Cloudflare CFO Thomas Seifert highlighted 2025 as an inflection year marked by sales transformation and product innovation, particularly in AI. Key metrics included a record $130 million contract, 30% revenue growth, and net revenue retention improving to 120%. Seifert emphasized Cloudflare's unique position as a connectivity and control plane for AI agents, driving massive traffic growth and enabling new monetization opportunities in "Act 4." He also discussed the strategic importance of the "pool of funds" contracting model, which now represents 20% of ACV, and addressed gross margin pressures from the influx of free-to-paid customer conversions.

Key Takeaways

• 2025 Inflection: Cloudflare achieved 30% revenue growth, signed its largest-ever contract ($130 million), and saw net revenue retention improve to 120% in Q4.
• AI Traffic Explosion: Weekly AI agent requests more than doubled in the first six weeks of 2026, driving significant traffic through Cloudflare's network which acts as a control plane for AI workflows.
• Developer Momentum: The platform now hosts over 4.5 million developers, with Workers downloads going "almost vertical" due to AI agents self-provisioning resources.
• Act 4 Opportunity: The "Connectivity Cloud" aims to monetize AI workflows and content, positioning Cloudflare as an intermediary between frontier models and content creators.
• Sales Transformation: The hiring of Mark Anderson and a focus on enterprise sales and channel partners led to partner-driven revenue reaching a record 29% in Q4.
• Pool of Funds Contracts: This new contracting model now accounts for ~20% of ACV, facilitating frictionless product adoption for large enterprises despite initial forecasting complexity.
• Gross Margin Dynamics: Margins remain within the 75-77% long-term target but face pressure from a mix shift as millions of free customers convert to paying ones, moving costs from Sales & Marketing to COGS.
• Capital Efficiency: Despite surging traffic, CapEx guidance for 2026 is 12-15% of revenue, demonstrating the network's ability to absorb demand fluctuations efficiently.

Q&A

Keith Weiss (Morgan Stanley): What clicked into place to drive the spectacular results in 2025, including 30% revenue growth and record contract sizes?

• Thomas Seifert: The results were driven by the compounding effects of a two-year sales transformation moving upmarket and the clear demonstration that Cloudflare is a platform solving complex problems, particularly in AI.

Keith Weiss (Morgan Stanley): How does Cloudflare maintain developer affinity and become the platform of choice against hyperscalers?

• Thomas Seifert: Affinity is driven by superior tooling, ease of use, cost efficiency, and performance; additionally, the platform is now seeing massive adoption by AI agents themselves, which download and execute code autonomously.

Keith Weiss (Morgan Stanley): What is the defensibility of the Workers platform against AI labs expanding their scope into the development lifecycle?

• Thomas Seifert: The moat lies in Cloudflare's role as the control plane for 20-30% of web traffic, combined with a unique network architecture that allows for instant "isolates" rather than slower containers, which is critical for agent workflows.