In today’s fast-evolving technology landscape, cybersecurity and cloud infrastructure are critical arenas for innovation and growth. Cloudflare, Inc. (NET) and Arqit Quantum Inc. (ARQQ) both operate in the software infrastructure sector, offering cutting-edge security solutions but through different technological approaches. This comparison will explore their market positions, innovation strategies, and growth potential to help you decide which company could be the more compelling addition to your investment portfolio.
Table of contents
Companies Overview
I will begin the comparison between Cloudflare, Inc. and Arqit Quantum Inc. by providing an overview of these two companies and their main differences.
Cloudflare, Inc. Overview
Cloudflare, Inc. operates as a cloud services provider delivering integrated cloud-based security solutions worldwide. Its offerings include cloud firewalls, bot management, DDoS protection, performance optimization, and reliability solutions across public and private clouds, SaaS, and IoT devices. Founded in 2009 and headquartered in San Francisco, Cloudflare serves diverse sectors such as technology, healthcare, finance, and government.
Arqit Quantum Inc. Overview
Arqit Quantum Inc. is a UK-based cybersecurity company providing encryption services via satellite and terrestrial platforms. Its flagship product, QuantumCloud, enables devices to generate encryption keys through lightweight software agents. Founded recently and listed on NASDAQ, Arqit focuses on advanced quantum encryption technologies with a small workforce based in London.
Key similarities and differences
Both companies operate in the software infrastructure sector focusing on cybersecurity solutions; however, Cloudflare offers a broad range of cloud security and performance services globally, while Arqit specializes in quantum encryption technologies primarily through satellite infrastructure. Cloudflare has a significantly larger market cap and employee base compared to Arqit’s niche and smaller scale operation. Their geographic bases differ, with Cloudflare in the US and Arqit in the UK.
Income Statement Comparison
The table below presents a side-by-side comparison of key income statement metrics for Cloudflare, Inc. and Arqit Quantum Inc. for their most recent fiscal years.
| Metric | Cloudflare, Inc. (NET) | Arqit Quantum Inc. (ARQQ) |
|---|---|---|
| Market Cap | 64.5B | 416M |
| Revenue | 1.67B | 530K |
| EBITDA | 62M | -37M |
| EBIT | -66M | -38M |
| Net Income | -79M | -35M |
| EPS | -0.23 | -2.56 |
| Fiscal Year | 2024 | 2025 |
Income Statement Interpretations
Cloudflare, Inc.
Cloudflare’s revenue grew significantly from 431M in 2020 to 1.67B in 2024, with net income losses narrowing from -119M to -78.8M. Gross margins remained strong and favorable at 77.3%, while net margins stayed negative but improved by nearly 83% over the period. In 2024, revenue growth accelerated by 28.8%, supported by a 30.4% gross profit increase and better operating efficiency.
Arqit Quantum Inc.
Arqit Quantum’s revenue rose sharply from 48K in 2021 to 530K in 2025, alongside a net loss reduction from -272M to -35.3M. Despite unfavorable gross and EBIT margins, the company showed favorable revenue and net income growth overall. The latest year saw revenue increase 80.9%, but EBIT declined by 58.2%, reflecting ongoing operational challenges amid rapid expansion.
Which one has the stronger fundamentals?
Cloudflare exhibits stronger fundamentals with consistent revenue growth, favorable gross margins above 77%, and improving net margins despite ongoing losses. Arqit Quantum, while growing revenue impressively, suffers from persistently negative margins and high operating losses. Cloudflare’s more stable profitability trends and efficient cost management indicate comparatively stronger financial health.
Financial Ratios Comparison
This table presents the most recent key financial ratios for Cloudflare, Inc. and Arqit Quantum Inc., enabling a straightforward side-by-side analysis for investors.
| Ratios | Cloudflare, Inc. (NET) | Arqit Quantum Inc. (ARQQ) |
|---|---|---|
| ROE | -7.53% | -129.77% |
| ROIC | -6.06% | -127.45% |
| P/E | -466.54 | -15.12 |
| P/B | 35.14 | 19.62 |
| Current Ratio | 2.86 | 2.69 |
| Quick Ratio | 2.86 | 2.69 |
| D/E (Debt-to-Equity) | 1.40 | 0.03 |
| Debt-to-Assets | 44.32% | 1.68% |
| Interest Coverage | -29.78 | -802.90 |
| Asset Turnover | 0.51 | 0.01 |
| Fixed Asset Turnover | 2.63 | 0.74 |
| Payout Ratio | 0 | 0 |
| Dividend Yield | 0 | 0 |
Interpretation of the Ratios
Cloudflare, Inc.
Cloudflare exhibits mostly unfavorable financial ratios, including negative net margin (-4.72%) and return on equity (-7.53%), indicating profitability and efficiency challenges. The company’s current and quick ratios at 2.86 are favorable, showing reasonable short-term liquidity. Cloudflare does not pay dividends, reflecting its reinvestment strategy amid negative free cash flow and ongoing R&D focus.
Arqit Quantum Inc.
Arqit’s ratios are largely unfavorable, with extreme negative returns such as net margin at -6668.49% and ROE at -129.77%, signaling significant losses and operational difficulties. Favorable metrics include a low debt-to-equity ratio (0.03) and strong liquidity (current ratio 2.69). The company does not issue dividends, consistent with its high-growth phase and priority on technology development and expansion.
Which one has the best ratios?
Both companies report predominantly unfavorable ratios, but Cloudflare shows marginally better liquidity and asset turnover metrics, while Arqit benefits from lower leverage and debt ratios. Neither company pays dividends, reflecting reinvestment priorities. Overall, Cloudflare’s ratios suggest slightly stronger operational stability, whereas Arqit faces more pronounced profitability and efficiency challenges.
Strategic Positioning
This section compares the strategic positioning of Cloudflare and Arqit Quantum, including market position, key segments, and exposure to technological disruption:
Cloudflare, Inc.
- Large market cap of 64.5B in cloud services, facing competitive pressure in software infrastructure.
- Key segments include cloud security, performance, reliability, developer and consumer solutions.
- Exposure to disruption through integrated cloud-based security and developer solutions.
Arqit Quantum Inc.
- Small market cap of 416M, focused on cybersecurity via satellite and terrestrial platforms.
- Focused on QuantumCloud encryption software for device security in the UK market.
- Exposure to disruption via quantum encryption technology and lightweight software agents.
Cloudflare vs Arqit Quantum Positioning
Cloudflare has a diversified strategic approach with multiple cloud-based security and performance solutions, serving various industries globally. Arqit Quantum concentrates on a niche quantum cybersecurity technology in the UK, with a smaller scale and focused product offering.
Which has the best competitive advantage?
Both companies currently show a slightly unfavorable MOAT with value destruction but improving profitability. Cloudflare’s larger scale and diversified portfolio may offer broader resilience, while Arqit’s niche quantum focus could present future growth potential.
Stock Comparison
The past year reveals pronounced bullish trends for both Cloudflare, Inc. (NET) and Arqit Quantum Inc. (ARQQ), marked by significant price appreciation but recent downward corrections in trading dynamics.
Trend Analysis
Cloudflare, Inc. (NET) showed a strong bullish trend with an 87.07% price increase over the past 12 months, though the trend has decelerated recently with a 27.29% decline since November 2025. Volatility remains high with a 52.73 standard deviation.
Arqit Quantum Inc. (ARQQ) experienced a 93.6% bullish price increase over the same period, also decelerating recently with a 39.03% drop since November 2025. Volatility is lower than NET, with an 11.75 standard deviation.
Comparing both, ARQQ outperformed NET in overall market gains despite sharper recent declines; ARQQ delivered the highest total price appreciation over the past year.
Target Prices
Analysts present a cautiously optimistic consensus on target prices for Cloudflare, Inc. and Arqit Quantum Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Cloudflare, Inc. | 300 | 210 | 248.86 |
| Arqit Quantum Inc. | 60 | 60 | 60 |
Cloudflare’s target consensus at 248.86 USD is significantly above its current price of 184.17 USD, suggesting potential upside. Arqit Quantum’s single target price of 60 USD also indicates a strong expected increase from its current 26.6 USD.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Cloudflare, Inc. and Arqit Quantum Inc.:
Rating Comparison
Cloudflare, Inc. Rating
- Rating: D+, considered very favorable
- Discounted Cash Flow Score: 1, very unfavorable
- ROE Score: 1, very unfavorable
- ROA Score: 1, very unfavorable
- Debt To Equity Score: 1, very unfavorable
- Overall Score: 1, very unfavorable
Arqit Quantum Inc. Rating
- Rating: C, considered very favorable
- Discounted Cash Flow Score: 2, moderate
- ROE Score: 1, very unfavorable
- ROA Score: 1, very unfavorable
- Debt To Equity Score: 4, favorable
- Overall Score: 2, moderate
Which one is the best rated?
Based strictly on the data, Arqit Quantum Inc. holds higher overall and discounted cash flow scores, and a significantly better debt to equity score, making it better rated than Cloudflare, Inc. in this comparison.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for Cloudflare, Inc. and Arqit Quantum Inc.:
Cloudflare, Inc. Scores
- Altman Z-Score: 9.47, indicating a safe zone with low bankruptcy risk.
- Piotroski Score: 2, classified as very weak financial strength.
Arqit Quantum Inc. Scores
- Altman Z-Score: -0.22, indicating distress zone with high bankruptcy risk.
- Piotroski Score: 2, classified as very weak financial strength.
Which company has the best scores?
Based on the provided data, Cloudflare has a significantly stronger Altman Z-Score, placing it in the safe zone, while Arqit falls into the distress zone. Both companies share the same very weak Piotroski Score of 2.
Grades Comparison
Here is a summary of the latest reliable grades for Cloudflare, Inc. and Arqit Quantum Inc.:
Cloudflare, Inc. Grades
This table presents recent grades and actions from established grading companies for Cloudflare, Inc.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Citigroup | Maintain | Buy | 2026-01-16 |
| UBS | Maintain | Neutral | 2026-01-13 |
| Piper Sandler | Maintain | Neutral | 2026-01-05 |
| Argus Research | Maintain | Buy | 2025-11-10 |
| Susquehanna | Maintain | Neutral | 2025-11-03 |
| Citigroup | Maintain | Buy | 2025-11-03 |
| Cantor Fitzgerald | Maintain | Neutral | 2025-10-31 |
| Stifel | Maintain | Buy | 2025-10-31 |
| UBS | Maintain | Neutral | 2025-10-31 |
| Keybanc | Maintain | Overweight | 2025-10-31 |
Overall, Cloudflare’s grades show a mix of Buy and Neutral ratings with no recent downgrades, indicating a stable positive outlook.
Arqit Quantum Inc. Grades
This table shows the consistent grading by HC Wainwright & Co. for Arqit Quantum Inc.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| HC Wainwright & Co. | Maintain | Buy | 2025-10-13 |
| HC Wainwright & Co. | Maintain | Buy | 2025-09-18 |
| HC Wainwright & Co. | Maintain | Buy | 2024-12-31 |
| HC Wainwright & Co. | Maintain | Buy | 2024-12-06 |
| HC Wainwright & Co. | Maintain | Buy | 2024-07-11 |
| HC Wainwright & Co. | Maintain | Buy | 2024-05-29 |
| HC Wainwright & Co. | Maintain | Buy | 2024-05-15 |
| HC Wainwright & Co. | Maintain | Buy | 2023-11-22 |
| HC Wainwright & Co. | Maintain | Buy | 2023-09-27 |
| HC Wainwright & Co. | Maintain | Buy | 2023-09-26 |
Arqit Quantum’s grades from one reputable source have remained consistently Buy over multiple years, reflecting a steady positive recommendation.
Which company has the best grades?
Both Cloudflare and Arqit Quantum hold a Buy consensus, but Arqit has received uniformly consistent Buy ratings from a single firm, while Cloudflare’s ratings vary between Buy and Neutral from multiple firms. This consistency for Arqit might suggest clearer analyst confidence, while Cloudflare’s mixed grades indicate a more nuanced risk-return profile for investors.
Strengths and Weaknesses
Below is a comparative overview of the strengths and weaknesses of Cloudflare, Inc. (NET) and Arqit Quantum Inc. (ARQQ) based on recent financial and operational data.
| Criterion | Cloudflare, Inc. (NET) | Arqit Quantum Inc. (ARQQ) |
|---|---|---|
| Diversification | Moderate product base focused on cloud services (1.67B USD revenue in 2024) | Limited diversification; primarily focused on quantum encryption technology |
| Profitability | Negative net margin (-4.72%) and ROIC (-6.06%); shedding value but improving ROIC trend | Severely negative net margin (-6668.49%) and ROIC (-127.45%); also shedding value but ROIC trend improving |
| Innovation | Strong innovation in cloud security and performance with growing ROIC | High innovation in quantum encryption but financial results reflect early-stage challenges |
| Global presence | Established global footprint with strong market recognition | Smaller footprint, niche market with emerging global presence |
| Market Share | Significant share in cloud security and CDN markets | Niche market with limited current market share |
Key takeaways: Both companies are currently value destroyers with negative profitability and ROIC compared to their cost of capital, although both show improving profitability trends. Cloudflare benefits from a more diversified and globally established business, while Arqit focuses on cutting-edge quantum technology but faces severe financial challenges. Investors should weigh innovation potential against current financial stability and risk.
Risk Analysis
Below is a comparison of key risks faced by Cloudflare, Inc. (NET) and Arqit Quantum Inc. (ARQQ) based on the most recent data from 2025-2026:
| Metric | Cloudflare, Inc. (NET) | Arqit Quantum Inc. (ARQQ) |
|---|---|---|
| Market Risk | High beta (1.97) indicating higher volatility | Very high beta (2.41) indicating very high volatility |
| Debt Level | Moderate debt-to-assets (44.3%), DE ratio 1.4 (unfavorable) | Very low debt-to-assets (1.7%), DE ratio 0.03 (favorable) |
| Regulatory Risk | Moderate, US-based with global operations, subject to cybersecurity regulations | Elevated, UK-based quantum tech with evolving regulatory landscape |
| Operational Risk | Medium, scale of 4,400 employees and complex cloud infrastructure | High, small team (82 employees) and pioneering quantum encryption technology |
| Environmental Risk | Low, primarily software/cloud-based with limited direct environmental impact | Low, software-focused but reliant on satellite infrastructure |
| Geopolitical Risk | Moderate, US-based but global exposure | High, UK-based with potential export controls on quantum tech |
The most impactful risks are market volatility and operational challenges. Cloudflare faces significant market risk due to its high beta and moderate leverage, while Arqit’s small size and cutting-edge tech expose it to operational and geopolitical uncertainties. Both companies show unfavorable profitability ratios, increasing financial risk. Investors should weigh these risks carefully against growth prospects.
Which Stock to Choose?
Cloudflare, Inc. (NET) shows a favorable income evolution with a 28.76% revenue growth in 2024, but financial ratios reveal mostly unfavorable profitability and leverage metrics, including a negative ROE of -7.53% and a debt-to-equity ratio of 1.4. The company has a high current ratio of 2.86, indicating solid liquidity, but its overall rating is very unfavorable, despite a strong Altman Z-score of 9.47.
Arqit Quantum Inc. (ARQQ) presents a favorable income growth profile with an 80.89% revenue increase in 2025, but suffers from very poor profitability ratios, including a ROE of -129.77% and negative net margins. The firm maintains low debt levels with a debt-to-equity ratio of 0.03 and favorable liquidity ratios near 2.69. Its rating is moderate, although Altman Z-score points to financial distress.
Considering the ratings and financial evaluations, investors with a higher risk tolerance and seeking significant growth might find ARQQ’s rapid revenue expansion appealing, despite its profitability challenges. Conversely, more risk-averse investors prioritizing financial stability may view NET’s improving income statement and strong liquidity more favorably, even with its current profitability headwinds.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Cloudflare, Inc. and Arqit Quantum Inc. to enhance your investment decisions:
