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Cloudflare, Inc. Class A Common Stock
Our verdict on Cloudflare, Inc. Class A Common Stock isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Liquidity position significantly strengthened following the issuance of $2.0 billion in convertible notes, increasing total cash and available-for-sale securities to nearly $4.0 billion. (1 exceeded, 2 met across 3 tracked commitments)
“We believe that our existing cash, cash equivalents, available-for-sale securities, and available capacity under the Revolving Credit Facility will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.”
The 2025 Capped Calls were successfully settled in May 2025, resulting in a significant cash inflow. (3 met, 1 in progress across 4 tracked commitments)
“We expect the 2025 Capped Calls to settle in May 2025.”
See the full cited Management analysis of Cloudflare, Inc. Class A Common Stock
How durable is the business?
The moat is being reinforced by platform consolidation; dollar-based net retention improved to 114%, showing existing customers are integrating more deeply into the 'unified control plane'. (1 expanding)
“Our dollar-based net retention rates were 114% and 112% for the three months ended June 30, 2025 and June 30, 2024, respectively.”
The network effect moat is being actively strengthened through a strategic shift to an 'agentic AI-first' model, leveraging the massive data from the free customer base to train AI models. (1 expanding)
“These free customers expose us to diverse traffic, threats, and problems, often allowing us to see potential security, performance, and reliability issues at the earliest stage. This knowledge allows us to improve our products and deliver more effective solutions to our paying customers.”
See the full cited Business Model analysis of Cloudflare, Inc. Class A Common Stock
Where does growth come from?
Revenue from channel partners (third-party resellers) is accelerating as a percentage of total revenue, growing from 14% to 19% of the total mix. This indicates a successful shift toward a partner-led sales model to reach more customers efficiently. (5 accelerating across 5 signals)
“Channel partners [Revenue] $192,960 [30% of revenue in 2026] ... $112,555 [23% of revenue in 2025]”
Cloudflare is maintaining a steady expansion of its global network infrastructure, now reaching over 330 cities, with a specific focus on adding GPU capabilities for AI workloads. (3 steady across 3 signals, 1 leading indicator)
“We intend to continue to make substantial investments in our global network infrastructure... including the addition of... servers with graphics processing units (GPUs) to support our AI-related developer platform products.”
See the full cited Future Growth analysis of Cloudflare, Inc. Class A Common Stock
What could break the thesis?
The risk remains high and active. The company disclosed a likely nation-state threat actor intrusion in November 2023 and continues to face large-scale DDoS attacks, such as the HTTP/2 vulnerability exploitation in late 2023. Management notes that defending against these evolving threats is becoming increasingly challenging. (2 intensifying, 1 high-severity)
“In November 2023, we detected that a likely nation-state threat actor had gained unauthorized access to one of our internal systems... we expect we will continue to be subject to similar threats of unauthorized access in the future”
Cloudflare is undergoing a major restructuring to shift toward an AI-first business model, which includes cutting its workforce by approximately 20%. This transition could disrupt operations, hurt employee morale, and fail to deliver the expected cost savings or productivity gains. [EXECUTION]
“On May 7, 2026, the Company announced a plan (the Plan) designed to further accelerate its evolution to an agentic AI-first operating model. As part of the Plan, the Company expects to reduce its current workforce by approximately 20%. The Company currently estimates that it will incur charges of between $140 million and $150 million in connection with the Plan”
See the full cited Risk analysis of Cloudflare, Inc. Class A Common Stock
Read the full thesis on Cloudflare, Inc. Class A Common Stock
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