Cloudflare Reports Strong Security Demand Linked to AI Deployment

Cloudflare (NYSE:NET) closed 2025 with fourth quarter revenue of $614.5 million, up 34% year-over-year. The company reported operating income of $89.6 million, representing a 14.6% operating margin, and generated $99.4 million in free cash flow.

It ended the quarter with 4,298 customers paying more than $100,000 annually, up 23% year-over-year. Revenue from these large customers grew 42% year-over-year and accounted for 73% of total revenue. Dollar-based net retention reached 120%.

Discussion on the call centered on rising AI adoption and the growing role of Cloudflare’s network and developer platform in supporting that activity.

Management described increased demand for Workers Developer Platform, Application Services, and Zero Trust offerings as AI agents generate higher volumes of internet traffic. CEO Matthew Prince said, “AI is driving a paradigm shift in how software is both created and consumed,” noting sustained increase in use across the company’s platform.

Why It Matters: Technology leaders are evaluating how AI agents will affect infrastructure, security controls, and application design. Cloudflare reported that AI-driven workloads are increasing request volumes across its global network and driving adoption of developer tools and access controls. Prince stated that over January, “the number of weekly requests generated by AI agents more than doubled across the Cloudflare network.”

• AI Agent Traffic Is Expanding Network Demand: Cloudflare reported that AI agents are generating significantly more outbound requests than traditional user-driven applications, often reviewing thousands of sources for a single user query. Prince explained that if humans look at five sites when making a decision, agents might look at 5,000. This activity increases total request volumes across the internet and places additional load on application endpoints. As a result, organizations are relying on Cloudflare’s Application Services to manage traffic flow and access. With more than 20% of the web behind its network, Cloudflare is directly handling a meaningful portion of these agent-driven interactions, which is contributing to higher usage across its platform.

• Workers Developer Platform Gains Enterprise AI Adoption: Enterprises are building AI-powered tools and services on Cloudflare Workers, Durable Objects, Containers, and AI Gateway. Prince cited a Fortune 500 pharmaceutical company that built an internal AI coding platform using Workers AI and Durable Objects to support developer productivity. He also described a financial services firm that launched an MCP server enabling AI agents such as Claude or OpenAI to manage payment workflows through natural language prompts, fully deployed on Workers. Management emphasized that customers can scale compute usage dynamically without committing to long-term GPU leases. According to Prince, Cloudflare charges customers “for the actual work that’s getting done,” allowing organizations to experiment with AI applications without locking in fixed infrastructure costs.

• Zero Trust Adoption Rises with AI Deployment: The deployment of enterprise AI agents is raising security concerns fast. Prince stated that organizations are “speedrunning all of the security challenges that are out there” and have, in turn, granted agents access to an overabundance of data and systems. AI agents can operate continuously and may interact with sensitive applications, making identity controls and policy enforcement vital. Cloudflare reported increased demand for its Zero Trust portfolio, including Access, Gateway, DLP, CASB, and Email Security, supporting continuing enterprise efforts to segment data and maintain visibility into automated interactions across distributed environments.

• Application Services See Increased Usage from AI Queries: AI companies depend on Cloudflare to manage traffic and protect high-cost inference endpoints. Each AI query can require substantial resources, making the process of filtering malicious or non-human traffic important for cost management. Prince noted that distinguishing between legitimate users and unwanted automated activity is a capability where Cloudflare has longstanding expertise. In discussing AI demand overall, Prince said, “It’s not putting pressure on Cloudflare. We are seeing it as nothing but a tailwind for us,” indicating that increased AI interaction is driving product usage.

• Content Monetization and AI Crawl Control Gain Attention: Cloudflare is working with publishers and AI companies to address questions around data access and compensation. Prince emphasized, “If you create content, it should be up to you who gets access to it and who doesn’t.” The company reported adoption of AI Crawl Control by media organizations seeking transparency into model behavior and potential monetization paths. Prince also noted growing outreach from financial institutions concerned about research content being ingested by AI systems without compensation. Management indicated that discussions with publishers and AI providers are ongoing as new commercial frameworks develop to support sustainable digital content ecosystems.

Go Deeper -> Cloudflare Earnings Report – MarketBeat

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