Cloudflare (NET) quarter year Cloudflare Financial Results Summary
· Stocks · QuoteReporter
Cloudflare (NET) Q2 2026: Revenue Growth Accelerates, Losses Widen — Cautiously Optimistic
Cloudflare, Inc. (NYSE: NET) reported its second-quarter financial results for the period ending June 30, 2026, showcasing a significant revenue increase but also a notable widening of losses compared to the previous year.
Key Financial Metrics
- Revenue: $696.1 million, up $183.8 million or +36% year-over-year.
- GAAP Loss from Operations: $205.7 million, compared to a loss of $67.3 million in Q2 2025.
- Non-GAAP Income from Operations: $96.1 million, down from $72.3 million in Q2 2025.
- GAAP Net Loss: $170.0 million, compared to a loss of $50.4 million in Q2 2025.
- GAAP Net Loss per Share: $0.48, compared to $0.15 in Q2 2025.
- Free Cash Flow: $56.4 million, or 8% of revenue, compared to $33.3 million, or 6% of revenue in Q2 2025.
- Current RPO Growth: 35% year-over-year.
Analyst View
This quarter presents a mixed bag for shareholders. On one hand, the revenue growth of $183.8 million or +36% year-over-year is a strong indicator of Cloudflare's expanding market presence and demand for its services. The company has also reported record growth in total paying customers, large customers, and developers on its platform, which is promising for future revenue streams.
However, the widening GAAP loss from operations to $205.7 million, up from $67.3 million last year, raises concerns about the company's cost management and operational efficiency. The increase in losses, despite revenue growth, suggests that Cloudflare is investing heavily in its growth strategy, which may not yield immediate returns. The non-GAAP income from operations also decreased slightly, indicating that operational profitability is under pressure.
Dividend and Share Buyback
There were no announcements regarding dividends or share buybacks in this quarter's report, which may be a point of concern for income-focused investors.
Guidance
Looking ahead, Cloudflare provided guidance for the third quarter of fiscal 2026, expecting:
- Total Revenue: $736.0 to $737.0 million.
- Non-GAAP Income from Operations: $129.0 to $130.0 million.
- Non-GAAP Net Income per Share: $0.34.
For the full year fiscal 2026, the company anticipates:
- Total Revenue: $2,864.0 to $2,870.0 million.
- Non-GAAP Income from Operations: $443.0 to $445.0 million.
- Non-GAAP Net Income per Share: $1.25 to $1.26.
Forward Catalyst
Investors should closely monitor Cloudflare's ability to convert its growing customer base into sustainable profitability in the coming quarters. The company's focus on AI-driven solutions and its positioning in the evolving internet landscape could provide significant growth opportunities. Additionally, the management's execution on cost control and operational efficiency will be critical in determining whether the current trajectory can lead to improved margins and reduced losses in future reports.
In summary, while the revenue growth is encouraging, the widening losses and operational challenges present a cautious outlook for shareholders. The upcoming quarters will be pivotal in assessing Cloudflare's ability to balance growth with profitability.
Note: The amounts in the following tables are in thousands.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended | June 30, 2026 | June 30, 2025 | Six Months Ended | June 30, 2026 | June 30, 2025 |
|---|---|---|---|---|---|
| Revenue | $696,061 | $512,316 | Revenue | $1,335,821 | $991,403 |
| Cost of revenue | $196,544 | $128,677 | Cost of revenue | $380,702 | $244,253 |
| Gross profit | $499,517 | $383,639 | Gross profit | $955,114 | $747,150 |
| Operating expenses | |||||
| Sales and marketing | $276,122 | $219,359 | Sales and marketing | $547,722 | $433,370 |
| Research and development | $159,486 | $134,557 | Research and development | $310,458 | $249,646 |
| General and administrative | $118,912 | $96,987 | General and administrative | $213,931 | $184,645 |
| Restructuring and other charges | $150,693 | $— | Restructuring and other charges | $150,693 | $— |
| Total operating expenses | $705,213 | $450,903 | Total operating expenses | $1,222,804 | $867,661 |
| Loss from operations | $-205,652 | $-67,264 | Loss from operations | $-267,690 | $-120,568 |
| Non-operating income (expense) | |||||
| Interest income | $39,932 | $25,406 | Interest income | $80,098 | $46,805 |
| Interest expense | $-3,089 | $-1,524 | Interest expense | $-5,652 | $-2,967 |
| Other income (expense), net | $913 | $-3,907 | Other income (expense), net | $3,903 | $-7,375 |
| Total non-operating income | $37,756 | $19,975 | Total non-operating income | $78,349 | $36,463 |
| Loss before income taxes | $-167,896 | $-47,289 | Loss before income taxes | $-189,341 | $-84,048 |
| Provision for income taxes | $2,041 | $3,157 | Provision for income taxes | $3,567 | $4,852 |
| Net loss | $-169,937 | $-50,446 | Net loss | $-192,908 | $-88,900 |
| Net loss per share attributable to common stock | $-0.48 | $-0.15 | Net loss per share attributable to common stock | $-0.55 | $-0.26 |
| Weighted-average shares used to compute net loss per share, basic and diluted | 354,334 | 347,489 | Weighted-average shares used to compute net loss per share, basic and diluted | 353,485 | 346,605 |
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2026 | December 31, 2025 | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $1,663,773 | $943,536 |
| Available-for-sale securities | $2,499,025 | $3,157,715 |
| Accounts receivable, net | $422,945 | $382,488 |
| Contract assets | $27,187 | $23,531 |
| Restricted cash short-term | $12,163 | $9,364 |
| Prepaid expenses and other current assets | $153,282 | $128,203 |
| Total current assets | $4,778,375 | $4,644,837 |
| Property and equipment, net | $703,209 | $618,691 |
| Goodwill | $376,204 | $226,563 |
| Acquired intangible assets, net | $57,369 | $41,799 |
| Operating lease right-of-use assets | $247,675 | $237,646 |
| Deferred contract acquisition costs, noncurrent | $240,523 | $219,499 |
| Restricted cash | $— | $1,457 |
| Other noncurrent assets | $70,772 | $45,764 |
| Total assets | $6,474,127 | $6,036,256 |
| Liabilities and Stockholders’ Equity | ||
| Current liabilities: | ||
| Accounts payable | $127,032 | $84,115 |
| Accrued expenses and other current liabilities | $165,788 | $109,054 |
| Accrued compensation | $151,528 | $111,005 |
| Operating lease liabilities | $78,239 | $70,901 |
| Deferred revenue | $812,187 | $684,207 |
| Current portion of convertible senior notes, net | $1,293,260 | $1,291,281 |
| Total current liabilities | $2,628,034 | $2,350,563 |
| Convertible senior notes, net | $1,977,006 | $1,974,120 |
| Operating lease liabilities, noncurrent | $180,845 | $182,025 |
| Deferred revenue, noncurrent | $40,252 | $41,088 |
| Other noncurrent liabilities | $27,970 | $29,337 |
| Total liabilities | $4,854,107 | $4,577,133 |
| Stockholders’ Equity | ||
| Class A common stock; $0.001 par value; 2,250,000 shares authorized as of June 30, 2026 and December 31, 2025; 322,176 and 317,319 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | ||
Class B common stock; $0.001 par value; 315,000 shares authorized as of June 30, 2026 and December 31
DisclaimerThe content on MarketsFN.com is provided for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or trading guidance. All investments carry risk and past performance does not guarantee future results. You are solely responsible for your investment decisions and should conduct independent research and consult a qualified financial advisor before acting. MarketsFN.com and its authors are not liable for any losses or damages arising from the use of this information. Related Articles
| ||