Cloudflare Q4 Earnings Beat, AI Lifts 2026 Outlook

Cloudflare (NET) reported fourth-quarter 2025 revenue of $614.5 million on Feb. 10, 2026, a 34.0% increase year-over-year that topped the $591.3 million consensus. The company raised its 2026 revenue outlook, citing strong demand from artificial-intelligence workloads and a record annual contract that management said supports near-term growth.

Strong Quarter and Raised Outlook

Cloudflare posted non-GAAP net income per share of $0.28, surpassing the $0.16 consensus and marking its seventh consecutive quarterly earnings-per-share beat. The company raised full-year 2026 revenue guidance to $2.785 billion–$2.795 billion, above the roughly $2.74 billion expected, while setting non-GAAP EPS guidance of $1.11–$1.12, below the consensus near $1.19. Shares jumped about 14% in premarket trading on Feb. 11.

For the first quarter of 2026, Cloudflare forecast revenue of $620.0 million–$621.0 million, beating the consensus near $613.9 million. It projected non-GAAP income from operations of $70.0 million–$71.0 million and non-GAAP net income per share of $0.23 on roughly 377 million weighted average shares, below the $0.25 consensus.

AI Demand and Financial Strength

Management attributed the quarter’s results and the raised outlook to AI-driven demand for cloud infrastructure and a surge in large enterprise deals. The company closed its largest annual contract ever, averaging $42.5 million per year, while total new annual contract value grew about 50.0% year-over-year, the fastest pace since 2021. Remaining performance obligations rose 48.0% year-over-year, and current remaining performance obligations increased 34.0%, metrics the company cited to support durable revenue momentum. Chief Executive Matthew Prince said, "The shift toward AI and agents represents a fundamental re-platforming of the Internet that's driving demand across Cloudflare's services."

Cloudflare ended 2025 with $4.1 billion in cash and equivalents. It generated $603.1 million of operating cash flow and $260.6 million of free cash flow, about 12.0% of revenue. Non-GAAP gross margins contracted 270–290 basis points year-over-year in both the quarter and full year, reflecting higher costs relative to sales growth. Non-GAAP operating margins remained near 14.0%, at 14.6% in the quarter and 14.0% for the full year.

The results and raised revenue outlook highlight Cloudflare’s position to capture increased AI traffic and larger enterprise deals, even as margin compression and an EPS outlook below consensus raise questions about valuation and sustainability.