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What's in Store for Cloudflare (NET) This Earnings Season?
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Cloudflare (NET - Free Report) is slated to release third-quarter 2020 results on Nov 5.
Notably, the company completed its initial public offering (IPO) last September. Ever since, it has reported four quarterly earnings. In the last reported quarter, Cloudflare’s bottom line beat the Zacks Consensus Estimate by 50%.
Management expects third-quarter revenues between $102.5 and $103.5 million. The Zacks Consensus Estimate for the top line is currently pegged at $103.1 million. Notably, the consensus mark for loss has remained unrevised at 5 cents per share for the past 30 days.
Let’s see how things shaped up prior to this announcement.
Factors to Consider
Cloudflare’s diversified customer base is anticipated to have aided top-line growth during the third quarter. At the end of the second quarter, the company had more than 3 million free and paying customers. Moreover, it had added roughly 7,000 new paying customers, bringing the total count to approximately 96,000 across more than 160 countries.
Large customers (annual billings of more than $100,000) were 637 at second-quarter end, up from the 536 recorded at the end of the first quarter. The company’s large customer base witnessed a CAGR of 80% during the 2016-2019 period. This momentum is likely to have continued in the to-be-reported quarter as well on elevated demand for its cloud-based solutions amid the pandemic-led remote-working wave.
Further, Cloudflare’s recurring subscription-based business model provides relative stability to its top line despite the COVID-19 pandemic-induced disruptions.
Additionally, solid demand for security solutions, which became imperative due to aggravated cyberattacks, bring-your-own device policies and a zero-trust approach, is likely to have supported the top line in the quarter under review.
However, Cloudflare’s significant exposure to small and medium businesses (SMBs), the worst-hit cohort by the pandemic, might have impeded growth during the quarter to be reported.
What Our Model Says
Our proven model does not predict an earnings beat for Cloudflare this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Cloudflare currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:
Hologic, Inc. (HOLX - Free Report) has an Earnings ESP of +20.90% and holds a Zacks Rank of 2, currently.
Marchex, Inc. (MCHX - Free Report) has an Earnings ESP of +16.67% and currently carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
What's in Store for Cloudflare (NET) This Earnings Season?
Cloudflare (NET - Free Report) is slated to release third-quarter 2020 results on Nov 5.
Notably, the company completed its initial public offering (IPO) last September. Ever since, it has reported four quarterly earnings. In the last reported quarter, Cloudflare’s bottom line beat the Zacks Consensus Estimate by 50%.
Management expects third-quarter revenues between $102.5 and $103.5 million. The Zacks Consensus Estimate for the top line is currently pegged at $103.1 million. Notably, the consensus mark for loss has remained unrevised at 5 cents per share for the past 30 days.
Let’s see how things shaped up prior to this announcement.
Factors to Consider
Cloudflare’s diversified customer base is anticipated to have aided top-line growth during the third quarter. At the end of the second quarter, the company had more than 3 million free and paying customers. Moreover, it had added roughly 7,000 new paying customers, bringing the total count to approximately 96,000 across more than 160 countries.
Cloudflare, Inc. Price and Consensus
Cloudflare, Inc. price-consensus-chart | Cloudflare, Inc. Quote
Large customers (annual billings of more than $100,000) were 637 at second-quarter end, up from the 536 recorded at the end of the first quarter. The company’s large customer base witnessed a CAGR of 80% during the 2016-2019 period. This momentum is likely to have continued in the to-be-reported quarter as well on elevated demand for its cloud-based solutions amid the pandemic-led remote-working wave.
Further, Cloudflare’s recurring subscription-based business model provides relative stability to its top line despite the COVID-19 pandemic-induced disruptions.
Additionally, solid demand for security solutions, which became imperative due to aggravated cyberattacks, bring-your-own device policies and a zero-trust approach, is likely to have supported the top line in the quarter under review.
However, Cloudflare’s significant exposure to small and medium businesses (SMBs), the worst-hit cohort by the pandemic, might have impeded growth during the quarter to be reported.
What Our Model Says
Our proven model does not predict an earnings beat for Cloudflare this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Cloudflare currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:
Sunoco LP (SUN - Free Report) has an Earnings ESP of +1.00% and sports a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic, Inc. (HOLX - Free Report) has an Earnings ESP of +20.90% and holds a Zacks Rank of 2, currently.
Marchex, Inc. (MCHX - Free Report) has an Earnings ESP of +16.67% and currently carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>