Cloudflare plans to raise $2.175B through convertible debt offering due 2031

Cloudflare is going back to a well it knows intimately. The web infrastructure and security company announced plans to raise $2.175 billion through a private offering of convertible senior notes set to mature on August 15, 2031.

The offering targets qualified institutional buyers under Rule 144A and includes a $325 million over-allotment option, which could push the total raise even higher.

What Cloudflare is actually doing

Convertible senior notes are essentially corporate IOUs that come with a twist: holders can eventually swap them for company stock (or cash, or a mix) under certain conditions. They sit higher in the capital structure than regular equity, which makes them attractive to institutional investors who want exposure to a company’s upside without buying shares outright.

In Cloudflare’s case, the notes are unsecured, meaning they aren’t backed by specific company assets. The interest rate and precise conversion terms haven’t been set yet. Those details get locked in at pricing.

What Cloudflare has disclosed is that it plans to use some of the proceeds to fund capped call transactions. These are essentially options strategies designed to reduce the dilutive impact on existing shareholders if the notes eventually convert into stock. The capped calls would represent at least a 150% premium on the stock price, creating a buffer zone before new shares would need to be issued.

The remaining net proceeds go into the general corporate treasury. Cloudflare listed the usual menu of uses: working capital, capital expenditures, debt repayment, acquisitions, and strategic transactions.

A pattern, not a one-off

This isn’t Cloudflare’s first time at the convertible debt window. It’s not even the second.

Back in August 2021, the company completed an upsized $1.125 billion offering of convertible senior notes due in 2026. Then in June 2025, just weeks ago, Cloudflare issued $2.0 billion in convertible notes due 2030. Now it’s back with another $2.175 billion tranche due 2031.

The escalating deal sizes tell a story on their own. In four years, Cloudflare has gone from $1.125 billion to $2.0 billion to $2.175 billion in individual convertible note offerings.

Why the timing matters

Cloudflare’s decision to stack two massive convertible offerings within weeks of each other is notable. The June 2025 raise of $2.0 billion due 2030 and this new $2.175 billion tranche due 2031 represent more than $4 billion in fresh convertible debt in a compressed timeframe.

For existing Cloudflare shareholders, the capped call transactions provide some reassurance. By setting the dilution threshold at a 150% premium to the stock price at the time of pricing, Cloudflare is essentially saying that shareholders won’t feel the impact unless the stock has already risen substantially.

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