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

[Audio Gap] on Annual Meeting of Stockholders. My name is Matthew Prince, and I am Cloudflare's Co-Founder, Chief Executive Officer and Chair of the Board of Directors. I'll 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. We believe all members of our Board of Directors are attending today's meeting, which, in addition to myself, include Michelle Zatlyn, our Co-Founder, President and Chief Operating Officer and Director; Scott Sandell, our Lead Independent Director and member of the Board's Compensation Committee; Mark Anderson, a member of the Board's Compensation Committee and Nominating and Corporate Governance Committees; 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 and Compensation Committees; Stan Meresman, the Chair of the Board's Audit Committee; and Katrin Suder, a member of the Board's Audit Committee. In addition, the following other members of our management team are attending, Thomas Seifert, our Chief Financial Officer; 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 hand things off to Doug Kramer, who will conduct the formal portion of today's meeting. Doug, take it away.

Thank you, Matthew, and good morning, 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 14, 2021. On or about April 21, 2021, we mailed to our stockholders of record a notice of Internet availability of proxy materials containing instructions on how to access the proxy statement in our annual report on Form 10-K for the year ended December 31, 2020. 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. We 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 14, 2021. As of that date, there were 256,213, 833 shares of our Class A common stock and 54,367,286 shares of our 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 year 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 the Class B common stock taken together. We 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 21, 2021, 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. We also have a certified list of stockholders entitled to vote during the meeting, which will be available online for the duration of the meeting and can be found on the virtual meeting web portal. The inspector of election having reviewed the proxies delivered to date as certified by Broadridge Financial Solutions, which is also acting as 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. The voting polls are open. So any stockholders logged in and who wish to vote during this meeting may do so. We will then answer stockholder questions that were submitted prior to and during this meeting that are relevant to the proposals to be voted on by stockholders is reflected on the agenda for this meeting and that are otherwise consistent with the rules of conduct for this meeting. There is a text box on your screen where you can submit questions at any time during the meeting and prior to the end of the Q&A session. Only validated Cloudflare stockholders may ask a question in the designated field on the web portal relevant to an agenda item to be voted on. We will try to answer as many questions as we have time for, but we may not be able to answer all questions submitted. After the Q&A session and 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 Maria Eitel, Matthew Prince and Katrin Suder, who are nominated by the Board of Directors to serve as Class II directors as set forth in the 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, 2021. Third item. The third item of business is the approval on an advisory basis of the compensation of our named executive officers as set forth in the proxy statement. Fourth item. The fourth item of business is the approval on an advisory basis of the frequency of future stockholder advisory votes on the compensation of our named executive officers. Cloudflare's Board of Directors recommends that you vote for Proposals 1, 2 and 3 and for every 1 year for Proposal 4. It is now 9:05 a.m. Pacific Time on June 3, 2021, and the voting polls are open. You may cast your vote online until the polls close in 1 minute at 9:06 a.m. 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 elections. 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 that are relevant to the proposals and that are otherwise consistent with the rules of conduct, and we will read them out loud. 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 uncertainties, some of which are beyond our control, including, but not limited to, the extent and duration of the impact of the ongoing COVID-19 pandemic and adverse conditions in the global domestic -- the general domestic and global economic markets. Our actual results may differ significantly from these 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 proposals and consistent with the rules of conduct this meeting as time allowed. Jayson, have any questions been submitted?

No. There are no questions at this time. [Voting]

Thank you. It is now 9:07 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 will 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 voting results, all 3 nominees were elected to the Board as Class II directors; two, the proposal for the ratification of KPMG LLP as the company's independent registered public accounting firm for the year ending December 31, 2021, passed; three, the compensation of the company's named executive officers was approved; and four, the frequency of future stockholder advisory votes on the compensation of the company's named executive officers will be every 1 year.

Thank you, Kathy. There being no further business to come before the meeting, the meeting is now adjourned. Thank you all for attending.