NET Q2 Earnings Call Highlights Workers and Agentic AI Momentum

NET Sees Workers and Large-Customer Momentum

Prince said Cloudflare ended the quarter with 4,698 customers spending more than $100,000 annually, up 27% year over year, while dollar-based net retention reached 120%. The platform topped 7.4 million developers after adding nearly 2 million in the second quarter.

The company’s second-quarter 2026 adjusted earnings of $0.29 per share topped the Zacks Consensus Estimate of $0.27. Revenues of $696.1 million also exceeded the Zacks Consensus Estimate of $665.4 million by 4.60%.

Seifert said strength came from Workers, agentic workloads, large-customer momentum and go-to-market execution. Current RPO grew 35% year over year.

Cloudflare Expands Agentic Commerce Ambitions

Prince said more than half of traffic across Cloudflare’s network was nonhuman in the second quarter, reflecting rapid growth in AI-agent activity. He framed that shift as a major change in how Internet traffic will be generated and monetized.

The company introduced Monetization Gateway, wallets and cloudflare.pay as building blocks for agent-driven commerce. Prince said the goal is to let agents access resources, establish trust and pay autonomously.

Prince also highlighted a research pilot with OpenAI aimed at a more sustainable relationship between AI companies and content owners. He said additional initiatives are planned over the coming months.

NET Guidance Reflects Growth With More Variability

Seifert guided third-quarter 2026 revenue to $736 million to $737 million, with operating income of $129 million to $130 million and diluted earnings of $0.34 per share.

For full-year 2026, he expects revenue of $2.864 billion to $2.870 billion, operating income of $443 million to $445 million and diluted earnings of $1.25 to $1.26 per share.

Asked about pool-of-funds renewals by a Morgan Stanley analyst, Seifert said Cloudflare is shifting from a ratable SaaS model toward more pool-of-funds, consumption and T-shirt-size structures. Faster usage and renewals can raise quarter-to-quarter variability, supporting prudent guidance.

Cloudflare Q&A Highlights Security and Monetization

A Morgan Stanley analyst asked about securing AI agents. Prince said demand is already visible, with large organizations increasingly asking how to deploy AI securely and with agent-aware controls across SASE and Zero Trust.

A Citi analyst asked about Workers monetization. Prince said Workers has moved beyond an adoption-focused phase and has become a meaningful revenue contributor, with more pool-of-funds contracts incorporating the platform.

An RBC Capital Markets analyst asked about Cloudflare OS. Prince said its security, auditability and control framework has helped extend AI tools beyond developers to finance, legal and procurement.

NET Holds the Line on Capital Efficiency

A Scotiabank analyst asked why Cloudflare is not joining the AI infrastructure spending race. Prince said commodity compute is not an attractive model and emphasized extracting more utilization from each capital dollar.

Non-GAAP gross margin was 73.1%, and Seifert said he expects it to stabilize around that level while total unit economics expand in the second half.

Seifert said full-year restructuring charges are expected to be up to $165 million, with up to $130 million cash-related, higher than initially anticipated. In response to a William Blair analyst, he said Cloudflare is pacing ahead of its goal of GAAP profitability by the end of 2028.

Cloudflare Keeps Focus on Execution

Prince and Seifert maintained a confident posture on demand while tying Cloudflare’s direction to disciplined execution and capital efficiency.

Their priorities center on converting developer adoption into revenue, deepening large-customer use, building agentic commerce infrastructure and improving unit economics as the contract mix evolves.

NET's Zacks Signals Point to a Mixed Style Profile

NET carries a Zacks Rank #2 (Buy) at present. Its Growth Score of A is the strongest Style Score signal, while the Value Score of F, Momentum Score of C and VGM Score of C indicate a mixed profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Within the Zacks framework, top-ranked stocks pair most favorably with A or B Style Scores. NET’s A Growth Score fits that preference, while its other grades do not. The Zacks Rank can change as earnings estimates are revised after the reported results.

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