The Zhitong Finance App learned that Cloudflare (NET.US) released its financial report for the third quarter of 2026 ending September 30 after the market on Thursday: revenue of US$782.5 million, up 39% year on year, the company's fastest quarterly growth rate in the past four years. The annualized revenue exceeded US$3 billion, exceeding the consensus forecast (US$7368 million) of 6.2%. Non-GAAP diluted earnings of $0.38 per share beat expectations of $0.04, compared to $0.27 for the same period last year.
The profit scale must be broken down: non-GAAP operating profit of US$137.1 million and profit margin of 17.5% (US$102.6 million in the same period of the previous year, up 40% year over year); however, GAAP still lost money — operating loss of US$67.9 million, loss rate increased from 6.7% year on year to 8.7% year on year, net loss of US$34.1 million (US$1.3 million in the same period last year), and diluted loss of $0.10 per share. Free cash flow of $82.1 million and profit margin of 10% was lower than 13% in the same period last year.
As the rapid spread of artificial intelligence continues to drive demand for network services, the third upward guidance during the year: the company expects full-year non-GAAP diluted earnings of $1.35 per share, higher than the previous guidance of $1.25-1.26, and higher than Wall Street's estimate of $1.27 billion; full-year revenue guidance of $2,963 million to $2,964 million. Revenue guidance for the fourth quarter was US$845 million to US$846 million, about 6% higher than the forecast of $795.9 million.
AI is both a growth engine and a storyline. CEO Matthew Prince called this season the company's “best quarter in history,” and Cloudflare has become a “development platform for the AI-driven internet”; its AI product line includes Workers AI for developers to run models and AI Gateway to manage multi-vendor model calls. Cloudflare has also developed developer tools for its applications and artificial intelligence agents, which may increase the demand for its infrastructure and security services as more software is used.
Prince said in a statement: “We have accelerated our growth rate and achieved the fastest revenue growth in nearly four years while improving profitability.”
In May, the company announced layoffs of about one-fifth and a shift to an operating model centered on AI agents. Forward-looking statements in this quarter's press release confirmed the relevant restructuring fee arrangements.
Cloudflare's recent financial report shows that its business is growing rapidly, covering internet infrastructure, security, and development services. The overall performance of cybersecurity stocks was strong this year, but specific results varied from company to company and statistical cycle. For Cloudflare, artificial intelligence is both a growth opportunity and a security challenge.
Thursday's regular session coincided with a historic sell-off in technology stocks (NASDAQ -6.4%, the market weighed the impact of the Democratic Party's overall administration on data center construction). Cloudflare fell along with the general market, but it has accumulated a cumulative increase of 24% since the beginning of the year, outperforming the Russell 1000's 7.5%; after the earnings report was released, the stock price once surged by nearly 20%, and as of press release, the increase had narrowed to 15%.