Cloudflare (NYSE:NET) posted better-than-expected quarterly results on Tuesday, with revenue guidance for both the current quarter and full-year 2026 coming in ahead of Wall Street forecasts.
Class A shares of the cloud networking and cybersecurity company climbed more than 14% in premarket trading on Wednesday following the announcement.
Cloudflare operates one of the largest global internet networks, providing infrastructure that helps businesses build, secure, and accelerate websites. The company says it handles tens of millions of HTTP requests per second and offers services ranging from content delivery network (CDN) optimization to protection against cyber threats such as DDoS attacks.
Investor attention has increasingly focused on Cloudflare’s role in the emerging agentic AI landscape — systems capable of executing tasks with limited human oversight. Shares rallied in late January amid enthusiasm around Clawbbot, an open-source AI agent, which fueled optimism about Cloudflare’s edge computing capabilities.
For the fourth quarter of 2025, the San Francisco-based firm reported adjusted earnings of $0.28 per share, one cent above estimates, on revenue of $614.50 million. Analysts had expected revenue of $591.43 million.
“We had an exceptionally strong end to 2025. In Q4, we closed our largest annual contract value deal ever—averaging $42.5 million per year—and total new ACV grew nearly 50 percent year-over-year, our fastest growth rate since 2021,” CEO Matthew Prince said.
“The shift toward AI and agents represents a fundamental re-platforming of the Internet that’s driving demand across Cloudflare’s services. If agents are the new users of the web, Cloudflare is the platform they run on and the network they pass through,” he added.
Looking ahead, Cloudflare expects first-quarter 2026 revenue between $620 million and $621 million, exceeding the consensus estimate of $615.50 million. Adjusted earnings per share are projected at $0.23, below the $0.25 expected by analysts.
For full-year 2026, the company forecast revenue of $2.79 billion to $2.80 billion, topping market expectations of $2.74 billion. Adjusted EPS is anticipated in the range of $1.11 to $1.12, compared with the $1.19 consensus.
Bank of America analysts described the update as “record 4Q, record year, continued acceleration into FY26.”
“With a current valuation of 23x NTM sales, Cloudflare is the second most expensive software stock behind Palantir, however the company is uniquely positioned to service exploding AI traffic demands and should be a meaningful beneficiary as AI continues to move to inference,” they wrote.
Cloudflare’s results arrive after a period of underperformance, with the stock down 8.7% year-to-date compared to a 1.4% gain for the S&P 500.
“NET…has not been immune to the broader selloff in software (IGV down 21% YTD vs up 6% in CY25), given its premium multiple,” Jefferies analysts led by Joseph Gallo noted in a preview report last week.
“We still view NET as a beneficiary of greater AI adoption, with NET estimating that ~80% of the leading AI companies use its solutions, which positions it well to benefit via both its inference network at the edge and its AI Workers development platform,” they added.
Separately, Baird analysts upgraded the stock to Outperform after the earnings release, emphasizing that “Q4 marked the strongest confirmation yet that multiple growth-vectors are now compounding simultaneously.”