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Cloudflare
(NYSE:NET)
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Rating:68Neutral
Price Target:
$327.00
▲(24.74% Upside)
Action:Reiterated
Date:08/09/26
NET scores well on momentum and forward outlook: strong technical trend and a confident earnings call with robust growth and profitability guidance support the stock. The main constraints on the score are financial quality and valuation—ongoing GAAP losses and elevated leverage for a software company, plus a highly unfavorable (negative) P/E and no dividend yield.
Positive Factors
Sustained Revenue Growth
Consistent high-teens to mid-30s percent revenue growth demonstrates durable demand for Cloudflare’s platform and successful commercial penetration. Strong top-line scaling supports investment in network and products, enabling continued reinvestment and longer-term margin improvement as fixed costs are amortized.
Negative Factors
Elevated Leverage
Relative to growing software peers, high leverage reduces financial flexibility and raises refinancing and covenant risk if growth slows. Even with improving cash flow, low coverage (FCF covers ~0.33 of debt) means capital allocation and strategic moves could be constrained during adverse cycles.
Read all positive and negative factors
Positive Factors
Negative Factors
Sustained Revenue Growth
Consistent high-teens to mid-30s percent revenue growth demonstrates durable demand for Cloudflare’s platform and successful commercial penetration. Strong top-line scaling supports investment in network and products, enabling continued reinvestment and longer-term margin improvement as fixed costs are amortized.
Read all positive factors
Cloudflare Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down sales by region to reveal which countries or areas are fueling Cloudflare’s growth, where product-market fit is strongest, and where exposure to local economic cycles or regulation could create upside or risk.
Breaks down sales by region to reveal which countries or areas are fueling Cloudflare’s growth, where product-market fit is strongest, and where exposure to local economic cycles or regulation could create upside or risk.
Data provided by:
The Fly
The FlyCloudflare (NET) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$110.59B
Dividend YieldN/A
Average Volume (3M)3.00M
Price to Earnings (P/E)―
Beta (1Y)1.42
Revenue Growth33.53%
EPS Growth-72.17%
CountryUS
Employees5,156
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.58
Shares Outstanding322,618,770
10 Day Avg. Volume2,825,937
30 Day Avg. Volume3,003,331
Financial Highlights & Ratios
PEG Ratio-26.06
Price to Book (P/B)47.08
Price to Sales (P/S)31.69
P/FCF Ratio211.80
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$339.81Price Target Upside29.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering30
EPS Forecast (FY)1.2
Revenue Forecast (FY)$2.81B
Cloudflare Business Overview & Revenue Model
Company Description
Cloudflare, Inc. functions as a global provider of cloud-based services. The company delivers a comprehensive, integrated cloud security platform designed to safeguard a diverse array of digital environments, encompassing public and private clouds...
How the Company Makes Money
Cloudflare primarily makes money by selling subscriptions to its cloud-based network services, generally billed on a recurring basis (typically monthly or annually) under self-serve plans and enterprise contracts. Revenue is largely derived from (...
Cloudflare Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Positive
The call conveyed strong business momentum: double‑digit top-line growth (+36% YoY), expanding large-customer base, 120% dollar-based net retention, outsized developer and paying-customer acquisition, record bookings/pipeline acceleration, meaningful free cash flow and substantial enterprise wins. Management also laid out a confident outlook with robust guidance. Key negatives include a meaningful year-over-year gross margin decline (320 bps), sizable restructuring and severance charges (Q2: $151M; FY up to $165M), increased network CapEx expectations and added forecasting variability from new consumption and pool-of-funds contract structures. Overall, the positives — product adoption, customer expansion, cash generation and positioning for agentic AI — materially outweigh the near-term margin and one-time cost challenges.Positive Updates
Strong Revenue Growth
Total revenue of $696.1 million, up 36% year-over-year, demonstrating robust top-line momentum.
Negative Updates
Gross Margin Pressure Year‑over‑Year
Gross margin was 73.1%, which improved sequentially by 30 basis points (first sequential improvement in 8 quarters) but declined 320 basis points year-over-year. Management cited increased allocation of network costs driven by paid vs free traffic as a headwind.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Revenue Growth
Total revenue of $696.1 million, up 36% year-over-year, demonstrating robust top-line momentum.
Read all positive updates
Company Guidance
Cloudflare guided Q3 2026 revenue of $736–737 million (up ~31% YoY), operating income of $129–130 million, an effective tax rate of 20%, and diluted EPS of $0.34 (assuming ~374 million shares outstanding); for full‑year 2026 it expects revenue of $2.864–2.870 billion (up ~32% YoY), operating income of $443–445 million, a 20% tax rate, and diluted EPS of $1.25–1.26 (≈374M shares). Management also reiterated full‑year network CapEx of ~14–15% of revenue (Q2 was 7%), forecast severance and other restructuring charges up to $165 million (up to $130M cash), and said that excluding the higher restructuring impact its free cash flow expectations for 2026 remain unchanged.Cloudflare Financial Statement Overview
Summary
Income Statement
64
Positive
Balance Sheet
46
Neutral
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.51B | 2.17B | 1.67B | 1.30B | 975.24M | 656.43M |
| Gross Profit | 1.82B | 1.62B | 1.29B | 989.74M | 742.63M | 509.29M |
| EBITDA | 38.68M | 105.80M | 62.05M | -36.17M | -83.41M | -132.13M |
| Net Income | -206.28M | -102.27M | -78.80M | -183.95M | -193.38M | -260.31M |
Balance Sheet | ||||||
| Total Assets | 6.47B | 6.04B | 3.30B | 2.76B | 2.59B | 2.37B |
| Cash, Cash Equivalents and Short-Term Investments | 4.16B | 4.10B | 1.86B | 1.67B | 1.65B | 1.82B |
| Total Debt | 3.53B | 3.70B | 1.46B | 1.44B | 1.58B | 1.29B |
| Total Liabilities | 4.85B | 4.58B | 2.25B | 2.00B | 1.96B | 1.56B |
| Stockholders Equity | 1.62B | 1.46B | 1.05B | 763.05M | 623.96M | 815.80M |
Cash Flow | ||||||
| Free Cash Flow | 378.63M | 324.32M | 195.39M | 119.46M | -39.77M | -43.09M |
| Operating Cash Flow | 697.18M | 666.87M | 380.43M | 254.41M | 123.59M | 64.65M |
| Investing Cash Flow | -471.87M | -1.81B | -330.22M | -186.20M | -235.70M | -709.32M |
| Financing Cash Flow | -74.84M | 1.94B | 12.79M | -192.19M | 6.35M | 847.49M |
Cloudflare Technical Analysis
Positive
262.15
Price Trends
260.03
Positive
234.44
Positive
216.22
Positive
Market Momentum
12.90
Negative
66.08
Neutral
71.45
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 262.15 is below the 20-day moving average (MA) of 280.15, above the 50-day MA of 260.03, and above the 200-day MA of 216.22, indicating a bullish trend. The MACD of 12.90 indicates Negative momentum. The RSI at 66.08 is Neutral, neither overbought nor oversold. The STOCH value of 71.45 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 |
|---|---|---|---|---|---|---|---|
78 Outperform | $120.48B | 57.42 | 187.95% | ― | 18.77% | 12.93% | |
78 Outperform | $313.81B | 322.52 | 6.30% | ― | 19.51% | -33.05% | |
75 Outperform | $26.49B | 31.16 | -39.21% | 0.94% | 6.86% | 10.11% | |
75 Outperform | $229.27B | -4,671.58 | -0.58% | ― | 23.17% | 73.57% | |
71 Outperform | $28.57B | -371.98 | -3.71% | ― | 24.61% | -91.58% | |
68 Neutral | $110.59B | -526.26 | -6.23% | ― | 33.53% | -72.17% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
NET
Cloudflare
306.97
104.64
51.72%
FTNT
Fortinet
161.89
83.42
106.31%
PANW
Palo Alto Networks
383.80
208.40
118.81%
VRSN
Verisign
287.63
26.17
10.01%
ZS
Zscaler
178.55
-96.88
-35.17%
CRWD
CrowdStrike Holdings
221.90
112.95
103.67%
Cloudflare Corporate Events
Business Operations and StrategyFinancial Disclosures
Cloudflare Reports Strong Q2 Revenue Growth Amid AI Shift
Positive
Aug 6, 2026
On August 6, 2026, Cloudflare reported second-quarter 2026 results showing revenue of $696.1 million, up 36% year-over-year, with strong growth in paying and large customers and developers on its platform. The company posted a GAAP operating loss ...
Business Operations and StrategyShareholder MeetingsStock Split
Cloudflare Shareholders Approve Capital Structure and Governance Changes
Positive
Jun 30, 2026
At its 2026 Annual Meeting of Stockholders held on June 30, 2025, Cloudflare shareholders approved amendments to the company’s 2019 Equity Incentive Plan and 2019 Employee Stock Purchase Plan, which will become effective upon implementation ...
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.