Cloudflare (NYSE:NET) Releases Earnings Results, Beats Estimates By $0.02 EPS

Cloudflare (NYSE:NET) issued its quarterly earnings data on Thursday. The company reported $0.29 earnings per share for the quarter, topping the consensus estimate of $0.27 by $0.02, FiscalAI reports. The company had revenue of $696.06 million for the quarter, compared to analysts’ expectations of $664.66 million. Cloudflare had a negative net margin of 3.72% and a negative return on equity of 5.65%. Cloudflare’s revenue for the quarter was up 35.9% on a year-over-year basis. During the same quarter in the previous year, the firm posted $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 Trading Down 3.3%

NET traded down $9.63 during trading on Thursday, hitting $283.33. The company’s stock had a trading volume of 5,482,078 shares, compared to its average volume of 3,075,594. The firm has a market capitalization of $100.15 billion, a P/E ratio of -1,133.31, a PEG ratio of 219.10 and a beta of 1.65. Cloudflare has a twelve month low of $158.83 and a twelve month high of $305.00. The stock’s fifty day moving average price is $255.83 and its 200-day moving average price is $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.

Key Stories 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 related news, Director Carl Ledbetter sold 5,000 shares of the stock in a transaction on Thursday, August 6th. The shares were sold at an average price of $281.98, for a total transaction of $1,409,900.00. Following the transaction, the director directly owned 883,073 shares of the company’s stock, valued at $249,008,924.54. This represents a 0.56% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Mark J. Hawkins sold 133 shares of the firm’s stock in a transaction on Monday, August 3rd. The stock was sold at an average price of $277.74, for a total transaction of $36,939.42. Following the completion of the sale, the director owned 10,632 shares of the company’s stock, valued at $2,952,931.68. The trade was a 1.24% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last quarter, insiders sold 749,532 shares of company stock worth $183,882,628. Corporate insiders own 10.66% of the company’s stock.

Hedge Funds Weigh In On Cloudflare

A number of institutional investors and hedge funds have recently made changes to their positions in the stock. HM Payson & Co. acquired a new stake in shares of Cloudflare in the 4th quarter valued at about $25,000. Wiser Advisor Group LLC acquired a new position in Cloudflare during the 3rd quarter worth approximately $26,000. Wexford Capital LP acquired a new position in Cloudflare during the 3rd quarter worth approximately $30,000. Brown Brothers Harriman & Co. boosted its holdings in Cloudflare by 55.4% in the third quarter. Brown Brothers Harriman & Co. now owns 157 shares of the company’s stock worth $34,000 after acquiring an additional 56 shares in the last quarter. Finally, JPL Wealth Management LLC bought a new position in Cloudflare in the third quarter worth approximately $45,000. Institutional investors own 82.68% of the company’s stock.

Wall Street Analyst Weigh In

Several research analysts have commented on NET shares. Guggenheim reaffirmed a “sell” rating and set a $140.00 target price on shares of Cloudflare in a report on Wednesday, June 10th. Royal Bank Of Canada restated an “outperform” rating and set a $290.00 price objective on shares of Cloudflare in a research report on Thursday, July 16th. UBS Group lifted their price objective on Cloudflare from $220.00 to $250.00 and gave the stock a “neutral” rating in a research note on Wednesday, June 10th. The Goldman Sachs Group cut Cloudflare from a “buy” rating to a “sell” rating in a report on Wednesday, April 15th. Finally, Citizens Jmp increased their target price on shares of Cloudflare from $270.00 to $330.00 and gave the company a “market outperform” rating in a research report on Monday, July 20th. Two analysts have rated the stock with a Strong Buy rating, twenty-one have assigned a Buy rating, six have given a Hold rating and four have issued a Sell rating to the stock. Based on data from MarketBeat, the stock has an average rating of “Moderate Buy” and a consensus price target 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.