Investor Presentation

Q3 2020
This presentation and the accompanying oral commentary contain “forward-looking” statements within the meaning of the federal securities laws, and these statements involve substantial risks and
uncertainties. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, expectations of future operating results or financial performance, the
impact of the COVID-19 pandemic on our and our customers’, vendors’, and partners’ businesses and economic conditions generally, market size and growth opportunities, the calculation of certain of our
key financial and operating metrics, capital expenditures, plans for future operations, competitive position, technological capabilities, and strategic relationships, as well as assumptions relating to the
foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. In some cases, you can identify forward-looking statements by
terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “would,” “continue,” “ongoing” or the negative of these terms or other
comparable terminology. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not
necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all.

Forward-looking statements are subject to significant risks, uncertainties and assumptions. Actual results could differ materially from our current expectations as a result of many factors, including those
identified in the “Risk Factors” section of our filings made with the Securities and Exchange Commission ("SEC"), including our Form 10-Q for the quarter ended September 30, 2020, as well as other filings
that we may make from time to time with the SEC. You can locate these reports on our investor relations website (https://cloudflare.NET) or on the SEC website (www.sec.gov). If the risks or uncertainties
ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. Except as required by law, we assume no
obligation and do not intend to update these forward-looking statements or to conform these statements to actual results or to changes in our expectations.

In addition to our results determined in accordance with generally accepted accounting principles (“GAAP”), this presentation includes certain non-GAAP financial measures. These non-GAAP financial
measures are in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these
non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. See the appendix for a reconciliation of those measures to the most directly comparable
GAAP measures.

This presentation contains statistical data, estimates and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our
internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or
completeness of the data contained in these industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do
we undertake to update such data after the date of this presentation.

By attending or receiving this presentation you acknowledge that you will be solely responsible for your own assessment of the market and our market position and that you will conduct your own analysis
and be solely responsible for forming your own view of the potential future performance of our business.

The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the platform and products of
Cloudflare.

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as of Q3 2020

> $100,000 Annualized Revenue

2016 2017 2018 2019 YTD Q3 YTD Q3 Q3 Q3 Q3

2019 2020 2018 2019 2020
Note: Q3 2020 data as of September 30, 2020. GAAP Gross Margin is for the quarter ended September 30, 2020. See Appendix for Large Customers definition. 3
Cloudflare’s mission is to

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The Internet
was not built
for what it
has become.

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• Costly and complex • Easy-to-use, flexible, and scalable
• Web of dependencies • Unified control plane
• Specialized hardware • Serverless cloud architecture
• On-premise only
vv • Cloud, hybrid, on-premise, and SaaS
• Point solutions • Broad, integrated product platform

Global Cloud Platform

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Hardware / Software (Buy) Yesterday Services / Cloud (Rent) Tomorrow

NETWORK

APPLICATION

STORE/COMPUTE

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 Firewall IoT Security

Mobile Domain Name

Cache Optimization Load Balancing System (DNS)
Bot Management SSL/TLS

DDoS Protection Secure Origin Connection

Intelligent Image Anycast DNS

Routing Optimization Network Resolver

Infrastructure Protection Rate Limiting

Content Mobile SDK Virtual Always Online

Zero Trust Security Gateway Optimization Backbone

Serverless Compute Cloudflare Apps Analytics

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Cyber threats blocked Total Of the Fortune 1,000 Of revenue from
per day Customers are Paying Customers outside of the U.S.

Note: Cyber threats blocked per day is approximate average over the three months ended September 30, 2020. All figures as of the three months ended September 30, 2020. See Appendix for Paying Customers definition.
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• Every server, in every city, can run every Cloudflare service

• Abstracts underlying infrastructure

• Dynamically optimizes and leverages capacity across network

• Single unified code base

• Deployment on commodity hardware

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 Cities

Countries

Interconnects

Of the Internet-connected
developed world population is
located within 100 milliseconds
Cloudflare city
of our network

Note: Figures as of September 30, 2020, with the exception of interconnects, which is as of October 15, 2020.
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12
 Machine learning systems
with every
with paying customers in 175 countries.
customer’s request.

for the
Internet blocking an average of 76 and QA through free users volunteering
billion cyber threats each day. to test new products.

Note: Data as of the three months ended September 30, 2020.

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 SHARED NETWORK EASE NO TRADE OFFS
INTELLIGENCE SCALE OF USE Security +
Performance

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 Limitations

• Complex and expensive

• Not suited to address cloud-based and hybrid
deployments

• Architected to deliver single point / more narrow

product portfolio

• Customers are increasingly looking for an integrated

platform offering security, performance, and reliability
through a single vendor

• Inability to serve as a unified control plane across

on-premise, cloud, hybrid, and SaaS infrastructure

• Customer lock-in and competition concerns

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 2022

Serverless
Application Delivery Controls
2018
Content Delivery Networks
Wide Area Network Technology
Internet of Things

VPN
Internal and External Firewalls
Web Security
Distributed Denial of Service Prevention 5G Cellular
Intrusion Detection and Prevention
Advanced Threat Prevention

Remote Work

Note: Total addressable market represents 2018 spend and 2022 projections from our analysis based on latest IDC data available as of May 2019.
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 Model

Get customers
We don’t build ahead of the curve.

Add sales reps to

service new customer
• Self service adoption for customers of all sizes segments
• Natural expansion
• Pulled into new geographies Spend
• Pulled up market marketing
budget

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 Extend our
serverless
platform
strategy
Develop new
products
Expand • Enable a new class of
relationships applications
with existing • Power store and compute
customers • High product velocity
workloads
Acquire new • Set pace for innovation in • Increase stickiness
customers market • Opens new market
• Expand into new markets to opportunity
• Upgrading to premium expand TAM
plans
• Increased usage
• Grow awareness • Adding products
• Field sales
• International coverage
• Expand channel partnerships

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Financial Overview

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 CAGR
Large Addressable High Revenue Attractive GAAP Efficient
Market Growth Gross Margin Business Model

Note: Total addressable market represents 2018 spend and 2022 projections from our analysis based on latest IDC data available as of May 2019. Revenue growth is from 2016-2019 and gross margin data is for the
three months ended September 30, 2020.
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 Subscription-based revenue model

48% outside of the United States

Dollar-Based Net Retention consistently at or

above 115% for last 10 quarters1

Growing Large Customer contribution

Multiple independent growth vectors

2016 2017 2018 2019 Q3 Q3

2019 2020 Note: Revenue outside the United States is for the three months ended September 30, 2020. See Appendix for the
definitions of Dollar-Based Net Retention and Large Customers.
1
See our earnings release and related supplemental materials dated November 5, 2020 for a discussion of how we
changed the methodology by which we calculate Dollar-Based Net Retention. 21
 Total Paying Customers Large Customers
>$100,000 Annualized Revenue

Q3 Q3 Q3 Q3 Q3 Q3
2018 2019 2020 2018 2019 2020
Note: See Appendix for Paying Customer and Large Customer definitions. See our earnings release and related supplemental materials dated
November 5, 2020 for a discussion of how we changed the methodology by which we calculate Paying Customers and Large Customers. 22
 Serverless architecture deployed on
commodity hardware

Single software stack across the network

Symbiotic relationship with ISPs

Leverage idle capacity across network

2017 2018 2019 Q1 Q2 Q3

2020 2020 2020

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2018 2019 Q3 2019 Q3 2020 2018 2019 Q3 2019 Q3 2020

Note: $ in millions. Metrics shown are Non-GAAP. See Appendix for GAAP financial measures and reconciliation.
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 78 % 78 % 76 %

(% of revenue)
48 % 52 % 45 %

(% of revenue)
27 % 27 % 21 %

(% of revenue)
31 % 23 % 16 %

(30)% (25)% (4)%

Note: Metrics shown are Non-GAAP. See Appendix for GAAP financial measures and reconciliation.
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● Raised $565 million, net of fees and expenses, in our IPO that priced on September 12th, 2019
● Raised $562 million, net of fees and expenses, in our Convertible Note that priced on May 13th, 2020

Cash Balance Operating Cash Flow & Margin

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Disrupting a large and growing total addressable market

Widely distributed Global Cloud Platform; every service on every server

Expansive product portfolio; open to developer innovation

Highly efficient business model and low fundamental cost structure

High-growth subscription revenue model with attractive gross margin

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Appendix

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 2016 2017 2018 2019 Q3 2019 Q3 2020
GAAP Cost of Revenue $23,962 $28,788 $43,537 $63,423 $16,033 $27,005
Less: Stock-based Compensation Expense -$64 -$47 -$119 -$716 -$397 -$354
Less: Amortization of Acquired Intangible Assets -$38 -$462 -$517 -$125 -$31 -$700
Non-GAAP Cost of Revenue $23,860 $28,279 $42,901 $62,582 $15,605 $25,951
GAAP Gross Profit $60,829 $106,127 $149,137 $223,599 $57,908 $87,157
Add: Stock-based Compensation & Related Payroll Taxes $64 $47 $119 $716 $397 $354
Add: Amortization of Acquired Intangible Assets $38 $462 $517 $125 $31 $700
Non-GAAP Gross Profit $60,931 $106,636 $149,773 $224,440 $58,336 $88,211
GAAP Gross Margin 72% 79% 77% 78% 78% 76%
Non-GAAP Gross Margin 72% 79% 78% 78% 79% 77%
GAAP Sales and Marketing $40,122 $61,899 $94,394 $159,298 $45,538 $55,982
Less: Stock-based Compensation & Related Payroll Taxes -$381 -$488 -$979 -$8,709 -$4,880 -$4,761
Non-GAAP Sales and Marketing $39,741 $61,411 $93,415 $150,589 $40,658 $51,221
GAAP S&M Expense as a % of Revenue 47% 46% 49% 56% 62% 49%

GAAP to Non-GAAP Non-GAAP S&M Expense as a % of Revenue

GAAP Research and Development
47%
$23,663
46%
$33,650
48%
$54,463
52%
$90,669
55%
$27,863
45%
$30,902
Less: Stock-based Compensation & Related Payroll Taxes -$1,043 -$969 -$1,532 -$13,037 -$7,801 -$7,373

Reconciliation Non-GAAP Research and Development

GAAP R&D Expense as a % of Revenue
$22,620
28%
$32,681
25%
$52,931
28%
$77,632
32%
$20,062
38%
$23,529
27%
Non-GAAP R&D Expense as a % of Revenue 27% 24% 27% 27% 27% 21%
GAAP General and Administrative $14,073 $20,308 $85,179 $81,578 $25,593 $21,525
Less: Stock-based Compensation & Related Payroll Taxes -$4,212 -$1,251 -$24,717 -$14,165 -$9,833 -$3,518
Non-GAAP General and Administrative Expense $9,861 $19,057 $60,462 $67,413 $15,760 $18,007
GAAP G&A Expense as a % of Revenue 17% 15% 44% 28% 35% 19%
Non-GAAP G&A Expense as a % of Revenue 12% 14% 31% 23% 21% 16%
GAAP Loss from Operations -$17,029 -$9,730 -$84,899 -$107,946 -$41,086 -$21,252
Add: Stock-based Compensation & Related Payroll Taxes $5,700 $2,755 $27,347 $36,627 $22,911 $16,006
Add: Amortization of Acquired Intangible Assets $38 $462 $517 $125 $31 $700
Non-GAAP Loss from Operations -$11,291 -$6,513 -$57,035 -$71,194 -$18,144 -$4,546
GAAP Operating Margin -20% -7% -44% -38% -56% -19%
Non-GAAP Operating Margin -13% -5% -30% -25% -25% -4%

Note: $ in thousands. 29
Paying Customers. We believe our ability to grow the number of paying customers on our platform provides a key indicator of growth of our business and our
future business opportunities. We define a paying customer as a person or entity who has generated revenue during the quarter, excluding (i) customers that were
not acquired through ordinary sales channels, (ii) customers using only our registrar product, and (iii) customers using our consumer applications, such as 1.1.1.1
and Warp, which agreements and customers together represent an insignificant amount of our revenue. An entity is defined as a company, a government
institution, a non-profit organization, or a distinct business unit of a large company that has an active contract with us or one of our partners.

Paying Customers (> $100,000 Annualized Revenue). While we continue to grow customers across all sizes, over time, our large customers have contributed an
increasing share of our revenue. We view the number of customers with Annualized Revenue greater than $100,000 as indicative of our penetration within large
enterprise accounts. To measure Annualized Revenue, we take the sum of revenue for each customer in the quarter and multiply that amount by four. For
example, if we signed a new customer that generated $600 of revenue in the quarter, that customer would account for $2,400 of Annualized Revenue for that year.
Our Annualized Revenue calculation excludes (i) agreements that were not entered into through our ordinary sales channels, (ii) revenue generated from
customers using only our registrar product, and (iii) customers using our consumer applications, such as 1.1.1.1 and Warp, which agreements and customers
together represent an insignificant amount of our revenue. Our Annualized Revenue metric also includes any usage charges by a customer during a period, which
represents a small portion of our total revenue and may not be recurring. As a result, Annualized Revenue may be higher than actual revenue over the course of
the year.

Dollar-Based Net Retention Rate. Our ability to maintain long-term revenue growth and achieve profitability is dependent on our ability to retain and grow revenue
generated from our existing paying customers. We believe that we will achieve these objectives by continuing to focus on customer loyalty and adding additional
products and functionality to our platform. Our dollar-based net retention rate is a key way we measure our performance in these areas. Dollar-based net retention
measures our ability to retain and expand recurring revenue from existing customers. To calculate dollar-based net retention for a period, we compare the
Annualized Revenue from paying customers four quarters prior to the Annualized Revenue from the same set of customers in the most recent quarter. Our
dollar-based net retention includes expansion and is net of contraction and attrition, but excludes Annualized Revenue from new customers in the current period.
Our dollar-based net retention excludes the benefit of free customers that upgrade to a paid subscription between the prior and current periods, even though this
is an important source of incremental growth. We believe this provides a more meaningful representation of our ability to add incremental business from existing
paying customers as they renew and expand their contracts.

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