Cloudflare, Inc ( NET ) on Friday announced the pricing of $1.75 billion convertible senior notes due 2030 in a private offering by institutional buyers.

The company also granted the initial purchasers of the notes a 13-day option to purchase up to an additional $250 million aggregate principal amount of the notes to cover over-allotments.

The notes’ sale to the initial purchasers will likely settle on June 17, 2025, subject to customary closing conditions, resulting in $1.72 billion in net proceeds.

Also Read: Cloudflare Acquires Outerbase To Streamline AI App Development, ‘Our Goal Is To Make It Easy And Accessible For Any Developer’

Cloudflare ( NET ) may redeem the notes for cash if the last reported sale price of the stock has been at least 130% of the conversion price, which is then in effect for at least 20 trading days during any 30 consecutive trading day period.

The notes will be convertible at a premium of approximately 45% to the last reported sale price of $170.81 per share on June 12, 2025.

In connection with the pricing of the notes, Cloudflare ( NET ) entered into privately negotiated capped call transactions with certain of the initial purchasers and/or their respective affiliates and/or other financial institutions.

The cap price of the capped call transactions is approximately $469.73 per share, representing a premium of approximately 175% over the last reported sale price of $170.81.

Cloudflare ( NET ) intends to use approximately $248.0 million of the net proceeds to pay the cost of the capped call transactions. The remainder of the net proceeds from the offering will be used for general corporate purposes, which may include working capital, capital expenditures, repayment of outstanding indebtedness, and potential acquisitions and strategic transactions.

Cloudflare ( NET ) held $1.91 billion in cash and equivalents as of March 31, 2025.

The company reported first-quarter revenue of $479.09 million, up 27% compared to estimates of $469.28 million. It reported adjusted EPS of 16 cents compared to estimates of 17 cents.

Cloudflare ( NET ) expects second-quarter revenue of $500 million-$501 million versus estimates of $500.34 million. The company anticipates second-quarter adjusted earnings of 18 cents versus estimates of 19 cents.

Price Action: NET stock is trading lower by 2.78% to $166.06 premarket at last check Friday.

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