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Cloudflare
(NYSE:NET)
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Rating:67Neutral
Price Target:
$301.00
▲(49.76% Upside)
Action:Reiterated
Date:07/01/26
The score is driven primarily by improving fundamentals and strong cash generation (rising operating cash flow and solid free cash flow) alongside a constructive earnings outlook and ~30% YoY revenue guidance with expanding operating income. The uptrend versus major moving averages supports sentiment. These positives are meaningfully tempered by weak valuation support (negative P/E, no dividend yield) and balance-sheet risk from high debt relative to equity, plus near-term restructuring and margin/CapEx headwinds.
Positive Factors
Strong Cash Generation
Sustained, sizable operating and free cash flow provides durable funding for network CapEx, AI investments, and restructuring without immediate reliance on external financing. Positive FCF improves strategic optionality, reduces liquidity risk, and supports reinvestment and M&A flexibility over the next several quarters.
Negative Factors
Elevated Financial Leverage
High debt relative to equity materially increases financial risk and constrains flexibility. If growth or margins decelerate, servicing debt and meeting covenants could force tougher capital decisions or dilutive financing, limiting long-term strategic investments during the AI transition and network build-out.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong Cash Generation
Sustained, sizable operating and free cash flow provides durable funding for network CapEx, AI investments, and restructuring without immediate reliance on external financing. Positive FCF improves strategic optionality, reduces liquidity risk, and supports reinvestment and M&A flexibility 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
$98.60B
Dividend YieldN/A
Average Volume (3M)3.32M
Price to Earnings (P/E)―
Beta (1Y)1.39
Revenue Growth31.55%
EPS Growth-4.50%
CountryUS
Employees5,156
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.25
Shares Outstanding321,184,840
10 Day Avg. Volume2,890,639
30 Day Avg. Volume3,317,249
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
$257.42Price Target Upside28.08% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering29
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:May 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 06, 2026
Earnings Call Sentiment Positive
The call presents a strongly positive operational and financial momentum—robust revenue growth (34% YoY), expanding large-customer base, record large deals, solid profitability, and strong free cash flow—paired with aggressive strategic moves to replatform the company for agentic AI. Key near-term negatives include a substantial workforce reduction (~20%) with related $140M–$150M restructuring charges, and pressure on gross margins from mix shifts toward lower-margin developer products and reclassification of traffic costs. On balance, the growth, cash generation, customer wins, and clear strategic positioning for AI materially outweigh the immediate costs and execution risks of the transition.Positive Updates
Strong Revenue Growth
Total revenue of $639.8 million, up 34% year-over-year; Q2 revenue guide of $664M–$665M (~30% YoY) and full-year 2026 revenue guide of $2.805B–$2.813B (~30% YoY at midpoint).
Negative Updates
Workforce Reduction and Restructuring Charges
Reduction in headcount by more than 1,100 people (~20% of workforce) to transition to an agentic AI-first operating model; severance and restructuring charges of $140M–$150M for full-year 2026 (approximately $40M noncash), concentrated in Q2.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Revenue Growth
Total revenue of $639.8 million, up 34% year-over-year; Q2 revenue guide of $664M–$665M (~30% YoY) and full-year 2026 revenue guide of $2.805B–$2.813B (~30% YoY at midpoint).
Read all positive updates
Company Guidance
Cloudflare guided Q2 revenue of $664–665 million (≈+30% YoY), Q2 operating income of $90–91 million, an effective tax rate of 21.5% and diluted EPS of $0.27 on roughly 377 million shares; for full‑year 2026 it expects revenue of $2.805–2.813 billion (≈+30% YoY at midpoint), operating income of $418–421 million, an effective tax rate of 20.5% and diluted EPS of $1.19–1.20 on about 375 million shares, while keeping free cash flow expectations unchanged with ~25–30% of full‑year cash generation expected in Q2–Q3, forecasting network CapEx of 14–15% of revenue for 2026 (Q1 was 9%), and disclosing $140–150 million of severance/restructuring charges for the year (≈$40 million noncash, mostly in Q2) alongside commentary on continued operating leverage (Rule of 40 north of 46% this year with visibility >50% next year).Cloudflare Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
44
Neutral
Cash Flow
74
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.33B | 2.17B | 1.67B | 1.30B | 975.24M | 656.43M |
| Gross Profit | 1.71B | 1.62B | 1.29B | 989.74M | 742.63M | 509.29M |
| EBITDA | 137.89M | 105.80M | 62.05M | -36.17M | -83.41M | -132.13M |
| Net Income | -86.74M | -102.27M | -78.80M | -183.95M | -193.38M | -260.31M |
Balance Sheet | ||||||
| Total Assets | 6.16B | 6.04B | 3.30B | 2.76B | 2.59B | 2.37B |
| Cash, Cash Equivalents and Short-Term Investments | 4.17B | 4.10B | 1.86B | 1.67B | 1.65B | 1.82B |
| Total Debt | 3.52B | 3.70B | 1.46B | 1.44B | 1.58B | 1.29B |
| Total Liabilities | 4.64B | 4.58B | 2.25B | 2.00B | 1.96B | 1.56B |
| Stockholders Equity | 1.53B | 1.46B | 1.05B | 763.05M | 623.96M | 815.80M |
Cash Flow | ||||||
| Free Cash Flow | 355.53M | 324.32M | 195.39M | 119.46M | -39.77M | -43.09M |
| Operating Cash Flow | 679.42M | 666.87M | 380.43M | 254.41M | 123.59M | 64.65M |
| Investing Cash Flow | -1.87B | -1.81B | -330.22M | -186.20M | -235.70M | -709.32M |
| Financing Cash Flow | 1.93B | 1.94B | 12.79M | -192.19M | 6.35M | 847.49M |
Cloudflare Technical Analysis
Positive
200.99
Price Trends
236.75
Positive
219.70
Positive
210.73
Positive
Market Momentum
12.35
Negative
64.91
Neutral
64.46
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 200.99 is below the 20-day moving average (MA) of 252.05, below the 50-day MA of 236.75, and below the 200-day MA of 210.73, indicating a bullish trend. The MACD of 12.35 indicates Negative momentum. The RSI at 64.91 is Neutral, neither overbought nor oversold. The STOCH value of 64.46 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | $292.32B | 301.41 | 6.30% | ― | 19.51% | -33.05% | |
79 Outperform | $118.40B | 62.16 | 155.65% | ― | 15.75% | 6.24% | |
75 Outperform | $206.79B | -4,275.37 | -0.58% | ― | 23.17% | 73.57% | |
68 Neutral | $24.25B | -312.38 | -3.71% | ― | 24.61% | -91.58% | |
67 Neutral | $98.60B | -1,118.04 | -6.23% | ― | 31.55% | -4.50% | |
65 Neutral | $25.27B | 30.65 | -39.99% | 0.94% | 6.84% | 10.70% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
NET
Cloudflare
277.66
79.90
40.40%
FTNT
Fortinet
161.61
54.67
51.12%
PANW
Palo Alto Networks
358.68
158.80
79.45%
VRSN
Verisign
277.66
-4.82
-1.71%
ZS
Zscaler
149.94
-138.49
-48.02%
CRWD
CrowdStrike Holdings
203.08
82.69
68.68%
Cloudflare Corporate Events
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 ...
Business Operations and StrategyFinancial Disclosures
Cloudflare Announces Major AI-Driven Restructuring and Outlook
Neutral
May 7, 2026
On May 7, 2026, Cloudflare reported first-quarter 2026 revenue of $639.8 million, up 34% year over year, alongside a GAAP operating loss of $62.0 million and non-GAAP operating income of $73.1 million, reflecting strong top-line momentum and impro...
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.