Cloud security and performance company Cloudflare (NYSE: NET) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 35.9% year on year to $696.1 million. Guidance for next quarter’s revenue was optimistic at $736.5 million at the midpoint, 2.1% above analysts’ estimates. Its non-GAAP profit of $0.29 per share was 7.5% above analysts’ consensus estimates.
Is now the time to buy Cloudflare? Find out by accessing our full research report, it’s free.
Cloudflare (NET) Q2 CY2026 Highlights:
- Revenue: $696.1 million vs analyst estimates of $664.8 million (35.9% year-on-year growth, 4.7% beat)
- Adjusted EPS: $0.29 vs analyst estimates of $0.27 (7.5% beat)
- Adjusted Operating Income: $96.11 million vs analyst estimates of $90.55 million (13.8% margin, 6.1% beat)
- The company lifted its revenue guidance for the full year to $2.87 billion at the midpoint from $2.81 billion, a 2.1% increase
- Management raised its full-year Adjusted EPS guidance to $1.26 at the midpoint, a 5% increase
- Operating Margin: -29.6%, down from -13.1% in the same quarter last year (largely due to $150.7 million one-time impairment charge)
- Free Cash Flow Margin: 8.1%, down from 13.1% in the previous quarter
- Billings: $753.5 million at quarter end, up 34.8% year on year
- Market Capitalization: $104 billion
Company Overview
With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE: NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Cloudflare’s sales grew at an exceptional 36.5% compounded annual growth rate over the last five years. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Cloudflare’s annualized revenue growth of 30.4% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Cloudflare reported wonderful year-on-year revenue growth of 35.9%, and its $696.1 million of revenue exceeded Wall Street’s estimates by 4.7%. Company management is currently guiding for a 31% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 26.5% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is admirable and suggests the market is forecasting success for its products and services.
WHILE YOU’RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You’ve probably never heard of it.
This is what the early days of Palantir looked like before it became a giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE.
Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Cloudflare’s billings punched in at $753.5 million in Q2, and over the last four quarters, its growth was fantastic as it averaged 34.7% year-on-year increases. This performance aligned with its total sales growth, indicating robust customer demand. The high level of cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Cloudflare is very efficient at acquiring new customers, and its CAC payback period checked in at 24.6 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Cloudflare more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments. 
Key Takeaways from Cloudflare’s Q2 Results
We were impressed by how significantly Cloudflare blew past analysts’ billings expectations this quarter. We were also glad its EPS guidance for next quarter trumped Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 14.9% to $328.82 immediately following the results.
Cloudflare had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
