Cloudflare Inc.

NET
Financial Analysis · Updated May 18, 2026 · Coverage 2026-Q2
Latest Q Revenue
$639.8M
Q1 2026 · +34.3% YoY
TTM ROIC
6.4%
FY2025 · FCF / Invested Capital (Net Debt + Equity)

Financial Snapshot

ticker: NET step: 04 generated: 2026-05-13 source: quick-research

Cloudflare, Inc. (NET) — Financial Snapshot

Income Statement Summary

Metric FY2022 FY2023 FY2024 YoY
Revenue $0.975B $1.30B $1.67B +28.8%
Non-GAAP Gross Margin ~77% ~78% ~78%
GAAP Net Income ~-$0.2B ~-$0.2B ~-$0.18B improving
Non-GAAP EPS ~$0.22 ~$0.58 ~$0.72

FY2025: Revenue $2.17B (+29.8%); Q4 2025 revenue +34% YoY. Q1 2026: Revenue +34% YoY (re-acceleration). $1M+ ARR customers: 269 (+55% YoY). May 2026: 1,100-person layoff announced, saving costs as AI changes operations.

Cash Flow & Balance Sheet (FY2024)

Metric Value
Operating Cash Flow ~$0.3B
Free Cash Flow $0.17B
Capital Expenditures ~$0.13B
Cash & Equivalents ~$1.8B
Total Debt ~$1.5B (convertible notes)

FCF margin is modest (10%) relative to revenue due to heavy investment in PoP expansion, R&D, and sales. Stock-based compensation is significant (~25%+ of revenue), compressing GAAP earnings. Net cash positive. FCF expected to scale as operating leverage improves.

Key Ratios (approximate)

  • P/E: ~182x (non-GAAP FY2026E) | EV/Sales: ~28x | FCF Yield: <1%
  • Revenue Growth (TTM): ~30–34% | Non-GAAP Operating Margin: ~12–15%

Growth Profile

Cloudflare is a high-growth infrastructure platform with revenue compounding at ~30% annually: $975M (FY2022) → $2.17B (FY2025). Large customer growth ($1M+ ARR: 55% YoY) and Q4 2025/Q1 2026 re-acceleration to 34% are the strongest signals in years. However, the stock trades at ~28x forward revenues and ~182x non-GAAP earnings — one of the richest valuations in software. FCF margins remain thin (~10%) while the company invests aggressively in network expansion and new products.

Forward Estimates

  • FY2026: Revenue ~$2.8–3.0B (+27–30%); FCF margin expanding toward 15–20% as scale improves
  • $1M+ ARR customers: 269 → tracking toward 400+ by FY2026 year-end
  • New product bookings growing nearly 50% (Q4 2025) — Workers AI, AI Gateway, R2 accelerating
  • Analyst mean PT: $237 (+12% from ~$210; 22 Buy / 11 Hold / 2 Sell)
  • May 2026: 1,100-person layoff (~22% of workforce) targeting margin improvement as AI automates functions

Deeper Financial Analysis

The fundamental tier adds 9 additional research dimensions for $NET.

Revenue Breakdown
Segment revenue, geographic mix, product-line contribution margins, and cohort dynamics.
Financial Trends
Quarter-over-quarter momentum, leading indicators, and inflection point analysis.
Balance Sheet
Debt structure, liquidity runway, dilution risk, and working capital dynamics.
Capital Allocation
Buyback cadence, M&A appetite, dividend policy, and reinvestment priorities.
Returns on Capital (ROIC)
Multi-year ROIC vs. WACC, marginal returns on reinvestment, sales-to-invested-capital efficiency, and moat spread.
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Markdown: /stocks/net/financials/md · → thesis · → memo