The Week's Growth Wasn’t Enough For Wall Street
episodePreviously titled “The Week Growth Wasn’t Enough For Wall Street” — renamed by the publisher on Aug 3, 2026
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What did we learn from this week's earnings reports?
We're in the heart of earnings season, so what did we learn? Motley Fool Money starts now.
Everybody needs money. That's why they call it money.
From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. I'm Travis Hoem, joined today by Jason Moser and Lou Whiteman. Guys, this is really when earnings season kicks into high gear for a lot of the companies that we follow. We're going to do a rapid-fire look at some of the popular companies, disruptive companies, and find out what we learned from the quarter. Jason, what did we learn from Cloudflare? And maybe first, what in the world does Cloudflare do?
That's a good question. It's kind of like, hey, what does Salesforce do, right?
And I guess- Yeah, it's everywhere, but we don't necessarily see it.
The The proper answer, it does a little bit of a lot of stuff, but primarily, it's seen as a content delivery platform, focuses on application development, and most importantly, I think, in today's day and age, cybersecurity. There is a big cybersecurity dynamic to Cloudflare, and it's one we even talk a lot about with in our Quantum Leap service, thinking about beyond classical computing and into that post-quantum cryptography stage of life that we will ultimately hit Travis. Cloudflare is a company that is working to protect us on that front as well. But that's the answer in a nutshell. I think this was another good quarter that showed that the language we've been using over the last couple of years with Cloudflare, and with a number of enterprise software-type companies, the elongated sales cycle, the trepidation of their customers to commit to spending,
Those days seemed to be well past us. It was another very solid report. They grew revenue 34% for the quarter, well exceeding their own guidance, guiding for another tremendous year, 28% revenue growth. They tend to under-promise and over-deliver, which is certainly priced into the stock. The story with Cloudflare really continues to be large customers. Those customers that pay over $100,000 per year, they really continue to drive results. Revenue contribution in that segment for the quarter was up 42%, and now contributes 73% of revenue in total, and that's up from 69% from a year ago. And then just to top it all off, that dollar-based net expansion rate of 120%, that was up from 111% from a year ago.
Very encouraging to see that not only do they sign on new customers, but they continue to really grow those relationships with customers as we've seen from that large customer data.
Cloudflare is one of these companies that, if you go back to 2021, this is the first one of those high-flying stocks that I remember trading for 100X sales, and then suddenly crashing in 2022. We're back to the point where they're trading for 30X sales, which is still a very high number. Five-year growth rate is 38%. Is valuation ever a concern for Cloudflare? Or is this just one of those, hey, this is a utility on the internet, and so they're not going anywhere, that's why the market pays a premium for them?
I think it's a little bit of both, to be fair. I always look at something like a Cloudflare and think one of the primary risks to a business like this, beyond some sort of security breach, is the valuation itself. It has always really traded for a premium valuation. saved those couple of years just a few years back when we were talking about those elongated sales cycles and how how committed their customers were. We really saw the stock take a huge hit back then. But it has recovered, I think, based on these growth rates that we're seeing. As long as we see that top line continue to grow at the pace that we're seeing today, I think the market, the premium is fairly well-earned, but that is a big risk.
How is AI impacting trucking and logistics stocks?
If we see that tick down, we're going to absolutely see those shares pull back.
Lou, what did we learn from Airbnb?
Yeah. Narrative-busting week for Airbnb, because everything was down. Airbnb actually missed earnings, and the stock is up post. This week, that seemed really weird.
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