Cloudflare, Inc. (NYSE: NET) has priced a private offering of $2.175 billion in aggregate principal amount of 0% convertible senior notes due 2031, according to a company statement.

The notes, which carry no regular interest, are set to mature on August 15, 2031, and are expected to settle on August 13, 2026. Cloudflare granted initial purchasers an option to buy up to an additional $325 million in notes within a 13-day period following issuance. Net proceeds are expected to reach approximately $2.14 billion, assuming no exercise of that option.

The notes are convertible at an initial rate of 2.0123 shares of Cloudflare's Class A common stock per $1,000 principal amount, equivalent to a conversion price of approximately $496.94 per share. That figure represents a 60% premium over the August 10, 2026 closing price of $310.59 per share on the New York Stock Exchange.

Cloudflare also entered into capped call transactions intended to offset potential dilution from note conversions. The cap price on those transactions is approximately $854.12 per share, a 175% premium over the same reference price. The company intends to use approximately $225.8 million of the net proceeds to fund the cost of these capped call transactions.

Remaining proceeds are designated for general corporate purposes, which may include working capital, capital expenditures, repayment of debt, and potential acquisitions or strategic transactions.

Cloudflare may redeem the notes on or after August 20, 2029, if its Class A common stock trades at or above 130% of the conversion price for at least 20 trading days within any 30 consecutive trading day period. The notes were offered exclusively to qualified institutional buyers under Rule 144A and have not been registered under the Securities Act of 1933.