NET · Q4 2025 Earnings

Bullish

Cloudflare

Reported February 10, 2026

30-second summary

Cloudflare printed $614.5M in Q4 revenue, up 34% YoY — a third consecutive quarter of acceleration — and beat its own guide by $25M, while RPO jumped to +48% and new ACV grew 50%. Headline forward signals all point the same direction: FY2026 revenue guide of $2.785–2.795B implies +28.7–29.0% growth (a modest deceleration from FY2025's 29.8%), and Q1 FY2026 revenue guide of $620–621M implies +29–30% YoY — in line with the trend, not a deceleration. Matthew Prince used the call to explicitly reposition Cloudflare around an "agentic AI-first operating model," anchored by a record $42.5M ACV deal closed in Q4 and a $130M five-year TCV deal signed at the start of 2025.

Headline numbers

EPS

Q4 FY2025

$0.28

Revenue

Q4 FY2025

$0.61B

+33.6% YoY

Gross margin

Q4 FY2025

73.6%

Free cash flow

Q4 FY2025

$0.10B

Operating margin

Q4 FY2025

-8.0%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$0.61B	+33.6%	$0.56B	+9.3%
EPS	$0.28	—	$0.27	+3.7%
Gross margin	73.6%	—	75.3%	-170bps
Operating margin	-8.0%	—	15.3%	-2330bps
Free cash flow	$0.10B	—	$0.07B	+32.5%

Guidance

Cloudflare beat Q4 FY2025 revenue, EPS, and operating income across the board, then guided FY2026 for 28.7–29.0% revenue growth and 19.4–20.4% EPS growth, but signaled a sharp slowdown for Q1 FY2026 with only 1.0–1.3% YoY revenue growth—suggesting seasonal headwinds or near-term caution.

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	Q4 FY2025	$588.5 to $589.5 million	$614.5 million	+$25.0–25.5 million above guide	Beat
Non-GAAP EPS	Q4 FY2025	$0.27	$0.28	+$0.01 above guide	Beat
Non-GAAP Income from Operations	Q4 FY2025	$83.0 to $84.0 million	$89.6 million	+$5.6–6.6 million above guide	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	FY2026	$2,785.0 to $2,795.0 million	+28.7–29.0% YoY
Non-GAAP EPS	FY2026	$1.11 to $1.12	+19.4–20.4% YoY
Non-GAAP Income from Operations	FY2026	$378.0 to $382.0 million	+27.2–28.6% YoY
Revenue	Q1 FY2026	$620.0 to $621.0 million	+1.0–1.3% YoY
Non-GAAP EPS	Q1 FY2026	$0.23	—
Non-GAAP Income from Operations	Q1 FY2026	$70.0 to $71.0 million	—

Platform metrics

Q4 FY2025

Segment	Q4 FY2025
Remaining Performance Obligations (RPO) YoY Growth	48%
Current RPO YoY Growth	34%

Profitability

Q4 FY2025

Segment	Q4 FY2025
Non-GAAP Gross Margin	74.9%
Non-GAAP Operating Margin	14.6%
Free Cash Flow Margin	16.2%

Management tone

Narrative arc: Reacceleration thesis (Q2) → Acceleration confirmed and monetization broadening (Q3) → Agentic AI-first operating model as the company's core identity (Q4).

Two quarters ago Cloudflare was an infrastructure vendor pivoting its narrative around AI. Last quarter it was a platform with AI as a major theme. This quarter Prince declared an "agentic AI-first operating model" as the company's operating posture, framing the agentic internet as "a fundamental re-platforming of the Internet" in which "Cloudflare is the platform [agents] run on." This is not incremental narrative drift — it is a strategic frame-change, and management is betting the company's identity on it.

The capacity-and-economics argument has now hardened into a hyperscaler differentiation pitch. In Q3 Prince argued Cloudflare could achieve 70–80% utilization on GPUs as it does on CPUs; in Q4 he claimed AI workloads run "10x more efficiently on Cloudflare versus hyperscalers" and explicitly framed Cloudflare's pricing model — pay for work done, not for rented capacity — as the structural advantage over year-long GPU commitments. Quote: "More agents drive more code to Cloudflare Workers, which fuels demand for our performance, security, and networking services." The shift signals management believes the AI inference economics debate is settled in their favor.

The Workers traction story moved from anecdote to enterprise pattern. Last quarter Prince could cite a single $15M pool-of-funds Workers AI deal as a proof point; this quarter, Jonathan Ho's question prompted three specific named-vertical examples — a Fortune 500 pharma vibe-coding platform, a public tech company's plugin sandbox migration, and a major financial services MCP server for AI agent payments. The narrative has matured from "look at this one deal" to "here are three deployment patterns repeating across the enterprise base."

Recurring themes management leaned on this quarter:

Agentic AI-first operating modelPlatform consolidation reducing customer complexityGlobal network infrastructure at scaleEnterprise security and performanceAI-driven efficiency and automationDeveloper productivity acceleration

Risks management surfaced:

Execution risk on agentic AI platform integrationCustomer adoption velocity of new AI capabilities uncertainCompetitive pressure from larger cloud playersEconomic sensitivity of discretionary IT spendGeopolitical tensions impacting infrastructure deployment

Q&A highlights

Matt Hedberg · RBC

How do AI agents like OpenAI and others impact Cloudflare in the short and long term? How does Cloudflare provide picks and shovels for agentic infrastructure without absorbing GPU costs like hyperscalers?

Matthew explained Cloudflare is uniquely positioned because 20% of the internet sits behind them, forcing agents to interact with their platform. Cloudflare's business model focuses on getting work done efficiently rather than renting machines. They run AI workloads 10x more efficiently than hyperscalers by optimizing actual work performed rather than leasing servers. CapEx has increased modestly but remains far below hyperscaler levels due to their capital-efficient model.

20% of internet sits behind CloudflareAI workloads run 10x more efficiently on Cloudflare vs hyperscalersNetwork CapEx: 13% of Q4 revenue; expected 12-15% for 2026Weekly AI agent requests more than doubled in January

Keith Weiss · Morgan Stanley

How is Cloudflare seeing evolution in internet traffic driven by agents and workers? Where do acquisitions like Human Native and Astro fit into the vision?

Matthew discussed how application services and workers are both critical. HumanNative helps define future internet business models beyond ads/subscriptions. Astro powers next-generation web and vibe coding systems. Cloudflare can rewrite content in real-time as it flows through their network, allowing adaptation for agent-optimized formats. Acts to bring legacy internet forward into the agentic future through one-click upgrades.

4.5+ million human developers active on Cloudflare platformCloudflare ranked #1 cloud platform in Stack Overflow survey for learning developersApplication services can rewrite content in real-time for agent optimizationFocus on bringing small businesses along in agentic commerce via partnerships with Shopify, Visa, PayPal, Mastercard

Jonathan Ho · William Blair

Can you provide examples of how companies are using Cloudflare workers for AI projects and why they choose Cloudflare over hyperscalers?

Matthew provided three detailed examples: Fortune 500 pharma company built vibe coding platform using workers AI and durable objects; publicly traded tech company migrated plugin sandbox to Cloudflare containers for secure code execution; leading financial services company launched MCP server on workers for AI agent payment interactions. Key advantages: complete toolkit, modern architecture, infinite scalability with zero scaling to avoid budget overruns—unlike hyperscalers requiring year-long GPU commitments.

Fortune 500 pharma company using workers AI and durable objects for internal AI toolsFinancial services company launched official MCP server on workers for AI agentsHyperscalers require year-long server commitments vs Cloudflare's zero-cost scalingSandboxed containers enable secure isolated code deployment at scale

Gabriella Borges · Goldman Sachs

Can you provide color on the pipeline for large deals ($40M+ annual contract value)? What engagement across the Acts drives these conversions and what are you learning?

Matthew noted strong pipeline from existing customers. Large deals typically come from embedding developers with customer teams to understand use cases and identifying opportunities where Cloudflare can replace hyperscaler spend at lower cost and greater speed/scalability. Not yet at $100M+ deals per quarter but confident will reach that. Sees enormous TAM for workers platform shifting spend from hyperscalers. Success driven by embedding with customers and sophisticated go-to-market.

$42.5 million annual contract value deal closed in Q4 (largest in history)$130 million TCV deal signed at start of yearPipeline driven from existing customer base with embedded developer teamsFocus on replacing hyperscaler spend with more cost-effective Cloudflare solutions

Gray Powell · BTIG

What material pick-up is being seen in Act 1 (core application services) relative to prior quarters, particularly as customers deploy AI?

Matthew explained AI companies initially drove adoption due to security and DDoS mitigation needs—expensive to handle queries without Cloudflare's bot detection. Q4 saw broader uptake from media, e-commerce, and traditional online companies experiencing order-of-magnitude agent traffic increases. Acts 2/3 (zero trust) also seeing uptake as users rapidly implement controls for agents with system access. AI is a tailwind for legacy products, not a headwind.

AI companies use Cloudflare bot detection to manage expensive query handlingOrder-of-magnitude increase in agent-generated queries to web propertiesZero trust self-service adoption growing as users secure agent accessAI is tailwind for both new developer tools and legacy application services

Answers to last quarter's watch list

Q4 revenue printing above the $589.5M high end — Q4 printed $614.5M, beating the high end of the guide by $25M (+4.3% above midpoint) and accelerating to 34% YoY from Q3's 31%. The deceleration concern was decisively rejected. Status: Resolved positively

Current RPO reaccelerating back above 33% — Current RPO came in at +34% YoY, reaccelerating from Q3's +30% and clearing the 33% threshold. Total RPO also accelerated to +48% from +43%. Both forward indicators inflected positively. Status: Resolved positively

Operating margin sustaining at 15%+ — Non-GAAP operating margin came in at 14.6%, beating the implied 14.2% guide but below Q3's 15.3% and below the 15% threshold. Management did beat their own guide by $5.6–6.6M on operating income, so the moderation is contained, but the 15% floor was not held. Status: Resolved negatively

First discrete AI-attributable revenue disclosure — Cloudflare did not disclose a discrete Workers AI run-rate, NetDollar contribution, or AI Gatekeeper revenue figure. Management did quantify weekly AI agent requests "more than doubling in January" and 4.5M+ active developers, but no dollar disclosure. The pattern of qualitative-only AI commentary now extends to a third consecutive quarter. Status: Continue monitoring

$100k+ customer cohort sustaining +23% YoY growth and large-customer mix past 75% of revenue — Customers > $100k reached 4,298, +23% YoY (exactly matching the prior threshold). Large-customer revenue mix climbed to 73% of revenue, up from 69% in Q4 2024 — moved up materially but did not clear the 75% bar. Revenue from this cohort grew 42% YoY. Status: Resolved (mixed) — growth threshold met, mix threshold not yet cleared.

What to watch into next quarter

First discrete AI revenue disclosure remains overdue. Three quarters of qualitative AI commentary without a dollar figure tests investor patience. A Workers AI run-rate, MCP server economics, or NetDollar contribution disclosure is the cleanest catalyst available; continued silence becomes a credibility issue.

Non-GAAP operating margin holding above 14%. Q1 guide of $70–71M on $620–621M revenue implies ~11.4% operating margin — the lowest of 2025. Even with the customary beat, anything below 13% reported would signal that the "agentic AI-first operating model" is more expensive than the narrative suggests.

Current RPO sustaining above 34%. This quarter's reacceleration from 30% to 34% was the cleanest leading-indicator print of the year. If Q1 reverts back below 32%, it suggests Q4's strength was deal-timing-driven rather than structural.

Large-customer revenue mix clearing 75%. Mix moved from 69% to 73% YoY but did not clear the 75% threshold flagged last quarter. Continued progression toward and through 75% would validate the upmarket motion as structural rather than deal-timing-driven.

Concrete $100M+ ACV deal disclosure. Prince explicitly said Cloudflare is "not yet" at $100M+ ACV deals per quarter but is "confident" it will get there. The first $100M+ ACV announcement would validate the enterprise upmarket motion as a durable engine; absence by year-end 2026 would suggest the $42.5M Q4 deal was an outlier.

Sources

Cloudflare Q4 FY2025 press release (Form 8-K Exhibit 99.1), filed February 10, 2026: https://www.sec.gov/Archives/edgar/data/1477333/000147733326000008/q425exhibit991.htm
Cloudflare Q4 FY2025 earnings call prepared remarks and Q&A (Matthew Prince, Thomas Seifert).
Cloudflare Q3 FY2025 and Q2 FY2025 press releases and call commentary (for cross-quarter comparison).

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