社区

$Cloudflare, Inc.(NET)$ is a web infrastructure and global cloud service company that provides a variety of services to big and small businesses. They are famous for providing DDoS (Distributed Denial of Service) mitigation service to companies. The cloudflare service sit between the customer's website and the internet to filter traffic that is going to the website.

In addition, they also provide solutions to build, accelerate, and optimise web applications, configure CDN (Content DistributionNetwork) and hosting services, manage cloud services, provide access controls for company employees on the internet such as SASE (Secure Access Service Edge) and ZTNA (Zero Trust Network Access).

With a gross profit margin of more than 76% and growing 53% year over year, it is definitely a fast growing company. The revenue per share is also increasing from 1 dollar in Mar 2020 to 1.7 dollars in Jun 2021.

However, it is currently not profitable. It is burning cash on sales and marketing to grow the company customer base and also buying properties and equipment (Capital Expenditure) to support its networking infrastructure. It has a lot of cash reserve on hand to allow it expand and grow this rapidly and not a lot of debt, with its debt to equity ratio at around 0.56.

With the ever increasing need to connect everything to the internet in future, the total addressable market is set to hit 100 billion in 2024. Cloudflare is positioning itself to capture the growth in this area.

Cloudflare is moving towards 100% subscription based revenue model which will guarantee recurring profits and is attracting many large customers globally.

They are anticipating a profit break-even in Q1 of 2022.

However, with a current Price to Sales ratio of close to 70, it is quite overvalued, even with the kind of growth that is expected. A more acceptable value would be around 65 dollars per share. However, this is an exciting company and i will put it on my watchlist and observe for a correction.

@Tiger Stars