Cloudflare second quarter results boosted by strong AI demand

Cloudflare (NYSE:NET) shares were set to open sharply higher on Friday after the cloud connectivity company reported second quarter results that topped analyst expectations and issued stronger-than-expected guidance for the current quarter.

Shares of Cloudflare were indicated to open about 15% higher following the results.

Cloudflare reported adjusted earnings of $0.29 per share for the second quarter, compared with analyst estimates of $0.27, while revenue rose 36% year over year to $696.1 million, ahead of consensus expectations of $665.5 million.

The company attributed the growth to continued demand across its platform, including from AI-driven infrastructure needs. Current remaining performance obligations grew 35% year over year, while Cloudflare also reported record growth in total paying customers, large customers and developers on its platform.

“We delivered a stellar second quarter, highlighted by revenue accelerating to $696.1 million, up 36% year-over-year, and record growth in total paying customers, large customers, and developers on our platform,” said Matthew Prince, co-founder and CEO of Cloudflare.

“The business model of the web is changing, and no company is better positioned than Cloudflare to help define its future.”

Cloudflare posted GAAP gross profit of $499.5 million, compared with $383.6 million a year earlier, while GAAP gross margin declined to 71.8% from 74.9%.

GAAP loss from operations widened to $205.7 million, or 29.6% of revenue, from $67.3 million, or 13.1% of revenue, a year earlier. On a non-GAAP basis, operating income increased to $96.1 million from $72.3 million.

GAAP net loss was $170 million, compared with a loss of $50.4 million in the second quarter of 2025. Non-GAAP net income rose to $107.8 million from $75.1 million, while non-GAAP net income per diluted share increased to $0.29 from $0.21.

Operating cash flow was $117.6 million, up from $99.8 million a year earlier, while free cash flow increased to $56.4 million from $33.3 million.

For the third quarter, Cloudflare expects revenue of $736 million to $737 million, above analyst estimates of $722.1 million. The company expects adjusted earnings of $0.34 per share, compared with the $0.32 consensus estimate.

Cloudflare also expects third-quarter non-GAAP operating income of $129 million to $130 million, using weighted average common shares outstanding of approximately 374 million.