Cloudflare (NET)
The desk's stance
On our research list, not on the slate.
What the company does
The "connectivity cloud": a global edge network that started as DDoS protection and CDN and now sells zero-trust access, SASE, and AI-agent security (plus Workers, its developer platform) to the same buyers Zscaler chases.
In short: Connectivity cloud and security platform. Category: Global Cloud & Edge Security. Sector: Technology, Software - Infrastructure.
G-Street Value and Score
G-Street Value: $315.95, computed Oct 18, 2026 (confidence: medium).
How we got there: 100% analyst leg $315.95 (0 analyst targets, credibility- and freshness-weighted, after 8% optimism discount) + factor model can't price this profile (below its floor) — analyst leg only. 5 analyst targets have no linked source and are shown but not counted; this value will not open a position until they are sourced.
G-Street Score: 71 out of 100 (Medium).
- Top-line growth & guidance: 27 of 32
- Margin power: 12 of 15
- Revenue visibility & quality: 11 of 11
- Profitability & balance sheet: 13 of 24
- Capital allocation & governance: 1 of 6
- Valuation, sentiment & momentum: 7 of 12
Our current thesis
Updated Oct 12, 2026
The thesis
- Sequential revenue acceleration to 35.9% YoY driven by enterprise adoption and non-human agentic workloads.
- Net retention expanded to 120% with RPO increasing 38% YoY to $2.73 billion.
- Workers platform and edge network establish dominant infrastructure positioning in machine-to-machine AI routing.
Risks
- Forward P/E of 215x and EV/sales near 50x price perfection with zero execution cushion.
- Restructuring 20% of workforce risks operational and enterprise go-to-market friction into year-end.
- GAAP losses widened significantly with gross margins compressing 310 bps YoY to 71.8%.
What we're watching
- Q3 2026 earnings release on October 29, 2026, targeting $736M–$737M in revenue.
- Stabilization of gross margins back toward management's long-term 75%–77% target model.
- Sales leadership transition execution following President of Revenue Mark Anderson's planned retirement.
Latest
Cloudflare trades near 52-week highs at $360.93 (+83% YTD) following Q2 2026 revenue acceleration to 35.9% YoY ($696.1M) and RPO growth to $2.73B. GAAP operating loss widened to $205.7M due to a $150.7M workforce restructuring charge, though non-GAAP operating income reached $96.1M. Management guided FY26 revenue to $2.864B–$2.870B ahead of Q3 earnings on October 29, 2026, leaving valuation stretched at 215x forward P/E.
Key numbers
As of Oct 16, 2026: market cap $105.5B · revenue growth +35.9% year over year · gross margin 72.6% · net margin -8.2% · forward P/E 176.8 · next earnings Nov 5, 2026.
On the Gainz Lab maps
Who it does business with
- Zscaler competes with Cloudflare — Zero-trust edge. Two cloud edges selling the same replacement for the VPN and firewall: Zscaler from security, Cloudflare from the network up.