Cloudflare, Inc. (NET) Earnings Call Transcript & Summary

Good morning, and welcome to the Cloudflare 2020 Annual Meeting of Stockholders, our first stockholder meeting as a public company. My name is Matthew Prince, and I'm Cloudflare's Co-Founder, Chief Executive Officer and Chair of the Board of Directors. I will be presiding as Chair of Cloudflare's Annual Meeting of Stockholders, which I now call to order. Doug Kramer, our General Counsel and Secretary, will record the minutes of today's meeting. Especially in these turbulent times, I hope everyone attending the meeting is safe and healthy. We believe all members of our Board of Directors are attending today's meeting, including: Scott Sandell, our Lead Independent Director and a member of the Board's Compensation Committee; Mark Anderson, a member of the Board's Nominating and Corporate Governance Committee; Maria Eitel, the Chair of the Board's Compensation Committee; Carl Ledbetter, the Chair of the Board's Nominating and Corporate Governance Committee, and a member of the Board's Audit Committee; Stan Meresman, the Chair of the Board's Audit Committee; Katrin Suder, a member of the Board's Audit Committee; and Michelle Zatlyn, our Co-Founder, Chief Operating Officer and a Director. In addition, the following other members of our management team are attending: Thomas Seifert, our Chief Financial Officer; Doug Kramer, our General Counsel; and Jayson Noland, our Head of Investor Relations. We also have a representative from KPMG, our independent registered public accounting firm in attendance. With that, I would like to introduce Doug Kramer, our General Counsel and Secretary, who will conduct the formal portion of today's meeting. Doug?

Thank you, Matthew, and good morning to Cloudflare stockholders. We will now conduct the formal business as set forth in the notice of meeting and proxy statement that was made available to our stockholders of record as of April 13, 2020. On or about April 22, 2020, we mailed to our stockholders of record a notice of Internet availability of proxy materials containing instructions on how to access the proxy statement and our annual report on Form 10-K for the year ended December 31, 2019. The notice provided instructions on how to vote online or by telephone, and included instructions on how to receive a paper copy of proxy materials by mail. Kathy Blackwell of CT Hagberg has been appointed to act as the inspector of election for this meeting and has taken an oath of office, which will be filed with the minutes of this meeting. A copy of the rules of conduct that govern today's meeting can be found in the Meeting Materials section of the web portal for today's virtual stockholder meeting. I ask that each of you abide by these rules in order to facilitate an orderly meeting and to accomplish the items on today's agenda. The record date for this meeting was April 13, 2020. As of that date, there were 154,712,557 shares of Cloudflare Class A common stock and 148,685,322 shares of Cloudflare Class B common stock outstanding and entitled to vote at this meeting. Each share of Class A common stock is entitled to one vote on each proposal at this meeting, and each share of Class B common stock is entitled to 10 votes on each proposal at this meeting. Whenever we refer to Cloudflare common stock during this meeting, we are referring to both the Class A common stock and Class B common stock taken together. I have an affidavit of mailing from Broadridge Financial Services, which is acting as Cloudflare's mailing agent for this annual meeting, confirming that the notice of Internet availability of proxy materials was mailed on or about April 22, 2020, to the holders of Cloudflare's common stock as of the record date. The affidavit, notice and proxy materials will be filed with the minutes of this meeting. I also have a certified list of stockholders entitled to vote during this meeting, which will be available online for the duration of the meeting and can be found at the bottom of the virtual web portal. The inspector of election, having reviewed the proxies delivered to date as certified by Broadridge Financial Solutions, our proxy vote tabulator for this meeting, has advised me that there is a quorum of shares of Cloudflare common stock present, and this meeting is properly constituted for the transaction of business for which it has been called and as stated in the notice of meeting. A quorum being present, I declare that this meeting has been duly called. First, I will review the proposals to be voted on, which were included in the proxy statement for this meeting. I will then notify you when voting polls are open so that any stockholders logged in and who have not already voted and wish to vote during this meeting may do so. We will then answer stockholder questions that were submitted prior to and during this meeting regarding the proposals that are consistent with the rules of conduct for this meeting. [Operator Instructions] After the Q&A session and the voting polls have closed, we will announce preliminary voting results and then adjourn the meeting. First item. The first item of business is the election of Scott Sandell and Michelle Zatlyn, who are nominated by the Board of Directors to serve as Class I directors as set forth in the company's proxy statement. Second item. The second item of business is the ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for the year ending December 31, 2020. Cloudflare's Board of Directors recommends that you vote in favor of all director nominees and the proposal to ratify the appointment of KPMG. It is now 9:07 a.m. Pacific Time on June 2, 2020, and the voting polls are currently open. You may cast your vote online until the polls close in at least 1 minute at 9:08 Pacific Time, or if later, after we have finished answering appropriate questions from stockholders. If you are voting today, you must submit your votes at this time in order for them to be counted by the inspector of election. The inspector of election will not accept ballots, proxies or votes or any changes or revocations submitted after the closing of the polls. As a reminder, please submit any questions online regarding the proposals. And if appropriate, we will read them aloud. While we allow time for stockholders who haven't already done so to complete their voting, I'd like to remind you that we may make forward-looking statements during today's meeting. These statements are not guarantees of future performance, but rather are subject to risks and uncertainty, some of which are beyond our control, including, but not limited to, the extent and duration of the impact of the COVID-19 pandemic and adverse conditions in the general domestic and global economic markets. Our actual results may differ significantly from those projected or suggested in any forward-looking statements, and we urge you to review the cautionary statements and other information contained in our filings with the SEC. At this time, we will pause to answer any questions that are relevant to the meeting and consistent with the rules of conduct for this meeting as time allows. Jayson, have any questions been submitted?

No, there are no questions at this time.

Thank you. We will now pause very shortly until the remainder of the noted time has expired before the closing of the polls. [Voting]

It is now 9:09 a.m. Pacific Time, and the polls are closed. Any votes cast today, including those submitted electronically during the meeting, will be counted in the final voting tally, which will be reported on a Form 8-K that we file with the SEC within 4 business days of this meeting. I now call on the inspector of election to report the preliminary voting results.

Thank you, Doug. Based upon the preliminary results, both nominees were elected to the Board; and two, the proposal for the ratification of KPMG LLP as the company's independent registered public accounting firm for fiscal 2020 has passed.

Thank you, Kathy. There will be no further business to come before the meeting. The meeting is now adjourned. I hope all of you stay safe and healthy. Thank you for all attending.