NET$262.77

Cloudflare shows strong top-line momentum, with revenue rising from $656 million in FY2021 to $2.17 billion in FY2025 and TTM growth re-accelerating to 31.6% versus 28.8% in FY2024. However, profitability remains elusive: net losses persisted each year and widened again in TTM, despite improving free cash flow, which has become a clear strength. Gross margins remain high by software standards but have slipped in TTM, while operating margins are still meaningfully negative, showing only limited operating leverage so far. Interest income has boosted non-operating results, but this does not change the core earnings profile. Assuming a software infrastructure model, the business is solidly growing but still lacks durable bottom-line conversion, with spending intensity and margin compression the main flags.

Cloudflare’s balance sheet shows strong liquidity and a materially improved cash position, with cash and short-term investments rising to $4.10B in FY2025 and $4.16B TTM versus current liabilities of $2.35B and $2.41B, respectively. Current assets of $4.65B TTM comfortably exceed current liabilities, supporting adequate working capital. Total assets reached $6.04B in FY2025 against $4.58B of liabilities, leaving equity at $1.46B, or $1.53B TTM. The main offset is leverage: total debt jumped to $3.52B, including a large current portion, which is a meaningful structural shift. Even so, net cash remains positive at $639M TTM, and equity has trended upward despite cumulative retained losses.

Cash generation has improved steadily, with operating cash flow rising from $64.7 million in FY2021 to $603.1 million in FY2025, and TTM at $615.7 million, slightly above the latest year. Free cash flow also turned decisively positive after FY2022, reaching $287.5 million in FY2025 and $320.7 million TTM, despite heavier capital spending of $315.6 million and continued investment in intangible assets. The main quality concern is the large stock-based compensation burden, which climbed to $451.5 million, and persistent negative change in other operating activities. Working capital remains active but manageable, supported by strong deferred revenue growth. Capital allocation appears growth-oriented, with substantial investment and debt issuance rather than returns to shareholders.

Cloudflare is a non-financial software/infrastructure company, and its ratio profile is mixed. Liquidity has clearly weakened from very strong levels: the current ratio fell from 6.8x in FY2021 to about 2.0x currently, while the quick ratio declined from 6.7x to 1.9x, though both still indicate adequate short-term coverage. Leverage is moderate and broadly manageable, with debt-to-equity easing from 2.5x to 1.4x despite some fluctuation, while net debt remains negative, supporting balance-sheet flexibility. Efficiency improved through FY2024 but has softened recently, with asset turnover slipping back. Profitability remains the main weakness: ROE, ROA, and ROIC are still negative, although losses are narrowing over time.

FY2021-FY2024 are historical actuals, while FY2025-FY2026 are the analyst-covered outlook, with 31 analysts on FY2026. Revenue growth stayed strong but clearly decelerated from 52.3% in FY2021 to about 28.8% in FY2024, then held near 30% in the forecast years, suggesting sustained top-line expansion rather than a re-acceleration. EPS remained negative throughout, improving from -0.83 to -0.23 by FY2024 before slipping to -0.29 and -0.30, so earnings have not yet followed revenue higher and margins remain under pressure. No Forward P/E is provided, limiting valuation assessment. Sentiment is constructive: 34 analysts rate it Buy, with the Hold count falling from 9 to 5 and Buy rising from 15 to 18, indicating improving consensus depth.