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SAN FRANCISCO - Cloudflare, Inc. (NYSE: NET), a $62.24 billion market cap company whose stock has surged nearly 147% over the past year, announced Wednesday its intention to offer $1.75 billion in Convertible Senior Notes due 2030 to qualified institutional buyers in a private offering under Rule 144A of the Securities Act. According to InvestingPro data, the company maintains impressive gross profit margins of 77%.
The company plans to grant initial purchasers a 13-day option to buy up to an additional $250 million in notes to cover over-allotments. The notes will be senior, unsecured obligations with semi-annual interest payments and will be convertible into cash, Cloudflare Class A common stock, or a combination at the company’s discretion. With a healthy current ratio of 3.2x and operating with moderate debt levels, Cloudflare demonstrates strong financial flexibility for this offering.
Cloudflare expects to enter into capped call transactions with initial purchasers or their affiliates to offset potential dilution to its Class A common stock upon conversion of the notes. The cap price is anticipated to represent at least a 150% premium over the last reported sale price of Cloudflare’s Class A common stock on the pricing date.
The company intends to use part of the net proceeds to pay for the capped call transactions, with the remainder allocated for general corporate purposes, including working capital, capital expenditures, debt repayment, and potential acquisitions.
The notes and related Class A common stock potentially issuable upon conversion will not be registered under the Securities Act or other securities laws, limiting their sale to qualified institutional buyers under applicable exemptions.
This information is based on a press release statement issued by Cloudflare. The specific interest rate, conversion rate, and other terms will be determined upon pricing of the offering. For deeper insights into Cloudflare’s financial health and detailed analysis, including 18 additional ProTips and comprehensive valuation metrics, check out the full company research report on InvestingPro, available as part of our coverage of 1,400+ top US stocks.
In other recent news, Cloudflare Inc. reported notable achievements in its first-quarter performance for fiscal year 2025, surpassing revenue, operating income, and cash flow expectations set by the company and analysts like Stifel. The company also signed its largest deal ever, a $130 million contract, and secured a seven-year Secure Access Service Edge (SASE) deal valued at $12.7 million. Additionally, Cloudflare’s customer base continued to grow, marking the eighth consecutive quarter of expansion. Meanwhile, shareholders approved executive compensation and re-elected directors at the 2025 Annual Meeting, with KPMG LLP ratified as the independent auditor for the fiscal year.
In strategic developments, Cloudflare expanded its partnership with TD SYNNEX to enhance cybersecurity services across Latin America, aiming to simplify cybersecurity management for organizations. Analysts from Stifel maintained a Buy rating with a $175 price target, while RBC Capital Markets raised their price target to $155, citing Cloudflare’s enterprise growth and significant contract wins. Cantor Fitzgerald also increased its price target to $126, noting the company’s strong sales productivity and large deal closures. These developments reflect Cloudflare’s ongoing momentum and strategic positioning in the market.
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