Cloudflare Is Up 11% in a Week. Is Its “Even Higher Gear” Really That Good? Rexielyn Diaz Tue, November 10, 2026 at 8:35 AM EST 3 min read NET -2.36% DDOG -2.04% ZS -1.76% ^IXIC +2.74% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Cloudflare is up 11% in a week after third-quarter revenue rose 39% to $782.5 million and its guidance beat estimates.
Earnings erased losses from Datadog's flat outlook and an AI selloff, so the gain comes from the quarter.
Gross margin slipped to 71.2% from 74.0%, and the stock still trades at a steep forward multiple.
Zscaler's Dec. 2 report comes next, then Cloudflare's first 2027 outlook, likely in February.
Cloudflare (NET:NYSE) stock is up 11% in the past week.
On Nov. 4, Datadog (DDOG:NASDAQ) guided to flat fourth-quarter revenue, dragging cloud stocks down. The next day, the AI selloff after Democrats swept Congress hit Cloudflare again. Earnings won those losses back on Friday, and Monday added another 9%, more than three times the Nasdaq's gain. What's left is the quarter, and Zscaler (ZS:NASDAQ), its rival in zero-trust security, will want to read it closely.
Third-quarter revenue rose 39% to $782.5 million. CEO Matthew Prince was thrilled in the earnings release: "Our engine is firing on all cylinders, and we've found an even higher gear for this next phase of growth."
Cloudflare expects fourth-quarter revenue of $845 million to $846 million, against analysts' $798.2 million. Datadog's fourth-quarter guide of $1.19 billion to $1.20 billion, by contrast, is flat with the quarter it just reported. So far, the slowdown investors feared on Nov. 4 looks like Datadog's own.
Analysts have already raised their 2027 revenue estimate to $3.89 billion, from $3.70 billion going into the report:
That's about 31% growth on Cloudflare's new $2.96 billion outlook for 2026, down from about 37% this year. I'd expect it to keep rising.
Gross margin held above 76% from 2021 through 2024, then slipped to 74.5% last year:
It fell to 71.2% in the third quarter, from 74.0% a year ago. Management puts that down to its lower-margin developer products growing fastest. Higher estimates cut its forward P/E to 154x by Friday's close. Monday's jump puts it back around 170x, close to its 173x average since mid-2023.
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Zscaler reports first, on Dec. 2. Leaving out its Red Canary acquisition, its annual recurring revenue grew 20% in the year to July 31, and it expects 16.6% to 17.4% growth this fiscal year. If it holds that pace, security budgets are growing for both companies. A slowdown there would suggest Cloudflare is taking share.
Cloudflare's fourth-quarter report, likely in February, should bring its first 2027 outlook. Prince's "even higher gear" looks real to me, and growth like this is worth Cloudflare's usual premium. But the stock needs gross margin to stop slipping, and a 2027 outlook that keeps growth near 30%.
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