Cloudflare (NET) AI Stock Analysis

• Market Cap: $54.60B
• Dividend Yield: N/A
• Average Volume (3M): 3.81M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.17
• Revenue Growth: 27.79%
• EPS Growth: 56.19%
• Country: US
• Employees: 4,400
• Sector: Technology
• Sector Strength: 77
• Industry: Software - Infrastructure
• EPS (TTM): 0.16
• Shares Outstanding: 310,553,800
• 10 Day Avg. Volume: 4,505,278
• 30 Day Avg. Volume: 3,811,196
• PEG Ratio: -39.00
• Price to Book (P/B): 43.51
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 275.08
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 7.74
• Enterprise Value/Gross Profit: 36.59
• Enterprise Value/Ebitda: 200.22
• 1Y Price Target: $149.38
• Price Target Upside: -5.17% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 28

Cloudflare's strong revenue growth and improved cash flow metrics are key strengths, supported by positive earnings call outcomes and strategic developments. Despite bullish technical indicators, the high valuation and persistent profitability challenges present risks. Strategic focus on leveraging growth while managing profitability and debt will be crucial for sustaining shareholder value.

Positive Factors

Customer Growth

Cloudflare added over 13,000 net new customers, driving total revenue growth of 27% year-over-year.

Financial Performance

Cloudflare reported a strong Q1 with revenues of $479 million, a $10 million beat to the guide, outperforming Street expectations by 300bps.

Strategic Deals

Cloudflare lands a massive $130 million contract in Q1, the largest in its history.

Negative Factors

Geopolitical Uncertainty

Cloudflare describes a 'highly volatile external business and geopolitical backdrop' as a source of uncertainty.

Margin Pressure

Pool of Fund deals, which are large spend commitments with longer durations, present a short-term headwind to margins, and accounted for approximately 15% of Q1 ACV.

Revenue Outlook

Cloudflare's lack of upward revision to its FY25 revenue outlook despite Q1 revenue upside doesn't speak as loudly.

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, private cloud, on-premise, software-as-a-service applications, and IoT devices. Its security products comprise cloud firewall, bot management, distributed denial of service, IoT, SSL/TLS, secure origin connection, and rate limiting products. The company also offers performance solutions, which include content delivery and intelligent routing, as well as content, mobile, and image optimization solutions. In addition, it provides reliability solutions comprising load balancing, anycast network, virtual backbone, DNS, DNS resolver, online, and virtual waiting room solutions. Further, the company offers Cloudflare internal infrastructure solutions, including on-ramps, which connect users, devices, or locations to its network; and filters, which are the products that protect, inspect, and privilege data. Additionally, it provides developer-based solutions, such as serverless computing/programmable network, website development, domain registration, Cloudflare apps, analytics, and data localization management; Consumer DNS Resolver, a consumer app to browse the Internet; and Consumer VPN for consumers to secure and accelerate traffic on mobile devices. The company serves customers in the technology, healthcare, financial services, consumer and retail, and non-profit industries, as well as government. CloudFlare, Inc. was incorporated in 2009 and is headquartered in San Francisco, California.

How the Company Makes Money

Cloudflare makes money primarily through a subscription-based revenue model, offering a variety of tiered service plans. These plans range from free basic services to premium packages for enterprise clients, which include advanced security features, enhanced performance optimizations, and dedicated support. Revenue is generated through recurring fees charged for these service subscriptions. Additionally, Cloudflare monetizes by providing pay-as-you-go services for specific features and usage-based billing for certain products, such as its serverless computing platform, Workers. Partnerships with major technology companies and integrations with platforms like Amazon Web Services, Microsoft Azure, and Google Cloud also help Cloudflare expand its reach and customer base, contributing to its overall earnings.

Cloudflare Financial Statement Overview

Summary

Cloudflare exhibits strong revenue and cash flow growth, highlighting its robust market position in the software industry. However, persistent net losses and balance sheet concerns, including negative total assets, pose risks. Continued focus on improving profitability and financial stability is crucial for long-term success.

Income Statement

Cloudflare has demonstrated solid revenue growth with a revenue increase from $1.30 billion in 2023 to $1.67 billion in 2024, representing a 28.8% growth rate. The gross profit margin remains strong at 77.3% in 2024. However, the company continues to report net losses, with a net profit margin of -4.7% in 2024, indicating ongoing profitability challenges.

Balance Sheet

The company's balance sheet reveals a negative equity, with total assets at -$256.2 million and stockholders' equity at $19.8 million in 2024, indicating a potentially concerning financial position. The debt-to-equity ratio is unfavorable due to the negative equity, suggesting high leverage. Despite a significant cash position, the negative total assets require attention.

Cash Flow

Operating cash flow improved significantly to $380.4 million in 2024, and free cash flow also increased to $195.4 million, reflecting robust cash-generating capabilities. The free cash flow growth rate is substantial at 63.5% year-over-year, indicating strong cash flow management despite net losses.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.67B	1.30B	975.24M	656.43M	431.06M
	Gross Profit
1.29B	989.74M	742.63M	509.29M	330.00M
	EBIT
-154.76M	-185.49M	-201.20M	-127.68M	-106.77M
	EBITDA
65.87M	-36.17M	-92.13M	-127.68M	-50.62M
	Net Income Common Stockholders
-78.80M	-183.95M	-193.38M	-260.31M	-119.37M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.86B	1.67B	1.65B	1.82B	1.03B
	Total Assets
3.30B	2.76B	2.59B	2.37B	1.38B
	Total Debt
1.46B	1.44B	1.58B	1.29B	428.30M
	Net Debt
1.32B	1.35B	1.37B	979.43M	319.41M
	Total Liabilities
2.25B	2.00B	1.96B	1.56B	563.71M
	Stockholders Equity
1.05B	763.05M	623.96M	815.80M	816.94M
Cash Flow		Free Cash Flow
195.39M	119.46M	-39.77M	-43.09M	-92.09M
	Operating Cash Flow
380.43M	254.41M	123.59M	64.65M	-17.13M
	Investing Cash Flow
-330.22M	-186.20M	-235.70M	-709.32M	-515.27M
	Financing Cash Flow
12.79M	-192.19M	6.35M	847.49M	504.91M

Cloudflare Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 157.52
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 157.52 is above the 20-day moving average (MA) of 133.05, above the 50-day MA of 120.75, and above the 200-day MA of 108.79, indicating a bullish trend. The MACD of 10.85 indicates Negative momentum. The RSI at 77.68 is Negative, neither overbought nor oversold. The STOCH value of 97.59 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NET.

Cloudflare Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CRWD	76 Outperform	$109.41B	721.64	-0.69%	―	29.39%	-119.62%
EBR.B	74 Outperform	$17.36B	10.70	8.58%	3.77%	0.18%	99.46%
PANW	74 Outperform	$128.65B	109.77	21.16%	―	13.86%	-46.44%
ZS	74 Outperform	$39.08B	―	-1.21%	―	27.77%	89.39%
NET	72 Outperform	$54.60B	―	-7.35%	―	27.79%	56.19%
AKAM	71 Outperform	$11.39B	26.27	9.82%	―	3.51%	-27.28%
Sector *	60 Neutral	$11.59B	10.34	-7.15%	2.94%	7.49%	-10.88%

Cloudflare Corporate Events

Cloudflare Reports Strong Q1 2025 Financial Results

On May 8, 2025, Cloudflare announced its first quarter financial results, reporting a 27% year-over-year increase in revenue to $479.1 million. The company achieved its highest growth in net new ACV in three years and secured its largest contract ever, a $100 million deal, showcasing its strong market position and potential for future growth.

Spark’s Take on NET Stock

According to Spark, TipRanks’ AI Analyst, NET is a Neutral.

Cloudflare’s overall score reflects strong revenue and cash flow growth, supported by positive earnings call outcomes and strategic board changes. However, persistent net losses and a weak balance sheet pose significant risks. Despite some positive technical and corporate developments, valuation concerns and financial instability remain critical issues to address.

To see Spark’s full report on NET stock, click here.

Cloudflare Announces New Board Appointments for 2025

On March 27, 2025, Cloudflare announced the resignation of Maria Eitel from its Board of Directors, effective March 27, 2025, and the appointment of three new board members: Stacey Cunningham, Karim Lakhani, and John Graham-Cumming. These appointments are expected to enhance Cloudflare’s strategic direction, with Cunningham bringing financial expertise, Lakhani offering insights into AI-driven business transformation, and Graham-Cumming providing deep technical knowledge. This change reflects Cloudflare’s commitment to driving innovation and growth as it continues to shape the future of Internet security and performance.