Cloudflare’s guidance exceeded expectations and AI is proving to be a key growth driver

The stock surged after the software maker released its fourth-quarter earnings and revenue. These figures exceeded Wall Street expectations and the company’s 2026 revenue outlook.  The financial results were announced after the market closed on Tuesday.  For the quarter ending December 31st, Cloudflare reported earnings of 28 cents, a 47% increase compared to the previous year.  Revenue also rose 34% to $614.5 million, according to the San Francisco-based company. Analysts had predicted a fourth-quarter profit of 27 cents per share and revenue of $591.3 million.

In early trading today, Cloudflare stock surged over 15% reaching 207.50. It later fell back to $188.5

William Blair analyst Jonathan Ho’s report praised Cloudflare for delivering another exceptionally strong quarter.  The Company exceeded expectations across all metrics and provided robust guidance for 2026. Ho further explained that the company’s growing use of its Cloudflare Workers AI platform increased website traffic and led to larger deals resulting in substantial revenue growth.

Cloudflare 2026 Guidance

For full-year 2026, Cloudflare projected earnings per share of about $1.11 per share. The company expects revenue of $2.79 billion at the midpoint of guidance. Analysts predicted profit of $1.18 per share and revenue of $2.731 billion.

Heading into the Cloudflare earnings report, shares were down 7% in 2026 after popping 83% last year.

Fourth quarter revenue totaled $614.5 million, representing an increase of 34% year-over-year; fiscal year 2025 revenue totaled $2,167.9 million, representing an increase of 30% year-over-yearGAAP loss from operations of $49.2 million, or 8% of total revenue, and non-GAAP income from operations of $89.6 million, or 15% of total revenueDelivered RPO year-over-year growth of 48% and Current RPO year-over-year growth of 34%

“We had an exceptionally strong end to 2025. In Q4, we closed our largest annual contract value deal ever—averaging $42.5 million per year—and total new ACV grew nearly 50 percent year-over-year, our fastest growth rate since 2021,” said Matthew Prince, co-founder & CEO, Cloudflare. “The shift toward AI and agents represents a fundamental re-platforming of the Internet that’s driving demand across Cloudflare’s services. If agents are the new users of the web, Cloudflare is the platform they run on and the network they pass through. This creates a virtuous flywheel: more agents drive more code to Cloudflare Workers, which fuels demand for our performance, security, and networking services. We were built for this moment and the rise of the Agentic Internet.”

Started in 2009, Cloudflare works to speed up and provide security for web applications routed through its intelligent global network.

Many companies are in trials with autonomous, goal-driven artificial intelligence “agents.” Cloudflare sees an opportunity to be a key network provider for the agentic web by helping set the guardrails and business model around agent-to-agent transactions. To protect their content, Cloudflare in 2025 also began giving web domains the option to block AI crawlers.

“AI is becoming the biggest tailwind for Cloudflare’s network and Workers developer platform,” said TD Cowen analyst Shaul Eyal in a report. “The company  highlighted strength from the Workers developer platform, disclosing that it exited 2025 with more than 4.5 million developers active on its platform. Cloudflare also noted that during January 2026, the number of weekly requests generated by AI agents more than doubled across its network.”