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Cloudflare, Inc. (NET) vs Zscaler, Inc. (ZS)

Cloudflare, Inc. and Zscaler, Inc. are both Software Infrastructure companies. Cloudflare, Inc. is the larger, with a market value of $116.7B against $42.4B — 2.8× the size. Cloudflare, Inc. grew revenue faster over the last twelve months: 33.5% against 25.4%. Zscaler, Inc. has the higher net margin (−1.88% vs −8.21%) and the lower return on invested capital (−10.2% vs 0.00%). Across the 19 metrics below, Zscaler, Inc. leads on 13 and Cloudflare, Inc. on 6.

Valuation

Metric NET ZS Software Infrastructure median
P/E n/m n/m 30.50
P/S 46.36 12.45 2.94
P/B 71.90 16.07 2.92
Price to free cash flow 369.94 53.69 18.20
EV/EBITDA n/m 151.97 17.15
EV/Sales 45.49 12.27 2.93
Earnings yield (0.18%) (0.15%) 0.00%
Free cash flow yield 0.27% 1.86% 0.35%

Profitability

Metric NET ZS Software Infrastructure median
Gross margin 72.58% 76.80% 59.48%
Operating margin (14.11%) (3.98%) 0.00%
Net margin (8.21%) (1.88%) 0.00%
Free cash flow margin 12.53% 23.24% 0.79%
Return on equity (14.43%) (2.87%) 0.29%
Return on assets (3.43%) (0.88%) 0.00%
Return on invested capital 0.00% (10.15%) 0.00%

Growth

Metric NET ZS Software Infrastructure median
Revenue growth (TTM) 33.53% 25.42% 12.70%
EPS growth (last fiscal year) (26.09%) (44.44%) 20.51%
Revenue growth, 5-year CAGR 38.13% 37.87% 15.81%
Net income growth, 5-year CAGR 0.00% 0.00% 0.00%

Health

Metric NET ZS Software Infrastructure median
Debt to equity 1.22 0.65 0.02
Current ratio 1.82 1.70 1.52
Net debt to EBITDA (23.42) (6.57) 0.05

Dividend

Metric NET ZS Software Infrastructure median
Dividend yield — — 1.05%
Payout ratio — — 0.29

Size

Metric NET ZS Software Infrastructure median
Market cap 116.72b 42.42b 672.06m

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