Cloudflare reported financial results that exceeded expectations, with surging demand for artificial intelligence fueling its fastest growth since 2021. The company's stock surged nearly 16% in after-hours trading.
For the fourth quarter, Cloudflare announced revenue of $614.5 million, a 33.6% year-over-year increase, surpassing analyst estimates of $591.3 million. The company provided full-year 2026 revenue guidance in the range of $2.79 billion to $2.8 billion, which is above the market consensus of $2.74 billion.
Cloudflare disclosed that it secured its largest annual contract value deal in history during the fourth quarter. Co-founder and CEO Matthew Prince stated in the earnings report that the quarter ended strongly, marked by the record contract with an average annual value of $42.5 million. Total new annual contract value grew by nearly 50% compared to the same period last year, representing the company's most rapid growth rate since 2021.
Prince added that the shift toward artificial intelligence and intelligent agents signifies a fundamental restructuring of internet platforms, which is driving increased demand for Cloudflare's services.
The company reported earnings per share of $0.28 for the quarter, beating analyst forecasts. Its net loss narrowed to $12.1 million from $12.8 million in the prior-year period. Following the earnings release, Cloudflare's stock jumped nearly 16% in extended trading. Despite the after-hours gain, the stock is down more than 8% year-to-date, following an 83% surge throughout 2025.
The rapid integration of AI across various industries is fueling a surge in demand for cloud services, as businesses prioritize investment in the digital infrastructure required for this emerging technology. Cloudflare is seen as a direct beneficiary of this trend. The emergence of an open-source AI agent in late January, initially named "Clawdbot" and later renamed "OpenClaw," sparked investor enthusiasm for the company's edge computing infrastructure, contributing to a significant stock price increase at the time.
Prince commented that if intelligent agents are the new users of the internet, then Cloudflare is the platform they run on and the network they traverse. According to data on Cloudflare's website, the company provides services for millions of websites, processing an average of 81 million HTTP requests per second. Its offerings include accelerating website load times through a content delivery network and providing protection against malicious activities such as DDoS attacks. Users can leverage Cloudflare's technology for secure remote control without compromising home network security.
For the first quarter of 2026, Cloudflare anticipates revenue between $620 million and $621 million, exceeding the market expectation of $613.9 million. Adjusted earnings per share are projected to be $0.23, slightly below the anticipated $0.25. For the full year 2026, the company expects adjusted earnings per share in the range of $1.11 to $1.12, which is below the market consensus of $1.19.
In a recent earnings preview report, an analyst noted that Cloudflare remains well-positioned to benefit from increased AI application usage. The company estimates that approximately 80% of leading AI firms utilize its solutions, allowing it to capitalize on its edge inference network and AI Workers development platform. The analyst also observed that Cloudflare has not been immune to the broader sell-off in the software sector. A software-focused ETF is down 21% year-to-date, compared to a 6% gain during the same period last year. Given Cloudflare's high valuation multiples, this performance is not considered surprising.