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Can Cloudflare's Q3 Earnings & Revenue Beat Push the Stock Upward?
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Cloudflare (NET - Free Report) reported third-quarter 2024 non-GAAP earnings of 20 cents per share, which beat the Zacks Consensus Estimate by 11.11%. The bottom line increased 29.4% year over year.
NET’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 25.5%.
NET’s third-quarter revenues of $430.1 million surpassed the consensus mark by 1.52%.
The year-over-year increase of 28.2% in revenues can be attributed to the sustained momentum in the onboarding of large new enterprises, remarkable progress in the public sector and continued high prioritization of security by its customers and a zero-trust approach.
NET’s stronger-than-expected third-quarter 2024 results, driven by a huge inflow of large enterprises outside the U.S. region, accompanied by a raised fourth-quarter outlook, are anticipated to positively impact the stock’s movement, which was down by more than 6% as of pre-market data.
On a year-to-date basis, shares of NET climbed 14.9% compared with the Zacks Internet - Software industry’s return of 30.1%.
Cloudflare’s Q3 Details
NET’s top-line performance was positively impacted by its mix of customer segments (Channel Partners and Direct Customers).
Revenues from Channel Partners (20.7% of total revenues) were $88.9 million, up 70% year over year.
Cloudflare, Inc. Price, Consensus and EPS Surprise
Third-quarter revenues from Direct Customers (79.3% of total revenues) were $341.2 million, up 20% year over year.
NET had 221,540 paying customers in the third quarter, up 22% year over year. NET added 219 new customers who contributed more than $100,000 in annual revenues. The total count of such customers reached 3,265 at the end of the quarter.
NE’s third-quarter non-GAAP gross profit increased 28% year over year to $339.1 million. The non-GAAP gross margin expanded 10 basis points (bps) year over year to 78.8%.
Non-GAAP operating income for the quarter jumped to $63.5 million from $42.5 million in the year-ago quarter. The non-GAAP operating margin expanded 210 bps year over year to 14.8%.
NET’s Balance Sheet & Cash Flow
As of Sept. 30. 2024, Cloudflare had cash, cash equivalents and available-for-sale securities of $1.82 billion, up from $1.76 billion as of June 30, 2024.
NET generated an operating cash flow of $104.7 million and a free cash flow of $45.3 million.
NET Raises Q4 and FY24 Guidance
For the fourth quarter, Cloudflare expects revenues in the $451-$452 million range.
The Zacks Consensus Estimate for revenues is pegged at $455.1 million, suggesting a year-over-year rise of 25.6%.
Non-GAAP income from operations in the fourth quarter is expected to be between $57 million and $58 million. Non-GAAP earnings are anticipated to be 18 cents per share.
The Zacks Consensus Estimate for earnings is pegged at 17 cents per share, indicating a year-over-year rise of 13.3%.
For 2024, NET anticipates revenues between $1.661 billion and $1.662 billion. The Consensus mark for revenues are pegged at $1.66 billion, suggesting a year-over-year rise of 27.9%.
Non-GAAP income from operations is projected to be in the range of $220-$221 million. Non-GAAP earnings are anticipated to be 74 cents per share.
The Zacks Consensus Estimate for earnings is pegged at 71 cents per share, indicating a year-over-year increase of 44.9%.
Zacks Rank & Stocks to Consider
Currently, NET carries a Zacks Rank #3 (Hold) at present.
Shopify (SHOP - Free Report) , CyberArk Software (CYBR - Free Report) and Bilibili (BILI - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.
Image: Bigstock
Can Cloudflare's Q3 Earnings & Revenue Beat Push the Stock Upward?
Cloudflare (NET - Free Report) reported third-quarter 2024 non-GAAP earnings of 20 cents per share, which beat the Zacks Consensus Estimate by 11.11%. The bottom line increased 29.4% year over year.
NET’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 25.5%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
NET’s third-quarter revenues of $430.1 million surpassed the consensus mark by 1.52%.
The year-over-year increase of 28.2% in revenues can be attributed to the sustained momentum in the onboarding of large new enterprises, remarkable progress in the public sector and continued high prioritization of security by its customers and a zero-trust approach.
NET’s stronger-than-expected third-quarter 2024 results, driven by a huge inflow of large enterprises outside the U.S. region, accompanied by a raised fourth-quarter outlook, are anticipated to positively impact the stock’s movement, which was down by more than 6% as of pre-market data.
On a year-to-date basis, shares of NET climbed 14.9% compared with the Zacks Internet - Software industry’s return of 30.1%.
Cloudflare’s Q3 Details
NET’s top-line performance was positively impacted by its mix of customer segments (Channel Partners and Direct Customers).
Revenues from Channel Partners (20.7% of total revenues) were $88.9 million, up 70% year over year.
Cloudflare, Inc. Price, Consensus and EPS Surprise
Cloudflare, Inc. price-consensus-eps-surprise-chart | Cloudflare, Inc. Quote
Third-quarter revenues from Direct Customers (79.3% of total revenues) were $341.2 million, up 20% year over year.
NET had 221,540 paying customers in the third quarter, up 22% year over year. NET added 219 new customers who contributed more than $100,000 in annual revenues. The total count of such customers reached 3,265 at the end of the quarter.
NE’s third-quarter non-GAAP gross profit increased 28% year over year to $339.1 million. The non-GAAP gross margin expanded 10 basis points (bps) year over year to 78.8%.
Non-GAAP operating income for the quarter jumped to $63.5 million from $42.5 million in the year-ago quarter. The non-GAAP operating margin expanded 210 bps year over year to 14.8%.
NET’s Balance Sheet & Cash Flow
As of Sept. 30. 2024, Cloudflare had cash, cash equivalents and available-for-sale securities of $1.82 billion, up from $1.76 billion as of June 30, 2024.
NET generated an operating cash flow of $104.7 million and a free cash flow of $45.3 million.
NET Raises Q4 and FY24 Guidance
For the fourth quarter, Cloudflare expects revenues in the $451-$452 million range.
The Zacks Consensus Estimate for revenues is pegged at $455.1 million, suggesting a year-over-year rise of 25.6%.
Non-GAAP income from operations in the fourth quarter is expected to be between $57 million and $58 million. Non-GAAP earnings are anticipated to be 18 cents per share.
The Zacks Consensus Estimate for earnings is pegged at 17 cents per share, indicating a year-over-year rise of 13.3%.
For 2024, NET anticipates revenues between $1.661 billion and $1.662 billion. The Consensus mark for revenues are pegged at $1.66 billion, suggesting a year-over-year rise of 27.9%.
Non-GAAP income from operations is projected to be in the range of $220-$221 million. Non-GAAP earnings are anticipated to be 74 cents per share.
The Zacks Consensus Estimate for earnings is pegged at 71 cents per share, indicating a year-over-year increase of 44.9%.
Zacks Rank & Stocks to Consider
Currently, NET carries a Zacks Rank #3 (Hold) at present.
Shopify (SHOP - Free Report) , CyberArk Software (CYBR - Free Report) and Bilibili (BILI - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.
Shopify and CyberArk Software sport a Zacks Rank #1 (Strong Buy) each, while Bilibili carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
SHOP shares have appreciated 9.8% year to date. Shopify is set to report third-quarter 2024 results on Nov. 12.
CYBR shares have jumped 35.2% year to date. CyberArk Software is set to report third-quarter 2024 results on Nov. 13.
BILI shares have surged 98.3% year to date. Bilibili is set to report third-quarter 2024 results on Nov. 14.