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Cloudflare
(NYSE:NET)
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Rating:66Neutral
Price Target:
$377.00
▲(35.82% Upside)
Action:Reiterated
Date:08/17/26
The score is driven primarily by improving fundamentals (notably strong and accelerating free cash flow) and strong technical momentum, reinforced by a constructive earnings call with robust forward guidance. These positives are tempered by below-average balance-sheet quality/leverage, ongoing GAAP profitability gaps, and weak valuation signals (negative P/E and no dividend).
Positive Factors
Rapid recurring revenue growth
Cloudflare is sustaining rapid top-line expansion across its subscription and usage-based platform. Continued growth at this scale indicates broadening customer adoption and supports greater operating leverage, reinvestment in the network, and durable competitive positioning over the next several quarters.
Negative Factors
Elevated leverage limits flexibility
Leverage is high relative to the company’s software profile and reduces financial flexibility if growth slows or funding conditions tighten. Debt service and refinancing needs can compete with investment priorities, while the reported cash-flow coverage ratio remains modest.
Read all positive and negative factors
Positive Factors
Negative Factors
Rapid recurring revenue growth
Cloudflare is sustaining rapid top-line expansion across its subscription and usage-based platform. Continued growth at this scale indicates broadening customer adoption and supports greater operating leverage, reinvestment in the network, and durable competitive positioning over the next several quarters.
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
$124.30B
Dividend YieldN/A
Average Volume (3M)2.97M
Price to Earnings (P/E)―
Beta (1Y)1.44
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. Volume2,964,810
30 Day Avg. Volume2,968,474
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 Cap0.69
Enterprise Value/Revenue34.34
Enterprise Value/Gross Profit47.31
Enterprise Value/Ebitda2.23K
Forecast
1Y Price Target
$349.80Price Target Upside26.02% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering28
EPS Forecast (FY)1.26
Revenue Forecast (FY)$2.87B
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-delivered security, performance, and developer services that run on its global network.
1) Subscription revenue (core model)
- Cloudflare’s main revenue stream is recurring su...
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
277.58
Price Trends
307.73
Positive
274.05
Positive
235.21
Positive
Market Momentum
14.84
Positive
60.31
Neutral
54.25
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 277.58 is below the 20-day moving average (MA) of 332.67, below the 50-day MA of 307.73, and above the 200-day MA of 235.21, indicating a bullish trend. The MACD of 14.84 indicates Positive momentum. The RSI at 60.31 is Neutral, neither overbought nor oversold. The STOCH value of 54.25 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 86 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | $25.71B | 35.75 | 19.86% | ― | 9.41% | 10.59% | |
78 Outperform | $132.77B | 63.27 | 187.95% | ― | 18.77% | 12.93% | |
70 Outperform | $329.85B | 876.61 | 1.68% | ― | 24.49% | -68.55% | |
66 Neutral | $124.30B | -598.46 | -13.86% | ― | 33.53% | -72.17% | |
66 Neutral | $32.06B | -504.10 | -2.76% | ― | 25.42% | -47.39% | |
64 Neutral | $15.65B | 38.35 | 8.49% | ― | 5.87% | -0.31% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
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128.04
57.93%
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Cloudflare Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Cloudflare Raises $2.5 Billion via Convertible Notes Offering
Positive
Aug 13, 2026
On August 13, 2026, Cloudflare issued $2.5 billion of 0% Convertible Senior Notes due 2031 in a private Rule 144A placement, with an initial conversion price of about $496.94 per share, a roughly 60% premium to its August 10, 2026 closing price. T...
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 ...
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.