WS Investor
07 Aug 2026, 08:50
Cloudflare (NET) Stock Soars 15% as Q2 Revenue Growth Accelerates and AI Demand Strengthens
Cloudflare (NYSE: NET) shares surged about 15% in premarket trading on Friday after the company delivered strong second-quarter results, highlighted by accelerating revenue growth, expanding customer adoption, and an upbeat outlook.
Revenue reached $696.1 million, up 36% year over year, while current remaining performance obligations (RPO) also increased 35%, providing another strong indicator of future contracted revenue.
Revenue Growth Accelerates
Cloudflare reported broad-based growth across its platform, including record increases in total paying customers, large customers, and developers.
Key Q2 results included:
* Revenue: $696.1 million, +36% year over year
* Non-GAAP operating income: $96.1 million
* Non-GAAP EPS: $0.29, up from $0.21
* Free cash flow: $56.4 million, up from $33.3 million
* Current RPO growth: +35%
Cloudflare remained unprofitable on a GAAP basis, posting a $170 million net loss. Gross margin also declined year over year, but investors appear to be focusing more heavily on accelerating growth and improving cash generation.
AI Opportunity Adds to Optimism
CEO Matthew Prince emphasized Cloudflare's position in what he described as the emerging “Agentic Internet,” where AI agents increasingly interact directly with websites, applications, and other machines.
This could represent an important growth opportunity for Cloudflare because its global network already provides security, connectivity, developer infrastructure, and traffic management services. Rising AI-related internet traffic could therefore increase demand across multiple parts of its platform.
## Strong Outlook Supports the Rally
For Q3, Cloudflare expects revenue of $736 million to $737 million and non-GAAP EPS of $0.34. Full-year revenue is projected at $2.864 billion to $2.870 billion, with non-GAAP EPS of $1.25 to $1.26.
Friday's premarket rally suggests investors are particularly encouraged by the combination of accelerating revenue growth, strong bookings momentum, improving free cash flow, and Cloudflare's growing exposure to AI infrastructure demand.
Cloudflare (NYSE: NET) shares surged about 15% in premarket trading on Friday after the company delivered strong second-quarter results, highlighted by accelerating revenue growth, expanding customer adoption, and an upbeat outlook.
Revenue reached $696.1 million, up 36% year over year, while current remaining performance obligations (RPO) also increased 35%, providing another strong indicator of future contracted revenue.
Revenue Growth Accelerates
Cloudflare reported broad-based growth across its platform, including record increases in total paying customers, large customers, and developers.
Key Q2 results included:
* Revenue: $696.1 million, +36% year over year
* Non-GAAP operating income: $96.1 million
* Non-GAAP EPS: $0.29, up from $0.21
* Free cash flow: $56.4 million, up from $33.3 million
* Current RPO growth: +35%
Cloudflare remained unprofitable on a GAAP basis, posting a $170 million net loss. Gross margin also declined year over year, but investors appear to be focusing more heavily on accelerating growth and improving cash generation.
AI Opportunity Adds to Optimism
CEO Matthew Prince emphasized Cloudflare's position in what he described as the emerging “Agentic Internet,” where AI agents increasingly interact directly with websites, applications, and other machines.
This could represent an important growth opportunity for Cloudflare because its global network already provides security, connectivity, developer infrastructure, and traffic management services. Rising AI-related internet traffic could therefore increase demand across multiple parts of its platform.
## Strong Outlook Supports the Rally
For Q3, Cloudflare expects revenue of $736 million to $737 million and non-GAAP EPS of $0.34. Full-year revenue is projected at $2.864 billion to $2.870 billion, with non-GAAP EPS of $1.25 to $1.26.
Friday's premarket rally suggests investors are particularly encouraged by the combination of accelerating revenue growth, strong bookings momentum, improving free cash flow, and Cloudflare's growing exposure to AI infrastructure demand.
