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After Cloudflare reported its November results, we updated our fair value and raised our projections for sales and profit through the end of the decade. We have added the risk of the company's workforce reduction and its move toward automating more of its own operations to what we watch. We also increased our assumption for how much the company spends on its network equipment after that figure reached 16% of revenue over the past three months.
Cloudflare brought in about 782 million dollars in revenue last quarter, which was higher than the 740 million dollars analysts expected. This 39 percent growth rate is the fastest the company has seen in almost four years, suggesting that its efforts to sell more complex security and AI tools are working. The company also earned 38 cents per share, topping the 34 cents expected by the market.
Looking ahead, the company raised its full-year revenue forecast to about 2.96 billion dollars. While the business still reported a loss under standard accounting rules, it generated 137 million dollars in operating profit when excluding certain costs. This balance of accelerating growth and improving cash generation is exactly what the company needs to justify its high stock price.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Christian Smith has joined the company to lead its worldwide sales and revenue operations. He brings about 30 years of experience in enterprise leadership to the role. This hire is part of a broader push to scale the business from its current 3 billion dollar revenue run rate toward a 5 billion dollar goal.
For a company like Cloudflare, growth depends on moving beyond small self-service users to signing large contracts with major corporations. Smith's job will be to manage the teams that handle these complex sales. While a leadership change in sales is worth watching, it is a routine part of scaling a fast-growing tech company rather than a sign of trouble.
Source: Business Wire
Cloudflare reports its latest quarterly results after the market closes today. Analysts expect the company to show earnings of about $0.34 per share on revenue of roughly $740 million. We are watching two specific areas: how many large customers spending over $100,000 a year the company added, and its net retention rate. That rate shows how much more existing customers are spending compared to last year, which is a key measure of how deeply businesses are relying on Cloudflare's security and computing tools.
JPMorgan upgraded the stock to Overweight, a rating that means they expect it to perform better than the broader market. The firm noted that the stock's recent 26 percent drop over the last month has created a better entry point for a business that still has room to grow its sales quickly.
This is a meaningful shift from a major bank. While the stock has been volatile lately, the upgrade suggests that the underlying business, which handles security and speed for a large portion of internet traffic, remains healthy despite the recent selloff in the market.
Source: Finbold
Management consistently sets a bar they can clear, but the latest jump in sales shows the business is now outrunning even their own raised forecasts.
| Expectation | |
|---|---|
| EPS | $0.38 |
| Revenue | $796M |