TLDR
- Cloudflare reported Q4 2025 revenue of $614.5 million, a 34% year-over-year increase that surpassed the $591.3 million analyst forecast
- The company delivered $0.28 earnings per share, beating the $0.27 consensus, with a 74.9% gross margin and $89.6 million operating income
- Q1 2026 revenue is projected at $620-$621 million, above the $614 million estimate, but EPS guidance of $0.23 missed the $0.25 target
- Full-year 2026 revenue guidance of $2.785-$2.795 billion topped Wall Street’s $2.74 billion expectation driven by AI growth
- Shares jumped 16% in premarket trading as the customer base expanded to 4,298 accounts spending over $100,000 annually
Cloudflare shares soared nearly 16% in premarket trading Wednesday following Q4 2025 results that exceeded analyst predictions across key metrics.
The company posted revenue of $614.5 million for the quarter ending December 31. That represented 34% growth year-over-year and beat estimates of $591.3 million.
Earnings came in at $0.28 per share, topping the $0.27 Wall Street consensus. The stock gained 3.55% in aftermarket trading, closing at $179.50.
Cloudflare achieved a 74.9% gross margin during the quarter. Operating income reached $89.6 million with a 14.6% margin.
The company generated $99.4 million in free cash flow, equal to 16% of revenue. Strong performance across metrics demonstrated the business momentum.
Growing AI Adoption Powers Results
Businesses integrating AI technologies are increasing their reliance on cloud infrastructure services. Cloudflare’s network allows companies to deploy AI applications with enhanced speed and security.
CEO Matthew Prince highlighted how AI agents are transforming internet infrastructure requirements. This evolution is expanding the addressable market for Cloudflare’s offerings.
The company serves tools like “OpenClaw” that use its platform to create secure connections. These AI agents need robust infrastructure to function effectively at scale.
Cloudflare’s customer base now includes 4,298 accounts paying more than $100,000 annually. This segment grew 23% compared to the prior year.
2026 Outlook Exceeds Expectations
The company projects Q1 2026 revenue between $620 million and $621 million. That guidance tops the $614 million consensus estimate and indicates 29-30% growth.
Cloudflare forecasts adjusted earnings of $0.23 per share for the first quarter. That came in below analyst expectations of $0.25 per share.
Full-year 2026 revenue is expected to land between $2.785 billion and $2.795 billion. The midpoint of $2.79 billion beats Wall Street’s $2.74 billion forecast.
The company anticipates operating income of $378-$382 million for 2026. Management expressed confidence in capturing market opportunities.
Wall Street Perspective
Analysts maintain a Moderate Buy rating on NET stock according to TipRanks consensus. The rating combines 12 Buy recommendations, five Hold ratings, and one Sell rating.
The average price target sits at $225.67 among covering analysts. That represents potential upside of 25.4% from recent trading levels.
Strong margins and expanding enterprise customer adoption support bullish views. The AI infrastructure buildout continues to create tailwinds for cloud service providers like Cloudflare.
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