Cloudflare, which protects and speeds up a large share of the web, reported third-quarter results last night, and CEO Matthew Prince called it 'the best quarter ever'. Revenue reached $782.5 million, up 39% year over year and well above the company's own guidance of $736–737 million.
Under GAAP the company still posted an operating loss of $67.9 million, but excluding stock compensation and other items operating income was $137.1 million. Investors focused on growth: according to reports, the stock jumped 15% to 17% after hours, having slipped 2.7% during the day.
Cloudflare's growth is tied directly to AI. It runs a global network of small data centers that carries both security services and AI services that let developers run models close to users. It also offers websites tools to block, or charge, AI companies' bots that crawl their content, an issue of great concern to news and content sites.
Not every software company did well that evening. Atlassian, maker of Jira and Confluence, reportedly fell about 16% after hours despite beating estimates, on a cautious outlook for cloud subscriptions. Five9, which makes contact-center software, fell about 18%. The gap shows what is happening in software: investors reward companies that look like AI winners and punish those that look threatened by it.
