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Can Unified Platform Strategy Boost Cloudflare's Long-Term Growth?
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Key Takeaways
Cloudflare won an $11 million deal after a customer replaced five legacy point solutions.
A $5.2 million SASE deal will replace legacy VPNs and virtual desktops with Zero Trust.
Cloudflare had 4,698 $100,000-plus customers, up 27% year over year and generating 73% of revenues.
Cloudflare (NET - Free Report) is using its unified platform strategy to offer security, networking and developer services through a single platform as enterprises look to reduce the number of tools they use. In the second quarter of 2026, a Global 2000 European technology company signed a three-year, $11 million contract for Cloudflare’s Application Services and Zero Trust products, including its developer platform for future AI workloads. The customer replaced five legacy point solutions and could eliminate up to seven more as part of its longer-term plan.
Another customer win highlights the value of Cloudflare’s unified platform approach. A Fortune 100 technology company signed a three-year, $5.2 million contract for Cloudflare’s full SASE portfolio. The customer is replacing legacy virtual private networks and virtual desktops and plans to move its global workforce onto a single Zero Trust platform. Cloudflare said its faster network performance and single-pane management helped it win the deal against two first-generation Zero Trust vendors.
Cloudflare is also using its developer platform to expand relationships across its product portfolio. A technology company in Asia-Pacific expanded from an $8.7 million Application Services contract to a $4 million Workers deal in just one year. The customer now uses Cloudflare for Application Security, Zero Trust and its developer platform. These customer expansions show how the company’s unified offering can lead customers from one product to another and increase usage of its platform.
The platform strategy is being supported by strong customer growth. Cloudflare ended the second quarter with 4,698 customers generating more than $100,000 in annual revenues, up 27% year over year and accounted for 73% of total revenue. As more enterprises consolidate legacy tools onto Cloudflare, the company could have more opportunities to expand within existing accounts and increase the value of its customer relationships.
The Zacks Consensus Estimate for Cloudflare’s 2026 and 2027 revenues indicates year-over-year growth of 32.5% and 28.6%, respectively.
Cloudflare Faces Tough Competition
Competitors like Palo Alto Networks (PANW - Free Report) and Zscaler (ZS - Free Report) are also gaining ground through platform expansion and AI innovation.
Palo Alto Networks is benefiting from stronger enterprise platform adoption. The company added about 220 net new platformizations in the fourth quarter of fiscal 2026, while platformized customers had net revenue retention above 120%. PANW also closed several large enterprise deals, including a $126 million agreement with a global telecom company, a $72 million deal with an IT service provider and a $53 million transaction with a global payments platform.
Zscaler ended fiscal 2026 with 4,182 customers generating more than $100,000 in annual recurring revenue (ARR), up 20% year over year. The company also had 785 customers with more than $1 million in ARR, up 18%. Its Z-Flex offering is helping customers expand their spending, with Z-Flex generating more than $770 million in total contract value in the fourth quarter, up more than 60% sequentially.
NET’s Price Performance, Valuation & Estimates
Shares of Cloudflare have jumped 82% in the year-to-date period compared with the Zacks Internet – Software industry’s return of 9.1%.
NET YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NET trades at a forward price-to-sales ratio of 36.50, significantly higher than the industry’s average of 4.42. The Zacks Value Score of F suggests that NET stock is overvalued.
NET Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NET’s 2026 earnings is pegged at $1.26 per share, unchanged over the past 30 days, indicating a 35.5% increase from the previous year.
View the Zacks #1 Rank List
Image: Bigstock
Can Unified Platform Strategy Boost Cloudflare's Long-Term Growth?
Key Takeaways
Cloudflare (NET - Free Report) is using its unified platform strategy to offer security, networking and developer services through a single platform as enterprises look to reduce the number of tools they use. In the second quarter of 2026, a Global 2000 European technology company signed a three-year, $11 million contract for Cloudflare’s Application Services and Zero Trust products, including its developer platform for future AI workloads. The customer replaced five legacy point solutions and could eliminate up to seven more as part of its longer-term plan.
Another customer win highlights the value of Cloudflare’s unified platform approach. A Fortune 100 technology company signed a three-year, $5.2 million contract for Cloudflare’s full SASE portfolio. The customer is replacing legacy virtual private networks and virtual desktops and plans to move its global workforce onto a single Zero Trust platform. Cloudflare said its faster network performance and single-pane management helped it win the deal against two first-generation Zero Trust vendors.
Cloudflare is also using its developer platform to expand relationships across its product portfolio. A technology company in Asia-Pacific expanded from an $8.7 million Application Services contract to a $4 million Workers deal in just one year. The customer now uses Cloudflare for Application Security, Zero Trust and its developer platform. These customer expansions show how the company’s unified offering can lead customers from one product to another and increase usage of its platform.
The platform strategy is being supported by strong customer growth. Cloudflare ended the second quarter with 4,698 customers generating more than $100,000 in annual revenues, up 27% year over year and accounted for 73% of total revenue. As more enterprises consolidate legacy tools onto Cloudflare, the company could have more opportunities to expand within existing accounts and increase the value of its customer relationships.
The Zacks Consensus Estimate for Cloudflare’s 2026 and 2027 revenues indicates year-over-year growth of 32.5% and 28.6%, respectively.
Cloudflare Faces Tough Competition
Competitors like Palo Alto Networks (PANW - Free Report) and Zscaler (ZS - Free Report) are also gaining ground through platform expansion and AI innovation.
Palo Alto Networks is benefiting from stronger enterprise platform adoption. The company added about 220 net new platformizations in the fourth quarter of fiscal 2026, while platformized customers had net revenue retention above 120%. PANW also closed several large enterprise deals, including a $126 million agreement with a global telecom company, a $72 million deal with an IT service provider and a $53 million transaction with a global payments platform.
Zscaler ended fiscal 2026 with 4,182 customers generating more than $100,000 in annual recurring revenue (ARR), up 20% year over year. The company also had 785 customers with more than $1 million in ARR, up 18%. Its Z-Flex offering is helping customers expand their spending, with Z-Flex generating more than $770 million in total contract value in the fourth quarter, up more than 60% sequentially.
NET’s Price Performance, Valuation & Estimates
Shares of Cloudflare have jumped 82% in the year-to-date period compared with the Zacks Internet – Software industry’s return of 9.1%.
NET YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NET trades at a forward price-to-sales ratio of 36.50, significantly higher than the industry’s average of 4.42. The Zacks Value Score of F suggests that NET stock is overvalued.
NET Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NET’s 2026 earnings is pegged at $1.26 per share, unchanged over the past 30 days, indicating a 35.5% increase from the previous year.
Image Source: Zacks Investment Research
Cloudflare currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.