Cloudflare (NYSE:NET) will hand down its fourth quarter earnings after markets close on February 10, with Jefferies analysts expecting the report to reflect the company’s momentum in AI adoption and enterprise transformation.
Shares of the software and network services provider have been down roughly 15% in the year-to-date at about $168, amid broader weakness in the software sector, but analysts say the company remains well positioned for growth.
The analysts wrote that Cloudflare’s Q4 revenue guidance of 28% year-over-year growth at the midpoint, slightly slower than the prior quarter, “looks achievable.”
Consensus estimates for the quarter are $591 million, implying 28.6% growth compared with Q3’s 31% pace on an easier year-over-year comparison. Jefferies expects Cloudflare could beat these estimates by about 2%, consistent with prior quarterly outperformance.
Investors are also focused on the company’s outlook for fiscal year 2026, the firm believes. The analysts wrote that consensus revenue of $2.7 billion implies 27% year-over-year growth, slightly below 2025’s 28%, which they see as realistic given expected deceleration in new business annual recurring revenue (ARR).
“We believe investors are looking for a path to eventual 30% year-over-year revenue growth,” the analysts added.
Margins are another key focus. Cloudflare’s guidance for Q4 non-GAAP operating margin is 14.2% at the midpoint, down from 15.3% in Q3, reflecting higher sales and marketing investments and a modest decline in gross margin.
Jefferies noted that if Q4 margins outperform expectations by roughly 1.5 percentage points, “calendar year 2026 expectations seem feasible,” suggesting potential for improved sales efficiency in the year ahead.
Further, Jefferies sees the company as a key beneficiary of AI adoption, citing that “~80% of the leading AI companies use its solutions,” including both its inference network at the edge and its AI Workers development platform.