By Emma Richardson, Senior Correspondent
Cloudflare Inc. reported Q1 2026 revenue of $1.25 billion USD on April 10, up 52% from Q1 2025 and beating FactSet estimates of $1.18 billion USD. CEO Matthew Prince attributed growth to AI infrastructure demand on the earnings call.
Cloudflare reported net income of $150 million USD, or 21 cents per share, on April 10. Prince stated on the call that AI products accounted for 32% of total revenue. The company processed over 10 million AI inferences daily on its platform, per the earnings release.
AI Services Growth
Cloudflare launched expanded AI offerings in late 2025, including edge-based inference for large language models. Workers AI deployments grew 320% year-over-year, per the earnings release. Enterprise customers, including OpenAI partners and biotech companies, use these services, Cloudflare stated.
The company's network covers 310 cities worldwide as of March 31, 2026, per the release. Gartner analyst John-David Lovelock stated in an April 9 note that Cloudflare holds 15% of the AI inference market. Developer and platform revenue rose 65% to $450 million USD, driven by AI tools.
Prince noted on the call that AI services deliver 78% gross margins. This segment grew faster than overall revenue.
Q1 Financial Results
Subscription revenue reached $1.20 billion USD, up 55% from Q1 2025. Cloudflare added 120 customers spending over $100,000 USD annually. Cash and equivalents totaled $2.1 billion USD at quarter-end, per the release.
Shares rose 15% to $118.50 USD in after-hours trading on April 10. Bank of America analyst Tal Liani raised his price target to $140 USD in an April 10 note. Cloudflare guides Q2 revenue at $1.35 billion to $1.37 billion USD.
Edge AI Developments
Cloudflare's Magic Transit service handled AI traffic with 99.999% uptime in Q1, the company reported. It deployed 50,000 GPUs across its edge network during the quarter. Developers use Vectorize for AI embeddings, processing 5 petabytes weekly, per the earnings materials.
Cloudflare integrates Hugging Face models for serverless AI deployment. The platform delivers 40% cost reductions for inference tasks compared to centralized clouds, Prince said. Amazon Web Services announced new AI chips on April 8.
Prince forecasted AI demand will exceed GPU supply through 2027.
Cloudflare's Market Position
IDC estimated global AI infrastructure spending at $120 billion USD for 2025 in a March report. Cloudflare cited hyperscaler GPU shortages as a growth driver on April 10. Operating expenses rose 40% to $950 million USD due to AI-related hires.
Free cash flow reached $220 million USD. The board authorized $500 million USD in share buybacks. Cloudflare meets GDPR requirements via localized data processing, Prince confirmed.
EU regulators discussed data sovereignty rules on April 10, per a commission statement. Cloudflare's compliance enables European expansion.
Customer Adoption Trends
Financial services firms deploy Cloudflare AI for fraud detection. One major bank processes 1 billion inferences monthly on the platform, per an anonymized case study. Healthcare providers use it for drug discovery workloads.
Cloudflare plans Hyperdrive, a persistent GPU service, for Q3 2026 launch. Beta tests showed 5x speedups in training, the company reported. It will invest $1 billion USD in network capacity this year.
Analyst Outlook for Cloudflare Revenue
Analysts forecast full-year 2026 Cloudflare revenue at $5.4 billion USD, up 48% year-over-year. Morningstar analyst Jason Adler maintained a buy rating on April 10. Dollar-based net retention rate hit 118%.
Cloudflare trades at 12 times forward sales, below peers like Fastly at 15 times, per Yahoo Finance data on April 10. Cloudflare executives project 40% revenue growth through 2028, per the earnings call. Q1 results highlight AI's role in cloud software.