Cloudflare, Inc.

Thank you for standing by my name is jail and will be your conference operator today at this time, I would like to welcome everyone to the cloud flare first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise after the speakers remarks, there will be a question and answer session. If you'd like to ask question during this time, simply press star followed by the number one on your telephone keypad if you would like to withdraw your question simply press star one again, but now let's turn the conference over to phil winslow you may begin.

Thank you for joining us today to discuss Cloudflare's financial results for the first quarter of 2026. With me on the call, we have Matthew Prince, co-founder and CEO, Michelle Zatlin, co-founder and president, and Thomas Seifert, CFO. By now, everyone should have access to our earnings announcement. This announcement, as well as our supplemental financial information, may be found on our investor relations website. As a reminder, we'll be making forward-looking statements during today's discussion, including, but not limited to, our customers, vendors, and partners' operations and future financial performance, our anticipated product launches and the timing and market potential of those products, our anticipated future financial and operating performance, and our expectations regarding future macroeconomic conditions. These statements and other comments are not guarantees of future performance and are subject to risks and uncertainty, much of which is beyond our control. Our actual results may differ significantly from those projected or suggested in any of our forward-looking statements. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We take no obligation to update these statements after this call. For a more complete discussion of the risks and uncertainties that could impact our future operating results and financial condition, please see our filings with the SEC as well as in today's earnings press release. Unless otherwise noted, all financial numbers we talk about today, other than revenue, will be on an adjusted non-GAAP basis. You may find a reconciliation of GAAP to non-GAAP financial measures that are included in our earnings release on our investor relations website. For historical periods, a GAAP to non-GAAP reconciliation can be found in the supplemental financial information referenced a few moments ago. We would also like to inform you that we'll be hosting our annual Investor Day on Tuesday, June 9th. Now, I'd like to turn the call over to Matthew.

Thank you, Phil. We had a very strong start to 2026. We achieved revenue of $639.8 million, up 34% year over year. We now have 4,416 customers paying us more than $100,000 per year, a 25% increase year over year. Revenue contribution from these large customers grew 38% year over year, contributing to 72% of revenue during the quarter, up from 69% in the first quarter last year. Our dollar-based net retention was 118%, down 2% quarter over quarter, and up 7% year over year. A gross profit margin was 72.8%. We delivered an operating profit of $73.1 million, representing an operating margin of 11.4%. And we generated strong free cash flow of $84.1 million during the quarter, again, exceeding expectations. The strong momentum we've seen in our business continued to build through the first quarter. Some highlights. Sales productivity increased year over year for the ninth consecutive quarter. Growth in hiring sales force capacity also accelerated in the first quarter, increasing at the fastest pace since 2023. Deals over $1 million were up 73% year over year, the fastest growth rate since 2024. We added a record number of our largest customers in the quarter, those spending more than $5 million with us annually. In fact, we added as many $5 million-plus customers in Q1 as we did in all of last year. Bookings from new customers increased at the highest rate since 2023. New pipeline generation grew sequentially at the fastest pace in five years, and we exceeded our planned target by more than any other first quarter since 2021. Our quarterly gross retention reaches highest level in four years, reinforcing that customers understand Cloudflare is a must-have rather than a nice-to-have. We are a significant beneficiary of many of the most powerful trends across the economy. To give you some sense, we added one million new developers in just the last quarter. Our products were made for this moment, and we are helping our customers build the future on our platform. That's a good segue to talk about some of our customer wins in the quarter. A leading technology platform expanded their relationship with CloudFlare, signing a two-year, $10 million pool of funds contract with initial use cases for application services and our workers developer platform. With our full portfolio now unlocked under a single rate card, we won workloads from both a hyperscaler as well as point solution competitors. Looking ahead, we are also in discussions on AI pay-per-crawl to control and help monetize AI bot traffic. A rapidly growing technology company in APAC expanded their relationship with CloudFlare, signing a two-year $8.7 million contract for application services and our workers developer platform. Driven by the boom and AI-powered vibe coding, this company has seen explosive growth, and Cloudflare has become core to their infrastructure, intelligently routing billions of daily requests across the globe. This customer chose Cloudflare over a competitive bid from a hyperscaler due to the strength of our unified platform and our seamless, low-latency security. Fortune 100 technology company expanded their relationship with CloudFlare, signing a two-year, $8 million contract for our privacy proxy solution. The fifth privacy engagement with this customer, solidifying CloudFlare as their go-to privacy partner. They approached us with an urgent need to handle massive scale with precise geolocation accuracy for user-initiated agentic traffic. We delivered a fully operational solution within one week, demonstrating the speed, trust, and engineering depth that continues to set us apart. A leading insurance company in EMEA expanded their relationship with Cloudflare, signing a five-year, $5.1 million contract for application services and our full SASE portfolio. Driven by years of acquisitions, this customer's IT environment had bloated to over 600 vendors, with some employees literally juggling up to four laptops to access essential applications. By standardizing on Cloudflare, they displaced six legacy vendors at signing, with 10 more displacements already underway, targeting over $1.3 million in annual savings. Their CTO put it simply. He wanted a high-performance, quote-unquote, Formula One-level architecture with Cloudflare as the engine. The Fortune 500 Aerospace and Defense Company expanded their relationship with Cloudflare, signing a three-year, $5 million contract for our Zero Trust products, including browser isolation, access, and gateway. After a major security breach forced this customer to move from on-premise hardware to the cloud, they discovered that their first-generation zero-trust vendors browser isolation solution could not meet critical government compliance requirements, putting $5.5 billion in government revenue at risk. Cloudflare delivered a fully compliant solution in a matter of weeks where the incumbent could not. A leading AI company expanded their relationship with Cloudflare, signing a one-year $4.1 million contract for application services. As one of the most visible targets for cyber attacks globally, this customer needed a security layer to protect their massive infrastructure build-out. Despite a strong build-over-buy mentality, they chose Cloudflare, trusting a battle-tested network that has proven its resilience against the largest attacks. This is a customer that moves fast and pushes boundaries. And they're already testing our AI gateway for their AI workloads. Another leading AI company expanded their relationship with Cloudflare, signing a 10-month, $2 million contract for Argo Smart Routing, coming just one quarter after signing a workers' developer platform deal. This customer wants to be the fastest and most reliable AI provider in the market, and Cloudflare is delivering. After deploying Argo, they immediately reduced their average global latency by 30%. In the AI space, that kind of speed is a real advantage that our hyperscaler competitors simply can't match. In nearly every customer conversation, it's clear. The emergence of generative and agentic AI is not just redefining the economics of the internet and software companies. They're redefining the business models of all companies. fundamentally reshaping how organizations are structured, operate, and create value. At Cloudflare, we don't just build and sell AI tools and platforms. We are our own most demanding customer. AI and agents are no longer pilot projects at Cloudflare. They are now core parts of our workforce. It's been an interesting journey. We've been selling picks and shovels in the AI gold rush for the last four years, but we ourselves were cautious users wanting to ensure there was real ROI before making significant investments. We avoided a lot of the performance of Ai some companies engaged in internally the tipping point with last November at that point across our teams, we began to see massive productivity gains. team members that were 210 even 100 times more productive than they had been before it was like going from a manual to an electric screwdriver. cloudflare's usage of Ai has increased by more than 600% in the last three months alone. For team members in R&D, 97% use AI coding tools powered by the same workers' developer platform we ship to our customers. And 100% of their contributions to our production code bases are now reviewed by autonomous AI agents. I think across the industry, you're about to see a massive uptick in reliability as every code or configuration change can now have a tireless and uncorrelated set of eyes trained on every incident from the last 10 years, checking to avoid problems. At the same time, the impact on developer velocity is clear. We've never seen a quarter-to-quarter increase in new code generated, bugs squashed, and technical backlog burned down like we did last quarter. It's been wild. Beyond the product and engineering, employees cross Cloudflare from HR to marketing run thousands of AI sessions each day to get their work done. Those agentic workflows rely on dozens of MCP servers to reach data in systems of record and use hundreds of centrally managed skill files, as well as many more that have been created and shared within individual teams. The harness that we've built, which we call Cloudflare OS, allows teams across the company to quickly get up and running. We've asked our team to think what the fundamental job to be done is and then reimagine how we can make the work to achieve it more efficient, reliable, and joyous. At CloudFlare, the way work is done has fundamentally changed. That means being intentional in how we architect our company for the agentic AI era in order to supercharge the value we deliver to our customers and honor our mission to help build a better internet for everyone, everywhere. As a result, we announced significant actions this afternoon to further accelerate our evolution to an agentic AI first operating model. That unfortunately means saying goodbye to teammates who have contributed to building CloudFlare to where we are today, resulting in a reduction of the size of our team by more than 1,100 people. This decision is not a reflection of the individual work or talent of those leaving us. They were critical in getting us to where we are today. Instead, we are reimagining every internal process from engineering to finance to sales to run on an agendic AI backbone on our workers' platform. This isn't a cost-cutting exercise or an assessment of individuals' performance. It's about defining how a world-class, high-growth company operates and creates value in the agentic AI era. Deciding to part ways with teammates is the hardest part of this decision, and it's a responsibility the entire senior leadership team at Cloudflare takes personally. We believe that acting with empathy isn't about avoiding hard decisions, but rather about how you treat people when those decisions are made. If we are asking our team to be world class, we have a reciprocal obligation to be world class in how we treat them. By taking decisive action now, we provide immediate clarity to those departing and protect the stability of the team that remains. We are also pairing the directness of these measures with severance packages that lead the industry, because we want to ensure that those who have invested their time and talents in CloudFlare's mission are taken care of as we move into the next phase. It's the right thing to do, it's the honest thing to do, and it reflects the values of the company we are continuing to build. On a personal note, this has been a hard day. A number of friends will no longer be colleagues, but I'm confident they will land at other great places and bring with them a set of skills they learned building Cloudflare to where we are today. The group leading us will build many future great companies, and I'm confident that our reshaped organization will be even more nimble and innovative as we continue to build the future. Not an easy day, but the right decision. With that, I'll turn it over to Thomas to walk through the numbers. Thomas, take it away.