Strong Revenue Acceleration
Revenue grew 33.5% YoY to $639.8M in Q1 2026, up from $479.1M in Q1 2025, reflecting continued strong demand for Cloudflare's network security and connectivity services.
Source: 10-Q Income Statement
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Cloudflare (NET) delivered strong Q1 2026 revenue growth of 33.5% YoY to $639.8M, while narrowing its net loss to $22.9M and maintaining positive operating cash flow of $158.3M, though gross margin compressed 4.7 percentage points to 71.2%.
Revenue
$639.75M
+33.54% YoY
EPS (Diluted)
-$0.07
+36.36% YoY
Gross Margin
71.2%
-4.7 pts YoY
Operating Income
-$61.99M
-16.43% YoY
Source: SEC XBRL
Cloudflare (NET) reported Q1 FY2026 revenue of $639.75M, up 33.5% year over year. Operating margin was -9.7%, against -11.1% a year earlier. Operating cash flow was $158.33M, up 8.6% year over year. NET's fiscal Q1 FY2026 corresponds to calendar Q1 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026 | 0.29 | 0.27 | Beat +6.5% |
| Mar 2026This filing | 0.25 | 0.24 | Beat +6.2% |
| Dec 2025 | 0.28 | 0.27 | Beat +2.4% |
| Sep 2025 | 0.27 | 0.24 | Beat +14.2% |
Adjusted (non-GAAP) EPS of $0.25 versus the $0.24 analyst consensus — a +6.2% beat for Mar 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was -$0.07.
Compiled by AI from this SEC filing
Revenue grew 33.5% YoY to $639.8M in Q1 2026, up from $479.1M in Q1 2025, reflecting continued strong demand for Cloudflare's network security and connectivity services.
Source: 10-Q Income Statement
Gross margin declined 4.7 percentage points YoY to 71.2% (from 75.9%), driven by cost of revenue rising 59.3% YoY to $184.2M — significantly outpacing revenue growth — suggesting higher infrastructure and delivery costs.
Source: 10-Q Income Statement
Net loss improved 40.4% YoY to -$22.9M (from -$38.5M), and operating margin improved from -11.1% to -9.7%, indicating gradual progress toward profitability despite continued investment in growth.
Source: 10-Q Income Statement
Total assets surged 65.6% YoY to $6.16B, with cash and equivalents jumping 355.9% to $932.2M, likely reflecting capital markets activity; however, total liabilities also doubled (+102.0%) to $4.64B, and current liabilities nearly tripled (+193.6%) to $2.41B.
Source: 10-Q Balance Sheet
Operating cash flow remained healthy at $158.3M (+8.6% YoY), demonstrating that the business continues to generate cash from operations despite GAAP net losses, supported by $57.8M in D&A add-backs.
Source: 10-Q Cash Flow Statement
Compiled by AI from this SEC filing · 2 high, 3 medium, 0 low
Cost of revenue grew 59.3% YoY — nearly double the revenue growth rate of 33.5% — compressing gross margin by 4.7 percentage points to 71.2%. If infrastructure and bandwidth costs continue to outpace revenue growth, profitability timelines could be pushed out significantly.
Source: 10-Q Income Statement
Total liabilities more than doubled YoY to $4.64B, pushing the debt-to-equity ratio to 3.04. Current liabilities nearly tripled to $2.41B, which, while partially offset by a current ratio of 1.96, represents a meaningful increase in near-term financial obligations.
Source: 10-Q Balance Sheet
Cloudflare reported an operating loss of -$62.0M in Q1 2026, widening 16.4% from -$53.2M a year ago. Despite improving net loss figures, the company has yet to achieve GAAP operating profitability, and continued heavy R&D spending ($151.0M, +31.2% YoY) reflects ongoing investment intensity.
Source: 10-Q Income Statement
R&D expense reached $151.0M in Q1 2026, representing approximately 23.6% of revenue. While necessary to maintain competitive positioning in a rapidly evolving cybersecurity and networking landscape, this level of spending constrains near-term profitability.
Source: 10-Q Income Statement
Investing cash outflows increased 71.8% YoY to -$158.8M, nearly matching operating cash inflows of $158.3M, resulting in essentially breakeven free cash flow. Continued infrastructure investment could pressure free cash flow generation if revenue growth moderates.
Source: 10-Q Cash Flow Statement
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $M | 639.76 $M | 479.09 $M | +33.54% |
Cost of Revenue $M | 184.16 $M | 115.58 $M | +59.34% |
Gross Profit $M | 455.60 $M | 363.51 $M | +25.33% |
Operating Income $M | -61.99 $M | -53.25 $M | -16.43% |
Net Income $M | -22.93 $M | -38.45 $M | +40.38% |
EPS (Basic) $ | -0.07 $ | -0.11 $ | +36.36% |
EPS (Diluted) $ | -0.07 $ | -0.11 $ | +36.36% |
R&D Expense $M | 150.97 $M | 115.09 $M | +31.18% |
Answers draw on this SEC filing and the data on this page
Cloudflare's Q2 FY2026 featured strong revenue growth and improved customer retention, but a large restructuring charge drove a steep net loss as the company pivots toward an AI-first operating model.
Cloudflare (NET) delivered strong FY2025 revenue growth of 29.8% to $2.17B, but operating losses widened to -$207.2M as cost of revenue surged 45.9%, while a large financing raise boosted cash to $943.5M and total assets grew 82.9%.