More Than Half of Cloudflare’s Network Traffic Is No Longer Human. The Stock Broke to a Record on It.
More than half of the traffic that crossed Cloudflare’s (NET +5.57%) network last quarter came from machines, not people — the first time automated traffic has been the majority.
Shares of the internet-infrastructure company jumped to a record high Friday morning after Thursday’s second-quarter report, touching about $325 before giving back part of the day’s gain. Shares were still up about 8% for the day as of this writing.
“For the first time in human history, in Q2, more than 50% of the traffic flowing across Cloudflare’s network was not human,” CEO Matthew Prince said on the earnings call. The crossover arrived months ahead of his own forecast, which had pointed to the first half of 2027.
With this backdrop, revenue rose 36% year over year to $696.1 million, and Cloudflare raised its full-year revenue outlook to a range of $2.864 billion to $2.870 billion, about 32% growth. Adjusted earnings per share came in at $0.29, and free cash flow climbed 69% year over year to $56.4 million. For the third quarter, management guided to revenue of $736 million to $737 million, about 31% growth.
And customer growth was strong, too. Cloudflare ended June with 4,698 large customers (those spending more than $100,000 a year), up 27% year over year. And existing customers are spending more, with dollar-based net retention (how much more the same customers spend than a year earlier, after churn) reaching 120%, up 2 percentage points from the first quarter and 6 points from a year ago.
Image source: Getty Images.
Where the money shows up
The machine traffic itself doesn’t pay Cloudflare yet. The company earns subscriptions from businesses that use its network for cybersecurity and speed.
Today’s Change
(5.57%) $15.84
Current Price
$300.27
Key Data Points
Market Cap
Day’s Range
$295.89 – $324.73
52wk Range
$158.83 – $324.73
Volume
8.8M
Avg Vol
4M
Gross Margin
73.30%
So serving a fast-growing volume of artificial intelligence (AI) crawler traffic mostly adds cost without adding sales. On that measure, a majority-machine network makes Cloudflare busier, not bigger.
The bigger-business case rests on charging for what the machines do. Cloudflare has spent the past year building tools that let websites block AI crawlers or charge them for access, and Prince says the company is now building the payment infrastructure for machine-to-machine commerce. He has argued the advertising model that funded the internet for roughly a quarter century is giving way to something different, and Cloudflare wants to operate the payment layer that replaces it.
For now, the growth that investors just paid a record price for comes from the ordinary business — more customers, spending more, often on AI-related security. The 50% milestone is volume rather than revenue. Whether it converts depends on a payment layer the company is still building.
