Shares of the cloud content delivery network CloudFlare Inc. jumped more than 14% in extended trading on the back of a solid top- and bottom-line beat and strong revenue guidance for the current quarter and full year.

The connectivity cloud company reported fourth-quarter earnings before certain costs such as stock compensation of 28 cents per share, just edging past the analyst consensus estimate of 27 cents. Revenue shot up 34%, to $614.5 million, well ahead of the Street’s target of $591.3 million.

The strong results meant Cloudflare delivered a narrower loss overall. It reported a net loss of $12.1 million at the end of the quarter, down slightly from the $12.8 million loss it posted one year ago.

Cloudflare has emerged as one of the foundational companies of the modern internet as one of its largest network providers, helping other companies build and secure their websites. The company claims that it powers internet requests for millions of websites globally, serving about 81 million HTTP requests per second on average. Its content delivery services help to speed up website loading times and protect sites from malicious activity, such as distributed denial-of-service attacks.

In more recent times, Cloudflare has tried to establish itself as a central player in the artificial intelligence revolution, especially in the emerging agentic AI ecosystem. AI agents are autonomous systems that can accomplish tasks with only minimal human supervision, and Cloudflare believes it has a lot to offer in this area. Last month, the company unveiled a new AI agent called Moltworker that sparked a lot of enthusiasm among customers and investors because of the way it helps to automate mundane tasks associated with edge computing infrastructure.

In addition, Cloudflare provides connectivity services to many of the world’s leading AI companies. Its importance in that regard was evident during an hours-long outage that occurred in November, which took offline OpenAI Group PBC’s ChatGPT and Sora and Anthropic PBC’s Claude chatbot for several hours.

Cloudflare Chief Executive Matthew Prince (pictured) said the company closed on a massive new deal during the quarter that represents its largest annual contract value to date, averaging $42.5 million per year. He said this was partly because of the shift toward AI and AI agents, which is increasing demand for the company’s services.

“[This shift] represents a fundamental re-platforming of the internet. If agents are the new users of the web, Cloudflare is the platform they run on and the network they pass through,” he said. “This creates a virtuous flywheel: more agents drive more code to Cloudflare Workers, which fuels demand for our performance, security and networking services.”

Constellation Research analyst Chirag Mehta told SiliconANGLE that the $42.5 million contract makes for a nice headline, but the more durable signal is Cloudflare’s broader forward pipeline. He noted that its annual contract value increased almost 50% year-over-year, its fastest pace since 2021, while remaining performance obligations and current RPO grew at 48% and 34%, respectively. “If those three metrics are moving together, it often points to enterprise commitment velocity improving across multiple customers, not just one unusually large deal,” he said.

The big $42.5 million contract is still a great advertisement for Cloudflare though, because of the way it implies platform consolidation rather than CDN spend. Mehta said the size of the contract means it’s unlikely to be a narrow product purchase. “It signals a consolidation decision where performance, security, networking, and developer services are purchased as a platform to reduce operational complexity and vendor sprawl,” he explained. “That also aligns with Cloudflare’s “flywheel” narrative where more workloads running on Workers can pull through performance, security, and networking usage.”

The demand Cloudflare is seeing is evident in its bullish revenue forecast. For the first quarter, it’s anticipating sales of around $620 million to $621 million, well ahead of the Street’s target of $614.4 million. For the full year, it’s targeting between $2.785 billion and $2.795 billion in sales, compared to the analysts’ consensus estimate of $2.73 billion.

The company’s earnings forecast was less impressive, though. Cloudflare said it’s targeting a first-quarter profit of 23 cents per share at the midpoint, trailing the Street’s forecast of 25 cents. For the full year, it’s shooting for $1.12 per share, while analysts are targeting earnings of $1.18 per share.

Mehta said Cloudflare’s stock was rising after-hours because it outperformed so many other software vendors. “When many software names are getting punished for soft guidance, a strong beat combined with an above-consensus outlook tends to trigger fast risk-on repricing,” he said.

In addition, it seems many investors are buying into Cloudflare’s AI agent thesis, because it has the capacity to continue investing through market volatility, Mehta said. “Cloudflare ended the year with $4.10 billion in cash, cash equivalents and available-for-sale securities,” he explained. “That does not necessarily prove the thesis, but it does strengthen the plausibility that Cloudflare can sustain product and go-to-market investment to capture the agent-driven demand curve.”

Cloudflare demonstrated its willingness to invest during the prior quarter, making two significant acquisitions that aim to strengthen its hand in the agentic AI industry. In November, it swooped in to buy the AI data marketplace startup Human Native Ltd. for an undisclosed fee. In January it snapped up the AI model deployment specialist Replicate Inc.

Despite today’s impressive gains in extended trading, Cloudflare’s stock has endured a rough start to 2026. It’s down 8% in the year to date, trailing the broader Nasdaq 100 index, which is down just 1% over the same timeframe.

Photo: SiliconANGLE