One-glance verdict
Overvalued
$37.87 our estimate vs market $273.76
Wall Street consensus: $250.26 (560.8% higher than our fair-value estimate)
623% above our estimate, beyond the bull case
Fundamentals snapshot
Cloudflare, Inc.
NET · NYQ · Technology · Software - Infrastructure
Current price
$273.76
52-week range
$158.83 - $290.98
Market cap
$97.17B
Balance sheet
Healthy
-23.64x Concerning
Net cash $639.34M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 7.4% last year.
- Reward Free cash flow was positive in 3/10 years.
- Risk Return on equity was -5.9% last year — the company lost money on shareholders' equity.
- Risk Insider ownership is only 0.7% (peer median: 2.1%).
What this company does
Cloudflare, Inc.
Cloudflare acts like a security guard and a performance booster for websites and internal company networks. Businesses pay Cloudflare a recurring fee (a predictable, repeating payment, like a subscription) to protect their online services from cyberattacks and make sure they run quickly and reliably for customers and employees. This is important because as more business happens online, having a fast and secure internet presence is crucial for a company's success and safety.
How the company got here
Cloudflare was started in 2009 by Matthew Prince, Lee Holloway, and Michelle Zatlyn, born from an earlier project called Project Honey Pot that tracked how spammers found email addresses. They realized that in addition to tracking threats, they could also block them, and at the same time, make websites faster. The company launched publicly in 2010 and grew quickly by offering a popular free plan that provided website security and performance, which attracted millions of users. This large user base helped the company improve its network and products, eventually leading to its IPO (Initial Public Offering, the first time a private company sells its shares to the public) in 2019.
What it actually does
Imagine the internet is a highway system; Cloudflare acts like a combination of a super-fast toll road and a security checkpoint for a website's traffic. When you visit a website that uses Cloudflare, you are not connecting directly to that site's server but to one of Cloudflare's data centers spread across more than 300 cities worldwide. Cloudflare's network speeds up how fast the website loads for you by storing copies of the site's content closer to where you are. It also protects the website from online attacks, like those from malicious bots (automated computer programs) or DDoS attacks (Distributed Denial of Service, a flood of fake traffic meant to overwhelm and crash a site).
Application and Network Services
This is Cloudflare's core business and represents the majority of its revenue. Companies pay subscription fees for services that make their websites and applications faster and more secure. This includes their CDN (Content Delivery Network, a system that delivers web content to users based on their geographic location), WAF (Web Application Firewall, which blocks malicious traffic to a website), and DDoS protection. Customers range from small businesses on a basic monthly plan to very large corporations paying over $100,000 a year for a suite of advanced features.
Zero Trust and SASE Services
This is a newer but strategically important part of the company that helps businesses secure their internal operations, not just their public websites. Instead of a traditional corporate network where everything inside is trusted, a "Zero Trust" approach assumes no user or device is safe by default and must be verified before getting access. Companies pay Cloudflare to securely connect their employees to internal applications, whether they are in the office or working remotely, replacing older technologies like VPNs (Virtual Private Networks). This segment, often called Cloudflare One, is a key area of growth as it helps Cloudflare win larger enterprise customers.
Developer Platform
This is a fast-growing slice of Cloudflare's business that allows software developers to build and run their applications directly on Cloudflare's global network. Instead of renting servers from a central cloud provider like Amazon Web Services, developers can use services like Cloudflare Workers to run code closer to the end-user, which can make applications very fast. Customers typically pay based on their usage of these services, which include computing power, data storage, and video streaming. This turns Cloudflare from just a security checkpoint into the actual platform where parts of the internet are being built.
What management is betting on now
Cloudflare's main focus is on becoming the all-in-one "connectivity cloud" for businesses, aiming to replace multiple different security and network products with its single, integrated platform. A major priority is expanding its Zero Trust services to win bigger corporate clients and become more essential to their IT operations. The company is also heavily investing in its developer platform and artificial intelligence (AI) capabilities, believing that more applications will be built and run on its global network. Recently, the CEO has emphasized restructuring the company to focus on "builders" (engineers) and "sellers" while using AI to automate many internal measurement and operational roles.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q2
$45.19M
FY2024 Q3
$54.52M
FY2024 Q4
$54.16M
FY2025 Q1
$59.90M
FY2025 Q2
$39.90M
FY2025 Q3
$82.48M
FY2025 Q4
$105.22M
FY2026 Q1
$93.10M
Revenue
$639.75M
Net income
$-22.93M
Diluted EPS
-0.07
Operating cash flow
$158.33M
Free cash flow
$93.10M
Fetching…
Sources
Revenue
$614.51M
Net income
$-12.08M
Diluted EPS
-0.03
Operating cash flow
$190.41M
Free cash flow
$105.22M
Fetching…
Sources
Revenue
$562.03M
Net income
$-1.29M
Diluted EPS
0.00
Operating cash flow
$167.12M
Free cash flow
$82.48M
Fetching…
Sources
Revenue
$512.32M
Net income
$-50.45M
Diluted EPS
-0.15
Operating cash flow
$99.80M
Free cash flow
$39.90M
Fetching…
Sources
Revenue
$479.09M
Net income
$-38.45M
Diluted EPS
-0.11
Operating cash flow
$145.78M
Free cash flow
$59.90M
Fetching…
Sources
Revenue
$459.95M
Net income
$-12.85M
Diluted EPS
-0.05
Operating cash flow
$127.31M
Free cash flow
$54.16M
Fetching…
Sources
Revenue
$430.08M
Net income
$-15.33M
Diluted EPS
-0.04
Operating cash flow
$104.73M
Free cash flow
$54.52M
Fetching…
Sources
Revenue
$401.00M
Net income
$-15.08M
Diluted EPS
-0.04
Operating cash flow
$74.81M
Free cash flow
$45.19M
Fetching…
Sources
Is it cheap or expensive?
Fair value $37.87 vs current price $273.76
Wall Street consensus is the average analyst price target: $250.26 (560.8% higher than our fair-value estimate).
Our most-likely fair value is $37.87 a share — about 86.2% below today's price of $273.76, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $639.3M - more cash than debt. Interest coverage -23.6x.
Net debt
$-639.34M
Interest coverage
-23.64x
Cloudflare, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 4 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
NET
BASELINE
Cloudflare, Inc.
Total debt $3.52B Interest coverage -23.64x This is the baseline the peer rows are being compared against.
Total debt $397.75M Interest coverage -9.34x Neither company has much profit cushion over interest right now.
Total debt $5.87B Interest coverage 20.42x This peer still has a real interest-payment cushion, while NET does not.
Total debt $1.87B Interest coverage -24.32x Neither company has much profit cushion over interest right now.
Total debt $821.34M Interest coverage -10.47x Neither company has much profit cushion over interest right now.
Total debt $1.29B Interest coverage -4.01x Neither company has much profit cushion over interest right now.
What you should know
The case for and against NET
2 Rewards
2 Risks
Rewards
-
Revenue grew 7.4% last year.
-
Free cash flow was positive in 3/10 years.
Risks
-
Return on equity was -5.9% last year — the company lost money on shareholders' equity.
-
Insider ownership is only 0.7% (peer median: 2.1%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
173.42x
P/B
63.37x
P/S
41.73x
EV/EBITDA
-2,727.17x
PEG ratio
2.38x
Profitability
How much profit each dollar creates
Gross margin
73.3%
Operating margin
-9.7%
Net margin
-3.7%
ROE
-5.9%
ROA
-2.7%
Health
Liquidity and balance-sheet strength
Debt / equity
2.31x
Current ratio
1.96x
Quick ratio
1.90x
Total debt
$3.52B
Total cash
$4.16B
Growth
How the business has been compounding
Revenue TTM
$2.33B
Revenue 5Y CAGR
34.8%
EPS TTM
-0.25
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$615.66M
Free CF TTM
$287.50M
FCF margin
12.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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