Cloudflare, Inc. (NET): Results of Operations and Financial Condition
Cloudflare, Inc. (NET) filed an SEC Form 8-K — Results of Operations and Financial Condition. Cloudflare Announces Second Quarter 2026 Financial Results • Second quarter revenue totaled $696.1 million, representing an increase of 36% year-over-year • GAAP loss from operations of $205.7 million, or 30% of total revenue, and non-GAAP income from operations of $96.1 million,
How this was made
The 30-second read
Why it matters
The filing updates the market with new quarterly performance metrics and explicit forward guidance ranges for revenue and non-GAAP profitability, which can reset expectations for the next several quarters.
Market read
Fresh earnings and guidance ranges are the primary drivers for trading, with growth strength offset by continued GAAP losses.
What to watch
Traders may underweight the guidance share count assumption (~374M) and the mix between GAAP and non-GAAP profitability when modeling EPS sensitivity.
Cloudflare Announces Second Quarter 2026 Financial Results
Revenue increased 36% year-over-year to $696.1 million, operating cash flow and free cash flow increased year-over-year, and non-GAAP net income increased, while GAAP losses widened materially and GAAP and non-GAAP gross margins declined year-over-year.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $696.1 million | – | 36% |
| GAAP gross profitGAAP | $499.5 million | – | – |
| GAAP gross marginGAAP | 71.8% | – | – |
| Non-GAAP gross profitnon-GAAP | $508.9 million | – | – |
| Non-GAAP gross marginnon-GAAP | 73.1% | – | – |
| GAAP loss from operationsGAAP | $205.7 million | – | – |
| GAAP loss from operations as a percentage of revenueGAAP | 29.6% of revenue | – | – |
| Non-GAAP income from operationsnon-GAAP | $96.1 million | – | – |
| Non-GAAP income from operations as a percentage of revenuenon-GAAP | 13.8% of revenue | – | – |
| GAAP net lossGAAP | $170.0 million | – | – |
| GAAP net loss per basic and diluted shareGAAP | $0.48 | – | – |
| Non-GAAP net incomenon-GAAP | $107.8 million | – | – |
| Non-GAAP net income per diluted sharenon-GAAP | $0.29 | – | – |
| Net cash flow from operating activitiesGAAP | $117.6 million | – | – |
| Free cash flowother | $56.4 million | – | – |
| Free cash flow as a percentage of revenueother | 8% of revenue | – | – |
| Cash, cash equivalents, and available-for-sale securitiesGAAP | $4,162.8 million | – | – |
| Current RPO year-over-year growthother | 35% | – | 35% |
third quarter of fiscal 2026 and full year fiscal 2026 outlook
- RevenueThird quarter of fiscal 2026: $736.0 to $737.0 million; full year fiscal 2026: $2,864.0 to $2,870.0 million
- NoteThird quarter of fiscal 2026 non-GAAP income from operations: $129.0 to $130.0 million
- NoteThird quarter of fiscal 2026 non-GAAP net income per share: $0.34, utilizing weighted average common shares outstanding of approximately 374 million
- NoteFull year fiscal 2026 non-GAAP income from operations: $443.0 to $445.0 million
- NoteFull year fiscal 2026 non-GAAP net income per share: $1.25 to $1.26, utilizing weighted average common shares outstanding of approximately 374 million
What drove it
- Total revenue increased 36% year-over-year.
- Current RPO year-over-year growth was 35%.
- The CEO cited record growth in total paying customers, large customers, and developers on the platform.
- The CEO described demand associated with AI answer engines, agent-driven commerce, and machine-to-machine traffic.
Concerns
- GAAP loss from operations was $205.7 million, compared to $67.3 million in the second quarter of 2025.
- GAAP net loss was $170.0 million, compared to $50.4 million in the second quarter of 2025.
- GAAP gross margin was 71.8%, compared to 74.9% in the second quarter of 2025.
- Non-GAAP gross margin was 73.1%, compared to 76.3% in the second quarter of 2025.
- Non-GAAP income from operations as a percentage of revenue was 13.8%, compared to 14.1% in the second quarter of 2025.
What to watch
- Third quarter of fiscal 2026 total revenue guidance of $736.0 to $737.0 million.
- Third quarter of fiscal 2026 non-GAAP income from operations guidance of $129.0 to $130.0 million.
- Full year fiscal 2026 total revenue guidance of $2,864.0 to $2,870.0 million.
- The trajectory of GAAP and non-GAAP gross margins following year-over-year declines.
- Execution of the plan to further accelerate an evolution to an agentic AI-first operating model and align the organizational structure with that operating model.
Balance sheet and cash flow
- Net cash flow from operating activities was $117.6 million, compared to $99.8 million for the second quarter of 2025.
- Free cash flow was $56.4 million, or 8% of revenue, compared to $33.3 million, or 6% of revenue, in the second quarter of 2025.
- Cash, cash equivalents, and available-for-sale securities were $4,162.8 million as of June 30, 2026.
Analysis
Cloudflare reported second-quarter fiscal 2026 revenue of $696.1 million, up 36% year-over-year. Current RPO grew 35% year-over-year. Management highlighted record growth in total paying customers, large customers, and developers, and positioned AI answer engines, agent-driven commerce, and machine-to-machine traffic as important demand themes.
The profitability picture was mixed. GAAP gross margin was 71.8%, compared to 74.9% in the second quarter of 2025, while non-GAAP gross margin was 73.1%, compared to 76.3%. GAAP loss from operations expanded to $205.7 million from $67.3 million, and GAAP net loss expanded to $170.0 million from $50.4 million. Non-GAAP income from operations increased to $96.1 million from $72.3 million, although its percentage of revenue declined to 13.8% from 14.1%.
Cash generation improved year-over-year. Net cash flow from operating activities was $117.6 million compared to $99.8 million, and free cash flow was $56.4 million, or 8% of revenue, compared to $33.3 million, or 6% of revenue. Cash, cash equivalents, and available-for-sale securities were $4,162.8 million as of June 30, 2026. The release did not report debt, share repurchases, or dividends.
For the third quarter of fiscal 2026, Cloudflare expects revenue of $736.0 to $737.0 million and non-GAAP income from operations of $129.0 to $130.0 million. Full-year fiscal 2026 revenue guidance is $2,864.0 to $2,870.0 million, with non-GAAP income from operations of $443.0 to $445.0 million. The central reported issues are whether revenue and RPO growth remain durable, whether margins stabilize after their year-over-year declines, and whether the agentic AI-first operating-model transition delivers the expected benefits.
Management, verbatim
We delivered a stellar second quarter, highlighted by revenue accelerating to $696.1 million, up 36% year-over-year, and record growth in total paying customers, large customers, and developers on our platform.
Matthew Prince, co-founder & CEO of Cloudflare
As the web shifts to AI answer engines and agent-driven commerce, we are seeing a fundamental rewrite of the Internet for machine-to-machine traffic. Cloudflare sits at the center of this paradigm shift—building the infrastructure, controls, developer tools, and payment rails for the Agentic Internet. The business model of the web is changing, and no company is better positioned than Cloudflare to help define its future.
Matthew Prince, co-founder & CEO of Cloudflare
Not in the filing
stated, not guessed- Prior-quarter revenue, gross profit, gross margin, operating income or loss, net income or loss, EPS, operating cash flow, free cash flow, and cash balance.
- Prior-year total revenue dollar amount.
- Revenue by segment and segment growth metrics.
- GAAP operating expenses and operating-expense guidance.
- Debt balance and debt maturities.
- Share repurchases, dividends, and other capital-return activity.
- Third-quarter and full-year gross-margin guidance.
- Third-quarter and full-year tax-rate guidance.
- Prior-period guidance needed to compare actual results with prior guidance.
- CFO commentary.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is Cloudflare’s SEC Form 8-K (Item 2.02) reporting second quarter 2026 results and providing third-quarter and full-year 2026 financial outlook.
Ticker impact
Cloudflare reported Q2 2026 revenue of $696.1M (+36% YoY), GAAP operating loss of $205.7M, and issued Q3 and FY2026 guidance.
Likely volatility around the open as traders weigh strong top-line growth against continued GAAP losses and the specific guided non-GAAP profitability trajectory.
The filing includes concrete quarterly results (revenue, operating income/loss, net income/loss, cash flow) and forward-looking ranges for Q3 and FY2026, which are direct inputs to valuation and expectations.
Market effects
Cloudflare’s results and agentic-AI narrative may influence sentiment toward connectivity/security infrastructure names with similar cloud security and edge networking exposure.
Limited direct regional spillover; primarily impacts US-listed cloud infrastructure sentiment.
Moderate, as connectivity and edge security demand is globally relevant but the disclosure is company-specific.
Counterpoint
Investors may discount the non-GAAP improvement if GAAP operating losses remain large, focusing instead on margin durability and cash conversion.
Key entities
- public_companyCloudflare, Inc.
Subject of the 8-K, reporting Q2 2026 results and issuing Q3 and FY2026 guidance.
- executiveMatthew Prince
Co-founder and CEO quoted in the release discussing AI-driven internet traffic and Cloudflare’s positioning.
