NEW YORK, August 7, 2026, 07:00 EDT (U.S. premarket)
- U.S. cash trading had not opened. Shares were $329.10, up 15.7%, at 06:56 EDT.
- The annual revenue midpoint rose $58 million. About $26.4 million of that lifts the second-half plan.
- Preliminary calculations imply $794.6 million of fourth-quarter revenue and a 40.7-times sales valuation.
Cloudflare, Inc. NYSE:NET surged 15.7% before Friday’s open after second-quarter revenue growth accelerated to 36%. The company also lifted annual guidance above analysts’ average estimate.
The guidance bridge matters most. Second-quarter revenue beat Cloudflare’s prior midpoint by $31.6 million. Yet the full-year midpoint rose $58 million. That leaves $26.4 million of added revenue in the second half, by calculation.
Quarterly scorecard
| Metric | Q2 2026 | Benchmark | Gap or change |
|---|---|---|---|
| Revenue | $696.1 mln | $665.5 mln consensus | +4.6% |
| Adjusted EPS | $0.29 | $0.27 consensus | +7.4% |
| Revenue growth | 36% | 34% in Q1 | +2 points |
| Free cash flow | $56.4 mln | $33.3 mln in Q2 2025 | +69% |
| Large customers | 4,698 | Year-earlier count | +27% |
Revenue grew 8.8% sequentially. U.S. sales rose 41% from a year earlier. Europe, Middle East and Africa gained 30%, while Asia-Pacific rose 32%.
Expansion indicators strengthened too. Dollar-based net retention reached 120%, up two points sequentially. Cloudflare added 282 large customers and more than 80,000 paying customers.
Demand and efficiency trend
| Metric | Q1 2026 | Q2 2026 | Change |
|---|---|---|---|
| Revenue growth | 34% | 36% | +2 points |
| Large-customer growth | 25% | 27% | +2 points |
| Dollar-based net retention | 118% | 120% | +2 points |
| Non-GAAP gross margin | 72.8% | 73.1% | +0.3 point |
| Current RPO growth | 34% | 35% | +1 point |
Chief Executive Matthew Prince said the web faced a “fundamental rewrite of the Internet for machine-to-machine traffic.” More than half of Cloudflare’s network traffic was non-human during the quarter. The company counted over 7.4 million developers on its platform. StockAnalysis
The third-quarter revenue midpoint is $736.5 million, versus roughly $722.6 million expected. Full-year guidance rose to $2.864 billion-$2.870 billion from $2.805 billion-$2.813 billion. The new range also exceeded the prior analyst average near $2.81 billion.
Revenue guidance bridge
| Calculation | Result |
|---|---|
| Full-year midpoint increase | $58.0 mln |
| Q2 actual above prior Q2 midpoint | $31.6 mln |
| Residual added to second half | $26.4 mln |
| New second-half revenue implied | $1.5311 bln |
| Q3 guidance midpoint | $736.5 mln |
| Q4 revenue implied | $794.6 mln |
| Implied Q4 sequential growth | 7.9% |
*Preliminary calculations using company guidance midpoints. Cloudflare did not issue separate fourth-quarter revenue guidance.
The implied fourth-quarter figure is 7.9% above the third-quarter midpoint. That suggests continued momentum, not only a one-quarter timing benefit. It remains a preliminary estimate.
The premarket move added about $15.9 billion of equity value. Using 354.94 million basic shares, the total reached roughly $116.8 billion. That equals 40.7 times the 2026 revenue midpoint. Investors are pricing a multiyear AI benefit, not merely a $58 million revision.
Wall Street moved quickly. Seven firms raised targets before 07:00 EDT. Their new targets averaged about $371, or 12.8% above the premarket quote.
Analyst recommendations after Q2
| Firm | Recommendation | Old target | New target | Upside vs $329.10 |
|---|---|---|---|---|
| Wells Fargo NYSE:WFC | Overweight | $300 | $380 | 15.5% |
| Jefferies NYSE:JEF | Hold | $290 | $350 | 6.4% |
| Goldman Sachs NYSE:GS | Buy | $266 | $389 | 18.2% |
| KeyBanc / KeyCorp NYSE:KEY | Overweight | $300 | $375 | 14.0% |
| Citizens NYSE:CFG | Outperform | $330 | $394 | 19.7% |
| Barclays LON:BARC | Overweight | $300 | $355 | 7.9% |
| TD Cowen / Toronto-Dominion (TSE:TD) | Buy | $300 | $355 | 7.9% |
A broader consensus page still showed a $310 median target and an Overweight rating. Friday’s premarket quote stood 6.2% above that median. The fresh target cluster ranged from $350 to $394. The broader consensus had not yet captured every morning revision.
Wells Fargo analyst Ryan MacWilliams tied the quarter to rapid platform consumption and large-customer momentum. Jefferies analyst Joseph Gallo raised his target but retained a Hold rating. The split captures the price-versus-execution debate.
The earnings read-through reached Palo Alto Networks NASDAQ:PANW, which gained 3% premarket. Cloudflare’s much larger move suggests the surprise was mainly company-specific.
Through Thursday’s close, Cloudflare gained 2.0% from July 31. The premarket quote put it 18.0% above last Friday. It also stood 7.9% above the prior regular-session high. Management’s next disclosed investor appearance is August 24, leaving next week focused on estimate revisions and trading follow-through.
Cloudflare ended June with $4.16 billion in cash and securities. Remaining performance obligations reached $2.732 billion, up 38%. Free-cash-flow margin improved to 8% from 6%.
Risks: The valuation leaves little room for slower usage or weaker renewals. GAAP gross margin fell 3.1 points from a year earlier. The GAAP net loss widened to $170 million, while the quarter included $151 million of restructuring charges. Premarket gains may also fade when full liquidity returns.
The next test is the guided 31% third-quarter growth. Retention must hold near 120%, and fourth-quarter sales must approach the implied $795 million. At Friday’s premarket price, continued acceleration is already embedded.
Related articles: NYSE:NET
