NET: Key Takes from Upbeat 2026 Investor Day. Increase PT to $269. Reiterate Buy.

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NET: Key Takes from Upbeat 2026 Investor Day. Increase PT to $269. Reiterate Buy.

aving behind appears to still be strong. Sales rep productivity has reached an all-time high, and

the company continues to see positive momentum with large enterprise accounts. NET accounted for 42% of the F500 in FY25

(up from 35% in FY24), and its $1M+ customer cohort still represents less than 1% of NET’s total paying customers, representing a

large opportunity to continue to expand within their existing customer base. In addition, the company plans to continue increasing

enterprise sales capacity going forward. All in, we think Mr. Anderson has done a very good job transitioning NET’s GTM into an

enterprise-led motion. But we still think investors will view this announcement as more negative than positive.

Positive Momentum with Zero Trust. While most of the day was spent discussing Acts 3 and 4, management did call out a distinct

shift in security conversations. CIOs and CISOs are no longer simply looking to buy Zero Trust, but they are looking for a way to

safely deploy AI without blowing through budgets or exposing sensitive corporate data. NET's Cloudflare One platform acts as

the secure, auditable gateway for these deployments, complete with sophisticated routing to manage AI inference costs. This

dynamic is rapidly helping NET get into more strategic C-suite conversations, particularly with large enterprise organizations.

Cloudflare One saw ARR growth of 43% in FY25, and we estimate it was $400MM+ in total ARR.

Internal AI Efficiency Justifies Workforce Reduction. Management spent time showcasing Cloudflare OS, its internal AI

productivity platform that automates complex workflows for internal NET employees. By providing a centralized platform to