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Cloudflare (NET) Jumps 24% as Q4 Earnings & Sales Top Estimates
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Cloudflare’s (NET - Free Report) stock jumped 24% during Thursday’s extended trading session after it reported impressive fourth-quarter 2023 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate and improved year over year.
Cloudflare reported non-GAAP earnings of 15 cents per share, beating the Zacks Consensus Estimate of 12 cents. The bottom line also witnessed a robust year-over-year surge of 150% from the year-ago quarter’s earnings of 6 cents per share.
NET’s fourth-quarter revenues of $362.5 million outpaced the Zacks Consensus Estimate of $352.7 million. The top line grew 32% from the year-ago reported figure.
The robust top-line growth was aided by client wins and 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 52% of NET’s total revenues, while revenues from outside the United States made up the remaining 48%.
Cloudflare continued to win multiple customers in the fourth quarter. Its net dollar-based retention rate turned out to be more than 115%.
The company had 189,791 paying customers during the fourth quarter. The figure, which is the highest so far, rose 17% year over year.
In the fourth quarter of 2023, NET added 198 new customers who contributed more than $100,000 in annual revenues. The total count of such customers reached 2,756 at the end of the quarter.
Operating Details
Cloudflare’s non-GAAP gross profit increased 34.5% year over year to $286 million. The non-GAAP gross margin expanded 150 basis points (bps) to 78.9%.
Non-GAAP operating expenses climbed 25.8% to $246.2 million. As a percentage of revenues, non-GAAP operating expenses declined to 67.9% from the year-ago quarter’s figure of 71.2%.
Non-GAAP operating income for the quarter jumped to $39.8 million from $16.8 million in the year-ago quarter. Consequently, the non-GAAP operating margin expanded 490 bps to 11%.
Balance Sheet & Cash Flow
As of Dec 31, 2023, Cloudflare had cash, cash equivalents and available-for-sale securities of $1.67 million, up from $1.57 million as of Sep 30, 2023.
As of Dec 31, 2023, the company had long-term operating lease liabilities of $113.5 million.
NET generated an operating cash flow of $85.4 million and a free cash flow of $50.7 million in the fourth quarter. During fiscal 2023, the company’s cash flow from operating activities was $254.4 million and free cash flow was $119.5 million.
First-Quarter & FY24 Guidance
Cloudflare initiated guidance for the first quarter and full year 2024. For the first quarter of 2024, the company expects its revenues in the range of $372.5-$373.5 million. It expects its non-GAAP income from operations in the band of $34-$35 million for the quarter and has projected a non-GAAP net income per share of 13 cents.
For fiscal 2024, NET anticipates its top line in the range of $1.648-$1.652 billion. It expects non-GAAP income from operations in the range of $154-$158 million and non-GAAP net income per share in the band of 58-59 cents.
Zacks Rank and Stocks to Consider
Currently, Cloudflare carries a Zacks Rank #3 (Hold). Shares of NET have returned 55.3% in the past year.
The Zacks Consensus Estimate for BlackLine’s fourth-quarter 2023 earnings has been revised by a penny northward to 55 cents per share in the past 60 days. Shares of BL have lost 16.9% in the past year.
The Zacks Consensus Estimate for Arista’s fourth-quarter 2023 earnings has been revised by a penny northward to $1.71 per share in the past seven days. Shares of ANET have rallied 102.1% in the past year.
The Zacks Consensus Estimate for DELL fourth-quarter 2024 earnings per share has been revised by a penny northward to $1.73 in the past 30 days. Shares of DELL have surged 101.7% in the past year.
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Cloudflare (NET) Jumps 24% as Q4 Earnings & Sales Top Estimates
Cloudflare’s (NET - Free Report) stock jumped 24% during Thursday’s extended trading session after it reported impressive fourth-quarter 2023 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate and improved year over year.
Cloudflare reported non-GAAP earnings of 15 cents per share, beating the Zacks Consensus Estimate of 12 cents. The bottom line also witnessed a robust year-over-year surge of 150% from the year-ago quarter’s earnings of 6 cents per share.
NET’s fourth-quarter revenues of $362.5 million outpaced the Zacks Consensus Estimate of $352.7 million. The top line grew 32% from the year-ago reported figure.
The robust top-line growth was aided by client wins and 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
Key Metrics 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 52% of NET’s total revenues, while revenues from outside the United States made up the remaining 48%.
Cloudflare continued to win multiple customers in the fourth quarter. Its net dollar-based retention rate turned out to be more than 115%.
The company had 189,791 paying customers during the fourth quarter. The figure, which is the highest so far, rose 17% year over year.
In the fourth quarter of 2023, NET added 198 new customers who contributed more than $100,000 in annual revenues. The total count of such customers reached 2,756 at the end of the quarter.
Operating Details
Cloudflare’s non-GAAP gross profit increased 34.5% year over year to $286 million. The non-GAAP gross margin expanded 150 basis points (bps) to 78.9%.
Non-GAAP operating expenses climbed 25.8% to $246.2 million. As a percentage of revenues, non-GAAP operating expenses declined to 67.9% from the year-ago quarter’s figure of 71.2%.
Non-GAAP operating income for the quarter jumped to $39.8 million from $16.8 million in the year-ago quarter. Consequently, the non-GAAP operating margin expanded 490 bps to 11%.
Balance Sheet & Cash Flow
As of Dec 31, 2023, Cloudflare had cash, cash equivalents and available-for-sale securities of $1.67 million, up from $1.57 million as of Sep 30, 2023.
As of Dec 31, 2023, the company had long-term operating lease liabilities of $113.5 million.
NET generated an operating cash flow of $85.4 million and a free cash flow of $50.7 million in the fourth quarter. During fiscal 2023, the company’s cash flow from operating activities was $254.4 million and free cash flow was $119.5 million.
First-Quarter & FY24 Guidance
Cloudflare initiated guidance for the first quarter and full year 2024. For the first quarter of 2024, the company expects its revenues in the range of $372.5-$373.5 million. It expects its non-GAAP income from operations in the band of $34-$35 million for the quarter and has projected a non-GAAP net income per share of 13 cents.
For fiscal 2024, NET anticipates its top line in the range of $1.648-$1.652 billion. It expects non-GAAP income from operations in the range of $154-$158 million and non-GAAP net income per share in the band of 58-59 cents.
Zacks Rank and Stocks to Consider
Currently, Cloudflare carries a Zacks Rank #3 (Hold). Shares of NET have returned 55.3% in the past year.
Some better-ranked stocks from the broader technology sector are BlackLine (BL - Free Report) , Arista Networks (ANET - Free Report) and Dell Technologies (DELL - Free Report) . While BlackLine and Arista Networks sport a Zacks Rank #1 (Strong Buy) each, DELL carries 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 BlackLine’s fourth-quarter 2023 earnings has been revised by a penny northward to 55 cents per share in the past 60 days. Shares of BL have lost 16.9% in the past year.
The Zacks Consensus Estimate for Arista’s fourth-quarter 2023 earnings has been revised by a penny northward to $1.71 per share in the past seven days. Shares of ANET have rallied 102.1% in the past year.
The Zacks Consensus Estimate for DELL fourth-quarter 2024 earnings per share has been revised by a penny northward to $1.73 in the past 30 days. Shares of DELL have surged 101.7% in the past year.