NET

Cloudflare is a high-quality compounder hiding behind GAAP losses. Revenue has marched from $656M (FY2021) to $2.17B (FY2025), with FY2025 up 29.8% YoY — five straight years of ~30%+ growth on a 74.5% gross margin (75% per the filing, though slipping from 77% in 2024). The MD&A frames the real story: this is a serverless network with low marginal cost to launch products, and customers are increasingly building AI-enhanced applications on top of it. Paying customers grew to 332,466 from 237,714 (+40%), and large customers spending >$100k annualized rose to 4,298 from 3,497 — the land-and-expand engine is intact and broadening, with revenue well-diversified geographically (US 49%, EMEA 28%, APAC 15%).

The cash story is far better than the income statement. GAAP net loss widened to -$102M and operating margin sits at -9.6%, but that is dominated by stock-based comp: management's non-GAAP operating income was $304M (14% margin), operating cash flow jumped 58.5% to $603M (28% of revenue), and free cash flow reached $260M (12% margin) after $316M of capex. A company throwing off $260M of FCF while growing 30% is not a speculative story — the GAAP loss overstates the economic risk.