Cloudflare's Enterprise Push Powers 31% Revenue Jump

This article first appeared on GuruFocus.

Cloudflare (NYSE:NET) is riding a strong wave of momentum. The company posted a solid Q3, with revenue climbing 31% year-over-year to $562 million as more large businesses signed on. CEO Matthew Prince called it an extremely strong quarter, saying Cloudflare's shift from a product-led company to a true enterprise sales machine is clearly paying off. Big clients now make up 73% of total revenue, and retention rose to 119%, showing customers are sticking around.

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Profitability also improved. Operating income reached $85.9 million, and free cash flow doubled to $75 million. Prince said Cloudflare's edge in AI infrastructure is growing fast, adding, We estimate 80% of the leading AI companies already rely on us. CFO Thomas Seifert sounded upbeat, saying growth was accelerating for the second straight quarter.

For Q4, Cloudflare expects around $589 million in revenue and is targeting a $3 billion annual run rate by late 2026. The message to investors was clear Cloudflare's enterprise playbook is working, and management believes there's plenty of room left to run.

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