Cloudflare Q3 revenue tops estimates, shares rise 9.9%

Cloudflare (NET) reported third-quarter revenue of $782.5 million, up 39% from a year earlier, and non-GAAP earnings of 38 cents per share. Both topped consensus estimates.

Shares rose 9.9% at 3:59 p.m. ET, from a $244.51 close.

Here's how the company did:

• Revenue: $782.5 million vs. $745.54 million expected, up from $562.0 million a year earlier
• Non-GAAP EPS: 38 cents vs. 35 cents expected, up from 27 cents a year earlier
• GAAP net loss: $34.1 million, or 10 cents per share, vs. $1.3 million a year earlier

Annualized revenue crossed $3 billion.

GAAP gross margin was 71.2%, down from 74.0% a year earlier. Non-GAAP income from operations was $137.1 million, or 17.5% of revenue, compared with $85.9 million a year earlier.

Revenue has risen in each of the last three quarters, from $562.0 million in the third quarter of 2025 to $696.1 million in the second quarter of 2026.

The net loss has widened in each of the last three quarters, from $1.3 million in the third quarter of 2025 to $170.0 million in the second quarter of 2026.

2026 guidance

For the fourth quarter, the company expects total revenue of $845.0 million to $846.0 million and non-GAAP income from operations of $156.0 million to $157.0 million.

It expects non-GAAP net income per share of $0.43, on about 379 million weighted average shares.

For the full year, the company expects revenue of $2,963.0 million to $2,964.0 million, about $2.96 billion, with non-GAAP income from operations of $462.0 million to $463.0 million.

It expects full-year non-GAAP net income per share of $1.35, on about 376 million weighted average shares.

Costs and charges

Restructuring and other charges were $11.0 million in the quarter and $161.7 million for the first nine months of 2026.

Stock-based compensation and related employer payroll taxes totaled $174.1 million in the quarter. Sales and marketing expense rose to $338.0 million from $236.3 million a year earlier.

Free cash flow was $82.1 million, or 10% of revenue, compared with $75.0 million a year earlier. Cash, cash equivalents and available-for-sale securities were $5.13 billion as of Sept. 30.

President of Revenue appointment

Cloudflare also appointed Christian Smith as President of Revenue, effective Nov. 2. Smith will lead the company's worldwide go-to-market organization, including global sales and revenue operations.

Smith most recently was an Operating Partner at Technology Crossover Ventures. Before that he was Senior Vice President and Chief Revenue Officer at Splunk.

Smith succeeds Mark Anderson, who had announced plans to retire at the end of 2026. Anderson will remain an advisor through December.