Cloudflare, Inc. · Q2 2026 call

We achieved revenue of $696.1 million, up 36% year-over-year. We now have 4,698 customers paying us more than $100,000 per year, a 27% increase year-over-year. We added a record number of these large customers, 986 net additions year-over-year, the most we have ever added over 12 months in our history.

For the first time in human history, in Q2, more than 50% of the traffic flowing across Cloudflare's network was not human.

Network CapEx represented 7% of revenue in the second quarter. As a reminder, there can be some variability in this metric quarter-to-quarter, and we expect network CapEx to be 14%-15% of revenue for full year 2026.

Our total headcount ended the quarter at 4,700.

Excluded from these non-GAAP results were severance and other restructuring charges of $151 million for the second quarter, of which $99 million was paid in the second quarter. For full year 2026, we now expect severance and other restructuring charges of up to $165 million, with up to $130 million expected to be cash related. While higher than initially anticipated, we prioritized speed of resolution, particularly internationally, to ensure a continued focus on execution.

For the third quarter, we expect revenue in the range of $736 million-$737 million, representing an increase of 31% year-over-year. […] For the full year 2026, we expect revenue in the range of $2,864 million-$2,870 million, representing an increase of 32% year-over-year. We expect operating income for the full year in the range of $443 million-$445 million.

I was asked in the end of 2025, in November of 2025, when I thought that non-human traffic would pass human traffic. We pulled all the data, we ran all the numbers, and we were pretty confident that it was going to be the second half of 2027. […] I was quite surprised when in May of this year, our team came to me and said, "You won't believe it, but non-human traffic has now passed human traffic online."

if the current trends continue, we think in five years, non-human traffic will be as much as 1,000 times as much as human traffic. In other words, humans will be a rounding error on the Internet, not because human traffic goes down, but that's just how fast we're seeing non-human traffic grow.

the important metric for us to focus on is total unit economics, because the behavior of gross margin across the various products is just very different. […] Gross margin, I think, will stabilize around the level we have.

I made the team triple-check the developer numbers because we added more developers in a quarter than we did in all of last year, and we thought last year was pretty good.

It's moving away from a purely ratable SaaS model towards a much more diversified mix of pool of funds, consumption-based structures, and also what we call T-shirt sizing. As the business accelerates, that also leads to more and more customers burning through their T-shirt sizing faster. […] How we move from quarter to quarter becomes a little bit more difficult to forecast. That's why we continue to be prudent in terms of how we set the guidance.

I remember when our growth rates were a lot higher and I miss those days, won't be upset if we get back to even higher growth rates.

We handle, let's say, about half a billion requests per second through Cloudflare's network. We roughly estimate that somewhere between 1% and 10% of those you could monetize through some sort of a micro transaction. […] That means that you, day one on launching something like this, you'd need to be able to support, call it 10 million financial transactions per second, and be able to scale up to call it 100 million financial transactions per second. […] Visa, which is the largest payments network in the world, at peak during the holidays, handles about 20,000 transactions per second. You have to build something that's three orders of magnitude bigger than Visa in order to pull this off.

Without the impact of the restructuring charges, the GAAP net loss would have been around $18 million. That is almost striking distance.

I would guess that our share of revenue through partners will continue to tick up over time. I don't think it'll ever get to 90%+ of some of the first-generation Zero Trust companies or the hardware companies of old. […] I wouldn't be surprised if it gets north of 50%, even maybe over 60%.

I think not all revenue is created equal, and if you're selling what is just commodity compute, if you're basically letting an AI company use your balance sheet and your credit rating in order to buy servers that are the same as everybody else's servers, then that's just not attractive business for us.

The hyperscalers, the traditional first-generation clouds, are in the business of buying a server and then trying to sell it back, lease it back, and get five turns of revenue off of it. We're in a very different business where we're selling actually work getting done