Connectivity cloud — CDN + edge security (WAF/Zero Trust) + edge compute (Workers) on a global network, positioning as the toll layer for agentic traffic
AI exposure 11% — derived from reported segment revenue, not asserted.
Software Stack → Data & Infrastructure Software · figures rebased to Q2 2026, reported 2026-08-06
CDN/performance + application security (WAF, DDoS, bot mgmt) — the core network leads 2 businesses in this sub-tier that together are 80% of revenue, so Data & Infrastructure Software is effectively the whole company rather than one leg of it. The rest is tagged separately: Cybersecurity at 20%.
Also tagged: secondary in Software Stack → Cybersecurity.
Cloudflare (FY2026 guided $2.864-2.870B, +32%; $696.1M in Q2 2026, +36% YoY — an ACCELERATION from +34% in Q1) — connectivity cloud. Application services ~62% (CDN/performance + WAF/DDoS/bot management = primary B5 Data & Infra) + Zero Trust security ~20% (B5 Cyber) + developer platform ~18% (Workers edge compute). NOTE: Cloudflare reports a single operating segment and discloses NO product-level revenue split — the 62/20/18 is an atlas estimate and was NOT re-based this quarter because nothing was disclosed against which to re-base it. Primary B5 Data & Infrastructure Software. Q2 2026…
Moat. Connectivity-cloud platform on a global edge network, with developer adoption, Workers edge compute and a zero-trust attach. The enterprise motion is the evidence and it strengthened again in Q2 2026: DBNR 120% (+6pp YoY), 4,698 customers above $100K (+27% YoY) with a record 986 net adds over twelve months, large customers now 73% of revenue, and RPO of $2.732B (+38%). The developer funnel is the second leg — 7.4M developers on Workers after adding roughly 2M in Q2 alone, more than in all of 2025 — increasingly fed by AI app-builders (Replit, Lovable, Base44) whose generated code deploys onto…
Bottleneck / pricing power. Moderate, and the gross-margin erosion stopped this quarter. Non-GAAP gross margin was 73.1%, up 30bps sequentially — the first sequential expansion after a multi-quarter slide driven by compute-heavy Workers, R2 and inference — though still ~320bps below year-ago levels (GAAP 71.8%). Pricing power sits in security, not in the developer platform, and RPO of $2.732B (+38%) is the visibility story rather than the pricing story. The structural bottleneck Cloudflare is trying to build is a toll on agentic traffic — Monetization Gateway, Wallets, cloudflare.pay, and the pay-per-use publisher model…
Role in the AI stack. The connectivity-cloud (edge security + compute) layer — and the toll booth agentic traffic has to cross.
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