TLDR
- Cloudflare Q1 2026 revenue hit $639.8 million, up 33.5% year-over-year, beating estimates by 3%
- Adjusted EPS of $0.25 came in 7% above analyst expectations
- Large customer count grew 25% to 4,416 accounts, now making up 72% of total revenue
- Stock dropped 12% to $223.96 after earnings, despite the beat, before recovering 3.3% in aftermarket trading to $251.39
- Full-year 2026 revenue guidance raised to $2.81 billion at the midpoint
Cloudflare posted strong Q1 2026 results on May 7, beating Wall Street on revenue, earnings, and billings. The stock initially dropped 12% to $223.96, even as the numbers came in ahead of expectations.
Revenue for the quarter came in at $639.8 million, up 33.5% year-over-year and above the analyst estimate of $620.9 million. Adjusted EPS of $0.25 beat the consensus of $0.23 by 7%.
Billings, a closely watched metric, hit $709.4 million — up 37.8% year-over-year. That figure grew faster than revenue itself, which signals strong future revenue visibility.
$NET (Cloudflare) #earnings are out: pic.twitter.com/cQGmmUHRmg
— The Earnings Correspondent (@earnings_guy) May 7, 2026
The large customer segment — accounts generating over $100,000 in annualized revenue — grew 25% to 4,416 customers. That group now accounts for 72% of total revenue, up from 69% a year ago.
Dollar-based net retention came in at 118%, down slightly from the 120% peak in Q4 2025 but still reflecting solid expansion within the existing customer base.
Enterprise Momentum Continues
Cloudflare’s enterprise push is showing results. 42% of Fortune 500 companies are now paying customers, and the large customer segment has grown at a 30% compound annual growth rate over the past two years.
The company’s non-GAAP gross margin was 73% in Q1, down from 77% in the same quarter last year. Management pointed to its serverless architecture and commodity hardware model as structural supports for maintaining healthy margins.
Non-GAAP operating margin came in at 11.4% for the quarter. The company is guiding for a 15% operating margin for the full year.
Operating cash flow for the quarter was $158 million, representing a 25% margin. Free cash flow margin was 13.1%, down from 16.2% in the prior quarter.
Guidance and Outlook
For Q2 2026, Cloudflare guided for revenue of $664–665 million, representing roughly 30% year-over-year growth. Adjusted EPS guidance for Q2 is $0.27.
Full-year 2026 revenue guidance was raised to $2.805–$2.813 billion, up from the prior midpoint of $2.79 billion. Full-year EPS guidance was lifted to $1.19–$1.20, a 7.2% increase at the midpoint.
The company held $4.164 billion in cash as of March 31, 2026. Long-term operating margin targets remain above 20%, with a free cash flow margin target of approximately 25% or higher.
The stock recovered 3.3% in aftermarket trading to $251.39, leaving it near its 52-week high of $260. Cloudflare’s market cap stood at approximately $87.5–$90.6 billion at the time of reporting.
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