An investor flare-upCloudflare’s Q3 earnings report was better than expected, but it hasn’t stopped investors getting cold feet.
- Content delivery network Cloudflare released a positive Q3 earnings report on Friday. The company reported EPS of $0.06 which improved on the previous quarter’s $0.00, as well as revenues of $253.9m which marked a 47% increase YoY.
- Despite the positive report however, investors weren’t jumping for joy. Shares in the company nosedived by almost 19% on Friday, with concerns for the group’s future outweighing the good news.
- The investor-hesitation might have something to do with its user base growth. The report showed the company added more than 4k paying customers over the period, but last quarter was the sixth in a row in which user-growth slowed.
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Head in the CloudsWeb security company Cloudflare floats an earnings report that leaves investors feeling soft and fluffy.
- Its stock flew up 9% in extended trading on Thursday after the firm broke even (from LPS of $0.02 a year ago) and revenue jumped 54% to hit $193.6m.
- Impressive customer additions buoyed the results. Cloudflare saw large customer (spending more than $100k) growth of 71%, and that segment now makes up over 54% of its total revenue.
- It also announced its acquisition of cybersecurity firm Vectrix, whose tech should help further boost its customer base. Cloudflare must think so anyway, because it forecast revenue of up to $206m for the current quarter and estimated FY revenue of $929m.
Daniel Páscoa / Unsplash
Cloudflare finds the silver liningWebsite security company Cloudflare has rallied over the last week on the back of the severe outage that Facebook’s (FB) servers faced, and the stock lifted by over 25% since cybersecurity stocks started getting more attention.
October is also Cyber Security Month, and the Biden administration has been making sure to properly mark the occasion with a renewed focus on how to combat the spate of cyberattacks. On Monday, news hit that the President is considering a fresh crackdown on crypto oversight in the name of cybersecurity, and Cloudflare ended the day up 3.30%.
Making a comebackCloudflare investors get some welcome news as its latest earnings report comes out, bumping up the share price by almost 4%. It’s a nice recovery from the previous day's 12% drop, but software growth stocks are still suffering.
Cloudflare released earnings this week that raised revenue guidance and exceeded analyst expectations. The cybersecurity leader posted a loss of $40 million for the quarter, or $0.03 per share, on revenues of $138.1 million, compared to estimates of a $0.03 loss per share on $131 million in revenue. The report showed strong growth among its large customer numbers, adding a record 120 large customers that now represent more than 50% of revenue. While Cloudflare has yet to have a profitable quarter, revenue was up by 51% from the same period last year and profitability is expected in 2022.
“We had a record-setting start to the year. Our Q1 revenue growth was up 51% year-over-year, and dollar net retention increased to 123%. We crossed 4 million total customers, and our large customer count was up 70% year-over-year, accounting for more than half of our total revenue,”
said co-founder and CEO of Cloudflare, Matthew Prince.
“We delivered terrific financial results while also investing in innovation, the fuel our engine runs on. Firing on all cylinders, we've already announced or delivered more than 100 products and capabilities this year. There's no slowing down as we continue to deliver business-critical offerings and displace point solutions with Cloudflare's robust global network.”
Guidance wise, Cloudflare is forecasting a loss of $0.04 to $0.03 per share for Q2, and revenue to come in at around $145.5 million to $146.5 million. For the full year 2021, the tech company expects a loss of between $0.11 and $0.10 per share, with revenues of between $612 million to $616 million. The share price has fallen 9% since the beginning of this year, but has more than doubled over the last 12 months.
Cloudflare partners with NvidiaCloudflare spikes 11.30% on news that the company is partnering with graphics processing unit (GPU) maker Nvidia.
Cloudflare announced that it would be working with Nvidia to bring artificial intelligence (AI) tech to its global edge network. Cloudflare offers a number of services that “protect and accelerate” internet apps for companies, and this partnership will allow NVIDIA’s AI tech to be available through Cloudflare’s network to its users.
GPUs are basically chips that make artificial intelligence tasks easier, faster, and more powerful; and now any developer anywhere in the world can make use of “powerful artificial intelligence tools to build the applications that will power the future," said Cloudflare co-founder and CEO, Matthew Prince. Cloudshare itself has been making use of these GPUs from various vendors, including Nvidia, for a while now, and has decided to share the AI love.
Cloud companies have done super well this year during the COVID pandemic as companies, schools and governments have been forced to tap new options to keep things going while people stay home. Cloudflare’s 2020 revenue was up 50% year-on-year at $431 million, and the stock shot up by over 380% over the year. The company has been shaking things up this week, making a new hire in Jonathan Dixon, VP and GM for Asia Pacific, as part of its global expansion plan. It also finally released Cloudflare Pages, which has been in beta since December 2020, and is designed to make it easier for web developers to collaborate on building and deploying websites.
But the company will still have to deal with the increasingly urgent chip shortage that tech companies around the world are facing.
It's been a really challenging last twelve months from a supply chain perspective
said Matthew Prince, CEO, although he noted that the company has been able to “stockpile various components in locations around the world and build out our network as its needed”.
Nvidia says that its operations are currently supply-constrained, but it's not enough to impact growth. They seem to be the experts, so fingers crossed.