Shares of network solutions specialist Cloudflare (NET 0.52%) have skyrocketed recently, rising 75% in the past three months. During this same timeframe, the S&P 500 has only risen 5%.

While it might be tempting to conclude the growth stock's recent rise is all hype, a closer look at the underlying business reveals some very good reasons for investors' growing bullishness.

Here's a look at some of the key metrics behind Cloudflare's staggering momentum.

A person looking at charts on a laptop.

Image source: Getty Images.

1. Soaring revenue

Capturing the broad momentum across Cloudflare's business, the company's second-quarter revenue rose 53% year over year to $152.4 million. Not only was this growth on top of a tough year-ago comparison of 48% growth but it marked an acceleration from the 51% revenue growth Cloudflare posted in the first quarter of 2021. 

2. Record dollar-based net retention

Cloudflare's dollar-based net retention, or the amount of revenue the company brings in from existing clients compared to their year-ago spend, rose to a record high rate of 124% in the company's second quarter of 2021 -- and that followed achieving a record rate of 123% in the prior quarter.

3. Strong growth in large customers

The company has seen strong momentum recently from large customers, or customers that spend more than $100,000 annually with Cloudflare. During Q2 2021, Cloudflare added a record 140 large customers, bringing its total large customer count to 1,088.

As Cloudflare co-founder and CEO Matthew Prince pointed out in the company's second-quarter update, that's "the equivalent of more than two six-figure customers every single business day" during the quarter.

4. An expanding gross profit margin

Highlighting the scalability of Cloudflare's business model, the company's profitability is improving along with sales growth. The company's gross profit margin during Q2 2021 was 77%, up from 75.8% in the year-ago quarter.

5. Improving cash flow

The network solutions company's cash flow from operating activities improved from $4 million in the second quarter of 2020 to $7.5 million in the second quarter of 2021. Free cash flow improved from negative $20.2 million, or 20% of revenue, in the year-ago period to negative $9.8 million, or 6% of revenue.

6. A robust outlook

Looking out to the full year, management clearly expects its momentum to persist. Cloudflare guided for full-year revenue of $629 million to $633 million. This is up from $431 million last year, $287 million in 2019, and just $193 million in 2018.

Based on these metrics, Cloudflare appears early in its growth story. With strong momentum in new customer growth and record dollar-based net retention rates, similarly high growth rates will likely persist throughout 2021 and into 2022.

No wonder investors love Cloudflare stock so much.