NET NYSE Russell 1000 Earnings call
Cloudflare (NET) · Q2 2026 results and valuation
Share price: $315.00 · 2026-11-11
Cloudflare provides a suite of security, performance, and reliability services for websites, applications, and APIs. The company operates a global network that serves businesses of all sizes across various geographies to manage and secure their cloud and on-premises infrastructure. Source: 10-K annual report (2026-02-26)
Results Q2 2026 vs Q1 2026 · previous quarter · published 6 Aug 2026 and 7 May 2026
Net loss widened on the previous quarter. Management sounded about as positive as a typical company call, in its script and in answers to analysts.
1 · Numbers
Loss widened
Net income vs Q1 2026
Outlook given
Net income -170.0M vs -22.9M
Revenue +8.8%
Net income -170.0M vs -50.4M in Q2 2025 and -22.9M last quarter.
Why Against the same quarter last year (loss widened), net income changed because the GAAP net loss would have been around $18 million without the impact of the restructuring charges.
2 · How management spoke
Typical
Less upbeat than 51% of company calls
Answers to analysts: restrained, in line with the script.
Similar to last call.
3 · What stood out
A leading digital native media company signed a 5-year, $31.8 million contract for Application Services and Zero Trust to expand its relationship with Cloudflare.
Valuation
Is Cloudflare undervalued?
Reverse DCF. Free cash flow from the last full fiscal year (2025-12-31), grown for 10 years, discounted back, plus a terminal value. “Implied growth” is the rate the current price assumes.
At 20.0% growth a year (3-year revenue growth), the model's fair value is $52.60 a share — the stock trades 499% above it. Today's price assumes 49.3% growth a year.
Current price
$315.00
close of 2026-11-11
Market implies growth of iThe yearly free-cash-flow growth, for the next 10 years, that today’s share price already assumes. If you believe the company grows faster than this, the stock is cheap under this model; slower, and it is expensive.
+49.3% for 10 yrs
Fair value / share
$52.60
Buy below
$39.45
Price vs fair value
Overvalued >200%
Price vs buy-below price
Overvalued >200%
Management expects
Revenue +32% · from the Q2 2026 report: “The company expects full-year 2026 revenue between $2.864 billion and $2.870 billion, which represents an increase of 32% year-over-year.”
A guidance figure for revenue, usually one year ahead, not a 10-year free-cash-flow rate.
Read between the lines
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Guidance
The company expects full-year 2026 revenue between $2.864 billion and $2.870 billion, which represents an increase of 32% year-over-year.
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Guidance
The company expects network CapEx to be 14% to 15% of revenue for full year 2026 despite potential quarter-to-quarter variability in this metric.
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Key theme
Cloudflare beat 2 first-generation Zero Trust vendors because its performance and management ease allow customers to expect to run services with roughly 1/3 the staff.
Source quote
“In a competitive evaluation, Cloudflare beat 2 first-generation Zero Trust vendors winning due to our faster network performance and our single pane of glass management that is so easy the customer expects to run our services with roughly 1/3 the staff.”
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Figure
The company now has 4,698 customers paying more than $100,000 per year, which is a 27% increase year-over-year.
Source quote
“We now have 4,698 customers paying us more than $100,000 per year, a 27% increase year-over-year.”
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Figure
A leading digital native media company signed a 5-year, $31.8 million contract for Application Services and Zero Trust to expand its relationship with Cloudflare.
Source quote
“A leading digital native media company expanded their relationship with Cloudflare, signing a 5-year, $31.8 million contract for Application Services and Zero Trust.”
4 more
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Figure
In Q2, more than 50% of the traffic flowing across Cloudflare's network was not human for the first time in history.
Source quote
“For the first time in human history, in Q2, more than 50% of the traffic flowing across Cloudflare's network was not human.”
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Figure
Remaining performance obligations rose to $2.732 billion, representing a 7% sequential increase and a 38% year-over-year increase.
Source quote
“Remaining performance obligations, or RPO, came in at $2.732 billion, representing an increase of 7% sequentially and 38% year-over-year.”
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Guidance
The company expects higher developer platform adoption to drive significant business growth in the coming periods.
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Key theme
The engineering team selected Cloudflare as the only provider combining a zero egress model with enterprise-grade reliability, scale, and capabilities.
Source quote
“Their engineering team evaluated multiple providers and chose Cloudflare as the only one that pairs a zero egress model with the reliability, scale and comprehensive capabilities of an enterprise-grade platform.”
Tone
How upbeat the language was, compared with other companiesiTone counts positive minus negative finance words, adjusted for length. Executives mostly speak positively, so the labels compare each call with every company's latest call: “typical” is the middle third, “very upbeat” the top tenth, “cautious” the bottom tenth.. Dot: Q2 2026. Ring: Q1 2026.
Script and answers carried a similar tone, so the script's message held up under questioning.
Sentences that drove the tone
“We delivered a stellar second quarter with strength across all major metrics we track, driven in particular by another quarter of rapid growth in our Workers developer platform and agentic...”
“We ended the quarter with 4,698 large customers, those spending more than $100,000 annually with us, representing an increase of 27% year-over-year and an acceleration from 25% growth last quarter.”
“A leading digital native media company expanded their relationship with Cloudflare, signing a 5-year, $31.8 million contract for Application Services and Zero Trust.”
Full figures
USD · SEC EDGAR XBRL (10-Q, period end 2026-06-30)
| Metric | Q2 2026period end 2026-06-30 | Q1 2026period end 2026-03-31 | Change | Q2 2025 | YoY |
|---|---|---|---|---|---|
| Revenue | 696.1M | 639.8M | +8.8% | 512.3M | +35.9% |
| Gross profit | 499.5M | 455.6M | +9.6% | 383.6M | +30.2% |
| Operating income | -205.7M | -62.0M | Loss widened | -67.3M | Loss widened |
| Net income | -170.0M | -22.9M | Loss widened | -50.4M | Loss widened |
| EPS | -0.48 | -0.07 | Loss widened | -0.15 | Loss widened |
| P/E | 12-mo loss | 12-mo loss | — | 12-mo loss | — |
Topics
Most discussed now
- New customer bookings increased at the fastest rate in more than 5 years.
- New pipeline generation continues to accelerate, again, growing sequentially at its fastest pace in 5 years.
- In other words, humans will be a rounding error on the Internet, not because human traffic goes down, but that's...
- I was quite surprised when in May of this year, Cloudflare's team came to me and said, you won't believe...
- Ultimately, like Cloudflare is not going to do that just selling commodity hardware because that, again, is bad business for it.
Faded since Q1 2026
- Dropped What Cloudflare has seen, especially over the last six months, is incredible productivity gains from the people who are directly...
- Fading Cloudflare generated strong free cash flow of $84.1 million during the quarter, again exceeding expectations.
- Fading From this position of strength, Cloudflare is again applying the same winning formula of compounding technology innovation with business…
- Fading These two forces do not sit side by side at Cloudflare, Inc.; rather, they compound on each other in ways...
Latest announcements
Official filings, newest first. Summaries are generated from each filing and its attachment; every figure is checked against the source.
- Results of operations; Regulation FD disclosure · SEC 8-K
- Material agreement; New financial obligation; Unregistered share sale; Other events · SEC 8-K
Cloudflare, Inc. issued $2.50 billion of 0% Convertible Senior Notes due 2031 with an initial conversion price of approximately $496.94 per share.
- Results of operations; Regulation FD disclosure · SEC 8-K
Cloudflare, Inc. reported financial results for the fiscal quarter ended June 30, 2026, on August 6, 2026.
- Director or officer change; Shareholder vote results · SEC 8-K
Stockholders approved the amendment and restatement of the 2019 Equity Incentive Plan and the 2019 Employee Stock Purchase Plan at the Annual Meeting on June 30, 2025.
- Results of operations; Regulation FD disclosure · SEC 8-K
Cloudflare announced a plan to reduce its workforce by approximately 20% and estimates restructuring charges between $140 million and $150 million for the transition to an AI-first operating model.
- Director or officer change · SEC 8-K
Doug Kramer will resign as Chief Legal Officer on March 31, 2026, to become a Senior Advisor, and Alissa Starzak will succeed him in the role.
- Results of operations; Regulation FD disclosure · SEC 8-K
Cloudflare, Inc. reported its financial results for the fiscal quarter and year ended December 31, 2025, on February 10, 2026.
- Results of operations; Regulation FD disclosure · SEC 8-K
Cloudflare reported third-quarter revenue of $562.0 million, an increase of 31% year-over-year, with non-GAAP net income of $102.6 million compared to $72.6 million in the third quarter of 2024.
Catalyst calendar
management-stated targets — from the latest earnings call; plans, not promises.
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1 year
contract for Workers developer platform
Source quote
“A leading technology company expanded their relationship with Cloudflare, signing a 1-year, $6 million pool of funds contract for our Workers developer platform.”
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18-month
contract for Application Services and our Workers developer platform
Source quote
“A Fortune 1000 technology company expanded their relationship with Cloudflare, signing an 18-month, $15.9 million contract for Application Services and our Workers developer platform.”
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Over the coming months
announcement of more ways that AI companies; content creators; and businesses, large and small, can thrive together
Source quote
“Over the coming months, we'll announce more ways that AI companies; content creators; and businesses, large and small, can thrive together.”
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full year 2026
expectation for network CapEx to be 14% to 15% of revenue
Source quote
“As a reminder, there can be some variability in this metric quarter-to-quarter, and we expect network CapEx to be 14% to 15% of revenue for full year 2026.”
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full year 2026
severance and other restructuring charges
Source quote
“For full year 2026, we now expect severance and other restructuring charges of up to $165 million with up to $130 million expected to be cash related.”