Preview|NET 26Q2: Growth Momentum Remains Intact; Security Emerging as the Core Incremental Driver

Summary

• Q2 channel performance remains strong, with growth likely to accelerate further from Q1
• Our base case for 2H26 is stable to modestly accelerating growth
• The core growth driver has shifted from standalone CDN/WAF to product expansion and enterprise consolidation. Zero Trust is driving a meaningful increase in ACV, with incremental contributions from Workers and AI products
• Large-enterprise momentum continues to improve. Channel partners are seeing migrations from AWS/Azure CDN and Zscaler, alongside a growing number of large, multi-year deals
• Cloudflare One’s SASE advantages are primarily its installed base, global edge network, deployment speed, and vendor-consolidation proposition. However, gaps remain in data protection, SD-WAN, and identity security, while Palo Alto and Zscaler remain formidable competitors in large, complex enterprise deployments
• The principal risk is the pace of deal conversion rather than pipeline sufficiency. Higher hardware costs are squeezing enterprise IT budgets, while large multi-year deals require financing and multiple layers of approval. Better-than-expected conversion could drive stronger 2H26 growth
• Workers AI, AI Gateway, and bot monetization remain early-stage, with a more meaningful revenue contribution more likely to emerge in 2027
• Public internet data points to positive adoption trends across CDN, Zero Trust, and Workers

A. Key Investor Debates This Quarter

1. Cloudflare One & SASE: Penetration, Competition, and Product Gaps

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