W.028Cloudflare’s growth reached 39%, its fastest in at least two years. Its CEO says it isn’t concentrated in AI
Cloudflare’s revenue rose 39% to $782.5M in the quarter to September, beating the top of its own guidance by $45.5M, and it raised its 2026 forecast for the third time, to about $2.96B. Year-on-year growth has risen in 5 of the last seven quarters, from 27% at the end of 2024. Chief executive Matthew Prince said the growth is not concentrated in AI companies; the largest AI deal named on the call was an $11M one-year commitment. The non-GAAP gross margin fell 2.9 points to 72.4%; the company pointed to its lower-margin developer platform.
Growth has quickened for two years
The quarter was Cloudflare’s fastest growth in the eight quarters charted here. Revenue was $782.5M in the quarter to September, up 39.2% from $562.0M a year earlier and 12.4% from the June quarter. Growth on a year earlier was 26.9% at the end of 2024 and has risen in 5 of the seven quarters since. Cloudflare had guided to $736 million to $737 million in August, so it beat the top of its range by $45.5M, a wider margin than in either of the two earlier quarters of 2026. Prince said on the call that growth inflected in October 2025 and accelerated again in July 2026 and at the start of this October.
The guidance for the fourth quarter implies slightly slower growth. Cloudflare guided to revenue of $845 million to $846 million, 37.5% to 37.7% above the fourth quarter of 2025, and raised its 2026 forecast to $2,963 million to $2,964 million, about 36.7% above 2025. It started the year at $2,785 million to $2,795 million, which implied about 28.7% growth. Non-GAAP operating income rose 60% to $137.1M; on a GAAP basis Cloudflare lost $67.9M from operations, including restructuring charges and a legal reserve.
Growth rose in 5 of the last seven quarters
Cloudflare revenue growth on the same quarter a year earlier, %, from each quarter’s reported revenue (our calculation). The last bar, outlined, is the low end of the fourth-quarter 2026 guidance of $845 million to $846 million against fourth-quarter 2025 revenue.
Data
| Quarter | Revenue, $ thousands | A year earlier | Growth |
|---|---|---|---|
| Q4 2024 | 459,946 | 362,473 | 26.9% |
| Q1 2025 | 479,087 | 378,602 | 26.5% |
| Q2 2025 | 512,316 | 400,996 | 27.8% |
| Q3 2025 | 562,027 | 430,082 | 30.7% |
| Q4 2025 | 614,507 | 459,946 | 33.6% |
| Q1 2026 | 639,755 | 479,087 | 33.5% |
| Q2 2026 | 696,061 | 512,316 | 35.9% |
| Q3 2026 | 782,513 | 562,027 | 39.2% |
The beat widened each quarter this year
How far Cloudflare’s reported revenue in each quarter of 2026 exceeded the top of the range it had guided to a quarter earlier, $ millions (our calculation). The range is under each bar.
How much of it is AI
Cloudflare gave no figure for AI revenue. Prince said “by no means” was the growth “really concentrated around AI,” crediting demand across industries and for security. The largest contract with an AI company he described was a one-year, $11 million pool of funds, a prepaid usage commitment, for Workers, Cloudflare’s developer platform; the largest contract disclosed on the call was $15.5 million over 13 months with a Fortune 100 cloud infrastructure provider. Chief financial officer Thomas Seifert said variable revenue was the main source of the beat. Prince said Cloudflare recorded its first revenue from “Act 4” products, which he described as helping invent a new business model for the internet, such as charging AI agents and crawlers; he gave no amount.
The growth has cost some margin. The non-GAAP gross margin fell to 72.4% from 75.3% a year earlier, and Seifert said the Workers platform carries slightly lower margins. Purchases of property and equipment rose to $121.8M, 15.6% of revenue. Free cash flow was $82.1M, up from $75.0M. Dollar-based net retention, a measure of how much more existing customers spend, rose to 122% from 119%, and remaining performance obligations, contracted revenue not yet recognized, were $2,877 million, up 34%, the CFO said. The shares closed down 8.3% at $244.51 on November 5, in a tech selloff led by chipmakers, and rose as much as 18.6% after hours, to about $290, AskTraders reported.
The 2026 forecast, raised three times
Growth over 2025 revenue of $2,167.9 million implied by Cloudflare’s guidance for 2026 revenue, by the date it was issued: solid to the low end of the range, outlined to the high end (our calculation). Labels give the low-end growth and the range in $ millions.
What this changes on 06.ai
- Pack lead (Inference margins): Cloudflare’s gross margin fell 2.9 points in a year as its developer platform, which runs AI workloads among others, grew; it is a dated data point on what usage-based compute does to a network company’s margin.
- Watch: whether Cloudflare puts a figure on “Act 4” revenue, which includes charging AI agents and crawlers; it reported its first such revenue this quarter.
Sources and method
| Item | Figure | Source |
|---|---|---|
| Q3 2026 | Revenue 782,513K, up 39% (Q3 2025 562,027K); gross margin 71.2% GAAP, 72.4% non-GAAP (75.3%); GAAP operating loss 67,926K; non-GAAP operating income 137,084K (85,938K); free cash flow 82,080K (74,971K); purchases of property and equipment 121,809K; Q4 revenue guidance $845.0M–$846.0M; 2026 revenue guidance $2,963.0M–$2,964.0M | Cloudflare Q3 release, Nov 5, via StockTitan |
| Q3 call | Growth “by no means … really concentrated around AI” (Prince); largest AI-company deal a one-year, $11M pool-of-funds contract; largest disclosed deal $15.5M over 13 months with a Fortune 100 cloud infrastructure provider; dollar-based net retention 122% (119% a year earlier); RPO $2,877M, up 34%; Workers platform margins “slightly lower” (Seifert); variable revenue the primary contributor to the beat; first revenue from “Act 4” products | Q3 call transcript, Equibles |
| Q3 call | Gross margin, net retention and RPO as above | Call highlights, GuruFocus via Yahoo Finance |
| Q2 2026 | Revenue 696,061K and Q1 2026 639,755K; Q3 guidance $736M–$737M; 2026 guidance $2,864M–$2,870M | Cloudflare Q2 release, Aug 6 |
| Q1 2026 | Q2 guidance $664M–$665M; 2026 guidance $2,805M–$2,813M | Cloudflare Q1 release, May 7 |
| Q4 2025 | Revenue 614,507K; FY2025 2,167,937K; Q1 2026 guidance $620M–$621M; initial 2026 guidance $2,785M–$2,795M | Cloudflare Q4 release, Feb 10 |
| 2025 quarters | Q3 2025 562,027K, Q3 2024 430,082K | Cloudflare Q3 2025 release (8-K) |
| 2025 quarters | Q2 2025 512,316K, Q2 2024 400,996K | Cloudflare Q2 2025 release (8-K) |
| 2025 quarters | Q1 2025 479,087K, Q1 2024 378,602K | Cloudflare Q1 2025 release (8-K) |
| 2024 | Q4 2024 459,946K, Q4 2023 362,473K | Cloudflare Q4 2024 release (8-K) |
| Shares | Closed at $244.51, down 8.3%, on Nov 5; up about 18.6% to about $290 after hours | AskTraders, Nov 5 |
| Shares | Shares up more than 14% after hours | SiliconANGLE, Nov 5 |
Growth: each quarter’s revenue ÷ the same quarter a year earlier − 1: 459,946 ÷ 362,473 = 26.9%; 479,087 ÷ 378,602 = 26.5%; 512,316 ÷ 400,996 = 27.8%; 562,027 ÷ 430,082 = 30.7%; 614,507 ÷ 459,946 = 33.6%; 639,755 ÷ 479,087 = 33.5%; 696,061 ÷ 512,316 = 35.9%; 782,513 ÷ 562,027 = 39.2%. Quarter on quarter: 782,513 ÷ 696,061 − 1 = 12.4%. Fourth-quarter guidance: 845,000 ÷ 614,507 − 1 = 37.5%; 846,000 ÷ the same = 37.7%.
Beats: Q1 2026: 639,755 − 621,000 = 18,755; Q2 2026: 696,061 − 665,000 = 31,061; Q3 2026: 782,513 − 737,000 = 45,513 ($ thousands). Full year: midpoints 2,790 and 2,963.5, $173.5M apart; 2,963.5 ÷ 2,167.9 − 1 = 36.7%; 2,790 ÷ 2,167.9 − 1 = 28.7%. Margins: 75.3 − 72.4 = 2.9 points; operating income 137,084 ÷ 85,938 − 1 = 59.5%; property and equipment 121,809 ÷ 782,513 = 15.6%.
Wire reports are written within hours of the news, on a six-hour schedule. Each lists its sources and shows the arithmetic behind its figures. Not investment advice.