Analysis of Cloudflare’s Acquisitions

Cybersecurity player Cloudflare (NYSE: NET) has announced stellar quarterly results riding on the AI adoption tailwinds. Like others in the industry, Cloudflare too has been consolidating niche capabilities through acquisitions.

Cloudflare’s Financials

Cloudflare’s revenue for the second quarter grew 36% to $696.1 million, 5% ahead of the market’s expectations. On an adjusted basis, net income came grew 38% to in at $0.29 per share, and was ahead of the market forecast of $0.27.

Among key metrics, Cloudflare ended the quarter with nearly 4,700 customers generating more than $100,000 in annualized revenues, growing 27% over the year. The company added 282 large customers within the last quarter itself. It ended the quarter with more than 7.4 million developers on its platform, growing by over 2 million within the quarter. The company attributed agentic workloads as key contributors to this growth. In fact, more than half of the traffic flowing across its network during the last quarter was agentic.

For the third quarter, Cloudflare expects revenues of $736-$737 million and an EPS of $0.34. The market was looking for revenues of $721.25 million and an EPS of $0.32 for the quarter. It expects to end the year with revenues of $2.864-$2.87 billion and an EPS of $1.25-$1.26. The market was looking for revenues of $2.82 billion and an EPS of $1.21.

Cloudflare’s Acquisitions

Earlier this summer, Cloudflare announced the acquisition of VoidZero, an open source-first company known for its next-generation JavaScript tooling ecosystem Vite. VoidZero was founded in 2020 by Evan You with a mission to build an open-source, high-performance, and unified development toolchain for the JavaScript ecosystem.

When apps were built with JavaScript, it was mostly a browser-based scripting language. Since then, JavaScript has evolved into one of the most widely used language, powering web and mobile apps, game development, and IoT. Over the years several tools have been built to address the increasing scale and complexity of JavaScript applications, but the ecosystem has remained fragmented. Applications rely on third-party dependencies, and configuring them to work with other systems has been challenging. VoidZero has been built to reduce that fragmentation. By researching layers of the JavaScript tooling stack and dependencies, VoidZero has built a solution that provides users with a cohesive, out-of-the-box development experience.

As part of the acquisition, VoidZero’s Vite build tool, Vitest test runner, Rust-based Rolldown bundler and Oxc toolchain will be integrated into the Cloudflare ecosystem. By merging Cloudflare’s global edge network and Workers developer platform with the industry-standard toolchain, Cloudflare is looking to create a frictionless, one-click deployment stack. Together, the companies will focus on unifying the developer pipeline, enabling intent-based architecture, and maintaining open-source steward neutrality. Terms of the acquisition were not released. Prior to the acquisition, VoidZero was privately held with reports suggesting that it had raised $18.6 million in funding from investors including Accel, Peak XV Partners, Sunflower Capital, Koen Bok, and Eric Simons.

Earlier in the year, Cloudflare had also acquired Astro and Human Native. San Francisco-based Astro was founded in 2021 by Fred Schott with a mission to design a web framework specifically for building websites. Instead of building data-driven websites in a silo, Astro wanted to focus on content-driven websites that would load fast. To build fast-loading and clean pages, Astro focuses on ensuring that each web page loads only the most critical code that is needed to display a page in a browser. Cloudflare want to leverage Astro’s team and framework to drive growth. Astro is already the backbone for platforms like Webflow and Wix that run on Cloudflare, and it continues to bring support for additional JavaScript runtimes while enabling Cloudflare to continue to support open-source contributions. Funding, financial, and deal details for the acquisition were not disclosed.

Cloudflare also acquired Human Native, an AI data marketplace that connects creators and AI developers. Founded in 2024 by Dr. James Smith and Jack Galilee, Human Native was created to transition generative AI away from unauthorized-scraping to accessing content that creators and publishers were willing to connect with AI developers. It was set up to foster a more equitable and transparent relationship between content creators and AI companies. The acquisition will make it easier and faster for AI developers to discover and access the content they need and help creators and publishers optimize how their data can be surfaced to AI companies willing to pay.

With the expertise from the Human Native team, Cloudflare will accelerate the build out of its vision for the AI-driven Internet economy, empowering creators to turn their existing content into indexable, valuable data as well as to effectively price and monetize it. Cloudflare wants to help create a new economic model where they build the tools that allow content to be discovered, priced, and purchased through transparent channels. The acquisition is focused on building that capability. Like its other acquisitions, funding and financial details for Human Native were not disclosed. By acquiring Human Native, Cloudflare has improved its AI data marketplace capabilities. The Astro acquisition will help it with accelerating its web development tools while remaining relevant in the AI space.

Cloudflare’s stock is trading at $330.36 with a market capitalization of $116.5 billion. The stock had climbed to a 52-week high of $334.60 earlier this week from the 52-week low of $158.83 that it was trading at in March.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.