NET · Forward model · Prince case
The Prince case, 20 quarters out
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.
Management's own stated target, taken at face value: the $5B annual run rate Matthew Prince has guided to for FY2028. The deltas are set so the case lands there and not past it — it reaches $5.08B in FY2028 against the base case's $4.66B — which makes this the one scenario calibrated to a number the company has committed to rather than to a view of ours. Note what it does NOT assume: no acceleration in large-customer adds beyond the record year just posted, and no Act 4 heroics beyond the base case. The whole gap to base is revenue per large account, which is where Prince says the Acts show up.
Latest: $2.78B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q2 | $512M |
| 2025Q3 | $562M |
| 2025Q4 | $615M |
| 2026Q1 | $640M |
| 2026Q2 | $696M |
| 2026Q3E | $746M |
| 2026Q4E | $799M |
| 2027Q1E | $855M |
| 2027Q2E | $913M |
| 2027Q3E | $989M |
| 2027Q4E | $1.06B |
| 2028Q1E | $1.14B |
| 2028Q2E | $1.22B |
| 2028Q3E | $1.31B |
| 2028Q4E | $1.41B |
| 2029Q1E | $1.51B |
| 2029Q2E | $1.62B |
| 2029Q3E | $1.74B |
| 2029Q4E | $1.86B |
| 2030Q1E | $1.99B |
| 2030Q2E | $2.13B |
| 2030Q3E | $2.28B |
| 2030Q4E | $2.44B |
| 2031Q1E | $2.61B |
| 2031Q2E | $2.78B |
What drives each segment
Large customers (>$100k)
Units × priceThe 4,698 accounts spending more than $100,000 a year, which are 73% of revenue and rising. This is where Acts 1, 2 and 3 all land: an enterprise buys the reverse proxy first, then Zero Trust, then Workers and R2, and the whole expansion shows up as revenue per account rather than as a new line. Dollar-based net retention of 120% is the number that decides this vertical, and the count of accounts is the number that decides how fast it compounds.
Latest: $2.05B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q2 | $364M |
| 2025Q3 | $410M |
| 2025Q4 | $449M |
| 2026Q1 | $461M |
| 2026Q2 | $508M |
| 2026Q3E | $548M |
| 2026Q4E | $591M |
| 2027Q1E | $636M |
| 2027Q2E | $683M |
| 2027Q3E | $734M |
| 2027Q4E | $788M |
| 2028Q1E | $846M |
| 2028Q2E | $907M |
| 2028Q3E | $973M |
| 2028Q4E | $1.04B |
| 2029Q1E | $1.12B |
| 2029Q2E | $1.20B |
| 2029Q3E | $1.28B |
| 2029Q4E | $1.37B |
| 2030Q1E | $1.46B |
| 2030Q2E | $1.57B |
| 2030Q3E | $1.68B |
| 2030Q4E | $1.79B |
| 2031Q1E | $1.92B |
| 2031Q2E | $2.05B |
Assumptions & reasoning
- Modelled on accounts x revenue per account rather than a growth rate, because both halves are disclosed every quarter and they move independently: the count is a sales-motion number and the price is a product-attach number. A single growth rate would hide which one is carrying the quarter, which is the only interesting question about this cohort.
- The Acts are inside this line, not beside it. Workers and Zero Trust sell into accounts that already buy application services, so their contribution arrives as revenue per account rising from $97,992 to $108,158 over the last five quarters. If you want a view on Workers specifically, take it by moving the price drift, not by inventing a Workers vertical.
- Capex intensity RISES here, 10% to 13%, which is the opposite of every other mature line on this site. AI inference at the edge needs GPUs in points of presence that used to hold cache; gross margin has already fallen from 77.8% to 71.8% over four years on exactly this. The margin glide up to 44% assumes the May 2026 restructuring — a 20% workforce reduction, $140-150M of charges — pays for that capex in operating leverage. If it does not, this line is the first place it shows.
- The dollar split is derived, the inputs are not. Cloudflare disclosed 71%, 73%, 73%, 72% and 73% for the five quarters here, and disclosed the account count each time. Multiplying one by the other is arithmetic on two disclosures — but the percentages are rounded to whole numbers, so treat the level as good to about half a point of revenue and no better.
Self-serve and mid-market
Growth pathEverything under $100,000 a year: the free tier converting to Pro and Business, the millions of small properties, and the mid-market accounts that have not crossed into the large cohort yet. It is 27% of revenue and shrinking as a share, but it grew 26% year over year in absolute terms, and it is the only funnel the large-customer cohort is fed from.
Latest: $410M (2031Q2E)
| Period | Value |
|---|---|
| 2025Q2 | $149M |
| 2025Q3 | $152M |
| 2025Q4 | $166M |
| 2026Q1 | $179M |
| 2026Q2 | $188M |
| 2026Q3E | $198M |
| 2026Q4E | $209M |
| 2027Q1E | $219M |
| 2027Q2E | $229M |
| 2027Q3E | $240M |
| 2027Q4E | $250M |
| 2028Q1E | $261M |
| 2028Q2E | $271M |
| 2028Q3E | $282M |
| 2028Q4E | $292M |
| 2029Q1E | $303M |
| 2029Q2E | $314M |
| 2029Q3E | $326M |
| 2029Q4E | $337M |
| 2030Q1E | $348M |
| 2030Q2E | $360M |
| 2030Q3E | $372M |
| 2030Q4E | $385M |
| 2031Q1E | $397M |
| 2031Q2E | $410M |
Assumptions & reasoning
- This is the one line modelled on a growth rate, and it is a last resort rather than a choice. Cloudflare discloses the large-customer count and share but publishes nothing about the shape of the remainder — no count, no price, no retention. A driver built from invented inputs would look more rigorous and be less true, so the residual gets a rate and an honest label.
- It carries the highest margin in the model and the lowest capex, because self-serve costs almost nothing to sell and runs on the network the enterprise cohort already paid to build. That is also why it is the wrong place to look for growth: this cohort exists to feed the large-customer line, and every account that succeeds here leaves it.
- Being a residual, this line absorbs every error in the split above it. If the disclosed large-customer percentage is rounded up in a quarter, this line is rounded down by the same dollars. Do not read a wobble in its sequential growth as a change in the self-serve business.
Agentic Internet (Act 4)
Subscribers × ARPUCharging machines to use the internet: Pay Per Crawl for AI crawlers, the Monetization Gateway extending that to any API, dataset or MCP tool call, and the x402 payment rail underneath both. Cloudflare sits in front of roughly a fifth of the web, which makes it one of the few companies that could impose a toll booth. Today the whole layer earns approximately nothing and is justified internally as demand generation for Acts 1 to 3.
Latest: $326M (2031Q2E)
| Period | Value |
|---|---|
| 2025Q2 | $0.00 |
| 2025Q3 | $0.00 |
| 2025Q4 | $0.00 |
| 2026Q1 | $0.00 |
| 2026Q2 | $0.00 |
| 2026Q3E | $0.00 |
| 2026Q4E | $0.00 |
| 2027Q1E | $0.00 |
| 2027Q2E | $0.00 |
| 2027Q3E | $15M |
| 2027Q4E | $23M |
| 2028Q1E | $33M |
| 2028Q2E | $45M |
| 2028Q3E | $58M |
| 2028Q4E | $74M |
| 2029Q1E | $91M |
| 2029Q2E | $111M |
| 2029Q3E | $131M |
| 2029Q4E | $154M |
| 2030Q1E | $179M |
| 2030Q2E | $205M |
| 2030Q3E | $232M |
| 2030Q4E | $262M |
| 2031Q1E | $293M |
| 2031Q2E | $326M |
Assumptions & reasoning
- Zero across every historical quarter is a statement, not a placeholder. Pay Per Crawl and the Monetization Gateway do collect money today, but nothing Cloudflare has disclosed suggests it is material, and the company frames Act 4 as demand generation for the other three. Carving a number out of the reported total to represent it would be inventing the disclosure this model exists to avoid.
- Modelled on monetising properties x take rate because Cloudflare is a toll collector here, not a seller. It does not set the price of a crawl or an API call; it takes a slice of whatever the publisher charges. That makes property count the adoption question and revenue per property the volume question, and they are worth arguing about separately.
- This is the only vertical that could be worth more than the rest of the model combined and the only one that could be worth nothing. If agents pay for content, the company sitting in front of a fifth of the web collects a fraction of every transaction. If publishers cannot make crawlers pay, or the AI labs route around Cloudflare, the entire line is zero and the base case is overstated by whatever it contributes.
- The margin path is the aggressive part. It starts at -25% and reaches 55%, above every other line, on the reasoning that a payment rail on infrastructure that already exists has almost no marginal cost. That is true of the rail and not of the disputes, fraud and support that come with handling other people's money.
- The base case keeps this deliberately secondary: about $295M a quarter by 2031, roughly a ninth of revenue, against a first quarter of $15M in 2027 Q3. That is a real business and not a re-rating. The case where Act 4 is the whole story is the Bull case, where it reaches about a fifth of revenue — and even that is an assumption about publishers and agents, not about Cloudflare.
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $4.69B |
| Terminal-year revenue | $10.11B |
| Terminal-year EBITDA | $3.57B |
| Exit multiple, on revenue | 17.0x |
| Terminal value | $171.81B |
| Discounted at 9.5% a year, terminal value becomes | $109.14B |
| Enterprise value | $113.83B |
| Net cash | $873M |
| Equity value | $114.70B |
| Diluted shares | 0.36B |
| Fair value per share | $322.12 |
| Against the current price of $278.91 | +15% |
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 $278.91 the market is paying 14.6x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
| Quarter | Large customers (>$100k) | Self-serve and mid-market | Agentic Internet (Act 4) | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|---|
| 2026 Q3E | $548M | $198M | $0 | $746M | +33% | $217M | $69M | $130M | +50 | $127M |
| 2026 Q4E | $591M | $209M | $0 | $799M | +30% | $239M | $77M | $143M | +48 | $137M |
| 2027 Q1E | $636M | $219M | $0 | $855M | +34% | $261M | $84M | $156M | +52 | $146M |
| 2027 Q2E | $683M | $229M | $0 | $913M | +31% | $285M | $92M | $169M | +50 | $155M |
| 2027 Q3E | $734M | $240M | $15M | $989M | +33% | $310M | $102M | $182M | +51 | $163M |
| 2027 Q4E | $788M | $250M | $23M | $1.06B | +33% | $336M | $112M | $197M | +51 | $172M |
| 2028 Q1E | $846M | $261M | $33M | $1.14B | +33% | $365M | $122M | $214M | +52 | $183M |
| 2028 Q2E | $907M | $271M | $45M | $1.22B | +34% | $396M | $133M | $232M | +53 | $193M |
| 2028 Q3E | $973M | $282M | $58M | $1.31B | +33% | $430M | $144M | $251M | +52 | $205M |
| 2028 Q4E | $1.04B | $292M | $74M | $1.41B | +33% | $466M | $156M | $273M | +52 | $217M |
| 2029 Q1E | $1.12B | $303M | $91M | $1.51B | +33% | $505M | $169M | $296M | +52 | $230M |
| 2029 Q2E | $1.20B | $314M | $111M | $1.62B | +32% | $546M | $182M | $320M | +52 | $244M |
| 2029 Q3E | $1.28B | $326M | $131M | $1.74B | +32% | $591M | $196M | $347M | +52 | $258M |
| 2029 Q4E | $1.37B | $337M | $154M | $1.86B | +32% | $638M | $211M | $375M | +52 | $273M |
| 2030 Q1E | $1.46B | $348M | $179M | $1.99B | +32% | $688M | $227M | $406M | +52 | $289M |
| 2030 Q2E | $1.57B | $360M | $205M | $2.13B | +32% | $742M | $244M | $438M | +52 | $305M |
| 2030 Q3E | $1.68B | $372M | $232M | $2.28B | +31% | $799M | $261M | $473M | +52 | $322M |
| 2030 Q4E | $1.79B | $385M | $262M | $2.44B | +31% | $860M | $280M | $510M | +52 | $339M |
| 2031 Q1E | $1.92B | $397M | $293M | $2.61B | +31% | $924M | $300M | $549M | +52 | $357M |
| 2031 Q2E | $2.05B | $410M | $326M | $2.78B | +31% | $992M | $321M | $590M | +52 | $375M |
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 | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-18 | all | $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. |