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Cloudflare (NET) to Report Q1 Earnings: What's in Store?

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Cloudflare (NET - Free Report) is slated to release first-quarter 2021 results on May 6.

Management projects first-quarter revenues to lie between $130 and $131 million. The Zacks Consensus Estimate for the top line is currently pegged at $131.3 million, indicating a 43.9% year-on-year jump.

The company expects to report non-GAAP net loss per share between 8 cents and 9 cents in the quarter. Notably, the consensus mark for loss has remained unrevised at 3 cents per share for the past 30 days.

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

Cloudflare’s first-quarter performance is likely to have benefited from solid demand for security solutions, which became imperative due to aggravated cyberattacks, work and learn from home policies and a zero-trust approach.

Moreover, the company’s diversified customer base is anticipated to have aided top-line growth during the first quarter. At the end of fourth-quarter 2020, the company had more than 3.5 million free and paying customers. Also, it had added roughly 10,000 new paying customers sequentially, bringing the total count to approximately 111,000 across more than 160 countries.

The company added 92 new large customers (annual billings of more than $100,000) bringing the total count to 828 at the end of fourth quarter. This uptrend, which has prevailed for the past few quarters, 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 pandemic-induced disruptions.

However, Cloudflare’s significant exposure to small and medium businesses (SMBs), the worst-hit cohort by the pandemic, might have continued to impede 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:

Ralph Lauren Corporation (RL - Free Report) has an Earnings ESP of +6.25% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Walt Disney Company (DIS - Free Report) has an Earnings ESP of +46.11% and carries a Zacks Rank #3, at present.

Rackspace Technology, Inc. (RXT - Free Report) has an Earnings ESP of +4.55% and currently carries a Zacks Rank #3.

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