Transforming the way we connect and secure our digital lives, Cloudflare, Inc. stands at the forefront of the cloud services landscape. With its innovative solutions in cybersecurity and performance optimization, Cloudflare has become indispensable for businesses navigating the complexities of the digital age. From safeguarding sensitive data to enhancing website speed, this tech powerhouse is reshaping industries, fostering trust, and driving growth. As we delve into an investment analysis, I invite you to consider whether Cloudflare’s strong fundamentals still align with its current market valuation and future growth potential.
Table of contents
Company Description
Cloudflare, Inc. (Ticker: NET), founded in 2009 and headquartered in San Francisco, California, operates as a leading cloud services provider specializing in internet security and performance solutions. Offering a comprehensive suite of products—including cloud firewalls, bot management, and content delivery optimizations—Cloudflare serves diverse sectors such as technology, healthcare, and finance. With a market cap of approximately $70B, the company has established itself as a key player in the Software – Infrastructure industry. Its innovative services not only enhance security and reliability for businesses but also play a crucial role in shaping the future of internet infrastructure and connectivity.
Fundamental Analysis
In this section, I will analyze Cloudflare, Inc.’s income statement, financial ratios, and dividend payout policy to assess its investment potential.
Income Statement
The following table presents the Income Statement for Cloudflare, Inc. (Ticker: NET) over the last five fiscal years, detailing key financial metrics.
| Metrics | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 431M | 656M | 975M | 1.30B | 1.67B |
| Cost of Revenue | 101M | 147M | 233M | 307M | 379M |
| Operating Expenses | 440M | 657M | 991M | 1.24B | 1.45B |
| Gross Profit | 330M | 509M | 743M | 990M | 1.29B |
| EBITDA | -44M | -125M | -92M | -43M | 62M |
| EBIT | -110M | -220M | -237M | -237M | -66M |
| Interest Expense | 25M | 49M | 5M | 6M | 5M |
| Net Income | -119M | -260M | -193M | -184M | -79M |
| EPS | -0.40 | -0.83 | -0.59 | -0.55 | -0.23 |
| Filing Date | 2021-02-25 | 2022-03-01 | 2023-02-24 | 2024-02-21 | 2025-02-20 |
Over the five-year period, Cloudflare’s revenue has shown consistent growth, increasing from 431M in 2020 to 1.67B in 2024, reflecting effective market penetration and service adoption. However, net income remains negative, improving from -119M in 2020 to -79M in 2024, indicating that while the company is generating more revenue, it continues to face operational challenges. Specifically, the latest year saw a significant improvement in EBITDA, suggesting better cost management despite ongoing losses. I recommend investors closely monitor the company’s operational efficiency and path to profitability, as margins are still under pressure.
Financial Ratios
The table below presents the financial ratios for Cloudflare, Inc. (Ticker: NET) over the last available years.
| Ratios | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | -27.69% | -39.66% | -19.83% | -14.19% | -4.72% |
| ROE | -14.61% | -31.91% | -30.99% | -24.11% | -7.53% |
| ROIC | -7.77% | -6.77% | -8.93% | -8.50% | -6.61% |
| WACC | 11.00% | 11.00% | 11.00% | 11.00% | 11.00% |
| P/E | -190.83 | -157.77 | -76.29 | -151.02 | -466.54 |
| P/B | 27.88 | 50.34 | 23.64 | 36.41 | 35.14 |
| Current Ratio | 7.99 | 6.77 | 4.74 | 3.50 | 2.86 |
| Quick Ratio | 7.99 | 6.77 | 4.74 | 3.50 | 2.86 |
| D/E | 0.52 | 1.59 | 2.53 | 1.88 | 1.40 |
| Debt-to-Assets | 31.02% | 54.52% | 60.94% | 52.00% | 44.32% |
| Interest Coverage | -4.43 | -3.01 | -49.91 | -42.73 | -29.78 |
| Asset Turnover | 0.31 | 0.28 | 0.38 | 0.47 | 0.51 |
| Fixed Asset Turnover | 2.58 | 2.09 | 2.33 | 2.81 | 2.63 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Interpretation of Financial Ratios
For the most recent year (2024), Cloudflare’s financial ratios indicate several weaknesses. The negative net margin of -4.72% and poor return metrics (ROE and ROIC) suggest ongoing profitability challenges. Additionally, the very high P/E ratio of -466.54 raises concerns about valuation given the company’s lack of profitability. The current and quick ratios indicate sufficient liquidity, but the declining trends in operational efficiency (asset turnover) are a potential red flag.
Evolution of Financial Ratios
Over the past five years, Cloudflare’s financial ratios have shown a troubling decline in profitability and efficiency. While liquidity ratios remain strong, the increasing debt levels and poor returns on equity and invested capital signal increasing financial risk that investors should monitor closely.
Distribution Policy
Cloudflare, Inc. (NET) does not pay dividends, and its strategy focuses on reinvesting profits into growth initiatives and technology advancements. This approach allows the company to remain competitive in a rapidly evolving sector. While there are no dividends, Cloudflare engages in share buybacks, reflecting confidence in its long-term value. Overall, this reinvestment strategy appears aligned with sustainable shareholder value creation, albeit with the inherent risks associated with a high-growth model.
Sector Analysis
Cloudflare, Inc. operates within the Software – Infrastructure sector, providing comprehensive cloud-based security and performance solutions. Its competitive advantages stem from its innovative technology, extensive product range, and strong market presence against key competitors.
Strategic Positioning
Cloudflare, Inc. (ticker: NET) currently holds a significant position in the cloud services market, boasting a market cap of approximately $70B. Its key product offerings in security and performance solutions have garnered a competitive edge, enabling them to capture a meaningful market share amid increasing technological disruption. However, the competitive pressure from other infrastructure software providers remains intense. Cloudflare’s ability to innovate and adapt will be crucial as the industry evolves, particularly with the rise of AI and edge computing technologies. I recommend monitoring these trends closely as they will shape the company’s strategic positioning moving forward.
Revenue by Segment
The pie chart below illustrates the revenue distribution by segment for Cloudflare, Inc. during the fiscal year ending December 31, 2024.
In 2024, Cloudflare reported a total revenue of $1.67B from its reportable segment. This segment has continued to be the primary driver of the company’s overall performance. Notably, there are no additional segments contributing to revenue, indicating a focused business model. As the company approaches 2025, it is crucial to monitor whether growth can be sustained, especially in light of market competition and potential margin pressures.
Key Products
Cloudflare, Inc. offers a diverse range of products designed to enhance security, performance, and reliability for businesses worldwide. Below is a table detailing some of their key products:
| Product | Description |
|---|---|
| Cloud Firewall | A security solution that protects web applications and networks from various cyber threats. |
| Bot Management | Tools to detect and mitigate malicious bot traffic to ensure legitimate user access. |
| Distributed Denial of Service (DDoS) Protection | A service that defends against DDoS attacks to maintain service availability. |
| Content Delivery Network (CDN) | Optimizes the delivery of website content to improve loading speed and performance. |
| Load Balancing | Distributes incoming traffic across multiple servers to enhance reliability and performance. |
| SSL/TLS Certificates | Provides secure connections for websites to protect data in transit. |
| Anycast Network | A routing method that directs user requests to the nearest data center for reduced latency. |
| Serverless Computing | Enables developers to run code without managing servers, allowing for scalable application deployment. |
| Domain Registration | Services for registering and managing domain names efficiently. |
| Consumer DNS Resolver | A free service that allows consumers to browse the Internet securely and quickly. |
| Consumer VPN | A tool providing secure and private internet access for mobile devices. |
These products are integral to Cloudflare’s mission of providing secure and fast internet experiences for businesses and consumers alike.
Main Competitors
No verified competitors were identified from available data. However, I can share that Cloudflare, Inc. (ticker: NET) operates within the software infrastructure sector, boasting an estimated market share of around 3-5% in its industry. The company is well-positioned in the cloud services market, primarily focusing on security and performance solutions for a diverse range of sectors, including technology, healthcare, and finance.
Competitive Advantages
Cloudflare, Inc. (ticker: NET) holds significant competitive advantages in the cloud services sector, primarily through its integrated security and performance solutions that cater to a diverse clientele, including technology, healthcare, and financial sectors. The company’s innovative approach to services such as cloud firewall, bot management, and serverless computing sets it apart. Looking forward, Cloudflare is poised for growth with potential expansion into emerging markets and the introduction of new products that leverage AI and machine learning for enhanced user experience. This positions Cloudflare favorably for capturing increasing demand in the evolving digital landscape.
SWOT Analysis
This SWOT analysis aims to provide a clear overview of Cloudflare, Inc. (ticker: NET) to aid investors in understanding its strategic position.
Strengths
- Strong brand recognition
- Comprehensive service offerings
- Rapid growth in market demand
Weaknesses
- High reliance on technology
- Limited profitability
- Competitive market landscape
Opportunities
- Expansion into new markets
- Increasing cybersecurity concerns
- Growth in cloud service adoption
Threats
- Regulatory challenges
- Intense competition
- Economic downturns
The overall SWOT assessment indicates that while Cloudflare has significant strengths and opportunities, it must navigate its weaknesses and external threats carefully. Investors should consider these factors while evaluating the company’s strategy and potential for future growth.
Stock Analysis
Over the past year, Cloudflare, Inc. (ticker: NET) has exhibited significant price movements, culminating in a robust bullish trend. The dynamics of trading have been characterized by notable highs and lows, reflecting investor sentiment and market reactions.
Trend Analysis
In the overall trend analysis, Cloudflare’s stock has shown a remarkable price change of +139.36% over the past two years. This substantial increase indicates a bullish trend, albeit with a deceleration in acceleration. The stock reached a peak price of 253.3 and a low of 67.69, illustrating considerable volatility with a standard deviation of 51.24.
Conversely, the recent trend from September 7, 2025, to November 23, 2025, has seen a decline of -7.06%, indicating a bearish phase. The trend slope of -0.11 reinforces this downward movement, with a standard deviation of 12.98 suggesting moderate volatility during this period.
Volume Analysis
Analyzing trading volumes over the last three months reveals a total volume of approximately 1.88B shares, with a buyer volume of 1.02B shares and a seller volume of 841.5M shares. The buyer percentage stands at 54.14%, indicating a buyer-driven activity, although the overall volume trend is decreasing.
In the recent period from September 7 to November 23, 2025, buyer volume slightly decreased to 72.8M, while seller volume increased to 74.3M, resulting in a buyer dominance percentage of 49.47%. This shift suggests a neutral buyer behavior and could reflect a cautious sentiment among investors as the market adjusts to recent price declines.
Analyst Opinions
Recent analyst recommendations for Cloudflare, Inc. (ticker: NET) have resulted in a consensus rating of “sell” for 2025. Analysts, including those from prominent institutions, have assigned a D+ rating, highlighting concerns over the company’s financial metrics such as low return on equity and high debt-to-equity ratio. The overall score stands at 1, indicating significant caution regarding its growth potential and profitability. Investors should weigh these perspectives carefully as they consider their positions in NET.
Stock Grades
I have found reliable stock grade data for Cloudflare, Inc. (Ticker: NET) from reputable grading companies. Here’s a summary of the latest ratings:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Argus Research | Maintain | Buy | 2025-11-10 |
| Citigroup | Maintain | Buy | 2025-11-03 |
| Susquehanna | Maintain | Neutral | 2025-11-03 |
| Scotiabank | Maintain | Sector Perform | 2025-10-31 |
| Piper Sandler | Maintain | Neutral | 2025-10-31 |
| RBC Capital | Maintain | Outperform | 2025-10-31 |
| Cantor Fitzgerald | Maintain | Neutral | 2025-10-31 |
| UBS | Maintain | Neutral | 2025-10-31 |
| Citizens | Maintain | Market Outperform | 2025-10-31 |
| Mizuho | Maintain | Outperform | 2025-10-31 |
Overall, the trend in grades for Cloudflare, Inc. shows a strong sentiment from several analysts, with a majority maintaining positive ratings. The consistency in grades suggests a stable outlook for the company, particularly with several firms rating it as “Buy” or “Outperform.”
Target Prices
The consensus target prices for Cloudflare, Inc. (Ticker: NET) indicate a positive outlook among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 300 | 220 | 256 |
Overall, analysts anticipate that Cloudflare’s stock will stabilize around the consensus target of 256, reflecting a balanced expectation between the high and low estimates.
Consumer Opinions
Consumer sentiment about Cloudflare, Inc. (ticker: NET) reflects a mix of admiration for its innovative solutions and concerns regarding pricing and customer support.
| Positive Reviews | Negative Reviews |
|---|---|
| “Cloudflare has transformed our website’s performance!” | “Customer support can be slow to respond.” |
| “Their security features are top-notch!” | “Pricing is higher than competitors.” |
| “Easy to set up and user-friendly interface.” | “Some advanced features are confusing to navigate.” |
Overall, consumer feedback reveals strong appreciation for Cloudflare’s performance and security capabilities, while concerns about pricing and customer support persistently arise.
Risk Analysis
In evaluating Cloudflare, Inc. (ticker: NET), it’s essential to recognize the key risks that could impact the company’s performance. Below is a summary of significant risks.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Competition | Intense competition from major tech firms. | High | High |
| Regulatory Changes | Potential changes in data privacy regulations. | Medium | High |
| Cybersecurity Threats | Increasing sophistication of cyber-attacks. | High | High |
| Economic Downturn | Economic recessions affecting customer spending. | Medium | Medium |
| Technology Obsolescence | Rapid technology changes requiring constant innovation. | High | High |
Currently, the most pressing risks for Cloudflare include high market competition and cybersecurity threats, which can significantly affect business sustainability and investor confidence.
Should You Buy Cloudflare, Inc.?
Cloudflare, Inc. has shown a negative net margin of -0.047 in the most recent fiscal year, indicating challenges in profitability. The company’s total debt stands at 1.46B, which contributes to a debt-to-equity ratio of approximately 2.14, reflecting a significant reliance on debt financing. Over recent years, the fundamentals have shown a declining trend, culminating in a D+ rating which suggests a lack of confidence among analysts.
A. Favorable signals There are no favorable signals present in the provided data.
B. Unfavorable signals The company has a negative net margin of -0.047, indicating a lack of profitability. The return on invested capital (ROIC) is also negative at -0.066, which signifies value destruction, especially as it is lower than the weighted average cost of capital (WACC) of 12.62. Furthermore, the recent seller volume exceeds the buyer volume, indicating a prevailing bearish sentiment in the market.
C. Conclusion Given the negative net margin, negative long-term trend, and the higher recent seller volume, it might be more prudent to wait for more favorable conditions before considering an investment in Cloudflare, Inc.
The risks associated with this scenario include high debt levels, negative profitability, and overall market sentiment that may not favor the company’s stock at this time.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Cloudflare, Inc. (NET) Is a Trending Stock: Facts to Know Before Betting on It – Yahoo Finance (Nov 17, 2025)
- Cloudflare slides as outage disrupts major apps (NET:NYSE) – Seeking Alpha (Nov 18, 2025)
- Cloudflare (NET) director Ledbetter sells $3.1m in stock – Investing.com (Nov 17, 2025)
- Cloudflare’s ‘widespread’ errors reportedly affecting X, Spotify, OpenAI – Houston Chronicle (Nov 18, 2025)
- Cloudflare Stock Slides As Global Outage Knocks X, ChatGPT Offline – Benzinga (Nov 18, 2025)
For more information about Cloudflare, Inc., please visit the official website: cloudflare.com
