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Cloudflare (NET) Up 12.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Cloudflare (NET - Free Report) . Shares have added about 12.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cloudflare due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cloudflare Q4 Earnings and Revenues Beat Estimates
Cloudflare reported non-GAAP earnings of 28 cents per share for the fourth quarter of 2025, beating the Zacks Consensus Estimate by 2.04%. The bottom line increased 47.4% on a year-over-year basis.
Cloudflare’s fourth-quarter revenues increased 33.6% year over year to $614.5 million, surpassing the consensus mark by 4.1%. The year-over-year improvement in revenues can be attributed to sustained momentum in onboarding large new enterprise customers, remarkable progress in the public sector, continued high prioritization of security by its customers and a zero-trust approach.
Cloudflare’s Q4 Details
Cloudflare’s top-line performance was positively impacted by its mix of customer segments (Channel Partners and Direct Customers). Revenues from Channel Partners (26.7% of total revenues) were $176 million, up 73.6% year over year. Fourth-quarter revenues from Direct Customers (73.3% of total revenues) were $438.5 million, up 22.3% year over year.
Cloudflare had 332,466 paying customers at the end of the fourth quarter, up 40% year over year. It added 289 new customers during the quarter who contributed more than $100,000 in annual revenues. The total count of such customers reached 4,298 at the end of the quarter.
Cloudflare’s fourth-quarter non-GAAP gross profit increased 29% year over year to $460.2 million. The non-GAAP gross margin contracted 270 basis points (bps) year over year to 74.9%.
Non-GAAP operating income for the quarter jumped 33.2% year over year to $89.6 million. The non-GAAP operating margin remained flat on a year-over-year basis at 14.6%.
Cloudflare’s Balance Sheet & Cash Flow
As of Dec. 31, 2025, Cloudflare had cash, cash equivalents and available-for-sale securities of $4.1 billion, up from $4.04 billion as of Sept. 30, 2025.
Cloudflare generated an operating cash flow of $190.4 million and a free cash flow of $99.4 million during the fourth quarter. During full-year 2025, it generated operating and free cash flows of $603.1 million and $260.6 million, respectively.
Cloudflare Initiates Q1 and FY26 Guidance
Cloudflare initiates guidance for the first quarter and full-year 2026. For the first quarter, it expects revenues in the $620-$621 million range.
Non-GAAP income from operations in the first quarter is expected to be between $70 million and $71 million. Non-GAAP earnings are anticipated to be 23 cents per share.
For 2026, it anticipates revenues between $2,785 million and $2,795 million. Non-GAAP income from operations is projected in the range of $378-$382 million. Non-GAAP earnings per share are anticipated to be in the band of $1.11-$1.12.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -132.8% due to these changes.
VGM Scores
Currently, Cloudflare has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cloudflare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cloudflare belongs to the Zacks Internet - Software industry. Another stock from the same industry, Palantir Technologies Inc. (PLTR - Free Report) , has gained 11.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.
Palantir Technologies reported revenues of $1.41 billion in the last reported quarter, representing a year-over-year change of +70%. EPS of $0.25 for the same period compares with $0.14 a year ago.
For the current quarter, Palantir Technologies is expected to post earnings of $0.29 per share, indicating a change of +123.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Palantir Technologies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Cloudflare (NET) Up 12.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Cloudflare (NET - Free Report) . Shares have added about 12.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cloudflare due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cloudflare Q4 Earnings and Revenues Beat Estimates
Cloudflare reported non-GAAP earnings of 28 cents per share for the fourth quarter of 2025, beating the Zacks Consensus Estimate by 2.04%. The bottom line increased 47.4% on a year-over-year basis.
Cloudflare’s fourth-quarter revenues increased 33.6% year over year to $614.5 million, surpassing the consensus mark by 4.1%. The year-over-year improvement in revenues can be attributed to sustained momentum in onboarding large new enterprise customers, remarkable progress in the public sector, continued high prioritization of security by its customers and a zero-trust approach.
Cloudflare’s Q4 Details
Cloudflare’s top-line performance was positively impacted by its mix of customer segments (Channel Partners and Direct Customers). Revenues from Channel Partners (26.7% of total revenues) were $176 million, up 73.6% year over year. Fourth-quarter revenues from Direct Customers (73.3% of total revenues) were $438.5 million, up 22.3% year over year.
Cloudflare had 332,466 paying customers at the end of the fourth quarter, up 40% year over year. It added 289 new customers during the quarter who contributed more than $100,000 in annual revenues. The total count of such customers reached 4,298 at the end of the quarter.
Cloudflare’s fourth-quarter non-GAAP gross profit increased 29% year over year to $460.2 million. The non-GAAP gross margin contracted 270 basis points (bps) year over year to 74.9%.
Non-GAAP operating income for the quarter jumped 33.2% year over year to $89.6 million. The non-GAAP operating margin remained flat on a year-over-year basis at 14.6%.
Cloudflare’s Balance Sheet & Cash Flow
As of Dec. 31, 2025, Cloudflare had cash, cash equivalents and available-for-sale securities of $4.1 billion, up from $4.04 billion as of Sept. 30, 2025.
Cloudflare generated an operating cash flow of $190.4 million and a free cash flow of $99.4 million during the fourth quarter. During full-year 2025, it generated operating and free cash flows of $603.1 million and $260.6 million, respectively.
Cloudflare Initiates Q1 and FY26 Guidance
Cloudflare initiates guidance for the first quarter and full-year 2026. For the first quarter, it expects revenues in the $620-$621 million range.
Non-GAAP income from operations in the first quarter is expected to be between $70 million and $71 million. Non-GAAP earnings are anticipated to be 23 cents per share.
For 2026, it anticipates revenues between $2,785 million and $2,795 million. Non-GAAP income from operations is projected in the range of $378-$382 million. Non-GAAP earnings per share are anticipated to be in the band of $1.11-$1.12.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -132.8% due to these changes.
VGM Scores
Currently, Cloudflare has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cloudflare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cloudflare belongs to the Zacks Internet - Software industry. Another stock from the same industry, Palantir Technologies Inc. (PLTR - Free Report) , has gained 11.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.
Palantir Technologies reported revenues of $1.41 billion in the last reported quarter, representing a year-over-year change of +70%. EPS of $0.25 for the same period compares with $0.14 a year ago.
For the current quarter, Palantir Technologies is expected to post earnings of $0.29 per share, indicating a change of +123.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Palantir Technologies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.