Cloudflare (NYSE:NET) Announces Earnings Results

Cloudflare (NYSE:NET) posted its quarterly earnings results on Thursday. The company reported $0.29 earnings per share for the quarter, beating analysts’ consensus estimates of $0.27 by $0.02, FiscalAI reports. The firm had revenue of $696.06 million during the quarter, compared to the consensus estimate of $664.66 million. Cloudflare had a negative return on equity of 5.65% and a negative net margin of 3.72%.The business’s revenue was up 35.9% compared to the same quarter last year. During the same period last year, the company earned $0.21 earnings per share. Cloudflare updated its Q3 2026 guidance to 0.340-0.340 EPS and its FY 2026 guidance to 1.250-1.260 EPS.

Here are the key takeaways from Cloudflare’s conference call:

• Q2 results exceeded expectations, with revenue rising 36% year over year to $696.1 million, operating income reaching $96.1 million, and free cash flow increasing 69% to $56.4 million.
• Enterprise momentum accelerated, with large customers up 27% year over year to 4,698, dollar-based net retention reaching 120%, and record additions across every major customer spending tier.
• Cloudflare’s Workers developer platform and agentic AI strategy are gaining traction, with the developer base surpassing 7.4 million and the company stating that Workers has become a meaningful revenue contributor alongside strong adoption of pool-of-funds contracts.
• Management raised confidence in its outlook, guiding for third-quarter revenue of $736 million–$737 million and full-year revenue of $2.864 billion–$2.870 billion, while saying it is pacing ahead of its goal to reach GAAP profitability by the end of 2028.
• Gross margin declined 320 basis points year over year to 73.1%, while full-year restructuring charges are now expected to reach up to $165 million, including up to $130 million in cash costs.

Cloudflare Stock Performance

Shares of NET traded down $9.63 during trading hours on Thursday, hitting $283.33. The company had a trading volume of 5,482,078 shares, compared to its average volume of 3,075,594. The business has a fifty day moving average of $255.83 and a 200-day moving average of $218.26. The company has a quick ratio of 1.96, a current ratio of 1.96 and a debt-to-equity ratio of 1.29. The firm has a market cap of $100.15 billion, a price-to-earnings ratio of -1,133.31, a PEG ratio of 219.10 and a beta of 1.65. Cloudflare has a 12 month low of $158.83 and a 12 month high of $305.00.

Key Headlines Impacting Cloudflare

Here are the key news stories impacting Cloudflare this week:

• Positive Sentiment: Cloudflare beat second-quarter expectations. The company reported adjusted EPS of $0.29 versus the $0.27 consensus and revenue of $696.06 million versus estimates of approximately $664.7 million. Revenue increased 35.9% year over year, reinforcing demand for Cloudflare’s connectivity, security and developer products. Cloudflare Q2 earnings report
• Positive Sentiment: Management raised its outlook above Wall Street forecasts. Full-year 2026 EPS guidance increased to $1.25-$1.26, compared with consensus of $0.96, while revenue guidance was set at approximately $2.9 billion versus expectations of $2.8 billion. Third-quarter guidance also exceeded estimates, with EPS of $0.34 and revenue of $736-$737 million. Cloudflare raises annual outlook
• Positive Sentiment: AI demand is becoming a major growth driver. Cloudflare cited rising AI-agent traffic across its network and launched tools including an AEO Visibility Dashboard, Identity-Aware AI Gateway and Cloudflare OS. These offerings could expand its enterprise security, AI infrastructure and developer-platform markets. Cloudflare AEO Visibility Dashboard
• Neutral Sentiment: Analyst reaction is mixed. Jefferies maintained a Hold rating, while broader coverage remains generally favorable. The stock’s high beta and sharp recent rally may be contributing to profit-taking even after the earnings beat.
• Negative Sentiment: Insider selling may weigh on sentiment. CEO Matthew Prince sold more than $45 million of shares across multiple transactions, and director Carl Ledbetter sold 5,000 shares for about $1.4 million. The transactions were conducted under pre-arranged Rule 10b5-1 plans, limiting their value as a signal about business prospects, but they can still pressure investor sentiment. SEC insider filing
• Negative Sentiment: Valuation remains a key risk. With Cloudflare valued at roughly $100 billion and still reporting a negative net margin, investors may demand continued acceleration in growth, profitability and cash flow. Any guidance or AI-demand disappointment could trigger further volatility.

Insider Activity at Cloudflare

In other news, CFO Thomas J. Seifert sold 55,000 shares of the business’s stock in a transaction that occurred on Tuesday, August 4th. The stock was sold at an average price of $300.30, for a total transaction of $16,516,500.00. Following the completion of the sale, the chief financial officer owned 113,790 shares in the company, valued at $34,171,137. The trade was a 32.58% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Matthew Prince sold 33,631 shares of the business’s stock in a transaction on Wednesday, August 5th. The shares were sold at an average price of $296.10, for a total value of $9,958,139.10. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders have sold 749,532 shares of company stock valued at $183,882,628. 10.66% of the stock is currently owned by insiders.

Institutional Trading of Cloudflare

A number of institutional investors have recently modified their holdings of NET. HM Payson & Co. acquired a new stake in Cloudflare during the fourth quarter worth about $25,000. Wiser Advisor Group LLC acquired a new stake in shares of Cloudflare in the 3rd quarter valued at $26,000. Wexford Capital LP bought a new position in shares of Cloudflare in the 3rd quarter valued at $30,000. Brown Brothers Harriman & Co. increased its stake in shares of Cloudflare by 55.4% in the 3rd quarter. Brown Brothers Harriman & Co. now owns 157 shares of the company’s stock valued at $34,000 after purchasing an additional 56 shares during the last quarter. Finally, JPL Wealth Management LLC acquired a new position in shares of Cloudflare during the 3rd quarter worth $45,000. 82.68% of the stock is currently owned by institutional investors.

Wall Street Analysts Forecast Growth

NET has been the subject of several analyst reports. KeyCorp reissued an “overweight” rating on shares of Cloudflare in a research note on Wednesday, June 10th. Truist Financial upped their price target on shares of Cloudflare from $250.00 to $300.00 and gave the stock a “buy” rating in a research report on Tuesday, July 21st. Raymond James Financial initiated coverage on shares of Cloudflare in a research note on Tuesday, July 7th. They issued a “strong-buy” rating for the company. The Goldman Sachs Group downgraded shares of Cloudflare from a “buy” rating to a “sell” rating in a research report on Wednesday, April 15th. Finally, Citigroup restated a “market outperform” rating on shares of Cloudflare in a research note on Monday, July 20th. Two analysts have rated the stock with a Strong Buy rating, twenty-one have issued a Buy rating, six have issued a Hold rating and four have assigned a Sell rating to the company. According to MarketBeat, the stock currently has an average rating of “Moderate Buy” and an average target price of $265.27.

About Cloudflare

Cloudflare, Inc is a global web infrastructure and security company that provides a suite of services designed to improve the performance, reliability and security of internet properties. Its core offerings include a content delivery network (CDN), distributed denial-of-service (DDoS) protection, managed DNS, and a web application firewall (WAF). Cloudflare also provides tools for bot management, SSL/TLS, load balancing and rate limiting to help organizations maintain uptime and protect web applications from attack.

In addition to traditional edge and security services, Cloudflare has expanded into edge computing and developer platforms.