Key Takeaways
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Cloudflare CEO Matthew Prince said on TBPN that agent traffic could reach a thousand times human traffic within five years if current trends continue.
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He expects agents to pay a tiny fee each time they access a page, and Cloudflare has already released a gateway that lets sites collect those payments.
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Revenue grew 36% in the second quarter of 2026, but gross margin fell from 77.3% in fiscal 2024 to 74.5% in fiscal 2025 as Cloudflare carried more traffic.
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Management's goal of first revenue from agent payments in 2026 is the proof to watch, and gross margin shows what the extra traffic costs until then.
Cloudflare ( NET:NYSE )CEO Matthew Prince thinks the way the internet makes money is about to break. And his company is set up to collect when it does.
TBPN asked Prince for his most outlandish prediction for the internet in a decade. He answered: "The business model is going to change fundamentally."
His reason? If current trends hold for five years, "automated traffic, agent traffic is going to be a thousand times human traffic." For scale, he pointed out that the internet nearly collapsed during COVID, when traffic only doubled.
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Somebody has to pay for the menus
Prince's example: ask a ChatGPT agent where to have lunch, and it might check a thousand menus at a thousand restaurants. That uses up resources at every one of them, and it sends you to just one.
His hunch is that the fix is "some version of micropayments that every time you access a resource, your agent pays." He means something like a 10,000th of a penny to see a menu. An agent that tells the site what it's shopping for might pay less, or nothing. He thinks that trade becomes the next version of advertising.
And Cloudflare is already building for it. On No Priors, CTO Dane Knecht said the company has released a monetization gateway. Sites put themselves behind Cloudflare and charge agents small payments for their content, and Cloudflare provides wallets for the agents and a stablecoin to settle the payments.
The network is already in place, too. Management estimates that more than 20% of the web runs through Cloudflare. It also says the network already sends more than 2 billion replies a day telling a request it has to pay, though most of those end without a payment for now.
The traffic is already paying off
Non-human traffic passed human traffic on Cloudflare's network in May, management said on its second-quarter call. The business is already growing on that shift: revenue rose 36% in the second quarter of 2026, to $696.1 million. Analysts expect revenue to more than double from fiscal 2025 to fiscal 2028.
Agent payments don't figure in the case management makes for that growth. It left them out of the $238 billion market it sized for 2026. A podcast prediction shouldn't move these estimates, but a first dollar of agent revenue could.
The bill comes before the payment
But a thousand times the traffic has to be carried before any agent pays for it. In Prince's own words, that means a lot more servers, routers and bandwidth.
You can already see the cost in Cloudflare's gross margin.
Cost of revenue grew 46% in fiscal 2025, while revenue grew 30%. Non-GAAP gross margin was 73.1% in the second quarter of 2026, down from 76.3% a year earlier. In June, management widened its long-term range to 70% to 77%, from 75% to 77%. Management blames faster growth in lower-margin developer products and free traffic turning into paid traffic.
The payments are a hard engineering problem of their own. On Cloudflare's second-quarter call, Prince said agent payments could mean 10 million to 100 million transactions a second, against about 20,000 for Visa at its peak.
Plus: the traffic agents would pay for is already crossing Cloudflare's network. That's why management expects agent payments to have the lowest cost to serve of anything it sells.
Cloudflare holds the meter
Prince is right that the web can't serve a thousand bot visits for every human one for free. Cloudflare sits in front of a fifth of the web and already has a payment gateway built, so it's the company best placed to send the bill.
My take: agent payments are real upside on a business analysts already expect to grow close to 30% a year through 2028. Until agents actually pay, gross margin is the number to watch.
Of course, micropayments are still Prince's hunch. Third-quarter results in early November will show whether gross margin holds near 73.1%. The fourth-quarter report, expected in February, is the deadline management set itself for first revenue from agent payments.
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