Cloudflare (NET) AI Stock Analysis

• Market Cap: $79.55B
• Dividend Yield: N/A
• Average Volume (3M): 2.27M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.02
• Revenue Growth: 27.32%
• EPS Growth: -11.94%
• Country: US
• Employees: 4,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.21
• Shares Outstanding: 312,872,200
• 10 Day Avg. Volume: 2,586,309
• 30 Day Avg. Volume: 2,265,732
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.85
• Enterprise Value/Revenue: 35.90
• Enterprise Value/Gross Profit: 47.16
• Enterprise Value/Ebitda: 493.38
• 1Y Price Target: $219.71
• Price Target Upside: -3.75% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 26

• Rating: 70 Neutral
• Price Target: $222.00 ▼(-2.75% Downside)

Cloudflare's strong revenue growth and strategic customer expansion are the most significant factors driving the score. The company's operational improvements and strategic wins in key sectors bolster its growth outlook. However, profitability challenges and valuation concerns due to negative earnings and lack of dividends weigh on the overall score.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong demand for Cloudflare's services, enhancing its market position and supporting long-term expansion.

Customer Expansion

Growth in large customers shows Cloudflare's ability to scale and attract high-value clients, boosting revenue stability and market influence.

Strategic Partnerships

Strategic partnerships enhance Cloudflare's innovation and market reach, fostering new revenue streams and competitive advantages.

Negative Factors

Profitability Challenges

Ongoing profitability issues highlight the need for cost management and efficiency improvements to ensure sustainable financial health.

Gross Margin Decline

Declining gross margins could pressure future profitability, necessitating strategic adjustments to maintain competitive pricing and cost control.

Rising Debt Levels

Increased debt levels may strain financial flexibility, requiring effective cash flow management to meet future obligations and support growth.

Cloudflare Business Overview & Revenue Model

Company Description

Cloudflare, Inc. is a leading provider of web infrastructure and website security services. Founded in 2009, the company operates in the technology sector, focusing on enhancing the performance and security of websites, applications, and APIs. Cloudflare offers a suite of products including content delivery network (CDN) services, DDoS mitigation, internet security, and domain registration, aiming to improve user experience and protect against cyber threats for businesses of all sizes.

How the Company Makes Money

Cloudflare generates revenue primarily through a subscription-based model, offering various tiers of services that cater to different customer needs. Their key revenue streams include monthly or annual fees from customers subscribing to their CDN and security services, which vary based on usage levels and features. Additionally, Cloudflare provides enterprise solutions with customized pricing for larger clients, contributing significantly to their earnings. The company also benefits from partnerships with other technology firms and service providers, enhancing their market reach and customer base. Furthermore, by expanding their product offerings and entering new markets, Cloudflare continues to drive growth in its revenue streams.

Cloudflare Financial Statement Overview

Summary

Cloudflare shows strong revenue growth and improving operational efficiency, despite challenges with profitability and leverage. Cash reserves are solid, supporting future initiatives.

Income Statement

Cloudflare has demonstrated strong revenue growth with a TTM revenue of $1.88 billion, up from $1.67 billion in 2024 and $1.30 billion in 2023. Gross Profit Margin remains high at approximately 76%, indicating effective cost management. However, the company is still facing profitability challenges with a negative Net Income and EBIT, highlighting ongoing operational expenses and investments in growth. Despite these, the EBITDA margin has shown improvement, suggesting better operational efficiency.

Balance Sheet

The balance sheet shows a strong cash position with $3.96 billion in cash and short-term investments. The Debt-to-Equity ratio is relatively high, indicating significant leverage, but the substantial equity of $1.24 billion supports financial stability. Return on Equity remains negative due to net losses, but the company maintains a healthy Equity Ratio of approximately 22%, indicating a stable asset base.

Cash Flow

Cloudflare's cash flow statement reflects robust operating cash flow generation at $477 million, with Free Cash Flow growing to $246 million, a significant increase from previous years. This improvement in cash flow metrics signals effective cash management strategies, which are critical for sustaining growth and reducing reliance on external financing. The Operating Cash Flow to Net Income ratio is positive, indicating efficient conversion of revenue into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.88B	1.67B	1.30B	975.24M	656.43M	431.06M
Gross Profit	1.43B	1.29B	989.74M	742.63M	509.29M	330.00M
EBITDA	136.91M	65.87M	-42.62M	-92.13M	-125.17M	-43.69M
Net Income	-117.08M	-78.80M	-183.95M	-193.38M	-260.31M	-119.37M
Balance Sheet
Total Assets	5.56B	3.30B	2.76B	2.59B	2.37B	1.38B
Cash, Cash Equivalents and Short-Term Investments	3.96B	1.86B	1.67B	1.65B	1.82B	1.03B
Total Debt	3.46B	1.46B	1.44B	1.58B	1.29B	428.30M
Total Liabilities	4.32B	2.25B	2.00B	1.96B	1.56B	563.71M
Stockholders Equity	1.24B	1.05B	763.05M	623.96M	815.80M	816.94M
Cash Flow
Free Cash Flow	179.18M	195.39M	119.46M	-39.77M	-43.09M	-92.09M
Operating Cash Flow	477.62M	380.43M	254.41M	123.59M	64.65M	-17.13M
Investing Cash Flow	-1.13B	-330.22M	-186.20M	-235.70M	-709.32M	-515.27M
Financing Cash Flow	2.02B	12.79M	-192.19M	6.35M	847.49M	504.91M

Cloudflare Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 228.28
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 228.28 is above the 20-day moving average (MA) of 215.11, above the 50-day MA of 205.06, and above the 200-day MA of 154.73, indicating a bullish trend. The MACD of 6.43 indicates Negative momentum. The RSI at 64.20 is Neutral, neither overbought nor oversold. The STOCH value of 80.61 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
PANW	80 Outperform	139.25B	130.10	14.49%	―	14.87%	-57.43%
NET	70 Neutral	$79.55B	―	-11.04%	―	27.32%	-11.94%
VRSN	67 Neutral	26.41B	33.69	-40.10%	0.55%	4.59%	0.26%
FTNT	67 Neutral	65.14B	33.93	94.14%	―	14.46%	48.06%
ZS	67 Neutral	46.16B	-1,087.14	-2.31%	―	23.31%	31.04%
CRWD	66 Neutral	123.76B	-412.12	-7.91%	―	23.46%	-270.07%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Cloudflare Corporate Events

Cloudflare Reports Q2 2025 Revenue Growth of 28%

On July 31, 2025, Cloudflare announced its financial results for the second quarter of fiscal 2025, reporting a 28% year-over-year revenue increase to $512.3 million. Despite a GAAP loss from operations, the company achieved non-GAAP income from operations of $72.3 million. Cloudflare’s strategic focus on innovation and expanding customer investments has positioned it well for future growth, as highlighted by CEO Matthew Prince. The company expects continued revenue growth in the third quarter and full fiscal year 2025, with projections of up to $544.5 million and $2.115 billion, respectively.

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.