What Did Cloudflare’s Quarter Change For Its Stock?
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Following its fiscal Q3 2026 report on November 5, 2026, Cloudflare (NET) stock rose 9.9% in the subsequent session, compared with a 0.3% gain for the S&P 500. Although the company continued to report a GAAP loss, revenue growth accelerated and management raised its forecast for fiscal 2026. Buyers appear to be betting that customers will keep spending more and that this growth will turn into a reported profit. So how much did the quarter lift Cloudflare’s growth outlook?
Cloudflare Now Expects More Revenue In Fiscal 2026
Management raised its revenue forecast for fiscal 2026 to $2.963 billion to $2.964 billion, from $2.867 billion in its August 2026 release. The new forecast is about 3% above the old one, and management said it means revenue 37% higher than the year before. Cloudflare’s rise after the report outran its peers over the same session: Akamai Technologies gained 6.7% and Zscaler fell 3.1%.
The quarter behind that forecast showed growth picking up. Revenue grew 33.5% from a year earlier in fiscal Q1 2026 and 35.9% in Q2. In Q3, growth rose again, to 39.2%. Revenue for the quarter was $783 million.
Cloudflare also has more business signed. Business under contract but not yet counted as revenue was $2.877 billion at the end of the quarter, up 34% from a year earlier, management said. For fiscal Q4 2026, management forecasts revenue of $845 million to $846 million, which it said would be 38% more than a year earlier. That is a little slower than the third quarter’s pace. So far, customers are spending more each quarter, and management expects that to continue.
Cloudflare Still Reports A GAAP Loss
In its filings, Cloudflare reported an operating loss of $56.9 million for fiscal Q3 2026. This loss amounted to 7.3% of revenue. As a share of revenue, it was narrower than in Q1 and Q2 but wider than the 6.7% reported a year earlier. Over the same period, gross margin fell to 71.2% from 74.0% a year earlier.
Management said on the November 5 call that its Workers Developer Platform, which grew rapidly again in the quarter, has slightly lower gross margins than products such as Zero Trust but costs far less to sell. Management also said it expects Cloudflare to reach GAAP profitability in fiscal Q4 2026. At its 2026 Investor Day, it had expected that milestone by 2028 at the latest. For now, that profit is a forecast, not a result. Cloudflare’s GAAP net loss in fiscal Q3 2026 was $34.1 million, smaller than its operating loss.
Where Cloudflare’s Extra Revenue Came From
Management said on the call that variable revenue, the part that moves with how much customers use, was the main contributor to the quarter’s upside. Customers joined “pool of funds” deals, spending commitments they draw down as they use Cloudflare, or used up those commitments faster and renewed early into bigger ones. Revenue that follows use is likely to swing more than revenue fixed by contract, so that upside may not repeat at the same size.
Cloudflare trades at 38.4 times its sales over the last twelve months, compared with 3.1 for the S&P 500. At that price, investors are mostly paying for growth still to come, so the biggest risk for a holder is that customer spending slows or the GAAP profit arrives later than management expects.
Customer spending has held up so far, with a higher forecast for fiscal 2026 and more business under contract, while the GAAP profit is still ahead. Cloudflare’s GAAP result for fiscal Q4 2026, which management expects to be a profit, will be the figure to watch when the company reports in February 2027.
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