Key Highlights

● Revenue grew 36% year on year to $696.1 million, accelerating from the prior period.

● GAAP net loss widened to $170.0 million, including $150.7 million of restructuring charges.

● Non-GAAP Net Income was $107.8 million, or $0.29 per diluted share.

● Current remaining performance obligations rose 35% year on year during the quarter.

Cloudflare, Inc. (NYSE:NET) announced its second-quarter 2026 financial results on 6 August 2026, reporting revenue of $696.1 million, up 36% from $512.3 million a year earlier. Chief executive Matthew Prince described this as revenue accelerating, which is the central reason the report attracted attention: a company already at a revenue run rate of nearly $2.8 billion a year grew faster than it did in the comparable period.

What Cloudflare does

Cloudflare operates a large global network that sits between internet users and the websites, applications and corporate systems they use. Its products protect against attacks, speed up content delivery, replace parts of traditional corporate network security and provide developer tools for running code close to users. Customers range from individual developers to large enterprises, and most revenue comes from subscriptions.

The sector combines cybersecurity, networking and cloud computing. Cloudflare competes with content delivery and security specialists such as Akamai and Fastly, with security vendors including Zscaler and Palo Alto Networks, and with hyperscale cloud providers that offer similar services. Demand is shaped by rising traffic, cyber threats and the infrastructure needs of artificial intelligence applications.

Results for the quarter

Current remaining performance obligations, a measure of contracted revenue due within twelve months, rose 35% year on year. The company reported a GAAP loss from operations of $205.7 million, equal to 29.6% of revenue, and a GAAP net loss of $170.0 million, or $0.48 per share, compared with a net loss of $50.4 million in the second quarter of 2025. Restructuring and other charges of $150.7 million were included in the period.

On a non-GAAP basis, which excludes items such as share-based compensation and restructuring, income from operations was $96.1 million, a Margin of 13.8%, and net income was $107.8 million, or $0.29 per diluted share. Free Cash Flow was $56.4 million, equal to 8% of revenue, up from $33.3 million a year earlier. Cash, cash equivalents and available-for-sale securities stood at $4,162.8 million.

Guidance

For the third quarter of 2026 Cloudflare guides revenue of $736.0 million to $737.0 million, non-GAAP income from operations of $129.0 million to $130.0 million and non-GAAP Earnings Per Share of $0.34. For the full year it expects revenue of $2,864.0 million to $2,870.0 million, non-GAAP income from operations of $443.0 million to $445.0 million and non-GAAP earnings per share of $1.25 to $1.26, based on about 374 million shares. These are management projections, not reported results, and actual figures may differ materially.

Risks and uncertainties

The gap between GAAP and non-GAAP results is substantial, and the company remains loss making on a GAAP basis, so investors must judge how much weight to place on adjusted measures. The GAAP loss widened from the prior year, which makes the restructuring charge the key item to understand. The charge indicates that the organisation changed during the period, although the release itself should be consulted for its precise nature. Competition from larger cloud providers is a persistent challenge, and a Business that depends on network usage can be affected by outages or security incidents. Customer spending patterns, currency movements and the timing of large contracts also influence quarterly results.

What the Restructuring Charge Signals Next

The next Quarterly Report will test whether revenue lands near the guided $736 million and whether growth stays near the 36% reported. Further indicators include the growth in contracted revenue, the trajectory of free cash flow margin from the 8% reported in the second quarter, and the extent to which restructuring costs recur. Readers will also want to see whether full-year non-GAAP Operating Income of about $444 million, the midpoint of guidance, is achieved as the company continues to invest in its network and in products aimed at AI workloads.