Company Reports

Cloudflare reported second-quarter results with sales of $696 million, up 36% from 28% growth last year. Adjusted operating margins contracted by 30 basis points due to increased investment in artificial intelligence infrastructure. Management raised its 2026 sales outlook by $58 million.

Security-focused content delivery network, or CDN, Cloudflare stands to benefit from continued growth in cybersecurity spending. Currently, more than 20% of global internet traffic goes through Cloudflare’s network, with more than one-third of all websites in the world using Cloudflare. Cybersecurity remains a critical priority for firms across the globe as the frequency and intensity of cyber attacks continue to increase. However, we think Cloudflare is capable of much more than security, and we view edge computing, and increasingly, artificial intelligence infrastructure, as a major opportunity for the firm.

OpenAI revealed on July 21 that during an evaluation of its models' cyber capabilities, these models escaped the evaluation environment, discovered a never-before-seen (zero-day) exploit, and breached the infrastructure of the digital AI library Hugging Face to get answers for the evaluation test.

Cloudflare reported strong financial results to kick off fiscal 2026. Sales accelerated to 34% growth, while its adjusted operating margins contracted by 30 basis points due to continued investment in artificial intelligence infrastructure. Management raised its 2026 sales outlook by $19 million.

Anthropic confirmed the existence of an upcoming model after Fortune first reported plans for it on March 26. This new model, named either Mythos or Capybara, is reportedly much better than existing models at finding cyber vulnerabilities. This news sent our cyber coverage down 5% on average.

Over the last few months, investors have become increasingly worried about the future of software economic moats as fears of software disintermediation driven by artificial intelligence have grown.

Security-focused content delivery network, or CDN, Cloudflare stands to benefit from continued growth in cybersecurity spending. Currently, more than 20% of global internet traffic goes through Cloudflare’s network, with more than one-third of all websites in the world using Cloudflare. Cybersecurity remains a critical priority for firms across the globe as the frequency and intensity of cyber attacks continue to increase. However, we think Cloudflare is capable of much more than security, and we view edge computing, and increasingly, artificial intelligence infrastructure, as a major opportunity for the firm.

On Feb. 20, Anthropic released a vulnerability-scanning tool aimed at security applications, leading to an average drawdown of over 5% across our cybersecurity coverage as investors worry that Anthropic and other artificial intelligence labs could replace cybersecurity functions within companies.

focused content delivery network (CDN), Cloudflare stands to benefit from increased cybersecurity spending. Currently, more than 10% of global internet traffic goes through Cloudflare’s network, with more than one quarter of all websites in the world using Cloudflare. We expect cybersecurity to be increasingly relevant for firms across the globe as cyberattacks continue to increase. However, we think Cloudflare is capable of much more than security, and we view edge computing as a major opportunity for the firm.

Cloudflare reported solid fourth-quarter results, with sales growth accelerating to 34% while adjusted operating income remained flat at 15%. The firm's channel partner success continues to drive results, with channel sales up 74%, accounting for 29% of total sales in the quarter.

We believe Cloudflare is poised for success in the security and edge computing spaces. As a security-focused content delivery network (CDN), Cloudflare stands to benefit from increased cybersecurity spend. Currently, more than 10% of global internet traffic goes through Cloudflare’s network, with more than one quarter of all websites in the world using Cloudflare. We expect cybersecurity to be increasingly relevant for firms across the globe as cyberattacks continue to increase. However, we think Cloudflare is capable of much more than security, and we view edge computing as a major opportunity for the firm.

Cloudflare reported solid third-quarter results with the firm's sales growth accelerating to 31% while its adjusted operating margins expanded 50 basis points to 15.3%. The firm's channel partner sales spearheaded the top line, growing 68% year over year, making up 27% of total sales in the quarter.

Cloudflare reported solid second-quarter results, with sales growing 28% to $512 million and adjusted margin remaining flat at 14% as investments in artificial intelligence talent and infrastructure drove costs higher. Large accounts accounted for 71% of sales, up from 67% a year ago.

We believe Cloudflare is poised for success in both the security and edge computing spaces. As a security-focused content delivery network (CDN), Cloudflare stands to benefit from increased cybersecurity spend. Currently, more than 10% of global internet traffic goes through Cloudflare’s network, with more than one quarter of all websites in the world using Cloudflare. We expect cybersecurity to be increasingly relevant for firms across the globe as cyberattacks continue to increase. However, we think Cloudflare is capable of much more than security, and we view edge computing as a major opportunity for the firm.

Cloudflare kicked off 2025 with a solid set of financial results, with the firm's sales growing 27% year over year to $479 million and adjusted margins staying mostly flat year over year. Large clients constituted 69% of the firm's top line for the first quarter, up from 67% a year ago.

Cloudflare reported a strong finish to fiscal 2024 with quarterly sales of $460 million, up 27%, and adjusted margins of 15%, up 360 basis points year over year. The firm's customer mix continues to trend toward larger clients, which now constitute 69% of sales.

We believe Cloudflare is poised for success in both the security and edge computing spaces. As a security-focused content delivery network (CDN), Cloudflare stands to benefit from increased cybersecurity spend. Currently, more than 10% of global internet traffic goes through Cloudflare’s network, with more than one quarter of all websites in the world using Cloudflare. We expect cybersecurity to be increasingly relevant for firms across the globe as cyberattacks continue to increase. However, we think Cloudflare is capable of much more than security, and we view edge computing as a major opportunity for the firm.

Cloudflare reported solid third-quarter results, with the firm's sales growing 28% year over year, while adjusted margins also improved 210 basis points to 14.8% for the quarter. Cloudflare's sales mix continues to lean more enterprise, with large customers making up 67% of the quarter's sales.

We maintain our $87 fair value estimate for narrow-moat Cloudflare after the firm reported strong second-quarter financial results, with the firm’s top line slightly ahead of our prior estimates. Along with strong quarterly results that showcased the firm’s continued enterprise penetration, the firm’s total customer count (which includes SMB customers) reaccelerated markedly. After this robust set of results, we reiterate our optimism on Cloudflare’s long-term opportunity as a strong cybersecurity player. With an intensifying threat landscape, as evidenced by high-profile breaches at blue-chip companies such as UnitedHealth, we see robust growth in cybersecurity spending over the next five years. As a multimodule security firm, we believe Cloudflare stands to benefit from this increase in security spending more so than point-solution vendors that are at risk of being passed over as firms increasingly consolidate their security spending toward a smaller list of vendors.

We maintain our $87 fair value estimate for narrow-moat Cloudflare after the firm reported first-quarter results above our expectations while providing guidance that fits our model. We remain optimistic about Cloudflare’s long-term opportunity as it scales its business and penetrates more enterprise customers. While customers have slowed down additional spending, cybersecurity budgets have held up pretty nicely despite the tight macro, a trend we see continuing in the near term. As macro conditions improve, however, we expect Cloudflare to benefit from the upside as customers become more comfortable spending more on larger security vendors. The firm’s shares traded down sharply following the earnings report, likely due to guidance missing the market’s expectations. With this, we view current shares as slightly undervalued.