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Cloudflare (NET) Q2 Earnings & Sales Beat Expectations, Up Y/Y
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Cloudflare (NET - Free Report) reported second-quarter 2023 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate and improved year over year.
The company reported non-GAAP earnings of 10 cents per share, beating the Zacks Consensus Estimate of 7 cents. The bottom line improved from the year-ago quarter breakeven.
Cloudflare’s second-quarter revenues of $308.5 million outpaced the Zacks Consensus Estimate of $305.6 million. The top line grew 32% from the year-ago reported figure.
The robust top-line growth was aided by multiple client wins and a growing momentum among large enterprise customers driven by the heightened need for stronger security and a zero-trust approach.
Cloudflare, Inc. Price, Consensus and EPS Surprise
The company’s strong quarterly performance reflects its sustained focus on product innovation, a shift in its business model to subscription-based services, product development and continued investments in infrastructure expansion.
Region-wise, the United States accounted for 53% of NET second-quarter revenues, while revenues from the outside of the United States made up the remaining 47%.
Cloudflare continued to win multiple customers in the second quarter. Its net dollar-based retention rate turned out to be more than 115%.
The company had 174,129 paying customers during the second quarter. The figure, which is the highest so far, surged 14.7% year over year.
During second-quarter 2023, the company had 196 customers with higher than $100,000 annual revenues. The total count of such customers reached 2,352 at the end of the quarter.
Operating Details
Cloudflare’s non-GAAP gross profit increased 29.6% year over year to $239.7 million. Non-GAAP gross margin contracted 100 basis points (bps) to 78%.
Non-GAAP operating expenses climbed 18% to $219.4 million. As a percentage of revenues, non-GAAP operating expenses shot down to 71.1% from the year-ago quarter’s figure of 79.3%.
Non-GAAP operating income for the quarter totaled $20.3 million compared to a loss of $0.9 million reported a year ago. Consequently, the non-GAAP operating margin expanded 620 bps to 6.6%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, Cloudflare had cash, cash equivalents and restricted cash of $164.4 million, down from $268.4 million as of Mar 31, 2023.
As of Jun 30, 2023, the company had long-term operating lease liabilities of $107 million.
NET generated an operating cash flow of $64.5 million and a free cash flow of $20 million during the second quarter. During the first six months of 2023, the company’s cash flow from operating activities was $100.9 million and free cash flow was $33.9 million.
Guidance
Cloudflare anticipates 2023 revenues in the range of $1,283-$1,287 million, while it expects non-GAAP income from operations in the $81-$85 million range.
For 2023, non-GAAP earnings are forecasted to be 37 cents per share band.
For the third quarter of fiscal 2023, the company estimates revenues between $330 million and $331 million.
Non-GAAP operating income is anticipated between $20 million and $21 million. Non-GAAP earnings are forecasted to be 10 cents per share.
Zacks Rank & Stocks to Consider
Currently, Cloudflare carries a Zacks Rank #3 (Hold). Shares of NET have gained 11.3% over the past year.
The Zacks Consensus Estimate for NVIDIA’s second-quarter fiscal 2024 earnings has been steady at 92 cents per share over the past 90 days. For fiscal 2024, earnings estimates have moved up by 13 cents to $7.79 in the past 30 days.
NVDA's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 0.26%. Shares of the company have soared 131.6% in the past year.
The Zacks Consensus Estimate for Salesforce’s second-quarter fiscal 2024 earnings has been revised southward by a penny to $1.60 per share over the past 60 days. For fiscal 2024, earnings estimates have moved up by 4 cents to $7.44 in the past 60 days.
CRM's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.5%. Shares of the company have gained 13.1% in the past year.
The Zacks Consensus Estimate for Meta Platforms' third-quarter 2023 earnings has been revised upward by 15.1% to $3.44 per share over the past seven days. For 2023, earnings estimates have moved north by 7.9% to $12.94 in the past seven days.
META’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 19%. Shares of the company have surged 83.6% in the past year.
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Cloudflare (NET) Q2 Earnings & Sales Beat Expectations, Up Y/Y
Cloudflare (NET - Free Report) reported second-quarter 2023 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate and improved year over year.
The company reported non-GAAP earnings of 10 cents per share, beating the Zacks Consensus Estimate of 7 cents. The bottom line improved from the year-ago quarter breakeven.
Cloudflare’s second-quarter revenues of $308.5 million outpaced the Zacks Consensus Estimate of $305.6 million. The top line grew 32% from the year-ago reported figure.
The robust top-line growth was aided by multiple client wins and a growing momentum among large enterprise customers driven by the heightened need for stronger security and a zero-trust approach.
Cloudflare, Inc. Price, Consensus and EPS Surprise
Cloudflare, Inc. price-consensus-eps-surprise-chart | Cloudflare, Inc. Quote
Q1 in Detail
The company’s strong quarterly performance reflects its sustained focus on product innovation, a shift in its business model to subscription-based services, product development and continued investments in infrastructure expansion.
Region-wise, the United States accounted for 53% of NET second-quarter revenues, while revenues from the outside of the United States made up the remaining 47%.
Cloudflare continued to win multiple customers in the second quarter. Its net dollar-based retention rate turned out to be more than 115%.
The company had 174,129 paying customers during the second quarter. The figure, which is the highest so far, surged 14.7% year over year.
During second-quarter 2023, the company had 196 customers with higher than $100,000 annual revenues. The total count of such customers reached 2,352 at the end of the quarter.
Operating Details
Cloudflare’s non-GAAP gross profit increased 29.6% year over year to $239.7 million. Non-GAAP gross margin contracted 100 basis points (bps) to 78%.
Non-GAAP operating expenses climbed 18% to $219.4 million. As a percentage of revenues, non-GAAP operating expenses shot down to 71.1% from the year-ago quarter’s figure of 79.3%.
Non-GAAP operating income for the quarter totaled $20.3 million compared to a loss of $0.9 million reported a year ago. Consequently, the non-GAAP operating margin expanded 620 bps to 6.6%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, Cloudflare had cash, cash equivalents and restricted cash of $164.4 million, down from $268.4 million as of Mar 31, 2023.
As of Jun 30, 2023, the company had long-term operating lease liabilities of $107 million.
NET generated an operating cash flow of $64.5 million and a free cash flow of $20 million during the second quarter. During the first six months of 2023, the company’s cash flow from operating activities was $100.9 million and free cash flow was $33.9 million.
Guidance
Cloudflare anticipates 2023 revenues in the range of $1,283-$1,287 million, while it expects non-GAAP income from operations in the $81-$85 million range.
For 2023, non-GAAP earnings are forecasted to be 37 cents per share band.
For the third quarter of fiscal 2023, the company estimates revenues between $330 million and $331 million.
Non-GAAP operating income is anticipated between $20 million and $21 million. Non-GAAP earnings are forecasted to be 10 cents per share.
Zacks Rank & Stocks to Consider
Currently, Cloudflare carries a Zacks Rank #3 (Hold). Shares of NET have gained 11.3% over the past year.
Some better-ranked stocks from the broader Computer and Technology sector are NVIDIA Corporation (NVDA - Free Report) , Salesforce (CRM - Free Report) and Meta Platforms (META - Free Report) . While NVIDIA sports a Zacks Rank #1 (Strong Buy), Salesforce and Meta carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s second-quarter fiscal 2024 earnings has been steady at 92 cents per share over the past 90 days. For fiscal 2024, earnings estimates have moved up by 13 cents to $7.79 in the past 30 days.
NVDA's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 0.26%. Shares of the company have soared 131.6% in the past year.
The Zacks Consensus Estimate for Salesforce’s second-quarter fiscal 2024 earnings has been revised southward by a penny to $1.60 per share over the past 60 days. For fiscal 2024, earnings estimates have moved up by 4 cents to $7.44 in the past 60 days.
CRM's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.5%. Shares of the company have gained 13.1% in the past year.
The Zacks Consensus Estimate for Meta Platforms' third-quarter 2023 earnings has been revised upward by 15.1% to $3.44 per share over the past seven days. For 2023, earnings estimates have moved north by 7.9% to $12.94 in the past seven days.
META’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 19%. Shares of the company have surged 83.6% in the past year.