One-glance verdict
Overvalued
$23.62 our estimate vs market $296.30
Wall Street consensus: $343.42 (1,353.9% higher than our fair-value estimate)
1154% above our estimate, beyond the bull case
Fundamentals snapshot
Cloudflare, Inc.
NET · NYQ · Technology · Software - Infrastructure
Current price
$296.30
52-week range
$158.83 - $370.35
Market cap
$105.51B
Balance sheet
Healthy
-23.64x Concerning
Net cash $633.45M. 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 15.9% last year.
- Reward Free cash flow was positive in 3/10 years.
- Risk Return on equity was -14.4% last year — the company lost money on shareholders' equity.
- Risk Insider ownership is only 0.6% (peer median: 1.1%).
What this company does
Cloudflare, Inc.
Cloudflare acts like a security guard and speed booster for websites and company networks, protecting them from online threats and helping them load faster for visitors. The company primarily earns recurring revenue (predictable income from ongoing subscriptions) by selling these essential internet services to businesses of all sizes. This is important because as more of the world relies on the internet for business and daily life, the need for safe, fast, and reliable online services continues to grow.
How the company got here
Cloudflare was started in 2009 by three founders, Matthew Prince, Lee Holloway, and Michelle Zatlyn, who were working on a project to track where email spam came from. They realized their system for identifying malicious internet traffic could be used to protect websites. The company launched in 2010 with the goal of making websites faster and more secure. Over the years, it gained attention for protecting websites from large cyberattacks and expanded its services. Cloudflare went public on the New York Stock Exchange in 2019 under the ticker symbol NET.
What it actually does
Think of Cloudflare as a security guard and performance booster for websites and company networks. When you visit a website that uses Cloudflare, you are actually connecting to one of Cloudflare's servers first. This allows Cloudflare to block threats, like cyberattacks, before they ever reach the website's actual server. It also speeds up how fast the website loads for you by storing copies of the site's content in its data centers all over the world, so the information has a shorter distance to travel to your computer.
Application Services
This is Cloudflare's core business, focused on protecting and speeding up external-facing infrastructure (the parts of a company's online presence that customers and the public interact with, like websites and apps). Companies pay Cloudflare to shield their websites from Distributed Denial-of-Service (DDoS) attacks (where attackers flood a site with traffic to knock it offline) and other malicious activity. This segment also includes services that make websites load faster for visitors, which is a large and foundational part of the company's revenue.
Zero Trust and Network Services
This part of the business helps companies secure their internal networks and employee connections, a model called "Zero Trust." Instead of assuming everyone inside a company's network is safe, this service checks every request to access company data or applications to make sure it's legitimate. This is especially important as more employees work from home. Companies pay for these services to replace older security models, like VPNs (Virtual Private Networks), and to protect their internal data and applications from breaches. This is a strategically important and growing area for Cloudflare.
Developer-Based Solutions
This is a newer and fast-growing part of Cloudflare's business that provides tools for software developers to build and run applications directly on Cloudflare's global network. Instead of managing their own servers, developers can use Cloudflare's platform to run their code closer to users, which makes applications very fast. This area also includes new services related to artificial intelligence (AI), allowing developers to build AI-powered applications on Cloudflare's infrastructure. This segment makes money through usage-based fees, where developers pay for what they use.
What management is betting on now
Cloudflare's leadership is focused on becoming a single, unified platform that businesses can use for all their security and network needs, which they call a "connectivity cloud". A major priority is expanding its "Zero Trust" services, convincing large companies to replace a patchwork of different security products with Cloudflare's single, integrated offering. The company is also investing heavily in artificial intelligence, both to enhance its own security capabilities and to provide tools for developers to build AI applications on its network. Finally, they are preparing for future security threats by working to make their entire network resistant to decryption by quantum computers.
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 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
FY2026 Q2
$67.60M
Revenue
$696.06M
Net income
$-169.98M
Diluted EPS
-0.48
Operating cash flow
$117.56M
Free cash flow
$67.60M
Fetching…
Sources
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
Is it cheap or expensive?
Fair value $23.62 vs current price $296.30
Wall Street consensus is the average analyst price target: $343.42 (1,353.9% higher than our fair-value estimate).
Our most-likely fair value is $23.62 a share — about 92.0% below today's price of $296.30, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $633.4M - more cash than debt. Interest coverage -23.6x.
Net debt
$-633.45M
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 1 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 $3.53B Interest coverage -23.64x This is the baseline the peer rows are being compared against.
Total debt $820.18M Interest coverage -10.47x Neither company has much profit cushion over interest right now.
Total debt $561.40M Interest coverage 103.72x This peer still has a real interest-payment cushion, while NET does not.
Total debt $53.00M Interest coverage 38.25x This peer still has a real interest-payment cushion, while NET does not.
What you should know
The case for and against NET
2 Rewards
2 Risks
Rewards
-
Revenue grew 15.9% last year.
-
Free cash flow was positive in 3/10 years.
Risks
-
Return on equity was -14.4% last year — the company lost money on shareholders' equity.
-
Insider ownership is only 0.6% (peer median: 1.1%).
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
176.78x
P/B
65.09x
P/S
42.00x
EV/EBITDA
-29,050.69x
PEG ratio
2.38x
Profitability
How much profit each dollar creates
Gross margin
72.6%
Operating margin
-7.6%
Net margin
-8.2%
ROE
-14.4%
ROA
-2.0%
Health
Liquidity and balance-sheet strength
Debt / equity
2.18x
Current ratio
1.82x
Quick ratio
1.75x
Total debt
$3.53B
Total cash
$4.16B
Growth
How the business has been compounding
Revenue TTM
$2.51B
Revenue 5Y CAGR
34.8%
EPS TTM
-0.58
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$633.43M
Free CF TTM
$287.50M
FCF margin
11.4%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
—
Last ex-div date
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