Corporate Finance

Cloudflare completes $2.50 billion convertible notes financing due 2031

Cloudflare disclosed that it issued $2.50 billion of 0% convertible senior notes due 2031, generating approximately $2,462.3 million in net proceeds before the cost of related capped-call transactions.

By Carter Hayes · August 14, 2026

Convertible financing closes

Cloudflare issued $2.50 billion in aggregate principal amount of 0% convertible senior notes due 2031 on August 13, 2026. The securities mature on August 15, 2031, unless they are converted, repurchased or redeemed earlier under their terms. They do not accrue regular interest, although special interest can arise in defined circumstances tied to reporting compliance or tradability requirements.

The financing was initially arranged for $2.175 billion, with purchasers holding an option for another $325.0 million. That option was exercised in full on August 11, 2026, producing the final $2.50 billion issuance. The notes were sold in a private placement to initial purchasers for resale to parties believed to be qualified institutional buyers under Rule 144A.

Terms link future conversion to the share price

The notes initially convert at 2.0123 Class A shares per $1,000 principal amount, equating to an initial conversion price of about $496.94 per share. The filing states that this was about 60% above the August 10, 2026 last reported New York Stock Exchange sale price of $310.59.

Before May 15, 2031, conversions are generally limited to stated triggers, including share-price and note-trading-price tests, a redemption notice or designated corporate events. From May 15, 2031 through the period immediately before maturity, holders can convert regardless of those earlier conditions. On conversion, Cloudflare can elect to provide cash, Class A shares or a combination, subject to the indenture.

For businesses evaluating financing structures, the disclosure illustrates how a convertible instrument combines a stated principal obligation with potential future equity issuance or cash settlement. It also establishes senior unsecured claims that rank behind secured debt to the value of collateral and behind liabilities at subsidiaries.

Proceeds, capped calls and credit amendment

Cloudflare reported approximately $2,462.3 million in net proceeds after purchaser discounts, commissions and estimated offering expenses. It spent $259.5 million on capped-call transactions, which are designed generally to offset potential dilution from conversions or reduce cash payments above principal, subject to a stated cap. The initial capped-call strike price matches the notes’ conversion price, while the initial cap price is $854.1225 per share.

The company said it plans to use the remaining proceeds for general corporate purposes, including working capital, capital expenditures, repayment of outstanding debt and possible acquisitions or strategic transactions. These are permitted uses rather than an allocation to a particular project, repayment or transaction.

Separately, on August 10, 2026, Cloudflare amended its revolving credit and guaranty agreement. The change sets the cap at $2.0 billion for unrestricted cash, cash equivalents and available-for-sale securities that may be deducted from consolidated funded indebtedness for specified calculations of the consolidated total net leverage ratio. The amendment changes a measurement used in the credit agreement; the filing does not state that new revolving borrowings were made.