Cloudflare (NET) Accelerates to 36% Revenue Growth in Q2, Shares Jump +15%
Key Takeaways
- Revenue exceeded expectations: Cloudflare reported Q2 revenue of $696.1 million, a 36% year-over-year increase that sailed past the consensus estimate of approximately $664.7 million.
- Earnings per share beat forecasts: Non-GAAP diluted net income per share came in at $0.29, topping analyst expectations of $0.27.
- Large customer growth accelerated: The company added a record 986 large customers (those spending over $100,000 annually) year-over-year, reaching 4,698 total, up 27%.
- Developer platform momentum exploded: Cloudflare added nearly 2 million developers in Q2 alone, surpassing the 1.5 million added throughout all of 2025.
- Guidance raised across the board: Full-year 2026 revenue guidance was lifted to $2.864–$2.870 billion, with non-GAAP EPS now seen at $1.25–$1.26, both comfortably above prior forecasts.
- Stock surged after hours: Shares jumped approximately 15% in extended trading following the release, reflecting strong investor enthusiasm.
Why This Quarter Matters
Cloudflare's Q2 2026 report landed at a pivotal moment for the company. The quarter marked the first time in eight quarters that non-GAAP gross margin improved sequentially, rising to 73.1%. More significantly, CEO Matthew Prince revealed that for the first time in history, more than 50% of traffic flowing across Cloudflare's network was non-human — driven by AI agents and machine-to-machine communication. This paradigm shift positions Cloudflare at the center of what the company calls the "Agentic Internet," where its developer platform, Workers, and related infrastructure become essential building blocks. With revenue growth accelerating to 36% from roughly 33–34% in recent quarters, the results signaled that Cloudflare's strategic bets on AI workloads and enterprise consolidation are translating into measurable financial acceleration. I also checked this using Tickeron’s AI Screener to see how NET compares to peers in the sector.
Breaking Down the Q2 Results
Cloudflare delivered total revenue of $696.1 million for the second quarter ended June 30, 2026, beating the Wall Street consensus of roughly $664.7 million by over $30 million. Revenue growth accelerated to 36% year-over-year, up from 33.5% in Q1 2026. The United States accounted for 51% of revenue and grew 41% year-over-year, while EMEA contributed 27% and APAC represented 14%.
On a non-GAAP basis, diluted net income per share reached $0.29, exceeding the $0.27 consensus estimate. Non-GAAP operating income totaled $96.1 million, representing a 13.8% operating margin. Non-GAAP net income came in at $107.8 million, up from $75.1 million in the prior-year period. Free cash flow rose 69% year-over-year to $56.4 million, or 8% of revenue.
On a GAAP basis, the company posted a net loss of $170.0 million, which reflected $151 million in severance and other restructuring charges. Cash, cash equivalents, and available-for-sale securities stood at $4.2 billion at quarter-end. Remaining performance obligations climbed 38% year-over-year to $2.732 billion, with current RPO growing 35%.
Customer metrics underscored the quarter's strength. Dollar-based net retention accelerated to 120%, up two percentage points sequentially. Large customer additions hit a record 986 net new additions year-over-year across every spending tier. When reviewing the developer metrics, I ran a quick scan with Tickeron’s AI Pattern Search Engine to confirm the momentum in related names.
How the Market Reacted
Cloudflare shares surged approximately 15% in after-hours trading on August 6 following the earnings release. The rally reflected broad investor approval of both the top-and-bottom-line beats and the raised forward guidance. Heading into the print, the stock had already gained roughly 44% year-to-date in 2026, and the strong quarter validated bullish sentiment around the company's AI-driven growth narrative. Analysts responded favorably to the gross margin stabilization — a metric that had been under pressure for several quarters — as well as the record developer adoption and accelerating large-customer momentum. The triple-digit-million revenue beat and confident guidance raise left little for bears to latch onto in the immediate aftermath.
Forward Outlook and What to Watch
Cloudflare's Q3 2026 guidance calls for revenue between $736 million and $737 million, representing 31% year-over-year growth, with non-GAAP operating income of $129–$130 million and non-GAAP EPS of $0.34. Full-year 2026 revenue is now expected to reach $2.864–$2.870 billion, with non-GAAP EPS of $1.25–$1.26. Both ranges sit comfortably above prior consensus estimates.
Looking ahead, several factors deserve attention. First, the rapid expansion of Cloudflare's developer ecosystem — now exceeding 7.4 million developers — suggests the Workers platform may be entering a phase of compounding adoption that could reshape the company's revenue mix toward higher-margin developer services. Second, the company's push into agentic AI infrastructure, including announcements around Monetization Gateway, digital wallets, and agent-to-agent payment rails, represents a long-term bet on a fundamental restructuring of internet commerce. While the revenue impact of these initiatives is nascent, they underscore Cloudflare's ambition to become the connective tissue of the agent-driven web.
On the cost side, gross margin trajectory will remain a key watchpoint. After eight quarters of sequential decline, the 73.1% non-GAAP gross margin and management's commentary about stabilization suggest the worst of the margin compression cycle may be behind the company. Network capital expenditures are expected to run at 14–15% of revenue for the full year. Additionally, investors should monitor the pace of severance and restructuring charges, which at $151 million in Q2 ran ahead of initial expectations due to prioritized international resolution timelines. While these are one-time in nature, they affected GAAP profitability and warrant tracking through year-end. The core business momentum, however, appears firmly intact heading into the second half of 2026. I also cross-checked the guidance ranges against Tickeron’s AI Trend Prediction Engine for context on historical beats.
Enhancing Research with Tickeron Tools
In my own workflow, I frequently use Tickeron’s AI Screener to quickly filter for companies showing accelerating growth and strong AI exposure. The platform lets me apply custom criteria around revenue trends, customer metrics, and technical signals in one place, which helps surface ideas more efficiently than manual checks. It has become a regular part of how I validate earnings narratives like the one we just saw from Cloudflare.
Disclaimer
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
Contributor
Financial writer and active order flow futures trader with a focus on fundamental analysis, macroeconomic factors, and equity research. I make in-depth blogs on stocks and ETFs, bridging the gap between raw market data and real-world trading decisions.
NET's Indicator enters downward trend
The Aroon Indicator for NET entered a downward trend on September 11, 2026. Tickeron's A.I.dvisor identified a pattern where the AroonDown red line was above 70 while the AroonUp green line was below 30 for three straight days. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options. A.I.dvisor looked at 182 similar instances where the Aroon Indicator formed such a pattern. In 164 of the 182 cases the stock moved lower. This puts the odds of a downward move at 90%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for NET moved out of overbought territory on August 14, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 37 similar instances where the indicator moved out of overbought territory. In 26 of the 37 cases, the stock moved lower in the following days. This puts the odds of a move lower at 70%.
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 7 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where NET declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 78%.
NET broke above its upper Bollinger Band on September 14, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on September 14, 2026. You may want to consider a long position or call options on NET as a result. In 69 of 82 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 84%.
The Moving Average Convergence Divergence (MACD) for NET just turned positive on September 10, 2026. Looking at past instances where NET's MACD turned positive, the stock continued to rise in 44 of 49 cases over the following month. The odds of a continued upward trend are 90%.
NET moved above its 50-day moving average on September 08, 2026 date and that indicates a change from a downward trend to an upward trend.
Following a +12.64% 3-day Advance, the price is estimated to grow further. Considering data from situations where NET advanced for three days, in 278 of 335 cases, the price rose further within the following month. The odds of a continued upward trend are 83%.
Fundamental Analysis (Ratings)
The Tickeron Seasonality Score of 1 (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is 37 (best 1 - 100 worst), indicating steady price growth. NET’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 38 (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 91, placing this stock slightly better than average.
The Tickeron Valuation Rating of 90 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (70.922) is normal, around the industry mean (19.972). P/E Ratio (0.000) is within average values for comparable stocks, (153.820). Projected Growth (PEG Ratio) (2.377) is also within normal values, averaging (3.697). Dividend Yield (0.000) settles around the average of (0.004) among similar stocks. P/S Ratio (45.455) is also within normal values, averaging (103.889).
The Tickeron SMR rating for this company is 94 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is 100 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Advertisement
General Information
a company, which engages in the provision of cloud-based services to secure websites
Industry ComputerCommunications
Advertisement