Cloudflare, (NET:NYSE) shares jumped more than 27% on Friday after announcing second-quarter results and full-year guidance that exceeded analysts’ predictions
- For the second quarter and year to date, positive operating cash flow of $38.3 million
- 16% of total revenue, was accompanied by negative free cash flow of $4.4 million, 2% of total revenue.
Analysts were surprised at Cloudflare’s announcement of quarterly results and full-year guidance, as it exceeded their expectations.
Cloudflare is a content distribution network and security firm that operates an internet infrastructure.
The company has been rapidly growing its revenue in the past three quarters despite a slowdown in the technology industry in other sectors.
Revenue rose 54% year-over-year to $234.5 million, maintaining its recent pace. Analysts estimated $227.3 million in revenue.
Management increased its 2022 growth forecast to 48% from 43%, citing a record number of customers paying over $100,000 annually.
Cloudflare COO Jeremy Wittenstein said on the earnings call that in the first quarter, the company noticed that sales cycles had lengthened, pipeline generation had slowed, and customers took longer to pay their bills.
“We monitored those metrics carefully throughout the second quarter and saw that they at least stabilised. They’re not where we would throw a party yet, but the numbers are heading in the right direction.” says Price.
Analysts raised their targets after Cloudflare’s performance.
Despite the fact that no company is recession-proof, Cloudflare is better prepared to weather economic turbulence than others, according to RBC analysts.
Cloudflare shares currently sits at about $73, but analysts polled by FactSet anticipate share prices to rise to about $92 in the future.
That would be a record for the company, but it would be well below the $217.25 share price the company achieved in November.
Cloudflare’s net losses more than doubled to almost $64 million from $35 million in the year-ago quarter, despite revenue climbing substantially.
According to Prince, Cloudflare has altered its “go-to-market message” during the downturn, focusing on helping customers save money and consolidate “spend from multiple point solution vendors behind Cloudflare’s expansive platform.”
