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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

Breaking News: Cloudflare Inc is seeing increased attention in the AI cloud sector with comparisons to CoreWeave. The company recently dipped more than the broader market, closing at $194.63. Cloudflare's stock is being evaluated against competitors for growth and valuation. Fastly's margin expansion and successful cross-selling of security services have led to a potential multiple re-rating. Cloudflare's earnings and sales growth are accelerating, positioning the stock for a potential breakout. A cautious approach may be warranted given market conditions. Recommendation to hold is given by some analysts.

1.c. Company Highlights

2. Cloudflare's Strong Q4 2025 Earnings: A Deeper Dive

Cloudflare reported revenue of $614.5 million, a 34% year-over-year increase, driven by a 42% growth in revenue from large customers, who now account for 73% of total revenue. The company's dollar-based net retention rate stood at 120%, up 1% quarter-over-quarter and 9% year-over-year. Cloudflare generated $99.4 million in free cash flow during the quarter. Earnings per share (EPS) came in at $0.28, beating estimates of $0.2713.

Publication Date: Feb -12

📋 Highlights
  • Revenue Growth:: Q4 revenue reached $614.5 million, reflecting a 34% year-over-year increase and accelerating for the third consecutive quarter.
  • Large Customer Expansion:: 4,298 customers paying over $100,000 annually, contributing 73% of total revenue (up from 69% in Q4 2024), with revenue from these customers growing 42% YoY.
  • Strong Free Cash Flow:: Generated $99.4 million in free cash flow during the quarter, signaling robust liquidity and operational efficiency.
  • AI-Driven Demand:: Cloudflare Workers platform saw outsized growth, driven by increased AI and agentic Internet activity, with over 20% of the internet behind Cloudflare infrastructure.
  • RPO Growth:: Record $2.496 billion in Revenue Pipeline (RPO) for Q4, up 48% YoY, with current RPO comprising 63% of total, up 34% YoY.

Revenue Growth and Customer Acquisition

The company's customer base expanded to approximately 332,000 paying customers, with a record addition of nearly 37,000 customers sequentially, representing a 40% year-over-year increase. Large customers, defined as those paying over $100,000 per year, grew 23% year-over-year to 4,298. As Matthew Prince noted, "Our go-to-market engine is firing on all cylinders," with global sales productivity increasing year-over-year for the eighth consecutive quarter.

Margin Analysis and Operating Expenses

Gross margin stood at 74.9%, a decrease of 40 basis points sequentially and 270 basis points year-over-year. Operating expenses as a percentage of revenue decreased by 3% year-over-year to 60%. The total number of employees increased 21% year-over-year to approximately 5,200. Operating income was $89.6 million, a 33% year-over-year increase, with an operating margin of 14.6%, consistent year-over-year.

Guidance and Outlook

For Q1 2026, Cloudflare expects revenue of $620 million to $621 million, a 29-30% year-over-year increase. For the full year 2026, the company expects revenue of $2.785 billion to $2.795 billion, a 28-29% year-over-year increase. Analysts estimate next year's revenue growth at 27.5%. With a current P/S Ratio of 30.56, the market appears to be pricing in significant growth expectations.

Valuation and Growth Prospects

Given Cloudflare's growth prospects, particularly in AI and application services, the company's valuation multiples appear stretched. The EV/EBITDA ratio stands at 1654.61, indicating a high valuation relative to earnings. However, with a strong track record of revenue growth and a robust go-to-market engine, Cloudflare is well-positioned to continue its growth trajectory, driven by its unique position in the AI and cloud infrastructure landscape.

3. NewsRoom

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Why Cloudflare (NET) Dipped More Than Broader Market Today

Mar -30

Source: zacks.com

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CoreWeave vs. Cloudflare: Which AI Cloud Stock Offers Better Upside?

Mar -30

Source: zacks.com

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Internet Optimizer Getting A Handle On Cracked Market — Maybe

Mar -30

Source: investors.com

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NET Power, Inc. Investigated by the Portnoy Law Firm

Mar -30

Source: globenewswire.com

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Fastly: Why Margin Convergence With Cloudflare Justifies A Multiple Re-Rating

Mar -30

Source: seekingalpha.com

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Rep. Josh Gottheimer Sells Off Shares of Microsoft Corporation (NASDAQ:MSFT)

Mar -29

Source: defenseworld.net

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Monster Beverage (NASDAQ:MNST) Shares Acquired Rep. Josh Gottheimer

Mar -29

Source: defenseworld.net

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Cloudflare Stock Slides On Anthropic Leak, AI Competition Concerns

Mar -27

Source: benzinga.com

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

Stock-Card
Palantir

A-Score: 4.8/10

Value: 0.0

Growth: 7.6

Quality: 8.9

Yield: 0.0

Momentum: 10.0

Volatility: 2.7

1-Year Total Return ->

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Zscaler

A-Score: 4.7/10

Value: 2.3

Growth: 8.4

Quality: 3.5

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

1-Year Total Return ->

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Fortinet

A-Score: 4.5/10

Value: 1.0

Growth: 9.1

Quality: 7.9

Yield: 0.0

Momentum: 4.0

Volatility: 5.0

1-Year Total Return ->

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Adobe

A-Score: 4.5/10

Value: 3.0

Growth: 5.4

Quality: 9.2

Yield: 0.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Cloudflare

A-Score: 4.4/10

Value: 2.0

Growth: 8.1

Quality: 2.8

Yield: 0.0

Momentum: 9.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Block

A-Score: 4.4/10

Value: 4.8

Growth: 8.4

Quality: 7.1

Yield: 0.0

Momentum: 2.5

Volatility: 3.3

1-Year Total Return ->

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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

208.56$

Current Price

208.56$

Potential

-0.00%

Expected Cash-Flows