Cloudflare Inc (NET)
NYSE:NET
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Cloudflare
(NYSE:NET)
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Rating:62Neutral
Price Target:
$208.00
▲(3.49% Upside)
Action:Reiterated
Date:05/09/26
The score is driven mainly by improving fundamentals (strong gross margins and growing free cash flow) and a constructive earnings call with upbeat growth and profitability guidance. It is held back by balance-sheet leverage and the stock’s weaker technical setup (trading below key moving averages), with valuation providing limited support due to a deeply negative P/E.
Positive Factors
Enterprise customer expansion & recurring revenue
A growing base of high-dollar customers and 38% YoY revenue expansion from that cohort indicate durable platform-led revenue with strong upsell potential. Large, sticky contracts (72% of revenue) reduce churn sensitivity and support predictable subscription cash flows and long-term margin leverage.
Negative Factors
Elevated financial leverage
High debt relative to equity raises interest and refinancing sensitivity, constraining financial flexibility for acquisitions or aggressive buybacks. Until sustained GAAP profitability and retained earnings rebuild equity, leverage magnifies downside risk from any softening in growth or margins.
Read all positive and negative factors
Positive Factors
Negative Factors
Enterprise customer expansion & recurring revenue
A growing base of high-dollar customers and 38% YoY revenue expansion from that cohort indicate durable platform-led revenue with strong upsell potential. Large, sticky contracts (72% of revenue) reduce churn sensitivity and support predictable subscription cash flows and long-term margin leverage.
Read all positive factors
Cloudflare Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Cloudflare is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Cloudflare is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyCloudflare (NET) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$74.27B
Dividend YieldN/A
Average Volume (3M)5.18M
Price to Earnings (P/E)―
Beta (1Y)1.47
Revenue Growth31.55%
EPS Growth-4.50%
CountryUS
Employees4,400
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.25
Shares Outstanding319,528,350
10 Day Avg. Volume6,702,349
30 Day Avg. Volume5,184,504
Financial Highlights & Ratios
PEG Ratio-25.75
Price to Book (P/B)47.08
Price to Sales (P/S)31.69
P/FCF Ratio211.80
Enterprise Value/Market Cap1.03
Enterprise Value/Revenue32.99
Enterprise Value/Gross Profit44.89
Enterprise Value/Ebitda298.00
Forecast
1Y Price Target
$237.83Price Target Upside18.33% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering24
EPS Forecast (FY)1.19
Revenue Forecast (FY)$2.81B
Cloudflare Business Overview & Revenue Model
Company Description
CloudFlare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. The company offers an integrated cloud-based security solution to secure a range of combination of platforms, including public cloud,...
How the Company Makes Money
Cloudflare primarily makes money by selling subscription-based cloud services to customers on contracted terms, typically priced by service tier, usage, and/or the scope of deployment (e.g., number of domains, applications, users, traffic, or secu...
Cloudflare Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call presents a strongly positive operational and financial momentum—robust revenue growth (34% YoY), expanding large-customer base, record large deals, solid profitability, and strong free cash flow—paired with aggressive strategic moves to replatform the company for agentic AI. Key near-term negatives include a substantial workforce reduction (~20%) with related $140M–$150M restructuring charges, and pressure on gross margins from mix shifts toward lower-margin developer products and reclassification of traffic costs. On balance, the growth, cash generation, customer wins, and clear strategic positioning for AI materially outweigh the immediate costs and execution risks of the transition.Positive Updates
Strong Revenue Growth
Total revenue of $639.8 million, up 34% year-over-year; Q2 revenue guide of $664M–$665M (~30% YoY) and full-year 2026 revenue guide of $2.805B–$2.813B (~30% YoY at midpoint).
Negative Updates
Workforce Reduction and Restructuring Charges
Reduction in headcount by more than 1,100 people (~20% of workforce) to transition to an agentic AI-first operating model; severance and restructuring charges of $140M–$150M for full-year 2026 (approximately $40M noncash), concentrated in Q2.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Revenue Growth
Total revenue of $639.8 million, up 34% year-over-year; Q2 revenue guide of $664M–$665M (~30% YoY) and full-year 2026 revenue guide of $2.805B–$2.813B (~30% YoY at midpoint).
Read all positive updates
Company Guidance
Cloudflare guided Q2 revenue of $664–665 million (≈+30% YoY), Q2 operating income of $90–91 million, an effective tax rate of 21.5% and diluted EPS of $0.27 on roughly 377 million shares; for full‑year 2026 it expects revenue of $2.805–2.813 billion (≈+30% YoY at midpoint), operating income of $418–421 million, an effective tax rate of 20.5% and diluted EPS of $1.19–1.20 on about 375 million shares, while keeping free cash flow expectations unchanged with ~25–30% of full‑year cash generation expected in Q2–Q3, forecasting network CapEx of 14–15% of revenue for 2026 (Q1 was 9%), and disclosing $140–150 million of severance/restructuring charges for the year (≈$40 million noncash, mostly in Q2) alongside commentary on continued operating leverage (Rule of 40 north of 46% this year with visibility >50% next year).Cloudflare Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
44
Neutral
Cash Flow
74
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.33B | 2.17B | 1.67B | 1.30B | 975.24M | 656.43M |
| Gross Profit | 1.71B | 1.61B | 1.29B | 989.74M | 742.63M | 509.29M |
| EBITDA | 257.75M | 207.43M | 62.05M | -42.62M | -92.13M | -125.17M |
| Net Income | -86.74M | -102.27M | -78.80M | -183.95M | -193.38M | -260.31M |
Balance Sheet | ||||||
| Total Assets | 6.16B | 6.04B | 3.30B | 2.76B | 2.59B | 2.37B |
| Cash, Cash Equivalents and Short-Term Investments | 4.17B | 4.10B | 1.86B | 1.67B | 1.65B | 1.82B |
| Total Debt | 3.52B | 3.70B | 1.46B | 1.44B | 1.58B | 1.29B |
| Total Liabilities | 4.64B | 4.58B | 2.25B | 2.00B | 1.96B | 1.56B |
| Stockholders Equity | 1.53B | 1.46B | 1.05B | 763.05M | 623.96M | 815.80M |
Cash Flow | ||||||
| Free Cash Flow | 378.53M | 324.32M | 195.39M | 119.46M | -39.77M | -43.09M |
| Operating Cash Flow | 702.42M | 666.87M | 380.43M | 254.41M | 123.59M | 64.65M |
| Investing Cash Flow | -1.87B | -1.81B | -330.22M | -186.20M | -235.70M | -709.32M |
| Financing Cash Flow | 1.90B | 1.94B | 12.79M | -192.19M | 6.35M | 847.49M |
Cloudflare Technical Analysis
Positive
200.99
Price Trends
207.97
Positive
196.46
Positive
204.07
Positive
Market Momentum
-0.77
Positive
51.40
Neutral
41.30
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NET, the sentiment is Positive. The current price of 200.99 is below the 20-day moving average (MA) of 211.32, below the 50-day MA of 207.97, and below the 200-day MA of 204.07, indicating a neutral trend. The MACD of -0.77 indicates Positive momentum. The RSI at 51.40 is Neutral, neither overbought nor oversold. The STOCH value of 41.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NET.
Cloudflare Risk Analysis
Cloudflare disclosed 80 risk factors in its most recent earnings report. Cloudflare reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cloudflare Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $95.24B | 28.24 | 155.65% | ― | 15.75% | 6.24% | |
79 Outperform | $201.27B | 71.18 | 15.49% | ― | 15.43% | -2.40% | |
75 Outperform | $27.57B | 26.51 | -39.99% | 0.94% | 6.84% | 10.70% | |
73 Outperform | $165.48B | 720.36 | -4.68% | ― | 21.71% | -908.90% | |
69 Neutral | $28.05B | -232.70 | -3.48% | ― | 23.91% | -326.25% | |
62 Neutral | $74.27B | -793.39 | -6.23% | ― | 31.55% | -4.50% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
NET
Cloudflare
210.13
51.92
32.82%
FTNT
Fortinet
130.00
26.38
25.46%
PANW
Palo Alto Networks
246.66
60.52
32.51%
VRSN
Verisign
303.00
22.82
8.14%
ZS
Zscaler
174.45
-78.37
-31.00%
CRWD
CrowdStrike Holdings
650.11
206.04
46.40%
Cloudflare Corporate Events
Business Operations and StrategyFinancial Disclosures
Cloudflare Announces Major AI-Driven Restructuring and Outlook
Neutral
May 7, 2026
On May 7, 2026, Cloudflare reported first-quarter 2026 revenue of $639.8 million, up 34% year over year, alongside a GAAP operating loss of $62.0 million and non-GAAP operating income of $73.1 million, reflecting strong top-line momentum and impro...
Business Operations and StrategyFinancial Disclosures
Cloudflare Highlights Strong Q4 Growth and Improving Profitability
Positive
Feb 10, 2026
On February 10, 2026, Cloudflare reported fourth-quarter and full-year 2025 results showing strong top-line growth and improving profitability metrics, underpinned by rising demand from AI- and agent-driven Internet workloads. Fourth-quarter reven...
Executive/Board Changes
Cloudflare Announces Planned Transition in Chief Legal Leadership
Neutral
Feb 10, 2026
On February 6, 2026, Cloudflare, Inc. announced that its Chief Legal Officer, Doug Kramer, has decided to resign from his role after nearly a decade with the company, with his resignation to take effect on March 31, 2026. Following his departure f...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.