Cloudflare posts 39% growth to $782.5M as AI agent traffic dents gross margins
shashib · x · 2026-11-07
Cloudflare reported Q3 revenue of $782.5M, up 39% YoY — its fastest growth in nearly four years and roughly $45M ahead of the $737M analysts expected. Non-GAAP operating margin hit a record 17.5%, and active developers reached 10M, more than doubling since the start of 2026.
The tension: management acknowledged Workers and AI agent requests carry lower gross margins (non-GAAP gross margin fell from 75.3% to 72.4%) but cost less to sell, and plans to make up the gap through scale. Shares fell 8.3% in a broad selloff of high-valuation software stocks, then rose 14.7% after hours.
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