Cloudflare (NET) Stock Forecast & Price Target

Cloudflare is benefiting from broad-based demand across security, performance, and developer workloads, with 3Q revenue rising 39% year over year to $782.5 million and beating consensus by 620 basis points, while New ARR growth and DBNRR of 122% show accelerating consumption and stronger revenue visibility. Its platform economics are improving as Workers adoption, large-customer expansion, and pool-of-funds renewals drive a record 17.5% non-GAAP operating margin, $215.4 million of operating cash flow, and management’s expectation of GAAP profitability on a quarterly basis by year-end. The outlook is further supported by FY26 revenue guidance being raised to $2.963 billion-$2.964 billion, implying continued share gains across a large and expanding market with durable cross-sell potential.

Cloudflare is facing a weakening fundamental profile because gross margin fell to 72.4%, down 70 bps q/q and 290 bps y/y, as lower-margin Workers and higher infrastructure, colocation, network, and bandwidth costs pressure profitability. Despite record revenue upside, total RPO growth slowed to 34% y/y to $2.877B from 38% in 2Q26, while management also flagged elongated sales cycles, enterprise adoption challenges, and stalled expansion into adjacent products and the broader IT stack. Those issues, combined with macro softness and multiple compression in high-multiple software names, support a negative outlook because they point to less durable revenue visibility and a weaker growth-to-margin tradeoff.