Cloudflare, Inc. PP&E Disclosure
| Useful Lives | |||||
| Servers—network infrastructure | 5 years | ||||
| Buildings | 30 years | ||||
| Office and computer equipment | 3 years | ||||
| Office furniture | 3 years | ||||
| Software | 3 years | ||||
| Leasehold improvements | Lesser of useful life or term of lease | ||||
| Asset retirement obligation | Lesser of useful life or term of lease | ||||
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Property and equipment: | |||||||||||
| Servers—network infrastructure | $ | 726,763 | $ | 488,799 | |||||||
| Construction in progress | 58,372 | 68,973 | |||||||||
| Capitalized internal-use software | 109,730 | 98,055 | |||||||||
| Office and computer equipment | 34,414 | 30,872 | |||||||||
| Office furniture | 7,816 | 7,068 | |||||||||
| Software | 9,309 | 4,097 | |||||||||
| Leasehold improvements | 50,906 | 49,047 | |||||||||
| Asset retirement obligation | 826 | 827 | |||||||||
| Gross property and equipment | 998,136 | 747,738 | |||||||||
| Less accumulated depreciation and amortization | (379,445) | (280,318) | |||||||||
| Total property and equipment, net | $ | 618,691 | $ | 467,420 | |||||||
About PP&E Disclosures
The PP&E disclosure details a company's physical asset base — land, buildings, machinery, and equipment — along with the depreciation methods and useful life assumptions that determine how these costs flow through the income statement. Capitalization policy thresholds reveal management's judgment on the boundary between expense and asset, directly affecting both reported earnings and asset values.
Key signals: changes in estimated useful lives or depreciation methods can materially shift reported earnings without any operational change. Compare capital expenditures against depreciation expense — when capex consistently trails depreciation, the asset base may be aging and underinvested. Watch for large asset impairments or write-downs that signal overvalued carrying amounts. Asset retirement obligations reveal future environmental or decommissioning costs that are often underappreciated. Compare PP&E intensity (PP&E-to-revenue) against industry peers to assess capital efficiency and competitive positioning.