Cloudflare, Inc. (NET) vs Synopsys, Inc. (SNPS)

Cloudflare, Inc. and Synopsys, Inc. are both Software Infrastructure companies. Cloudflare, Inc. is the larger, with a market value of $128.1B against $81.4B — 1.6× the size. Cloudflare, Inc. has negative trailing earnings, so its P/E is not meaningful; Synopsys, Inc. trades at 74.7×. Synopsys, Inc. grew revenue faster over the last twelve months: 46.3% against 33.5%. Synopsys, Inc. has the higher net margin (11.4% vs −8.21%) and the higher return on invested capital (1.33% vs 0.00%). Across the 20 metrics below, Synopsys, Inc. leads on 15 and Cloudflare, Inc. on 5.

Valuation

Metric NET SNPS Software Infrastructure median
P/E n/m 74.69 28.02
P/S 49.22 8.66 3.07
P/B 76.34 2.62 3.36
Price to free cash flow 392.76 29.68 17.12
EV/EBITDA n/m 32.26 14.91
EV/Sales 48.35 9.34 3.03
Earnings yield (0.17%) 1.34% 0.13%
Free cash flow yield 0.25% 3.37% 1.15%

Profitability

Metric NET SNPS Software Infrastructure median
Gross margin 72.58% 72.38% 61.23%
Operating margin (14.11%) 8.52% 0.00%
Net margin (8.21%) 11.43% 0.00%
Free cash flow margin 12.53% 29.18% 1.67%
Return on equity (14.43%) 3.66% 0.59%
Return on assets (3.43%) 2.24% 0.00%
Return on invested capital 0.00% 1.33% 0.00%

Growth

Metric NET SNPS Software Infrastructure median
Revenue growth (TTM) 33.53% 46.33% 13.41%
EPS growth (last fiscal year) (26.09%) (44.59%) —
Revenue growth, 5-year CAGR 38.13% 13.87% 15.81%
Net income growth, 5-year CAGR 0.00% 14.93% 0.00%

Health

Metric NET SNPS Software Infrastructure median
Debt to equity 1.22 0.32 0.06
Current ratio 1.82 1.34 1.55
Net debt to EBITDA (23.42) 6.25 0.08

Dividend

Metric NET SNPS Software Infrastructure median
Dividend yield — — 1.53%
Payout ratio 0.00 0.00 0.00

Size

Metric NET SNPS Software Infrastructure median
Market cap 128.05b 81.44b 835.96m

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