Cloudflare posts its fastest growth in nearly 4 years and lifts its outlook

Cloudflare’s third-quarter revenue rose 39% from a year earlier to $782.5M, taking its annualised revenue past $3bn. The company reported the results on Thursday and raised its forecasts for the full year.

Co-founder and chief executive Matthew Prince called it “Cloudflare’s best quarter ever”. Revenue grew at its fastest pace in nearly four years.

“Our engine is firing on all cylinders, and we’ve found an even higher gear for this next phase of growth,” Prince said in a statement.

Cloudflare now expects 2026 revenue of $2.963bn to $2.964bn. Its earlier range was $2.86bn to $2.87bn, The Wall Street Journal reported. It also expects adjusted earnings of $1.35 a share, up from $1.25 to $1.26. Bloomberg noted that this is Cloudflare’s third profit forecast raise this year. Analysts had expected $1.27.

For the fourth quarter, Cloudflare expects revenue of $845M to $846M and adjusted earnings of 43 cents a share.

Its shares jumped about 15% in after-hours trading. In the regular session they had fallen 8%, as the AI stocks sell-off deepened.

A profit, adjusted

On an adjusted basis, Cloudflare made an operating profit of $137.1M. Its adjusted margin rose to 17.5%, from 15.3% a year earlier. Under standard accounting rules (GAAP), it made an operating loss of $67.9M. Its net loss was $34.1M, against $1.3M a year earlier.

The gap is mostly stock-based pay, which came to $174.1M with related payroll taxes. The quarter also carried $11M of restructuring charges, which reached $161.7M over nine months. They follow the 1,100 job cuts Cloudflare announced in May.

Free cash flow was $82.1M, or 10% of revenue, down from 13%. Current remaining performance obligations, the contracted revenue due within a year, grew 37%.

Prince’s warnings on the call

On the earnings call, Prince said the recent PHP flaws had been “in the wild for years”, Simon Sharwood reported for The Register. Cloudflare saw millions of attempts to exploit the PHP2Shell flaws after their disclosure last month.

“We’re going back through our logs looking for any evidence that hackers or nation-state actors or others had been using them in the past. I know that we’re going to find examples of that,” Prince said.

He added that some customers see AI agents as “a bane to their business” and want to keep them away. About 5% of the web had opted in to Cloudflare’s content protection products since 1 July, he said. Meta is a customer. Prince has said before that bots could outnumber people online by 1,000 to one.

“It may seem like the sky is falling with the number of new security vulnerabilities that have been reported over the last few weeks. I wish I could tell you we were through the worst, but we’re not,” he said.

A new revenue chief

Cloudflare also named Christian Smith as President of Revenue, to lead its global sales. His task is to take Cloudflare to $5bn in annual recurring revenue and beyond. Smith was chief revenue officer at Splunk and sits on the boards of Atlassian and Feedzai. He succeeds Mark Anderson, who retires from the role at the end of the year. Anderson will stay on as an adviser until December.