AI Analysis

Generated: 25 weeks ago. (Likely Outdated!)

1. Mandatory Disclaimer

⚠️ Disclaimer: This analysis is generated by AI. stockpicker.tech is not responsible for any mistakes, inaccuracies, or hallucinations. This is for educational purposes only and does not constitute financial advice. Users should always double-check the information and conduct their own research before making investment decisions.

2. The Business Model (How They Make Money)

Cloudflare, Inc. (NET) operates as a "connectivity cloud company" that helps make websites, applications, and networks faster and more secure. Think of them as a digital bodyguard and speed booster for anything connected to the internet. They essentially sit between a user and a website or application, filtering out bad traffic (like cyberattacks) and delivering content more efficiently.

Their core economic engine is built on a subscription model, where businesses pay Cloudflare for access to their suite of services. These services include things like protecting against online attacks (DDoS protection, web application firewall), speeding up website loading times (content delivery network), and ensuring secure access for employees to company resources (Zero Trust solutions).

Cloudflare primarily generates revenue from selling subscriptions to its integrated platform of cloud-native products and developer tools. For the fiscal year ended December 31, 2025, Cloudflare reported total revenue of $2,167.9 million, representing an increase of nearly 30% year-over-year. The company has a single operating segment, meaning all its revenue comes from these integrated offerings rather than distinct, separately reported business lines. A significant portion of their revenue, 73% in Q4 2025, comes from large customers who pay over $100,000 per year.

3. The Metrics That Matter Most

For Cloudflare, a growing technology company with a subscription-based model, these performance metrics are particularly important:

  • Revenue: This metric simply tells you the total amount of money Cloudflare brought in from selling its services. For a growth company like Cloudflare, consistently increasing revenue shows that more customers are signing up and existing customers are expanding their use of Cloudflare's platform. In fiscal year 2025, Cloudflare's revenue was $2,167.9 million, an increase of 29.8% from the previous year. For the full year 2026, Cloudflare expects total revenue to be between $2,785.0 million and $2,795.0 million. This growth indicates the company's ability to attract and retain customers for its internet infrastructure and security services.
  • Gross Margin: This shows how much profit Cloudflare makes from its core services after subtracting the direct costs of providing those services (like running their global network). A high gross margin indicates that their services are efficient to deliver and that they have strong pricing power. For fiscal year 2025, Cloudflare's GAAP gross margin was 74.5%. A healthy gross margin is crucial for a software-as-a-service (SaaS) company as it provides the funds to invest in research and development and sales and marketing.
  • Free Cash Flow: This is the cash a company generates after paying for its operating expenses and capital expenditures (investments in things like new equipment or network infrastructure). It's a crucial measure of a company's financial health and its ability to fund future growth, pay down debt, or return money to shareholders. Cloudflare reported free cash flow of $219.3 million for the full year 2025. This shows how much actual cash the company is generating from its operations, which is vital for a company that needs to continually invest in its network and technology.
  • R&D expenses (Research & Development expenses): This metric represents the money Cloudflare spends on developing new products and improving existing ones. For a technology company, strong R&D spending is essential for innovation and staying competitive in a rapidly evolving cybersecurity and internet infrastructure market. In fiscal year 2025, Cloudflare's adjusted research and development expense was $337.867 million. This investment directly fuels their ability to offer cutting-edge solutions and attract new customers.

4. How to Value This Company

The most relevant valuation metric for Cloudflare is P/Sales (Price-to-Sales ratio).

Here's why: Cloudflare is a growth-oriented technology company that has been investing heavily in expanding its network and product offerings. While they are generating positive free cash flow, they have reported a GAAP net loss for fiscal year 2025. When a company is growing rapidly and reinvesting heavily, its profits (and therefore metrics like P/E ratio) might be low or even negative. In such cases, looking at the P/Sales ratio helps investors understand how much they are paying for each dollar of the company's revenue.

To use it, you simply divide the company's total market value (its stock price multiplied by the number of shares outstanding) by its total revenue over the last twelve months. A lower P/Sales ratio generally suggests a more attractive valuation, meaning you're paying less for each dollar of sales. However, it's important to compare Cloudflare's P/Sales ratio to similar high-growth software and internet infrastructure companies to get a meaningful perspective on whether the stock is cheap or expensive.

⚠️ Disclaimer: This analysis is generated by AI. stockpicker.tech is not responsible for any mistakes, inaccuracies, or hallucinations. This is for educational purposes only and does not constitute financial advice. Users should always double-check the information and conduct their own research before making investment decisions.

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Cloudflare, Inc.

$280.70 +$84.68 (+43.20%)
NYSE · 30 Oct 2026 20:02 UTC
Previous Close
$310.30
Day Range
$271.63$299.69
Year Range
$158.83$370.35
Market Cap
99.95B
AVG Volume
3.34M
Trailing/Forward PE
-481.39/167.54
PEG ratio
-12.65
Dividend Yield
-
Next Earnings Date
2026-11-05
Primary Exchange
New York Stock ExchangeUS
Revenue (USD) · Q
0200M400M600M800M24 Q124 Q224 Q324 Q425 Q125 Q225 Q325 Q426 Q126 Q2
NET Revenue (USD) by quarter
PeriodRevenue (USD)
26 Q2696.06M
26 Q1639.75M
25 Q4614.51M
25 Q3562.03M
25 Q2512.32M
25 Q1479.09M
24 Q4459.95M
24 Q3430.08M
24 Q2401M
24 Q1378.6M
Net Income (USD) · Q
-200M-150M-100M-50M024 Q124 Q224 Q324 Q425 Q125 Q225 Q325 Q426 Q126 Q2
NET Net Income (USD) by quarter
PeriodNet Income (USD)
26 Q2-169.98M
26 Q1-22.93M
25 Q4-12.08M
25 Q3-1.29M
25 Q2-50.45M
25 Q1-38.45M
24 Q4-12.85M
24 Q3-15.33M
24 Q2-15.08M
24 Q1-35.54M
Operating Income (USD) · Q
-300M-200M-100M024 Q124 Q224 Q324 Q425 Q125 Q225 Q325 Q426 Q126 Q2
NET Operating Income (USD) by quarter
PeriodOperating Income (USD)
26 Q2-205.7M
26 Q1-61.99M
25 Q4-49.23M
25 Q3-37.46M
25 Q2-67.26M
25 Q1-53.25M
24 Q4-34.72M
24 Q3-30.79M
24 Q2-34.7M
24 Q1-54.55M
EBITDA · Q
Cash Flows · Q
EPS · Q
Expenses · Q
Cash & Debt · Q
Debt ratios · Q
Margins · Q
Return on Capital · Q
Shares Outstanding · Q
Dividends (USD) · Q
Employee Count
Book Value Per Share · Q
Total Assets · Q
PE Ratio
Free Cash Flow Yield
Price to Sales
EV/EBITDA
Price/Operating Cashflow
Price to Book

Earnings: NET

Estimate against actual revenue and earnings per share, the beat and miss record of recent reports, and how the price moved around each one. Next report: 5 Nov 2026.

Cloudflare, Inc.
NET
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Disclaimer: The historical data presented on this platform is provided by Financial Modeling Prep. Stock Picker is a platform for informational purposes only and does not provide financial advice. Users are encouraged to conduct their own research and consult with a qualified financial advisor before making investment decisions.