Forensic Analysis · Software & SaaS · as of Nov 9, 2026
Cloudflare, Inc. (NET)
A forensic read on Cloudflare, Inc. built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
B · Sound & dependable
Forensic grade
Grey Zone
Financial health
1.9
Distress distance
Clean
Earnings quality
3
Forensic signals
-8.2%
ROE
29.8%
Revenue growth
This free snapshot doesn't read filing or proxy text, so the auditor-quality and governance checks that can lower a grade were not evaluated (auditor quality, say on pay, board independence, going concern). Those checks only ever lower a grade, so the full analysis can land below the grade above but never above it — treat it as the most favourable reading, not the settled one.
Cloudflare, Inc. earns a B (Sound & dependable) forensic quality grade, and its balance-sheet distress test reads 1.9, placing it in the Grey zone. 3 forensic signals were flagged in its latest SEC filings, led by return on invested capital.
What the filings flag
-6.4%
FY2025
Return on invested capital.Return on invested capital is -6.4% in the latest fiscal year and steady across FY2023–FY2025, inside a 1.5-point range. After-tax operating profit was ($147M) in FY2023 and ($164M) in FY2025, with operating income at -14.3% of revenue in FY2023, -9.3% in FY2024 and -9.6% in FY2025. The capital base behind it grew +21% across FY2023–FY2025, from $2.1B to $2.6B, but the short-term investments inside it — only cash is subtracted from the base — grew $846M over the same years, at least the whole increase: no operating capital was added for that return to be earned on, and what the added dollars earned is the securities' yield, not the operation's. $2.4B of the $2.6B base at FY2025 is short-term investments (95.4%) — securities held beside cash, which the base keeps because only cash is subtracted from it; they earn the balance sheet's yield, which is not in the operating profit above, so the loss on the operating capital is larger than this rate shows.
+2.2%/yr
FY2023–FY2025
Share-count dilution.Diluted share count changed +4% over the last 2 years to FY2025 (+2.2%/yr). The count is growing — 333.7M shares in FY2023, 348.4M in FY2025: more stock was issued than repurchased over this window, so aggregate results grew faster than their per-share equivalents. That's ~2.2% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2023 has been diluted ~4%.
21% of rev
FY2025
Stock-based comp load.Stock-based compensation ran 21% of revenue and 157% of free cash flow in FY2025 — about $1.30 per diluted share. No cash left the business to pay it, which is why operating cash flow adds it back. Net of repurchases the diluted count still rose about 2.2% a year across FY2023–FY2025 and that rate is not falling, so total profit has to grow by that much annually before any of it reaches a share. Stock compensation is one source of that issuance; acquisition consideration, equity raises, convertibles and other employee plans also net into the count, and these figures do not separate them.
Key fundamentals
Latest Revenue$2.17B
Revenue Growth YoY+29.8%
Revenue CAGR (2yr)+29.3%
Net Margin-4.7%
Free Cash Flow$287.5M
Return on Equity-8.2%
The forensic grade and screens above are free — no account needed. Want the AI investment read on top — the 0–100 rating, thesis, bull-vs-bear, red flags and the 12-month scenario, written from Cloudflare, Inc.'s actual 10-K/10-Q/8-K filings?