MeritValue

Cloudflare, Inc.

NETdata completeness 88%9 fiscal years on file
The thesis, from the filings

Cloudflare, Inc. earns about -21% on invested capital, below its ~9% cost of capital, but has diluted owners by 12% over 5 years — no moat visible in the numbers. The estimate methods put fair value between $12.66 and $13.5 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$656.4M1$975.2M2$1.3B3$1.67B3$2.17B3
Net income−$260.3M4−$193.4M5−$183.9M6−$78.8M6−$102.3M6
Operating cash flow$64.6M7$123.6M8$254.4M9$380.4M9$603.1M9
Capital expenditure$93M10$143.6M11$114.4M12$185M12$315.6M12
Free cash flow (derived)−$28.3M7−$20M8$140M9$195.4M9$287.5M9
Total debt—————
Cash & equivalents$313.8M13$204.2M14$86.9M15$147.7M16$943.5M16
Diluted shares312.3M326.3M333.7M341.4M348.4M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$41.88
your share of equity
Profit it earned you last year
−$2.94
Free cash flow it threw off
$8.25
Debt you’d be carrying
—

10 shares is a claim on $41.88 of net worth that earned you −$2.94 and generated $8.25 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
-21% avg · 5y
FY21 -32%FY22 -35%FY23 -20%FY24 -6%FY25 -14%

It earned about -21% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
+12% shares · 5y

Share count is up 12% over 5 years — owners have been diluted. Worth asking what they got for it.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 2 estimate methods that apply put fair value between $12.66 and $13.5 a share. They rest on different assumptions, so where they diverge is the story.

DCF · Growth Exit 10Y
$13.5
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth5.0%
  • fcfBase$195.4M
DCF · Growth Exit 5Y
$12.66
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth5.0%
  • fcfBase$195.4M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years5.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $12.66
The three cases
Bear0.0%$10.72
Base5.0%$12.66
Bull10.0%$14.98

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 5.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001477333-24-000013 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001477333-25-000043 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001477333-26-000016 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001477333-24-000013 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001477333-25-000043 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001477333-26-000016 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001477333-24-000013 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001477333-25-000043 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001477333-26-000016 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001477333-24-000013 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001477333-25-000043 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001477333-26-000016 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001477333-23-000017 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2022-12-31 · accession 0001477333-24-000013 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2023-12-31 · accession 0001477333-25-000043 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2024-12-31 · accession 0001477333-26-000016 (CashAndCashEquivalentsAtCarryingValue)