Cloudflare (NYSE:NET) Announces Earnings Results

Cloudflare (NYSE:NET) issued its earnings results on Thursday. The company reported $0.38 earnings per share for the quarter, beating analysts’ consensus estimates of $0.34 by $0.04, FiscalAI reports. The firm had revenue of $782.51 million for the quarter, compared to the consensus estimate of $737.16 million. Cloudflare had a negative return on equity of 3.88% and a negative net margin of 8.21%. The company’s revenue was up 39.2% compared to the same quarter last year. During the same quarter last year, the business posted $0.27 EPS.

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

• Cloudflare reported Q3 revenue of $782.5 million, up 39% year over year, its fastest growth in nearly four years. Large-customer momentum remained strong, with dollar-based net retention rising to 122% and more than 5,000 customers now spending over $100,000 annually.
• Profitability improved alongside growth: adjusted operating income rose 60% to $137.1 million, and operating margin expanded to a record 17.5%. Management also expects to reach GAAP profitability in Q4, earlier than previously anticipated.
• Demand indicators were robust, including a record 158,000 net new paying customers, record additions across large-customer cohorts, and RPO growth of 34% year over year. Management said consumption-based revenue and customers drawing down pool-of-funds contracts faster helped drive the quarter’s upside.
• Q4 guidance calls for revenue of $845 million–$846 million, up 38% year over year; full-year 2026 revenue is expected to grow 37%. Management attributed momentum to broad demand across industries, including for security and its Workers developer platform.
• Gross margin fell 290 basis points year over year to 72.4%, which management linked in part to strong growth in the Workers platform; free-cash-flow margin also declined to 10% from 13% a year earlier. Management expects full-year network capital expenditure to remain elevated at 14%–15% of revenue.

Cloudflare Stock Up 10.1%

NYSE:NET opened at $269.20 on Friday. The company has a quick ratio of 1.82, a current ratio of 1.82 and a debt-to-equity ratio of 1.22. Cloudflare has a fifty-two week low of $158.83 and a fifty-two week high of $370.35. The firm’s fifty day simple moving average is $318.23 and its 200-day simple moving average is $249.77.

Analysts Set New Price Targets

Several research analysts have recently weighed in on the company. Truist Financial upped their target price on Cloudflare from $300.00 to $350.00 and gave the stock a “buy” rating in a research note on Friday, August 7th. Wells Fargo & Company upped their price objective on shares of Cloudflare from $380.00 to $400.00 and gave the company an “overweight” rating in a research report on Wednesday, October 28th. BTIG Research boosted their target price on shares of Cloudflare from $382.00 to $413.00 and gave the stock a “buy” rating in a report on Tuesday, October 6th. Cantor Fitzgerald decreased their target price on Cloudflare from $340.00 to $310.00 and set a “neutral” rating for the company in a research note on Friday. Finally, The Goldman Sachs Group set a $420.00 price objective on Cloudflare and gave the stock a “buy” rating in a report on Friday. Twenty-six equities research analysts have rated the stock with a Buy rating, seven have assigned a Hold rating and four have issued a Sell rating to the company’s stock. Based on data from MarketBeat.com, the company has a consensus rating of “Moderate Buy” and a consensus price target of $332.82.

Insider Transactions at Cloudflare

In other Cloudflare news, insider Michelle Zatlyn sold 33,003 shares of Cloudflare stock in a transaction dated Wednesday, October 7th. The shares were sold at an average price of $348.29, for a total value of $11,494,614.87. Following the completion of the transaction, the insider directly owned 69,775 shares of the company’s stock, valued at approximately $24,301,934.75. The trade was a 32.11% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Thomas J. Seifert sold 12,500 shares of the stock in a transaction on Monday, October 19th. The shares were sold at an average price of $299.59, for a total value of $3,744,875.00. Following the sale, the chief financial officer directly owned 104,958 shares in the company, valued at $31,444,367.22. This trade represents a 10.64% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 259,057 shares of company stock valued at $79,516,905 in the last three months. 10.66% of the stock is currently owned by corporate insiders.

More Cloudflare News

Here are the key news stories impacting Cloudflare this week:

• Positive Sentiment: Third-quarter revenue rose 39.2% year over year to $782.5 million, beating estimates, while adjusted EPS of $0.38 also topped forecasts. The company cited strong enterprise demand and growing adoption of its developer platform. Cloudflare Q3 Earnings Beat Estimates on Robust Enterprise Demand
• Positive Sentiment: Cloudflare raised its 2026 outlook: full-year revenue guidance is about $3.0 billion and EPS guidance is $1.35, above consensus estimates. Fourth-quarter revenue guidance of $845 million–$846 million and EPS guidance of $0.43 also exceeded expectations. Why Cloudflare Stock Opened Higher Today
• Positive Sentiment: Further signs of AI-related momentum include Cloudflare’s first revenue from AI bot traffic and a developer base that doubled to 10 million. Analysts at Wolfe Research upgraded the shares to Outperform. Why Cloudflare Stock Opened Higher Today
• Neutral Sentiment: Analyst actions were mixed: Piper Sandler reaffirmed Overweight and raised its target, while Scotiabank, Needham and Cantor Fitzgerald lowered targets; the latter firms retained positive or neutral ratings. Scotiabank rating update
• Negative Sentiment: Some profitability measures lagged growth: gross margin faced pressure, free cash flow grew more slowly than revenue, and the GAAP operating loss widened. Cloudflare’s high valuation may make the stock sensitive to any slowdown or disappointment. Cloudflare Sales Up 39%, Gross Margin Falls

About Cloudflare

Cloudflare, Inc provides cloud-based services that help businesses and other organizations protect, connect and improve the performance of websites, applications and networks. Its global network delivers services including content delivery, domain name system management, and protection against distributed denial-of-service attacks and other cyber threats.

The company also offers web application security, bot management and Zero Trust services for securing access to applications and internal networks.