Earnings Edge for Thursday: Setups for Cloudflare, Datadog, Unity Software, Airbnb, Microchip, Rocket Companies, Twilio, Fiserv, Atlassian, The Trade Desk, Celsius, and 200 More
Full Valuation Context for all of the Day's Reporters
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Relative winners and losers over the last quarter, followed by names of note, concluding with a spreadsheet containing setup tables for all of the day’s reporters. Each name of note now comes with a direct read on whether the setup leans long or short into the print, grounded in the table’s valuation, growth, and historical reaction data.
Relative Winners and Losers
Names of Note
Cloudflare (NET)
Reports Thursday, August 6 after the close (Q2 2026)
Research as of: August 5, 2026
Directional Commentary
The setup into this print is priced for perfection. The stock enters at 35.7x forward price to sales, the richest multiple since Q4’21 at 41.6x and 21% above last quarter’s 29.4x, after outperforming SPY by 4,118 bps since the last report. Forward estimates are improving, with NTM revenue growth of 28.5% against 28.1% last quarter and NTM EPS growth of 28.9% against 24.6%, but the acceleration is incremental while the re-rating has been anything but. The historical reaction pattern at elevated multiples is unforgiving: Q1’26 went into the print at 29.4x with a 7.3% EPS beat and still fell 23.6%, and Q2’25 at 29.6x with a 12.9% beat fell 3.6%. The rewards have come from the other end of the range, with Q4’25 at 22.3x and a 2.9% beat returning 5.2% and Q4’24 at 23.8x and a 3.8% beat returning 17.8%. Short interest of 3.1% offers no squeeze fuel to offset a disappointment, and the options market is pricing plus or minus 10.3%, well short of the 23.6% downside delivered at a lower multiple three months ago. This is a SHORT into the print, small sizing given the underlying growth trend, with the expectation that a beat and raise gets sold.
Bull Bullets: Agentic web monetization and inference workloads support multi-year growth reacceleration
• Second quarter revenue guidance of $664 million to $665 million implies roughly 30% growth, and management has cleared its own revenue guide consistently. The forward question is whether the company can frame a path to a mid-30% exit rate for 2026, with sell-side work into the print looking for a full year raise larger than the quarter’s beat itself.
• Positioning as the neutral toll road for the agentic internet is the structural differentiator. Crawler controls and content licensing infrastructure give publishers negotiating leverage with AI companies, and management has framed micro-transactions for agentic requests as a new business model layered onto existing network scale, with transaction volumes potentially running well above one million per second.
• The AI-first reorganization resets the cost base without changing free cash flow expectations, with $140 million to $150 million of 2026 restructuring charges concentrated in the reported quarter. If net capacity growth in the quota-carrying sales force accelerates as guided, operating margin expansion and revenue acceleration can arrive together in 2027.
Bear Bullets: Premium multiple leaves no cushion for second-half deceleration or execution slippage
• The guided growth rate implies roughly four points of sequential deceleration against a comparison that is only one point tougher, and second-half comparisons tighten further. Guidance that does not credibly support a mid-30% exit rate risks a rapid de-rating from a multiple that already assumes the acceleration arrives.
• Gross margin has been drifting lower as faster growth in developer and AI products carries a structurally lower margin profile and network cost allocation rises. Continued mix shift toward inference and consumption-based workloads could keep margin under pressure precisely when the market is underwriting operating leverage.
• A headcount reduction of more than 1,100 during a go-to-market transformation creates execution risk in the exact quarters the market is underwriting. Slippage in quota capacity or large-deal timing would widen the gap between the multiple and delivered growth.
Key Investment Thesis
Cloudflare operates a global connectivity cloud that delivers network security, performance, and developer compute services from a distributed edge network spanning hundreds of cities.
Upside Case: If AI inference and agentic traffic settle onto edge infrastructure, the company captures a toll on a new layer of internet activity while its developer platform converts free users into large enterprise contracts. A guide toward a mid-30% growth exit rate combined with the reset cost base would validate both the growth reacceleration and the margin expansion the multiple already embeds.
Downside Case: Growth decelerates into tougher second-half comparisons while the restructuring disrupts sales productivity, leaving a premium multiple attached to a mid-20s growth rate. Gross margin erosion from lower-margin AI workloads would compound the problem by undercutting the operating leverage narrative.
Differentiation: Ownership of the network itself, rather than reselling hyperscaler capacity, gives the company a cost structure and latency profile competitors cannot easily replicate. Its neutrality between publishers and AI companies is a position no hyperscaler can credibly occupy.
Datadog (DDOG)