NEW YORK, August 6, 2026, 17:11 EDT
- Cloudflare NYSE:NET gained 17.8%, reaching $335 in after-hours trading.
- Revenue for the second quarter increased by 36%, surpassing consensus estimates by 4.7%.
- According to FactSet NYSE:FDS, the quote surpassed its previous high target set before the results.
Cloudflare stock jumped after the company reported faster revenue growth and executives lifted the outlook for 2026. The shares hit $335 at 5:08 p.m. EDT, after ending regular trading down 2.9% at $284.43. U.S. markets had closed, but shares continued trading after hours.
The surge sent Cloudflare shares past FactSet’s top price target of $330 and lifted the stock to 15.5% over the consensus target of $290.
Based on Cloudflare’s June 30 share tally, the decision boosted implied equity value by about $18 billion. That amount represents nearly 310 times the $58 million rise in full-year revenue outlook. This calculation is a straightforward sensitivity analysis rather than a valuation framework. It indicates investors are expecting significant growth past 2026.
Short-term numbers indicate continued easing. The outlook for the third quarter points to revenue growth of roughly 31%, down from 36% in the second quarter. Adjusted gross margin declined by 3.2 percentage points.
The company outperformed in the second quarter, with revenue, adjusted earnings, and free cash flow all surpassing figures from the same period a year earlier.
| Second-quarter metric | Q2 2026 | Benchmark | Change |
|---|---|---|---|
| Revenue | $696.1 million | $664.7 million consensus | 4.7% above; up 36% |
| Adjusted EPS | $0.29 | $0.27 consensus | 7.4% over; up 38% |
| Current RPO growth | 35% | 33% one year earlier | 2 percentage points higher |
| Free cash flow | $56.4 million | $33.3 million one year earlier | Increase of 69% |
| Free-cash-flow margin | 8% | 6% one year earlier | 2 percentage points higher |
| Adjusted gross margin | 73.1% | 76.3% one year earlier | Drop of 3.2 points |
| Adjusted operating margin | 13.8% | 14.1% one year earlier | Decrease of 0.3 points |
Company data and analyst forecasts for Wall Street; changes based on published information.
CEO Matthew Prince described the move to AI answer engines and agent commerce as “a fundamental rewrite of the Internet for machine-to-machine traffic.” Prince stated that Cloudflare is developing infrastructure, controls, developer tools, and payment systems to support this market. Business Wire
GAAP operating loss increased to $205.7 million, with the total reflecting $150.7 million in restructuring and related charges. Stripping out certain items, operating income climbed 33% to $96.1 million.
Cloudflare’s AI-driven restructuring, announced in May, led to the charges. The initiative meant eliminating roughly 20% of staff, totaling over 1,100 jobs.
Management increased all main full-year metrics, while guidance for third-quarter revenue and profit also exceeded forecasts set before the results.
| Outlook measure | Previous benchmark | New guidance | Midpoint change |
|---|---|---|---|
| Q3 revenue | $721.3 million consensus | $736 million-$737 million | 2.1% over consensus |
| Q3 adjusted EPS | $0.32 consensus | $0.34 | 6.3% higher than consensus |
| FY revenue | $2.805 billion-$2.813 billion | $2.864 billion-$2.870 billion | Increase of $58 million, or 2.1% |
| FY adjusted operating income | $418 million-$421 million | $443 million-$445 million | Increase of $24.5 million, or 5.8% |
| FY adjusted EPS | $1.19-$1.20 | $1.25-$1.26 | Increase of $0.06, or 5.0% |
Third-quarter figures are compared with consensus ahead of the results. Full-year figures are compared with previous company guidance.
The midpoint for third-quarter operating income suggests a 17.6% adjusted margin, roughly 3.8 percentage points higher than the previous quarter. The quicker rise in profit guidance signals improved operating leverage following restructuring.
Valuation continues to be the main point of discussion. At $335, Cloudflare’s implied equity was around 42 times the updated 2026 revenue midpoint, based on shares outstanding as of June 30.
| Market and valuation comparison | Value | Difference at $335 |
|---|---|---|
| Thursday’s closing price | $284.43 | Shares rise 17.8% after hours |
| Highest price in prior 52 weeks | $305.00 | 9.8% above this level |
| FactSet analysts’ median forecast | $290.00 | 15.5% above |
| FactSet analysts’ highest forecast | $330.00 | 1.5% above this mark |
| Resulting equity value | About $119.2 billion | Gains about $18.0 billion |
| Equity value relative to FY revenue midpoint | About 41.6 times | — |
Cloudflare’s equity values are based on its Class A and Class B share figures as of June 30.
FactSet data showed analysts favored the stock ahead of the results, recording 26 buy or overweight ratings, while 11 recommended neutral or negative positions.
| Analyst recommendation | Three months ago | One month ago | Current |
|---|---|---|---|
| Buy | 19 | 21 | 21 |
| Overweight | 5 | 5 | 5 |
| Hold | 11 | 9 | 8 |
| Underweight | 0 | 0 | 1 |
| Sell | 2 | 2 | 2 |
| Consensus | Overweight | Overweight | Overweight |
FactSet recommendation figures shown following the end of regular trading on Thursday.
The response stood in contrast to Datadog NASDAQ:DDOG, another cloud infrastructure firm that reported Thursday. Datadog similarly achieved 36% revenue growth and exceeded expectations. However, its shares dropped 19.1% as investors concentrated on reduced usage by a major AI customer and forecasts for slower growth.
Cloudflare rose 20.1% from its closing price on July 31 to Thursday’s post-market level. Key upcoming events include the July employment report due on Friday, with the CPI set for August 12 and producer prices expected August 13.
Risks: The after-hours price surpassed all FactSet forecasts before results. Gross margin narrowed, and third-quarter growth guidance indicates a slowdown. Execution continues to face challenges from the workforce restructuring and software valuations impacted by interest rates.
Related articles: NYSE:NET
