- Cloudflare (NET) Valuation Check After Recent Pullback And Conflicting Fair Value Estimates
May 13, 2026
Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St.
Stock performance snapshot
Cloudflare (NET) has drawn investor attention after a recent pullback, with the stock down 3.5% on the day and 23.6% over the past week, while still up over the past month.
Over the past 3 months, the stock is slightly lower and year to date it is down about 4.7%. The 1 year total return stands at roughly 24.2% and the 3 year total return is described as very large.
See our latest analysis for Cloudflare.
The recent 7 day share price decline of 23.6% has cut into Cloudflare's earlier gains. However, the 1 year total shareholder return of 24.2% and very large 3 year total shareholder return still reflect substantial longer term momentum.
If you are weighing Cloudflare against other opportunities in digital infrastructure, it can be useful to scan a broader set of AI infrastructure stocks using the Simply Wall St screener, starting with 38 AI infrastructure stocks.
With Cloudflare now down from recent levels but still carrying a very large 3 year return and a roughly 25% gap to analyst targets, you have to ask: is this a buying window, or is future growth already priced in?
Most Popular Narrative: 19.4% Undervalued
Cloudflare's most followed narrative places fair value at about $231.85 per share, above the last close of $186.79. This sets up a valuation built around aggressive growth and profitability assumptions.
The analysts have a consensus price target of $231.85 for Cloudflare based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $300.0, and the most bearish reporting a price target of just $135.0.
Read the complete narrative.
Curious what kind of revenue curve and margin lift could justify such a wide price target range and still land on a premium future earnings multiple? The narrative leans on fast compound growth, a swing into sustained profitability, and a very high future P/E that is far above typical sector benchmarks. If you want to see exactly how those ingredients combine into that $231.85 fair value and 19.4% discount label, the full narrative lays out every step.
Result: Fair Value of $231.85 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this narrative can break if large enterprise customers pull back on spend, or if tighter global data rules push Cloudflare's costs and complexity higher.
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Find out about the key risks to this Cloudflare narrative.
Another View: Cash Flows Point To A Very Different Story
While the popular narrative frames Cloudflare as about 19.4% undervalued at a fair value of roughly $231.85, Simply Wall St's DCF model points the other way, with an estimate of $110.35 per share. On that view, the stock at $186.79 looks expensive, not discounted. This raises a simple question: which set of assumptions do you trust more?
Look into how the SWS DCF model arrives at its fair value.NET Discounted Cash Flow as at May 2026
Next Steps
Mixed signals on value and growth can feel unsettling, so take a closer look at the data and form your own view while sentiment is still shifting. You can start with 1 key reward and 2 important warning signs.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NET.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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- Why Cloudflare (NET) Stock Is Trading Lower Today
May 12, 2026
What Happened?
Shares of cloud security and performance company Cloudflare (NYSE:NET) fell 24.3% in the afternoon session after the company reported mixed first quarter results with high expectations amid a share price run up heading into the prints making it hard for the numbers to impress.
In addition, adjusted gross margin came in at 72.8% versus the 75.1% the market expected, and Q2 revenue guidance ($664–665M) landed below the $666M consensus together undermining the core bull-case assumption that Cloudflare's developer-platform/AI mix would expand margins, not compress them.
On the other hand, Cloudflare blew past analysts' billings expectations this quarter and its full-year EPS guidance trumped Wall Street's estimates. Also the growth in high paying customers all confirmed that CEO Matthew Prince's "biggest tailwind in Cloudflare's history" claim about AI is showing up in the numbers.
But the bolder statement is the layoff (20% of staff): management is signalling they believe AI agents will let them scale revenue without scaling headcount, which is a structural margin thesis. There is a 210bps gross margin compression in the near-term cost (paid-vs-free traffic mix and developer platform load), but the FY26 operating income guide of $418–421M implies that the cost actions will more than offset this.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Cloudflare? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Cloudflare’s shares are very volatile and have had 27 moves greater than 5% over the last year. But moves this big are rare even for Cloudflare and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 8.7% on the news that peer, DigitalOcean reported stellar Q1 2026 earnings report.
DigitalOcean reported a 22% year-over-year revenue increase and, crucially, a 221% surge in AI customer annual recurring revenue (ARR), proving that inference demand is moving from experimental to production scale. Because DigitalOcean specializes in serving small-to-medium digital native enterprises, its success signaled that AI adoption is broadening beyond tech giants, fueling optimism for other edge infrastructure providers.
Cloudflare is flat since the beginning of the year, and at $195.44 per share, it is trading 23.9% below its 52-week high of $256.79 from May 2026. Investors who bought $1,000 worth of Cloudflare’s shares 5 years ago would now be looking at an investment worth $2,838.
Story Continues
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- Wall Street Analysts Think Cloudflare (NET) Is a Good Investment: Is It?
May 12, 2026
When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?
Let's take a look at what these Wall Street heavyweights have to say about Cloudflare (NET) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
Cloudflare currently has an average brokerage recommendation (ABR) of 1.79, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 33 brokerage firms. An ABR of 1.79 approximates between Strong Buy and Buy.
Of the 33 recommendations that derive the current ABR, 21 are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 63.6% and 6.1% of all recommendations.
Brokerage Recommendation Trends for NETBroker Rating Breakdown Chart for NET
Check price target & stock forecast for Cloudflare here>>>
While the ABR calls for buying Cloudflare, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.
Zacks Rank Should Not Be Confused With ABR
In spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
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Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.
Should You Invest in NET?
In terms of earnings estimate revisions for Cloudflare, the Zacks Consensus Estimate for the current year has increased 9.8% over the past month to $1.14.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Cloudflare. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Cloudflare may serve as a useful guide for investors.
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- QBTS Q1 Earnings Top Estimates, Revenues Miss, Stock Up
May 12, 2026
D-Wave Quantum Inc. QBTS posted a first-quarter 2026 loss of 5 cents per share, narrower than the Zacks Consensus Estimate of a loss of 8 cents. The reported figure widened from a loss of 2 cents in the year-ago quarter.
Revenues came in at $2.86 million, down 80.9% year over year and below the consensus estimate of $5.01 million by 42.9%. Still, contract activity improved, with remaining performance obligations rising to $42.4 million at quarter-end.
Following the announcement, QBTS shares rose 1.96% in the pre-market session today.
QBTS Faces Tough Comparison After Prior-Year System Sale
The quarter’s revenue decline was largely tied to a difficult comparison versus the first quarter of 2025 when the company recognized $12.6 million from its first annealing quantum computing system sale. Without a similar system revenue event, QBTS delivered a smaller top line despite continued commercial engagement.
Management emphasized expanding adoption across both its annealing and gate-model platforms. During the quarter, D-Wave recognized revenues from more than 100 individual customers, with more than half classified as commercial enterprises, underscoring that demand remains broad, even as revenue recognition timing can be lumpy.
D-Wave Scales Commercial Activity With Record Bookings
D-Wave reported first-quarter 2026 bookings of $33.4 million, up 1,994% year over year and 149% higher than the prior quarter. The total included a $20 million system purchase agreement with Florida Atlantic University and a $10 million, two-year enterprise quantum computing as a service deal with a Fortune 100 customer.
D-Wave Quantum Inc. Price, Consensus and EPS SurpriseD-Wave Quantum Inc. Price, Consensus and EPS Surprise
D-Wave Quantum Inc. price-consensus-eps-surprise-chart | D-Wave Quantum Inc. Quote
Remaining performance obligations totaled $42.4 million as of March 31, 2026, with about 54% expected to be recognized as revenues over the next 12 months and 71% over the next two years, leaving a longer-duration tail beyond that.
QBTS Expands Platform Breadth With Quantum Circuits Deal
In January 2026, D-Wave acquired Quantum Circuits, a developer of error-corrected superconducting gate-model systems. The company also laid out targeted roadmap milestones, including a dual-rail system with roughly 175 physical qubits by the end of 2028 and a 1,000 physical-qubit dual-rail system with 10 logical qubits by the end of 2030. D-Wave plans to provide additional details on its Investor Day at the New York Stock Exchange on June 1, 2026.
D-Wave’s Profitability Metrics Show Margin Compression
On a non-GAAP basis, gross profit was $2.0 million, down 86% from the prior-year quarter. The corresponding non-GAAP gross margin was 70.6%, down 2300 basis points (bps) year over year, reflecting a different revenue mix versus the year-ago period that benefited from a system sale.
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Operating discipline also remained in focus as investments ramped up. Non-GAAP adjusted operating expenses were $34.8 million, up 73% year over year, while adjusted EBITDA loss widened to $32.8 million. Management attributed higher spending to initiatives supporting accelerated product development and go-to-market execution, along with costs incurred following the Quantum Circuits acquisition.
QBTS’ Liquidity Remains Strong After Large Investing Outflow
QBTS ended the quarter with $588.4 million in cash and marketable investment securities, up 93% year over year. The balance sheet strength provides flexibility as the company funds product development, go-to-market initiatives and integration work following the Quantum Circuits acquisition.
Cash flow reflected that investment posture. Net cash used in operating activities was $45.0 million, while net cash used in investing activities totaled $252.1 million, driven primarily by acquisition-related cash outflows. Despite the heavier spend, management framed liquidity as a key support for executing its dual-platform strategy in a rapidly evolving quantum computing market.
Our Take on QBTS
D-Wave Quantum exited the first quarter of 2026 with a narrower-than-expected loss, while revenues fell short of the estimates. Performance highlights the company’s strong execution, expanding commercial adoption, and technology leadership across both annealing and gate model quantum computing. D-Wave’s acquisition of Quantum Circuits is expected to meaningfully accelerate the delivery of a scalable, error-corrected gate model system.
Some of the major highlights in the quarter include the introduction of new hybrid solver software that supports integrated machine learning models and the completion of the second phase of an ongoing Quantum AI project with Shionogi, a major Japanese pharmaceutical company.
Meanwhile, the top line was down on a year-over-year basis. The contraction of non-GAAP gross margin in the quarter is also discouraging.
QBTS' Zacks Rank & Key Picks
Currently, D-Wave carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Computer and Technology sector are Docebo Inc. DCBO, Cloudflare, Inc. NET and Microchip Technology MCHP.
Docebo, sporting a Zacks Rank #1 (Strong Buy), reported a first-quarter 2026 EPS of 34 cents, which beat the Zacks Consensus Estimate by 2.01%. Revenues of $65.6 million surpassed the Zacks Consensus Estimate by 0.19%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DCBO has an earnings yield of 7.9% compared with the industry’s 4.5% yield. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 21.86%.
Cloudflare, carrying a Zacks Rank #2 (Buy) at present, posted a first-quarter 2026 adjusted EPS of 25 cents, exceeding the Zacks Consensus Estimate by 7.53%. Revenues of $639.8 billion beat the Zacks Consensus Estimate by 2.87%.
NET has an estimated long-term earnings growth rate of 26.8% compared with the industry’s 21.8% growth. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 11.62%.
Microchip Technology, currently carrying a Zacks Rank #2, reported fourth-quarter fiscal 2026 earnings of 57 cents per share, which topped the Zacks Consensus Estimate by 13.14%. Revenues of $1.31 billion surpassed the consensus mark by 3.26%.
MCHP has an estimated long-term earnings growth rate of 36.8% compared with the industry’s 29.4% growth. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 8.72%.
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- Fastly's Q1 Revenues Rise 20%: Can Growth Stay Near Record Highs?
May 12, 2026
Fastly, Inc. FSLY entered 2026 with strong momentum, as first-quarter revenues increased 20% year over year to a record $173 million. Rising demand across edge cloud, security and compute services helped the company sustain one of its strongest growth phases in recent years.
The performance followed 23% revenue growth in the fourth quarter of 2025, showing that Fastly has largely held on to the acceleration seen over the past several quarters. Quarterly growth had earlier remained in single digits through much of 2024 before rebounding sharply in late 2025, making the latest 20% increase notable.
The composition of growth remains important. Network Services revenues, still the company’s largest business, increased 11% year over year to $126.2 million. Security revenues climbed 47% to $38.8 million and represented 22% of total revenues, while Other revenues, primarily driven by compute products, surged 67% to $8 million. This mix shows that Fastly’s growth is being supported by both its core delivery business and faster-growing newer categories.
Fastly also benefited from expansion within its customer base. LTM net retention rate improved to 113% from 100% a year ago, reflecting higher spending across a broader mix of customers. The company also reported record remaining performance obligations of $369 million, up 63% year over year, indicating stronger contracted revenue visibility.
Even so, the pace may gradually normalize from recent highs. Second-quarter 2026 revenue guidance of $170-$176 million implies 16% year-over-year growth at the midpoint, while full-year 2026 guidance of $710-$725 million points to a 15% increase. This indicates that while growth is expected to cool from the recent peak, Fastly still sees a mid-teens revenue trajectory for 2026.
NET & AKAM Benefit From AI-Driven Revenue Momentum
Cloudflare, Inc. NET posted first-quarter 2026 revenues of $639.8 million, up 34% year over year, driven by strong adoption of its AI, developer and security offerings. NET also highlighted accelerating enterprise traction, with large customer revenues rising 38% year over year. Cloudflare further noted that AI-driven and agentic workloads are becoming a major growth catalyst, with management calling AI the “biggest tailwind” in the company’s history.
Akamai Technologies, Inc. AKAM generated first-quarter 2026 revenues of $1,074 million, reflecting 6% year-over-year growth. AKAM continued benefiting from strong momentum in cloud infrastructure and security services, with cloud infrastructure services revenues jumping 40% year over year. Akamai Technologies also emphasized growing AI-related demand and signed a landmark $1.8 billion cloud infrastructure deal during the quarter.
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FSLY Stock Price Performance, Valuation & Estimates
Shares of Fastly have surged 139.7% over the past year against the industry’s decline of 14.6%.
FSLY Price Performance Versus IndustryZacks Investment Research
Image Source: Zacks Investment Research
From a valuation standpoint, FSLY trades at a forward price-to-sales ratio of 4.11, higher than the industry’s average of 3.75.
FSLY Valuation Compared to IndustryZacks Investment Research
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for FSLY’s 2026 and 2027 earnings implies year-over-year growth of 123.1% and 28.7%, respectively.
Fastly currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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- Cloudflare Q1 Earnings Call Highlights
May 12, 2026
Cloudflare logo
Key Points
Interested in Cloudflare, Inc.? Here are five stocks we like better. Cloudflare posted strong Q1 2026 results, with revenue up 34% year over year to $639.8 million and large-customer revenue growing 38%. The company also reported $84.1 million in free cash flow and ended the quarter with $4.2 billion in cash and securities. AI demand is accelerating Cloudflare’s business, especially through its Workers developer platform and agentic workloads. Executives said internal AI usage surged, developer counts rose to more than 5.5 million, and AI-related traffic is becoming a major growth driver. Cloudflare is restructuring its workforce to become AI-first, cutting more than 1,100 roles, or about 20% of staff. Management said the move is aimed at redesigning operations around AI and expects restructuring charges of $140 million to $150 million in 2026, while leaving free cash flow guidance unchanged.
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Forget The Chips? Cloud Stocks Are The New Hardware
Cloudflare (NYSE:NET) reported a strong first quarter of 2026, with revenue rising 34% year over year to $639.8 million, as executives said demand tied to AI, agentic workloads and its Workers developer platform continued to accelerate.
Co-founder and CEO Matthew Prince said the company began the year with “very strong” momentum, citing gains in large customers, sales productivity and new pipeline generation. Cloudflare ended the quarter with 4,416 customers paying more than $100,000 annually, up 25% from a year earlier. Revenue from those large customers grew 38% year over year and accounted for 72% of total revenue, compared with 69% in the prior-year period.
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The company’s dollar-based net retention rate was 118%, down 2 percentage points sequentially but up 7 percentage points year over year. Gross margin was 72.8%, and Cloudflare reported operating income of $73.1 million, representing an 11.4% operating margin. Free cash flow was $84.1 million, or 13% of revenue.
Cloudflare Announces AI-Driven Restructuring
Alongside the earnings results, Cloudflare announced a significant workforce reduction as part of what Prince described as a shift toward an “agentic AI-first operating model.” Prince said the company is reducing the size of its team by more than 1,100 people. CFO Thomas Seifert later described the reduction as approximately 20% of the workforce, across all functions and geographies.
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Prince said the decision was not a cost-cutting exercise or a reflection of individual performance, but rather an effort to redesign internal processes around AI and Cloudflare’s Workers platform. He said AI and agents are “no longer pilot projects” at the company and are now core to its workforce.
“At Cloudflare, the way work is done has fundamentally changed,” Prince said. He added that the company’s internal AI usage increased by more than 600% in the last three months, and that 97% of employees in research and development use AI coding tools powered by the Workers developer platform.
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Seifert said the restructuring will result in severance and other restructuring charges of $140 million to $150 million for full-year 2026, with about $40 million of that non-cash and the majority concentrated in the second quarter. He said the company’s free cash flow expectations for 2026 remain unchanged.
AI and Developer Platform Drive Momentum
Executives repeatedly pointed to AI as a key driver of growth. Prince said Cloudflare is seeing “hundreds of billions of agentic requests per month,” with the number growing exponentially. He said the company’s positioning in front of application programming interfaces, applications and other essential internet traffic has differentiated it from traditional content delivery network providers.
Seifert said AI is driving “a fundamental re-platforming of the Internet” and described it as the biggest tailwind Cloudflare has seen for both its network and Workers developer platform. Developers on Cloudflare’s platform increased to more than 5.5 million at the end of the quarter, including 1 million new developers added during the quarter. Seifert noted that the company added 1.5 million developers during all of 2025.
Prince said Cloudflare’s developer tools are being used to build and run agentic workloads more efficiently, including through products such as Dynamic Workers and AI Gateway. In the Q&A portion of the call, he said one large AI studio went from essentially zero Dynamic Workers to more than 1 million running on Cloudflare’s platform in 15 days, without naming the customer.
Customer Wins Include AI, Security and SASE Deals
Prince highlighted several customer expansions during the quarter. A leading technology platform signed a two-year, $10 million pool-of-funds contract covering application services and the Workers developer platform. A rapidly growing technology company in APAC signed a two-year, $8.7 million contract for application services and Workers, with Prince saying the customer selected Cloudflare over a hyperscaler due to its unified platform and low-latency security.
Cloudflare also expanded with a Fortune 100 technology company through a two-year, $8 million contract for its Privacy Proxy solution. Prince said the company delivered a fully operational solution within one week to support user-initiated agentic traffic at scale.
In security, Prince said a leading insurance company in EMEA signed a five-year, $5.1 million contract for application services and Cloudflare’s full SASE portfolio. A Fortune 500 aerospace and defense company signed a three-year, $5 million contract for Zero Trust products after a major security breach and compliance concerns with an incumbent vendor’s browser isolation solution.
Cloudflare also disclosed expansions with two AI companies: a one-year, $4.1 million contract for application services with one AI company, and a 10-month, $2 million contract for Argo Smart Routing with another. Prince said the latter customer reduced average global latency by 30% after deploying Argo.
Margins, Expenses and Balance Sheet
Seifert said first-quarter gross margin declined 210 basis points sequentially and 130 basis points year over year to 72.8%. He attributed the decline in part to paid traffic growing relative to free traffic, which shifted some network costs from sales and marketing into cost of revenue. He also said Workers developer platform products currently carry lower gross margins than the company average, though they have a lower cost to book.
Operating expenses as a percentage of revenue declined 3 percentage points year over year to 62%. Sales and marketing expenses were $227.5 million, or 36% of revenue, down from 38% a year earlier. Research and development expenses were $101.5 million, or 16% of revenue, while general and administrative expenses were $63.6 million, or 10% of revenue.
Net income was $94 million, or $0.25 per diluted share. Cloudflare ended the quarter with $4.2 billion in cash, cash equivalents and available-for-sale securities. Remaining performance obligations were $2.543 billion, up 36% year over year.
Guidance Points to 30% Revenue Growth
For the second quarter, Cloudflare expects revenue of $664 million to $665 million, representing 30% year-over-year growth. The company forecast operating income of $90 million to $91 million and diluted net income per share of $0.27, assuming approximately 377 million shares outstanding.
For full-year 2026, Cloudflare expects revenue of $2.805 billion to $2.813 billion, representing 30% growth at the midpoint. The company forecast operating income of $418 million to $421 million and diluted net income per share of $1.19 to $1.20.
Seifert said Cloudflare still expects growth in net capacity of its quota-carrying sales force to accelerate in 2026, despite the restructuring. In response to an analyst question, he said the company “hardly” touched quota-carrying account executive capacity and expects productivity gains in support ratios to allow more sales capacity within the same spending envelope.
Prince closed the call by emphasizing that the restructuring was not about downsizing or saving costs, but about aligning roles with Cloudflare’s future. “Our mission is to help build a better internet,” he said. “It’s never been more important as the internet goes through all of the transitions with AI and agents.”
About Cloudflare (NYSE:NET)
Cloudflare, Inc is a global web infrastructure and security company that provides a suite of services designed to improve the performance, reliability and security of internet properties. Its core offerings include a content delivery network (CDN), distributed denial-of-service (DDoS) protection, managed DNS, and a web application firewall (WAF). Cloudflare also provides tools for bot management, SSL/TLS, load balancing and rate limiting to help organizations maintain uptime and protect web applications from attack.
In addition to traditional edge and security services, Cloudflare has expanded into edge computing and developer platforms.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
The article "Cloudflare Q1 Earnings Call Highlights" was originally published by MarketBeat.
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- Cloudflare, Inc. (NET) Is a Trending Stock: Facts to Know Before Betting on It
May 12, 2026
Cloudflare (NET) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
Shares of this web security and content delivery company have returned +5.2% over the past month versus the Zacks S&P 500 composite's +8.8% change. The Zacks Internet - Software industry, to which Cloudflare belongs, has gained 3.9% over this period. Now the key question is: Where could the stock be headed in the near term?
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Revisions to Earnings Estimates
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Cloudflare is expected to post earnings of $0.27 per share, indicating a change of +28.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The consensus earnings estimate of $1.14 for the current fiscal year indicates a year-over-year change of +22.6%. This estimate has changed +9.8% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $1.44 indicates a change of +25.7% from what Cloudflare is expected to report a year ago. Over the past month, the estimate has changed +0.7%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Cloudflare is rated Zacks Rank #2 (Buy).
Story Continues
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS12-month consensus EPS estimate for NET
Projected Revenue Growth
Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
In the case of Cloudflare, the consensus sales estimate of $663.56 million for the current quarter points to a year-over-year change of +29.5%. The $2.8 billion and $3.58 billion estimates for the current and next fiscal years indicate changes of +29.3% and +27.7%, respectively.
Last Reported Results and Surprise History
Cloudflare reported revenues of $639.76 million in the last reported quarter, representing a year-over-year change of +33.5%. EPS of $0.25 for the same period compares with $0.16 a year ago.
Compared to the Zacks Consensus Estimate of $621.91 million, the reported revenues represent a surprise of +2.87%. The EPS surprise was +8.7%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.
Valuation
Without considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.
Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Cloudflare is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom Line
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Cloudflare. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term.
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Cloudflare, Inc. (NET) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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