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Cloudflare (NET) is jumping sharply higher following a beat-and-raise Q3 report last night. Adjusted EPS increased 40.7% yr/yr to $0.38, exceeding expectations, while revenue growth continued to accelerate, increasing 39.2% to $782.51 mln as strong enterprise demand, developer platform adoption, and growing security needs supported results. Additionally, NET guided Q4 EPS of $0.43 on revenue of $845-846 mln, both above expectations, with revenue growth expected to remain strong at approximately 38% yr/yr.

• Cloudflare surpassed $3 bln in annualized revenue, marking its fastest revenue growth in nearly four years. Remaining performance obligations (RPO) increased 34% yr/yr to $2.88 bln, while current RPO growth accelerated to 37% from 35% in Q2.
• Large customer momentum remained particularly strong, with NET adding a record 308 customers spending more than $100,000 annually, bringing the total to 5,006, up 25% yr/yr. Large customers now account for 75% of revenue, while dollar-based net retention improved to 122% from 120% in Q2, reflecting increased spending from existing customers.
• Cloudflare's Workers developer platform remained a major growth driver, supported by increasing adoption for AI applications and agentic workflows. The platform surpassed 10 mln active developers, more than doubling since the start of 2026. Management also highlighted accelerating consumption-based revenue, with customers using their committed spending pools faster and renewing earlier.
• AI adoption and growing cybersecurity needs are providing additional growth opportunities. Management highlighted increasing demand for protection against more sophisticated security vulnerabilities, including those uncovered using AI. Meanwhile, rapid growth in AI agents is driving demand for Cloudflare's infrastructure, with daily AI agent requests across its network increasing more than 1,700% over the past year.

Briefing.com Analyst Insight

Cloudflare's Q3 was an encouraging report, with revenue growth accelerating to its fastest pace in nearly four years alongside improving profitability. Much of this strength reflects growing adoption of its developer platform, particularly as companies build more AI applications and agents, while demand for its security offerings continues to expand. What stands out is that this growth is not limited to AI-focused customers, with larger enterprises across industries increasingly adopting more of Cloudflare's platform. Improving sales execution has also contributed, reflected in record large customer additions and stronger retention. Another upside Q4 outlook reinforces this momentum, with management expecting strong growth to continue through year-end.