NET · Forward model · Bear case
The Bear case, 20 quarters out
Model as of
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
Cloudflare reports ONE operating segment and management has said repeatedly, including on the Q2 2026 call, that it does not disclose revenue by product. So the four “Acts” it uses to describe itself — Application Services, Zero Trust, the Workers developer platform and the Agentic Internet — are NOT the verticals here. Splitting revenue into them would be inventing a disclosure the company refuses to make. This model instead uses the split Cloudflare does publish every quarter: the large-customer cohort (>$100,000 annualised) and its share of revenue. Both figures are disclosed — 4,698 large customers at 73% of revenue in 2026 Q2 — and everything else is the residual. Act 4 is carried as a third vertical because it is the one layer that genuinely earns nothing today, so it can start from zero without re-cutting anything reported. Acts 1 to 3 live inside the two cohorts and show up as revenue per large customer rising, which is exactly how Cloudflare describes Workers and Zero Trust selling: expansion inside existing accounts, at 120% dollar-based net retention. EVERY historical point in this model is marked estimated, and that is not a hedge — Cloudflare has never reported a revenue split in dollars. The quarterly percentages it does report are rounded to whole numbers, so the dollar split carries that rounding. Only the consolidated total per quarter is exact.
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Latest: $1.37B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q2 | $512M |
| 2025Q3 | $562M |
| 2025Q4 | $615M |
| 2026Q1 | $640M |
| 2026Q2 | $696M |
| 2026Q3E | $720M |
| 2026Q4E | $745M |
| 2027Q1E | $768M |
| 2027Q2E | $792M |
| 2027Q3E | $829M |
| 2027Q4E | $858M |
| 2028Q1E | $889M |
| 2028Q2E | $921M |
| 2028Q3E | $955M |
| 2028Q4E | $989M |
| 2029Q1E | $1.02B |
| 2029Q2E | $1.06B |
| 2029Q3E | $1.10B |
| 2029Q4E | $1.13B |
| 2030Q1E | $1.17B |
| 2030Q2E | $1.21B |
| 2030Q3E | $1.25B |
| 2030Q4E | $1.29B |
| 2031Q1E | $1.33B |
| 2031Q2E | $1.37B |
From cash flow to fair value
The published model, discounted at 12.5% a year with an exit multiple of 8.0x on revenue. The horizon and sliders above do not change this walk.
| Present value of free cash flow, 20 quarters | $1.41B |
| Terminal-year revenue | $5.25B |
| Terminal-year EBITDA | $1.26B |
| Exit multiple, on revenue | 8.0x |
| Terminal value | $41.97B |
| Discounted at 12.5% a year, terminal value becomes | $23.29B |
| Share of enterprise value from the terminal | 94% |
| Enterprise value | $24.70B |
| Net cash | $873M |
| Equity value | $25.58B |
| Shares | 0.36B |
| Fair value per share | $71.82 |
| Against the deployed price of $347.28, as of | −79% |
14x terminal revenue against roughly 42x trailing today, at a $299.23 price. The compression is deliberate: the terminal year grows near 20%, not 36%, and it carries a materially lower gross margin than the 77.8% the current multiple was set against. This is the largest single input in the model — read the fair value as a function of it before anything below.
Read the other way round: at $347.28 the market is paying 41.7x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
The published model's 20 quarters. The horizon and sliders above do not change this table.
| Quarter | Large customers (>$100k) | Self-serve and mid-market | Agentic Internet (Act 4) | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|---|
| 2026 Q3E | $528M | $192M | $0 | $720M | +28% | $127M | $67M | $53M | +36 | $52M |
| 2026 Q4E | $548M | $196M | $0 | $745M | +21% | $137M | $71M | $58M | +29 | $55M |
| 2027 Q1E | $568M | $200M | $0 | $768M | +20% | $147M | $76M | $63M | +28 | $58M |
| 2027 Q2E | $589M | $203M | $0 | $792M | +14% | $157M | $80M | $68M | +22 | $60M |
| 2027 Q3E | $610M | $206M | $13M | $829M | +15% | $165M | $86M | $70M | +23 | $60M |
| 2027 Q4E | $631M | $209M | $19M | $858M | +15% | $174M | $90M | $74M | +24 | $62M |
| 2028 Q1E | $652M | $211M | $27M | $889M | +16% | $184M | $95M | $78M | +25 | $63M |
| 2028 Q2E | $674M | $213M | $35M | $921M | +16% | $194M | $100M | $83M | +25 | $65M |
| 2028 Q3E | $696M | $214M | $44M | $955M | +15% | $204M | $104M | $88M | +24 | $67M |
| 2028 Q4E | $718M | $216M | $55M | $989M | +15% | $215M | $109M | $93M | +25 | $69M |
| 2029 Q1E | $741M | $217M | $65M | $1.02B | +15% | $226M | $114M | $99M | +25 | $71M |
| 2029 Q2E | $764M | $218M | $77M | $1.06B | +15% | $237M | $118M | $104M | +25 | $73M |
| 2029 Q3E | $788M | $220M | $89M | $1.10B | +15% | $249M | $123M | $111M | +25 | $75M |
| 2029 Q4E | $813M | $220M | $101M | $1.13B | +15% | $261M | $128M | $117M | +25 | $77M |
| 2030 Q1E | $838M | $221M | $113M | $1.17B | +14% | $273M | $132M | $123M | +25 | $79M |
| 2030 Q2E | $863M | $222M | $126M | $1.21B | +14% | $285M | $137M | $130M | +25 | $81M |
| 2030 Q3E | $890M | $222M | $139M | $1.25B | +14% | $297M | $142M | $137M | +25 | $83M |
| 2030 Q4E | $916M | $223M | $152M | $1.29B | +14% | $310M | $147M | $143M | +25 | $84M |
| 2031 Q1E | $944M | $223M | $165M | $1.33B | +14% | $323M | $152M | $150M | +25 | $86M |
| 2031 Q2E | $972M | $224M | $178M | $1.37B | +13% | $335M | $157M | $157M | +25 | $87M |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Fair value then | Note |
|---|---|---|
| 2026-08-18 | $216.65 | Initial model, built off the Q2 2026 print: $696.1M revenue up 35.9%, 4,698 large customers at 73% of revenue, 120% dollar-based net retention, 71.8% gross margin. Verticals are cut by customer cohort rather than by product, because the cohort split is disclosed every quarter and the product split never is. Act 4 carried separately at zero. Net cash is the June 30 balance sheet: $4,162.8M of cash and securities less the $1.29B 2026 and $2.0B 2030 convertible notes. Q3 2026 projects to $738.9M against guidance of $736-737M, and FY2026 to $2,858M against $2,864-2,870M, which is the closest thing this model has to a calibration check. |