Cloudflare (NET) Q3 2026 Earnings Call: Q&A Summary

Q: Matt Hedberg from RBC Capital Markets asked about the paradigm shift of agents outnumbering humans and how Act 4 monetization will kick in as this evolves.

A: Matthew Prince, Co-Founder and CEO, stated that Cloudflare is acting as a mediator between agent builders and content creators, and that agent companies understand they must compensate creators. He added that Cloudflare is setting the rules of the road for the Agentic Internet and expects Act 4 to become a major business driver over the long term.

Q: Gabriela Borges from Goldman Sachs asked about the timeline for Act 4 monetization in real dollar amounts and key levers that could impact that timeline.

A: Matthew Prince, Co-Founder and CEO, explained that Act 4 is already recognizing significant revenue through efficiency tools like their partnership with OpenAI. He noted that future micro-payments and advertising exchanges will drive further revenue over a longer 10-year horizon.

Q: Matt Hedberg from RBC Capital Markets asked about the key drivers behind the 3Q revenue beat and the strong 4Q guidance.

A: Thomas Seifert, CFO, stated that demand is driven by highly diversified momentum across developer counts, network traffic, 158,000 net new paying customers, and record adds across all revenue cohorts without customer concentration, which informed their guidance.

Q: Gabriela Borges from Goldman Sachs asked how the shift toward consumption revenue and faster pool of funds burn rates informs fourth-quarter forecasting.

A: Thomas Seifert, CFO, noted that variable revenue strength came from a long tail of customers joining or burning through pool of funds commitments faster, leading to early renewals and larger commitments, which was factored into the guidance.

Q: Ryan MacWilliams from Wells Fargo asked how AI native customers ramp across products and if AI is driving stronger growth in specific acts.

A: Matthew Prince, Co-Founder and CEO, replied that growth is broad-based across financial services, government, manufacturing, health care, and e-commerce, driven in part by a wave of security vulnerabilities that researchers have quietly disclosed to Cloudflare for early customer protection.

Q: Ryan MacWilliams from Wells Fargo asked how CDN customers are evaluating traffic shifting to agent-based models and whether they want that traffic.

A: Matthew Prince, Co-Founder and CEO, answered that customer reactions vary, with some welcoming agentic traffic and others blocking it as a threat. He emphasized that Cloudflare provides control and does not charge customers for CDN traffic they should not pay for.

Q: Saket Kalia from Barclays asked how a potential slowdown in data center construction could impact Cloudflare's Agentic cloud and isolate architecture.

A: Matthew Prince, Co-Founder and CEO, stated that Cloudflare focuses on engineering and operational excellence rather than financial engineering. He believes a more rational market will favor platforms like Cloudflare that deliver efficiency and real engineering differentiation through isolate architecture.

Q: Saket Kalia from Barclays asked where cross-sell is breaking out across acts and customer segments and if net retention can continue to improve.

A: Thomas Seifert, CFO, confirmed that dollar-based net retention can continue to improve, driven by pool of funds, rapid growth in large customers, and expanding security adoption across the portfolio.

Q: Sanjit Singh from Morgan Stanley asked how developer traction translates into paid workers consumption and enterprise revenue, and what portion of growth comes from AI instances versus traditional use cases.

A: Matthew Prince, Co-Founder and CEO, noted that developer growth is translating into paying customers, new startups, and existing businesses onboarding developers, which drives faster pool of funds consumption and earlier renewals.

Q: Sanjit Singh from Morgan Stanley asked about the core levers to get workers' unit economics at or above the core business.

A: Thomas Seifert, CFO, explained that workers carry slightly lower gross margins but significantly lower customer acquisition costs, which directly benefits operating margins. He highlighted ongoing engineering efficiency gains in compute infrastructure as a key margin lever.

Q: Samik Chatterjee from JPMorgan asked about win rates against first-generation Zero Trust vendors and why customers choose Cloudflare over legacy options.

A: Matthew Prince, Co-Founder and CEO, explained that Cloudflare's developer platform and focus on agent identity give them a leg up over legacy vendors. He noted that customers are buying Cloudflare as an overall platform rather than isolated point solutions.

Q: Samik Chatterjee from JPMorgan asked what portion of new large customer wins incorporate Workers and where headroom remains.

A: Matthew Prince, Co-Founder and CEO, replied that Workers is a major component in almost every pool of funds deal, serving as a powerful tool that developers insist on adding once they gain access.

Q: Joseph Gallo from Jefferies asked how CISOs are reacting to the vulnerability tsunami in terms of budgets and whether free solutions are the best market response.

A: Matthew Prince, Co-Founder and CEO, described the current CISO sentiment as panic due to severe incoming vulnerabilities. He stated that while Cloudflare provides broad protection, major organizations are signing large contracts to rely on Cloudflare as a trusted security partner.

Q: Joseph Gallo from Jefferies asked Christian Smith about the greatest opportunities to improve go-to-market execution and what tactical changes to expect.

A: Matthew Prince, Co-Founder and CEO, outlined plans to continue scaling hiring, increase awareness among large customers, and evolve sales structures with technical overlays and forward-deployed engineers for an increasingly technical, AI-driven world.

Q: Fatima Boolani from Citi asked how the organizational restructuring executed 6 months ago has fundamentally and structurally changed Cloudflare's business, agility, and go-to-market execution.

A: Matthew Prince, Co-Founder and CEO, explained that the restructuring was designed to flatten the organization by doubling down on builders and sellers while leveraging AI for measurement tasks. He noted that headcount will be higher by year-end due to shifting roles, resulting in a more nimble and innovative company.