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SAN FRANCISCO - Cloudflare, Inc. (NYSE:NET) shares rose 4% after the connectivity cloud company reported better-than-expected second quarter results and provided an optimistic outlook that exceeded Wall Street forecasts.
The company posted second quarter revenue of $512.3 million, representing a 28% increase YoY and surpassing analyst expectations of $501.21 million. Adjusted earnings per share came in at $0.21, beating the consensus estimate of $0.18. Notably, Cloudflare’s revenue growth accelerated compared to previous quarters, with the company exceeding $2 billion in annualized revenue for the first time.
"We had an excellent second quarter, exceeding $2 billion in annualized revenue while also reaccelerating revenue growth to 28% year-over-year," said Matthew Prince, co-founder & CEO of Cloudflare. "We’re innovating faster than ever, and demand remains strong, as our largest customers grow their investments with Cloudflare at the highest levels we’ve seen since 2022."
Cloudflare’s guidance further fueled investor optimism. For the third quarter, the company expects revenue between $543.5 million and $544.5 million, above analyst estimates of $538.6 million, and adjusted earnings per share of $0.23, exceeding the $0.21 consensus. For the full fiscal year 2025, Cloudflare projected revenue of $2.113 billion to $2.115 billion, topping Wall Street expectations of $2.096 billion.
The company’s current remaining performance obligations (RPO) grew 33% YoY, while total RPO increased 39%, indicating strong future revenue potential. Non-GAAP income from operations reached $72.3 million, or 14.1% of revenue, compared to $57.0 million, or 14.2% of revenue, in the same quarter last year.
Despite the strong revenue performance, GAAP loss from operations widened to $67.3 million, or 13.1% of revenue, compared to $34.7 million, or 8.7% of revenue, in the second quarter of 2024. Free cash flow was $33.3 million, representing 6% of revenue, down from 10% in the prior-year period.
Cloudflare’s position in the market remains strong, with the company noting it sits in front of more than 20% of all websites, with over half of its dynamic traffic flowing through APIs.
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