Revenue surges 34% year-over-year as company shifts to an AI-first operating model
Cloudflare (NET) reported a strong start to fiscal 2026, highlighting robust revenue growth and increasing momentum driven by artificial intelligence. The company posted first-quarter revenue of $639.8 million, representing a 34% increase year-over-year, as demand for its connectivity cloud platform continues to expand.
The results reflect Cloudflare’s growing role in the evolving digital infrastructure landscape, where AI is reshaping how software is built and consumed. CEO Matthew Prince emphasized that artificial intelligence is driving a “fundamental re-platforming of the Internet,” positioning Cloudflare to benefit from one of the most significant technology shifts in its history.
Profitability metrics showed mixed results. On a GAAP basis, the company reported an operating loss of $62 million, or roughly 10% of revenue. However, on a non-GAAP basis, Cloudflare delivered operating income of $73.1 million, representing 11% of revenue and an improvement from the prior year. Net losses also narrowed, while non-GAAP net income rose to $94 million, reflecting stronger operational efficiency.
Cloudflare also generated solid cash flow, with $158.3 million from operations and $84.1 million in free cash flow, accounting for 13% of revenue. The company ended the quarter with a strong balance sheet, holding over $4.1 billion in cash and investments.
As part of its strategic shift, Cloudflare announced plans to transition to an “agentic AI-first” operating model, which will include reducing its workforce by approximately 1,100 employees. The restructuring is expected to cost between $140 million and $150 million, with most expenses recognized in the coming quarters.
Looking ahead, Cloudflare expects continued growth, forecasting second-quarter revenue of up to $665 million and full-year revenue exceeding $2.8 billion. The company’s results underscore its ambition to lead in the AI-driven transformation of the Internet.
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