Form 4: Cloudflare President Sells Shares Under 10b5-1 Plan

Cloudflare President and Board Co-Chair Michelle Zatlyn sold 76,923 shares of Class A Common Stock for over $15.8 million through pre-arranged trading plans.

Summary

• Michelle Zatlyn, President and Board Co-Chair of Cloudflare, Inc. (NET), reported transactions involving the exercise of employee stock options and subsequent sale of Class A Common Stock.
• Over three days, from December 9 to December 11, 2025, Zatlyn exercised options to acquire a total of 76,923 shares of Class A Common Stock by converting Class B Common Stock.
• Concurrently, she sold a total of 76,923 shares of Class A Common Stock at weighted average prices ranging from approximately $204.80 to $210.25 per share.
• The total proceeds from these sales amount to approximately $15,870,000.
• All sales were conducted under a Rule 10b5-1 trading plan adopted on February 14, 2025.
• Following these transactions, Zatlyn directly holds 349,644 Class A Common Stock and 1,748,710 Class B Common Stock (remaining options), along with significant indirect holdings through various trusts.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While insider selling can sometimes be viewed negatively, these transactions were pre-planned under a 10b5-1 plan, indicating a routine diversification or liquidity event rather than a reaction to new adverse information. The high sale prices are positive for the insider.

Positives

• Transactions were executed under a pre-arranged Rule 10b5-1 trading plan, indicating planned diversification rather than a reaction to new negative information.
• The sales occurred at relatively high stock prices, ranging from $204.14 to $210.695, demonstrating the value of the company's equity.
• The exercise of options with a low strike price ($2.04) and subsequent sale at over $200 per share indicates significant personal gain for the insider.

Negatives

• Significant insider selling by a key executive and board member could be perceived negatively by some investors, even if pre-planned.
• The reduction in direct beneficial ownership of Class A Common Stock by 76,923 shares.

Future Outlook

NA

Industry Context

NA

Related Party Transactions

• Michelle Zatlyn holds shares indirectly through various trusts, including The Sutherland/Zatlyn Revocable Trust, The SZ 2021 Irrevocable Trust, The SZ 2020 Irrevocable Trust, The SZ 2023 Irrevocable Trust, and several Sutherland/Zatlyn Annuity Trusts (2024, 2024 II, 2024 III, 2025, 2025 II, 2025 III), where she serves as co-trustee, appointer, investment advisor, or trustee.

Stakeholder Impact

• Shareholders may view the insider selling as a routine diversification event given the 10b5-1 plan, but some might interpret it as a lack of confidence, potentially leading to minor short-term price fluctuations.
• The company's reputation for transparent executive compensation practices is reinforced by the disclosure of these planned transactions.

Key Dates

Recommendation

The filing details routine insider transactions under a pre-established 10b5-1 plan, which is a common practice for executives to manage personal finances and diversify holdings. These sales do not signal new material information about the company's performance or outlook. Therefore, the filing itself does not provide a basis for a change in investment thesis, and a 'hold' recommendation is appropriate for investors already holding the stock, maintaining their current position based on broader company fundamentals.

Keywords

Cloudflare, NET, Michelle Zatlyn, Insider Trading, Form 4, Stock Sale, Option Exercise, 10b5-1 Plan, Corporate Governance, Executive Compensation