Cloudflare (NET) investor relations material

Executive summary

• Achieved Q2 2026 revenue of $696.1 million, up 36% year-over-year, with record growth in large and paying customers, and strong developer adoption.

• Large customers (>$100,000/year) reached 4,698, representing 73% of revenue and 27% year-over-year growth.

• Dollar-based net retention rate was 120% for Q2 2026, up from 114% in Q2 2025.

• Net loss widened to $170.0 million due to higher operating expenses and $150.7 million in restructuring charges related to a 20% workforce reduction.

• Positioned at the center of the shift to AI-driven and agentic internet infrastructure, with a focus on security, performance, and developer innovation.

Financial highlights

• Q2 2026 non-GAAP gross margin was 73.1%, with GAAP gross margin at 71.8%; gross profit was $499.5 million.

• Non-GAAP operating margin was 13.8%; non-GAAP operating profit reached $96.1 million.

• Free cash flow was $56.4 million (8% of revenue), up 69% year-over-year.

• Net cash from operating activities was $117.6 million for the quarter.

• Cash, cash equivalents, and available-for-sale securities totaled $4.16 billion as of June 30, 2026.

Outlook and guidance

• Q3 2026 revenue expected between $736 million and $737 million; non-GAAP operating income $129 million–$130 million; non-GAAP net income per share $0.34.

• FY 2026 revenue guidance of $2.864 billion–$2.870 billion, up 32% year-over-year; non-GAAP operating income $443 million–$445 million; non-GAAP net income per share $1.25–$1.26.

• FY 2026 network capex expected at 14–15% of revenue.

• Effective tax rate expected to be 20%.

• Targeting GAAP profitability by 2028.