Jared Sleeper
Partner & Head of Software at Avenir, Startup Investing
Cloudflare's valuation, about 28.5x EV/ARR and 453x run-rate GAAP EBIT, leaves little room for its competitive risks. Its SASE and developer-platform businesses face Zscaler, Palo Alto and hyperscalers with far bigger budgets, and OpenAI and Anthropic may keep inference on their own backends. The bull case is crisp and arguably priced in: bot security and edge workloads matter more as agents spread, growth sped up from 27% to 34%, and weekly agent requests doubled in January. x.com
Cloudflare at 38x NTM revenue and 150x NTM EBITDA is insane, so a decent return from here is unlikely even though it is the leader. That has never happened before without massive acceleration in growth rates and margin expansion. x.com
Cloudflare is difficult to buy at about 30x EV/sales because a lot is already priced in, even after a good quarter. Q1 revenue rose 34% to $640 million versus $623 million expected and EPS of $0.25 beat, with strong AI and agentic traction, but remaining performance obligations of $2.54 billion fell short of the roughly $2.61 billion expected. It also announced a 20% workforce reduction. x.com
Cloudflare may be the strongest software play on agentic AI in the public markets. x.com
Cloudflare cannot justify a bullish view at a 10000x revenue valuation. x.com
Cloudflare has one of the most ludicrous valuations relative to its actual performance. @ecommerceshares notes it has run since 2009 yet still has a -10% operating margin, surviving because fund managers keep buying the new stock it issues every quarter, equal to 18% of revenue, so breakeven is never required. x.com
Cloudflare's 20% workforce cut reflects AI doing the work of 1,100 employees, not a failing business, so margins are about to explode. It beat on EPS and revenue and raised full-year guidance, with revenue up 34% and billings up 37.8%, and holds $4.16 billion of cash. The 18% post-earnings drop misses that it is building the infrastructure every AI agent on the planet will run through. x.com
Cloudflare is extremely expensive at 44 times trailing twelve-month sales, a valuation that makes Datadog look cheap. x.com
Cloudflare looks absurdly valued at about $120B in market cap on a $2.7B revenue run rate, roughly 45x annualized quarterly revenue, while it still loses money on a GAAP basis. x.com x.com x.com
Cloudflare's Q2 beat-and-raise shows growth holding above 35% as it becomes an AI-era platform for networking, security, edge computing and agent infrastructure. Revenue rose 36% to $696M versus $666M expected, current RPO grew 35%, and full-year revenue guidance rose again to $2.86-2.87B. Its CEO says traffic is shifting toward AI-to-AI and agent-to-agent interaction. Non-GAAP gross margin fell 320 bps to 73.1% and layoff charges drove a GAAP loss, but neither affects cash flow or guidance. … Show more
Cloudflare is a short because 45-50x sales is too much to pay for 35% growth. x.com
