Live: Is Cloudflare (NET) The Next AI Stock to Top Earnings Expectations?

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What Wall Street Expects When Cloudflare Reports Today

10:14 am

Here’s Wall Street’s consensus expectations for Q2 earnings.

• Revenue: $501.6 million
• Adjusted EPS: $1.8
• Gross Margin: 77.8%
• Free Cash Flow: $29.9 million

More importantly, Cloudflare will likely need to raise forward guidance if shares are going to rise tomorrow.

In the third quarter, Wall Street expects:

• Revenue: $538.6 million
• Adjusted EPS: $.21

And the company could also raise 2025 growth targets. Currently, Cloudflare is projecting sales of $2.090 billion to $2.094 billion. Wall Street expectations are slightly above that range at $2.096 billion.

If Cloudflare took revenue guidance for the year beyond $2.1 billion, that could be enough for shares to rise again tomorrow.

Cloudflare (NYSE: NET) reports earnings after the bell today. The company’s shares have raced forward 78% this quarter. Bears will argue that Cloudflare’s valuation is stretched to the max. Cloudflare is expected to post revenue of $2.1 billion this year, but is now worth more than $70 billion. 

Bulls point to Cloudflare being an essential company for the growth of agentic AI. With inference needs rising, companies will look to Cloudflare as a solution to limit latency in the age of AI. 

Count me in on the bull side, I added shares of Cloudflare to the $500,000 AI Portfolio I manage for 24/7 Wall St. back in January. 

I’ll be updating this live blog with news and analysis the moment Cloudflare’s earnings go live. All you have to do is simply leave this page open and updates will automatically appear. 

With that, let’s look back at Cloudflare’s first quarter earnings. 

Here’s What Cloudflare Reported In the First Quarter 

Cloudflare last reported on May 8th. Shares jumped the next day and are up 61%. Let’s take a look back at what the company reported: 

NET | Cloudflare Q1’25 Earnings Highlights:

• Adj. EPS: $0.16 ; UP +0% YoY
• Revenue: $479.1B []; UP +27% YoY
• Adj. Gross Margin: 77.1% []; DOWN -240 bps YoY
• Net Income: -$38.5M []; DOWN -8% YoY
• Free Cash Flow: $52.9M; UP +48% YoY

Q1’25 Outlook:

• Revenue: $500.0 to $501.0M []
  • Cloudflare expects continued growth driven by strong demand for its services, particularly in the SASE and developer platform segments.
  • The company anticipates maintaining its momentum with new customer acquisitions and upselling to existing customers.

Q1 Segment Performance:

• Revenue from Core Services: $479.1M []; UP +27% YoY

Other Key Q1 Metrics:

• Adj. Operating Income: $56.0M []; UP +32% YoY
• Adj. Operating Expenses: $416.8M []; UP +20% YoY
• Cash, Cash Equivalents, and Available-for-Sale Securities: $1,914.9M; UP +2% YoY
• Effective Tax Rate: 4.6% (vs. 6.3% YoY)

CEO Commentary:

• Matthew Prince: “We kicked off 2025 with confidence, momentum, and strong results. In Q1, we landed the largest contract in Cloudflare’s history, a more than $100 million deal driven by our Workers developer platform, and signed the longest-term SASE contract to date. We have the scale, the technology, and the team to capture the massive opportunity ahead of us—as evidenced by the size and the length of the deals we’re closing and the caliber of customers betting on Cloudflare. In a constantly changing world, one thing’s for certain: innovation wins. From networking, to security, to AI, Cloudflare is the envy of the industry for innovation, and there’s no slowing down.”

Strategic Updates:

• Cloudflare continues to enhance its product offerings, focusing on innovation in networking, security, and AI technologies to maintain its competitive edge.

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