Introduction

We deliver a suite of deeply integrated products that serve as a unified control plane for our customers, allowing them to build, connect, and secure web applications and corporate infrastructure. Customers can quickly and easily join Cloudflare by using just one of our products and then expand their usage of Cloudflare over time by adding additional products. Our full suite of products consists of (1) our website and application services to deliver security, performance, and reliability for an organization’s websites, applications, and application programming interfaces (APIs), (2) our secure access service edge (SASE) platform — Cloudflare One — which contains our suite of Zero Trust and network services solutions to help ensure traffic in and out of an organization’s internal network and devices is verified and authorized as well as to securely connect data centers, cloud services, and branch offices to an organization with our Connectivity Cloud, (3) our developer-based solutions to build and deploy serverless applications with scale, performance, security and reliability, and (4) our consumer offerings.(from cloudflare’ s form 10k)

Balance Sheet Analysis

In 2023, Cloudflare’s total assets were $2.76 billion, while in 2022, Cloudflare’s total assets were $2.59 billion.

In 2023, Cloudflare’s current assets were $1.99 billion, accounting for 72% of its total assets. The asset structure of Countflare is mainly composed of current assets, and the liquidity of assets is relatively strong.

Cloudflare’s current liabilities were $5.7 billion, with a current ratio of 3.5. its current assets covered current liabilities 3.5 times in 2023.

Cloudflare’s total liabilities in 2023 were $2 billion, which was roughly equivalent to the amount of current assets. Therefore, Cloudflare’s liquidity and solvency are relatively strong.

Income statement analysis

In 2023, 2022, and 2021, Cloudflare’s revenue reached $1.3 billion, $980 million, and $660 million, respectively.

The growth rate in 2023 is 32.7%, and the growth rate in 2022 is 48%.

Clouflare’ s  gross profit  was $ 990 million, $740 million, and $510 million in 2023, 2022, and 2021, respectively.

In 2023, 2022, and 2021, Cloudflare’s gross profit margin was 76%, 75.5%, and 77%, respectively. The gross profit margin is relatively stable.

In 2023, 2022, and 2021, Cloudflare’s operating profit was -185 million US dollars, -200 million US dollars, and -130 million US dollars.

Cloudflare has been operating at a loss for the past three years.

Although Cloudflare has been losing money, its cash flow is positive, at least its business can be sustained in the long term.

In 2023, 2022, and 2021, Cloudflare’s operating net cash was $250 million, $120 million, and $64 million.

Cloudflare’s cash flow is very good.

In 2023, Cloudflare’s sales and marketing expenses were $600 million, accounting for 46% of its revenue.

In 2023, Cloudflare’s R&D expenses were $360 million, consisting of  27.7% of its revenue.

In 2023, Cloudflare’s general and administrative expenses were $220 million, accounting for 17% of its revenue.

The cost of Cloudflare is still quite high, especially its sales and marketing expenses, which are a strong driving force for the continued growth of revenue.

summary

Cloudflare is continuously expanding, and a significant increase in expenses is normal.

At present, Cloudflare has never repurchased stocks or has paid dividends to shareholders.

The current market value of Cloudflare is $30 billion, which is too high. We would consider $3 billion to be a suitable price.

Disclaimer: The content is for reference only and does not constitute investment advice.