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1. Company Snapshot

1.a. Company Description

CloudFlare, Inc.operates as a cloud services provider that delivers a range of services to businesses worldwide.The company offers an integrated cloud-based security solution to secure a range of combination of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and IoT devices.


Its security products comprise cloud firewall, bot management, distributed denial of service, IoT, SSL/TLS, secure origin connection, and rate limiting products.The company also offers performance solutions, which include content delivery and intelligent routing, as well as content, mobile, and image optimization solutions.In addition, it provides reliability solutions comprising load balancing, anycast network, virtual backbone, DNS, DNS resolver, online, and virtual waiting room solutions.


Further, the company offers Cloudflare internal infrastructure solutions, including on-ramps, which connect users, devices, or locations to its network; and filters, which are the products that protect, inspect, and privilege data.Additionally, it provides developer-based solutions, such as serverless computing/programmable network, website development, domain registration, Cloudflare apps, analytics, and data localization management; Consumer DNS Resolver, a consumer app to browse the Internet; and Consumer VPN for consumers to secure and accelerate traffic on mobile devices.The company serves customers in the technology, healthcare, financial services, consumer and retail, and non-profit industries, as well as government.


CloudFlare, Inc.was incorporated in 2009 and is headquartered in San Francisco, California.

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1.b. Last Insights on NET

Cloudflare, Inc.'s recent performance has been impacted by several negative factors. Advisory Resource Group and Alfreton Capital LLP decreased their positions in the company, selling 1,863 and 30,000 shares, respectively. Additionally, Banco Bilbao Vizcaya Argentaria S.A. cut its stock holdings by 51.4%. The company's outages affected a large portion of the internet, impacting major websites. These events have contributed to a decrease in investor confidence. Cloudflare's third-quarter earnings report showed impressive results, but concerns remain. (Source: various SEC filings and news articles)

1.c. Company Highlights

2. Cloudflare's Q3 2025 Earnings: A Strong Performance

Cloudflare reported revenue of $562 million, a 30.7% year-over-year increase, with a gross margin of 75.3% and an operating margin of 15.3%. Earnings per share (EPS) came in at $0.27, beating estimates of $0.2301. The company's financial performance was driven by a 23% year-over-year increase in large customers to 4,009, with revenue contribution from these customers growing 42% year-over-year to 73% of total revenue. Dollar-based net retention was 119%, up 5 percentage points quarter-over-quarter.

Publication Date: Nov -04

📋 Highlights
  • Revenue Growth:: Cloudflare recorded $562M revenue, up 30.7% YoY, driven by 23% YoY increase in large customers (4,009) contributing 73% of total revenue, up 42% YoY.
  • Financial Metrics:: Gross margin stabilized at 75.3%, operating margin reached 15.3% ($85.9M profit), and free cash flow hit $75M (13% of revenue).
  • Customer Wins:: Secured key contracts totaling $73.2M, including a 5-year $34.3M deal with a European tech firm and a 3-year $22.8M contract with a Global 2000 media platform.
  • AI Strategic Position:: 80% of leading AI companies use Cloudflare; CEO emphasized agentic commerce and AI-driven Internet transformation, with AI-native revenue growth accelerating.
  • Guidance & Outlook:: Q4 revenue projected at $588.5–$589.5M (28% YoY growth), with full-year 2025 revenue expected to reach $2.142–$2.143B (28% YoY growth).

Go-to-Market Transformation

The company's go-to-market transformation is tracking well, with sales productivity increasing year-over-year for the seventh consecutive quarter. Bookings from partner-initiated opportunities doubled year-over-year, and gross retention levels increased year-over-year and quarter-to-quarter. New pipeline attainment exceeded expectations, with the team "firing on all cylinders." Notable customer wins include a Global 2000 digital media platform and a leading European technology company, with contract values of $22.8 million and $34.3 million, respectively.

AI and Future Growth

CEO Matthew Prince discussed the impact of AI on the company's business, stating that 80% of leading AI companies already rely on Cloudflare. He believes the company will help shape the future of the Internet, with a focus on creating a platform for agentic commerce. The rise of AI will change the fundamental business model of the Internet, with human eyeball traffic no longer being the primary currency. Cloudflare's AI native ecosystem exposure is still a relatively small portion of their revenue, but it's growing fast.

Valuation and Outlook

With a P/S Ratio of 43.16 and an EV/EBITDA of 5096.92, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 27.3%. The company's guidance for the fourth quarter is between $588.5 million and $589.5 million, representing a 28% year-over-year increase. With a strong track record of execution and a focus on emerging trends like AI, Cloudflare is well-positioned to drive long-term growth and deliver value to shareholders.

Competitive Advantage

Cloudflare's ability to offer better total cost of ownership and performance is a key differentiator, particularly in inference workloads where hyperscalers are the primary competition. The company's focus on multi-cloud and supporting various protocols and standards is expected to drive long-term growth and make Cloudflare a key player in the industry. Additionally, the company's investments in public policy and thought leadership in the future of the internet are positioning them for success in a rapidly evolving landscape.

3. NewsRoom

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Market Today: WBD Sale Bids, Meta Cuts, Apple Shake-Up

Dec -04

Source: gurufocus.com

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The Big 3: CRM, CRWD, NET

Dec -04

Source: youtube.com

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Net Stock Forecast: How Much Could Cloudflare Shares Drop?

Dec -03

Source: forbes.com

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Cloudflare and AWS Keep Breaking the Internet

Dec -03

Source: 247wallst.com

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Cloudflare Stock Pops on Brand-New "Overweight" Rating

Dec -02

Source: schaeffersresearch.com

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Here Are Tuesday’s Top Wall Street Analyst Research Calls: Albemarle, Circle Internet, Cloudflare, Danaher, Inspire Medical, Six Flags, Workday and More

Dec -02

Source: 247wallst.com

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First Look: Versace deal, crypto slump, WBD bids and Airbus woes

Dec -02

Source: gurufocus.com

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AXQ Capital LP Has $338,000 Holdings in Cloudflare, Inc. $NET

Nov -25

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (30.00%)

6. Segments

Internet Telephone

Expected Growth: 25.0%

The shift to remote work and growing demand for unified communication platforms drive adoption of Internet Telephone, which is poised to benefit from Cloudflare's existing customer base and strong brand reputation.

7. Detailed Products

Cloudflare CDN (Content Delivery Network)

A network of servers distributed globally that cache and serve static content, such as images, videos, and stylesheets, to reduce latency and improve website performance

Cloudflare Security

A suite of security features that protect websites and applications from DDoS attacks, SQL injection, cross-site scripting (XSS), and other types of cyber threats

Cloudflare Load Balancing

A service that distributes incoming traffic across multiple servers to improve responsiveness, reliability, and scalability of applications

Cloudflare DNS (Domain Name System)

A fast and secure DNS service that translates domain names into IP addresses, improving website performance and security

Cloudflare SSL/TLS

A service that provides secure socket layer (SSL) and transport layer security (TLS) encryption to protect data in transit

Cloudflare Web Application Firewall (WAF)

A security feature that filters and monitors incoming traffic to protect web applications from attacks and vulnerabilities

Cloudflare Cloudflare Workers

A serverless platform that allows developers to run custom code at the edge of the network, closest to users

Cloudflare Zero Trust

A security framework that provides secure access to applications and data, regardless of where users are located

8. Cloudflare, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Cloudflare's unique blend of CDN, security, and performance features makes it difficult for substitutes to replicate its value proposition. While some competitors may offer similar services, they often lack the comprehensive and integrated platform that Cloudflare provides.

Bargaining Power Of Customers

Cloudflare's customers are diverse and range from small businesses to large enterprises. While some large customers may have significant negotiating power, the company's broad customer base and competitive pricing mitigate the bargaining power of individual customers.

Bargaining Power Of Suppliers

Cloudflare's suppliers, such as data center providers and hardware manufacturers, do not have significant bargaining power due to the company's large scale and diversified supplier base.

Threat Of New Entrants

While it is possible for new entrants to emerge in the market, Cloudflare's first-mover advantage, strong brand recognition, and significant investments in research and development create barriers to entry for new competitors.

Intensity Of Rivalry

The CDN and cybersecurity markets are highly competitive, with established players such as Akamai, Verizon Digital Media Services, and Stackpath. Cloudflare must continually innovate and invest in its platform to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.31%
Debt Cost 4.33%
Equity Weight 41.69%
Equity Cost 12.73%
WACC 7.83%
Leverage 139.86%

11. Quality Control: Cloudflare, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 8.4

Quality: 4.6

Yield: 0.0

Momentum: 9.0

Volatility: 5.3

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A-Score: 4.8/10

Value: 0.8

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Quality: 8.5

Yield: 0.0

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Cloudflare

A-Score: 4.4/10

Value: 2.0

Growth: 8.1

Quality: 2.5

Yield: 0.0

Momentum: 9.5

Volatility: 4.0

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A-Score: 4.1/10

Value: 3.5

Growth: 8.4

Quality: 6.7

Yield: 0.0

Momentum: 3.0

Volatility: 3.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

204.15$

Current Price

204.15$

Potential

-0.00%

Expected Cash-Flows