Cloudflare Inc
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Intrinsic Value
The intrinsic value of one NET stock under the Base Case scenario is 20.91 USD. Compared to the current market price of 104.24 USD, Cloudflare Inc is Overvalued by 80%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Cloudflare Inc
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Fundamental Analysis
Economic Moat
Cloudflare Inc
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Cloudflare Inc. is a pioneering technology company that emerged in 2009 with a bold vision: to build a better Internet. As the digital world grows increasingly complex, Cloudflare stands at the forefront, providing a comprehensive suite of services designed to enhance the performance, security, and reliability of websites and applications. By leveraging a robust global network, Cloudflare protects businesses from online threats, accelerates their web traffic, and ensures content is delivered efficiently worldwide. This makes it an essential partner for companies seeking to navigate the evolving landscape of digital infrastructure, especially as cyber threats and regulatory demands escalate....
Cloudflare Inc. is a pioneering technology company that emerged in 2009 with a bold vision: to build a better Internet. As the digital world grows increasingly complex, Cloudflare stands at the forefront, providing a comprehensive suite of services designed to enhance the performance, security, and reliability of websites and applications. By leveraging a robust global network, Cloudflare protects businesses from online threats, accelerates their web traffic, and ensures content is delivered efficiently worldwide. This makes it an essential partner for companies seeking to navigate the evolving landscape of digital infrastructure, especially as cyber threats and regulatory demands escalate.
For investors, Cloudflare presents a compelling opportunity, reflecting a potent blend of innovation and market relevance. The company operates under a subscription-based model, which fosters predictable revenue streams and supports rapid growth as businesses increasingly recognize the importance of robust cybersecurity and fast online performance. With a diverse array of customers, from startups to Fortune 500 companies, Cloudflare demonstrates resilience and scalability in a rapidly expanding market. As digital transformation continues to accelerate, Cloudflare is well-positioned to capitalize on this growth, making it an attractive prospect for investors looking for exposure to the tech sector's future.
Cloudflare Inc. operates primarily in the technology sector, specializing in web infrastructure and security services. Its core business segments include:
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Network Services: Cloudflare provides a suite of services designed to enhance the performance and security of websites and applications. This includes Content Delivery Network (CDN) services, which improve load times by caching website content across various locations, and load balancing, which efficiently distributes traffic across servers.
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Security Services: Cloudflare’s security offerings include DDoS protection, a Web Application Firewall (WAF), and bot management services. These tools help businesses protect their online presence from various cyber threats, ensuring data integrity and service availability.
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Performance Optimization: This segment focuses on services that improve the speed and reliability of web applications. Solutions like Auto Minify, Polish (for image optimization), and Argo Smart Routing enhance user experience and reduce latency.
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Access and Identity Management: Cloudflare Access provides secure access to applications without requiring a VPN. This service focuses on zero-trust security principles, allowing organizations to verify user identities before granting access to sensitive information.
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Developer Services: Cloudflare offers various tools and APIs to help developers build and deploy applications more efficiently. This includes Cloudflare Workers, which allows for serverless computing, and our domain registration services, providing easy management of DNS and domain properties.
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Enterprise Solutions: Cloudflare provides tailored solutions for large enterprises, addressing their specific security, performance, and compliance needs. This includes dedicated support, advanced analytics, and custom configurations.
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Internet of Things (IoT) Security: As IoT devices proliferate, Cloudflare is positioning itself to provide security tailored to these devices, which often require unique protection measures due to their varied deployment environments.
By leveraging these core segments, Cloudflare aims to deliver comprehensive solutions that enhance internet security, performance, and user experience across various industries. The company maintains a focus on innovation and expansion, constantly evolving its offerings to meet the changing demands of the digital landscape.
Cloudflare Inc. possesses several unique competitive advantages that differentiate it from its rivals in the cloud services and cybersecurity sectors. Here are some key advantages:
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Comprehensive Service Offerings: Cloudflare provides a wide range of services beyond traditional CDN (Content Delivery Network) functions, such as DDoS protection, web application firewalls, secure access service edge (SASE), and domain registration. This comprehensive suite allows customers to consolidate services, simplifying vendor management and reducing costs.
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Global Network Infrastructure: Cloudflare operates a vast and highly distributed network of data centers worldwide, which enables it to deliver content and services with low latency to users across different regions. This extensive infrastructure improves performance and reliability for its customers.
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Scalable and Flexible Solutions: Cloudflare's services are designed to be highly scalable, allowing businesses of all sizes — from startups to large enterprises — to utilize their platform without the need for extensive IT resources or infrastructure investment. This flexibility attracts a diverse customer base.
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Free Tier and Transparent Pricing: Cloudflare offers a robust free tier that provides critical services to smaller companies and startups, allowing them to experiment with the platform without initial costs. Their transparent and predictable pricing model further enhances customer trust and ease of budgeting.
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Security Focus: Cloudflare integrates security into its core offerings rather than as an add-on. Its approach to security, which encompasses DDoS mitigation, SSL, WAF, and bot management, helps position it as an all-in-one solution for businesses prioritizing cybersecurity.
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Innovation and Rapid Development: Cloudflare has a strong track record of innovation, frequently updating its platform with new features and services. This agility allows it to respond swiftly to changing market conditions and customer needs, keeping it ahead of competitors.
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Developer and Community Engagement: Cloudflare places significant emphasis on developer engagement through robust APIs, documentation, and community support, fostering loyalty and enhancing its user base among tech-savvy clients.
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Ecosystem Integration: The company has cultivated partnerships and integrations that enhance its platform's capabilities with other popular services and applications, promoting a seamless experience for users and increasing its appeal.
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Data and Analytics Capabilities: Cloudflare's extensive network allows it to gather vast amounts of data for analytics and insights, enabling clients to make informed decisions about their traffic and security posture.
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Reputation and Trust: As a pioneer in internet security and performance, Cloudflare has built a strong reputation. Trust plays a critical role in customer acquisition, especially in cybersecurity, where companies tend to prefer established players.
By leveraging these competitive advantages, Cloudflare can maintain a strong market position and foster sustained growth in the rapidly evolving technology landscape.
Cloudflare Inc. operates in a rapidly evolving tech landscape, and while it has a strong market position, it faces several risks and challenges that could impact its future performance:
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Competition: The competitive landscape for cybersecurity and content delivery networks (CDNs) is intense, with established players like Amazon Web Services, Microsoft Azure, Akamai, and new entrants continuously emerging. Price competition could pressure margins and market share.
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Cybersecurity Threats: As a provider of security services, Cloudflare is a target for cyberattacks. If successful attacks occur against its infrastructure or clients, it may damage its reputation and client trust.
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Regulatory Changes: Changes in data protection regulations (like GDPR, CCPA, etc.) could impose additional compliance costs and operational challenges, especially as they vary across regions in which Cloudflare operates.
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Economic Slowdowns: Economic downturns can lead to reduced IT budgets among its customer base, potentially impacting growth rates as companies might defer spending on security and networking solutions.
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Operational Reliance on Technology: Cloudflare's services depend heavily on its technology and infrastructure. Any significant outages, hardware failures, or software bugs could lead to service interruptions and loss of customer confidence.
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Market Saturation: The market for CDN and cybersecurity services is maturing. Finding new and innovative ways to grow might become increasingly difficult as the market becomes saturated.
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Customer Concentration: If a significant portion of Cloudflare's revenue comes from a limited number of large clients, losing any major customers could substantially affect its financial health.
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Talent Acquisition and Retention: The tech industry faces a shortage of skilled talent, particularly in areas like cybersecurity. Attracting and retaining top talent is critical for Cloudflare’s innovation and service delivery.
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Global Dependency: Operating in multiple regions exposes Cloudflare to geopolitical risks, trade wars, and variations in internet regulations across countries.
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Technological Obsolescence: The fast pace of technological advancement may render Cloudflare’s existing services obsolete if they fail to adapt and innovate in line with new trends and technologies.
Addressing these risks requires a proactive management approach, continual investment in R&D, and a robust strategy to maintain customer trust and loyalty.
Revenue & Expenses Breakdown
Cloudflare Inc
Balance Sheet Decomposition
Cloudflare Inc
Current Assets | 2.2B |
Cash & Short-Term Investments | 1.8B |
Receivables | 266.4m |
Other Current Assets | 73.6m |
Non-Current Assets | 898.9m |
PP&E | 548.1m |
Intangibles | 176.4m |
Other Non-Current Assets | 174.4m |
Current Liabilities | 641.6m |
Accounts Payable | 74.1m |
Accrued Liabilities | 177.7m |
Other Current Liabilities | 389.8m |
Non-Current Liabilities | 1.4B |
Long-Term Debt | 1.3B |
Other Non-Current Liabilities | 161.7m |
Earnings Waterfall
Cloudflare Inc
Revenue
|
1.6B
USD
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Cost of Revenue
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-353.3m
USD
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Gross Profit
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1.2B
USD
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Operating Expenses
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-1.4B
USD
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Operating Income
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-162.9m
USD
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Other Expenses
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69.1m
USD
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Net Income
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-93.8m
USD
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Free Cash Flow Analysis
Cloudflare Inc
USD | |
Free Cash Flow | USD |
In Q3 2024, Cloudflare achieved impressive revenue of $430.1 million, a 28% year-over-year increase, driven by the addition of 219 large customers, raising the total to 3,265. Operating income surged nearly 50%, leading to an operating margin of 14.8% and free cash flow of $45.3 million, reflecting operational efficiency. Looking ahead, the company expects Q4 revenue between $451 million and $452 million, up 25% year-over-year, and full-year revenue of approximately $1.661 billion to $1.662 billion, marking a growth of 28%. As Cloudflare navigates a transformative phase in its sales strategy, they foresee a stronger pipeline and improved customer adoption for their AI products.
What is Earnings Call?
NET Profitability Score
Profitability Due Diligence
Cloudflare Inc's profitability score is 38/100. The higher the profitability score, the more profitable the company is.
Score
Cloudflare Inc's profitability score is 38/100. The higher the profitability score, the more profitable the company is.
NET Solvency Score
Solvency Due Diligence
Cloudflare Inc's solvency score is 55/100. The higher the solvency score, the more solvent the company is.
Score
Cloudflare Inc's solvency score is 55/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
NET Price Targets Summary
Cloudflare Inc
According to Wall Street analysts, the average 1-year price target for NET is 95.65 USD with a low forecast of 57.57 USD and a high forecast of 126 USD.
Dividends
Current shareholder yield for NET is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
NET Insider Trading
Buy and sell transactions by insiders
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Profile
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Description
Cloudflare, Inc. engages in the provision of cloud-based services to secure websites. The company is headquartered in San Francisco, California and currently employs 3,063 full-time employees. The company went IPO on 2019-09-13. The firm's network serves as a scalable, unified control plane to deliver security, performance, and reliability across on-premise, hybrid, cloud, and software-as-a-service (SaaS) applications. The firm's integrated suite of products consists of solutions for an organization's external-facing infrastructure, such as Websites, applications, and application programming interfaces (APIs) to deliver security, performance, and reliability; solutions to serve an organization's internal resources, such as Internal networks and devices; developer-based solutions, and consumer offerings. Its security products include Cloud Firewall, Bot Management, Unmetered Mitigation, Cloudflare Orbit, SSL for SaaS, Dedicated & Custom Certs and others. Its performance products include Content Delivery, Intelligent Routing, Content Optimization and others.
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IPO
Employees
Officers
The intrinsic value of one NET stock under the Base Case scenario is 20.91 USD.
Compared to the current market price of 104.24 USD, Cloudflare Inc is Overvalued by 80%.