Cloudflare posts 36% revenue growth, 20% staff cut and stock hits 50x revenue multiple

Cloudflare reported Q2 revenue of $696.1 million, a 36% increase that annualizes to $2.8 billion, and the stock jumped 17% after hours; the results are detailed in a SaaStr analysis Jason Lemkin. The company had cut more than 1,100 roles—about 20% of its headcount—three months earlier, yet it paid departing employees full base salary through the end of 2026, costing $165 million, of which $130 million was cash.

Following the layoff, headcount fell to 4,700 and non-GAAP operating expenses dropped to 59% of revenue, with sales and marketing at 33%. Annualized revenue per employee rose to $592 K from roughly $477 K a year earlier, supporting a projected Q3 non-GAAP operating margin of about 17.6%, up from 13.8% in Q2.

The market valued Cloudflare at $355.01 per share on October 6, giving a market-cap of roughly $126 billion and a trailing-12-month revenue multiple of about 50×, up from 40× a year ago.

Our read: Cloudflare’s ability to sustain high growth while executing a sizable layoff demonstrates disciplined cost management and a shift toward higher-margin, enterprise-focused contracts, reinforcing investor confidence despite short-term headcount reductions.