We feel now is a pretty good time to analyse Cloudflare, Inc.'s (NYSE:NET) business as it appears the company may be on the cusp of a considerable accomplishment. Cloudflare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. The US$47b market-cap company’s loss lessened since it announced a US$184m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$94m, as it approaches breakeven. As path to profitability is the topic on Cloudflare's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Cloudflare

According to the 34 industry analysts covering Cloudflare, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2026, before generating positive profits of US$61m in 2027. Therefore, the company is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 32% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Cloudflare's growth isn’t the focus of this broad overview, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Cloudflare currently has a debt-to-equity ratio of 132%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Cloudflare which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Cloudflare, take a look at Cloudflare's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

1. Valuation: What is Cloudflare worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Cloudflare is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cloudflare’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.