Cloudflare (NET) AI Stock Analysis

• Market Cap: $64.34B
• Dividend Yield: N/A
• Average Volume (3M): 3.27M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.08
• Revenue Growth: 27.79%
• EPS Growth: 56.19%
• Country: US
• Employees: 4,400
• Sector: Technology
• Sector Strength: 86
• Industry: Software - Infrastructure
• EPS (TTM): 0.16
• Shares Outstanding: 310,553,800
• 10 Day Avg. Volume: 3,257,657
• 30 Day Avg. Volume: 3,268,266
• PEG Ratio: 8.95
• Price to Book (P/B): 7.06
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -53.23
• Enterprise Value/Market Cap: 0.08
• Enterprise Value/Revenue: 0.77
• Enterprise Value/Gross Profit: 3.67
• Enterprise Value/Ebitda: 14.64
• 1Y Price Target: $164.83
• Price Target Upside: -11.21% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 26

• Rating: 69 Neutral
• Price Target: $212.00 ▲(14.20%Upside)

Cloudflare's strong revenue growth and financial performance, coupled with positive earnings call highlights, contribute to a solid stock score. While technical indicators show bullish momentum, high valuation multiples and profitability challenges present risks. The company's ongoing growth efforts, particularly in the enterprise sector, provide a positive outlook despite these challenges.

Positive Factors

Business Expansion

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

Financial Performance

Cloudflare reported a strong 1Q with revenues of $479mn, a $10mn beat to the guide, outperforming Street expectations by 300bps.

Market Positioning

Cloudflare's growth is reaccelerating due to increasing platform adoption and strong positioning in attractive markets.

Negative Factors

Market Uncertainty

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

Operational Challenges

The second-quarter free cash flow estimate was lowered significantly, indicating potential challenges in that quarter.

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. is a leading provider of web infrastructure and website security solutions, primarily focusing on network services, security, and performance optimization. The company operates in the sectors of cybersecurity and cloud services, offering a wide range of products such as content delivery network (CDN), Internet security, DDoS protection, and domain name server (DNS) services. Cloudflare's solutions are designed to enhance the performance and security of websites and applications, serving businesses across various industries worldwide.

How the Company Makes Money

Cloudflare makes money through a subscription-based revenue model, offering tiered service packages that cater to different business needs, from small enterprises to large corporations. Key revenue streams include its core products, such as CDN, DDoS protection, and DNS services, which are offered on a subscription basis. The company also generates income from its web application firewall (WAF), bot management, zero-trust security, and serverless computing offerings. Additionally, Cloudflare partners with major technology companies and internet service providers to expand its product reach and enhance its service capabilities, contributing to its revenue growth.

Cloudflare Financial Statement Overview

Summary

Cloudflare shows strong revenue growth and improving cash flow metrics, indicating positive momentum in its business operations. The balance sheet is solid with good liquidity, but leverage and profitability remain concerns.

Income Statement

Cloudflare has demonstrated strong revenue growth with a consistent upward trend over the years, notably with a revenue increase from $656 million in 2021 to $1.77 billion in TTM. The gross profit margin is robust, though the company is yet to achieve net profitability, as evidenced by negative net income and EBIT margins. The EBITDA margin has improved to positive territory, indicating progress towards operational efficiency.

Balance Sheet

The balance sheet reveals a stable financial base with a healthy cash position exceeding total debt, providing liquidity strength. However, the debt-to-equity ratio remains relatively high, indicating leverage risks. An improvement in stockholders' equity is noted, though the return on equity is impacted by negative net income, highlighting challenges in generating returns for shareholders.

Cash Flow

Cloudflare has shown significant improvement in operating cash flow, achieving positive free cash flow in recent periods, a positive indicator of financial health. The operating cash flow to net income and free cash flow to net income ratios are positive, demonstrating effective cash generation relative to reported losses, though capital expenditures remain a key consideration.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.77B	1.67B	1.30B	975.24M	656.43M	431.06M
Gross Profit	1.36B	1.29B	989.74M	742.63M	509.29M	330.00M
EBITDA	88.53M	65.87M	-36.17M	-92.13M	-127.68M	-50.62M
Net Income	-81.71M	-78.80M	-183.95M	-193.38M	-260.31M	-119.37M
Balance Sheet
Total Assets	295.46M	3.30B	2.76B	2.59B	2.37B	1.38B
Cash, Cash Equivalents and Short-Term Investments	144.14M	1.86B	1.67B	1.65B	1.82B	1.03B
Total Debt	10.63M	1.46B	1.44B	1.58B	1.29B	428.30M
Total Liabilities	92.16M	2.25B	2.00B	1.96B	1.56B	563.71M
Stockholders Equity	203.30M	1.05B	763.05M	623.96M	815.80M	816.94M
Cash Flow
Free Cash Flow	184.18M	195.39M	119.46M	-39.77M	-43.09M	-92.09M
Operating Cash Flow	452.63M	380.43M	254.41M	123.59M	64.65M	-17.13M
Investing Cash Flow	-519.61M	-330.22M	-186.20M	-235.70M	-709.32M	-515.27M
Financing Cash Flow	16.29M	12.79M	-192.19M	6.35M	847.49M	504.91M

Cloudflare Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 185.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 185.64 is above the 20-day moving average (MA) of 181.98, above the 50-day MA of 157.52, and above the 200-day MA of 122.79, indicating a bullish trend. The MACD of 8.80 indicates Positive momentum. The RSI at 61.61 is Neutral, neither overbought nor oversold. The STOCH value of 62.17 is Neutral, 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
PANW	78 Outperform	$131.75B	112.72	21.16%	―	13.91%	-50.96%
AKAM	76 Outperform	$11.62B	26.80	9.82%	―	3.51%	-27.28%
CRWD	74 Outperform	$122.65B	721.64	-5.76%	―	25.94%	-226.80%
EBR.B	73 Outperform	$17.28B	10.67	8.58%	0.94%	0.18%	99.46%
ZS	72 Outperform	$47.85B	―	-2.68%	―	25.46%	49.20%
NET	69 Neutral	$64.34B	―	-7.35%	―	27.79%	56.19%
Sector *	50 Neutral	AU$1.48B	1.28	-28.24%	3.26%	16.24%	-7.89%

Cloudflare Corporate Events

Cloudflare Issues $2 Billion Convertible Notes

On June 17, 2025, Cloudflare, Inc. issued $2.0 billion in 0% Convertible Senior Notes due 2030, with a conversion rate initially set at 4.0376 shares of Class A common stock per $1,000 principal amount. The notes, which mature on June 15, 2030, are part of a strategic financial maneuver to bolster Cloudflare’s capital for general corporate purposes, including potential acquisitions. The company also entered into capped call transactions to mitigate potential stock dilution, showcasing a proactive approach to managing its financial obligations and market positioning.

The most recent analyst rating on (NET) stock is a Buy with a $205.00 price target. To see the full list of analyst forecasts on Cloudflare stock, see the NET Stock Forecast page.

Cloudflare Holds 2025 Annual Stockholders Meeting

On June 5, 2025, Cloudflare, Inc. held its 2025 Annual Meeting of Stockholders, where significant decisions were made regarding the company’s governance and financial oversight. The election of Class III directors, the ratification of KPMG LLP as the independent registered public accounting firm, and the approval of executive compensation were key outcomes, reflecting shareholder support for the company’s strategic direction and management.

The most recent analyst rating on (NET) stock is a Buy with a $205.00 price target. To see the full list of analyst forecasts on Cloudflare stock, see the NET Stock Forecast page.

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.