NET · Q3 2025 Earnings

Bullish

Cloudflare

Reported October 30, 2025

30-second summary

Cloudflare printed $562M in Q3 revenue, up 31% YoY — a second consecutive quarter of acceleration — and beat its own guide by $17.5M+ while raising FY2025 revenue guidance by ~$28M and non-GAAP EPS to $0.91 from $0.855. The standout metric is RPO at +43% YoY (the highest since 2022) and Current RPO at +30%, both running materially ahead of in-period revenue and signaling durable forward bookings. Large customer concentration deepened (73% of revenue from $100k+ accounts vs. 67% a year ago) and Workers/AI inference continues to absorb capacity without breaking the capital-light architecture.

Headline numbers

EPS

Q3 FY2025

$0.27

Revenue

Q3 FY2025

$0.56B

+31.0% YoY

Gross margin

Q3 FY2025

75.3%

Free cash flow

Q3 FY2025

$0.07B

Operating margin

Q3 FY2025

15.3%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$0.56B	+31.0%	$0.51B	+9.7%
EPS	$0.27	—	$0.21	+28.6%
Gross margin	75.3%	—	74.9%	+40bps
Operating margin	15.3%	—	-13.1%	+2840bps
Free cash flow	$0.07B	—	$0.03B	+125.4%

Guidance

Strong Q3 beat drives significant full-year FY2025 guidance raise across revenue, operating income, and non-GAAP EPS; Q4 guidance newly issued.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q3 FY2025	$543.5 to $544.5 million	$562.0 million	+$17.5–18.5 million above guide	Beat
Non-GAAP EPS	Q3 FY2025	$0.23	$0.27	+$0.04 above guide	Beat
Non-GAAP Income from Operations	Q3 FY2025	$75.0 to $76.0 million	$86.0 million	+$10.0–11.0 million above guide	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	Q4 FY2025	$588.5 to $589.5 million	—
Non-GAAP EPS	Q4 FY2025	$0.27	—
Non-GAAP Income from Operations	Q4 FY2025	$83.0 to $84.0 million	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY2025	$2,113.5 to $2,115.5 million	$2,142.0 to $2,143.0 million	+$26.5–29.5 million	Raised
Non-GAAP EPS	FY2025	$0.85 to $0.86	$0.91	+$0.05–0.06	Raised
Non-GAAP Income from Operations	FY2025	$284.0 to $286.0 million	$297.0 to $298.0 million	+$11.0–14.0 million	Raised

Platform metrics

Q3 FY2025

Segment	Q3 FY2025
RPO YoY Growth	43%
Current RPO YoY Growth	30%

Profitability

Q3 FY2025

Segment	Q3 FY2025
Non-GAAP Operating Margin	15.3%
Non-GAAP Gross Margin	75.3%
Free Cash Flow Margin	13%
Operating Cash Flow	167.1 million

Management tone

Narrative arc: Reacceleration thesis (Q2) → Acceleration confirmed and monetization broadening (Q3).

The most important shift is from "the largest customers are spending at 2022 highs" (Q2's framing) to a broader claim about platform momentum and consumption velocity. In Q2, Prince leaned heavily on a single $15M pool-of-funds Workers AI deal as proof point; in Q3, pool-of-funds is now described as "low double digits of total ACV" with multiple cohorts ($1M+ and $5M+) growing at record rates. The concentration story has matured into a distribution story.

Second, the Act 4 / agentic web framing has moved from speculative ("too early to model") to operational. Prince used the Q3 call to position NetDollar as agent-to-agent commerce infrastructure, with explicit partnerships (Coinbase on X402, Visa/MasterCard/Amex on agent payments) and a multi-protocol stance (MCP, Google, Microsoft variants). The hedge that Cloudflare "may not optimize" near-term monetization from media partners persists, but the surface area of disclosed AI-adjacent products expanded materially.

Third, the capacity question has been answered more aggressively. Where Q2 framed the distributed architecture as a cost advantage during DDoS spikes, Q3 extends the same logic to GPU economics: Cloudflare is "working to achieve similar 70–80% utilization rates" on GPUs as on CPUs, and Thomas Seifert noted supply chain optimization "allows revenue generation before hardware payment." The implication is that AI inference scaling does not require a hyperscaler-style capex front-load.

Q&A highlights

Matt Hedberg · RBC Capital Markets

What drove the 43% RPO growth acceleration this quarter, the highest reported since 2022? How is the pool of funds contract vehicle showing up in results?

Matthew attributed acceleration to transformation from product-led to enterprise sales, with higher average deal sizes and large customer growth. Thomas noted RPO drivers were customer quality, platform expansion, record growth in $1M+ and $5M+ customer cohorts, and workers platform consumption. Pool of funds contracts now represent low double digits of total ACV with balanced consumption slightly ahead of contract value.

43% RPO growth, highest since 2022RPO now $2.143 billion, up 8% sequentially and 43% YoYPool of funds now low double digits of total ACV4,009 large customers, 23% YoY growth

Gabriela Borges · Goldman Sachs

Is workers capacity-constrained and how do capacity investments dictate workers revenue outcomes? What are thoughts on fungibility of workloads between CPUs and different GPU generations?

Matthew stated they are not capacity-constrained due to architecture flexibility and ability to move workloads globally. They invest behind demand, not ahead. Described achieving 70-80% CPU utilization and now optimizing GPU utilization similarly. Emphasized they sell ability to get work done across network, not individual server capacity. Thomas added supply chain optimization allows revenue generation before hardware payment.

Maintain 70-80% CPU utilization ratesWorking to achieve similar GPU utilization ratesNetwork capex 14% of revenue in Q3, expect ~13% for full year 2025Can deploy hardware in tier-one cities and generate revenue before paying for equipment

Shaul Eyal · TD Cowan

How should we think about regulatory framework around NetDollar and early reception? What has changed with AI Gatekeeper in recent months and is anyone else emerging with similar offerings?

Matthew explained NetDollar is designed for agent-to-agent commerce currency but unlikely to be executed entirely in-house due to regulatory concerns. Noted thoughtful approach with Stephanie Cohen's financial services expertise. Emphasized multi-protocol support (MCP, Google, Microsoft versions) and partnerships with Coinbase (X402) and card networks. On AI Gatekeeper, said media companies report markedly better deal terms with AI companies and strong engagement; competition likely but Cloudflare differentiated through public policy work and focus on fair participation for small businesses.

NetDollar approach is multi-partnership strategy, not all-inPartnering with Coinbase on X402 protocolWorking with Visa, MasterCard, American Express on agent-to-agent paymentsAI Gatekeeper showing strong media company adoption

Mark Murphy · JPMorgan

Can you describe quantum-safe security work and timeline implications? Can you touch on economics unlocked by eliminating egress fees?

Matthew characterized quantum as solvable problem, not apocalyptic. Described partnership with Google on post-quantum cryptography, submission to IETF and NIST, and rollout across entire network. Emphasized importance now due to data storage risk and showed U.S. government cabinet agency example. On egress fees, explained hyperscalers keep them artificially high despite low bandwidth costs. R2 object store allows customers to move data on Cloudflare network and multi-cloud environments without egress penalties.

Post-quantum cryptography rolled out across entire networkPartnered with Google on cryptography standardsU.S. government cabinet agency prioritizes quantum-safe securityR2 object store enables multi-cloud data movement without egress fees

Answers to last quarter's watch list

Current RPO growth sustaining above 30% — Current RPO came in at +30% YoY, right at the threshold and below Q2's +33%, while total RPO accelerated to +43% from +39%. The reacceleration thesis is intact at the total-RPO level but the current-RPO line is a hair softer. Status: Resolved positively

Q3 revenue landing above the $544.5M high end — Q3 printed $562M, beating the high end of the guide by $17.5M (+3.3% above midpoint) and accelerating to 31% YoY. Status: Resolved positively

Non-GAAP operating margin holding 14%+ as investment continues — Q3 operating margin came in at 15.3%, up 120bps from Q2's 14.1%, with FCF margin stepping from 6% to 13%. Operating leverage thesis holds. Status: Resolved positively

Any disclosed revenue contribution from Workers AI or pay-per-crawl — Management did not break out a discrete AI revenue line; Workers consumption was cited as an RPO driver and AI Gatekeeper traction was discussed qualitatively, but no dollar figure was disclosed. Status: Continue monitoring

Customers > $100k net adds and pool-of-funds commentary — $100k+ cohort grew to 4,009 customers (+23% YoY, accelerating from +22% in Q2), large customers now 73% of revenue (vs. 67% YoY), and pool-of-funds was sized at "low double digits of total ACV" with consumption running slightly ahead of contract — the most informative pool-of-funds disclosure to date. Status: Resolved positively

What to watch into next quarter

Q4 revenue printing above the $589.5M high end. With three straight quarters of beat-and-raise, anything at or below the midpoint would read as a deceleration signal — particularly because the implied Q4 YoY growth (~28%) decelerates from Q3's 31%.

Current RPO reaccelerating back above 33%. Current RPO at +30% in Q3 was below Q2's +33%; if it slips further while total RPO holds, it suggests the bookings strength is concentrated in longer-dated contracts rather than near-term revenue conversion.

Operating margin sustaining at 15%+. Q4 guide of $83–84M on $589M revenue implies ~14.2% operating margin — a step-down from Q3's 15.3%. Watch whether actuals beat the implied margin or confirm the moderation.

First discrete AI-attributable revenue disclosure. Two quarters of qualitative AI commentary without a dollar figure is approaching the limit of investor patience; either a Workers AI run-rate disclosure, a NetDollar contribution, or an AI Gatekeeper economics datapoint would be a meaningful catalyst.

$100k+ customer cohort sustaining +23% YoY growth and large-customer mix climbing past 75% of revenue. The concentration trajectory is the engine of the reacceleration; any stall here flags the enterprise motion plateauing.

Sources

Cloudflare Q3 FY2025 press release (Form 8-K Exhibit 99.1), filed October 30, 2025: https://www.sec.gov/Archives/edgar/data/1477333/000147733325000140/q325exhibit991.htm
Cloudflare Q3 FY2025 earnings call Q&A commentary (Matthew Prince, Thomas Seifert).
Cloudflare Q2 FY2025 press release and call transcript (for cross-quarter comparison).

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