From DDoS protection to AI-inference edge cloud.
Cloudflare delivered FY2025 revenue of $2.168B, up +30% YoY; the count of large customers (>$100K ARR) rose to 4,298, with full-year dollar-based net retention at 120%. Workers / Workers AI edge compute and R2 object storage are driving multi-product attach, while NET’s quarterly non-GAAP operating margin held in the 14-15% band. This report is built from the latest three SEC filings — FY2025 10-K, Q3 2025 10-Q, Q2 2025 10-Q — covering business mix, balance sheet, and governance. Figures in USD thousands unless noted.
Quick numbers
| Item | Value |
|---|---|
| Ticker | NYSE : NET |
| CIK | 0001477333 |
| FY25 Revenue | $2.17B (+30%) |
| DBNR Q4 | 120% (+9 pp) |
| >$100K customers | 4,298 (+23%) |
| Cash + AFS | $4.10B |
§01 · Key Metrics — the year at a glance
Image: Wikimedia Commons / CC BY-SA 4.0.
| KPI | Value | Notes |
|---|---|---|
| FY2025 Revenue | $2.17B · YoY +29.8% | FY2024: $1.67B · FY2023: $1.30B |
| Non-GAAP operating income | $303.9M · margin 14% | FY24 $230.1M · FY23 $122.0M |
| FY25 Free cash flow | $260.6M · YoY +56% | FCF margin 12% · OCF $603M |
| Cash + AFS securities | $4.10B · +82% vs end-2024 | Issued 2030 Notes raising $2B in June |
| DBNR (Q4 2025) | 120% · +9 pp YoY | Q4 24: 111% · Q4 23: 115% |
| >$100K ARR large customers | 4,298 · YoY +22.9% | FY24: 3,497 · FY23: 2,756 |
| Remaining performance obligations (RPO) | $2.50B · 63% to be recognized within 12M | Provides ~14 months of revenue visibility |
| Gross margin FY25 | 75% · -2 pp YoY | Edge compute / GPU spend dragging the margin |
FY2025 was the pivot year for Cloudflare’s “large-customer acceleration + edge AI commercialization”: large customers crossed 4,300, and DBNR rose linearly from Q1 111% to Q4 120%, reflecting existing enterprise customers expanding across Workers / R2 / Zero Trust / AI Gateway. Cash + AFS reached $4.1B, but the company also carries $3.29B of convertible notes, leaving net cash at only ~$0.8B — refinancing and dilution still bear watching.
— Compiled from 10-K / 10-Q disclosures, not independently re-audited
§02 · Business — geography, cohorts, scale
Geographic split · US / EMEA / APAC / Other
The U.S. contributes 49% of revenue ($1,073.0M), down from FY23’s 52% — EMEA (28%) and APAC (15%) continue to outgrow U.S. growth; APAC alone rose from $168.8M to $329.8M, nearly doubling in two years, consistent with enterprise Zero Trust and CDN deal flow in Japan, Singapore, and India.
Customer cohorts · paid customers by size
Total paying customers grew from 265.9K in Q2 to 332.5K in Q4; large customers (ARR > $100K) grew from 3,712 to 4,298, with quarterly net adds of 289-297 — roughly double the FY24 cadence (~150 per quarter), evidence that the deliberate GTM and sales-capacity ramp is paying off.
DBNR · quarterly progression
DBNR climbed quarterly from FY24-end 111% — Q2 114% → Q3 119% → Q4 120%. 120% is still below Snowflake (125%), Datadog (119%), and Zscaler, but the 9pp YoY improvement is NET’s fastest since the 2022 high.
Non-GAAP operating margin trend
Non-GAAP operating margin expanded from FY23’s 9% to a steady 14% in FY24/25. GAAP still at -10% — driven by SBC of $463M and amortization. Management has not committed to a GAAP-profitability timeline, but Q3 2025 already showed pre-tax income of +$1.9M.
Quarterly revenue & YoY growth
§03 · P&L — path to GAAP breakeven
Income statement (quarterly + annual)
Per SEC disclosure · USD thousands.
| Item | Q2 25 | Q3 25 | Q4 25* | FY 25 | FY 24 |
|---|---|---|---|---|---|
| Revenue | 512,316 | 562,027 | 614,507 | 2,167,937 | 1,669,626 |
| Cost of revenue | 128,677 | 146,316 | 161,956 | 552,525 | 378,702 |
| Gross profit | 383,639 | 415,711 | 452,551 | 1,615,412 | 1,290,924 |
| Sales & marketing | 219,359 | 236,309 | 251,138 | 920,817 | 745,791 |
| R&D | 134,557 | 120,956 | 141,887 | 512,489 | 421,374 |
| G&A | 96,987 | 95,906 | 108,760 | 389,311 | 278,520 |
| Total operating expenses | 450,903 | 453,171 | 501,785 | 1,822,617 | 1,445,685 |
| Operating loss | (67,264) | (37,460) | (49,234) | (207,205) | (154,761) |
| Non-GAAP operating income | 72,315 | 85,938 | 89,597 | 303,851 | 230,111 |
| Net loss | (50,446) | (1,290) | (12,077) | (102,267) | (78,800) |
* Q4 2025 derived from FY2025 less 9M 2025 (Q3 10-Q YTD) and is not separately disclosed.
Margin structure
GAAP operating loss of $(207.2)M vs non-GAAP operating income of $303.9M; the $511M gap is driven by SBC + payroll tax of $489.9M (SBC alone $451.5M), $15.0M of acquired-intangible amortization, and $15.0M of one-time compensation (Graham-Cumming CTO retirement). SBC/revenue rose from FY24’s 20% to FY25’s 21%; dilution remains the main valuation drag.
§04 · Balance — cash-rich, debt-heavier
Three-period balance sheet
6/30 · 9/30 · 12/31 2025 · USD thousands.
| Item | Jun 30 | Sep 30 | Dec 31 |
|---|---|---|---|
| Cash & equivalents | 1,518,608 | 1,052,644 | 943,536 |
| Available-for-sale securities (AFS) | 2,441,112 | 2,990,864 | 3,157,715 |
| Accounts receivable (net) | 297,040 | 348,723 | 401,515 |
| Total current assets | 4,452,843 | 4,581,028 | 4,702,541 |
| Goodwill & intangibles | 279,879 | 293,115 | 325,908 |
| Total assets | 5,562,361 | 5,786,395 | 6,036,256 |
| Current liabilities (incl. 2026 Notes) | 857,593 | 2,223,183 | 2,350,563 |
| Convertible senior notes | 3,260,506 | 1,974,120 | 1,974,120 |
| Total liabilities | 4,322,634 | 4,439,379 | 4,577,133 |
| Accumulated deficit | (1,191,540) | (1,192,830) | (1,204,907) |
| Stockholders’ equity | 1,239,727 | 1,347,016 | 1,459,123 |
Note: 2026 Notes ($1,293.8M principal) reclassified from long-term to current liabilities in Q3 2025 (mature 2026-05); 2030 Notes issued 2025-06-17 with $2,000M principal.
Cash + AFS stack
Liquid assets rose from $2.25B at end-FY24 to $4.10B at Dec 31, mostly from the June issuance of 2030 Notes for $2.0B (zero-coupon, mature 2030, conversion price $247.67). Net of $3.294B of convertible-note principal, NET’s net cash is only ~$0.8B, not the headline-grabbing “$4.1B.”
Convertible note structure
Issuance / maturity / principal / conversion price.
| Series | Maturity | Principal | Conversion price |
|---|---|---|---|
| 2026 Notes (0%) | 2026-05 | $1,293.8M | $191.34 |
| 2030 Notes (0%) | 2030-06 | $2,000.0M | $247.67 |
| Total | — | $3,293.8M | — |
Assets vs liabilities · structure
§05 · Cash Flow — free cash, heavy stock comp
OCF / FCF / SBC comparison
Cash flow takeaways
- OCF jumps 59%. FY25 operating cash flow $603.1M (OCF/revenue 28%), up from FY24’s $380.4M. The $206M increase in deferred revenue is the main non-net-income driver.
- Capex steps up sharply. Equipment capex $315.6M (+70% YoY, 15% of revenue) + capitalized software development of $26.9M. Workers / R2 / GPU edge nodes are the main drivers.
- SBC/revenue = 21%. FY25 SBC (cash-flow basis) of $451.5M (+33% YoY); the non-GAAP add-back including payroll tax is $489.9M. The ratio is similar to FY24’s 20% — at the upper end of the mature-SaaS range.
- 2030 Notes financing was a net cash drain. The $2B zero-coupon issue in June was paired with a Cap Call of -$283.4M + early redemption of 2025 Notes of -$172.7M. The 2026 Notes ($1,293.8M) come due in the next 12 months.
§06 · Leadership — who’s running this
Named Executive Officers
The following are the named executives identified in the FY2025 10-K (filed 2026-02-26). No C-suite departures or new appointments were disclosed during the year (no Item 5.02 in any of Q2 / Q3 / 10-K). Co-founders Prince and Zatlyn together control about 50.5% of the vote — Cloudflare remains a de facto founder-led company.
| Role | Name | Notes |
|---|---|---|
| CEO · Co-founder · Co-Chair | Matthew Prince | Chief Executive Officer & Co-Chair · Co-founder. Co-founded Cloudflare with Zatlyn / Holloway in 2009; CEO since inception. Harvard Law JD; lecturer at Harvard Law School. Class B holdings + voting agreements make him the de facto majority voter — combined with Zatlyn at ~50.5%. |
| President · Co-founder · Co-Chair | Michelle Zatlyn | President & Co-Chair · Co-founder. Running product, marketing, customer success, and GTM; full-time since 2009. McGill + Harvard MBA. Since the 2019 IPO, she has been Cloudflare’s most senior female operating executive and is the architect of the “Dollar-Based Expansion” playbook. |
| CFO | Thomas Seifert | Chief Financial Officer. Joined ahead of the 2019 IPO; previously CFO of Brightstar Corp. and AMD; full-cycle CFO experience across semiconductors, telecom, and payments. Filed a 10b5-1 plan on Nov 20 to step-sell up to 187,841 Class A shares through March 2027. |
| Chief Legal Officer | Douglas Kramer | General Counsel & Chief Legal Officer. GC since before the IPO and one of the 10-K authorized signatories. Former White House counsel, Deputy Assistant Attorney General. Owns compliance, M&A legal, and government affairs — a key “shield” in AWS/Fastly litigation, Russia/Ukraine SaaS sanctions, and EU DSA implementation. |
Management changes
Q2 2025 – FY2025 · 10-Q / 10-K / 8-K disclosures.
- 2025-Q2. No executive departures; 2030 Notes $2B issued (6/17), with simultaneous partial redemption of 2025 Notes.
- 2025-Q3. No executive departures; acquired Replicate (AI-inference hosting platform) for $50.9M cash.
- 2025-Q4. CFO Seifert and CAO Riley each filed 10b5-1 step-sell plans; no Item 5.02 events.
- Stability. Prince / Zatlyn / Seifert / Kramer have been unchanged since IPO — among the most stable C-suites of any public cloud-security company.
Board of Directors
10 directors · 2026-02 10-K signature page.
| Director | Role |
|---|---|
| Matthew Prince | CEO · Co-Chair |
| Michelle Zatlyn | President · Co-Chair |
| Stacey Cunningham | Independent |
| John Graham-Cumming | CTO retired |
| Mark Hawkins | Independent |
| Karim Lakhani | Independent |
| Carl Ledbetter | Independent |
| Scott Sandell | NEA-nominated |
| Katie Mitic | Independent |
| Maria Eitel | Independent |
Dual-class equity (Class A 1 vote / Class B 10 votes); Prince + Zatlyn hold ~50.5% of the vote, with directors/officers/5%+ holders combining for 71.0%. The board is split into three classes with three-year staggered terms and removable only for cause — strong defenses against hostile takeovers and external activists.
§07 · Risk — what could derail this
- Sustained DDoS / large-scale incidents. Cloudflare’s brand started as the “attack-resistant edge network”; any major outage (the 2022 I-O incident, the 2023 DDoS record, the June 2024 Workers outage) directly impacts large-customer renewals and NRR. Concentrated customer churn surfaced in Q1 2024 — listed as risk #1 in the 10-K.
- Direct competition from AWS / Fastly / Akamai. Hyperscaler cloud bundling (AWS CloudFront, Azure Front Door), Fastly’s CDN depth, and Akamai’s security legacy are all compressing NET’s pricing room. Workers AI opens a new lane, but still needs to prove an independent moat against Bedrock / Vertex AI.
- International expansion · compliance & FX. International is now 51% of revenue, but FY25 booked $7.95M of Other Expense, much of which is FX losses. EU DSA, GDPR, and various data-sovereignty regimes (Russia, Middle East, mainland China) imply heavier compliance costs and potential market exits.
- Regulation · content moderation · customer behavior. As a “bottom-of-stack” service provider, NET has periodically faced media storms over terminating bad actors (8chan, KiwiFarms). Moderation policy swings in either direction can trigger political pressure or litigation, and affect brand and employee retention.
- SBC dilution + 2026 Notes refinancing. SBC of $451.5M is 21% of revenue, ~2% annual dilution. The 2026 Notes ($1,293.8M principal) mature 2026-05 — settlement can be cash + stock, but if the share price is below the $191.34 conversion price, NET must redeem in cash, compressing balance-sheet liquidity.
Bottom line · Large-customer flywheel engaged; AI inference still to be proven.
Cloudflare’s signal of entering the “enterprise vendor” stage is now clear: large customers +23%, DBNR +9 pp, RPO of $2.5B providing 14 months of revenue visibility. The valuation pivot for the next 1–2 years lands on:
- Can DBNR hold above 120%?
- Will Workers AI / R2 break out as a separately disclosed revenue line?
- Can non-GAAP operating margin lift to 17–18%?
- Refinancing structure for 2026 Notes and the magnitude of dilution
“$4.1B of liquid assets · $3.29B of convertibles · dual-class equity · founder co-chairs” — these four define NET’s offense/defense boundary.
§08 · Valuation — valuation in context
NET current valuation
Data as of 2026-04-20 · close · TTM.
| Metric | Value |
|---|---|
| Price | $199.00 |
| Market Cap | $69.9B |
| P/E (TTM) | N/M |
| P/S (TTM) | 32.2× |
| EV/EBITDA | N/M |
| FCF Yield | 0.4% |
| 52W range | $100.25–$260.00 |
GAAP net loss of $102.3M and slightly positive GAAP EBITDA make P/E and EV/EBITDA non-meaningful; FCF Yield is FY25 FCF $260.6M / market cap.
Peer benchmark
Edge / CDN / Observability · TTM · latest.
| Ticker | Price | Mkt cap | P/E | P/S | EV/EBITDA | FCF Yield |
|---|---|---|---|---|---|---|
| NET | $199.00 | $69.9B | N/M | 32.2× | N/M | 0.4% |
| DDOG | $126.52 | $38.3B | 410.8× | 12.2× | ~95× | 2.4% |
| FSLY | $24.56 | $3.7B | N/M | 5.8× | N/M | 1.2% |
| AKAM | $96.82 | $14.1B | 37.3× | 3.4× | 17.2× | 6.9% |
Sources: Yahoo Finance / StockAnalysis / GuruFocus · latest closes between 2026-04-17 and 04-20.
NET trades at P/S 32×, materially above AKAM (3.4×, a low-growth steady-state cash-flow CDN) and FSLY (5.8×, also a “high-growth, unprofitable” name but with much weaker growth), yet still below DDOG (12.2×) — counterintuitive on the surface, until you recognize DDOG already turned GAAP-profitable with $915M of annual FCF, so its “cheap” multiple partly reflects steady-state SaaS discounting. NET’s premium is supported by three threads: Workers / Workers AI as the edge-inference lane, DBNR rising from 111% to 120% on large-customer expansion, and $2.5B RPO providing 14 months of revenue visibility. But FCF Yield of 0.4%, GAAP losses, and the $1.29B convertible due May 2026 are the most acute near-term variables — if the share price falls below the $191.34 conversion price, forced cash redemption would compress liquidity, in stark contrast to AKAM’s defensive 6.9% FCF Yield.