We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Cloudflare's Deutsche Telekom Deal Drive Enterprise Growth?
Read MoreHide Full Article
Key Takeaways
Cloudflare gains access to Deutsche Telekom's enterprise customers through its sales and service network.
Deutsche Telekom will offer Cloudflare security solutions for applications, networks, data and AI workloads.
The deal supports NET's European expansion in digital resilience, sovereignty and post-quantum security.
Cloudflare (NET - Free Report) is expanding its enterprise reach in Europe through a strategic partnership with Deutsche Telekom. Under the agreement, Deutsche Telekom will add Cloudflare’s security and connectivity solutions to its enterprise portfolio. The two companies will also directly connect their networks, combining Cloudflare’s global cloud platform with Deutsche Telekom’s European infrastructure and customer base. This gives Cloudflare another channel to reach enterprise customers across the region.
The partnership will also strengthen Cloudflare’s access to Deutsche Telekom’s enterprise business through T-Systems. Deutsche Telekom will train and certify its professionals on the Cloudflare platform, allowing customers to get support for consulting, implementation and managed security services. This could make it easier for enterprises to adopt Cloudflare’s products while giving the company access to Deutsche Telekom’s established sales and service network.
Security is a key part of the deal. Deutsche Telekom plans to offer Cloudflare solutions that protect applications, networks and data, as well as increasingly important AI workloads. Enterprises are facing higher security requirements as their IT environments become more distributed, cloud-based and AI-powered. Cloudflare could benefit as Deutsche Telekom expands its enterprise portfolio with these solutions and introduces them to more customers across Europe.
The partnership also supports Cloudflare’s focus on digital resilience and sovereignty in Europe. The companies plan to work on solutions for security and resilience, including protection of critical data and infrastructure and the use of post-quantum cryptography. For Cloudflare, the deal provides a way to expand its European enterprise reach and create more opportunities to sell its security and connectivity services as businesses upgrade their digital infrastructure.
The Zacks Consensus Estimate for Cloudflare’s 2026 and 2027 revenues indicates year-over-year growth of 32.5% and 28.6%, respectively.
Cloudflare Faces Tough Competition
Competitors like Palo Alto Networks (PANW - Free Report) and Zscaler (ZS - Free Report) are also gaining ground through platform expansion and AI innovation.
Palo Alto Networks is benefiting from stronger enterprise platform adoption. The company added about 220 net new platformizations in the fourth quarter of fiscal 2026, while platformized customers had net revenue retention above 120%. PANW also closed several large enterprise deals, including a $126 million agreement with a global telecom company, a $72 million deal with an IT service provider and a $53 million transaction with a global payments platform.
Zscaler ended fiscal 2026 with 4,182 customers generating more than $100,000 in annual recurring revenue (ARR), up 20% year over year. The company also had 785 customers with more than $1 million in ARR, up 18%. Its Z-Flex offering is helping customers expand their spending, with Z-Flex generating more than $770 million in total contract value in the fourth quarter, up more than 60% sequentially.
NET’s Price Performance, Valuation & Estimates
Shares of Cloudflare have jumped 77% in the year-to-date period compared with the Zacks Internet – Software industry’s return of 9.9%.
NET YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NET trades at a forward price-to-sales ratio of 35.28, significantly higher than the industry’s average of 4.42. The Zacks Value Score of F suggests that NET stock is overvalued.
NET Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NET’s 2026 earnings is pegged at $1.26 per share, unchanged over the past 30 days, indicating a 35.5% increase from the previous year.
View the Zacks #1 Rank List
Image: Bigstock
Can Cloudflare's Deutsche Telekom Deal Drive Enterprise Growth?
Key Takeaways
Cloudflare (NET - Free Report) is expanding its enterprise reach in Europe through a strategic partnership with Deutsche Telekom. Under the agreement, Deutsche Telekom will add Cloudflare’s security and connectivity solutions to its enterprise portfolio. The two companies will also directly connect their networks, combining Cloudflare’s global cloud platform with Deutsche Telekom’s European infrastructure and customer base. This gives Cloudflare another channel to reach enterprise customers across the region.
The partnership will also strengthen Cloudflare’s access to Deutsche Telekom’s enterprise business through T-Systems. Deutsche Telekom will train and certify its professionals on the Cloudflare platform, allowing customers to get support for consulting, implementation and managed security services. This could make it easier for enterprises to adopt Cloudflare’s products while giving the company access to Deutsche Telekom’s established sales and service network.
Security is a key part of the deal. Deutsche Telekom plans to offer Cloudflare solutions that protect applications, networks and data, as well as increasingly important AI workloads. Enterprises are facing higher security requirements as their IT environments become more distributed, cloud-based and AI-powered. Cloudflare could benefit as Deutsche Telekom expands its enterprise portfolio with these solutions and introduces them to more customers across Europe.
The partnership also supports Cloudflare’s focus on digital resilience and sovereignty in Europe. The companies plan to work on solutions for security and resilience, including protection of critical data and infrastructure and the use of post-quantum cryptography. For Cloudflare, the deal provides a way to expand its European enterprise reach and create more opportunities to sell its security and connectivity services as businesses upgrade their digital infrastructure.
The Zacks Consensus Estimate for Cloudflare’s 2026 and 2027 revenues indicates year-over-year growth of 32.5% and 28.6%, respectively.
Cloudflare Faces Tough Competition
Competitors like Palo Alto Networks (PANW - Free Report) and Zscaler (ZS - Free Report) are also gaining ground through platform expansion and AI innovation.
Palo Alto Networks is benefiting from stronger enterprise platform adoption. The company added about 220 net new platformizations in the fourth quarter of fiscal 2026, while platformized customers had net revenue retention above 120%. PANW also closed several large enterprise deals, including a $126 million agreement with a global telecom company, a $72 million deal with an IT service provider and a $53 million transaction with a global payments platform.
Zscaler ended fiscal 2026 with 4,182 customers generating more than $100,000 in annual recurring revenue (ARR), up 20% year over year. The company also had 785 customers with more than $1 million in ARR, up 18%. Its Z-Flex offering is helping customers expand their spending, with Z-Flex generating more than $770 million in total contract value in the fourth quarter, up more than 60% sequentially.
NET’s Price Performance, Valuation & Estimates
Shares of Cloudflare have jumped 77% in the year-to-date period compared with the Zacks Internet – Software industry’s return of 9.9%.
NET YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NET trades at a forward price-to-sales ratio of 35.28, significantly higher than the industry’s average of 4.42. The Zacks Value Score of F suggests that NET stock is overvalued.
NET Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NET’s 2026 earnings is pegged at $1.26 per share, unchanged over the past 30 days, indicating a 35.5% increase from the previous year.
Image Source: Zacks Investment Research
Cloudflare currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.