| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 12 | — | 17.6x | Bottom tier | |
Growth | 84 | 33.5% | 7.1% | Top tier | |
Quality | 43 | -7.4% | 4.5% | Around median | |
Safety | 28 | — | 2.6x | Bottom tier | |
Capital Return | 50 | — | 2.15% | Around median | |
Momentum | 92 | 42.7% | 2.3% | Top tier | |
Sentiment | 45 | 18 | 3 | Around median |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Cloudflare operates a global network that combines application and network security, performance acceleration, Zero Trust and SASE services, and the Workers developer platform within a unified architecture. The company generates revenue from enterprise contracts, subscriptions, consumption, and funds pool agreements; the Workers platform has become a significant revenue contributor, while customers spending more than $100,000 annually accounted for 73% of Q2 FY2026 revenue, compared with 71% a year earlier.
In Q2 FY2026, revenue increased 36% year over year to $696.1 million, and adjusted operating income reached $96.1 million at a 13.8% margin, while adjusted net income was $107.8 million and adjusted diluted earnings per share were $0.29. Gross margin was 73.1%, up 30 basis points sequentially and down 320 basis points year over year, while free cash flow increased 69% to $56.4 million, equivalent to 8% of revenue.
Geographically, 51% of Q2 FY2026 revenue came from the United States, with growth of 41%, 27% came from Europe, the Middle East, and Africa, with growth of 30%, and 14% came from Asia-Pacific, with growth of 32%. On a GAAP basis, the company remains unprofitable; EDGAR filings reported a net loss of $22.9 million in Q1 FY2026 and a net loss of $86.7 million during the reported twelve-month period for 2026.
The average analyst price target is $320.81, slightly below the 52-week range high of $332.22, while the divergence between the lowest target of $136 and the highest target of $390 reveals sharp disagreement over the opportunities in Workers and AI and the execution risks. The consensus is “Buy,” but the absence of a usable price-to-earnings ratio is consistent with continuing GAAP losses, so the valuation is tied to the company's ability to achieve its FY2026 revenue growth guidance of 32% and convert adjusted profitability into sustainable accounting profitability.
Figures in the text are as of 2026-08-27; the live price is shown at the top of the page.
Revenue increased 36% year over year to $696.1 million, driven by momentum in the Workers platform, growth in large customers, and improved sales execution. The number of customers spending more than $100,000 annually reached 4,698, an increase of 27%, and dollar-based net retention rose to 120%. The company also added more than 80,000 paying customers and approximately two million developers during the quarter, ending it with more than 7.4 million developers.
Management said that more than 50% of traffic across Cloudflare's network in Q2 FY2026 was no longer generated by humans, increasing the need for computing, security, and control over agent access. Workers provides a lightweight environment for running agents, and a generative AI company selected it under a $7.5 million funds pool contract to avoid data transfer fees and vendor lock-in. In August 2026, Cloudflare also added Monetization Gateway, wallets, and cloudflare.pay to build mechanisms for selling resources, verification, and payments between agents.
In Q2 FY2026, Cloudflare generated adjusted operating income of $96.1 million and adjusted net income of $107.8 million, with adjusted diluted earnings per share of $0.29. However, EDGAR data shows a GAAP net loss of $22.9 million in Q1 FY2026 and a loss of $86.7 million during the reported twelve-month period for 2026. On August 6, 2026, the CFO said the company was ahead of its goal of reaching GAAP profitability by the end of 2028 at the latest, without specifying an alternative date.
Automated analysis for informational purposes only — not investment advice.
Management expects FY2026 revenue of between $2.864 billion and $2.870 billion, equivalent to annual growth of approximately 32%. The expected adjusted operating income range is $443 million to $445 million, with adjusted diluted earnings per share of between $1.25 and $1.26 based on approximately 374 million shares. For Q3 FY2026, the company expects revenue of between $736 million and $737 million and adjusted operating income of between $129 million and $130 million.
The segment of customers spending more than $100,000 annually represented 73% of Q2 FY2026 revenue, up from 71% a year earlier. Disclosed deals included a five-year, $31.8 million contract for application services and Zero Trust and an 18-month, $15.9 million contract for application services and Workers. A U.S. government customer also signed a five-year, $7.7 million contract for Magic Transit and Network Firewall after Cloudflare reduced the rule-modification time from a one-week service agreement to 30 seconds.
Gross margin in Q2 FY2026 declined 320 basis points year over year to 73.1% despite improving sequentially, while the company expects network capital expenditures equal to 14% to 15% of FY2026 revenue. Expected severance and restructuring charges reached up to $165 million, with a cash impact of up to $130 million. The $2.175 billion of convertible notes due in 2031 also carry the potential for shareholder dilution, while the wide range of analyst targets from $136 to $390 makes valuation sensitivity high.
