Cloudflare Inc. shares surged to a record after posting better-than-expected sales figures that topped quarterly and annual estimates, following a reorganization and the addition of more large enterprise customers.

The cybersecurity firm projected sales of $589 million in the fourth quarter, exceeding analysts’ estimates of $580.9 million on average. Cloudflare’s revenue totaled $562 million last quarter, also far outpacing analysts’ forecasts.

Cloudflare raised its outlook for adjusted earnings per share for the fiscal year to 91 cents, from 85 to 86 cents previously.

Cloudflare gained as much as 9.3% on Friday to $243.20, its biggest intraday rally since May.

San Francisco-based Cloudflare has been on a roll. Shares are up more than 120% for the year, a rise analysts attribute to Cloudflare’s grand ambitions of turning its widely distributed network into a cloud on which customers can train AI models and run inference.

While Cloudflare may be smaller than rivals such as Akamai Technologies Inc., Palo Alto Networks Inc. and Fortinet Inc., its ease of use has appealed to small and midsized businesses, according to Bloomberg Intelligence. And the addition of large customers this year, along with its support for generative AI, has fueled steady growth in recent quarters.

“The agents of the future will inherently have to pass through our network and abide by its rules,” said Chief Executive Officer Matthew Prince during the earnings call Thursday. “And as they do, we will help set the protocol, guardrails, and business rules for the agentic internet of the future. And we’ll make sure the tools to participate in that future are available to all businesses, large and small.”

Prince brushed off concerns that an artificial intelligence bubble bursting would impact sales at Cloudflare, which has heavily courted AI companies. He estimated that 80% of AI companies used Cloudflare but said it was a relatively minor portion of our overall revenue. Chief Financial Officer Thomas Seifert confirming that no customer made up more than 2% of Cloudflare’s revenue.

— By Margi Murphy (Bloomberg News)