Cloudflare, a leading cybersecurity and software company, experienced a significant surge in its stock following the release of its strong earnings report. The company’s shares jumped 24% in Thursday’s extended session, driven by what Cloudflare deemed “exceptionally strong” financial results for the December period.
In terms of the numbers, Cloudflare reported a net loss of $27.9 million, or 8 cents per share, for the fourth quarter. This was a significant improvement compared to the year-earlier period when the company incurred a loss of $45.9 million, or 14 cents per share. On an adjusted basis, Cloudflare earned 15 cents per share, up from 6 cents per share the previous year. Analysts surveyed by FactSet were expecting earnings of 12 cents per share. Additionally, revenue rose by an impressive 32% to reach $363 million, surpassing analysts’ expectations of $353 million.
Cloudflare’s success can be attributed to several factors. CEO Matthew Prince highlighted the company’s substantial improvement in pipeline close rates, sales-force productivity, and average deal size on a sequential basis. He also mentioned the robust momentum with large customers, significant progress in the public sector, and growth in Cloudflare One as key drivers of the company’s strong performance. Despite macroeconomic uncertainties, Cloudflare’s customers continued to spend, indicating confidence in the company’s offerings.
Analyst James Fish from Piper Sandler commended Cloudflare’s performance in his analysis of the report. He noted that the company outperformed on remaining performance obligations (RPO) and showed positive traction on non-RPO metrics. Fish suggested that these factors, combined with Cloudflare’s recent execution, indicate a conservative outlook for 2024 and sustainable growth of over 30%. However, he maintained a neutral stance on the stock, waiting for a more attractive entry point.
Looking ahead, Cloudflare provided optimistic guidance for the current quarter and the full year. The company expects revenue in the range of $372.5 million to $373.5 million for the current quarter, along with adjusted earnings per share of 13 cents. The FactSet consensus was slightly lower, at $372 million in revenue and 12 cents in adjusted earnings per share. For the full year, Cloudflare anticipates revenue between $1.648 billion and $1.652 billion, with adjusted EPS ranging from 58 cents to 59 cents. This surpasses analysts’ expectations of $1.65 billion in revenue and 54 cents in adjusted EPS.
Overall, Cloudflare’s impressive financial results and positive outlook have driven a significant surge in its stock price. The company’s strong performance, coupled with its ability to navigate macroeconomic uncertainties, has instilled confidence in investors and analysts alike. As Cloudflare continues to innovate and expand its offerings in the cybersecurity and software industry, it remains poised for continued growth and success in the future.
