Andra AP fond ve 1. čtvrtletí snížil podíl v Cloudflare o 30,2 % a po prodeji držel 33 456 akcií v hodnotě 6,903 milionu USD. Cloudflare zároveň za čtvrtletí oznámila tržby 639,75 milionu USD a EPS 0,25, nad odhady.
Andra AP fonden lessened its holdings in shares of Cloudflare, Inc. (NYSE:NET – Free Report) by 30.2% in the 1st quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The institutional investor owned 33,456 shares of the company’s stock after selling 14,475 shares during the period. Andra AP fonden’s holdings in Cloudflare were worth $6,903,000 at the end of the most recent reporting period.
A number of other hedge funds also recently bought and sold shares of NET. Cassaday & Co Wealth Management LLC acquired a new stake in Cloudflare in the 1st quarter valued at about $53,000. Florida Financial Advisors LLC boosted its holdings in shares of Cloudflare by 22.4% during the 1st quarter. Florida Financial Advisors LLC now owns 5,611 shares of the company’s stock worth $1,158,000 after purchasing an additional 1,025 shares during the last quarter. Earned Wealth Advisors LLC grew its position in shares of Cloudflare by 2.9% in the first quarter. Earned Wealth Advisors LLC now owns 2,119 shares of the company’s stock valued at $437,000 after purchasing an additional 60 shares in the last quarter. Hollencrest Capital Management grew its position in shares of Cloudflare by 153.9% in the first quarter. Hollencrest Capital Management now owns 358 shares of the company’s stock valued at $74,000 after purchasing an additional 217 shares in the last quarter. Finally, Meeder Advisory Services Inc. grew its position in shares of Cloudflare by 14.9% in the first quarter. Meeder Advisory Services Inc. now owns 8,155 shares of the company’s stock valued at $1,683,000 after purchasing an additional 1,058 shares in the last quarter. Institutional investors and hedge funds own 82.68% of the company’s stock.
Cloudflare Trading Down 1.3% Shares of Cloudflare stock opened at $268.86 on Thursday. The stock has a 50 day moving average of $241.16 and a 200 day moving average of $211.56. The company has a debt-to-equity ratio of 1.29, a quick ratio of 1.96 and a current ratio of 1.96. The firm has a market capitalization of $95.04 billion, a price-to-earnings ratio of -1,075.46, a PEG ratio of 277.55 and a beta of 1.67. Cloudflare, Inc. has a fifty-two week low of $158.83 and a fifty-two week high of $291.00.
Cloudflare (NYSE:NET – Get Free Report) last posted its earnings results on Thursday, May 7th. The company reported $0.25 EPS for the quarter, beating analysts’ consensus estimates of $0.23 by $0.02. Cloudflare had a negative return on equity of 5.65% and a negative net margin of 3.72%.The company had revenue of $639.75 million for the quarter, compared to the consensus estimate of $620.83 million. During the same quarter in the previous year, the business earned $0.16 earnings per share. The company’s revenue for the quarter was up 33.5% on a year-over-year basis. Cloudflare has set its FY 2026 guidance at 1.190-1.200 EPS and its Q2 2026 guidance at 0.270-0.270 EPS. As a group, research analysts predict that Cloudflare, Inc. will post 0.02 earnings per share for the current year.
Wall Street Analysts Forecast Growth A number of brokerages recently commented on NET. Sanford C. Bernstein reiterated a “market perform” rating and set a $136.00 price objective on shares of Cloudflare in a research report on Wednesday, June 10th. Wells Fargo & Company upped their target price on Cloudflare from $270.00 to $300.00 and gave the company an “overweight” rating in a report on Monday. Benchmark downgraded Cloudflare to an “underperform” rating in a research note on Tuesday, July 7th. Barclays lifted their price target on Cloudflare from $250.00 to $300.00 and gave the stock an “overweight” rating in a report on Monday, July 13th. Finally, Mizuho boosted their price target on shares of Cloudflare from $260.00 to $310.00 and gave the company an “outperform” rating in a research report on Wednesday, July 15th. Two investment analysts have rated the stock with a Strong Buy rating, twenty-two have assigned a Buy rating, six have given a Hold rating and four have assigned a Sell rating to the stock. Based on data from MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and a consensus price target of $258.59.
Get Our Latest Stock Analysis on Cloudflare
Insider Transactions at Cloudflare In related news, Director Mark J. Hawkins sold 133 shares of the stock in a transaction dated Wednesday, July 1st. The stock was sold at an average price of $249.00, for a total transaction of $33,117.00. Following the transaction, the director owned 10,765 shares of the company’s stock, valued at approximately $2,680,485. This represents a 1.22% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Matthew Prince sold 52,383 shares of the firm’s stock in a transaction dated Monday, July 6th. The shares were sold at an average price of $247.28, for a total value of $12,953,268.24. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last three months, insiders have sold 564,903 shares of company stock worth $127,356,194. 10.66% of the stock is owned by corporate insiders.
About Cloudflare (Free Report)
Cloudflare, Inc is a global web infrastructure and security company that provides a suite of services designed to improve the performance, reliability and security of internet properties. Its core offerings include a content delivery network (CDN), distributed denial-of-service (DDoS) protection, managed DNS, and a web application firewall (WAF). Cloudflare also provides tools for bot management, SSL/TLS, load balancing and rate limiting to help organizations maintain uptime and protect web applications from attack.
In addition to traditional edge and security services, Cloudflare has expanded into edge computing and developer platforms.
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Cloudflare zpřístupnila Precursor, nástroj pro průběžné behaviorální ověřování proti botům v reálném čase bez zásahů do běžných uživatelů. Funguje jedním kliknutím a sleduje celou relaci v prohlížeči.
Built on one of the world’s largest networks, Precursor is the only defense of its kind to replace disruptive checkpoints to stop evasive bots without slowing down users
SAN FRANCISCO--(BUSINESS WIRE)--Cloudflare, Inc. (NYSE: NET), the leading connectivity cloud company, today announced the general availability of Precursor, a next-generation, continuous behavioral validation engine for bot management. Built directly on Cloudflare’s edge, Precursor runs seamlessly inside web browsers to monitor entire user sessions in order to detect bot automation. Unlike traditional, static CAPTCHAs, it analyzes ongoing interactions in real time to catch advanced bots, improving detection precision without interrupting legitimate users.
For the first time, automated bot traffic has eclipsed human activity on the Internet, now generating roughly 57% of all web requests. This milestone emphasizes a seismic evolution from an Internet built for human clicks to a digital landscape now dominated by AI agents. For organizations and everyday consumers, this means that legacy defenses are blind to a new breed of automated threats that drive up infrastructure costs, manipulate inventory, and compromise data. While a modern bot can easily fake a single action to pass a one-time security check, replicating an entire human journey remains a massive engineering hurdle. To protect the integrity of the global Internet, organizations must move away from static, point-in-time defenses and embrace continuous behavioral validation—analyzing telemetry across an entire session to unmask automated imposters trying to blend into the crowd.
"Traditional security checks look at a single moment in time, but modern bots have gotten smart enough to fake their way through the front door," said Dane Knecht, CTO of Cloudflare. "Instead of just checking an ID at the gate, we are looking at behavior over the entire visit. This makes life seamless for real users, while making it incredibly difficult and expensive for bad actors to fake human behavior. Cloudflare already protects users billions of times a day at critical moments like login and checkout, but until now, the space between those moments was a black box. With Precursor, we’re now eliminating that blindspot."
Now generally available, Precursor provides a session-level view of site activity by continuously collecting robust browser signals to block unwanted automated traffic through:
Privacy-Led Defense: Built to protect end user confidentiality, Precursor logs aggregate behavioral patterns rather than recording specific user inputs. For example, keyboard activity is recorded exclusively as timing rhythm and cadence—never capturing actual keystrokes. Zero-Code, One-Click Setup: Precursor is enabled with one click, automatically allowing Cloudflare to inject a compact, dynamic script passing through the network, requiring no modifications to underlying code. The script evaluates interaction trail dimensions such as mouse movement, scrolling rhythm, typing cadence, clipboard activity, and page visibility duration. A Real-Time Analysis Engine: Cloudflare's servers instantly unpack the telemetry data sent from a user's browser and scan it for signs of faked or computer-generated activity. We then validate whether interaction streams map rationally to human behavior, such as cross-referencing that pointer activity aligns with page visibility or text fields are focused during typing events. Session-Long Security Measures: Unlike traditional defense challenges that reset per every request, Precursor continuously evaluates the visitor’s user journey across a web or single page application. Automated agents cannot reset their behavioral signatures by refreshing a page, allowing defensive algorithms to adjust a session's Bot Score with compounding context. To learn more, please check out the resources below:
Blog: Introducing Precursor: detecting agentic behavior with continuous client-side signals Cloudflare Precursor About Cloudflare
Cloudflare, Inc. (NYSE: NET) is the leading connectivity cloud company. It empowers organizations to make their employees, applications and networks faster and more secure everywhere, while reducing complexity and cost. Cloudflare’s connectivity cloud delivers the most full-featured, unified platform of cloud-native products and developer tools, so any organization can gain the control they need to work, develop, and accelerate their business.
Powered by one of the world’s largest and most interconnected networks, Cloudflare blocks billions of threats online for its customers every day. It is trusted by millions of organizations – from the largest brands to entrepreneurs and small businesses to nonprofits, humanitarian groups, and governments across the globe.
Learn more about Cloudflare’s connectivity cloud at cloudflare.com/connectivity-cloud. Learn more about the latest Internet trends and insights at radar.cloudflare.com.
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Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “explores,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these words, or other similar terms or expressions that concern Cloudflare’s expectations, strategy, plans, or intentions. However, not all forward-looking statements contain these identifying words. Forward-looking statements expressed or implied in this press release include, but are not limited to, statements regarding the capabilities and effectiveness of Cloudflare Precursor and Cloudflare’s other products and technology, the benefits to Cloudflare’s customers from using Cloudflare Precursor and Cloudflare’s other products and technology, the timing of when Cloudflare Precursor or any of its related features will be generally available to all current and potential Cloudflare customers, Cloudflare’s technological development, future operations, growth, initiatives, or strategies, and comments made by Cloudflare’s CTO. Actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Cloudflare’s filings with the Securities and Exchange Commission (SEC), including Cloudflare’s Quarterly Report on Form 10-Q filed on May 8, 2026, as well as other filings that Cloudflare may make from time to time with the SEC.
The forward-looking statements made in this press release relate only to events as of the date on which the statements are made. Cloudflare undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. Cloudflare may not actually achieve the plans, intentions, or expectations disclosed in Cloudflare’s forward-looking statements, and you should not place undue reliance on Cloudflare’s forward-looking statements.
Cloudflare vzrostl v úterý o 7 % poté, co Scotiabank zvýšila rating na Sector Outperform ze Sector Perform a cílovou cenu na 300 USD. Banka vidí rostoucí roli firmy v AI infrastruktuře.
Cloudflare Inc. NET shares climbed 7% on Tuesday after Scotiabank upgraded the cloud infrastructure and cybersecurity company, citing growing confidence in its long-term role in artificial intelligence infrastructure and raising its price target on the stock.
The brokerage upgraded Cloudflare to Sector Outperform from Sector Perform and increased its price target to $300 from $225, pointing to multiple catalysts that it believes could drive stronger revenue growth over the coming quarters.
Shares of Cloudflare rose after the analyst report, adding to investor optimism surrounding the company's expanding role in AI infrastructure and developer tools.
Scotiabank analyst Patrick Colville said Cloudflare's Workers platform is increasingly becoming a preferred infrastructure layer for AI-generated, or "vibe coded," applications, including OpenAI Codex Sites and Lovable.
"We upgrade our rating on the common shares of Cloudflare to Sector Outperform and lift our price target to $300," Colville said.
After spending the past 4+ weeks doing a deeper dive on Cloudflare's opportunity, we feel convinced that the time is now to own NET as: (1) Workers is becoming the default infrastructure for vibe coded applications – including OpenAI Codex Sites and Lovable, a dynamic we think is underappreciated by investors; (2) Traffic trends, which typically precede revenue by 3 quarters are inflecting due to agentic AI and will set Cloudflare up nicely to beat and raise Street numbers by ~5pp in 2H26, (3) Cloudflare is winning the best of the best AI-native customers, which validates their architecture and provides a long runway for growth.
According to Scotiabank, these developments are not yet fully reflected in investor expectations and could become an increasingly important driver of Cloudflare's future growth.
The brokerage also pointed to the company's ability to attract leading AI-native customers, saying this validates its technology platform and supports a longer runway for expansion.
Scotiabank said Cloudflare's traffic growth has historically preceded revenue growth by approximately three quarters and noted that those trends are now accelerating as demand for agentic AI applications increases.
The firm believes the improvement in traffic could allow Cloudflare to outperform Wall Street expectations by roughly five percentage points during the second half of 2026.
The report argues that stronger traffic trends, combined with growing adoption of AI-focused applications, position the company for improved financial performance over the coming quarters.
The analyst note follows Cloudflare's July 1 launch of Monetization Gateway, which expands its existing Pay Per Crawl service into Pay Per Use through the open x402 protocol.
The initiative is designed to allow website owners to charge AI agents for access on a per-use basis, supporting what the company describes as the emerging agentic web.
The feature remains in an early-access and waitlist phase.
While acknowledging that Cloudflare continues to trade at a premium valuation, Scotiabank said the company's long-term opportunity in AI infrastructure is becoming increasingly clear.
The brokerage argued that the combination of growing AI adoption, improving traffic trends and continued product development supports a more constructive outlook for the stock despite its elevated valuation.
Cloudflare trades at a forward P/E of 204.19, according to data from stockanalysis.
Cloudflare v 1. čtvrtletí zvýšila tržby o 33,54 % na 639,75 milionu USD a překonala odhady EPS. Zároveň oznámila, že zruší zhruba 1 100 pracovních míst, tedy asi 20 % stavu.
Cloudflare is making the boldest AI pivot of any Tier 1 internet infrastructure provider. On the Q1 2026 earnings call, CEO Matthew Prince told investors that "AI is driving a fundamental re-platforming of the Internet and a paradigm shift in how software is created and consumed; it's shaping up to be the biggest tailwind we've ever seen in Cloudflare's history."
The Numbers Behind the AI Thesis Cloudflare (NYSE:NET | NET Price Prediction) posted Q1 revenue of $639.75 million, up 33.54% year-over-year, with non-GAAP EPS of $0.25 exceeding estimates. Current RPO grew 34% year-over-year, and free cash flow reached $84.07 million, or 13% of revenue. Prince disclosed that $5M+ annual customer additions in Q1 matched the entire haul from all of 2025, and Cloudflare added 1 million new developers in Q1 alone, versus 1.5 million in all of 2025.
Reorganizing Around Agents Cloudflare announced a workforce reduction of approximately 1,100 employees, roughly 20% of headcount, with restructuring charges of $140 million to $150 million concentrated in Q2. Prince said: "This is not a cost-cutting exercise or an assessment of the individuals' performance. It is about defining how a world-class, high-growth company operates and creates value in the agentic AI era."
Internal proof points are striking. Prince noted Cloudflare's usage of AI has increased more than 600% in the last three months, 97% of engineering uses AI coding tools, and 100% of production code contributions are reviewed by autonomous AI agents. On Workers, one large AI studio went from zero Dynamic Workers to over 1 million running on the platform in 15 days.
Peer Contrast: Fastly and Akamai Fastly (NYSE:FSLY) is pursuing bot-management tools like Content Guard and the Fastly Agent Toolkit. The security segment grew 47% year-over-year to $38.8 million. Akamai (NASDAQ:AKAM) is chasing scale deals: CEO Tom Leighton highlighted a $1.8 billion, seven-year commitment from a leading frontier model provider for Cloud Infrastructure Services, which grew 40% year-over-year to $94.6 million, even as total company growth registered just 5.76%.
Valuation and Market Response Cloudflare shares trade at $242.41, up 22.96% year-to-date, against a forward P/E of 204 and price-to-sales of 37. The analyst consensus price target sits at $243.65, with 22 buy or strong-buy ratings against two sell ratings. Eric Bleeker holds Cloudflare as an active recommendation in The AI Investor Portfolio.
The bull case: if agents become the dominant internet users, Cloudflare’s Workers platform sits at the center of that traffic. The bear case is valuation and GAAP gross margin compression from 75.9% to 71.2%. Watch Q2 execution against $664-$665 million revenue guidance and restructuring rollout pace.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Cloudflare didn't make the cut. Grab the names FREE today.
Cloudflare začne od 15. září 2026 ve výchozím nastavení blokovat „mixed-use“ crawlery na webech s reklamou, pokud si majitelé webu nenastaví výjimku. Zároveň rozšiřuje model Pay Per Crawl na Pay Per Use, aby vydavatelé mohli účtovat AI firmám za využití obsahu.
Cloudflare has just issued the AI industry a new deadline to separate the web crawlers used for traditional search purposes, like Google Search, from those used for AI agents and training. Starting on September 15, 2026, Cloudflare’s default settings will block “mixed-use” crawlers from any pages that host ads, the company announced on Wednesday.
That means that the crawlers that blend search, agent use, and training will be blocked from crawling these sites by default, unless the site owner adjusts the settings otherwise. These changes to the defaults will apply to new Cloudflare customers, new sites set up by existing customers, and all existing free customers, the company says.
The move could impact how AI model providers are able to access web content for training purposes and to help power their agentic services.
Cloudflare points out that most website owners want their content to be discoverable via search and often through AI services as well, but they want protections against having their intellectual property given away for free.
Cloudflare specifically calls out the “world’s largest search engine” (clearly a Google reference!) as having access to about “2x more information” than other AI companies because the search giant makes it difficult for customers to remain discoverable without being used for AI.
Google has pushed back against this generalization in the past, noting that it provides a bot called Google Extended that lets site owners opt out of having their content used for training and AI products and services like Gemini Apps and Vertex API. Its use doesn’t impact a site’s inclusion in Google Search. However, the tech giant’s flagship Googlebot crawls for Search, including AI features like AI Overviews and AI Mode.
“Now that the majority of traffic on the Internet is non-human, we must go further and act faster so that a sustainable ecosystem can emerge,” said Cloudflare co-founder and CEO Matthew Prince in his announcement of the news, referring to the recent milestone where bots surpassed human traffic online for the first time. That shift was not expected to occur until next year.
“Cloudflare’s new tools and partnerships give website owners increased visibility and commercial opportunities and benefit AI companies that have bots with clear and transparent intent. We hope that our proposed default changes encourage mixed-use crawlers to separate out search from agent use and training,” Prince said.
While Cloudflare offers a number of products to help users launch their own AI systems, the company has also released a range of tools to give publishers more control over their content in the AI era. In recent years, Cloudflare launched tools to combat AI bots, including a marketplace that lets websites charge AI bots for scraping, dubbed Pay Per Crawl.
The latter is now also evolving into “Pay Per Use,” the company said, which will allow publishers to charge AI companies when their content creates value, not just when it’s fetched.
The change could also help conserve publishers’ bandwidth and compute resources for AI model providers, as Cloudflare’s data suggested that over 50% of crawl traffic from AI crawlers is spent re-fetching unchanged pages.
To put this into action, Cloudflare is initially working with two partners, Ceramic.ai and You.com. When a publisher opts in, they’re paid when their content appears in Ceramic’s AI search results or when You.com accesses a piece of their premium content.
Other AI companies can customize this model for how they work, Cloudflare says.
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Cloudflare (NET - Free Report) closed the most recent trading day at $226.65, moving +1.42% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.01%. At the same time, the Dow added 0.14%, and the tech-heavy Nasdaq lost 0.46%.
Prior to today's trading, shares of the web security and content delivery company had gained 6.82% outpaced the Computer and Technology sector's loss of 2.57% and the S&P 500's loss of 1.4%.
The investment community will be paying close attention to the earnings performance of Cloudflare in its upcoming release. The company's upcoming EPS is projected at $0.27, signifying a 28.57% increase compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $665.42 million, showing a 29.88% escalation compared to the year-ago quarter.
For the annual period, the Zacks Consensus Estimates anticipate earnings of $1.2 per share and a revenue of $2.81 billion, signifying shifts of +29.03% and +29.72%, respectively, from the last year.
Investors should also take note of any recent adjustments to analyst estimates for Cloudflare. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, there's been a 400% rise in the Zacks Consensus EPS estimate. At present, Cloudflare boasts a Zacks Rank of #2 (Buy).
Investors should also note Cloudflare's current valuation metrics, including its Forward P/E ratio of 185.62. This signifies a premium in comparison to the average Forward P/E of 18.07 for its industry.
We can additionally observe that NET currently boasts a PEG ratio of 4.3. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As the market closed yesterday, the Internet - Software industry was having an average PEG ratio of 1.01.
The Internet - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 89, placing it within the top 37% of over 250 industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.
Cloudflare v 1. čtvrtletí vykázala provozní ztrátu 62 milionů USD a tržby vzrostly o 34 %, ale firma zůstává nerentabilní. Akcie se obchodují za více než 33násobek tržeb.
Cloudflare (NET +2.96%) hasn't fared as well as other cybersecurity stocks this year. It's only up 13.8% year to date, while competitors like CrowdStrike (CRWD +0.81%) and Fortinet (FTNT +1.85%) are up by 49% and 87% year to date, respectively. This gap may exist for a reason, and there is good cause to believe that Cloudflare is overvalued, even at current levels.
Image source: Getty Images.
Profitability remains an issue for Cloudflare Cloudflare's first-quarter results once again showed a net operating loss, which is one of the major headwinds holding the stock back from a higher valuation. Solid growth rates matter, but when a company has been around for more than 15 years, profitability matters a lot more.
The company produced a net operating loss of $62 million. That's a higher operating loss than last year, but it also represents 9.7% of revenue, while the Q1 2025 net operating loss represented 11.1% of revenue. CrowdStrike and Fortinet are both profitable, which partially explains why those stocks have enjoyed better rallies.
Revenue is still good for Cloudflare, with total sales up 34% year over year. Like many cybersecurity companies, Cloudflare enjoys an annual recurring revenue model, which makes it easier to project future results.
Cloudflare also anticipates $2.81 billion in full-year revenue at the midpoint, which represents a 29.6% year-over-year improvement. It's a step down from the 34% growth rate in Q1, but it's also normal for growth-oriented companies to beat and raise guidance. There was no guidance for GAAP (generally accepted accounting principles) net income, indicating that profitability may remain an issue.
Today's Change
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Cloudflare's valuation is already high The price-to-sales (P/S) ratio does not paint a pretty picture for Cloudflare. The stock trades at more than 33 times sales, which is similar to CrowdStrike's valuation and more than double Fortinet's valuation. Still, CrowdStrike delivers profits, while Cloudflare isn't at that level yet.
Cloudflare's P/S ratio doesn't leave much flexibility if revenue growth starts to decelerate in future quarters. Artificial intelligence can accelerate revenue growth rates across the cybersecurity industry, but Cloudflare's recent guidance does not suggest this scenario will play out for the company.
It would be easier to give the stock a chance if it had a lower P/S ratio. Some high-growth companies can get away with high valuations, but if they remain unprofitable for too long, more investors will start to notice and look for other investments.
Cloudflare does a good job of retaining customers and has more than 4,400 large customers, defined as any business that pays at least $100,000 per year for Cloudflare's cybersecurity solutions. Cloudflare also works with more than 40% of Fortune 500 companies.
The company has an excellent service that continues to attract leading businesses. That part is good. However, profitability concerns, guidance forecasting revenue deceleration, and a lofty P/S ratio suggest that investors can do better with other stocks.
