NETMEDIUM SIGNALFINANCIAL10-K

Cloudflare delivered solid revenue growth of nearly 30% while substantially expanding its asset base, though operating losses deepened as the company continues investing heavily in growth.

The company demonstrates strong momentum with meaningful revenue expansion and robust operating cash flow growth, indicating healthy underlying business fundamentals. However, widening operating losses reflect continued heavy investment in R&D and infrastructure, suggesting management is prioritizing growth over near-term profitability in this competitive market.

Comparing 2026-02-26 vs 2025-02-20View on EDGAR →
FINANCIAL ANALYSIS

Cloudflare showed strong top-line performance with revenue growing nearly 30% to $2.2B, accompanied by healthy gross profit expansion and notably higher operating cash flow generation. The company's asset base grew substantially to $6.0B, driven by meaningful increases in capital expenditure, reflecting significant infrastructure investments. While operating losses widened and net losses increased, the combination of solid revenue growth, expanding gross margins, and strong cash generation suggests the business is scaling effectively despite continued investment-focused spending.

FINANCIAL STATEMENT CHANGES
Total Assets
Balance Sheet
+82.9%
$3.3B→$6.0B

Asset base grew 82.9% — expansion through organic growth, acquisitions, or capital deployment.

Capital Expenditure
Cash Flow
+70.6%
$185.0M→$315.6M

Capital expenditure jumped 70.6% — major investment cycle underway; assess returns on deployment.

Operating Cash Flow
Cash Flow
+58.5%
$380.4M→$603.1M

Operating cash flow surged 58.5% — exceptional cash generation, highest quality earnings signal.

Stockholders Equity
Balance Sheet
+39.5%
$1.0B→$1.5B

Equity base grew 39.5% — retained earnings accumulation or equity issuance strengthening the balance sheet.

Operating Income
P&L
-33.9%
-$154.8M→-$207.2M

Operating income deteriorated sharply — investigate whether driven by one-time charges or structural cost issues.

Revenue
P&L
+29.8%
$1.7B→$2.2B

Revenue growing 29.8% — solid top-line momentum, watch margins for quality of growth.

Net Income
P&L
-29.8%
-$78.8M→-$102.3M

Net income declined 29.8% — review whether driven by operations, interest costs, or non-recurring items.

Gross Profit
P&L
+25.1%
$1.3B→$1.6B

Gross profit expanding — improving pricing power or product mix shift toward higher-margin offerings.

R&D Expense
P&L
+21.6%
$421.4M→$512.5M

R&D investment increased 21.6% — signals commitment to future product development, though near-term margin impact.

Accounts Receivable
Balance Sheet
+20.8%
$316.8M→$382.5M

Receivables grew 20.8% — monitor days sales outstanding for collection efficiency.

LANGUAGE CHANGES
NEW — 2026-02-26
PRIOR — 2025-02-20
ADDED
As of February 12, 2026, 317,576,096 shares of the registrant's Class A common stock were outstanding and 34,404,202 shares of the registrant's Class B common stock were outstanding.
Management's Discussion and Analysis of Financial Condition and Results of Operations 76 Item 7A.
Conflicts and geopolitical tension around the world or any worsening or expansion of those conflicts or tensions, other geopolitical events such as elections and other governmental changes, and any related challenging macroeconomic conditions globally and in various countries in which we and our customers operate may materially adversely affect our customers, vendors, and partners, and the duration and extent to which these factors may impact our future business and operations, results of operations, financial condition, and cash flows remain uncertain.
Our business depends on our ability to retain and upgrade paying customers, expand the number of products we sell to paying customers, and, for certain of our products, expand our paying customers' usage of such products, and, to a lesser extent, convert free customers to paying customers, and any decline in renewals, upgrades, expansions, usage, or conversions could adversely affect our future results of operations.
Our primary application security product offerings include: Web Application Firewall (WAF) : Protects a customer s Internet properties from common vulnerabilities like SQL injection attacks, cross-site scripting, and cross-site forgery requests, with no changes to the customer s existing infrastructure, and also provides the ability to configure thresholds, define responses, and apply throttling rules across web applications and API endpoints.
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REMOVED
As of February 6, 2025, 308,320,930 shares of the registrant's Class A common stock were outstanding and 36,753,779 shares of the registrant's Class B common stock were outstanding.
Management's Discussion and Analysis of Financial Condition and Results of Operations 75 Item 7A.
Our business depends on our ability to retain and upgrade paying customers, expand the number of products we sell to paying customers, and, to a lesser extent, convert free customers to paying customers, and any decline in renewals, upgrades, expansions, or conversions could adversely affect our future results of operations.
This suite of products also includes analytics products to provide a customer with the ability to build customized analytics to provide insights and intelligence to further protect and accelerate their Internet properties, such as monitoring threats, searching for specific search engine crawlers, understanding DNS query traffic, and analyzing real time data traffic.
Our primary website and application security product offerings include: Web Application Firewall (WAF) : Protects a customer s Internet properties from common vulnerabilities like SQL injection attacks, cross-site scripting, and cross-site forgery requests, with no changes to the customer s existing infrastructure.
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