Cloudflare Stock Gains 15% as Q4 Earnings and Revenues Beat Estimates

Cloudflare, Inc. NET shares jumped 15.5% during Wednesday’s extended trading session after the company reported better-than-expected fourth-quarter 2025 results. NET 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 earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and met in one, delivering an average surprise of 9%.

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. Third-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 third 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. The Zacks Consensus Estimate for revenues is pegged at $611.8 million, suggesting a year-over-year rise of 27.7%.

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. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, calling for a year-over-year increase of 56.3%.

For 2026, it anticipates revenues between $2,785 million and $2,795 million. The consensus mark for revenues is pegged at $2.72 billion, suggesting a year-over-year rise of 26.8%.

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. The Zacks Consensus Estimate for earnings is pegged at $1.16 per share, indicating a year-over-year jump of 27%.

Cloudflare’s Zacks Rank & Stocks to Consider

Currently, NET carries a Zacks Rank #3 (Hold).

Micron Technology MU, Amphenol APH and Analog Devices ADI are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Micron Technology sports a Zacks Rank #1 (Strong Buy) at present, while Amphenol and Analog Devices each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings has moved northward by 14 cents in the past 30 days to $32.90 per share, implying 296.9% year-over-year growth. Micron Technology shares have soared 307.1% over the past year.

The Zacks Consensus Estimate for Amphenol’s 2026 earnings has been revised upward by 26 cents over the past 30 days to $4.32 per share, calling for an increase of 29.3% year over year. Amphenol shares have surged 106.7% over the past year.

The Zacks Consensus Estimate for Analog Devices’ fiscal 2026 earnings has moved upward by 21 cents over the past 30 days to $9.97 per share, indicating a year-over-year increase of 28%. Analog Devices shares have rallied 58.5% over the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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