Cloudflare, Inc.

(New York Stock Exchange)
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Bullish +65

Why Did Cloudflare Stock Jump?

Earnings report New AI features AI-generated analysis

📈 Cloudflare shares climbed 79.7% from January to October 2026, outpacing the S&P 500's 12.5% return.

💰 The company generated $696 million in sales during the second quarter of fiscal 2026.

🚀 Revenue grew 35.9% year-over-year, accelerating from a 27.8% pace in the same period last year.

🤝 Cloudflare closed its largest deal on record with an average annual contract value of $42.5 million.

👥 The number of customers paying over $100,000 annually increased by 27% compared to a year earlier.

🛠️ Management credits the rapid growth specifically to its Workers developer platform.

📉 Cloudflare posted an operating loss equal to 8.1% of revenue for the twelve months ending June 2026.

💸 The reported net loss widened to $170 million in Q2 due to $151 million in restructuring charges.

🎯 Management maintains a target to reach GAAP profitability by the end of 2028 at the latest.

📊 Investors are paying 45.0 times Cloudflare's trailing twelve-month sales as of October 28, 2026.

🔮 The current share price assumes developers and AI companies will sustain fast enough growth for profitability.

⚠️ Management noted that a shift toward consumption-based deals makes quarterly forecasting more difficult.

Bullish Signals
  • Cloudflare shares surged 79.7% over eight months, significantly outperforming the S&P 500's 12.5% return.
  • Second-quarter sales reached $696 million, marking a 35.9% year-over-year revenue increase.
  • The company secured its largest deal on record with an average annual contract value of $42.5 million.
  • High-value customer base expanded rapidly, with customers paying over $100,000 annually climbing 27%.
  • Management attributes growth acceleration to the rapid adoption of its Workers developer platform.
  • Operating loss margin narrowed to 8.1% of revenue from 9.9% a year prior despite restructuring costs.
Risk Factors
  • The company reported a net loss of $170 million in Q2, driven by $151 million in severance and restructuring charges.
  • Cloudflare has posted an operating loss for every twelve-month period since June 2019, with no GAAP profit yet.
  • The stock price has risen based on expectations of future profitability rather than current earnings beats.
  • Management warned that a shift toward pool-of-funds and consumption-based deals makes revenue forecasting harder.
Full Analysis
Cloudflare (NET) shares surged 79.7% between January and October 2026, significantly outperforming the S&P 500, driven by accelerating revenue growth and a strategic partnership with OpenAI. The stock price has incorporated expectations that the company will achieve GAAP profitability by the end of 2028, despite recent volatility including a 23.6% drop following a staff reduction announcement in May. Financially, Cloudflare reported $696 million in sales for the second quarter of fiscal 2026, representing a 35.9% year-over-year increase compared to 27.8% growth the prior year. The company is securing larger contracts, with its largest deal averaging $42.5 million annually and the number of high-value customers rising 27%. Management attributes this expansion primarily to rapid adoption of its Workers developer platform. Despite strong top-line growth, Cloudflare continues to operate at a loss, posting an operating margin of -8.1% for the twelve months ending June 2026, which has narrowed from -9.9% the previous year. The reported net loss widened to $170 million in Q2 due to $151 million in restructuring charges, though executives estimate the core business loss was only roughly $18 million without these one-time expenses. Investors are currently valuing Cloudflare at 45.0 times its trailing twelve-month sales, a multiple that has climbed from 34.6x by June due to rising share prices rather than new earnings data. While the company has not yet broken out revenue by product line, the Workers platform is becoming a meaningful contributor. Analysts and management are watching the upcoming November report for further clarity on operating margins as the path to profitability continues.