Cloudflare (NET) Q2 2026 earnings summary

Executive summary

• Achieved Q2 2026 revenue of $696.1 million, up 36% year-over-year, with record growth in large and paying customers, strong developer adoption, and a dollar-based net retention rate of 120%.

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

• Net loss widened to $170.0 million due to higher operating expenses and a $150.7 million restructuring charge related to a 20% workforce reduction, as the company accelerated its transition to an agentic AI-first operating model.

• Over 7.4 million developers now on the platform, with nearly 2 million added in Q2 alone.

• Positioned as a unified platform for security, connectivity, and developer innovation, with a focus on AI and agentic internet trends.

Financial highlights

• Q2 2026 non-GAAP gross margin was 73.1%, up sequentially but down year-over-year; GAAP gross profit was $499.5 million (71.8% margin).

• Non-GAAP operating profit was $96.1 million (13.8% margin), and non-GAAP net income reached $107.8 million ($0.29/share); GAAP net loss was $170.0 million.

• Free cash flow was $56.4 million (8% of revenue), and net cash from operating activities was $117.6 million.

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

• Accumulated deficit reached $1.40 billion as of June 30, 2026.

Outlook and guidance

• Q3 2026 revenue expected at $736–$737 million; non-GAAP operating income $129–$130 million.

• FY 2026 revenue guidance raised to $2.864–$2.870 billion, with non-GAAP operating income $443–$445 million and diluted net income per share $1.25–$1.26.

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

• Targeting GAAP profitability by 2028.