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 (Basic)
$-0.07
++36.36% YoY
Gross Margin
71.2%
-4.66% YoY
Operating Income
$-61.99M
-16.43% YoY
Filed · Source: SEC EDGAR 10-Q 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: 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: 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: Source: 10-Q Income Statement
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Upgrade to unlockCost 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: Source: 10-Q Income Statement
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Upgrade to unlockReported EPS of $0.25 versus the $0.24 analyst consensus — a +6.2% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $639.75M | $479.09M | +33.54% |
Cost of Revenue | $184.16M | $115.58M | +59.34% |
Gross Profit | $455.6M | $363.51M | +25.33% |
Operating Income | $-61.99M | $-53.25M | -16.43% |
Net Income | $-22.93M | $-38.45M | +40.38% |
EPS (Basic) | $-0.07 | $-0.11 | +36.36% |
EPS (Diluted) | $-0.07 | $-0.11 | +36.36% |
R&D Expense | $150.97M | $115.09M | +31.18% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $6.16B | $3.72B | +65.64% |
Current Assets | $4.72B | $2.62B | +79.69% |
Total Liabilities | $4.64B | $2.3B | +102.03% |
Current Liabilities | $2.41B | $821.01M | +193.62% |
Stockholders' Equity | $1.53B | $1.43B | +7.07% |
Cash & Equivalents | $932.23M | $204.46M | +355.95% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $158.33M | $145.78M | +8.61% |
Investing Cash Flow | $-158.81M | $-92.44M | -71.80% |
Financing Cash Flow | $-9.47M | $3.52M | -368.82% |
D&A | $57.81M | $42.21M | +36.98% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 71.2% | 75.9% | -4.66% |
Operating Margin | -9.7% | -11.1% | +1.42% |
Net Margin | -3.6% | — | — |
ROE | -1.5% | — | — |
ROA | -0.4% | — | — |
Current Ratio | $1.956 | — | — |
Debt to Equity | $3.037 | — | — |
Cloudflare reported Q1 2026 revenue of $639.8M, a 33.5% YoY increase, and a net loss of $22.9M (EPS of -$0.07), significantly improved from a -$38.5M loss (-$0.11 EPS) a year ago. Whether these results beat Wall Street consensus estimates would require comparison to analyst forecasts, which are not included in the filing itself.
The key takeaways are strong revenue growth of 33.5% to $639.8M, a narrowing net loss to $22.9M, and sustained positive operating cash flow of $158.3M. However, gross margin compressed 4.7 percentage points to 71.2% as cost of revenue surged 59.3% YoY, and total liabilities more than doubled to $4.64B.
Cloudflare's revenue grew 33.5% year-over-year to $639.8M in Q1 2026, up from $479.1M in Q1 2025, reflecting continued strong demand for its cloud networking and cybersecurity services. This growth rate demonstrates robust enterprise adoption of the platform.
Cloudflare maintains adequate short-term liquidity with a current ratio of 1.96 and cash of $932.2M, but carries significant leverage with a debt-to-equity ratio of 3.04 and total liabilities of $4.64B — more than double from a year ago. The company generates positive operating cash flow of $158.3M but remains GAAP unprofitable with an operating loss of $62.0M.
Cloudflare's gross margin fell to 71.2% in Q1 2026 from 75.9% in Q1 2025, a 4.7 percentage point decline, because cost of revenue grew 59.3% YoY to $184.2M — nearly twice the 33.5% revenue growth rate. This suggests rising infrastructure, bandwidth, or data center costs that are outpacing the company's revenue expansion.