Cloudflare 2025 Q2 Earnings Misses Expectations as Net Loss Widens 234%

Cloudflare (NET) reported its fiscal 2025 Q2 earnings on July 31st, 2025. The company missed expectations with an earnings per share loss of $0.15, compared to a predicted loss of $0.04, and a net loss of $50.45 million. Despite the wider losses, Cloudflare raised its guidance for Q3 2025, projecting revenue between $543.5 million and $544.5 million, surpassing analyst expectations of $538 million. For the full year, Cloudflare increased its revenue outlook from $2.09 billion to $2.113 billion, suggesting a potential for recovery and improved performance going forward.

Revenue

Cloudflare reported total revenue growth of 27.8% year-over-year, reaching $512.32 million in Q2 2025, up from $401 million in Q2 2024.

Earnings/Net Income

Cloudflare's loss widened to $0.15 per share in Q2 2025 from a loss of $0.04 per share in Q2 2024, indicating unfavorable EPS performance.

Price Action

The stock price of Cloudflare edged up 1.42% during the latest trading day, jumped 8.40% during the most recent full trading week, and climbed 6.05% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing Cloudflare shares after its quarterly revenue increase and holding for 30 days has yielded impressive returns over the past three years, with a total return of 200.15%, surpassing the benchmark return of 60.52%. This approach generated an excess return of 139.62%, demonstrating robust performance with a compounded annual growth rate (CAGR) of 49.83% and a maximum drawdown of 0.00%. The strategy's success showcases effective risk management and consistent gains, positioning Cloudflare as a favorable investment option post-earnings announcements.

CEO Commentary

Cloudflare's Co-Founder, Co-Chairman & CEO Matthew Prince expressed confidence in the company's performance, celebrating a 28% year-over-year revenue growth fueled by a 22% increase in large customers paying over $100,000 annually. He highlighted the operational progress in sales capacity, reporting record bookings, particularly with enterprise clients. Prince noted, "The momentum you see in these results shows that we have the right technology, the right strategy, and importantly, the right team to accelerate Cloudflare's next phase of growth." He emphasized the importance of innovation, stating that Cloudflare is uniquely positioned to redefine content creation in an AI-driven web, while maintaining a positive outlook for future performance.

Guidance

For Q3 2025, Cloudflare expects revenue between $543.5 million and $544.5 million, marking a growth of 26% to 27% year-over-year. The company anticipates operating income in the range of $75 million to $76 million and a diluted net income per share of $0.23. For the full year 2025, the revenue guidance is set between $2.1135 billion and $2.1155 billion, reflecting a 27% increase year-over-year, with operating income projected at $284 million to $286 million.

Additional News

Recently, Cloudflare has been actively addressing its cybersecurity measures following reports of AI agents bypassing its CAPTCHA verification. The company continues to innovate while maintaining robust security protocols. On the leadership front, CFO Thomas J. Seifert sold a significant portion of his shares, indicating possible strategic shifts within the company. Additionally, Cloudflare successfully blocked 7.3 million DDoS attacks in Q2 2025, with India being the fourth most attacked country, reflecting Cloudflare's ongoing efforts to protect its global network and ensure service reliability for its clients.