Cloudflare Q1 2026 earnings: strong revenue growth, but a net loss tied to AI-driven restructuring

May 8, 2026 · Published August 7, 2026

Cloudflare's revenue grew 34% from a year earlier, but the company posted a GAAP net loss after announcing a roughly 1,100-person workforce cut tied to an AI-focused restructuring.

Figures as reported by the company to the SEC for the quarter ended March 31, 2026. Analyst estimates are not part of a filing, so no comparison to expectations is shown.

Key takeaways

• Revenue grew 34% year-over-year to $639.8 million, continuing a long stretch of fast growth as more businesses adopt Cloudflare’s network, security, and AI infrastructure services.
• The company reported a GAAP net loss for the quarter, driven largely by charges tied to a newly announced workforce reduction of roughly 1,100 employees as part of a shift to what management calls an “agentic AI-first” operating model.
• Even with the net loss, gross margin over the past year stayed high at about 73%, meaning the core cost of delivering Cloudflare’s services relative to revenue remains low — it was restructuring and other operating costs, not the core business, that pushed results into negative territory.
• The company generated positive free cash flow of $84.1 million for the quarter (about 13% of revenue), showing it is still bringing in real cash even while reporting an accounting loss, since non-cash items like stock-based compensation don’t reduce cash flow the way they reduce reported earnings.
• The number of customers paying Cloudflare more than $100,000 a year rose 25% year-over-year to 4,416, a sign that larger organizations are increasingly building on its platform.
• Cloudflare expects the workforce reduction to result in $140-150 million of restructuring charges during 2026, a near-term hit to profitability tied to the company’s push toward more automated, AI-driven operations.
• Looking ahead, the company guided to second-quarter revenue of $664-665 million and full-year revenue of roughly $2.81 billion, pointing to continued growth in the high-20s to 30% range even as it reshapes its workforce.
• CEO Matthew Prince said AI is driving “a fundamental re-platforming of the Internet” and called it “the biggest tailwind we’ve ever seen in Cloudflare’s history,” framing the restructuring as preparation for that shift rather than a retreat.

Q1 2026 in context

Figures for the quarter ended Mar 2026 and the quarter ended Mar 2025, as reported to the SEC.

How the stock took it

Cloudflare Inc closed at $256.79 on May 7, 2026, the last session before the report, and at $193.52 on May 11, 2026, the first session after it — -24.6% across the report.

Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.

Financial history →

Sources: company report · earnings coverage · company guidance · company statement