Is Cloudflare stock a buy after Q3 2026 earnings?

SELL: Cloudflare is worth $86.23, 67.9% below the $268.75 price.

Cloudflare · Q3 2026 · Published Nov 9, 2026 · Data cut-off: 2026-11-07 · By DeepCell AI · Sources

1 · Cover

SELL: Cloudflare is worth $86.23, 68% below the $268.75 price, even after 39% revenue growth

Revenue beat every forecast, ours included, and lifted the value. We would buy at $74.98 or below and sell above $95.81.

SELL
Base value per share $86.23 up from $78.56 before results
Share price $268.75 6 November close, up 10% on the first close after results
Value needed to HOLD $242 no forward case reaches it
Average analyst target $339 at 6 November; slide 10 shows the gap
The price needs growth no plan supports.

Revenue would have to compound 60% a year to FY2031E. After raising our forecast we have 26%.

Stock pay is still the cost.

It was $174M in Q3, more than the $137M of non-GAAP operating income.

Margins have not followed revenue.

Non-GAAP gross margin fell to 72.4% from 75.3% a year earlier. Value needs margins to rise.

Source: Cloudflare Third Quarter 2026 results (Form 8-K Exhibit 99.1, 2026-11-05) · stockanalysis.com: NET daily price history (close 6 November 2026) · stockanalysis.com — NET analyst forecast (S&P Global consensus)

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2 · Our view

Revenue of $783M beat the $737M top of the guide and our $759M

We forecast too low. Net retention of 122% also beat our 120%, but operating margin of 17.5% fell short of our 18.0%.

Exhibit 1: Revenue by quarter, Q3 2025 to Q4 2026E

USD millions; the arrow is reported revenue over the guide midpoint

Total revenue · Q3 2025A: $562Total revenue · Q4 2025A: $615Total revenue · Q1 2026A: $640Total revenue · Q2 2026A: $696Total revenue · Q3 2026: $783Total revenue · Q4 2026E: $846$0$250$500$750$900Q3 2025AQ4 2025AQ1 2026AQ2 2026AQ3 2026Q4 2026E$562$696$783$846GuidedQ3 guide midpoint: $737Reported over the guide: $46

Exhibit 2: Q3 2026: reported against expectations

The guide, consensus, our forecast before results, and the reported figure

USD millions; EPS in USD
Q3 2026 · GuidanceQ3 2026 · ConsensusQ3 2026 · Our forecastQ3 2026 · Actual
Total revenue$M736.5736.8758.7782.5
Revenue growth on the year-ago quarter%31.0%31.1%35.0%39.2%
Non-GAAP operating income$M129.5136.6137.1
Non-GAAP net income per diluted share$0.340.340.380.38
Dollar-based net retention rate%120%122%

Revenue landed 6.2% over the top of the guide; we had taken 2.9%. EPS of $0.38 beat consensus of $0.34.

Source: Cloudflare Third Quarter 2026 results (Form 8-K Exhibit 99.1, 2026-11-05) · Cloudflare Q3 2026 earnings call transcript (5 November 2026), via Equibles · MarketBeat — Cloudflare (NET) earnings date and estimates (Q3 2026)

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3 · Results

We raised the forecast to management's view: Q4 revenue of $846M, up from our $823M

FY2026E revenue goes to $2,964M from $2,918M. Management named no figure beyond 2026.

Exhibit 3: Revenue growth by quarter, against the lines set before results

The upper line would re-open the growth path; the lower line is the Q3 guide; Q4 is the guide midpoint

Revenue growth on the year-ago quarter · Q4 2025A: 34%Revenue growth on the year-ago quarter · Q1 2026A: 34%Revenue growth on the year-ago quarter · Q2 2026A: 36%Revenue growth on the year-ago quarter · Q3 2026: 39%Revenue growth on the year-ago quarter · Q4 2026E: 38%25%30%35%42%Q3 2025AQ4 2025AQ1 2026AQ2 2026AQ3 2026Q4 2026E31%36%39%38%GuidedGrowth path re-opens at: 37%The Q3 guide: 31%Revenue growth on the year-ago quarter · Q3 2025A: 31%Revenue growth on the year-ago quarter · Q4 2025A: 34%Revenue growth on the year-ago quarter · Q1 2026A: 34%Revenue growth on the year-ago quarter · Q2 2026A: 36%Revenue growth on the year-ago quarter · Q3 2026: 39%Revenue growth on the year-ago quarter · Q4 2026E: 38%

The raise moved the value from $85.60 to $86.23. Reported figures had already moved it from $78.56. The guide implies growth of 38% in Q4.

Source: Cloudflare Third Quarter 2026 results: Financial Outlook for Q4 and FY2026 (Form 8-K Exhibit 99.1, 2026-11-05)

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4 · Growth

Net retention rose to 122%, a point short of our 123% line, and it sets FY2027E growth of 32%

FY2027E growth was 30% before results. The CFO says net retention can keep improving, but gave no figure.

Exhibit 4: Dollar-based net retention by quarter

The dashed line is the level we said, before results, would re-open the growth path

Dollar-based net retention rate · Q4 2025A: 120%Dollar-based net retention rate · Q1 2026A: 118%Dollar-based net retention rate · Q2 2026A: 120%Dollar-based net retention rate · Q3 2026: 122%110%115%120%126%Q3 2025AQ4 2025AQ1 2026AQ2 2026AQ3 2026119%120%118%120%122%Growth path re-opens at: 123%Up again in Q3: +2 ptsDollar-based net retention rate · Q3 2025A: 119%Dollar-based net retention rate · Q4 2025A: 120%Dollar-based net retention rate · Q1 2026A: 118%Dollar-based net retention rate · Q2 2026A: 120%Dollar-based net retention rate · Q3 2026: 122%
Customers above $100,000 5,006 up from 4,698 in Q2
Current RPO growth 37% up from 35% in Q2; revenue grew 39%

The mechanic may understate FY2027E. It adds 10% for new customers, while Q3 growth ran 17% above what net retention gives. Expansion holding is worth $91.

Source: Cloudflare Q3 2026 earnings call transcript (5 November 2026), via Equibles · Cloudflare Third Quarter 2026 results (Form 8-K Exhibit 99.1, 2026-11-05)

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5 · Net retention

One segment; the United States led Q3 and is over half of revenue

Exhibit 5: Revenue by region, FY2023A to FY2031E

USD billions; from the bottom: United States, EMEA, Asia Pacific, other; total above each column

United States revenue · FY2023A: $1United States revenue · FY2024A: $1United States revenue · FY2025A: $1United States revenue · FY2026E: $1United States revenue · FY2027E: $2United States revenue · FY2028E: $2United States revenue · FY2029E: $3United States revenue · FY2030E: $4United States revenue · FY2031E: $5Europe, Middle East and Africa revenue · FY2023A: $0Europe, Middle East and Africa revenue · FY2024A: $0Europe, Middle East and Africa revenue · FY2025A: $1Europe, Middle East and Africa revenue · FY2026E: $1Europe, Middle East and Africa revenue · FY2027E: $1Europe, Middle East and Africa revenue · FY2028E: $1Europe, Middle East and Africa revenue · FY2029E: $2Europe, Middle East and Africa revenue · FY2030E: $2Europe, Middle East and Africa revenue · FY2031E: $3Asia Pacific revenue · FY2023A: $0Asia Pacific revenue · FY2024A: $0Asia Pacific revenue · FY2025A: $0Asia Pacific revenue · FY2026E: $0Asia Pacific revenue · FY2027E: $1Asia Pacific revenue · FY2028E: $1Asia Pacific revenue · FY2029E: $1Asia Pacific revenue · FY2030E: $1Asia Pacific revenue · FY2031E: $2Other regions revenue · FY2023A: $0Other regions revenue · FY2024A: $0Other regions revenue · FY2025A: $0Other regions revenue · FY2026E: $0Other regions revenue · FY2027E: $0Other regions revenue · FY2028E: $0Other regions revenue · FY2029E: $0Other regions revenue · FY2030E: $1Other regions revenue · FY2031E: $1FY2023AFY2024AFY2025AFY2026EFY2027EFY2028EFY2029EFY2030EFY2031E$0$3$5$8$10$1$2$2$3$4$5$6$8$9ForecastUnited States revenueEurope, Middle East and Africa revenueAsia Pacific revenueOther regions revenue

The United States grew 44% in Q3 and was 52% of revenue. Asia Pacific, the fastest region in FY2025, grew 32%.

Source: Cloudflare, Inc. Form 10-Q (quarter ended 2026-09-30): RPO and revenue by region · Cloudflare, Inc. Form 10-K (fiscal year ended 2025-12-31) — revenue by geographic area and key business metrics

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6 · Regions

Stock pay of $174M turned $137M of non-GAAP income into a $68M GAAP loss in Q3

Exhibit 6: FY2025 non-GAAP to GAAP operating income

USD millions; the company's own reconciliation, last full year

FY2025A · Non-GAAP operating income: $304FY2025A · SBC and payroll tax: -$490FY2025A · Amortization: -$15FY2025A · Other items: -$6FY2025A · GAAP operating income (loss): -$207-$300-$200$0$200$400Non-GAAP operating incomeSBC and payroll taxAmortizationOther itemsGAAP operating income(loss)$304-$490-$15-$6-$207

The valuation charges stock pay as a cost. The CFO expects GAAP profitability in Q4; the model takes stock pay to 12% of revenue by FY2031E.

Source: Cloudflare Third Quarter 2026 results (Form 8-K Exhibit 99.1, 2026-11-05) · Cloudflare Fourth Quarter and Fiscal Year 2025 results (Form 8-K Exhibit 99.1, 2026-02-10) — statements and non-GAAP reconciliation · Cloudflare Q3 2026 earnings call transcript (5 November 2026), via Equibles

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7 · Earnings quality

The converts and the cash roughly offset in the bridge; the value is the operating case

Exhibit 7: Enterprise value to equity value

USD millions; the axis is broken below enterprise value so the bridge steps can be read

Enterprise value (two-stage terminal): $31,450Enterprise value (two-stage terminal): $31,450Add: cash and securities (pro forma): $5,072Less: convertible notes at face: -$4,500Equity value (two-stage terminal): $32,022Equity value (two-stage terminal): $32,022Enterprise value (two-stageterminal)Add: cash and securities (proforma)Less: convertible notes at faceEquity value (two-stage terminal)$31,450$5,072-$4,500$32,022

Pro forma cash of $5,072M against $4,500M of notes at face. Reported cash and securities at 30 September were $5,129M. The 2030 notes convert at $248; their capped call covers dilution to $470.

Source: Cloudflare Third Quarter 2026 results (Form 8-K Exhibit 99.1, 2026-11-05) · Cloudflare, Inc. Form 10-Q (quarter ended 2026-06-30, filed 2026-08-06) — key business metrics, RPO, convertible notes, equity awards and restructuring · Cloudflare, Inc. Form 8-K (event 2026-08-10, filed 2026-08-13) — 0% Convertible Senior Notes due 2031 and capped calls

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8 · The equity bridge

Every forward case sits below the HOLD line; only the analyst targets reach the price

The cases are boundaries, not weights: $91 if expansion holds, $53 if inference squeezes margins.

Exhibit 8: Value per share by case, against the price and the HOLD line

USD per share; base on WACC 10.7%, stage-two growth 12% at a 20% margin, terminal growth 3.5%

Low · Analyst targets: lowest to highest: $160Point value · Analyst targets: lowest to highest: $339Low · DCF: two-stage base to exit-multiple bound: $86Point value · DCF: two-stage base to exit-multiple bound: $86Low · Forward cases: inference squeeze to expansion holds: $53Point value · Forward cases: inference squeeze to expansion holds: $82Analyst targets: lowest to highestDCF: two-stage base to exit-multiple boundForward cases: inference squeeze to expansionholds$0$100$200$300$400$450$160–$430$86–$116$53–$91HOLD from: $242Price: $269

The exit multiple gives $116, an upper bound, not a target. The price is 224x trailing and 136x FY2027E non-GAAP earnings.

Source: stockanalysis.com: NET daily price history (close 6 November 2026) · stockanalysis.com — NET analyst forecast (S&P Global consensus)

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9 · Valuation

Every generous assumption in this model reaches $179; the $339 analyst target needs $160 more

Each step uses a figure in this model. It shows what it takes to reach the target, not what any analyst assumes.

Exhibit 9: From our value to the average analyst target

USD per share; the multiple and stock pay steps are taken on the expansion holds case

Our value: $86Stronger growth: $530x EBITDA exit: $30Stock pay free: $57Beyond all of these: $160Analyst target: $339Our valueStronger growth30x EBITDA exitStock pay freeBeyond all oftheseAnalyst target$86$5$30$57$160$339
Revenue growth a year the price needs 60% to FY2031E on this model's margins; this model has 26%
FY2027E revenue, this model $3,915M consensus before results was $3,710M: the gap is in later years

Source: stockanalysis.com — NET analyst forecast (S&P Global consensus) · stockanalysis.com: NET daily price history (close 6 November 2026)

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10 · From our value to the street

What would change the rating from here

Price moves the rating. No forward case we model does.

If we see Value per share Rating
Shares at $74.98 or below The base, 15% above the price BUY
Shares above $95.81 The base, more than 10% below the price SELL, where the shares are now
Expansion holds: Q4 growth level with Q3, more from new customers $91 SELL. HOLD needs $242 at this price
Expansion slows: less from new customers, a faster step-down $82 SELL
Inference squeezes gross margin $53 SELL

SELL. The next test is Q4: revenue of $846M guided, with the CFO expecting GAAP profitability.

Source: Cloudflare Third Quarter 2026 results: Financial Outlook for Q4 and FY2026 (Form 8-K Exhibit 99.1, 2026-11-05) · Cloudflare Q3 2026 earnings call transcript (5 November 2026), via Equibles · values from the forward cases and the rating rule

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11 · What would change the rating

What we said and what happened: SELL stood, and our forecast was too low

Growth of 37% or more with net retention of 123% or more would re-open the growth path. Growth passed at 39%; net retention of 122% fell a point short.

We said SELL before results.

The base value then sat far below the $265.17 price. The shares closed at $268.75 on 6 November, up 10% on the day.

Value before results $78.56 on Q3 revenue growth of 35%
Our forecast was too low.

Revenue of $783M beat our $759M. Margin came in below ours, at 17.5%.

Value now $86.23 on growth of 39%, after the raise to management's figures
No slowdown line was crossed.

Those lines were growth of 31% or less, net retention of 117% or less, and a Q4 guide below 28%.

Q4 growth guided 38% the next test, with gross margin

Source: Cloudflare Third Quarter 2026 results (Form 8-K Exhibit 99.1, 2026-11-05) · Cloudflare Q3 2026 earnings call transcript (5 November 2026), via Equibles · Cloudflare Third Quarter 2026 results: Financial Outlook for Q4 and FY2026 (Form 8-K Exhibit 99.1, 2026-11-05)

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12 · What we said and what happened

Sources

Not investment advice. Any rating here is this model's view of value against price at the data cut-off.

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