Cloudflare, Inc. (NYSE: NET), a leading connectivity cloud company, has released its financial results for the fourth quarter and the full fiscal year ended December 31, 2025. The company demonstrated remarkable growth, driven by a significant increase in annual contract value (ACV) and a strategic focus on the burgeoning AI landscape.

1. Record Contracts and Strong Revenue Growth

In a statement from co-founder and CEO Matthew Prince, Cloudflare celebrated an exceptional finish to 2025, marked by the closing of its largest annual contract value deal to date, averaging $42.5 million per year. Prince emphasized the accelerating demand for Cloudflare’s services as the Internet experiences a transformative shift towards AI and agent-driven interactions. This evolving landscape is fostering a "virtuous flywheel," wherein increased usage by AI agents drives more demand for the company’s offerings.

Q4 2025 Financial Highlights

Revenue: Cloudflare reported total revenue of $614.5 million for Q4 2025, reflecting a robust year-over-year increase of 33.6%.

Gross Profit: The GAAP gross profit stood at $452.6 million, yielding a gross margin of 73.6%, down slightly from 76.4% in Q4 2024. Non-GAAP gross profit was reported at $460.2 million, with a margin of 74.9%.

Operating Income: The company recorded a GAAP loss from operations of $49.2 million, equating to 8.0% of total revenue. Conversely, non-GAAP income from operations was $89.6 million, maintaining a consistent 14.6% of total revenue.

Net Income: GAAP net loss narrowed to $12.1 million, improving from a loss of $12.8 million in the same quarter last year. Non-GAAP net income surged to $106.8 million, compared to $68.8 million in Q4 2024.

Cash Flow: Net cash flow from operating activities rose to $190.4 million, up from $127.3 million year-over-year. Free cash flow also saw significant growth, reaching $99.4 million, or 16.2% of total revenue.

Full Year 2025 Financial Performance

For the full fiscal year, Cloudflare reported:

Revenue: Total revenue reached $2,167.9 million, a 29.8% increase compared to fiscal 2024.

Gross Profit: The GAAP gross profit was $1,615.4 million with a gross margin of 74.5%, down from 77.3% in the previous fiscal year. Non-GAAP gross profit was $1,643.2 million, representing a margin of 75.8%.

Operating Loss: The GAAP loss from operations totaled $207.2 million, while non-GAAP income from operations was $303.9 million, reflecting a slight increase in operating efficiency.

Net Loss: The GAAP net loss for 2025 was $102.3 million, compared to $78.8 million in 2024. Non-GAAP net income rose to $342.9 million.

Cash Flow: The company reported a net cash flow from operating activities of $603.1 million and free cash flow of $260.6 million, which accounted for 12.0% of total revenue.

2. Positive Outlook for 2026

Looking forward, Cloudflare has provided optimistic guidance for the first quarter of 2026, projecting total revenue of between $620.0 million and $621.0 million. The company expects a non-GAAP income from operations between $70.0 million and $71.0 million, with a non-GAAP net income per share ranging from $0.23.

For the full year 2026, Cloudflare anticipates total revenue between $2,785.0 million and $2,795.0 million, alongside a non-GAAP income from operations of $378.0 million to $382.0 million. The projected non-GAAP net income per share is expected to be between $1.11 and $1.12.

3. Conclusion

Cloudflare's impressive financial results for Q4 and fiscal year 2025 underscore the company's strong position in a rapidly evolving digital landscape. With a strategic focus on AI-driven solutions and a record in annual contract values, the firm is well-poised for continued growth in the upcoming year. The forthcoming investor conference call will provide further insights into the company’s performance and strategic direction.

Original press release