Cloudflare Q2 Growth Accelerated on Improving Execution, Consumption Shift, Morgan Stanley Says

MT Newswires Live08-07

Cloudflare (NET) Q2 growth accelerated as improving sales productivity, a consumption-based business model shift, broad-based demand across security and its Workers developer platform drove results above expectations, Morgan Stanley said in a report Friday.

Revenue rose 36% from a year earlier to $696 million, while constant-currency remaining performance obligations grew 34%. Sales productivity improved for a "10th straight quarter," and new-customer bookings increased at the "fastest rate" in five years, according to the report.

The investment bank said Workers is becoming a more "meaningful" revenue contributor. It also said growing enterprise demand for AI-agent security is creating an additional growth opportunity for Cloudflare's "Zero Trust" and "SASE" products.

Cloudflare raised its 2026 revenue outlook to $2.87 billion at the midpoint, implying growth of about 32%. Morgan Stanley said the forecast could "prove conservative." It cited the business' shift toward more "consumption-based Pool-of-Funds" contracts and continued growth in customer usage.

Morgan Stanley reiterated an overweight rating on Cloudflare and raised the price target to $370 from $322.

Price: 309.00, Change: +24.57, Percent Change: +8.64

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