Cloudflare shares closed about 10% higher on Friday after the internet infrastructure company reported third-quarter revenue growth of 39% and raised its outlook for the rest of the year.

The stock finished at $268.75, up 9.91% on the day, after opening about 17% higher. The jump stood out on a day when the wider market was still nursing the wounds of Thursday's heavy sell-off, in which Cloudflare itself had fallen 8.3%.

Revenue beats expectations

Cloudflare reported third-quarter revenue of $782.5 million, up 39% from a year earlier and ahead of the roughly $737 million analysts had expected. Adjusted earnings came in at $0.38 per share, against a consensus forecast of $0.34. It was the company's fastest revenue growth in nearly four years.

Chief executive Matthew Prince called it the company's best quarter ever, saying Cloudflare had crossed $3 billion in annualised revenue. The company also reported a net loss of $34.1 million, wider than the $1.3 million loss a year earlier, while gross margin slipped to 71.2% from 74% as the cost of revenue grew faster than sales.

Outlook raised

Cloudflare raised its full-year revenue forecast to between $2.963 billion and $2.964 billion, up from $2.864 billion to $2.870 billion previously. It guided fourth-quarter revenue to $845 million to $846 million, well above the roughly $798 million analysts had expected.

The results suggest demand for the company's network security and connectivity services is accelerating as businesses build infrastructure for artificial intelligence, with management pointing to growing interest from customers running AI workloads.