Cloudflare delivered a stronger-than-expected quarter on Thursday, raising its full-year revenue forecast as demand for artificial intelligence infrastructure continues to grow.
The cloud networking and cybersecurity company said businesses building AI-powered applications are increasingly relying on its platform to securely manage and route internet traffic, helping drive growth across its cloud and security services.
Investors welcomed the results, sending Cloudflare (NYSE: NET) shares up about 18 percent in after-hours trading.
Cloudflare now expects full-year revenue to come in between $2.86 billion and $2.87 billion, up from its previous forecast of $2.805 billion to $2.813 billion.
The updated outlook also topped Wall Street’s average estimate of $2.81 billion, according to LSEG data.
Cloudflare quarterly results
The company also reported quarterly results that beat analysts’ expectations. Revenue for the three months ended June 30 reached $696.1 million, ahead of the $665.5 million analysts had forecast.
Adjusted earnings came in at 29 cents per share, compared with expectations of 27 cents per share.
Cloudflare also issued an optimistic outlook for the current quarter, forecasting revenue of $736 million to $737 million, above analysts’ estimate of $722.1 million.
In addition, it raised its full-year adjusted earnings forecast to $1.25 to $1.26 per share, up from the previous range of $1.19 to $1.20 per share.
AI growth aids firm’s rise
A major factor behind the stronger performance is the rapid rise of AI agents and AI-powered software.
As more companies deploy AI tools that interact with customers, automate business processes or generate content, they also need reliable infrastructure to keep those applications running securely and efficiently.
That is where Cloudflare sees an opportunity.
Its platform helps businesses route internet traffic, improve website performance and defend against cyberattacks. As AI applications generate more online activity, Cloudflare’s network is handling a growing share of that traffic.
The company believes this trend will continue as AI adoption spreads across industries. The results also come just a few months after Cloudflare announced significant job cuts.
In May, the company said it would lay off roughly 20 percent of its workforce, affecting more than 1,100 employees, as part of an AI-led restructuring aimed at improving efficiency and focusing resources on areas with stronger long-term growth.
The latest earnings suggest those efforts may already be beginning to show results.
Cloudflare is not alone in trying to capitalize on the AI boom, but its position as an internet infrastructure provider gives it exposure to a different part of the market than companies building AI models themselves.
Rather than competing to create chatbots or large language models, Cloudflare is focused on providing the network and security services that help those tools operate at scale.
With businesses continuing to invest heavily in AI, Cloudflare is betting that the growing amount of AI-generated internet traffic will keep driving demand for its platform in the months ahead.
