Cloudflare Q3 Results Lift Outlook
Cloudflare Q3 Results show record revenue acceleration and a raised full-year outlook, prompting traders to rebalance exposure amid mixed GAAP signals.
KEY TAKEAWAYS
- Q3 revenue rose 39.2% to $782.5 million and annualized revenue exceeded $3.0 billion.
- Management raised full-year revenue guidance to $2.963-$2.964 billion.
- Company said it expects to achieve GAAP profitability in Q4 2026.
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Cloudflare, Inc. (NET) reported third-quarter 2026 results on Nov. 5, showing accelerating revenue growth that prompted management to raise its full-year outlook. The company signaled stronger enterprise demand despite mixed GAAP profitability.
Revenue and Guidance
For the quarter ended Sept. 30, 2026, Cloudflare reported revenue of $782.5 million, up 39.2% year over year. Management said annualized revenue exceeded $3 billion during the period. The company raised its full-year revenue guidance to a range of $2.963 billion to $2.964 billion. CEO Matthew Prince said, "The third quarter was Cloudflare’s best quarter ever."
Profitability, Cash Flow, and Customers
On a non-GAAP basis, Cloudflare posted diluted earnings per share of $0.38, up from $0.27 a year earlier. Adjusted operating income rose to $137.1 million, or 17.5% of revenue, compared with $85.9 million, or 15.3%, in the prior-year quarter. On a GAAP basis, the operating loss widened to $67.9 million, and the net loss was $34.1 million, or $0.10 per diluted share, compared with a $1.3 million loss in the year-earlier period.
Gross margin narrowed to 72.4%, down 70 basis points sequentially and 290 basis points year over year. The company generated $82.1 million of free cash flow, about 10% of revenue, and $215.4 million of operating cash flow. Billings at quarter-end reached $846.2 million, up 35.5% year over year. Current remaining performance obligations (cRPO)—contracted revenue expected within the next year—increased 37%, while customers generating more than $100,000 in annual revenue rose 25%. Stock-based compensation totaled $174.1 million, and restructuring charges were $11.0 million.
Cloudflare filed its Form 10-Q with the Securities and Exchange Commission for the quarter ended Sept. 30, 2026. Its Form 8-K confirmed the appointment of Christian Smith as president of revenue, effective Nov. 2, 2026.
Management said it expects to achieve GAAP profitability in the fourth quarter of 2026, moving that milestone earlier than the previous Investor Day framework, which had targeted no later than 2028.
