all outstanding shares of our capital stock. Following the Capitalization Changes, stockholders who sell their shares of Class C common stock will not lose any voting power, but their relative equity interest in us will decrease as a result of such sale. Conversely, stockholders who purchase shares of Class C common stock after the Capitalization Changes will increase their relative equity interest in us but will not gain any additional voting power or have any voting power at all if they do not otherwise own shares of Class A common stock or Series FF preferred stock.
  6. 새 리스크 항목
    If the Class C Split occurs, it would affect the market price of our outstanding shares of Class A common stock and Class C common stock.
  7. 신규If the Class C Split occurs, it would affect the market price of our outstanding shares of Class A common stock and Class C common stock.
    If the Class C Split occurs, we believe that the market price for the shares of our Class A common stock will generally reflect the effect of a two-for-one stock split and, accordingly, the market price of the Class A common stock will decrease by approximately one-half. Assuming that the Class C Split occurs, we expect the market price of shares of Class C common stock to be approximately equal to the market price of shares of Class A common stock, as that market price adjusts as a result of the Class C Split.
  8. 신규If the Class C Split occurs, it would affect the market price of our outstanding shares of Class A common stock and Class C common stock.
    The trading prices for shares of Class A common stock and Class C common stock may be affected by the relative voting rights between these two classes of stock. Because the Class A common stock carries voting rights, it is possible that it could trade at a premium compared to the Class C common stock. This is particularly true if investors were to place a premium on owning our shares that have voting rights, as opposed to shares without voting rights.
  9. 신규If the Class C Split occurs, it would affect the market price of our outstanding shares of Class A common stock and Class C common stock.
    Furthermore, the trading price of shares of Class A common stock and Class C common stock would continue to depend on many factors, including our future performance, the relative trading liquidity of the Class A common stock and the Class C common stock, general market conditions, and conditions relating to companies in businesses and industries similar to us. Accordingly, we cannot predict the prices at which shares of Class A common stock and Class C common stock would trade following the Class C Split, just as we could not predict the price at which shares of Class A common stock would trade absent the Class C Split.
  10. 신규If the Class C Split occurs, it would affect the market price of our outstanding shares of Class A common stock and Class C common stock.
    Following the Capitalization Changes, there will continue not to be any trading market for our Class B common stock and there will not be a trading market for our Series FF preferred stock.
  11. 새 리스크 항목
    Any issuance of additional shares of Class C common stock by us or dispositions of shares of Class C common stock by significant or other stockholders may serve to further increase market activity in the shares of Class C common stock relative to the shares of Class A common stock.
  12. 신규Any issuance of additional shares of Class C common stock by us or dispositions of shares of Class C common stock by significant or other stockholders may serve to further increase market activity in the shares of Class C common stock relative to the shares of Class A common stock.
    Following implementation of the Capitalization Changes, in order to minimize dilution of voting power to existing stockholders, we are more likely to issue shares of Class C common stock than shares of Class A common stock in the future to further strategic initiatives (such as the acquisition of complementary businesses and raising funds from equity or equity-linked financing transactions), or issue equity awards to our employees, directors, and other service providers. Following the Class C Split, some of our stockholders may sell their shares of Class C common stock but retain their shares of Class A common stock or Series FF preferred stock in order to monetize a portion of their investment in us while retaining their relative voting power. Any such issuance of additional shares of Class C common stock by us or dispositions of shares of Class C common stock by our stockholders may serve to further increase market activity in the shares of Class C common stock relative to the shares of Class A common stock.
  13. 새 리스크 항목
    The Class C common stock may not be as attractive as our Class A common stock for financings, acquisition currency, or equity incentives.
  14. 신규The Class C common stock may not be as attractive as our Class A common stock for financings, acquisition currency, or equity incentives.
    Following the Class C Split, we expect to utilize the Class C common stock as currency for equity incentives for our service providers, for equity and equity-linked financing transactions, and, to the extent we engage in M&A transactions involving stock consideration, as the stock component of the consideration in those transactions. It is possible that potential financing sources, counterparties and/or employees and directors will view nonvoting Class C common stock negatively as compared to the voting Class A common stock, particularly if the nonvoting Class C common stock trades at a discount to the voting Class A common stock. In these circumstances, it may be more difficult to use the nonvoting Class C common stock as a source for obtaining financing, as consideration for potential acquisition targets or as incentive compensation to hire or retain employees and directors. In that scenario, we may consider using shares of Class A common stock for those purposes, which will dilute the aggregate voting power of its stockholders (including our co-founders), or, in the case of our employees, provide other incentives to compensate them.
  15. 새 리스크 항목
    A liquid trading market for our Class C common stock may not develop and/or our Class C common stock may trade at a discount to our Class A common stock.
  16. 신규A liquid trading market for our Class C common stock may not develop and/or our Class C common stock may trade at a discount to our Class A common stock.
    The Class C Split would result in each current holder of Class A common stock holding half of its existing economic interest in Class A common stock and half of its existing economic interest in Class C common stock. Following the Class C Split, we expect the Class C common stock to trade in a sufficiently liquid market and for the Class C common stock to trade at a minimal or zero discount to the Class A common stock. However, it is possible that this liquid market will not develop and that the Class C common stock could trade at a more meaningful discount to the Class A common stock.
  17. 새 리스크 항목
    Litigation relating to the Capitalization Changes could adversely impact the Company and its stockholders.
  18. 신규Litigation relating to the Capitalization Changes could adversely impact the Company and its stockholders.
    As of August 5, 2026, eight complaints have been filed by purported Cloudflare stockholders, seeking to enjoin the Capitalization Changes and other relief, including attorneys’ fees and costs. Seven of these complaints have been consolidated into one action (the Consolidated Action), which asserts claims against the Company and Board of Directors for breach of fiduciary duty in connection with the Capitalization Changes. The allegations in the Consolidated Action include that the Capitalization Changes are not entirely fair to the Company’s stockholders because they allegedly allow the Co-Founders to maintain control and retain significant liquidity opportunities, without sufficient consideration in return. The eighth complaint asserts a claim against the Company for breach of the Company’s amended and restated certificate of incorporation and alleges that the Company is required, under Article X of our amended and restated certificate of incorporation, to seek the affirmative vote of the holders of two-thirds of the Company’s voting power to approve Proposal 4 that was included in the proxy statement for 2026 Annual Meeting.
  19. 신규Litigation relating to the Capitalization Changes could adversely impact the Company and its stockholders.
    The Company and the Board of Directors believe the claims in these complaints are without merit, that the Capitalization Changes comply fully with all applicable laws, and that the description of the votes required to approve Proposal 4 contained in the proxy statement for the 2026 Annual Meeting is correct. Additional lawsuits arising out of the Capitalization Changes may be filed in the future. No assurances can be made as to the outcome of such lawsuits or the complaints described above, or the effect they may have on the Company.
  20. 수정We have a history of net losses and may not be able to achieve or sustain profitability in the future.
    We have incurred net losses in all periods since we began operations and we may not achieve or maintain profitability in the future. We experienced net losses of $22.9 $170.0 million and $38.5 $50.4 million for the three months ended March 31, June 30, 2026 and 2025, respectively, and $192.9 million and $88.9 million for the six months ended June 30, 2026 and 2025, respectively, and as of March 31, June 30, 2026, we had an accumulated deficit of $1,227.8 $1,397.8 million. Because the markets for our products are rapidly evolving, it is difficult for us to predict our future results of operations. We expect our operating expenses to increase over the next several years as we continue to hire additional personnel, expand our operations and infrastructure both domestically and internationally, and continue to develop our products. If we fail to increase our revenue to offset the increases in our operating expenses, we may not achieve or sustain profitability in the future.
  21. 수정We have experienced rapid revenue growth, which may not be indicative of our future performance.
    We have experienced rapid revenue growth in recent periods, with revenue of $639.8 $696.1 million and $479.1 $512.3 million for the three months ended March 31, June 30, 2026 and 2025, respectively, and $1,335.8 million and $991.4 million for the six months ended June 30, 2026 and 2025, respectively. However, our rate of revenue growth has periodically slowed in past periods and may slow again in future periods. You should not consider our historical growth in revenue as indicative of our future performance. In particular, our revenue growth rates may slow or decline in the future and may not be sufficient to achieve and sustain profitability, as we also expect our costs to increase in future periods. We believe that historical comparisons of our revenue may not be meaningful and should not be relied upon as an indication of future performance. Accordingly, you should not rely on our revenue and other growth for any prior quarter or year as an indication of our future revenue or revenue growth.
  22. 수정The ongoing evolution of our business to an agentic AI-first operating model, including our use of artificial intelligence (AI) and other automation tools and resources and our related recent workforce reduction, may not achieve the benefits we expect in the time we expect, if at all, and could adversely affect our business, financial condition, and results of operations.
    We are in the process of evolving how we operate our business to an agentic AI-first operating model. As part of this evolution in our operating model, in May 2026 we announced a workforce reduction designed to better align our organizational structure to this operating model. model and that workforce reduction has been substantially completed. We expect to incorporate are also in the process of incorporating AI tools and automation to increase productivity and maintain operational efficiency as we continue this evolution in our operating model. However, we may not realize the expected operating efficiencies, cost savings, or other expected benefits of these changes within the expected timeframe, if at all.
  23. 수정The ongoing evolution of our business to an agentic AI-first operating model, including our use of artificial intelligence (AI) and other automation tools and resources and our related recent workforce reduction, may not achieve the benefits we expect in the time we expect, if at all, and could adversely affect our business, financial condition, and results of operations.
    Our recently announced recent workforce reduction will result has resulted in severance and other restructuring charges. We may also incur unexpected additional costs in connection with these announced departures, including as a result of potential claims by employees, organizations that represent employees such as works councils, and governmental or regulatory bodies. In addition, the workforce reduction may disrupt our operations, adversely affect employee morale and productivity, and result in increased employee turnover. The departure of employees, including experienced personnel, may result in the loss of institutional knowledge and expertise, and remaining employees may experience increased workloads, which could lead to increased error rates, reduced innovation, and further attrition of key talent. Although we expect to continue to invest in the employees not impacted by the workforce reduction and those we may hire in the future, the workforce reduction could harm our reputation, make the future retention and hiring of employees more difficult, and require payment of increased compensation.
  24. 수정We face intense and increasing competition, which could adversely affect our business, financial condition, and results of operations.
    The markets for our network and products are intensely competitive and characterized by rapid changes in technology, customer requirements, industry standards, and frequent introductions of new, and improvements of, existing products. Our broad portfolio of products exposes us to competition from a large number of competitors in a number of different markets, including companies and their product and services offerings in, among others, virtual private networks, internal and external firewalls, web security (including web application firewalls and content filtering), distributed denial-of-service (DDoS) prevention, intrusion detection and prevention, application delivery controls, content delivery networks, domain name systems, email security vendors, advanced threat prevention, and wide area network (WAN) technology. technology, and developer platforms.
  25. 수정If we do not effectively attract, train, and retain our sales force to be able to sell our existing and new products and product features, we may be unable to add new contracted customers, or increase sales to our existing customers and our business would be adversely affected.
    A substantial majority of our revenue in the three six months ended March 31, June 30, 2026 was from contracted customers that were acquired through our inside and field sales teams, and we expect our sales teams to continue generating the majority of our revenue for the foreseeable future. As a result, our financial condition and results of operations are dependent to a significant degree on our ability to effectively attract, train, and retain qualified sales personnel, including senior sales leaders, and the ability of our dedicated sales personnel to acquire new contracted customers and expand our relationships with our existing contracted customers. Our sales representatives typically engage in direct interaction with our prospective contracted customers. Increasing our customer base and achieving broader market acceptance of our network and products will depend, to a significant extent, on our ability to expand and further invest in our sales and marketing operations and activities. There is significant competition for sales personnel with the advanced sales skills and technical knowledge we need. We believe that selling subscriptions to our products requires particularly talented sales personnel that understand a very wide array of highly technical topics, including significant portions of global networking, Internet, enterprise and identity security, and application development for both on-premises and cloud requirements. Changes in the senior leadership of our sales team (including the previously announced departure of our current President of Revenue at the end of 2026) could negatively impact our ability to retain current members of our sales team or attract new talent. In addition, as we continue to develop and sell newer types of products and product features, we will need our sales personnel to be proficient in selling both these newer products and features and our overall broader suite of products to our existing and potential customers. If we are unable to effectively attract, train, and retain qualified sales personnel, particularly as our lines of products and product features expand, our business, results of operations, and financial condition will be adversely impacted.
  26. 수정We rely on our co-founders and other key technical, sales, and management personnel to grow our business, and the loss of one or more key employees or the inability to successfully attract, integrate, and retain qualified senior management and other personnel, or the failure of new members of our management team to successfully lead and scale our business, could harm our business.
    From time to time, there may be changes in our management team as a result of the hiring, departure or realignment of our senior management and other key personnel, and such changes may impact our business. Additionally, as our business grows in scale and complexity, other changes to our management team may be necessary. For example, we have hired or promoted several new members of our senior management team in recent years, such as our President of Revenue, our Chief Strategy Officer, our Chief People Officer, our Chief Marketing Officer, our Chief Legal Officer, and our Chief Marketing Engineering Officer. In addition, our President of Product and Engineering departed during 2025 to become chief executive officer of another public company, our prior Chief Legal Officer resigned from that position during the first quarter of 2026, and our President of Revenue announced that he is departing at the end of 2026. Any significant leadership change or senior management transition, such as these, involves inherent risks and any failure to ensure timely and suitable replacements and smooth transitions could hinder our strategic planning, business execution, and future performance. In particular, these or any future leadership transitions may result in, and in some cases have resulted in, a loss of personnel with deep institutional or technical knowledge and changes in business strategy or objectives and disruptions in our operations and relationships with existing employees and customers due to added costs, operational inefficiencies, changes in strategy, decreased employee morale and productivity, and increased turnover. We must successfully integrate our new leadership team members within our organization to achieve our operating objectives. If we lose one or more of our senior management or other key employees and are unable to find adequate replacements, or if we fail to successfully attract, integrate, retain and motivate members of our senior management team and key employees, our business could be harmed.
  27. 수정We rely on third-party software for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively.
    We regularly upgrade or replace our various software systems and processes. If the implementations of these new applications are delayed, or if we encounter unforeseen problems with our new systems and processes or in migrating away from our existing systems and processes, our operations and our ability to manage our business could be negatively impacted. For example, we are in the process of implementing recently implemented a new enterprise resource planning system (ERP). Our ERP is a critical element of our financial planning, reporting, and compliance programs, and any unforeseen problems with our new ERP or in migrating away from previous systems and processes could harm our ability to manage our business.
  28. 수정Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value, and adversely affect our results of operations, financial condition, and prospects.
    In addition, we may not be able to find suitable acquisition candidates and we may not be able to complete acquisitions on favorable terms, if at all. If we identify companies that we would like to buy, we may also face antitrust, competition, and other regulatory scrutiny that may limit our ability to complete such acquisitions. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by customers, developers, or investors. In addition, we may not be able to integrate acquired businesses successfully or effectively manage the combined company following an acquisition. If we fail to successfully integrate our acquisitions, or integrate and retain the people, technologies, business partners, or customers associated with those acquisitions, into our company, the results of operations of the combined company could be adversely affected. Any integration process in connection with an acquisition will require significant time and resources, require significant attention from management, and disrupt the ordinary functioning of our business, and we may not be able to manage the process successfully, which could adversely affect our business, results of operations, and financial condition. We also frequently provide significant incentives for key employees of acquired companies to remain as our employees after the completion of the acquisition in order to facilitate integration and allow us to achieve the benefits we expect from the acquisition, but these incentives may have not prove to be always been successful in retaining those new key employees. In addition, we may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction, including accounting charges.
  29. 수정If our global network that delivers our products or the core co-location facilities we use to operate our network are damaged, interfered with, or otherwise fail to meet the requirements of our business or local regulations, our ability to provide access to our network and products to our customers and maintain the performance of our network could be negatively impacted, which could cause our business, results of operations and financial condition to suffer.
    As of March 31, June 30, 2026, we hosted our global network and served our customers from co-location and Internet Service Provider (ISP) partner facilities located in more than 335 cities and over 125 countries worldwide. In addition to these global facilities, much of the infrastructure for our global network and for our business and operations is maintained through a core co-location facility located in the greater Portland, Oregon area, a second core co-location facility located in Amsterdam that provides certain redundancy to the U.S. core facility, and through a limited number of other U.S. co-location facilities that provide limited subsets of our network support. While we have electronic and, to a lesser extent, physical access to the components and infrastructure of our network and co-location facilities that are hosted by third parties — including ISP-partner facilities — we do not control the operation of these third-party facilities. Consequently, we may be subject to service disruptions as well as failures to provide adequate support for reasons that are outside of our direct control. All of our co-location and ISP-partner facilities and network infrastructure are vulnerable to damage or interruption from a variety of sources including earthquakes; weather events; floods; fires; power loss; system failures; computer viruses; physical or electronic break-ins; human error; malfeasance; or interference, including by disgruntled employees, former employees, or contractors; military conflicts; terrorism; and other catastrophic events. For example, in November 2023, our control plane and analytics services experienced an outage triggered by a power failure at one of our core data centers in the greater Portland, Oregon area, which impacted certain customers' access to some of our products and services for several days and the loss of certain customer logs. In March 2024, a subsequent power failure occurred at the same core data center in the greater Portland, Oregon area, which impacted certain customers’ access to some of our products for minutes and to our analytics services for several hours. In addition, we have experienced a route leak and a limited number of network outages involving our core and network co-location facilities over the past five years due to a variety of causes. Co-location facilities housing our network infrastructure may also be subject to local governmental or other administrative actions, changes to legal or permitting requirements, labor disputes, and litigation to stop, limit, or delay operations. Despite precautions taken at these facilities, such as disaster recovery and business continuity arrangements, the occurrence of a natural disaster or an act of war or terrorism, a decision to close the co-location facilities without adequate notice, interference with, or sabotage of, our equipment at these facilities, or other unanticipated problems at these facilities could result in interruptions or delays in the availability of our network and products, impede our ability to scale our operations, or have other adverse impacts upon our business, results of operations, and financial condition. In addition, errors or defects in our customers’ software can result in unexpected and unintentional upward spikes in their usage of our products and network, and those spikes can cause strains on, and adversely affect the availability and functioning of, our co-location facilities and our network.
  30. 수정We rely on a limited number of suppliers for certain components of the equipment we use to operate our network and any disruption in the availability, or price, of these components could delay our ability to expand or increase the capacity of our global network, replace defective equipment, or identify alternative supply sources favorable to us.
    In addition, the technology equipment industry has experienced component shortages and delivery delays in the past, and we may experience shortages or delays, including as a result of natural disasters, increased demand in the industry, military conflicts and geopolitical tensions, fuel shortages, labor strikes, or other related conditions, or our suppliers lacking sufficient rights to supply the components in all jurisdictions in which we have co-location facilities that support our global network. For example, we expect significant component shortages that may impact our server supply chain during the current year, particularly in memory products such as Dual In-line Memory Modules (DIMMs), as well as enterprise Solid State Drives (SSDs), Central Processing Units (CPUs), and high-capacity Hard Disk Drives (HDDs). These anticipated shortages, driven by factors such as the reallocation of manufacturing capacity to support artificial intelligence infrastructure and increased demand from hyperscale data center operators, and other shortages or similar supply constraints in the future may disrupt and increase the cost of our expected purchases of network equipment and servers. Furthermore, if the costs of these critical components continue to escalate rapidly, such cost increases may outpace our ability to adjust our pricing, renegotiate existing agreements, or sign new customer contracts at rates that fully absorb these higher capital expenditures. If we are unable to pass these increased infrastructure costs on to our customers in a timely manner, we could experience compressed gross margins, which would materially and adversely impact our profitability, cash flows, and overall financial condition.
  31. 수정Activities of our paying and free customers or the content of their websites and other Internet properties may violate applicable laws and/or our terms of service and could subject us to lawsuits, regulatory enforcement actions, and/or liability in various jurisdictions.
    Policies and laws in this area remain highly dynamic, and we may face additional theories of intermediary liability in various jurisdictions. Many policymakers in the United States have called for a re-examination of CDA section 230 and copyright law. The Digital Services Act and Digital Markets Act have gone into effect in the European Union (EU), updating the rules governing digital services like ours and imposing additional legal requirements on certain service providers. In addition, in 2019, the EU approved a Copyright Directive that imposes additional obligations on service providers and failure to comply could give rise to significant liability. More recently, some countries in the EU have adopted or are considering adopting regulatory schemes that impose significant obligations on service providers related to online content and may give rise to fines for alleged noncompliance. For example, in December 2025, an Italian regulator issued an administrative fine of approximately €14.2 million against Cloudflare for alleged failure to comply with its regulatory scheme. Cloudflare is challenging both the fine and the underlying regulation. Other laws and pending legislation at the EU level (terrorist content, child sexual abuse materials) and in the United
  32. 수정Activities of our paying and free customers or the content of their websites and other Internet properties may violate applicable laws and/or our terms of service and could subject us to lawsuits, regulatory enforcement actions, and/or liability in various jurisdictions.
    Other laws and pending legislation at the EU level (terrorist content, child sexual abuse materials) and in the United Kingdom (online harms), Australia (online harms), and India (Digital India Act), as well as other new laws like them, may also expose Internet companies like us to significant liability. We may incur additional costs to comply with these new laws, which may have an adverse effect on our business, results of operations, and financial condition.
  33. 수정Our actual or perceived failure to comply with privacy, data protection, information security, AI, and other applicable laws, regulations, and obligations could harm our business.
    Laws and regulations regarding the development, use, and deployment of AI technologies in the EU, U.S., and elsewhere are increasing in complexity. For example, the EU AI Act provides for compliance deadlines in 2025 and 2026, and a number of U.S. states have enacted AI governance and safety frameworks. frameworks or laws or regulations imposing transparency or other obligations in connection with the development, use, or deployment of AI. Numerous Further, numerous jurisdictions have proposed legislation to regulate the development, use, and deployment of AI, in whole or in part. AI. As we continue to see efforts to regulate this new technology, we have incurred and will continue to incur costs to address the impact, if any, of these laws and regulations regulating AI on our products and practices.
  34. 수정Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
    Under certain circumstances, our income tax obligations may be reduced as a result of our net operating loss carryforwards and other tax attributes. As of December 31, 2025, we had net operating loss carryforwards for U.S. federal and state income tax purposes of $1,859.1 million and $988.3 million, which will begin to expire in 2029 and 2027, respectively. We had net operating loss carryforwards for U.K. income tax purposes of $269.8 million that can be carried forward indefinitely. Also as of December 31, 2025, we had U.S. federal and state research and development tax credit carryforwards of $91.6 million and $42.2 million that will begin to expire in 2029 and 2039, respectively.
  35. 수정Our international operations expose us to significant risks, and failure to manage those risks could materially and adversely impact our business and results of operations.
    Historically, we have derived a significant portion of our revenue from outside the United States. We derived 49% and 51% of our revenue from our non-U.S. customers for the three months ended June 30, 2026 and 2025, respectively, and 50% and 51% of our revenue from our non-U.S. customers for the six months ended June 30, 2026 and 2025, respectively. We are continuing to adapt to and develop strategies to address international markets and our growth strategy includes expansion into geographies around the world, but there is no guarantee that such efforts will be successful. In addition, our global network includes co-location facilities located in more than 335 cities and over 125 countries worldwide as of March 31, June 30, 2026. We expect that our international sales and network activities will continue to grow in the future, as we continue to pursue opportunities in international markets and further grow our network around the world. These international operations will require significant management attention and financial resources and are subject to substantial risks, including:
  36. 수정Our failure to protect our intellectual property rights and proprietary information could diminish our brand and other intangible assets.
    We rely and expect to continue to rely on a combination of patent, patent licenses, trade secret, domain name protection, trademarks, copyrights, and confidentiality and license agreements with our employees, consultants, and third parties in order to protect our intellectual property rights and proprietary information. As of March 31, June 30, 2026, we had 383 390 issued patents and 62 75 pending patent applications in the United States and abroad. However, third parties may knowingly or unknowingly infringe our intellectual property rights. Third parties may challenge our intellectual property rights, pending and future patent, trademark, and copyright applications may not be approved, and we may not be able to prevent infringement, misappropriation, or violations of our intellectual property rights without incurring substantial expense. We have also devoted substantial resources to the development of our proprietary technologies and related processes, and we provide access to these technologies and processes to certain of our vendors and partners, including JD Cloud with respect to the facilities included within China. We must protect this proprietary information in order to realize commercial benefit from our investment.
  37. 수정The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our initial public offering, and it may depress the trading price of our Class A common stock.
    Our Class B common stock has 10 votes per share and our Class A common stock has one vote per share. As of March 31, June 30, 2026, our directors, executive officers, and holders of more than 5% of our common stock, and their respective affiliates, held in the aggregate 63.8% 66.0% of the voting power of our capital stock, with our co-founders Matthew Prince and Michelle Zatlyn (our co-founders) together holding approximately 49.9% 49.3% of the voting power of our capital stock. Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively continue to control a majority of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval. This concentrated control will limit or preclude the ability of holders of Class A common stock to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders.
  38. 수정Repaying and servicing our existing and future debt, including our Notes and our Revolving Credit Facility, may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness.
    As of March 31, June 30, 2026, $1,293.8 million in aggregate principal amount of the 2026 Notes were outstanding and $2,000.0 million in aggregate principal amount of the 2030 Notes were outstanding. In addition, in May 2024, we entered into a senior secured credit agreement with a $400 million Revolving Credit Facility. Our ability to make scheduled payments of the principal of, or to refinance our indebtedness, including the Notes, and any borrowings under our Revolving Credit Facility, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, the credit agreement for our Revolving Credit Facility contains restrictive covenants that limit us, and any of our future debt agreements may contain restrictive covenants that may limit or prohibit us, in each case from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt.
  39. 수정Transactions relating to the Notes may affect the value of our Class A common stock.
    The conversion of some or all of the Notes would dilute the ownership interests of our existing stockholders to the extent we satisfy our conversion obligation by delivering shares of our Class A common stock upon any conversion of the Notes. The Notes of either series may become convertible at the option of their holders under certain circumstances set forth in the applicable Indenture. For example, in connection with the Capitalization Changes, the 2030 Notes will become convertible between the 25th scheduled trading day prior to the ex-dividend date until the close of business on the business day immediately preceding the ex-dividend date. If holders of the Notes elect to convert their Notes, we may settle our conversion obligation by delivering to them a significant number of shares of our Class A common stock, which would cause dilution to our existing stockholders. In addition, from time to time, we may enter into certain exchange transactions with respect to the Notes which may also cause dilution to our existing stockholders. For example, in August 2021, we entered into privately-negotiated exchange agreements with certain holders of our previously outstanding 0.75% Convertible Senior Notes due 2025 (the 2025 Notes) for the exchange of approximately $400.7 million in cash and approximately 7.6 million shares of our Class A common stock for $400.0 million in aggregate principal amount of the 2025 Notes. In addition, during the year ended December 31, 2023, we settled conversions of approximately $35.4 million aggregate principal amount of the 2025 Notes for approximately 0.5 million shares of our Class A common stock. These conversions were exercised by the holders of the 2025 Notes in connection with our issuance of a redemption notice.
  40. 문장 삭제If we fail to effectively manage our growth, we may be unable to execute our business plan, maintain high-quality levels of customer support, ensure the reliability and security of our network, adequately address competitive challenges, or maintain our corporate culture, and our business, financial condition, and results of operations would be harmed.
    For example, our headcount grew from 4,400 employees as of March 31, 2025 to 5,483 employees as of March 31, 2026.
  41. 문장 삭제We rely on our co-founders and other key technical, sales, and management personnel to grow our business, and the loss of one or more key employees or the inability to successfully attract, integrate, and retain qualified senior management and other personnel, or the failure of new members of our management team to successfully lead and scale our business, could harm our business.
    In addition, our President of Product and Engineering recently departed to become chief executive officer of another public company.
  42. 문장 삭제Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
    As of December 31, 2025, we had net operating loss carryforwards for U.S.
  43. 문장 삭제Our international operations expose us to significant risks, and failure to manage those risks could materially and adversely impact our business and results of operations.
    We derived 51% and 51% of our revenue from our international customers for the three months ended March 31, 2026 and 2025, respectively.