Cloudflare (NET.US) Q2 conference call: AI agent traffic inflection point revealed, diversified businesses increased, profit progress exceeded expectations
The Zhitong Finance App learned that cybersecurity company Cloudflare (NET.US) released its second-quarter earnings report on August 6. Core financial and operating indicators such as overall revenue, large customer size, developer ecology, and cash flow all exceeded expectations, and the network traffic structure ushered in a historic inflection point — the share of non-human traffic such as AI agents exceeded 50% for the first time.
In this conference call Q&A session, a number of leading brokerage analysts asked questions on core topics such as AI commercialization, Workers developer platform, zero trust security, payment infrastructure, channel ecology, profit rhythm, and computing power strategy. Company CEO Matthew Prince and CFO Thomas Seifert thoroughly explained the business growth logic, product barriers, and year-round operating guidelines.
Here is the Chinese translation of the minutes of Cloudflare's Q2 2026 earnings call:
Executive speeches
Philip Winslow (Philip Winslow)
Vice President of Strategic Finance, Treasury and Investor Relations
Thank you all for joining us on the conference call today to discuss Cloudflare's financial results for the second quarter of 2026. Also attending the conference today were co-founder and CEO Matthew Prince (Matthew Prince), co-founder and president Michelle Zatlyn (Michelle Zatlyn), and Chief Financial Officer Thomas Seifert (Thomas Seifert).
I believe everyone has received our results announcement by now. The announcement and additional financial information can be found on our investor relations website.
I would like to remind you that we will be making forward-looking statements in today's discussions, including but not limited to our customers, suppliers and partners, operations and future financial performance, anticipated new products and their launch timing and market potential, anticipated future financial and operating performance, and our expectations for future macroeconomic conditions. These statements and other reviews are not a guarantee of future performance and are subject to risk and uncertainty, many of which are beyond our control. Our actual results may differ materially from those predicted or implied in forward-looking statements. These forward-looking statements are for today only, and no one should rely on them to represent our future views. We are under no obligation to update these statements after this conference call.
For a more complete discussion of the risks and uncertainties that may affect our future operating results and financial position, please refer to our filings with the US Securities and Exchange Commission (SEC) and today's results press release. Unless otherwise stated, all financial data we are discussing today (with the exception of revenue) is adjusted non-GAAP (non-GAAP) data. You can find a reconciliation of GAAP and non-GAAP financial measures in the results press release on our Investor Relations website. For historical data, the GAAP and non-GAAP reconciliation tables can be found in the supplementary financial information just mentioned.
We would also like to inform you that we will be attending the Stifel Tech Executive Summit (Stifel's Tech Executive Summit) on August 24 and the Goldman Sachs' Communacopia and Technology Conference (Goldman Sachs' Communacopia and Technology Conference) on September 9.
Now I'd like to leave the meeting to Matthew.
Matthew Prince (Matthew Prince)
Co-founder, Co-Chairman and CEO
Thanks, Philip.
We had extremely strong second quarter results. We achieved revenue of $696.1 million, up 36% year over year. Currently, the number of major customers spending more than $100,000 a year has reached 4,698, an increase of 27% over the previous year. The number of new major customers we added this quarter reached a record high, with a year-on-year net increase of 986, the largest net increase in our company's history in 12 months. The net retention rate (NRR) in US dollars was 120%, up 2% month-on-month and 6% year-over-year. Our gross margin was 73.1%, the first month-on-month improvement in 8 quarters. We achieved an operating profit of $96.1 million and a non-GAAP operating margin of 13.8%. We generated $56.4 million in free cash flow this quarter, up 69% year over year. The strong momentum we've seen in our business for some time continued to grow in the second quarter.
Here are some highlights:
Sales productivity increased year over year for the 10th consecutive quarter.
New customer bookings are growing at the fastest rate in over 5 years.
The generation of new sales pipelines (pipelines) continues to accelerate, once again recording the fastest month-on-month growth rate in 5 years.
We added more than 8,000 new paying customers this quarter, driving a 74% year-over-year increase in the number of paying customers. As a background reference, the number of new paying customers we added this quarter is already equivalent to the total number of paying customers when we went public in the third quarter of 2019.
We added nearly 1,000 new major customers over the same period last year. Additionally, our net year-over-year increase reached a record high for every major customer tier, from $100,000 in annualized revenue to $5 million or more.
By the end of the quarter, there were over 7.4 million developers on our platform. We added nearly 2 million developers in the second quarter alone, more than the 1.5 million we added throughout 2025.
It's clear that the future of Agentic requires a new kind of cloud. Developers are flocking to Cloudflare because our Workers developer platform gives them everything they need to build the future of intelligence. We're the fastest, safest, and most cost-effective place to build, deploy, and scale agents and generate code.
At Cloudflare, we're constantly proving that when you build a company the right way, you can keep growing and innovating while performing efficiently and profitably. We have a network, a platform, and a culture of innovation; we have business momentum and strict execution. We're at the right point in time, and we're steadily stepping on the accelerator. It's a winning formula we know works, and it's the same formula that is driving Cloudflare to the lead and ushering in the next phase of the internet in the age of intelligent AI.
That's just a smooth transition to discussing some of the customer engagements we've received this quarter:
A leading digital native media company expanded its partnership with Cloudflare and signed a 5-year, $31.8 million Application Services (Application Services) and Zero Trust (Zero Trust) contract. To address aggressive web scraping and improve global performance, the customer chose Cloudflare's best edge capabilities and operational speed. Despite competitive pressure to focus spending on its existing hyperscaler cloud vendor (Hyperscaler), the customer's long-term commitment proved that when performance and security were uncompromising, businesses chose Cloudflare's unified platform.
A European global 2000 tech company has expanded its partnership with Cloudflare, signed a 3-year, $11 million contract for application services and zero trust, and paved our developer platform for future AI workloads. After years of acquisitions that fragmented their IT architecture, the customer chose Cloudflare to abandon a stack of 5 existing traditional point solutions (or as many as 7 in their long-term roadmap) and use our single unified platform as the foundation for their entire organization.
A major US federal agency expanded its partnership with Cloudflare and signed a 5-year, $7.7 million Magic Transit and network firewall contract. After a traditional vendor's outage left more than 100,000 users unable to access mission-critical systems for several days, the agency urgently sought greater flexibility and real-time control. Cloudflare cut the customer's global rule change time from a 1-week SLA to just 30 seconds. They've also cut hardware costs by blocking unpopular traffic at the edge, and have shut down an entire data center. As an established application security customer, the agency can now run its network and application security on a unified platform, solidifying Cloudflare's position as the gateway for all of its internet traffic.
A rapidly growing generative AI company has signed a 1-year Pool of Funds (Pool of Funds) contract worth $7.5 million for its developer platform. The customer's workload pulls massive amounts of images and videos. At this scale, hyperscale cloud vendors' outbound traffic fees (egress tax) can disrupt their economic efficiency and cause vendor lock-in, limiting their choice of inference tools and GPUs. Their engineering team evaluated multiple vendors and ultimately chose Cloudflare because we are the only company that combines a zero-outbound traffic fee model with the reliability, scale, and comprehensive capabilities of an enterprise-grade platform. By building it as a pool transaction, customers can address immediate storage needs while maintaining the flexibility to expand across our entire developer platform.
A rapidly growing tech company in the Asia-Pacific region has expanded its partnership with Cloudflare to sign a 1-year, $4 million funding pool contract for its Workers developer platform. The deal accelerates a strong partnership that builds on the $8.7 million application services contract that was just signed last quarter. In just 1 year, the customer has standardized end-to-end Cloudflare — from application security and zero trust to today's developer platform; routing every request through Cloudflare Workers and using KV and Durable Objects as routing and tenant configuration layers for their entire platform. They chose Cloudflare over their existing hyperscale cloud vendor to avoid additional delays, which validated the flywheel effect of our unified product. Once performance and security run on Cloudflare, our developer platform naturally becomes the cornerstone of any company's technology stack.
A Fortune 100 tech company expanded its partnership with Cloudflare to sign a 3-year, $5.2 million contract for its entire SASE product portfolio. The customer is retiring traditional VPNs and virtual desktops and migrating its entire global workforce to a single zero-trust platform. In a competitive assessment, Cloudflare beat two first-generation zero-trust vendors and won because of our faster network performance and easy to use Single Pane of Glass management — the simplicity of which made customers expect only about 1/3 of their employees to run our services. This is the type of security integration we're seeing accelerate: Businesses are moving away from fragmented, single-point solutions in favor of Cloudflare's extremely fast, easy to use, and unified platform.
A Fortune 1000 tech company expanded its partnership with Cloudflare to sign an 18-month, $15.9 million contract for its application services and Workers developer platform. This customer service serves hundreds of thousands of businesses, and this requires an architecture that can act as their front-end entry point for global security and performance without adding latency. By standardizing on Cloudflare rather than traditional alternatives, they removed multi-product complexity and ensured long-term operational predictability when building an AI-first customer platform.
A leading tech company expanded its partnership with Cloudflare to sign a 1-year, $6 million pool contract for its Workers developer platform. As the customer expands its new AI agent capabilities, they need an elastic, secure container infrastructure to keep up with its rapid growth and deliver new capabilities in weeks rather than quarters. They chose to build on Cloudflare over traditional hyperscale cloud vendors and point solution competitors because of our built-in threat intelligence that passively prevents misuse of computing power, the rapid pace of innovation, and the ability to deliver FedRAMP compliance. The signing also shows that top AI builders are increasingly choosing Cloudflare as the agent cloud (Agent Cloud) of the future.
These customers, and others like them, are increasingly choosing Cloudflare because we're not only keeping up with the pace of change, but driving it. We deliver fast, solve tough problems, and do so in a way that significantly raises standards across the internet. This relentless pursuit of innovation is most exciting in our work in the field of AI.
For the first time in human history, more than 50% of the traffic flowing through Cloudflare's network in the second quarter was not generated by humans. The number of network requests from AI agents continues to grow endlessly. As the internet shifts from human-driven browsing to AI question-and-answer engines and agent-driven commerce, we're seeing a fundamental rewrite of the Internet's machine-to-machine (machine-to-machine) traffic. Cloudflare is at the center of this paradigm shift, building a scalable infrastructure that controls developer tools and the payment trajectory that powers the smart internet.
Since the beginning of the third quarter, we've celebrated innovation in this field from “Content Independence Day” (Content Independence Day) to the ongoing “Agent Week” (Agent Week). During these events, we unveiled the core building blocks of the 2-sided agentic marketplace:
Monetization Gateway: Allows our customers to sell any resource behind Cloudflare, whether it's a web page, API, data set, or MCP tool. This will enable new business models that will define the next generation of the Internet.
Wallets (wallets): Buyers will be provided with a way to pay autonomously through their smart device.
cloudflare.pay: It will provide merchants and buyers with an intelligent-friendly way to identify themselves and build trust.
Not only are we building the building blocks for smart commerce success, we also believe AI companies and content owners should thrive together. That's why we recently announced a first-of-its-kind research pilot project with OpenAI, which we believe will help pave the way for content creators and AI companies to build a sustainable ecosystem. Over the next few months, we'll be announcing more ways for AI companies, content creators, and businesses big and small to thrive together. The internet's business model is changing, and no company is better suited to define its future than Cloudflare. It was an incredibly exciting time.
Now seems like the perfect time to return to Thomas to talk about the financial situation. Thomas, please.
Thomas Seifert (Thomas Seifert)
chief financial officer
Thank you Matthew, and thank you all for participating.
We handed over an excellent Q2 questionnaire, which was strong across all of the core metrics we tracked, thanks in particular to the rapid growth of our Workers developer platform and intelligent workloads across the network for another quarter, the continued momentum of our largest customer base, and strong go-to-market (GTM) execution.
Regarding revenue: Total revenue for the second quarter increased 36% year over year to $696.1 million. Geographically, the US market accounted for 51% of revenue, up 41% year over year; Europe, Middle East, and Africa (EMEA) accounted for 27% of revenue, up 30% year over year; and Asia Pacific (APAC) accounted for 14% of revenue, up 32% year over year.
Regarding customer metrics: By the end of the quarter, we had 4,698 major customers (that is, customers who spend more than $100,000 with us each year), up 27% year over year, further accelerating 25% from the previous quarter. We had a net increase of 282 major customers this quarter, reaching a record year-on-year net increase of 986 major customers. This is the largest year-over-year net increase in our history. In fact, every major customer tier, with annualized revenue of $100,000, $500,000, and $1 million to $5 million, the net year-over-year increase in the number of new customers in the second quarter reached a record high.
Major customers contributed 73% of this quarter's total revenue, up from 71% in the second quarter of last year. The significant expansion of our largest customer base accelerated our net retention rate (NRR) in the second quarter to 120% in US dollars, up 2% month-on-month and 6% year-over-year.
Regarding gross profit margin: The gross margin for the second quarter was 73.1%, up 30 basis points from month to month, down 320 basis points year over year. Paid traffic on our network continued to grow year over year compared to free traffic, once again causing additional network costs to be reallocated from sales and marketing expenses to cost of revenue (Cost of Revenue). However, as we discussed on Investor Day (Investor Day), the trend is beginning to show signs of stabilizing.
Network capital expenditure (CapEx) accounted for 7% of second-quarter revenue. As a reminder, this indicator may fluctuate slightly from quarter to quarter, and we expect network capital expenditure to account for 14% to 15% of revenue for 2026.
Regarding operating expenses: The ratio of operating expenses to revenue in the second quarter decreased by 3% to 59% year-on-year. By the end of the quarter, we had a total of 4,700 employees.
Sales and marketing (S&M) expenses for the quarter were $232.5 million. Sales and marketing expenses fell to 33% of revenue from 36% in the same period last year.
Research and development (R&D) expenses for the quarter were $104.1 million. R&D expenses as a share of revenue fell to 15% from 16% in the same period last year.
General and administrative (G&A) expenses for the quarter were $76.3 million. The share of general and administrative expenses in revenue increased to 11% from 10% in the same period last year.
Operating profit was $96.1 million, up 33% year over year, compared to $72.3 million in the same period last year. The operating margin for the second quarter was 13.8%, up 240 basis points from month to month, and down 30 basis points year over year.
Regarding net profit and balance sheet: Our net profit for the quarter was $107.8 million, or $0.29 per diluted share (EPS). These non-GAAP results exclude $151 million in layoffs and other restructuring charges in the second quarter, of which $99 million was paid in the second quarter. For the full year of 2026, we currently expect layoffs and other restructuring expenses of up to $165 million, of which up to $130 million is expected to relate to cash expenses. While this was above initial expectations, we prioritized resolution speed, particularly in international markets, to ensure continued focus on business execution.
Free cash flow for the quarter was $56.4 million, or 8% of revenue, compared to $33.3 million, or 6% of revenue, in the same period last year. Excluding the impact of higher layoffs and other restructuring costs, our free cash flow expectations for 2026 remain unchanged.
As of the end of the second quarter, we had $4.2 billion in cash, cash equivalents, and marketable securities. The remaining performance obligation (RPO) was $2.732 billion, up 7% month-on-month and 38% year-over-year. Current RPO accounts for 64% of total RPO, up 35% year over year.
Regarding the third quarter and full year 2026 results guidance:
For the third quarter of 2026, we expect revenue to be between $736 million and $737 million, up 31% year over year. We expect operating profit of between $129 million and $130 million. We expect an effective tax rate of 20%. Assuming a current share capital of approximately 374 million shares, we expect net earnings per diluted share of $0.34.
For the full year of 2026, we expect revenue between $2,864 billion and $2.87 billion, an increase of 32% year over year. We expect full-year operating profit of between $443 million and $445 million. We expect an effective tax rate of 20%. We expect diluted net earnings per share of $1.25 to $1.26 for the period. The estimated current share capital is approximately 374 million shares.
All in all, the second quarter reflected the strength of our underlying business. Our strategic position in leading the smart internet paradigm shift has never been more secure, and the opportunities ahead of us are greater and more clear than at any time in our history. We remain committed to seizing this opportunity through rigorous execution, sustained growth, and long-term focus.
Analyst Q&A Summary
AI traffic monetization logic and gross margin trend
Barclays Saket Kalia asked: Currently, more than half of the company's network traffic comes from AI agents. Does this increase mainly drive new customer expansion or additional purchases from existing customers? Which is the driving force more significant for large customers or small to medium customers? How to predict subsequent gross margin fluctuations?
CEO Matthew Prince replied:
Traffic is growing much faster than internal estimates. At the end of 2025, the company estimates that non-human traffic will surpass human traffic in the second half of 2027, and actually reached an inflection point ahead of schedule in May 2026.
Traffic tiered commercialization strategy. Malicious crawlers and unauthorized content scraping traffic are directly blocked for free, and are not included in paid services; compliant AI business traffic is a core source of growth. Currently, over 80% of leading AI companies are Cloudflare customers, and large, medium, and small customers benefit simultaneously.
The next generation of Internet business models has been implemented. The traditional Internet relies on advertising for monetization, and the core of the AI smart era is the micropayment system. The company launched Monetization Gateway and cloudflare.pay smart payment tools, which charge a very low fee for a single AI request, and generate large-scale revenue based on 500 million requests per second across the network, which is expected to restructure the industry's business rules.
CFO Thomas Seifert replied:
Compared with a single gross margin value, the company pays more attention to the comprehensive unit economic benefits of the entire product line. Gross margin will remain within the current range in the short term, and the overall unit profit level will continue to improve in the second half of 2026.
Workers developers explode, Cloudflare OS companies implement value
RBC Matthew Hedberg asked: With 2 million new developers added in a single quarter, what are the core strengths of the Workers platform to attract the R&D community? How can open source Cloudflare OS break R&D boundaries and cover all employees in the enterprise?
CEO Matthew Prince replied:
Workers adapts to the unique advantages of AI agent development: it uses a lightweight architecture, pay-as-you-go billing, and elastic scaling, and is the preferred underlying layer for building AI agents; mainstream low-code, AI programming tools such as Replit and Wix are deployed to Cloudflare by default. The company's developers are conservative in terms of statistics. Large enterprises only count individual developer accounts, but the scale of independent developers is rapidly expanding, and many of these startup teams will become major paying customers in the future.
Cloudflare OS differentiated security barriers: The company started on a secure circuit. The product comes with a complete authority control and operation audit system. Non-R&D employees in corporate finance, legal affairs, procurement, etc. can safely use AI development tools to solve the data security pain points of enterprises implementing AI on a large scale; after the product was open source, many large enterprises around the world expressed their intention to implement it.
AI agent security circuit, capital pool contract revenue disturbance
Morgan Stanley Sanjit Singh asked: When will security requirements be fulfilled after AI agents are scaled up? What is the layout of the corresponding product matrix?
CEO Matthew Prince: The core demand of government and enterprise customers at this stage is AI security. Traditional zero-trust vendors focus only on human employee terminals and lack a security architecture specific to smart devices. A number of overseas government agencies terminated their original vendor tenders midway and instead adopted Cloudflare's “Smart First” program, directly driving the market share of SASE and zero-trust products to continue to increase.
Morgan Stanley Sanjit Singh asked: The early pay-as-you-go pool contract caused short-term revenue disturbances. Has it passed the pressure period now?
CFO Thomas Seifert: The company's business model is shifting from fixed subscription SaaS to diversified capital pool consumption, pay-as-you-go, and tiered packages. Customer package consumption is speeding up, renewal frequency is increasing, and long-term RPO (remaining performance obligations) and revenue continue to grow; however, performance fluctuations in a single quarter will increase, so the official performance guidelines remain conservative, and the long-term growth curve is clearly improving.
Long-term growth ceiling, competitive barriers in smart payment systems
Goldman Sachs Gabriela Borges asked: Revenue has maintained a steady growth rate of 20%-30% in the past three years. Are there structural opportunities to drive up the overall growth rate in the next three years?
CFO Thomas Seifert: The company can reach the market. TAM expanded from 30 billion US dollars to more than 300 billion US dollars; the business continued to open up order space in four major stages of development. The larger the customer volume, the higher the growth rate, and the resonance of multiple growth engines supported the upward performance.
CEO Matthew Prince added: The founding team experienced the company's high growth cycle in the early years, and the company has the potential to return to a higher growth range.
Goldman Sachs Gabriela Borges asked: What are the implementation difficulties, competitive landscape and pace of popularity of the three major products: Monetization Gateway, smart wallet, and identity authentication?
CEO Matthew Prince:
Extremely high technical threshold: The entire network needs to carry tens of millions of financial transactions per second, and the peak supports hundreds of millions of transfers. The processing scale is 1000 times that of Visa's peak. Traditional payment networks cannot adapt; they can only develop their own underlying architecture.
Exclusive ecological advantage: More than 20% of the world's websites are connected to Cloudflare. Users can activate the micropayment function with one click, and free sites can also obtain revenue through small smart installments, forming a positive business cycle.
No direct competition yet: Traditional payment vendors only adapt to credit card transaction scenarios and do not have the underlying capabilities of edge networks or AI traffic. Cloudflare is expected to dominate the smart internet payment industry standards.
Workers revenue contribution, balance between PLG and direct enterprise sales
Citi Fatima Boolani asked: How much does Workers+Workers AI contribute to overall revenue? What are the functional modules with the strongest monetization capacity; will product self-growth (PLG) reduce the value of enterprise direct sales teams after the industry returns to developers?
CEO Matthew Prince replied:
The company does not split revenue from a single product line separately, but Workers is the core driving force for new customer conversion and additional stock purchases, and large enterprise contracts are generally tied to the Workers platform with capital pool terms.
The growth model is two-way parallel: small and medium-sized developers rely on PLG products to grow on their own to gain customers; orders for large enterprises worth tens of millions of dollars still rely on direct sales teams to build trust and provide exclusive after-sales service. The company is building a technical sales team. Sales personnel can quickly iterate and deliver product functions at the customer site, taking into account business relationships and technical delivery capabilities.
GAAP profit progress, product line pipeline boom ranking
William Blair Jonathan Ho asked: The company previously set to achieve GAAP overall profit by 2028. Combined with the performance guidelines for the second half of the year, what is the current progress of completion?
CFO Thomas Seifert: Overall progress was far ahead of schedule. Excluding restructuring expenses, GAAP net loss for the second quarter was only about $1.8 million, which is only one step away from break-even. Core driver: Revenue expansion brings operating leverage, Cloudflare OS automation cost reduction, refined pricing, and discount control.
William Blair Jonathan Ho asked: How do you rank the sales pipeline popularity of each product line?
CFO Thomas Seifert: Workers ranked first in terms of product pipeline growth rate; followed by SASE and zero trust security product lines. The boom tier was consistent with the Investor Day disclosure, and there was no change.
Channel partner revenue growth space
Stifel Adam Borg asked: Channel partners contributed 31% of total revenue this quarter. Act2 security products are highly dependent on channels, Act3/4 developer products have weak channel attributes, and is there any room for an upward share of channel revenue in the future?
CEO Matthew Prince replied:
The share of channel revenue still has room for continuous improvement, and is expected to exceed 50% or even reach 60% in the long term.
Traditional channels: System integrators and service providers mainly promote zero trust and SASE security products, and implement mature systems and continue to scale;
Emerging channels: large integrators undertake the privatization implementation of Cloudflare OS and simultaneously drive large-scale implementation of developer platforms;
Improved ecological support: AI restructured the service provider delivery model, the company introduced standardized cooperation rates and supporting training systems, and partner profit levels continued to improve.
Edge inference value, net retention rate modeling logic
William Blair Ryan MacWilliams asked: Is AI agents calling big models at high frequencies, and is edge reasoning just what the industry needs? How is the demand for low-latency AI being implemented?
CEO Matthew Prince: AI agents not only require independent reasoning capabilities, but also rely on distributed networks around the world to unify scheduling computing, storage, and reasoning resources to achieve “a network is a computer.” The traditional container architecture consumes too much computing power. The company developed its own lightweight isolation sandbox (isolates) to greatly improve the utilization of hardware computing power and adapt to the concurrent operation requirements of a large number of smart devices.
William Blair Ryan MacWilliams asked: Large Workers pool contracts drive 120% net retention this quarter. What is the reference basis for modelling retention rates in the second half of the year?
CFO Thomas Seifert: High retention in the second quarter was driven by all product lines, all customer levels, and all contract types. There was no single core driver, and customer consumption, renewal, and additional purchases strengthened across the board.
GPU computing power arms race strategy, cybersecurity demand, and performance pace
Scotiabank Patrick Colville asked: Why doesn't Cloudflare participate in the AI hardware arms race when peers sign multi-billion dollar GPU computing power infrastructure orders?
CEO Matthew Prince replied:
Simply selling standardized GPU servers is a commodity business. High capital investment, low hardware utilization, and weak profits are not the company's preferred track.
Business model differences: Traditional cloud vendors rely on leased hardware to generate revenue; Cloudflare relies on self-developed scheduling technology to improve hardware reuse efficiency, and the same capital expenditure can release 10 times the computing power output.
Differentiated business layout: They don't voluntarily purchase GPU hardware on a large scale and rent it out, but the world's leading AI vendors are all corporate customers, relying on networks and developer platforms to serve AI companies, avoiding heavy internal assets.
Technology priority route: Continuously optimize scheduling, isolate the underlying technology of the sandbox, maximize existing hardware production capacity, and prioritize high-profit, light-capital businesses.
Scotiabank Patrick Colville asked: Global cybersecurity risks continue to rise. Did related demand turn into an increase in performance in the second quarter, or was it focused on being released in the second half of 2026?
CFO Thomas Seifert replied: In the second quarter, it was observed that enterprises, government and enterprise customers actively raised security budgets, zero trust and cyber protection orders continued to increase, and the security business growth momentum will be further accelerated in the second half of 2026.